Finance Bill (Third sitting)
(9 years, 1 month ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
What a pleasure it is to serve under your chairmanship this morning, Sir Roger, after our short break. I welcome the hon. Members for Wolverhampton South West and for Leeds East to the Opposition Front Bench. I hope that they remain there for a long time. I also pay tribute to the work of the hon. Members for Worsley and Eccles South (Barbara Keeley) and for Wirral South (Alison McGovern), who worked so hard in that role before the break.
The changes made by the clause mean that banks will no longer be entitled to tax relief for compensation payments made in relation to their misconduct and mis-selling. That will protect the Exchequer from banks’ past management failures and ensure that the sector makes an appropriate contribution to restoring the public finances.
Let me start by providing some background to the tax rules in this area. Fines are generally treated as non-deductible expenses in calculating companies’ profits liable to corporation tax. That means that the fines imposed on banks as a result of their conduct have had no direct impact on UK tax receipts; in fact, they have actually benefited the Exchequer due to a change in rules enacted by the Government. That is not the case, however, for banks’ customer compensation payments. Such payments are generally treated as deductible expenses for corporation tax purposes, reflecting the fact that they are non-punitive and often the straightforward reimbursement of income on which businesses have already been taxed. As a result, compensation payments made by banks in relation to the mis-selling of financial products have, until this point, impacted directly on corporation tax receipts.
The scale of banks’ compensation payments in recent years has been unprecedented. More than £25 billion has already been paid out or provided for in relation to the mis-selling of payment protection insurance, with a further £1.8 billion paid or provided for in relation to the mis-selling of interest rate products. Crucially, the exceptional levels of banking sector compensation are persisting. New PPI provisions exceeded £2 billion in the first half of 2015 alone, with cumulative provisions now well in excess of initial market expectations and continuing to grow. In that context, the Government believe that the existing tax rules have become unsustainable. It is not acceptable that post-crisis corporation tax receipts continue to be depressed by conduct failures that in some instances took place more than 10 years ago. The clause therefore makes a change to address that.
The clause makes banks’ compensation payments in relation to misconduct and mis-selling non-deductible for tax purposes from 8 July 2015. That will apply to compensation material enough to have been disclosed in banks’ accounts, albeit with an exclusion for compensation relating to administrative errors, system failures and the actions of unconnected third parties. The changes will also capture administrative expenses associated with that compensation, but will achieve that indirectly by requiring banks to apply a 10% uplift in calculating their non-deductible compensation expenditure. That will help to ensure that the changes are proportionate. It will also ensure that the Exchequer is protected from the large-scale compensation seen in recent years, but in a way that is administrable and recognises that banks, like other industries, will inevitably make compensation payments as part of their ordinary course of business. Overall, this is a fair and workable set of rules, which is forecast by the independent Office for Budget Responsibility to increase banks’ corporation tax payments by £1 billion over the next five years.
We have already taken action to reduce the sensitivity of corporation tax receipts to losses incurred by banks during the crisis. The changes made by clause 18 now do the same in respect of banks’ past misconduct and the exceptional levels of compensation it has given rise to. This is crucial in ensuring that taxpayers get a fair deal from the banking sector, which they stood behind during the crisis. I therefore commend clause 18 to the Committee.
Rob Marris (Wolverhampton South West) (Lab)
What a pleasure it is to appear in Committee before you, Sir Roger. It has been a good many years. I thank the Minister for her kind words and pay tribute to my predecessors in this role, who worked hard, including on this Finance Bill. It is a particular pleasure to be shadowing the hon. Member for South West Hertfordshire. He and I have crossed swords in previous Committees—it is getting on for 10 years ago. I always think it is a bit like that Texas festival, South by Southwest—we are South West Hertfordshire and Wolverhampton South West. I look forward to our debate.
It will not surprise the Committee, and in particular my hon. Friends, that the Labour party thinks that clause 18 is rather a good idea. I will not detain the Committee for long, but I want to make one point and raise one issue. It was on this very day in 2008 that one of the major banks in this country was nationalised—I believe it was Lloyds bank. I remember, because I remarked in the Commons, as a then Government Back Bencher, that happy days were here again, because we were nationalising a bank on Margaret Thatcher’s birthday. It seems to go with the zeitgeist of the current Labour party leadership.
Harriett Baldwin
On that point, I am keen to explore whether the hon. Gentleman supports that leadership.
The Chair
Order. I am going to throw the hon. Gentleman a lifebelt. That is strictly not part of the Bill.
Rob Marris
Thank you, Sir Roger. As a shadow Minister, I think the Minister knows my response.
I have a question for the Minister—one that has just occurred to me, so I hope she will indulge me, as I have not had a chance to research it. The explanatory notes seem to suggest that this clause refer to banking, but the wording seems to suggest that it refers to corporation tax and deductions for compensation. All hon. Members will be aware that the largest car company in Europe—the second largest in the world—has been doing precisely what banks were doing leading up to the crash in 2008. Starting in 2009—which shows that the capitalists never learn and need regulating—the Volkswagen Audi group has been using computer algorithms and deception to con consumers. My personal view is that the Government, with the prosecuting authorities, should look at prosecuting Volkswagen executives if there is a case to answer that they obtained pecuniary advantage by deception—a breach of section 15 of the Theft Act 1968. However, my question for the Minister is this. Would clause 18, on the deductibility or non-deductibility from corporation tax of payments made by cheating companies, cover a company such as Volkswagen if it were adjudicated formally to have cheated?
Harriett Baldwin
Let me answer the hon. Gentleman’s question by agreeing that clause 18, given the way it is worded, applies only to banks. Clearly, it was introduced in response to the fact that the scale of bank compensation, to which I referred in my opening remarks, has been so significant. More than £25 billion has already been paid out, which has had a material and meaningful impact on the corporation tax receipts of Her Majesty’s Treasury. We have always been clear that we want banks to make a fair contribution to their historic costs and their potential impact on future risks to the economy.
The hon. Gentleman asked about compensation relating to the Volkswagen emissions scandal, which, as he is right to highlight, is a complete scandal. There is currently no intention to extend this measure. It is obviously early days in terms of the full scale of potential actions regarding Volkswagen, in particular Volkswagen in the UK and where the company pays corporation tax. However, I can assure the hon. Gentleman that the Government reserve the right to act decisively through legislation such as Finance Bills when they need to take steps to protect the public finances.
Mark Garnier (Wyre Forest) (Con)
On a point of clarification, the Minister mentioned that the costs of expenses incurred in addition to fines would also not be tax deductible. As she knows, under a section 166 agreement, the Financial Conduct Authority can ask a bank, at its own expense, to investigate an alleged misdemeanour. As I understand it from what she is saying, if that results in a fine, the section 166 cost is not tax deductible, but what would happen if it did not result in a fine and came off with a negative result? Would the section 166 undertaking be recoverable under tax?
Harriett Baldwin
My hon. Friend speaks with great insight and authority from his position on the Select Committee on the Treasury. I can explain to him that these measures are designed to tackle the material costs of compensation that are reflected, or provisioned for, in a bank’s accounts. In addition to that, a further 10% for the general costs of administration is attached. Were the costs that my hon. Friend refers to significant enough to require provision in the company’s accounts, they would be captured by this measure.
Question put and agreed to.
Clause 18 accordingly ordered to stand part of the Bill.
Clause 19
Banks established under Savings Bank (Scotland) Act 1819: loss allowance
Question proposed, That the clause stand part of the Bill.
Harriett Baldwin
The changes made by clauses 19 and 20 ensure that special provisions for building societies in the loss-relief restriction legislation extend to savings banks, which share many of the same characteristics. This is a very narrowly targeted change to the legislation to ensure that it applies fairly across the sector and delivers on its stated policy objectives. Clause 20 makes a change to the definition of a bank for the purposes of bank-specific tax legislation, helping to ensure that it is aligned with regulation and delivers the intended policy outcome.
Let me start by explaining the background to clause 19. When a company makes a loss for corporation tax purposes, it is entitled to carry forward that loss and offset it against taxable profit arising in future periods. Legislation was included in the Finance Act 2015 to restrict the amount of profit that banks and building societies can offset with historical losses to 50% from 1 April 2015. This is designed to reduce the sensitivity of corporation tax receipts to losses incurred by banks during the financial crisis and subsequent misconduct and mis-selling scandals. The loss-restriction legislation includes a special provision for building societies, meaning that the restriction applies only to profits they make in excess of £25 million. That reflected a concern that the smallest building societies could otherwise be disproportionately impacted by the restriction, due to the fact that they are non-profit maximisers and reliant on retained earnings to build regulatory capital.
It has been brought to the Government’s attention that this provision does not accommodate banks incorporated under the Savings Bank (Scotland) Act 1819, which share many of the same characteristics as building societies and thus have the potential to be affected in the same way. The changes made by clause 19 therefore address that by ensuring that, from its inception, the legislation applies fairly and consistently across the sector. The changes will have a negligible impact on tax receipts. The independent OBR still forecasts that the loss restriction will increase banks’ tax payments by around £4 billion across the next five years, helping to ensure a fair deal for the taxpayer.
I will now turn briefly to clause 20. The Government have taken a number of steps to ensure that banks make a fair contribution to the public finances. That includes the bank levy, a tax on banks’ balance sheet equity and liabilities. The measures also include a restriction on the amount of profit that banks can offset by carried-forward corporation tax losses.
These policies, which will have raised over £30 billion in total by 2020-21, rely on there being a suitable definition of a bank within tax legislation. That definition needs to be able to take account of the differences between retail banks, investment banks and building societies. The current definition, which is based on regulatory concepts and supervision responsibilities, has been successful at targeting tax measures in accordance with the Government’s policy objective. However, as part of the modernisation of financial regulation, there have been recent changes to the regulatory terms used. Clause 20 aligns the definition used within tax legislation with those changes, and so ensures that investment banks supervised by the FCA remain within the definition, in line with the stated policy objective. The amended legislation will continue to apply to the same population and will continue to operate in the same manner.
Clause 19 represents a narrowly targeted change to the loss restriction legislation to ensure that it applies consistently across similar institutions. It is consistent with existing policy and immaterial in terms of sector-wide tax receipts. Clause 20 is a technical change to the bank tax legislation to ensure that it remains appropriately targeted and appropriately aligned with regulation.
Rob Marris
We seem to be dealing with the progressive clauses early on in our proceedings. That suits me and my party rather well: we like building societies, and I suspect that, were we to know more about savings banks in Scotland, we would like them as well, because they are not driven solely by profit, but do wish to make a surplus. I therefore encourage my hon. Friends to support clause 19.
As for clause 20, I have to confess—and this will not be the last time—that some of the technical matters are beyond me, although I appreciate that there is considerable expertise on the Committee and I thank the Minister for her explanation of this technical change. I have one question for her about the clause. It is a troubling one, but she may be able to allay my fears; if she cannot, I will be encouraging my hon. Friends to abstain.
As I understand it, the effect of clause 20, if enacted, would be retrospective to 1 January 2014—that is, a year and a half before the Budget on 8 July 2015. As a lawyer and as a Member of Parliament, I am always acutely concerned about retrospective legislation. I know it happens in Finance Acts in particular; it is common to backdate things to the date of the Budget, for example, and, on occasion, to the beginning of the tax year of that Budget. However, this is the second Finance Bill this year—one hopes it will be the last—and it is concerning to have retrospectivity, even if the measure is a very technical one.
Harriett Baldwin
The hon. Gentleman is absolutely right that, where possible, we always try to ensure that this type of legislation has no retrospective effect. He is also right that that is an important principle that we apply in dealing with such Bills. However, I can reassure him that, as he will see from the impact assessment, there will be no change to the effect of the legislation in terms of its financial impact. The legislation will continue to apply to the same population as before and will continue to operate in the same manner. He is right to raise a general principle that we would seek to observe with regard to the Bill, but in this example, because the institutions in question are already being treated in this manner for tax purposes and for regulatory purposes, it is simply a case of the legislation catching up with the real world.
Rob Marris
Is the Minister suggesting, by talking about catch-up, that the regime has been acting outside the law for the best part of two years?
Harriett Baldwin
The wording in the legislation is being changed to reflect the way in which the system has been operating, and so the change will have no material or measurable impact. Given the regulatory changes that came into effect with the Finance Act 2012, the legislation was ambiguous, so I would describe the change as a clarification of the wording to provide certainty in the legislation to match what has been happening in the real world.
George Kerevan (East Lothian) (SNP)
I welcome clause 19, which fits in with the drift of the previous discussion we had about not all banks being the same and about how treating them the same under the new levy was therefore the wrong approach. We also agreed that savings banks should be encouraged. I am happy to tell colleagues that they are not simply a Scottish invention, but grew out of the savings movement in the 19th century following the industrial revolution. Given the experience of banking in this country in recent years, the savings movement is to be encouraged at all levels.
Question put and agreed to.
Clause 19 accordingly ordered to stand part of the Bill.
Clause 20 ordered to stand part of the Bill.
Clause 21
Pensions: special lump sum death benefits charge
The Financial Secretary to the Treasury (Mr David Gauke)
I beg to move amendment 13, in clause 21, page 32, line 44, at end insert—
‘( ) In paragraph 16 of Schedule 32 to FA 2004 (benefit crystallisation event 7: defined benefits lump sum death benefit is a “relevant lump sum death benefit”)—
(a) in the first sentence, in paragraph (a), after “benefit” insert “, other than one—
(i) paid by a registered pension scheme in respect of a member of the scheme who had not reached the age of 75 at the date of the member’s death, but
(ii) not paid before the end of the relevant two-year period”, and
(b) in the second sentence, for “sub-paragraph” substitute “paragraphs (a)(ii) and”.”
Mr Gauke
It is a great pleasure to serve under your chairmanship again, Sir Roger. I add my words of welcome to the hon. Member for Wolverhampton South West. As he said, we crossed swords in Finance Bills many years ago and I am delighted to see him back. I know that he will be an assiduous and thoughtful scrutiniser of the Bill and I am delighted to see him in place following his overdue promotion to the Front Bench. I also welcome the hon. Member for Leeds East to his Front-Bench position, as well as the hon. Member for St Helens North to the important role of Opposition Whip—although I note that the hon. Member for Scunthorpe is still present to provide any necessary words of guidance. Given his additional Front-Bench duties, that is to be commended. He clearly cannot keep away from Finance Bill debates—an attribute that both I and the hon. Member for Wolverhampton South West appear to share.
Clauses 21 and 22 will reduce the 45% tax on lump sums payable from a pension of individuals who die aged 75 or over to the marginal rate of income tax. These changes will ensure that individuals receiving taxable pension death benefits are taxed in the same way regardless of whether they receive the funds as a lump sum or as a stream of income. April this year marked the introduction of the Government’s radical reforms to private pensions. The historic changes included the removal of the 55% tax charge that used to apply to pensions passed on at death. Under our reforms, lump sums payable from the pension of someone who has died before age 75 are now tax-free. That was not previously the case: the recipient of the lump sum had to pay the 55% tax if the pension had been accessed. We also reformed who can take a pension death benefit.
Individuals can now nominate anyone they want to draw down the money as pension, paying tax at their marginal rate. However, for 2015-16, individuals receiving the money as a lump sum from the pension of someone who has died aged 75 or over pay tax at a special rate of 45%. These clauses meet the Government’s commitment to reduce that special rate to the recipient’s marginal rate from April 2016. That will align the income tax treatment of individuals who take the money as a lump sum with those who receive it as a stream of income.
Around 320,000 people retire each year with defined contribution pension savings. Their beneficiaries could now potentially benefit. Clause 21 removes the 45% tax charge that applies when certain lump sum death benefits are paid to individuals, and clause 22 applies the marginal rate of income tax instead. The 45% tax charge will remain in place where the lump sum death benefit is not paid directly to an individual.
For individuals who have such a payment made to them through a trust, clause 21 ensures that when the money is paid out, the individual will be able to reclaim any excess tax paid. That means that they will ultimately pay tax at their marginal rate, as though they had received it directly. For many people receiving these lump sum death benefits, clauses 21 and 22 will therefore mean a reduction in the tax payable. However, we must of course safeguard the Exchequer. These clauses will therefore ensure that people who leave the UK for a short period, receive the lump-sum death benefit and then return here will not escape UK tax charges, nor will they be able to escape UK tax charges because the member transferred their pension savings overseas in the five tax years before they died. UK tax charges will still apply in such cases, to make sure that people pay the right amount of tax.
Government amendment 13 removes potential unfair outcomes for individuals who have a defined benefit, lump-sum death benefit paid to them by removing the test against the lifetime allowance where the lump sum is subject to another tax charge. That means that any such lump-sum death benefit will be subject to one tax charge only.
Clauses 21 and 22 will make the tax system fairer and ensure that individuals who receive death benefit payments from the pension of someone who dies aged 75 or over are taxed in the same way, regardless of whether the death benefit is paid as a lump sum or a stream of income.
Rob Marris
I knew that we would hit the buffers sooner or later, but I thank the Minister for his kind words. To get it out the way, it will not surprise him to know that we support amendment 13, because taxation should not happen twice. Perhaps he might tell me at some point whether this was another difficulty spotted by Mrs Gauke, who has been known to grace this Committee in the past with her insights and specialties.
Rob Marris
The Minister says it was not.
I am uneasy, however, about clauses 21 and 22, which are twins. As I understand it—I may have misunderstood—an individual who as a beneficiary would previously have been paying tax at 45% on a windfall will in future be paying tax at their marginal rate, whether 20% or 40%. I am uneasy about that for two reasons. First, we have historically tended to impose taxes on death calculated on the estate rather than on the recipient. The inheritance tax, as you may remember, Sir Roger, became the capital transfer tax and then went back to being inheritance tax again, which is where we are now—although they are commonly called death duties. The tax payable back then was calculated on the value of the estate and the thresholds, allowances and so on relating to that. These clauses change that—perhaps the change was made in the past and I am not aware of it, which I readily concede might be the case—and tax payable will now be calculated on the tax rate of the individual beneficiary or recipient.
Secondly, this is money that has been taxed at 45%. It is a windfall. It is money that had tax relief when paid into the pension scheme and it had tax relief while that pension scheme was accumulating its funds. It now gets not tax relief, but a lowered tax rate than has hitherto been the case, dropping from 45% to 20% or 40% due to these two clauses. I am uneasy about that. My fears may be allayed if the Minister or his colleagues can clarify the matter further, but it may be that I will ask my hon. Friends to vote against these two clauses.
Mr Gauke
I am sorry that we seem to have hit the buffers quite so quickly when things were so consensual. First, there is a well-established distinction between the inheritance tax regime and the treatment of lump-sum death benefits. For example, if a spouse dies and leaves his or her estate to the surviving spouse, there is an exemption and no tax is paid. There is no equivalent provision in terms of the tax on lump-sum death benefits. I take the hon. Gentleman’s point, but I disagree with it. His argument does not go very far in terms of a direct analogy between the inheritance tax regime and lump-sum death benefits.
The hon. Gentleman argues that pensions are taxed on the basis of what tax professionals describe as EET—that is, exempt, exempt and then taxed. It is worth pointing out that under this regime, although pension savings are still taxed at the final stage, they are taxed at the marginal rate of the recipient. That does not mean that these sums essentially go completely untaxed—which I think is at the heart of the hon. Gentleman’s concern. More fundamentally, however, I would argue that we want a savings regime that encourages people to save for their pensions and a regime with a charge of 55%—as it was not that long ago—could be seen as punitive. In the circumstances that apply in this case, it is not unreasonable that there should be consistency in the tax treatment of these pension funds, regardless of whether payments are made as a lump sum or a stream of income.
I do not know whether I have succeeded in persuading the hon. Gentleman of the case for this, but I would argue that these provisions make our tax system fairer. They ensure that individuals receiving taxable pension death benefits are taxed in the same way, regardless of whether they receive the funds as a lump sum or as a stream of income. I therefore hope that clauses 21 and 22 can stand part of the Bill.
Amendment 13 agreed to.
Clause 21, as amended, ordered to stand part of the Bill.
Clause 22 ordered to stand part of the Bill.
Clause 23
Pensions: annual allowance
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 14 to 21.
That schedule 4 be the Fourth schedule to the Bill.
Mr Gauke
Clause 23 and schedule 4 ensure that the cost of pensions tax relief is fair, manageable and affordable. These changes will restrict the benefits of pensions tax relief for the highest earners by tapering away the annual allowance for those with an income, including pension contributions, of more than £150,000. Amendments 14 to 21 were drafted in response to industry feedback on the legislation for this schedule, which was published before the recess. They will ensure that an aspect of the transitional legislation providing an administrative easement for defined benefit schemes works as intended.
Pensions tax is one of the Government’s most expensive reliefs. In 2013-14, the cost to the Exchequer of income tax relief for pensions was more than £34 billion. This has increased from £17.6 billion in 2001. About two-thirds of pensions tax relief currently goes to higher and additional rate taxpayers, and around 15% of the tax relief in 2013-14 went to those with an income of more than £100,000. In the last Parliament we took steps to control that cost and ensure that pensions tax relief is appropriately targeted. These provisions take further steps to achieve that. They are focused on the wealthiest pension savers, to ensure that the benefit they receive is not disproportionate to that of other pension savers.
The annual allowance is the limit placed on the amount of tax-relieved pension saving that can be made by an individual each year. It is currently set at £40,000. The clause introduces a tapered reduction in the amount of the annual allowance for individuals with an income, including the value of any pension contributions, of more than £150,000. The taper, which will have effect from 6 April 2016, will be at the rate of £1 for every £2 of income that exceeds the £150,000 threshold, down to a minimum of a £10,000 annual allowance. To provide further certainty about who is affected by the change, the clause also provides that those who have incomes excluding pension contributions of £110,000 and below are not affected by the reduced annual allowance.
Rob Marris
I regard the amendments as technical changes that smooth the transition periods for the input year and tax year. I have to say that I am delighted by the clause. Many years ago, I was a lone voice in Parliament calling for a restriction of tax relief on pension contributions. As the Minister quite rightly said, it cost almost £18 billion a year in 2001 and that figure has shot up.
When I asked the Department for Work and Pensions—in 2003 or 2004—what evidence there was that tax relief on pension contributions encouraged people to save for a pension, the DWP had no such evidence. To me, that was shocking for a tax relief that then cost £18 billion a year. In a sense, the Government were spending, through forgone income, to encourage a pattern of behaviour when there was no evidence that they were encouraging such behaviour. I salute this Government for grasping that nettle.
The other reason I oppose pension tax relief—the Minister generously adverted to this today and clarified for the Committee—is that it has hitherto been incredibly regressive. When I raised this matter 10 or 12 years ago, it was even more regressive. The proportion being claimed by higher and additional rate taxpayers is now down to two thirds; it used to be about 90%. It was astounding to me that a Labour Government—a socialist Government in name—would continue with a tax measure that did not do what it was designed to do and which favoured the very well-to-do. We then had my hon. Friend Ruth Kelly, then Member for Bolton and, I think, Financial Secretary to the Treasury, introducing the nonsense of the annual allowance. It was completely bodged, as the Finance Bill Committee at the time, on which I sat, pointed out to her.
I still think there is a question mark over the whole concept of pension tax relief system for pension contributions, but this measure is progressive and, I have to say, it is somewhat to my surprise that the Government and their predecessor have now grasped the nettle twice. I urge my hon. Friends enthusiastically to support the clause.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Schedule 4
Pensions: annual allowance
Amendments made: 14, in schedule 4, page 99, line 43, leave out “227B(2)” and insert “227B(1)(b) and (2)”.
Amendment 15, in schedule 4, page 100, line 10, leave out “section 227ZA(1)(b)” and insert
“each of sections 227ZA(1)(b) and 227B(1)(b)”.
Amendment 16, in schedule 4, page 100, line 14, leave out “section 227ZA(1)(b)” and insert
“each of sections 227ZA(1)(b) and 227B(1)(b)”.
Amendment 17, in schedule 4, page 103, line 3, at end insert—
“Exceptions in certain cases where individual is deferred member of scheme
(6A) Subsections (3) to (5) do not apply, and subsections (6B) and (6C) apply instead, if—
(a) because of section 238ZA(2), a pension input period for the arrangement ends with 8 July 2015,
(b) another pension input period for the arrangement ends with a day (“the unchanged last day”) after 5 April 2015 but before 8 July 2015, and
(c) section 230(5B) or 234(5B), when applied separately to each of—
(i) the pension input period for the arrangement ending with 8 July 2015, and
(ii) the pension input period for the arrangement ending with 5 April 2016,
gives the result that the pension input amount in respect of the arrangement for each of those periods is nil.
(6B) The pension input amount in respect of the arrangement for the post-alignment tax year is nil.
(6C) The pension input amount in respect of the arrangement for the pre-alignment tax year is the amount which would be the pension input amount in respect of the arrangement for the pre-alignment tax year if—
(a) the pension input period ending with the unchanged last day were the only pension input period for the arrangement ending in the pre-alignment tax year, and
(b) subsections (3) to (5) were ignored.”
Amendment 18, in schedule 4, page 103, line 4, after “Modifications”, insert “in some other cases”.
Amendment 19, in schedule 4, page 103, line 44, at end insert—
“Modification where last input period ends before 9 July 2015
(11A) If the last pension input period for the arrangement ends after 5 April 2015 but before 9 July 2015—
(a) the time-apportioned percentage for the post-alignment tax year is treated as being nil, and
(b) the time-apportioned percentage for the pre-alignment tax year is treated as being 100.”
Amendment 20, in schedule 4, page 103, line 46, at end insert—
“() subsections (6B) and (6C) do not apply,”.
Amendment 21, in schedule 4, page 104, line 7, after “period”, insert
“(for this purpose treating that remainder as a single pension input period if not otherwise the case)”—(Mr Gauke.)
Schedule 4, as amended, agreed to.
Clause 24
Relief for finance costs related to residential property businesses
Mr Gauke
I beg to move amendment 22, in clause 24, page 36, line 23, leave out
“a property business carried on by a company”
and insert
“calculating the profits of a property business for the purposes of charging a company to income tax on so much of those profits as accrue to it”.
The Chair
With this it will be convenient to discuss the following:
Government amendments 23 to 26.
Clause stand part.
Mr Gauke
Clause 24 makes changes to ensure that all individual residential landlords get the same rate of tax relief on their property finance costs. This change will make the tax system fairer. Landlords with the largest incomes will no longer receive a more generous tax treatment. The distortion between property investment and investment in other assets will be reduced, and the advantage landlords may have over those who work hard to save for a deposit in order to own their own home will be minimised.
Let me begin by setting out the problem that the clause remedies. Landlords are able to offset their finance costs, such as mortgage interest, from property income when calculating their taxable income, reducing their tax liability. At present, the relief they receive from this is at the marginal rate of tax. That means that landlords with the largest incomes benefit the most from the relief, receiving relief at the higher or additional rates of income tax—40% or 45%—whereas landlords with lower incomes are able to benefit from relief only at the basic rate of income tax, which is 20%. In contrast, owner-occupiers of properties do not get any tax relief on their mortgage costs, and finance cost relief is also not available to individuals investing in other assets, such as shares in public companies. That creates a distortion between property investment and investment in other assets.
Clause 24 will reduce the inequity by restricting finance cost relief to the basic rate of income tax—20%—for all individual landlords of residential property. It will unify the tax treatment of finance costs for such landlords, including individual partners of partnerships and trusts. The change will ensure that landlords with the largest incomes no longer benefit from more generous rates of relief.
The Government recognise that many hard-working people who have saved and invested in property depend on the rental income they get, so the clause is being introduced in a proportionate and gradual way. The restriction will be phased in over four years from April 2017, ensuring landlords have time to plan for the change.
The Government have tabled five amendments to the clause. Amendment 22 ensures that all companies are excluded from the restriction, even when carrying on a property business in partnership. Amendments 23 to 26 ensure that where a trustee’s finance cost deduction is restricted, basic rate relief is available to trustees with accumulated or discretionary income.
Only one in five individual landlords are expected to pay more tax as a result of this measure. The Government do not expect the change to have a large impact on either house prices or rent levels due to the small overall proportion of the housing market affected. The Office of Budget Responsibility has endorsed this assessment. It believes that the impact on the housing market will be small and, taking account of the other measures in the Budget, has not adjusted its forecast for house prices. By April 2020, only 10% of individual landlords will see a tax bill increase greater than £500.
The clause will make the tax system fairer. It will restrict the amount of tax relief landlords can claim on property finance costs to the basic rate of tax, thus ensuring that landlords with the largest incomes no longer receive the most generous tax treatment. It will also reduce the distorting effect that tax treatment of property has on investment and the advantage landlords may have in the property market over owner-occupiers.
Rob Marris
The amendments, as far as I can tell, are technical measures to smooth things out. As ever, these things come out in the wash, whether it is Mrs Gauke or someone else who spots them.
It is likely that I will ask my hon. Friends to support the clause but I want to probe the Government on it. As the Minister knows, this is one of the higher profile clauses in the Bill and has attracted a rather large postbag. Some landlords—not all—are concerned.
I appreciate that any landlord among the one in five paying more tax under the provision has almost two years from 8 July to April 2017 to sell the property if they wish to do so, so that they are not boxed in with de facto retrospective action, which can happen if there is only three months in which to sell. I salute the Government for giving that transition time.
I am surprised to hear that only one in five landlords will be affected, but the Government and the OBR have done their research. I am concerned that the measure will do nothing for house prices, which is perhaps a debate for another day. Would that it would bring down house prices, which are far too high around the country. Those prices might well get higher when pensioners, under the Government’s freedoms, buy not Lamborghinis but houses with the money freed from their pension funds.
Mark Garnier
I have a small amount of sympathy with the view that house prices are too high, but is the hon. Gentleman genuinely advocating that the principal method of saving for most people in this country should be reduced in value? The effect on households would be astronomically catastrophic if one were to start reducing house prices. Is that part of his policy?
Rob Marris
Yes, I would like house prices to come down; they are far too high. For most people, property is not an asset that is any good to them until they die—in which case, of course, it is no good to them. The house I live in is worth roughly eight times what we paid for it 30 years ago. That is almost entirely a windfall, though some of it is due to improvements we have made. I will not take long on this, Sir Roger, because I know you do not want us to be too diverted, but were my wife and I to move, we would have to pay an equivalent sum for something else. Yes, house prices are far too high but they will come down when the Government do their bit by increasing the supply of houses.
Meanwhile, returning to clause 24, this is the issue on which I wish to probe the Minister. I may have misunderstood these technical matters because I am not an accountant, but I believe the buy-to-let income accruing to the landlord is counted as income for income tax purposes. There will therefore be some landlords—perhaps the Government have figures—who, before this change, when their non-buy-to-let income, perhaps from a job, was added to their buy-to-let income were standard rate taxpayers, but who will become higher rate taxpayers after the change is made. Therefore, that group may end up paying considerably more tax.
It is not simply a question of landlords who are already 40% taxpayers because of other income being levelled, as it were, to 20%, which is what I understand the clause is designed to do. That is understandable. However, it would actually be promoting people—pushing them into a higher rate tax bracket—and therefore they would be losers. Does the Minister have any figures on that “in between” group—a rather maladroit phrase, but the Minister will understand what I mean—who will be pushed up. I hope that, now he has the piece of paper, he will be able to elucidate that point for the Committee. As I say, my inclination is to support the measure, but I am concerned about that cohort who may be suddenly treated in a slightly different way, which may mean that the figure of one in five the Minister quoted is somewhat low.
Mr Gauke
I hope I will be able to welcome the support of the Opposition for the clauses in full, although the hon. Gentleman is quite right to ask scrutinising questions.
We are not making any claims about the effect on house prices. The OBR’s assessment is that the impact on the housing market will be small and it has not adjusted its forecast for house prices. The answer to the issue of house prices is improvement in supply—I suspect the hon. Gentleman would agree—so it is worth pointing out that housing starts are at a seven-year high. However, the Government remain focused on putting the right conditions in place so that we build more houses and more people have the opportunity to own their own home.
Christian Matheson (City of Chester) (Lab)
The hon. Member for Wyre Forest made the interesting point that home ownership is the principal form of saving for most people in this country—I hope I am not misrepresenting him, Sir Roger. Do the Government share that view?
Mr Gauke
It is up to individuals to decide how they wish to save. We are determined to ensure that the opportunity to own one’s own home is available to as many people as possible. That requires us to increase the supply of homes in this country, and that is a Government priority. We are moving in the right direction, but, as we set out during the Conservative party conference last week, we want to do more to put in place the conditions wherein more people will have that opportunity.
On the impact of the changes, there was a question about whether the measures might move a basic rate taxpayer into the higher tax band. We expect that around 94% of landlords who will have to pay more tax will have a total taxable income of over £35,000. On average, landlords own 2.7 properties. Those currently with taxable income under £35,000 who will have to pay more tax have, on average, larger rental incomes and larger property portfolios; they have an average pre-tax rental income of more than £64,000, and own six properties. It is true that basic rate taxpayers could be affected by the measures, but often—not in every case, but overwhelmingly—those people will have quite large portfolios and may have leveraged up to a greater extent than the typical buy-to-let landlord.
I hope that clarification has been helpful to the Committee, and that the measures will have the Committee’s support.
The Chair
Order. I will make an exception in this case, but, as a matter of form, ordinarily when I call the Minister to wind up the debate, that is it. If the hon. Gentleman wishes to intervene, he needs to be a little more spritely in leaping to his feet.
George Kerevan
Forgive me, Sir Roger. I am concerned about a sub-class of property owners in rural areas who might have unincorporated businesses on farms. They often rely on rented accommodation as part of the diversification of their business. I am concerned that one of these changes will make that more difficult for them, as they will be penalised, albeit unintentionally, with regard to investing in their property as part of a farm business. They might also be penalised with regard to their ability to make relevant commercial deductions for investment loans. In rural areas, property is quite often mortgaged less as part of a buy-to-let and more as part of the general farm business. Will the Minister comment on that?
Mr Gauke
The same principles apply to rural landlords as apply across the board. We want to ensure fairness in how interest deductibility applies: the same rate should apply across the board. In terms of whether businesses will be able to secure loans against property for business development, the measure will apply to restrict relief for borrowings used for the purpose of residential property businesses, not to borrowings secured against residential properties that are used for the development of other business. I hope that that reassures the hon. Gentleman and, again, I commend the clause to the Committee.
Amendment 22 agreed to.
Amendments made: 23, in clause 24, page 37, line 18, leave out “finance costs” and insert
“costs of a dwelling-related loan”
Amendment 24, in clause 24, page 37, line 19, leave out
“non-deductible costs of a dwelling-related loan”
and insert “individuals”
Amendment 25, in clause 24, page 38, line 26, at end insert—
“274B Tax reduction for accumulated or discretionary trust income
(1) Subsections (2) to (4) apply if—
(a) an amount (“A”) would be deductible in calculating the profits for income tax purposes of a property business for a tax year but for section 272A,
(b) the trustees of a particular settlement are liable for income tax on N% of those profits, where N is a number—
(i) greater than 0, and
(ii) less than or equal to 100, and
(c) in relation to those trustees, that N% of those profits is accumulated or discretionary income.
(2) The trustees of the settlement are entitled to relief under this section for the tax year in respect of an amount (“the relievable amount”) equal to N% of A.
(3) The amount of the relief is given by—
BR × L
where BR is the basic rate of income tax for the year, and L is the lower of—
(a) the total of—
(i) the relievable amount, and
(ii) any difference available in relation to the trustees of the settlement and the property business for carry-forward to the year under subsection (4), and
(b) the profits for income tax purposes of the property business for the year after any deduction under section 118 of ITA 2007 (“the adjusted profits”) or, if less, the share of the adjusted profits—
(i) on which the trustees of the settlement are liable to income tax, and
(ii) which, in relation to the trustees of the settlement, is accumulated or discretionary income.
(4) Where the amount (“AY”) of the relief under this section for the year in respect of the relievable amount is less than—
BR × T
where BR is the basic rate of income tax for the year and T is the total found at subsection (3)(a), the difference between—
(a) T, and
(b) AY divided by BR (with BR expressed as a fraction for this purpose),
is available in relation to the trustees of the settlement and the property business for carry-forward to the following tax year.
(5) In this section “accumulated or discretionary income” has the meaning given by section 480 of ITA 2007.”
Amendment 26, in clause 24, page 40, line 3, at end insert—
‘( ) In section 26(2) of ITA 2007 (tax reductions deductible at Step 6 of the calculation in section 23 of ITA 2007 in the case of taxpayer who is not an individual), before the “and” at the end of paragraph (a) insert—
“(aa) section 274B of ITTOIA 2005 (trusts with accumulated or discretionary income derived from property business: relief for non-deductible costs of dwelling-related loans),”.—(Mr Gauke.)
Clause 24, as amended, ordered to stand part of the Bill.
Clause 25
Enterprise investment scheme
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
That schedule 5 be the Fifth schedule to the Bill.
Clause 26 stand part.
That schedule 6 be the Sixth schedule to the Bill.
Clause 27 stand part.
Mr Gauke
These clauses and schedules will make changes to the rules for the enterprise investment scheme and venture capital trusts. I will discuss clause 27 after dealing with the rest of the group.
The changes will ensure that the schemes are brought into line with new state aid rules, which came into force in January 2015. They will ensure that the schemes continue to be well targeted towards companies that need investment to develop and grow, and they will provide for greater levels of support for innovative, knowledge-intensive companies, which play a key part in economic growth.
The UK has put forward a very strong case for schemes that go beyond the general block exemption regulations, and to support that we commissioned independent academic research into the UK equity gap. I am pleased to be able to announce that the Commission has now given its approval for the schemes. The UK is the first member state to negotiate an approval beyond the basic EU rules. That secures the long-term future of the schemes and will mean that they continue to support companies that need funding to develop and grow.
EIS and VCT have been supporting small companies to access finance for more than 20 years. The schemes provide generous tax incentives to encourage private individuals to invest in higher risk small and growing companies that would otherwise struggle to access finance from the market. The changes made by clauses 25 and 26 and schedules 5 and 6 will ensure that the schemes are state aid compliant and that they offer support in line with the latest evidence of market failure. They will mean that additional support is provided for knowledge-intensive companies that are particularly likely to struggle to access finance.
The changes include the following provisions. Knowledge-intensive companies will need to have received their first investment through the schemes no later than 10 years after their first commercial sale, and may receive up to £20 million of tax-advantaged risk finance investment. Other qualifying companies must receive their first investment through the schemes no later than seven years after their first commercial sale, and may receive up to £12 million of tax-advantaged risk finance investment. The age limits will not apply where the investment represents more than 50% of turnover averaged over the previous five years, or where follow-on funding is being raised.
Companies will no longer be able to use money raised through EIS and VCT to acquire existing businesses, whether through asset purchase or share purchase, building on rule changes introduced in 2012 to prevent the use of EIS and VCT money to acquire other companies through a share purchase. The rules will also apply to non-qualifying VCT holdings, as well as investments by VCTs of funds raised before 2012. The employee limit for knowledge-intensive companies will be increased to 500, providing further support to innovative firms. All EIS investors will be required to be independent from the company unless the shares they already hold are founders’ shares. The requirement that 70% of seed enterprise investment scheme money must be spent before EIS or VCT funding can be raised will be removed, smoothing the interaction between the schemes. It will also be required that all investments be made with the intention to grow and develop a business.
The Government have been consulting on the majority of the rule changes since last year. A consultation was held last summer to explore how the schemes were working in practice and to gather evidence. The Government are grateful to everyone who provided evidence. Many examples were used in the state aid discussions with the European Commission. Draft legislation, based on discussions with the European Commission up to that point, was published in March for a technical consultation. A response to last summer’s consultation was published at the summer Budget. Throughout, my officials have been working closely with members of the industry and their representatives, including through a legislative working group. Many of the changes to the draft legislation first published in March, including amendments to be introduced on Report, arise from those discussions. We are grateful for the industry’s support, which it is continuing to give, including on developing the guidance in due course.
The Government will be tabling a number of amendments on Report to cover a number of areas. Most of the amendments are technical in nature and will ensure that the detailed rules work as intended, and that the new rules work correctly with the existing provisions. I would like to use this opportunity to address a point that has been raised with me by EIS and VCT investors and managers concerning the use of the schemes for replacement capital. Replacement capital is the purchase of shares from existing shareholders and is not currently allowed within the schemes. The Government are keen to provide increased flexibility when the amount invested in newly issued shares is at least equal to the amount invested in secondary shares. The change will be introduced through secondary legislation at a later date, subject to state aid approval.
The Government are securing the long-term future of the schemes by making these changes, which will also ensure that the schemes remain well targeted and provide value for money for the taxpayer. I understand the impact that these changes will have on the way that some VCTs and EIS investors operate. Those that have specialised in investing in older, more established companies, often through management buy-outs, will be affected in particular. The Government expect that fundraising will be reduced in the 2015-16 tax year owing to the adjustment to the new rules, but also that it will recover as existing VCTs adapt and new VCTs enter the market. The Government are encouraged by recent reports from industry commentators that the industry is confident the changes can be managed and that they may help new VCTs focused on early stage businesses to enter the market.
Based on current trends, over 90% of companies seeking investment through the schemes will be unaffected by the changes to the scheme limits. Any start-up or early stage company seeking finance to grow that already meets the current rules will not be affected by the changes. Of course, EIS and VCT are only two of the many schemes that the Government provide to support small businesses. The Government also provide support through other schemes such as the angel co-investment fund, enterprise capital funds, the venture capital catalyst fund and the business growth fund to help businesses to access the finance that they need to develop and grow.
Clause 27 corrects a technical flaw that allows farming activities outside the UK to qualify for tax relief under the venture capital schemes and for enterprise management incentives. The venture capital schemes in question are the enterprise investment and seed enterprise investment schemes, and venture capital trusts. Farming activities have always been excluded from the scope of the venture capital schemes and EMI. Indeed, farming activities were excluded from the business expansion scheme that preceded the enterprise investment scheme from 1984.
Rob Marris
I welcome the continuation of a Labour scheme from 2007 in clauses 25 and 26, and the refinement of the scheme. I congratulate the Government on securing approval from the European Commission, which has been in question for some time. That is also a replay—we will get on to this—of what happened in 2010 with farming.
I am pleased that the employee limit will be raised—to 500, I think the Minister said. That is helpful. I thank the Minister for the teaser he gave us on two occasions for the amendments to be tabled on Report, which we look forward to with excitement. I am pleased that the EIS and VCT schemes are not to be used to take over existing businesses, because that would undercut their whole raison d’être. However, in the light of that, I am a little concerned about what the Minister said about using the schemes for replacement capital. Prima facie, that is not what the schemes are intended to do, which is to kick-start and help to grow knowledge-based, innovative industries—hence the exclusion, for example, of farming. That replacement capital, of course, would keep such a business going, but in a sense it is not new money, because it is, as its title suggests, replacement capital. I am concerned about that point. We must focus on the tax relief and why it is being given.
I am pleased about clause 27. It concerns a scheme brought in by the last Labour Government—and happily continued by the coalition Government and, now, the current Government—to encourage investment in cases of market failure, and it shows that people will look for loopholes. The Minister adverted to market failure, which is also helpfully mentioned in the explanatory notes. Indeed, let me take this opportunity to pay tribute to those who compile the explanatory notes. I am sure it is a big team and they do an excellent job; the notes are very helpful. [Hon. Members: “Hear, hear!”] Would that this Government and their predecessors were a little more alert to market failure on a broader canvas—for example, in the energy industry. That is one of the things my party is very keen on: using the levers of the state to address market failure.
This small scheme, which is being continued from the Labour scheme in 2007, is of course to do with market failure, but when it comes to farming, it shows just how cunning these tax accountants are at coming up with loopholes. As I understand it, there was no loophole for the three years before 2010. Then the European Union made a ruling on certain aspects of state aid, which meant that a company could not be wholly or mainly a UK company in terms of its operations. Lo and behold, we have a few companies—I think that the Minister’s noun was “handful”—who exploit this to carry on farming activities outside the UK, claiming tax reliefs through EIS and VCT. Had they been carrying out farming activities within the UK from the inception of the scheme in 2007, they could not have claimed that tax relief. Wow, are they cunning! They have been getting with away with it, doing something quite legitimate and lawful, as I understand it—it is avoidance, not evasion—for five years.
Of course, some aspects of farming are very knowledge-based and innovative, but that is not what these schemes are focused on, and this example underlines how vigilant we all need to be as parliamentarians about these cunning tax avoiders. The Minister and his colleagues spent years in opposition decrying my Government for an increasingly long tax code, as shadow Ministers used to call it—although that is an Americanisation, just as they pronounce leverage the American way, rather than using the proper English pronunciation. We will come to the issue of our tax legislation being so long and complicated later, but this is just one minor example of where we have to introduce anti-avoidance provisions because these experts are so cunning with their tax avoidance. I am therefore very pleased about clause 27.
Mr Gauke
I thank the hon. Gentleman for his support for these clauses. He essentially raised two points. First, he raised his concern about whether replacement capital was consistent with the rationale behind these schemes. Let me provide what I hope is some reassurance. The intention is for replacement capital to be available only where there is significant new investment in the company. That will be subject to state aid approval, but there are circumstances where it may be necessary as part of any new investment for there to be some re-organisation of capital. That is what we are getting at in this clause. Our intention is to come forward with secondary legislation on this point, and I look forward to the opportunity to debate this with the hon. Gentleman in detail when we do so.
I welcome the hon. Gentleman’s support for clause 27. It is always disappointing when a technical flaw is found in legislation, especially after a few years. It came to light only recently and we are correcting it as quickly as we can. It arises from a fairly obscure interaction between the main scheme rules and the definition elsewhere in the Taxes Act. Very few cases of farming outside the UK have received tax reliefs under the schemes.
On that point, the most information I can provide to the Committee is this. HMRC does not keep a record of tax reliefs by reference to the activities of the company. However, HMRC’s operational staff can recall seeing no more than half a dozen or so applications a year, most of which were rejected because the company failed to meet all the requirements. The number of cases that have received relief is small, as I said earlier. Given those points of clarification, I hope the Committee is happy with these measures, and I hope they stand part of the Bill.
Question put and agreed to.
Clause 25 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 26 ordered to stand part of the Bill.
Schedule 6 agreed to.
Clause 27 ordered to stand part of the Bill.
Clause 28
Travel expenses of members of local authorities etc
Question proposed, That the clause stand part of the Bill.
Mr Gauke
The clause makes changes to allow tax relief for councillors on expenses paid by a local authority for home-to-work travel. Councillors perform an important constitutional role in representing communities across the United Kingdom. They carry out their role in their own time, often in addition to other professional and personal commitments, and most receive no payment other than allowances in recognition of the time and expenses they incur. The current rules enable councillors to claim tax relief for business journeys. Where councillors routinely see their constituents at the councillor’s home, tax relief is also due for travel between their home and council offices. However, changes in working practices mean that fewer councillors now see constituents at home, so most are no longer eligible to relief for home-to-work journeys. The Government do not think that is fair. We want to ensure that no one is discouraged from undertaking a role as a councillor due to the tax treatment of their travel expenses. Clause 28 will achieve that aim by introducing a clear, statutory exemption.
The changes made by the clause will exempt travel expenses paid to councillors from income tax, including journeys between a councillor’s home and permanent workplace, where the councillor lives in the local authority area or within 20 miles of its boundary. Secondary legislation will be used to introduce a matching disregard for national insurance contributions. The exemption will apply only where qualifying payments are made by a local authority for travel expenses incurred either on public transport or where a councillor uses their own vehicle for travel.
To ensure that councillors do not benefit from an unlimited tax relief, the exemption will be limited to the statutory approved rates where qualifying payments are made to a councillor for travel in their own vehicle. This will make the rules clearer and more consistent for local authorities and councillors. The measure will affect only the tax liability of elected or appointed councillors who currently receive taxable home-to-work travel expenses.
Wes Streeting (Ilford North) (Lab)
How many councillors does the Minister anticipate will benefit from these changes?
Mr Gauke
I think the numbers are difficult to calculate because they will depend on the particular arrangements that councillors wish to pursue and whether they claim or not. We received representations from a large number of councils—particularly county councils—that said the change would be welcomed.
Wes Streeting
I should have said that I am still an elected member of the Redbridge London Borough Council, albeit an unpaid one. The reason I ask is that, although I agree with the Minister’s case about fairness to local councillors, I wonder how he squares that with, for example, the changes the Government made to local government pensions, which meant that such people—in particular, leaders, mayors and cabinet members, who often give up their full-time work—are no longer eligible for the local government pension scheme. Surely these changes, which I do not think will apply to many authorities because many do not reimburse councillors for any journeys, are pretty small beer compared with the previous Government’s changes.
Mr Gauke
I do not know if the hon. Gentleman is advocating reversal of the changes made in the previous Parliament to pensions for councillors. I would argue that there is a degree of consistency with those changes. Councillors do not perform a job in the normal sense of most people in employment, so we argued in the previous Parliament that for them to have the same pension provision as most employees would not be appropriate. It is right to have a special regime that is not the same as that applied to people in employment with regard to travel expenses, and that is why we have brought in this measure.
Simon Hoare (North Dorset) (Con)
Following on from the intervention by the hon. Member for Ilford North, I spent 11 years as a district councillor and several of those in cabinet. There always seemed an anomaly to me. I never joined the local government pension scheme and I always thought it was rather incorrect for councillors to be allowed to do so, because it equated their position with that of local government staff, rather than elected volunteers. The Government are to be congratulated. There were many in local government—possibly the silent majority—who welcomed that decision and had been rather embarrassed by being allowed to be members of that pension fund.
Mr Gauke
My hon. Friend makes a good point. It is not my purpose to reopen the debate on pensions and local councillors, however tempting that might be, but I am grateful for my hon. Friend’s intervention.
The clause will support councillors in the vital constitutional role they perform by exempting travel expenses paid by their local authorities from liability to income tax, and I hope it will stand part of the Bill.
Rob Marris
I do not propose to spend a long time on this. I have never been a councillor but it would be seen as navel gazing for us as elected representatives to spend a long time on this clause. The Opposition support the clause because we want to encourage democracy and so that democratic parties can get the best candidates, and this measure is all part of that spectrum.
I would like the Minister to clarify one point. He referred to journeys by public transport. I apologise that I was not concentrating enough when he made that reference. My understanding from the Chartered Institute of Taxation is that this change would not cover travel by public transport. If public transport travel is not covered, will the Minister please explain why? Will he also say whether, for example, a mayor who travelled by bicycle might claim these expenses?
Mr Gauke
I am grateful to the hon. Gentleman for his support for the clause. It is always good to see a consensus on supporting democracy. As I said earlier, the provision does apply to public transport, so the hon. Gentleman can be reassured that there is nothing that would discourage people using public transport. The provision will apply to public transport or where a councillor uses their own vehicle.
Mr Gauke
I am afraid that I do not think that the travel expenses regime will apply to bicycling. I sense that the hon. Gentleman has his first campaigning issue to get his teeth into as a Front Bencher.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Clause 29
London Anniversary Games
Question proposed, That the clause stand part of the Bill.
Mr Gauke
The clause makes changes to ensure that sports people who visited the UK to compete in the London Anniversary games are exempt from tax on any income received as a result of their performance at the games.
As hon. Members will know, the London 2012 Olympic and Paralympic games were an extraordinary success, with stunning wins for British athletes, beautiful stadiums and an unforgettable atmosphere. For the Olympics, the Government provided an exemption from income tax for non-resident sportspersons. That was a condition of the bid to host an internationally mobile, world-class event.
The success of the 2012 Olympics and Paralympics did not end there: we have now created a legacy programme that has delivered urban regeneration and engagement in sporting activities. The prestigious 2015 London Anniversary games were an important part of that legacy, attracting icons that hon. Members will remember from 2012.
The clause applies the same exemption policy that the Government provided in 2012. It benefits athletes who reside overseas and visited the UK to participate in the London Anniversary games, which were held in July. Importantly, this tax exemption encouraged more world-class international athletes to compete in the event. Following the announcement in the Budget, Usain Bolt confirmed that he would compete and he went on to win the 100-metre race, which drew a much wider audience’s attention to the success of the Olympics and London. The exemption was granted on an exceptional basis owing to the opportunity the event provided to build on the legacy of the 2012 games.
Christian Matheson
The London Anniversary games were specifically related to the Olympics, which were a great success for London and the whole of the nation. I have to say that a feeling remains in other parts of the UK that London, notwithstanding its success, does seem to get more than the lion’s share of sporting events. Is there a view in government that specific provisions such as this, which help to attract world-class athletes such as Usain Bolt, might be extended on individual bases to other great events that take place outside London, so that they too might benefit from the attendance of such athletes?
Mr Gauke
I can give one good example: we applied the same exemption for the Glasgow 2014 Commonwealth games. That is an example of the Government’s willingness to do that. Again, that was part of maintaining the Olympic legacy and ensuring that we could get top athletes to compete in the Commonwealth games. The hon. Gentleman raises a fair point and I hope he accepts that I have given a fair answer to it. I hope the Committee agrees that the clause should stand part of the Bill.
Rob Marris
My hon. Friend the Member for City of Chester raised a point that I wished to raise. The Minister’s reply was not entirely clear. My hon. Friend’s question, as I understood it, was whether such ad hoc arrangements would continue to be ad hoc, or whether they would be systematised into our tax rules on a general basis, so that we can continue to attract world-class athletes and other competitors, indeed to other parts of the country as well as London.
I echo what my hon. Friend said. As I am sure all hon. Members know, the Olympic games were revived in Much Wenlock, just down the road from Wolverhampton South West, in the late 19th century. We want to encourage such events and we want more to be held outside London, so it seems logical for the Government to look at systematising the tax relief, rather than giving it on an ad hoc basis, with the uncertainty that that brings. Do the Government have any plans to investigate whether there should be—or indeed should not be—such a permanent tax relief?
Mr Gauke
I hope to provide a little more clarity. In my previous answer, I wanted to make the point that we are not London-centric in granting relief. Indeed, as I said, we granted relief for the Glasgow Commonwealth games.
As for providing an overall exemption, we allow tax exemptions for sporting events only if they are a condition of a bid to host an international mobile and major world-class sporting event. We see the clause as part of the legacy of the Olympics, which is why we have made this decision. Any potential exceptions to the rule will be considered on a case-by-case basis and we will continue to take that approach, but we are of course determined to ensure that we attract major sporting events to this country. We are currently hosting the rugby world cup, although unfortunately England are no longer participating in it, and there will be major football finals in Cardiff in forthcoming years. We believe that the current policy of providing exemptions when world-class events request them as part of the bid conditions is the right approach, and we intend to continue with it.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Clause 30
R&D expenditure credits: ineligible companies
Question proposed, That the clause stand part of the Bill.
Mr Gauke
Clause 30 makes changes to correct an anomaly in research and development tax credits legislation by ensuring that universities and charities are unable to claim the new above-the-line expenditure credit, in line with the original intention of the policy. The change will ensure that R&D tax credits remain targeted at business R&D investment. The Government remain committed to supporting university research, and in 2015-16 will provide £4.6 billion of support through science resource funding.
The above-the-line credit was introduced in 2013. It was never intended that universities and charities would be able to claim it, and they were unable to do so under the previous large company scheme. However, HMRC has now received a number of claims from charities, mostly universities. Clause 30 amends the legislation so that it meets the original policy intention.
The Government are committed to supporting university research, which is funded by higher education funding bodies and research councils. Those organisations are better targeted to the research universities undertake, and the change maintains the focus on them as routes to funding research excellence in universities.
The clause amends the qualifying conditions for the above-the-line credit so that an institution of higher education or a charity will be ineligible to make a claim in relation to any expenditure incurred on or after 1 August 2015. The measure will impact only on universities and charities currently carrying out qualifying R&D activities. It is estimated that it will affect fewer than 50 universities and charities that were claiming under the previous rules, and will protect £150 million of revenue for the Exchequer each year. The change only applies to universities and charities in the way they are prescribed by law and does not impact on spin-outs—separate commercial entities of universities that transform university research into commercial products. They are fully liable for corporation tax and were always intended to be able to claim R&D tax credits.
R&D tax credits remain an effective mechanism for supporting business investment. A recent study conducted by HMRC found that each £1 of tax forgone stimulated between £1.53 and £2.35 of additional R&D investment. The clause will ensure that R&D tax credits remain effective and targeted towards business R&D investment.
Rob Marris
The research and development tax credit scheme has been successful. It was, of course, introduced under a Labour Government. The coalition Government’s decision in 2013 to extend research and development tax relief to large companies was welcome. Historically, probably since the turn of the last century more than 100 years ago, this country has not invested enough in research and development. That is one reason why we have poor productivity—another is Government policy, of course. That trend needs to be reversed.
Christian Matheson
Will the Minister clarify one small area I am unsure of, which comes from my experience serving as Member for City of Chester? When Shell decided to close its research and technology area at Thornton in my constituency, which contains a large petrochemicals sector, it gave the Thornton research centre over to the University of Chester, which is growing in size, in stature and in academic reputation. Thornton science park has since become a very successful seedbed for growing companies as well as for academic research. My hon. Friend the Member for Wolverhampton South West talked about spin-off companies, and I am looking for clarification from the Minister on a similar issue. Some joint venture companies comprise higher education institutions, such as the University of Chester, and companies from the private sector that are engaged in research that may well bring economic development into an area or into the nation, and may lead to new technologies being developed in the area. Will the participation of a higher education institution preclude a company from receiving such grants? Is this an area on which the Government are not yet quite clear?
Mr Gauke
Again, I am grateful for the support of the hon. Member for Wolverhampton South West for the clause. I reiterate that the move towards above-the-line credit has been a success. Since 2013 it has ensured that the benefits of R&D relief are more visible and has provided greater financial and cash-flow support to companies, regardless of their corporation tax liability. The aim of the credit is the same as that of the previous large company scheme—to incentivise additional R&D investment—but it uses a completely different design. Teething problems can occur, and claims from universities and charities were not anticipated when the scheme was designed. HMRC monitors the use of reliefs to check that they are being used as intended, and occasionally it is necessary to clarify the law to support the original policy intention. This is one of those occasions.
On the question raised by the hon. Member for City of Chester about whether the change will discourage businesses from collaborating with universities and their R&D activities, no, we do not believe that it will. This change will prevent universities and charities from claiming above-the-line credit for their individual R&D. Firms are already able to claim R&D tax credits for qualifying R&D projects that are subcontracted to universities, and that will remain the case. The Government remain committed to promoting business collaboration with universities. Innovate UK schemes provide support for firms collaborating with academia. That includes catapult centres, which are a series of physical centres comprising the very best of the UK’s businesses, scientists and engineers working side by side on late-stage R&D, transforming high-potential ideas into new products and services to generate economic growth. I hope that the hon. Gentleman is reassured by that.
The hon. Member for Wolverhampton South West asked about funding for science research. Science resource funding was protected through the ring-fencing of £4.6 billion per year. The Government are committed to £1.12 billion per year on capital spend until 2021, rising with inflation. I hope that that provides some reassurance to the Committee. With those points, I hope that the clause can stand part of the Bill.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 31
Loan relationships and derivative contracts
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 33 stand part.
Government amendments 8 to 10.
That schedule 7 be the Seventh schedule to the Bill.
Mr Gauke
The clauses and the schedule make wide-ranging changes to the corporation tax rules for company debt—referred to as loan relationships in the statute—and derivatives. These changes bring the rules up to date, making them simpler and easier for companies to use and at the same harder to misuse or manipulate.
It may help the Committee if, before I explain the changes in detail, I provide some background. The rules on loan relationships are almost 20 years old. They are based on the straightforward idea of taxing company debt on the basis of commercial accounts. The rules operate without difficulty for many, particularly for smaller companies with simple financing arrangements, but they also have to cater for commercial situations that can be highly complicated. The Government have frequently received comments on the complexity of the rules. At the same time, the loan relationships and derivatives regimes have frequently been targeted by tax avoiders. Often, the reaction to those attempts at avoidance has been to close loopholes by very specific, narrowly focused changes to the law. That approach has generally been successful, but it has not deterred avoiders from finding new ways to get round the rules or abuse them. It has also added to their complexity. In addition, over the years there have been changes to the accounting standards that underlie the tax rules, and further significant changes are being made at the moment.
Those factors mean that the time is ripe for a general review of this part of the tax code. Indeed, an article in Tax Journal in December 2014 noted that such a review was “long overdue and necessary”. At Budget 2013, the Government announced a consultation on a package of proposals to modernise the legislation. The clauses and schedule before the Committee today are the outcome of that consultation.
We are making extensive changes. I will explain briefly the most significant elements of the package. First, we are aligning taxable amounts more closely with commercial accounting profits, so taxation of loans and derivatives will now be based on amounts recognised in accounts as profits or losses, similar to the way trading profits are calculated. In contrast, up to now the tax rules for loans and derivatives have looked at amounts recognised anywhere in accounts—in equity or reserves, for example. A transitional rule will ensure that this change is broadly tax-neutral and that nothing is taxed twice or not at all. A recent article in Tax Journal described the change as “a hugely welcome simplification”. Alongside it, we are making further changes that will reduce the occasions when taxation does not follow the accounting treatment.
We are introducing new corporate rescue provisions, which will benefit companies that are in genuine financial difficulty and looking to restructure their loans to avoid insolvency. The rules will make it easier for such companies to agree arrangements with creditors without incurring a tax charge. The change has been warmly welcomed and will help companies to stay in business, to continue contributing to the UK economy and to preserve jobs. For example, in its February 2015 client newsletter, Allen & Overy noted:
“These exemptions received a uniformly positive welcome.”
I described how, although they effectively close down avoidance schemes as they come to light, the existing narrowly focused rules have not stopped attempts to target or use company loans and derivatives in tax avoidance arrangements. Because of that, we are strengthening the protection for the Exchequer by introducing new regime-wide anti-avoidance rules, which will deter and block arrangements of any kind that are entered into with the intention of obtaining a tax advantage by way of the loan relationships or derivatives rules. Unlike many existing anti-avoidance provisions, the new rules do not focus narrowly on specific situations or types of avoidance, so it will be harder to sidestep them.
It is important that the rules do not interfere with genuine commercial activity, so we have worked closely with interested parties to ensure that they will prevent avoidance without affecting legitimate business transactions. A number of existing anti-avoidance rules will now be redundant, so we are repealing them, which will be a welcome simplification.
Consultation has continued since the Bill was introduced and has identified the need for Government amendments to schedule 7 to deal with a potential unintended outcome. The amendments do not represent any substantive change of policy, but simply bring forward the date at which the corporate rescue reliefs that I described a few moments ago become available. The Bill currently provides for those reliefs to be available from the date of Royal Assent, but we have recently been made aware in consultation that a small number of companies have entered into transactions on the basis that retrospective relief would be available from 1 January 2015, as was envisaged in earlier draft legislation published in December 2014. As a result, they would not qualify for relief and so would be in danger of becoming insolvent, with possible loss of jobs.
As a rule, the Government do not legislate to take account of the fact that taxpayers have acted on the basis of unenacted legislation, but I am mindful that in this case the whole purpose of the corporate rescue reliefs is to avoid unnecessary insolvencies and preserve businesses and jobs, so the amendments reset the commencement date to 1 January 2015.
In conclusion, the provisions support the Government’s aim of promoting a tax system that is efficient, competitive, predictable, simple and fair. They bring the tax system for corporate debt and derivative contracts up to date and make it simpler. They make it easier for companies to restructure debt to avoid insolvency and they make it harder for tax avoiders to get around or take advantage of the rules. I therefore commend clauses 31 and 33 and schedule 7 to the Committee.
Rob Marris
These are welcome anti-avoidance measures, although I must say that they are of such complexity that I do not understand them and, with respect to my hon. Friends, I suspect that few of them do either. I am pleased that the Government have listened to the consultation and changed the commencement date to 1 January 2015, which was something on which I was lobbied.
The provisions indicate how difficult it is to simplify our tax regime—something with which the Minister will have struggled in the past five and a half years since he got into government. It is easy to argue from the Opposition Benches for a simplified tax regime, and of course I would argue for that as well. Clause 31 looks simple: it is 11 words long—now that is nice and simple. However, those 11 words incorporate schedule 7, which is, at 43 pages, the longest schedule I can recall seeing appended to any Bill. I would like some further reassurance from the Minister, if he is in a position to give it, that a 43-page schedule simplifies our tax regime.
Mr Gauke
I would probably pray in aid the various remarks in the articles I quoted earlier. We consulted extensively with industry and tax professionals to ensure that the changes we are making are balanced and fair, and that they fulfil the aims of the review, which include making the rules as simple as possible to understand and use. The rules are straightforward for the great majority of companies with ordinary loans, which means that the great majority of small companies will experience simplification. However, the measure must also cater for highly complex commercial situations and financial instruments, so it can never be entirely simple.
Key simplifications that we are making include aligning tax and commercial accounting profits more closely. As I said, the 30 July article in Tax Journal, which I suspect the hon. Gentleman will read assiduously from now on, described the measure as “a hugely welcome simplification”. The changes include the repeal of about 26 pages of primary legislation with more than seven pages of anti-avoidance rules. There is a net increase of 18 pages, but I think it is fair to say that, as the Office of Tax Simplification has pointed out, the number of pages of legislation is not always the best measure of complexity.
I note that by and large there is consensus between us on the measures, although not about the pronunciation of “schedule”.
Question put and agreed to.
Clause 31 accordingly ordered to stand part of the Bill.
Clause 33 ordered to stand part of the Bill.
Schedule 7
Loan relationships and derivative contracts
Amendments made: 8, in schedule 7, page 179, line 6 leave out “and 33(2)”
Amendment 9, in schedule 7, page 179, line 8, leave out
“the day on which this Act is passed” and insert “1 January 2015”
Amendment 10, in schedule 7, page 179, line 8, at end insert—
107A Paragraph 33(2) has effect in relation to the release of a debtor relationship of a company on or after the day on which this Act is passed.”—(Mr Gauke.)
Schedule 7, as amended, agreed to.
Clause 32
Intangible fixed assets: goodwill etc
Question proposed, That the clause stand part of the Bill.
Mr Gauke
The clause removes corporation tax relief in relation to purchased goodwill and certain other customer-related intangible assets. The changes ensure that companies will no longer be able to reduce their corporation tax profits by claiming relief for the cost of purchased goodwill written off in the company accounts. Clause 32 applies to all acquisitions made on or after 8 July 2015. Companies that have completed acquisitions before 8 July 2015 will not be affected.
In accounting terms, purchased goodwill is the balancing figure between the purchase price of a business and the net value of the assets acquired. Goodwill can therefore be thought of as representing the value of a business’s reputation and customer relationships. Customer-related intangible assets include the types of assets associated with the goodwill of the business or the business’s reputation, such as customer lists, customer information and unprotected trading names or marks.
The Finance Act 2002 introduced a new tax regime for companies’ intangible fixed assets commencing on 1 April 2002. The treatment of intangible assets generally follows the accounting treatment set out in the legislation, which treats goodwill like any other type of intellectual property such as a trademark, patent, design right or copyright. However, in reality goodwill is simply the difference between the purchase price of a business and the business’s net asset value. It represents the premium a buyer will often pay to acquire an established business, compared with buying business assets and commencing a new business. It is therefore different from other, separable, intangible assets such as websites and patents.
The existing rules allow the buyer to claim annual corporation tax relief for the cost of the goodwill. That relief reduces corporation tax profits, as the cost of the purchased goodwill is written down in the company accounts or is given on a fixed-rate basis of 4% per annum. That advantage is not generally available to companies that undertake mergers and acquisitions by purchasing the shares of the target company, nor is it available to new start-up businesses or to businesses that grow organically. The current rules can therefore distort commercial practices and lead to manipulation and avoidance. For example, relieving the cost of a business acquisition can affect the price payable in anticipation of the available tax relief.
The changes made by clause 32 will withdraw amortisation and fixed-rate relief for all goodwill and customer-related intangible asset acquisitions that occur on or after 8 July 2015. Instead, relief will be given if and when those assets are subsequently sold or otherwise disposed of. The clause will treat any loss arising on such a disposal as a non-trading loss. That is to limit how such losses can be relieved. Existing cases—companies that acquired goodwill or other relevant assets before 8 July 2015—will not be affected.
In conclusion, clause 32 removes the financial advantage for structuring a merger or business acquisition so that goodwill can be recognised by the buyer. It levels the playing field for mergers and acquisitions, and brings the UK in line with international standards. I hope the Committee will agree to its standing part of the Bill.
Rob Marris
This seems to be a sensible measure to level the playing field, although it may have an effect on businesses that are not incorporated and where there could be no question of shares being substituted. The change builds on the excellent 2002 legislation on the taxation of intangible assets, and Opposition Members should support it.
Question put and agreed to.
Clause 32 accordingly ordered to stand part of the Bill.
Clause 34
Group relief
Question proposed, That the clause stand part of the Bill.
Mr Gauke
Clause 34 makes the tax system simpler by removing differences in the treatment of consortium link companies based in the UK and other jurisdictions. The current rules state that, for corporation tax group relief to be available between a group and a consortium, the company that links the two must be located in the UK or the European economic area. Where the link company is in the EEA but not the UK, there are other requirements.
The changes made by clause 34 remove all requirements relating to the location of the link company so that relief may be given regardless of where it is based. The change simplifies the tax system by putting consortium relief on the same footing as normal group relief. That supports the Government’s ambition to continually improve the UK’s international ranking as a place to do business.
Rob Marris
With due respect to the Minister, I would like a little more clarification, because I do not think this is simply a simplifying measure. I may be wrong, but it appears to change the nature of the game. As I understand it, it removes the requirement for all link companies to be either in the UK or the EEA; a link company could therefore be in Canada, Hong Kong or Indonesia, for example. That seems quite a big change and more than merely a simplification.
Will the Minister explain a little more—touching on more than just simplification—why it is desirable for the tax regime of UK plc to be so flexible about the headquarters and location of link companies, when most, if not all, hon. Members present would recognise to a greater or lesser extent that the UK has a particular problem with companies disappearing to, or setting up in, tax havens overseas. I am concerned that the clause, if implemented, would increase opportunities for companies and groups of companies to take advantage of tax havens, to the disadvantage of UK plc, those we represent and companies that are playing morally by the rules, as opposed to companies such as Facebook, which, we heard this week, appears to be adhering to UK legislative rules, but to its considerable financial advantage. That suggests that the UK legislative rules adhered to by the Facebooks, Starbucks and Googles of this world are not sufficiently tight. I am concerned that clause 24 goes in the wrong direction on that issue.
Ordered, That the debate be now adjourned.—(Mel Stride.)
Finance Bill (Fourth sitting)
(9 years, 1 month ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship once again, Mr Howarth. Welcome to what may prove to be a briefer sitting than you were anticipating. I hope that that does not upset your plans too much.
The hon. Member for Wolverhampton South West raised a concern that the clause might permit aggressive tax planning or tax avoidance by multinational companies, and that a consequence could be lost revenue to the Exchequer. Let me reassure him. We believe that the clause will have a negligible impact on the Exchequer, but it will simplify the UK tax system. To some extent, if the existing rules were designed to deal with tax avoidance, they were not going to be able to do that effectively anyway because companies could put in a European economic area or UK-linked company.
We do not think the clause opens up a particular vulnerability in any event, but the hon. Gentleman made an important point about ensuring that our tax system is fit for purpose in a world in which multinational companies have choices and can structure themselves in particular ways. That is why the UK was keen to encourage the OECD to look at the international tax system as part of the base erosion and profit shifting project. That project reported recently; it was debated by G20 Finance Ministers at Lima last week and recommendations have been taken on board. As my right hon. Friend the Chancellor of the Exchequer has made clear, the UK will implement the BEPS recommendations.
There is an important point, but I do not believe that it is relevant to the clause. The Government remain determined that the international tax system should ensure a closer alignment between economic activity and taxing rights. That is the key to the BEPS reforms, which is an agenda we are keen to push forward.
Rob Marris (Wolverhampton South West) (Lab)
There is a difference between something that affects those currently trading in a particular way and the actions that a group of companies might take in the light of a changed tax regime. Is the Minister confident that a change of behaviour through company restructuring following the changes in the clause is unlikely because there will not be much of a loss of revenue from linked companies and so on, and there will not be a change in behaviour that will lead to such a loss in the future?
Mr Gauke
We do not believe that there will be a change of behaviour that will lead to a loss of revenue as a consequence of the clause. I hope that that provides reassurance to the hon. Gentleman and to the Committee.
Question put and agreed to.
Clause 34 accordingly ordered to stand part of the Bill.
Clause 35
CFC charge: abolition of relief
Question proposed, That the clause stand part of the Bill.
Mr Gauke
Clauses 35 and 36 make changes to prevent the offsetting of UK losses and other surplus expenses against tax that should be paid by UK companies in accordance with the reformed controlled foreign companies rules. That will improve the effectiveness of our CFC regime in countering aggressive tax planning by UK multinational groups while maintaining the competitiveness of the UK corporation tax regime.
The CFC rules are designed to protect the UK corporate tax base from the artificial diversion of UK profits to low-tax jurisdictions. The rules were extensively reformed in 2012 during the previous Parliament as part of the corporate tax road map, which provided the protection necessary for a more territorial corporate tax base while ensuring that the rules operate in a way that reflects modern global business practices.
A CFC charge arises on a UK company in relation to CFC profits that have been diverted from the UK. Under the CFC rules, UK losses and other surplus expenses could be set against profits taxable under the CFC rules, which can reduce or eliminate the amount of UK tax actually paid on those diverted profits. The Government believe that tax should be paid on profits diverted from the UK. These changes will ensure that that happens.
The changes made by clauses 35 and 36 will remove the ability of a UK company to reduce or eliminate its CFC charge by offsetting UK losses and surplus expenses against that CFC charge, which will improve the effectiveness of the CFC regime in deterring the diversion of profits from the UK by ensuring that those profits are taxed. The changes made by clauses 35 and 36 apply to corporate entities, not individuals. They will apply with effect from 8 July 2015 to UK-resident companies that hold an interest in a CFC on which a CFC charge will arise. The changes will mainly affect large UK multinational groups with overseas subsidiaries. The changes will raise an estimated £860 million in additional tax receipts over the next six years.
The reform of the CFC rules in 2012 was an important part of corporation tax reform. These clauses ensure that the CFC rules work as intended by preventing UK losses or other surplus expenses from reducing or eliminating the amount of UK tax paid on diverted UK profits. The changes are in line with our broader corporate tax policy objectives, which seek to balance competitiveness and fairness.
Rob Marris
It is a pleasure to serve under your chairmanship, Mr Howarth. I do not think I have had the pleasure since taking a five-year sabbatical.
Rob Marris
I will endeavour to conduct myself in a way that produces that result.
I wish I had thought of clauses 35 and 36 myself. They contain great anti-avoidance provisions, for which I again salute the Government. I understand that they seek to ensure that the CFC legislation operates as intended. There is one sting in the tail—I may have misunderstood—but clause 35 addresses loopholes that have been exploited since the introduction of provisions in the Finance Act 2012. That does not instil great confidence in the creation, drafting and passage of that legislation. The more so with clause 36, which—again, I may be mistaken—attempts to close a loophole or dissuade companies from a course of conduct with their tax affairs pursuant to rules that were introduced by the Finance Act 2015. If that be the case, I am concerned that the House is repeatedly battling against aggressive tax avoiders. If it be the case that we are amending legislation introduced about six months ago to close a loophole, we are not doing as well as we should be and might be on countering the actions of aggressive tax-avoiding companies, which is a goal shared on both sides of the House. Although the different ways one might do that may be the subject of debate, the goal that companies should pay their fair share of tax is a shared goal. Again, we can debate what is a fair share of tax, but loopholes appear to be popping up all over the place at very short notice, which is a concern.
Mr Gauke
I again thank the hon. Gentleman for supporting the content of these clauses. I have general and specific points to make in response to his comments. He is right that there is a consensus across the House that aggressive tax avoidance should be tackled. Although he was on sabbatical for the previous Parliament, he will be aware that measures designed to deal with that matter were brought forward in the previous Parliament. A lot of the work that needed to be done in the context of large multinationals is essentially of a multilateral, international nature, and we have pursued that agenda through the BEPS project, which I mentioned a moment ago, so there has been a determination on that front.
We brought in measures over the previous Parliament, as have previous Governments, to address what could be described as loopholes in domestic legislation. Her Majesty’s Revenue and Customs has also been very effective in collecting more tax from large businesses. The position of tax administration at HMRC has ensured that those revenues are collected.
If I were to argue against the provisions for a moment, I could say that a UK company can set its losses against UK profits, so why can it not also set its losses against profits that have been diverted from the UK? We are not persuaded by that argument, hence the measures in front of us. The provisions are consistent with our wider policy of protecting our corporation tax base against the diversion of UK profits, which is consistent with our approach to the diverted profits tax, for example. It is right to take action, but it is also right to ensure that we get the balance right between fairness and competitiveness. As evidence has emerged of particular practices that companies pursue, it is right to make adjustments as and where necessary ensure that legislation reflects those twin objectives of fairness and competitiveness.
Rob Marris
Can the Minister indicate when the Government will push forward hard on what they have said that they will do on transparency of beneficial ownership of companies in tax havens and so on? Anecdotally, there is quite some evidence of tax avoidance, which the introduction of that transparency could lessen. The Opposition want it and the Government say they want it, but it appears to be slow in coming.
Mr Gauke
The hon. Gentleman takes me into wider matters, but I am happy to respond even though it takes me a little way from clauses 35 and 36. The UK is leading the way by introducing a central register of beneficial ownership. That issue relates more to tax evasion as opposed to tax avoidance. We are encouraging other jurisdictions, including overseas territories and Crown dependencies, to move in the same direction as the UK.
On the subject of transparency and tax avoidance, the hon. Gentleman will be aware that one of the earlier recommendations from the BEPS project was on the introduction of county-by-country reporting information that goes to tax authorities. To ensure that we made progress on that front, we debated it before the conference recess. Such a measure would be more helpful and beneficial to tax authorities than a different arrangement. They could more easily assess a multinational’s tax affairs around the world and understand whether significant profits located in a low-tax jurisdiction might be indicative of a need for a closer look at the tax affairs of that multinational company.
Returning to the clauses before us, the hon. Gentleman referred to the interaction with the loss restriction rules that were introduced in a previous Finance Bill this year. The measure amends the rules restricting the use of carried forward losses introduced in the Finance Act 2015 to put it beyond doubt that those rules apply to arrangements involving CFCs. The measure is in addition to and, I would argue, complementary and consistent with the previous legislation. It puts it beyond doubt that that anti-avoidance measure applies to CFCs.
I hope those points are helpful to the Committee. We are determined to ensure that the UK is a competitive place in which to do business. The reforms of the CFC regime that we introduced in the last Parliament have helped the UK to attract additional business and more headquarters have been located in the UK. It is also right to ensure that those reforms do not go beyond what we intended and leave open opportunities for tax avoidance. The clauses are evidence of our determination to address that matter and I hope they will stand part of the Bill.
Question put and agreed to.
Clause 35 accordingly ordered to stand part of the Bill.
Clause 36 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Mel Stride.)
Welfare Reform and Work Bill (Seventh sitting)
(9 years, 1 month ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 9 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 9 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 9 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 11 / Noes: 9 - Question accordingly agreed to.
The Committee divided: - Ayes: 9 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 11 / Noes: 9 - Question accordingly agreed to.
The Chair
Order. Welcome to our continued line-by-line scrutiny of the Welfare Reform and Work Bill. We have some new Committee members at our proceedings—a warm welcome to you.
Before we begin proceedings, I wish to clarify the procedure on combining questions before the Committee. The usual practice is that, with the leave of the Committee, successive questions on which the Committee agrees—for example, a series of non-contentious amendments—can be combined and taken as one question. However, that does not apply if Members want to divide on the amendments. If the Committee wants to vote on a particular amendment or series of amendments, the questions will have to be put separately and individual Divisions held for each question.
I understand that in my absence at the last sitting you were all very naughty. That is trying to put things right. I hope it is clear and helpful to Committee members in today’s proceedings.
Clause 11
Changes to child tax credit
Hannah Bardell (Livingston) (SNP)
I beg to move amendment 44, in clause 11, page 12, line 39, leave out “2017” and insert “2022”.
This amendment would see current arrangements for child tax credit remaining in place for children born before 6 April 2022.
I hope Committee members have all had an enjoyable recess and a successful conference. Unfortunately, the Scottish National party has to juggle a week of Bill Committees and conference, so the week will no doubt be a busy one for us.
From the outset I want to make it clear that the SNP wholeheartedly condemns the intentions behind the clause, which will exclude many of the poorest children in society from the support of our social security system, against the very principles on which that system was set up. The two-child policy, which has been much discussed, will affect more than 872,000 families who receive support for third and subsequent children. I cannot understand how anyone in Committee could say that that was fair, just or necessary.
The stark reality is that the Government’s national child poverty strategy recognises that the risk of poverty is much more significant in larger families than in smaller ones. A third of the children living in poverty live in families with three or more children. Perhaps it is for that reason that the Government are seeking to airbrush child poverty from the statute books. It is easy for the Government to come in with a clean page, to spout theories without evidence and to claim that reducing financial support to only two children will make poorer families rethink their financial choices, but that is based on the falsehood that all children are planned and that it is possible to plan financially for children. As I am sure we all know, that is not possible.
What if someone’s second pregnancy turns out to be twins, or even triplets? We still have no real clarity on how multiple births will be treated. Will the Minister concede that such eventualities simply cannot be planned for? Perhaps he needs a biology lesson. Are we telling families to stop having children just in case? The scenarios are not that simple.
I have raised many times in Committee and on the Floor of the House, as have my SNP colleagues, the very sensitive issue of children resulting from rape and the even more insensitive plan of the Minister and the Government to make women justify their children in front of a caseworker from the Department for Work and Pensions. Many organisations have stated clearly that their staff have to train for a considerable amount of time to support women who have been raped, so I cannot understand how the Government’s proposed system and policy will work.
I therefore ask, clearly and specifically, for the Minister to keep in place the existing arrangements for children born before 2022 and to tell the Committee, before we vote on the amendment, exactly what his Department’s plans are for that. We all have to deal with constituency cases, but I am interested to know how any Government Members would deal with a woman coming to them who cannot seek benefit because she has been raped and therefore has to justify herself to the DWP. Even in evidence to the Committee, stakeholders described the policy as “unpalatable”. Does it simply show, at the height of Tory insensitivity, how out of touch the party is with reality? My view and that of my colleagues is that the Government have simply not thought things through.
When the Minister responds, will he tell me just how a woman would prove that her child was a result of rape? We all know the difficulties involved in securing a criminal conviction in that respect, as well as the high burden of proof, never mind the devastating emotional impact on the victim. What exactly will be the Government’s standard? Why did the Minister, and the Conservatives generally, think it appropriate to include the issue? The policy will ultimately result in a complete abuse of rape victims’ privacy, leading to serious emotional damage of the child should he or she become aware through the social security system that they are the result of rape. Imagine someone finding that out purely because their parents seek benefits.
Let me be clear: discussing this matter is not something I do lightly, but the SNP feels, as I hope others on the Opposition side of the Committee feel, that we must speak up. Amendment 44 would kick the policy into the long grass. Even campaigners Women Against Rape have called the policy “disgusting”, saying it will have “appalling consequences”. The SNP stands firm with that position and urges the Government to remove the two-child policy from child tax credit and universal credit provisions to ensure that no victim or child should go through the torment associated with justifying a third child, given the horrific crime inflicted on them.
Given the current economic climate, families simply cannot plan for a third child, or subsequent children. What if their first or second child was the result of rape, and they went on to have further children, but their economic circumstances changed? The Government’s failure to secure a strong, thriving economy with stable employment opportunities means that, although the members of a family may have stable and reliable jobs, there is, as we have seen, no guarantee that someone who decides to have a child will be employed for the next 18 years. To deny assistance to families who fall on hard times completely flies in the face of what the welfare system was built for.
Working people will ask why they pay their taxes when they can no longer receive support in our social security system. Will they be made to feel that their third child was a bad choice because the company they worked for made them redundant? Does the Minister have an answer for the parents of twins or other children? Could he, or any Government member of the Committee, look into a constituent’s eyes and say with a clear conscience that that constituent’s bad financial planning means they deserve no support from the Government?
The provisions in the Bill are nothing more than a move to socially engineer society into a form the Tory Government have dreamt up—one where the right to have a third child is a luxury reserved for the rich. That is not a society that I, any of my colleagues or, I believe, anybody in this country wants to live in. That is why the SNP are standing up for the poor, for hard-working folk and for children. We want to protect them when they fall on challenging times.
Child Poverty Action Group research shows that many families in receipt of tax credits are already struggling to meet their children’s most basic needs. Current levels of entitlement cover only between 73% and 85% of the cost of raising a child. Removing tax credit entitlements will only widen that gap further. Ultimately, the provision in the Bill could sink more families below the breadline, leaving children at risk of ill health and lower educational attainment.
From the heart, and using my head, I can only urge all Members to unite with the SNP today and to think of the constituents who will come to them—those with three or more children and those struggling to get more hours at work to make ends meet. Members should think of what rejecting the policy will do for those people: they will be able to look their constituents in the eye and say they did everything they could to stop the policy. If we, as parliamentarians, are here to legislate for those we represent, let us legislate properly and with our consciences. The provisions in the Bill do not make good law, so I ask Members to please think again and vote with us.
Emily Thornberry (Islington South and Finsbury) (Lab)
It is a pleasure to return to the Committee, Mr Streeter.
The two-child policy—there is a list of political regimes that begins with the Vietnamese communists and the Iranian theocrats—is not going to end well. We are debating a proposal that would see the current Administration join that inauspicious rank of people who at one time or other have imposed state-sanctioned limits on the number of children a family can have. Even the ayatollahs backed away from it in recent years.
Of course, there is a caveat in the Bill that adds a layer of unpleasantness to the proceedings. The Government will impose a limit on family size that applies only to poor families. At least the other countries tried to stop all families from having more children. This Government seem to focus only on the poor. They seem to be trying to limit the number of children that the poor have.
We are not all poor always. Some of us might begin life by being quite well off and comfortable and able to make decisions. We would know we could be completely confident that we could be independent, but then things happen. That is what the social security system has always been about. I speak from personal experience. My parents were allegedly, supposedly happily married. They had three children and then one day, when I was seven and my younger brother was five and my other brother was three, my father left—he left the country and abandoned us. I remember the bailiffs came round. They were wearing bowler hats—this was the ’60s—and they threw us out of our house. We had nowhere to go and we had no money and the welfare state picked us up and gave us accommodation. They gave us a house. Nobody said, “How many children have you got? You’ve been very reckless, Mrs Thornberry, I’m sorry we can’t give you any money for the third child. Young Ben Thornberry is going to have to starve.” There was none of that thinking. It was tough, but we were looked after. Nobody looked down on my mother for having made a decision with my father to have three children. That was a long time ago, but I feel that that is the sort of Britain we ought to want to be involved in.
We ought to be able to have a Britain where we have a safety net that looks after people when they find themselves in difficult circumstances. We do not want to have a Government that tells people, “Now listen here, you look a bit rough round the edges. We don’t want you to have any more than two children. Lord knows what they will be like and you won’t even be able to look after them. Sorry, but no, that’s it.” Where will it end?
Frankly, this is an extraordinary piece of legislation. It is shockingly bad and it flies in the face of a British value of which I have always been very proud—that we look after the weakest and poorest and have a safety net. If things happen, people will not starve. We should not say, “I’m sorry, we are now in a world where people must make choices.” The third or fourth child does not make a choice to live. The third, fourth or fifth child is not to be blamed for their existence. The sixth child is not to have no shoes because of a reckless mother who cannot keep her legs crossed. It is not the sixth child’s fault that he is the sixth child. Why should he starve? How will it make a difference? What is the evidence that the Government want to put before us that will tell us that a change to the benefits system in that way will stop people having more children?
It is interesting that there is not going to be an equality impact assessment. The Government have learned their lesson. The last welfare Bill had 20 equality impact assessments, which the Opposition revelled in, as did all the people opposing that previous piece of pernicious legislation, because the assessments showed what the effect of welfare legislation would be. I may be quoting roughly—I will be corrected if I am wrong—but one of the equality impact statements produced for the previous Bill, which the Government have unfortunately not produced for this one, said that black and Asian families were three times as likely to have more than two children. It is interesting that the Government decided not to have an equality impact assessment on clause 11. Perhaps nobody will notice that the legislation affects black and Asian families that much more.
We all know whom the Bill will affect: women—black, Asian, white or whatever. Women will be adversely affected by the Bill and will struggle to work out how they are going to afford a pair of shoes that winter for the fourth child. Mr Streeter, you may be surprised to hear this, but yes, we are against this particularly nasty piece of legislation. I do not know at this point if you wish me to speak to new clauses 5 and 6.
Damian Hinds (East Hampshire) (Con)
The amendment seeks to delay the Government’s proposed changes to the family element of child tax credit until April 2022. The Government were elected on a mandate to reduce the deficit and restore order to our public finances. As part of the plan to get us into surplus and to continue the progress made in the previous Parliament, the Government have committed to making a further £12 billion of welfare savings.
To set the scene, the most recent statistics show that, in 2011, the level of UK expenditure on family benefits was the second highest out of the 34 countries in the OECD and almost double the average. Child tax credits are there, of course, to provide support to low-income families to help them with the costs of raising children.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Will the Minister clarify those figures? Are they in terms of percentage of spend to GDP or absolute figures?
Damian Hinds
The OECD has done a survey based on percentage of spend to GDP. The hon. Lady has not asked this question but let me clarify further: it takes together family benefits, cash benefits, tax breaks and childcare. Of course, the mix is different in different countries. Nordic countries tend to spend more on direct childcare and Anglophone countries tend to spend less on that but put more into tax breaks. Our country has tended to spend a little bit more on cash benefits and on childcare.
As I said, child tax credits are there to provide support to low-income families to help them with the cost of raising children, but the system has grown unsustainably—a family with three children that earns up to almost £40,000 could still be eligible for some support. The previous Labour Government let public spending on tax credits rocket out of control so that, in 2010, nine out of 10 families with children were eligible for tax credits. That was not targeted support for low-income families.
Emily Thornberry
Does the Minister agree that we have in this country a unique system that in fact helped us to weather the international storm caused, not by Gordon Brown being at Lehman Brothers throwing dollar bills out the back window, but by an international financial crisis, and that we did not have higher levels of unemployment because measures such as in-work benefits meant that people could continue to work and employers did not feel the need to continue put up wages because they felt that it was easier to continue to employ people? Does he agree that in-work benefits have resulted in people remaining in work?
Damian Hinds
The hon. Lady tempts me into a wider debate about the deficit, which would be interesting to get into, particularly with some of the news this morning about her own party’s interesting deliberations on how the deficit should be dealt with. I do not think that anybody denies that there was an international financial crisis in 2007-08, but it is also true—I doubt that many people will deny it, though she may be one who does—that it came on top of a structural budget deficit that was out of control because we had spent too much and borrowed too much, even in the good years.
The Chair
It is interesting, but it is not strictly to do with amendment 44. I am sure the Minister is about to return directly to it.
Damian Hinds
I fell into the temptation of the wider debate, but I will now get away from it. However, the existence of the structural deficit and the continuing problems that we find ourselves in post 2007-08 are why we need to get our public finances back into order.
Nobody would deny the existence of automatic stabilisers, as the hon. Lady mentioned, but we need a welfare system, a benefits system and general public finances that are sustainable and fair to all people—those who pay in and those who are beneficiaries. Despite reforms in the previous Parliament reducing the number of families eligible for tax credits to six out of 10, the current level of spending on tax credits is unsustainable.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Will the Minister give way?
Damian Hinds
I think I ought to make some progress. [Interruption.] Oh, go on then.
Neil Coyle
I am glad that my disappointed face worked on this occasion.
Although the suggestion that the change is about balancing the books is fine on one level, the Minister has had specific requests for information about families who will not feel that they are personally responsible for the national economic position. We heard from the hon. Member for Livingston about incidents of rape, and we have heard a discussion about the equality impact assessment. I would like the Minister to address the concerns of people of faith who do not believe in contraception. Will they be subject to the cap?
We know that the Chancellor of the Exchequer is a big fan of China, but even in China, with its single child policy, there is flexibility within the system to allow people from minority ethnic communities to have more than one child, to allow people from farming and rural communities to have more than one child—
The Chair
Order. Interventions should be brief. I sounds like the hon. Gentleman perhaps missed his opportunity to make a speech in this debate. He has made his point, and I am sure that the Minister will give way for a further intervention if he wishes.
Damian Hinds
Thank you, Mr Streeter.
Let me be clear, lest there be any doubt, that this is not about limiting the number of children that people have. It is about financial support in the form of child tax credit. Child benefit, for example, will continue to go up in line with the number of children. The hon. Gentleman says, and he is right, that individual families are not responsible for the financial mess that our country found itself in as a result of the unholy combination of the financial crisis and the previous Labour Government. That is correct, but we do have a shared future, and it is the responsibility of a Government, on behalf of all their citizens, particularly the most disadvantaged and vulnerable, to make sure that we have sound finances, that we can continue to afford to pay for our public services, that we can continue to afford to invest in our national health service and that we can give people the support that they need.
Damian Hinds
I think I will have to move on a little.
Last year the Government spent almost £30 billion on tax credits—more than three and a half times what we spent on military personnel. That level of spending on tax credits is unfair on those who foot the bill, who are, of course, other taxpayers. That is why the Government took steps in the summer Budget to put tax credit spending on a more—[Interruption.] Does the hon. Member for Birmingham, Yardley want to intervene?
Jess Phillips (Birmingham, Yardley) (Lab)
Yes, I do; I just want to point out that people who are on tax credits are in work. They are taxpayers, and they are therefore paying that bill. The Minister should not pitch two sets of people against each other. He should recognise that people who get tax credits work.
Damian Hinds
I do not know whether the hon. Lady deliberately did not hear me say that. I did say that people who pay the tax credit uplift are other taxpayers. That is true. That is not pitching one person against another, it is just a statement of the reality, a statement of how the system works. That is why the Government took steps—[Interruption.] Does the hon. Lady want to intervene again? She keeps on speaking.
Jess Phillips
I am more than happy to do so. The Minister is being extremely divisive. What he actually said was that the person footing the bill was basically someone else. The Government are basically trying to make some people feel that they are being robbed for the sake of the poor. When I lived on tax credits, I worked probably about a 14-hour day. I will not have it said of people such as me and my hon. Friends that we were beholden to someone else. We were taxpayers.
Damian Hinds
I do not recall referring to the hon. Lady’s specific case or the case of anybody else on the Opposition Benches. Nor did I say that anybody should feel bad for supporting others, but there is a case for balance. It is just a statement of fact that, in any tax and benefits system, benefits paid to one group or person have to be paid for by others, and we have to make sure that that system is fair.
As the hon. Lady will recall, we had a great reforming Budget with a set of measures to move us from a low-wage, high-tax, high-welfare society to a lower-tax, higher-wage, less welfare-reliant society, including measures such as the national living wage, with which we seek permanently to reform the structure of the economy and the way the system works.
Damian Hinds
I will give way one last time to the hon. Lady, and then I must progress.
Hannah Bardell
On the point that the hon. Member for Islington South and Finsbury made about families in work who are on tax credits, the Institute for Fiscal Studies—which the Government have quoted on a number of occasions—has said that the increase in the minimum wage, which is not a true living wage, will not compensate for the cuts that are coming to tax credits, which will hit the poorest hardest and is a regressive policy. What does the Minister say to the IFS?
Damian Hinds
I say that these are major structural changes. I think you would admonish me, Mr Streeter, if I went too far down this road, because we had this debate on the Floor of the House and there will be other opportunities to discuss the matter.
We are talking about helping people through the national living wage and increases in the income tax personal allowance, but also through measures such as childcare support and, most important of all, the general strength of the economy. We see real wages rising very strongly at the moment, and we have very low inflation and very strong economic growth. Those are the things that most help families with their budgets and living standards.
In the summer Budget, the Government took steps to put tax credit spending on a more sustainable path, including by limiting the individual element of child tax credit to two children and by removing the family element of child tax credit for those who are not responsible for a child or qualifying young person before 6 April 2017. The average family size in this country has decreased over recent decades. The average number of dependent children in families in the UK in 2012 was 1.7.
Damian Hinds
I will not, if the hon. Lady will forgive me.
The Government believe that it is fair and proportionate to limit support through tax credits and universal credit to two children per family. The measures in clause 11 will ensure that there is greater fairness between those receiving benefits and those paying for them, and will ensure that, in the future, families in receipt of benefits face the same sorts of financial decisions when they consider having children as those supporting themselves solely through work. The Government decided to implement the measures from April 2017 to give families time to make decisions about having more children. That provides sufficient time for those considering whether to have more children to make plans, while at the same time putting tax credits on a more sustainable footing.
The hon. Member for Livingston quite rightly raised some of the difficult issues. We have already been clear about multiple births, and there will be more detail forthcoming on that. We will also have a chance discuss that in debates on further amendments. The Government have been absolutely clear that if parents have twins or triplets and previously there were fewer than two children in the household, that will be treated as a single birth. In the most difficult circumstance—a child conceived as a result of rape—it is right that the Government take a careful and sensitive approach to working out how best to deal with those circumstances and support women through that situation in relation to the tax credit system. There will be more detail in due course.
Hannah Bardell
Should the Government not have thought that through before they put the policy in place?
Damian Hinds
It is not at all uncommon for a Government to say that particular aspects of the implementation of a policy are delicate and sensitive and require careful thought with external stakeholders who are experts in the field. That is what will happen in this case. I do not feel the need to defend that. It is the right thing to do because there are people who have expertise, and it is absolutely right that they should have the opportunity to be consulted.
Damian Hinds
I will not, if the hon. Gentleman will forgive me.
The Government will continue to support larger families through child benefit, which is paid for all qualifying children in a household. There are 15 hours of childcare available to the 40% least advantaged families. Families will continue to receive 15 hours a week of free childcare for all three and four-year-olds, and the Government have announced that from September 2017 that will be extended to 30 hours for parents who are in work. I therefore urge the hon. Member for Livingston to withdraw the amendment.
Hannah Bardell
I will be brief, because I and my colleagues covered the points in our initial remarks. From what the Minister has said, it is clear that there was no consultation and consideration on the most serious parts of the Bill, including the issue of the third child and the matter of rape. We have no details, and many organisations have said that those provisions were a great surprise to them.
I cannot believe that a Government would be so insensitive as to put a clause such as this one in a Bill. On the day of the Budget, when the policy was announced and we saw it in black and white, it seemed like an afterthought. To treat people as an afterthought—particularly women who are vulnerable and who have been raped—is nothing short of a disgrace.
The IFS has been very clear that the Budget and these policies will hit the poorest in society hardest. In Scotland, the Daily Record recently reported that the
“poorest households could be more than £500 a year worse off in 2020 as a result of changes made in Chancellor George Osborne’s budget...800,000 households north of the border will have less cash as a result”,
and that the
“IPPR Scotland think-tank found there would be more winners than losers, with some 1.3 million households expected to be better off. But while the richest 20 per cent of households will gain £110 a year by...2020/21, the impact of tax and benefit changes on the poorest 20 per cent of households will see them lose an average of £520 a year.”
Getting our finances into a surplus cannot come at the cost of people’s lives, including children’s lives, and at the cost of making the poorest even poorer.
Question put, That the amendment be made.
Corri Wilson (Ayr, Carrick and Cumnock) (SNP)
I beg to move amendment 45, in clause 11, page 13, line 10, leave out “one other child” and insert “two other children”.
This amendment would retain entitlement to child tax credit for families with three children.
The Chair
With this it will be convenient to discuss the following:
Amendment 46, in clause 11, page 13, line 10, leave out “one other child” and insert “three other children”.
This amendment would retain entitlement to child tax credit for families with four children.
Amendment 47, in clause 11, page 13, line 10, leave out “one other child” and insert “four other children”.
This amendment would retain entitlement to child tax credit for families with five children.
Amendment 48, in clause 11, page 13, line 10, leave out “one other child” and insert “five other children”.
This amendment would retain entitlement to child tax credit for families with six children.
Amendment 50, in clause 12, page 13, line 18, leave out subsections (1) to (4).
This amendment would retain entitlement to the child element of universal credit for families with more than two children.
Amendment 51, in clause 12, page 13, line 22, leave out “two” and insert “three”.
This amendment would retain entitlement to the child element of universal credit for families with three children.
Amendment 52, in clause 12, page 13, line 22, leave out “two” and insert “four”.
This amendment would retain entitlement to the child element of universal credit for families with four children.
Amendment 53, in clause 12, page 13, line 22, leave out “two” and insert “five”.
This amendment would retain entitlement to the child element of universal credit for families with five children.
Amendment 54, in clause 12, page 13, line 22, leave out “two” and insert “six”.
This amendment would retain entitlement to the child element of universal credit for families with six children.
New clause 5—Entitlement to housing benefit—
‘(1) Section 130A of the Social Security Contributions and Benefits Act 1992 (Appropriate maximum housing benefit), is amended as follows.
(2) After subsection (2) insert—
“(2A) Entitlement to housing benefit shall not be restricted in respect of a maximum number of children or qualifying young persons for whom a claimant is responsible.”’
To prevent the Secretary of State from limiting entitlement to housing benefit by taking into account only a certain number of children in a family.
New clause 6—Entitlement to housing costs under Universal Credit—
‘(1) Section 11 of the Welfare Reform Act 2012 (Housing costs), is amended as follows.
(2) After subsection (5) insert—
“(6) Entitlement to an amount under this section shall not be restricted in respect of a maximum number of children or qualifying young persons for whom a claimant is responsible.”’
To prevent the Secretary of State from limiting entitlement to housing costs under Universal Credit by taking into account only a certain number of children in a family.
I will allow a wide-ranging discussion on this group of amendments.
Corri Wilson
It is a pleasure to serve under your chairmanship once again, Mr Streeter, on another full day of scrutiny on a Bill that is about neither welfare nor work. It serves only to make some of the most vulnerable in society worse off. As I speak to amendment 45 and the other amendments in this group, I am going to raise some of the issues that I find most absurd about the Bill.
I was, as may be expected, disheartened to see the Committee reject amendment 44. It was, however, not a surprise that Government Members would oppose the plan to keep the family element of child tax credit for at least another five years. For that reason, the Scottish National party is looking to protect larger families through this series of amendments. We tabled each of the amendments because protection needs to be afforded to all families, large or small. Families include children, and the policies in the Bill will affect young children. That is why my party opposes the Bill in its entirety.
Emily Thornberry
I should like to speak to new clauses 5 and 6 in particular, which are grouped with the amendments. New clause 5 would prevent the Secretary of State from limiting entitlement to housing benefit based on family size, and new clause 6 would do a similar job with universal credit. There is no mention in the Bill of limiting housing benefit on the basis of family size. That is odd. It is a radical proposal, it is pernicious, it needs scrutinising and it is not there, but we are told that it is coming. The Red Book mentions that there will be a limit on tax credits to a maximum of two children and then states, on page 38:
“An equivalent change will be made in Housing Benefit to ensure consistency between both benefits.”
It is coming—it is linked with the limits on tax credits—but the Government have not yet told us about it. We therefore want to pre-empt that and have a discussion now, putting in our new clauses.
Another removal of money from poor families is the getting rid of what is called the family premium. The premium is an acceptance that families are expensive and that a working family ought to have more of its income disregarded when assessing entitlement to housing benefit. On getting rid of the family premium, Shelter has said:
“Exploiting the complexity of housing benefit and tinkering with means tests and tapers is a clever ruse to extract savings from housing benefit in a technical way that doesn’t attract attention in the way that big, visible cuts like the bedroom tax did.”
Well, we have noticed.
If the Government get their way, they will be abolishing the family premium for housing benefit. That means that families—working families—will have £17.45 a week in earnings held against them when a decision is being made on whether they can get help with their housing costs. I do not know what the Government intend. Do they think that families are not expensive these days? Do they believe that the contribution of working families to the Osborne economic miracle by way of the cuts to tax credits is not enough, so the family premium ought to be cut as well? I would be grateful if the Minister enlightened us.
May I go back to limiting housing benefit to two children and how that will work? As I have said, the Government have stated their intention. I have a few questions because I do not understand it. Perhaps no such provision is included in the Bill because the policy has not been thought through yet. We might be being helpful to the Government if we raise some of the likely problems if they place a two-child limit on housing benefit. For example, will local authorities presented with a homeless family with four children be obliged to house them in housing that means that they are not statutorily overcrowded? If so, and the family is not working and the property is a local authority one, will anyone pay the rent? Will the Government pay rent only for two bedrooms and the other two bedrooms will not be paid? Or will the family be expected to pay the rent out of the child benefit?
The Minister repeated today that child benefit is not affected by the reforms, because the Government want to ensure a fair start in life for children in all families. That is certainly part of the Tory script at the moment, but it is not true—we have a script alert here for my hon. Friends. The irony is that there is an enormous difference between the level of support provided through child benefit, which is subject to a four-year freeze, and that provided by tax credits. For a third child, a family can claim £712.40 a year, compared with £2,780 in tax credits.
The Government say of such families, “Don’t worry, they are still getting child benefit. They’ll be fine.” They will not be fine. In particular, families will not be fine if there are no tax credits for the third child and housing benefit is being taken away. The Government are therefore presumably expecting parents to pay for their rent out of—I do not know—jobseeker’s allowance, child benefit or something. How will that work? Will people simply have to end up living in cars, because that must be what the Government’s policy is about?
How will the Government assess whether they are giving housing benefit to a family with only two children, as opposed to three? Would they expect families possibly to split up, so that two children live with a parent at one address and two with another parent at another address? Housing benefit for four children could be paid in that way. Or would that be wrong? Given that there is a housing crisis in London, I cannot see how that would work because there is not enough accommodation for all the families as it is. In my constituency, I have 19,000 families waiting for accommodation. If the Government are to restrict housing benefit for larger families, where will they go? I would be interested to hear from the Minister as to what might happen.
The Government have not put that measure in the Bill, which may be because they have not really worked out what they mean, how it will work and what the impact will be on homelessness and the number of people living in cars. If they have not worked that out, perhaps that is a good reason for them not putting it in the Bill yet. I applaud them for that. Of course, there is another possibility: they want to slip the provision into a statutory instrument. If they put it into a statutory instrument, they do not need to have any impact assessment—heaven forbid they have an equality impact assessment! We know they will not have an assessment, so we will not know how much money, if any, will be saved, who will be affected, how much more homelessness or how much more child poverty it will cause. That is why we want to have a debate now, so that the Government are given the opportunity to tell us their thoughts and enlighten us, and so that we can explain to them why that is one of the more horrible aspects of their so-called welfare reform and something that will have a devastating effect.
I should bring up another point—I forgot to raise it earlier and I apologise for the illogical order, but it is important. The Government have said that they will abolish the family premium a full year before the introduction of restrictions to child tax credit. I wonder why. Will the Minister say why they are doing that? They will restrict child tax credit but will take away the family premium a year early. The Government say that the measure will apply to new claims but have not made clear what it will mean in practice. For example, would a family moving into a new area, perhaps as a result of the Government’s welfare reforms, be treated as making a new claim if an existing housing benefit was simply transferred from one local authority to another? Will the Minister help us with that? The proposals to restrict entitlement to housing benefit are not included in the Bill and, as I have said, we have not had any details on how the restriction will work in practice. The Minister has quite a lot of explaining to do.
Entitlement to housing benefit is currently calculated on the basis of the number of rooms a family needs, as we know. Children under 10 are expected to share a room, for example, with a single mother. A single mother with four young children would be entitled to claim housing benefit for a three-bedroom property. Are the Government proposing that she should be entitled only to a two-bedroom property? Indeed, are the Government expecting to change the law on overcrowding in order to accommodate those larger families who do not have the money to pay rent on a decent-sized property? It would be very helpful to hear from the Government on those points.
Damian Hinds
The amendments serve a similar purpose: to increase, or indeed remove, the limit on the number of children or qualifying young people in respect of which a person is entitled to the individual element of child tax credit or the child element of universal credit, and to prevent limits being placed on the number of children for the purposes of calculating housing benefit or the housing costs element of universal credit.
I thank hon. Members for tabling the amendments. Despite the progress we have made towards reducing the deficit since 2010, we still ran a budget deficit of 4.9% last year and are expected to have the second highest deficit in the G7 in 2015. That is why it is important, indeed imperative, to get welfare spending under control, to help us get into surplus so that we can continue to increase our investment in our NHS, schools and pensions. As I have already mentioned, tax credit expenditure more than trebled in real terms between 1999 and 2010 and cost the taxpayer just under £30 billion last year.
Emily Thornberry
I wondered how much money the Government might save if they did not introduce their changes to inheritance tax?
Damian Hinds
Today’s debate is not about inheritance tax. If the hon. Lady is making a point about fairness in the tax system, that would be a fair question to ask. In fact, if we look at the overall package of what the Government have done in tax and spending since 2010, we see that the distribution of spending between different income groups and society has stayed pretty much the same.
Damian Hinds
Yes, indeed it has, and the incidence of taxation has shifted up the income scale so that the top fifth is now paying proportionately more than they were, and the top 1% who were paying 25% of income tax in 2010—[Interruption.] The Opposition can shake their heads all they like and say it is not proportionate, but it is proportionate. That is exactly the point. The top 1% who were already paying 25% income tax in 2010 are paying—
The Chair
Order. I think this could go on for a while, but I am afraid that it is not directly relevant to the amendment and the Minister’s response to the amendment. I should not have allowed the intervention to take the Minister down a different path. Let us continue with amendment 45.
Damian Hinds
The fault was all mine, Mr Streeter. I do not blame the hon. Lady and I apologise for my part in it. The last thing I was going to say was 27.5%.
The level of spending we have reached on tax credits—£30 billion—is unsustainable and carries a risk to our public services. That is why the Government have taken steps to ensure that the system is fair to those who pay for it as well as those who benefit from it. That is why the Government are limiting support to two children in child tax credit and universal credit from April 2017.
Amendments 45 to 48 and 50 to 54 would increase or remove the limit on the number of children or qualifying young people in respect of whom a person is entitled to the individual element of child tax credit or the child element of universal credit. If that policy were to protect six children in each household in terms of the payments or remove the limit completely, as suggested by SNP Members, there would be negligible savings from the measure and it would undermine our commitment to deficit reduction. It would also continue the unfairness that an out of work family with six children could receive over £17,000 per year in child tax credit in addition to other benefits if they are not subject to the benefit cap, while many working families would not see their budgets rise by anything like that when they have more children.
Damian Hinds
I am going to press on for the moment. The average number of children in families in the UK in 2012 was 1.7. The Government therefore think it is fair and proportionate to limit support through tax credits and universal credit to the payments for two children. To give families time to prepare, the change will not come into effect until April 2017. In child tax credit, the change will affect families who have a third or subsequent child born on or after 6 April 2017 only. In universal credit, the change applies to any third or subsequent children born, or joining the household, on or after 6 April 2017 and to families making a completely new claim to universal credit after that date.
Jess Phillips
I want some clarity on whether the measure relates to children born after that date or a new claim for a child after that date. What if my children were born in 2005 and 2010 and I do not currently need tax credits—who knows what the future will hold?—but need to claim them later? What if I need to go back on to tax credits after having a third child? Would my children count because they were born before or is it the claim that counts?
Damian Hinds
I believe we will have an opportunity at a subsequent stage to debate that point in detail in relation to a subsequent amendment, but I do not want to keep the hon. Lady waiting. To be clear in simple terms, the tax credit system is for new births after April 2017; universal credit is for new births and for new claims. Of course, universal credit is replacing the tax credit system. When we talk about new claims, that is with a gap of six months. It may apply to someone who has never been in that system before or in the predecessor tax credit system, or who has been out of both systems for a period of six months.
Damian Hinds
I do not want to pre-empt the more interesting discussion we may have later, but on the grounds that the intervention is relevant, as always, I give way.
Neil Coyle
As universal credit is rolled out, will the Minister provide families with a time machine so that they can go back and not have children?
Damian Hinds
I fear that that is another invitation to err from the path of the rightful debate.
On new clause 5, the intention seems to be to amend section 130A of the Social Security Contributions and Benefits Act 1992 to prevent the Secretary of State from making changes to housing benefit that would restrict the number of children who can be included in the housing benefit assessment. Housing benefit and the housing element in universal credit take into account the number of children for whom the claimant is responsible. There is no maximum number attached to that, and the Bill does not introduce one.
The only related changes to housing benefit, which will follow in regulations, are to ensure that a claimant’s housing benefit award is no higher than it would have been if the tax credit changes were not introduced. Obviously, without those changes, the tax credit change would have the unintended effect of awarding claimants with more than two children a higher amount of housing benefit, which would reduce the savings from the tax credit change.
Let me be absolutely clear, because the hon. Member for Islington South and Finsbury raised some very reasonable questions, which we need to address directly. As she knows, housing benefit is made up of a number of elements. That includes taking into account the number of children in calculating the family’s income. The family premium she mentioned is part of that calculation. The changes will affect the calculation of family income, but not the number of rooms allocated, which is a separate issue.
Emily Thornberry
I do not think that I have quite understood—it is my being slow, and I know he is trying to be helpful. The number of rooms allocated will be down to whether the local authority has accommodation available or access to private sector accommodation. It will also be a matter of need. However, the local authority will not be able to rent a larger property to a larger family if there is not enough housing benefit to cover that. What I really did not understand—I am so sorry, and I may understand it when it read it—is whether the Government will restrict housing benefit to larger families and say, “You may be a six-person family, but we are not going to give you enough money to rent a four-bedroom property”?
Damian Hinds
The change in the regulations will ensure that, for families with more than two children, housing benefit does not rise to offset the notional loss in tax credit or universal credit, because the amount saved in tax credit would then reappear in housing benefit.
Let me move on to new clause 6, which is related. The housing cost element in universal credit is an additional amount paid to a claimant to cover the costs of the accommodation they occupy as their home. The new clause seeks to amend section 11 of the Welfare Reform Act 2012 by making it clear that the Secretary of State will have no power to make regulations limiting the amount of the housing costs element based on the number of children living in the home.
In calculating the amount of a renter’s housing element under the universal credit regulations, a determination is, as the hon. Member for Islington South and Finsbury said, made as to the category of accommodation it is reasonable for the renter to occupy, having regard to the number of people in the household. Claimants in rented accommodation are currently entitled to one bedroom for each qualifying young person for whom they are responsible; one bedroom for two children who are under 10 years old; one bedroom for two children of the same sex; and one bedroom for any other child. Additional rooms are available in certain other circumstances. The Bill does not make changes to matters such as the number of rooms the claimant’s family is allowed as part of the local housing allowance or removal of the spare room subsidy.
It is right that families on benefits should in future face the same financial considerations when deciding whether to have more children as families who support themselves solely through work. I therefore urge hon. Members not to press the provisions.
Naz Shah (Bradford West) (Lab)
It is a great honour to serve under your chairmanship, Mr Streeter. I might just need the time machine we heard about. I have three children, but if I was not in a job in five years’ time, after the next election, my youngest child would not qualify for a bedroom. Which one would the Minister like me to put into care?
Damian Hinds
In future, a different system will be in operation. It limits the cash support through the tax credit system to two children. It will continue to include child benefit, and it will also include enhanced child care. For example, we will be moving to 30 hours of free childcare for all three and four-year-olds and there will be further improvements in universal credit.
Damian Hinds
I think the hon. Lady’s point was about her child. I do not think she meant it as a direct question. [Interruption.] I am trying to explain that there will be a limit to the amount of financial support coming through the tax credit system according to the number of children, but there will be other elements still in place, and enhanced elements in relation to childcare. There will also be a further increase in the income tax personal allowance and a major structural reform in the labour market so that the tax credit system does not top up low wages. People will be paid properly for the job that they do via the national living wage, and we estimate that 65% of people who benefit from the national living wage will be women.
Corri Wilson
In tabling our amendments, the SNP seeks to lessen hardship in families. We want families, no matter how many children they have, to be able to access the child tax credit and child element of universal credit to allow children to have the best possible start. Life is complex and not quite as black and white as the Bill suggests. When my children were at school, I was a single parent and I worked full time. I wanted to work, but, without the tax credits, I could not have afforded to. Please do not cut this lifeline for people in a similar position today. We will press amendments 45 and 50 to a vote.
Question put, That the amendment be made.
Emily Thornberry
Mr Streeter, may I make it clear that new clauses 5 and 6—I should have said this earlier—were probing amendments?
The Chair
In any event, they would have been considered later, but it is helpful to know that.
Emily Thornberry
I beg to move amendment 83, in clause 11, page 13, line 12, at end insert—
‘(3C) The limit on the number of children or qualifying young person for whom an individual element of child tax credit can be claimed, as set out in subsection (3B), shall not apply to households where one or more of the child or qualifying young person in that household is disabled. This includes, but is not limited to, those persons in receipt of the disability element of child tax credit.’
The amendment exempts households from the limit on the number of children for whom the individual element of child tax credit can be claimed where one or more child in that household is disabled.
The Chair
With this it will be convenient to discuss the following:
Amendment 84, in clause 12, page 13, line 23, at end insert—
‘(1B) The limit on the number of children or qualifying young person for whom a child element of universal credit can be claimed, as set out in subsection (1B), shall not apply to households where one or more of the child or qualifying young person in that household is disabled. This includes, but is not limited to, those persons in receipt of the disabled child element of universal credit.’
The amendment exempts households from the limit on the number of children for whom the child element of universal credit can be claimed where one or more child in that household is disabled.
New clause 16—Exemptions to changes in child tax credit and child element of universal credit—
‘(1) The limit on the number of children for which child tax credit or the child element of universal credit can be claimed, as provided for clauses 11 and 12 of this Act, do not apply in the following circumstances—
(a) where the number of children exceeds two because the third (or subsequent) child was part of a multiple birth at the same time as the second qualifying child;
(b) where a third (or subsequent) child becomes a member of a household as a result of being fostered or adopted into that household, or enters the household as the result of a kinship care arrangement;
(c) in exceptional circumstances as defined by the Social Security Advisory Committee, including but not limited to—
(i) the claimant becoming unemployed;
(ii) the death of one of the parents in the claimant household; and
(iii) one of the parents in the claimant household leaving the household following a breakdown in relationship.
(2) No limit shall apply to a household where any child or qualifying young person is disabled.
(3) No limit shall apply to couples with dependent children who if living in separate households would not be affected by the limit.
(4) The Secretary of State shall, by regulation, establish an appeals process by which an individual can appeal a decision as to whether an exemption set out in this clause applies in their individual situation.’
Emily Thornberry
Amendment 83 exempts households from the limit on the number of children for whom the individual element of tax credits can be claimed where one or more of the children in the household is disabled. Amendment 84, which would amend clause 12, would carry the same requirement on to universal credit.
Any legislation that amends our current social security structure must have attached to its leg the aspirational legislation of universal credit, which I know that the Government hope will someday apply across the board. They have rolled it out for some of the simpler cases and they claim they will continue to roll it out, but we have been waiting for several years. However, we are told that it will happen, but we do not know when; it is not clear. We hear lots of stories about extraordinary overspends, computer systems that do not work and the Treasury tearing its hair out. We hear about all kinds of things going on behind the scenes, and we keep hearing that the implementation date has been pushed back. We will wait and see what happens. We appreciate that in the meantime we have to continue to produce two-legged administration with one leg in the current situation, and the second leg being the aspirational universal credit that at some stage in the future will apply to all of us. Good luck with it.
Jess Phillips
Has my hon. Friend read the piece in this morning’s Guardian about kinship carers also being badly affected? Specifically, some people are now not being able to take on the care of disabled children who for a number of reasons cannot be looked after by their parents, because of the changes to their financial assistance.
Emily Thornberry
Yes, indeed. From speaking to people who have spent many years devoted to this sector and who have tried to make our safety net as good as it possibly can be in difficult times, the attacks are coming from so many different angles, at so many different levels and so fast, that for many of us it is very difficult to know where to start. The changes are fundamental and very frightening. We know that what will happen in two or three years’ time will become manifest, and it will become increasingly obvious that the poor have got much poorer and that people have got much more desperate. That will affect children, and those born now will be disproportionately affected.
I hope that at that point, the Government will finally realise that, because I do not think that many of those on the Government Benches are heartless, but they have not thought this through. The difficulty is that their policy is based entirely on rhetoric. That is clear from some of the lines in their manifesto that are now appearing in proposed legislation. Look at the Childcare Bill, which says very little more than what was in the manifesto. The difficulty is that if you do not make policy on the basis of evidence but on the basis of rhetoric—what sounds right and what you think will work well with your focus groups—that will not work when it comes to ruling the country.
This is yet another ill-thought-out cut and change to the most vulnerable and most hard-working families, to the families in the most difficulty. Imagine spending time bringing up a child with disabilities and the continued worry of that. Those families have enough worry in terms of their child’s welfare without worrying about why the Government are taking away yet more funding and making life that much more difficult.
Hannah Bardell
It is a pleasure to speak again, Mr Streeter. I will keep my remarks brief and start by saying that we are more than happy to support Labour’s amendments. We offer that hand of friendship across the Benches as a form of compromise.
The amendments support the same policy intentions—although not quite as strongly—as our amendments that we have already discussed, so I will not go on too much. We support the intentions of protecting those who are fostering or adopting, households with disabled children and also, as the hon. Member for Birmingham, Yardley mentioned, kinship carers. That is something which the SNP in the Scottish Government have done a lot on in recent years. These are some of the most vulnerable children in society. We must do everything we can to protect them. Please, Minister, you must concede that we need to protect at least some of these children from the cuts. Will you back the advice of the Social Security Advisory Commission which said that there has to be a review? Will you take that into consideration in your closing remarks?
The Chair
Just before I call Debbie Abrahams, a number of colleagues have been using the word “you”, which of course refers to the Chair, when they really mean the hon. Gentleman or the Government. I say that to all my colleagues, both experienced and inexperienced. It is an easy mistake to make.
Debbie Abrahams
It is a pleasure to serve under your chairmanship, Mr Streeter. This is the first opportunity I have had to speak as the shadow Minister for Disabled People, so if you will allow me, I would like to start by paying tribute to my predecessor and friend, the hon. Member for Stretford and Urmston (Kate Green). She did a fantastic job, not just in this Bill Committee but in the past in this role and her mantle is going to be hard to take up.
I want to add my voice to what my hon. Friend the Member for Islington South and Finsbury has said. The tax credit provisions in the Bill are pernicious, and these elements are particularly callous and unjust. We are seeking to try to exempt families with disabled children from their impact.
Those who have spoken to parents and carers with disabled children will know that there are additional costs associated with raising disabled children. Contact A Family’s “Counting the Costs” report found that families with disabled children are more likely to be living in poverty than other families and that it costs three times as much to raise a disabled child. Families with disabled children face considerable additional expenditure on heating, housing, clothing, equipment and other items compared with other families. My youngest daughter was diagnosed with asthma when she was very little. One of the triggers for her was the cold and we had to have our heating on all day and all night when she was little to try and avoid what often happened, which was that she stopped breathing. I have that personal experience and, fortunately, we were able to cope with the financial costs of additional heating, but that is not the case for many families.
Research over many years demonstrates a strong relationship between low income, social exclusion and disability among families who have a disabled child. As the “Every Disabled Child Matters” campaign has said, childhood disability is frequently a trigger event for poverty, as a result of additional costs, family break-up and unemployment following the birth or diagnosis of a disabled child. As I said, disabled children are also at a high risk of poverty as a result of low household incomes. Many parents of disabled children are unable to work because of care responsibilities and the lack of, or the cost of, appropriate childcare. I would be interested in the Minister’s response to the issue of providing appropriate childcare for disabled people because, within the proposed provisions, the Government have not been particularly explicit about how that relates to disabled children.
Neil Coyle
I welcome my hon. Friend to her new role. The Minister has already mentioned a commitment to providing 30 hours of childcare, but at no point have the Government provided any information on how it will be assessed and whether parents can genuinely access that level of childcare, in particular the parents of disabled children. Would my hon. Friend welcome the Government clarifying whether childcare is genuinely accessible, particularly for parents of disabled children?
Debbie Abrahams
My hon. Friend makes a valid point and I would be grateful if the Minister could address it in his response.
Barriers to work are created by the stress of caring, often with no support. I am thinking again in the context of the £3.6 billion of cuts in social care, which also affect disabled people. When people do not have that support enabling them to work, it can build difficulties into family relationship. It is not clear in the impact assessment whether an assessment has been done on the likely increase in poverty of families with disabled children.
For example, what is the increase in NHS admissions predicted to be? I have mentioned my daughter who has asthma. The implication is that there will be other families in similar circumstances. Is there any prediction of an increase in family breakdown? We cannot be in a situation where, potentially, the Government are arguing that the measure will balance the books when it is really about cost-shunting from one Department to another. What assessment has been done on that?
We do not believe that disabled people, their families and their carers should be subject to further cuts and therefore seek to exempt households with one or more disabled children from the provisions on both child tax credit and universal credit. The Government and the social security system rightly recognise the additional costs of raising disabled children but the provisions in clauses 11 and 12 seem to be at odds with that. I oppose them absolutely and in their entirety. At the very least, the effect of the provisions should be mitigated for households with a disabled child and I urge all members of the Committee to do the right thing and support the amendments.
Emily Thornberry
Might I rise again? It is entirely my mistake but I realise that I spoke just to amendments 83 and 84 and not to new clause 16. Would it be convenient for me to do so now?
Emily Thornberry
I am sorry, Mr Streeter.
New clause 16 takes the issue of child tax credits and universal credit face on and raises some of the most difficult aspects of trying to restrict tax credits. It exposes some of the most serious flaws in the Government’s thinking. The Government’s rhetoric is constantly about choices, how people can shape their future by way of choices and how Governments can in some way affect people’s choices by changing tax credits. We say that that is simply not right. If we are wrong, will they show us some evidence? In fact, would they like to show us evidence that anyone has ever made a decision about how many children they are going to have on the basis of benefits? Do people really make a profit out of having a child? Do they have a child and then get more money than they actually need to spend on that child and rake it in thinking, “This is a good career,” or is it possible that that is nonsense and, that, in fact, the changes to tax credits are just about saving money, dressed up as some form of slightly extraordinary social policy?
The impact assessment states that the aim is to ensure that
“those on benefits face the same financial choices around the number of children they can afford as those supporting themselves through work.”
However, that creates a completely false distinction that seems to exist only in the minds of Tory Ministers. The fact is that almost two thirds of families with three or more children who claim tax credits are, as my hon. Friend the Member for Birmingham, Yardley has said, in work. The impact assessment may state that the aim is for financial choices for those who are out of work to be the same as for those who are in work, but let me say one more time to ensure that Ministers get it: people who claim tax credits are in work.
Hannah Bardell
The hon. Lady’s points are very interesting. Does she agree that we also have to take cognisance of religious groups across the divide? In many cases, such as those of Catholics, who consciously do not use contraception—[Interruption]—these policies could well be an infringement of their human rights.
Emily Thornberry
The Minister says from a sedentary position that, in the 21st century, we should not pay attention to the Catholic view of contraception and decisions made within Catholic families. I am surprised. I say no more.
As I was saying, the Government have not provided details about what might be considered exceptional circumstances, so new clause 16 has suggested a few examples, such as multiple births, adoptions or kinship care arrangements. I recommend to the Minister an article in The Guardian today, written by Patrick Butler, about kinship adoption and related difficulties. One difficulty, among the many difficulties that people who put themselves forward to adopt children face, will be a potential cut in tax credits. If someone adopts a child who has a little brother, and the little brother then needs to go up for adoption, will that person say, “No, I can’t do it, because I can’t get the tax credits”? Are they really going to say that? Is that right? No, it is not, so will the Minister please do something about that, and will Government Members pay attention to our arguments and vote with us on new clause 16? It is entirely sensible and fleshes out the exceptional circumstances, which we think are glaring.
Those exceptional circumstances are: multiple births, adoptions, kinship care arrangements, relationship breakdowns, including, but not limited to, cases of domestic violence, and the death of a partner. The Minister says, “We are doing this in order to make sure that people make the correct choices.” I have spoken from my own personal circumstances. Frankly, my example is out of date, but unfortunately, in the last 40 or 50 years, these things have continued. People die unexpectedly and people leave unexpectedly. It is not as though someone can make a “bad choice”—in the Minister’s words—to have a third child and then take it back because their partner has died. That seems exceptionally harsh to us.
The new clause also proposes an exemption for those who become unemployed. The point here is to emphasise that, even if we accept the Government’s suggestion that families should make their family planning decisions based on the Government’s welfare reform legislation—that is a tall order in itself, although I suppose having to sit up and read the Government’s legislation on welfare reform might be some form of contraception—and even if the Government are right that people will realise welfare reform means it will be a bad idea for them to have a third child, people in work will not see that as relevant. They will make decisions because they can afford to have their children, but something may then happen, such as their becoming unemployed, and they will be hit that much harder. Therefore, even if the Government are right, which they are not, that people will make decisions on how big their family should be based on welfare reform, those people who are in work at the moment, making decisions frivolously to have four children, will find themselves in great difficulties if they suddenly become unemployed. That is unfair, as I am sure the Minister will recognise. We need to acknowledge the realities of life, particularly in the 21st century job market. People work in an insecure market. People can lose their jobs. Hopefully, they will get back into work, but it is unrealistic to expect parents to make decisions about their jobs and income with 100% certainty over an 18-year period. It is just not right. There are also abusive relationships. Women should not be expected to make decisions based on the possibility that they might become victims of domestic violence.
The new clause raises the serious issue of a couple’s penalty. Couples with more than two children will be given an incentive to separate just to continue receiving the support that they need to feed their children. That will happen. It is especially ironic that measures of child poverty are being replaced by measures of family breakdown, among other things. The Government are to measure child poverty on the basis of family breakdown, yet their social policy seems to pressure families into a form of breakdown so that they can continue to receive the benefits and tax credits that they need. The Tory party used to be the party of family and marriage. Why is its social policy dividing people? The irony is especially acute given the Secretary of State’s claim at the Conservative party conference that this Government’s reforms are
“all about making families stronger”.
Clearly, they are not.
Damian Hinds
I welcome the hon. Member for Oldham East and Saddleworth to her place in the Committee and, more broadly, to the Opposition Front Bench. She has a hard act to follow in the shape of the hon. Member for Stretford and Urmston, but I know that she will execute her work absolutely admirably in this Committee and beyond. She and the hon. Member for Islington South and Finsbury have spoken powerfully about the challenges faced by the parents of disabled children. I echo them in acknowledging the invaluable work that such parents and families do in difficult circumstances.
The Government are protecting benefits related to the additional costs of disability and care by exempting them from the freeze and from the cap that we discussed on another day. Those benefits include personal independence payments, disability living allowance and the support group component of employment and support allowance. Additionally, we will continue to increase those benefits by inflation. The Government are committed to supporting disabled children. We have reformed the special needs system to support children continuously from birth to the age of 25 and increased our spend on the main disability benefits by more than £2 billion over the course of the last Parliament. Overall, of course, we continue to spend about £50 billion on disability benefits and services each year.
My understanding is that amendments 83 and 84 would have the effect of removing households with one or more children with a disability from the two-child support limit policy in child tax credit and universal credit respectively. Thus, a family with five children, one of whom is disabled, would continue to receive child tax credit or universal credit in respect of all five children, as well as the appropriate disabled child element in child tax credit and the additional amount in universal credit. The Government think it right that, just as families who support themselves solely through work must weigh up financial considerations when deciding to have more children, families in receipt of benefits should face the same sorts of financial consideration. That should apply to all families.
In recognition of the costs of supporting disabled children, we will create a separate disability element of child tax credit that will be payable for all disabled children, regardless of whether they are the third or subsequent children or otherwise. We will continue to pay the relevant additional amount for disabled children in universal credit, regardless of whether those children are the third or subsequent children or otherwise.
The hon. Member for Bermondsey and Old Southwark rightly raised the subject of childcare. He will know that, in the tax-free childcare system that we are introducing, there is, quite rightly, a special addition to recognise the additional costs of childcare that pertain for children with a disability. In the overall offer of 15 hours and 30 hours of childcare there is, as he will know, rightly a statutory duty on local authorities to ensure proper provision for children with disabilities in the nurseries that their families trust.
Neil Coyle
The Minister mentioned universal credit. It sounds like that might be welcome. Will he update us on the roll-out of universal credit and identify where the overlap with the measure will not exist? There is a statutory responsibility on local authorities, but how will the Government ensure that families with disabled children who cannot access appropriate, accessible childcare are not penalised?
Damian Hinds
I do not dispute for a moment what the hon. Gentleman says. I agree with him entirely that we—the Government and Members of Parliament—must be vigilant in ensuring that families, including those with disabled children, have access to good childcare. It is a duty on local authorities but vigilance is always required to ensure that such measures are delivered. The hon. Gentleman asked about the roll-out of universal credit. I am not quite sure of the specific context in relation to the measures—I will just say that it is on track. It will be in every jobcentre by April 2016, with the bulk of migration complete by 2019.
New clause 16 seeks to specify exemptions to our proposals, including a new role for the Social Security Advisory Committee, and to establish an appeals process. The Government have already given a clear commitment that multiple births, for example twins or triplets, will be treated as a single birth with a child element for each sibling where there were previously fewer than two children in the household. We have also set out that there will be protections—we discussed this earlier—for women who have a third child as the result of rape. We will set out exemptions in regulations after discussions with stakeholders and careful consideration. Using regulations to set out exemptions provides the Government with greater flexibility to adjust exemptions in the future without needing to secure primary legislation. That is more appropriate because we may wish to act relatively quickly in the light of operational experience.
The Social Security Advisory Committee, as its name suggests, is a valuable body for advising the Government on our secondary legislation. It does not, however, have the remit to design legislation. That is the proper job of the Government and we consult with the committee as appropriate. Amendments 83 and 84 relate to the proposed exemption of households where any child or qualifying young person is disabled. I have responded on that issue.
Finally, the new clause requires the Secretary of State to set up an appeals structure. Social security and tax credits already have comprehensive appeals arrangements that will apply to any decisions made under the provisions in the Bill or exceptions set out in regulations. The provision is therefore not required. For the reasons I have set out, the new clause is not appropriate for inclusion in the Bill. We have recognised that there will be a need for some exemptions, for example in relation to multiple births, but those are much better dealt with in a considered way in collaboration with stakeholders through secondary legislation. I urge the hon. Member for Islington South and Finsbury to withdraw the amendment.
Emily Thornberry
I am very grateful to the Minister for the answers he has given but the reason for our view that the Social Security Advisory Committee should define the exceptional circumstances is that that decision should not be made by politicians. The Social Security Advisory Committee, which is an expert body on the matter, can look at exceptional circumstances. The Government may have come round to the idea of an exemption for multiple births—we are glad to hear that—but they will not necessarily have thought of all the exceptional circumstances, so an expert body, such as the Social Security Advisory Committee, is important.
We are always concerned about dealing with such matters in secondary legislation because the level of democratic accountability in secondary legislation is not the same as that in primary legislation. If the Bill had been thought through properly, it would not be for the Opposition to table such amendments—the Government would have thought through the most difficult effects of their policy and would have done all they could to counter them. It is our duty in Committee to point out such things. I hope the Government come back with amendments to the primary legislation so that it can be scrutinised properly rather than knocked off into the long grass. It is an important aspect. In such circumstances, we will press the amendment to a vote.
The Chair
I think that we have had a pretty good canter around the clause, so I do not propose to allow a separate debate on it.
Question put, That the clause stand part of the Bill.
Emily Thornberry
I beg to move amendment 18, in clause 12, page 13, line 23, at end insert—
“unless this would result in an amount no longer being paid in respect of a child or young person who was born before 6 April 2017, in which case a payment shall still be made in respect of this child or young person.”
To ensure that the reduction of the child element of Universal Credit to two children only affect children born after 6 April 2017.
The point of the amendment, which largely echoes points made earlier, is that it is unrealistic and unfair to expect families to make long-term decisions based on the proposals in the Bill. Even if it were not, it would still be unfair to include families with children born before the policy was even announced, which is what the clause does. As far as I understand the clause—I would love to stand corrected if I have misinterpreted it—proposed new subsection (1A) in clause 12(2) makes it clear that, regardless of when a child was born, when universal credit is brought in people will be penalised. It is as if the policy is being sold as, “Let’s get people to make responsible decisions” and “This policy will make all the difference in terms of the decisions that people make”, but when universal credit finally comes over the sunlit mountains and changes our world it will not matter at what stage people have decided to have their children—“We will penalise you anyway.”
I do not want to reiterate the points that have already been made about the assumption that people will make decisions about their next 18 years based on Tory party policy, or how likely they are to know whether their partner is going to die or be abusive towards them in later years, but a particularly troublesome area of the Bill is that it would force women to stay with abusive partners. On the other hand, there is an equally perverse couples penalty that will provide a strong financial incentive for couples with more than two children to separate. The clause is particularly vicious in that it goes in the opposite direction from the Conservative party rhetoric that is used to justify this unfair piece of legislation, so that is why we tabled the amendment.
Damian Hinds
The amendment would see the policy that limits support to two children applied only to children born after April 2017, rather than also applying to entirely new claims for universal credit. The part of clause 12 that the amendment would change is primarily about fairness to the taxpayer and ensuring that where people can provide for themselves, they do so. We estimate that the amendment would increase universal credit expenditure by £245 million in 2019-20. We have committed to protecting universal credit claimants at the point of change and new claimants who have been in receipt of universal credit or tax credits in the previous six months. The policy will therefore apply only to claimants who have been supporting themselves entirely outside the benefits and tax credits system for more than six months and who will therefore not see a cash loss.
We also need to remember that child benefit will remain in payment for all eligible children, continuing to provide support beyond the child element of universal credit.
Emily Thornberry
Can I just rewind a little? New claims for universal credit will be affected by the two-child policy. When universal credit comes in, people will need to make a claim for it. If someone is on benefits or tax credits when universal credit is brought in, will there be a seamless transition whereby they will not be seen as a new claimant and not be adversely affected?
Damian Hinds
It is an untold pleasure to put the hon. Lady’s mind at rest. We are referring to entirely new claims and not to an existing recipient of tax credits for a third or subsequent child under either universal credit or the predecessor tax credits system. There is also the six-month window, so the Bill strikes the right balance between those needing support and the taxpayer.
Emily Thornberry
Why, then, is there a discrepancy between clause proposed new subsection (3A) in clause 11(4) and proposed new subsection (1A) in clause 12(2)? Clause 11(4) spells out that a qualifying young person is born on or after 6 April 2017, but clause 12 does not state a date of birth. That is the reason for the misunderstanding. I am glad to hear what the Minister says here in Committee, because that has some legal standing, but it would have been easier if it had been in the Bill.
Damian Hinds
I will have to ask for the hon. Lady’s forbearance and forgiveness for my lack of photographic memory of proposed new subsection (3A). However, I can reassure her that the point is about new claims or those with a gap of more than six months since receipt of either universal credit or the predecessor tax credits system. The Bill strikes the right balance between the support that people need and the taxpayer. I therefore urge the hon. Lady to withdraw the amendment.
Emily Thornberry
In those circumstances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question put, That the clause stand part of the Bill.
Welfare Reform and Work Bill (Eighth sitting)
(9 years, 1 month ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 9 / Noes: 8 - Question accordingly agreed to.
The Committee divided: - Ayes: 9 / Noes: 8 - Question accordingly agreed to.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 10 / Noes: 8 - Question accordingly agreed to.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
I beg to move amendment 139, in clause 13, page 14, line 21, at end insert—
‘(5A) The Secretary of State must make provision for additional personalised and specialist employment support in connection with subsections (1) to (3).
(5B) The Secretary of State must issue guidance on the following—
(a) the forms of personalised and specialist employment support;
(b) the means by which a diverse market of suppliers for personalised and specialist employment support can be developed in local areas; and
(c) information for local authorities seeking to improve local disability employment rates.’
To provide additional specialist employment support for disabled people.
I thank all Members for their understanding earlier and apologise for the interruption to our business, which was due to some sad family news.
Amendment 139 would require the Secretary of State to make provision for additional personalised and specialist employment support for disabled people. As we have heard previously in the Committee, the Government’s ambition of halving the disability employment gap is welcome, but it represents a not insignificant challenge and much more detail is needed for Committee members to be able to scrutinise how itis to be achieved. It is unclear from the Bill how Ministers intend practically to narrow the disability employment gap.
Of course, we operate in the context of what has happened in the past five years in particular, when we have seen the number of disability employment advisers at Jobcentre Plus drop; the number of disabled people supported by Access to Work, in particular, fall; work capability assessments being delayed or made inaccurately; and a lower percentage of working-age disabled people actually supported into work. We have a Work programme that has not had the highest success rate in ensuring that disabled people go on into employment. Many disabled people can and want to work, but face significant barriers to entering and staying in work. That is why specialist employment support is crucial, and this amendment is aimed at securing information from Ministers to ensure that that is delivered and is effective.
The Committee heard a great deal from witnesses about the kind of employment support that would be effective, the improvements that are needed and the lack of support that disabled people currently feel able to access. We have heard from the Minister that the Government plan to invest in additional employment support for disabled people, starting at £60 million a year from 2016-17 and rising to £100 million a year by 2021. That is positive and welcome, but it is important to understand how it will be used and how its efficacy will be measured. As yet we have heard no detail on how that investment will be directed or implemented, or how many people it is designed to support.
There are also concerns in the disability sector about whether that money will be used for Disability Confident, because of the lack of transparency about how Disability Confident is measured, and whether it is just a means of attracting employers to events or is genuinely about focusing on job outcomes for disabled people. I hope that the Minister will have the opportunity today to set out how the Government intend to develop the support programme and what it will look like in practice.
We know that disabled people trying to find, enter and stay in work face a number of barriers. They can include a lack of suitable and vacant jobs, poor attitudes from potential employers towards hiring disabled people and a lack of appropriate support to enter the workplace. However, current back-to-work support for disabled people simply is not delivering. The work capability assessment does not accurately determine the support that disabled people need; it is more of a medically focused assessment process and does not relate to disabled people’s real experience of trying to find work and, in particular, stay in work. Specialist support to assist with finding and staying in work is essential, and the amendment is designed to help secure that.
There is also concern that existing employment support is misfiring and is ineffective. To provide some detail, job outcomes for disabled people on the Work programme are only 7.7% for those entering employment support allowance, and just 3.9% for those moving from incapacity benefit on to employment support allowance. Furthermore, the specialist Work Choice programme is ineffectively targeted and offers support only to a very small number of disabled people, and I should say that the figures I have just used are the Department’s own figures. A recent evaluation of the Work programme by the Department found that disabled people were more likely than other groups to say they had not received support, which is surprising given that there is meant to be dedicated support. Those who had received support were less likely to say that it was helpful.
Both programmes come to an end in 2017, and the amendment gives the Minister another opportunity to outline what support will be available in practice from then. What plans do the Government have to re-evaluate those programmes and the type of support they offer? What improvements do they have planned?
There is particular concern among disabled people and disability organisations—I refer particularly to the briefing I have received from the disability organisation Scope—about what the quantitative changes to employment and support allowance could mean in relation to conditionality. I do not think any Member would want to find a disabled person coming to their surgery having experienced sanctions, unable to access any benefit as a result of the changes and without sufficient employment support.
Written evidence to the Committee has called for employment support to be tailored to the needs of the individual, joined up with wider public services and more reflective of local labour markets. Specialist providers have the expertise to respond directly to specific barriers to work that disabled people experience. If the Minister has not already visited, I certainly recommend that she sees the Royal National Institute of Blind People’s support programme in Loughborough. Specialist employment support could include peer-to-peer sessions, interview and CV preparation, support focused on managing specific impairments, and discussing with employers how to manage different types of support in the workplace. Such support allows for more intensive and effective interventions that reflect the specific support needs of an individual.
Scope provided me with Azar’s story. Azar is 20 and recently took part in Scope’s pre-employment programme for young disabled people. Azar has cerebral palsy and told Scope that because of his disability, potential employers assumed that “he couldn’t do this and he couldn’t do that”. He knew that he wanted to work in business, so after he left college he was looking for a job, as he wanted experience to put on his CV. Having had the support of a professional mentor, he feels more confident and less worried about being judged, which has a significant and positive impact on his employability.
Job retention is another area that requires renewed focus if we are to halve the disability employment gap, and specialist employment support has a role to play in that too. Ann, a member of staff of Scope’s employment service, provides an example of how such support can help people stay in work. Ann supported a client with Asperger’s syndrome who worked in a hotel. When he got stressed and bombarded with customers, he went into his shell and ignored people. He got really upset with his own behaviour. The reasonable adjustment was for Ann, the specialist disability employment support worker, to speak to the manager and ask about making sure that the client was able to have a breather for five minutes to handle the stress. The manager was absolutely fine with that. That is a straightforward, cost-neutral, reasonable adjustment and has significant positive benefits, but requires someone who understands the health condition and is able to work with the employer.
The Government should consider personal budgets to support disabled people, so that they have greater control over the type of employment support they receive. The In Control programme had a certain measure of success, and it is a shame that it has been wrapped up. There is considerable international evidence that personal budgets can empower disabled people to have increased choice and control over their career by removing bureaucracy from the employment support system and creating greater flexibility in the type of employment support available. They also serve to help smooth the transition for disabled people moving from unemployment into work, they and should link up with Access to Work support. If people were able to carry through the Access to Work package, it would smooth the system significantly.
Finally, the devolution agenda provides a big opportunity to do far more to ensure that disabled people are connected to growth and employment opportunities in their local area. There are precedents for funding focused on increasing employment rates for specific groups of people, such as the Youth Contract and the Youth Contract for cities. There is the potential for regions to be incentivised to put disabled people at the heart of their growth strategies. That could be done by creating specialist employment support programmes, bringing together local employers or looking at wider strategies. I therefore urge the Government to ensure as a minimum that regulations made under the Bill give due consideration to types of support that will ensure that many more disabled people are better supported in the workplace.
Hannah Bardell (Livingston) (SNP)
I welcome the hon. Gentleman back to his place, and I am glad to see that he has been able to return.
The SNP fully oppose the proposals within clauses 13 and 14. We are glad to see Labour making some headway and supporting us in our opposition. To reduce the rate of employment and support allowance to that of jobseeker’s allowance is completely immoral and makes absolutely no sense to us. The Government clearly did not consider when formulating the policy the fact that those who have been placed in the ESA work-related activity group have been independently found unfit to work. Otherwise they would not seek to reduce the support for those who are ill or have disabilities or more complex needs to the same level as support for fit-for-work claimants, such as those receiving JSA.
ESA claimants have always received a higher rate than those on JSA, because they typically take longer to move back into work, as they face additional barriers. Paul Farmer, chief executive of Mind, expressed the same concern when he said:
“Almost 60% of people on JSA move off the benefit within 6 months, while almost 60% of people in the WRAG need this support for at least two years. It is unrealistic to expect people to survive on £73 a week for this length of time.”
Returning to employment is not an option for many people with disabilities. Those unable to work should receive an income replacement benefit to ensure a fair income.
The Minister needs to understand that those who live with an illness or condition are typically worse off than those who do not. A Parkinson’s UK survey in 2007 found that just under a third of working-age people with Parkinson’s were in any form of employment. It further reported that many younger people with Parkinson’s who cannot sustain work because of their condition relied on incapacity benefit for their income or part of their income.
I cite again the case of my constituent with Parkinson’s who came to see me after having been sanctioned. I wrote to the Department about his sanction and raised it with the Secretary of State on the Floor of the House and by letter. He was sanctioned and taken to a tribunal, although the Department’s own legislation said that the process should be done in a paper-based format, as people with degenerative diseases are not always fit to present themselves. The Department was not even aware of its own policy, and said so in an email to me. I found that particularly disturbing, and I continue to pursue that case.
The Scottish National party is extremely worried about the provisions. Reducing the ESA WRAG rate from £102.15 a week to £73.10 a week from April 2017—a reduction of just under £30—will force sick people further away from getting back into work, despite the fact that the WRAG was created especially to support the ill and disabled back into work. The Conservatives’ policies are doing exactly the opposite of what they claim they want to do.
The Chancellor said in the summer Budget that it was a perverse incentive for ESA claimants to receive more than JSA claimants without getting support to return to work. He cited the reduction in the number of JSA claimants by 700,000 since 2010 while incapacity benefit claimants have fallen by only 90,000, and said that 61,000 of those in the WRAG want to work. We do not dispute that, and we agree that more support must be put in place to assist those with illnesses and disabilities back into work. However, we do not understand the Government’s rationale for reducing the payments for the ESA WRAG or universal credit. How will that incentivise more people to work? Perhaps the Minister can help us.
The Disability Benefits Consortium has told us that more than 493,000 disabled people are assessed as not being fit for work, 248,000 of them with mental and behavioural problems, 86,000 with diseases of the musculoskeletal system and connective tissue and 8,000 with progressive and incurable conditions such as Parkinson’s, multiple sclerosis and other serious and degenerative diseases. The DBC has said that those living with long-term conditions are struggling to get by on the current rate of ESA. For the Government to cut it further will surely put them further into poverty and deprivation. The Conservative manifesto committed to halving the disability employment gap, but it is my party’s contention that the reduction in the ESA WRAG component will in fact present more barriers to those with disabilities who are trying to get back to work.
Mencap has said that households that include a disabled person will be hit much harder than others. Given that a third of them already live below the poverty line, the additional reduction in income will have a devastating impact on those most in need of Government support. The Government’s own figures already show that over the past year, the number of disabled people living in poverty has increased by 300,000. I am astonished that the Minister can even consider taking a small additional payment away from the ill and disabled when they are struggling to deal with the challenges of their condition.
Given the Government’s own admission that the vast majority of people in the WRAG want to work, they should be protecting any benefit that will help break down the barriers to work. The SNP has been sent here to defend our people from further hardship, to protect them from poverty and to secure a fair, just and sustainable pathway to prosperity. We will not find that in this Bill. I call on Members on both sides of the Committee to vote with the SNP to remove these unscrupulous plans.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is good to see you again, Mr Streeter. I pay tribute to my hon. Friend the Member for Bermondsey and Old Southwark for his introductory speech, especially given the circumstances.
I stand to speak against clause 13. Are we considering clause 14 at the same time?
The Chair
Not at the same time, but let us now agree that this can develop into a clause 13 stand part debate at the same time as considering amendment 139.
Debbie Abrahams
I am grateful for that clarification and for your leeway, Mr Streeter.
I am grateful to the various organisations, charities and many individuals who have contacted me with their personal stories about how they believe these changes to ESA WRAG support will affect them. I particularly mention Parkinson’s UK, Macmillan Cancer Support, Leonard Cheshire Disability, the RNIB, the Disability Benefits Consortium, Scope, Inclusion London, United Response, Mind and the Richmond group. Collectively, those disability and health organisations represent more than 15 million people in the UK who are disabled or have a serious long-term condition.
We want to prevent the cuts to the work-related activity component of employment and support allowance. We believe it is unjust and unfair that disabled people, and people with serious health conditions who have been assessed as part of the work capability assessment process as not fit for work and placed in the work-related activity group, are having their social security support cut by nearly £30 from £102.15 to £73.10. There is compelling evidence from the independent Extra Costs Commission, which analysed the additional costs facing disabled people and found that, on average, they spend an extra £550 a month associated with their disability.
The Government’s proposed cuts affecting people in the ESA WRAG are on top of the whole host of other cuts in social security support for disabled people since 2010. The Hardest Hit coalition has estimated that, by 2018, £23.8 billion will have been taken from 3.7 million disabled people. There were 13 policy changes under the Welfare Reform Act 2012, including changes in the indexation of social security payments from the higher retail prices index to the lower consumer prices index and the 1% cap on the uprating of certain working-age benefits, which has cut £9 billion from 3.7 million people’s social security support. People on incapacity benefit have been reassessed, which has taken another £5.6 billion. The time for which disabled people in the ESA WRAG are able to receive support has been limited, cutting another £4.4 billion. The reassessment of disabled people receiving disability living allowance to determine whether they are eligible for personal independence payment means that another £2.62 billion has been taken. That is on top of the provisions in the Bill, and we should not forget the cuts to social care, which are currently up to £3.6 billion and predicted to be £4 billion by 2020. Disabled people rely very much on support through social care.
In light of the significant existing cuts, will the Minister confirm whether the Government have undertaken a cumulative impact assessment on the latest proposed cuts affecting disabled people, in light of the requirements under the Equality Act 2010 and the Equality and Human Rights Commission’s work on cumulative impact modelling?
This morning, the Exchequer Secretary mentioned the importance of controlling welfare and social security spending. The UK currently spends 1.3% of GDP on disabled people. Out of 32 European states, we rank 19th in what we provide to disabled people. I did not have the information at my fingertips this morning, but for families and children it is slightly worse at 1.1%—23rd out of 32 European countries. We are a wealthy country, and to build our recovery on punitive measures against disabled people, vulnerable children and families is appalling.
The Government’s impact assessment on the changes to the work-related component of ESA—apart from being delayed, so that Members were unable to scrutinise it before Second Reading—is very limited in its analysis. For example, although the assessment estimates that approximately 500,000 people and their families will be affected by the cut to ESA WRAG support, there is no analysis of the impact that will have on the number of disabled people who will be pushed into poverty. We know that disabled people are twice as likely to be in persistent poverty as non-disabled people and that 80% of disability-related poverty is caused by the extra costs that I have mentioned. Last year there was a 2% increase in the proportion of disabled people living in poverty, which is equivalent to more than 300,000 disabled people pushed into poverty in one year. Given that half a million people will be affected, according to the Government’s own impact assessment, and will lose 30%, or nearly a third, of their income, what is the Government’s estimate of the increase in the number of disabled people living in poverty?
Emily Thornberry (Islington South and Finsbury) (Lab)
My hon. Friend is making a very powerful speech. She has come to the Committee relatively late. I know that this is an area of expertise for her, but perhaps I can put on record the evidence that was given to us before she was on the Committee. It was essentially that if the Government are trying, as they put it, to “incentivise” people on employment and support allowance into work by cutting their benefits so that they live on the same level as JSA claimants, it will mean that they are ignoring the fact that people on ESA take longer to get into work. They may well find themselves in a crisis over the winter, when they need a new coat, because they have been unemployed that much longer. People claiming ESA are recognised by the system as not being fit for work.
Debbie Abrahams
My hon. Friend makes an absolutely pertinent point; in fact, I was going to come on to that, so she must have read my mind. On Second Reading, the Secretary of State stated that
“the current system discourages claimants from making the transition into work”.—[Official Report, 20 July 2015; Vol. 598, c. 1258.]
But what about people with progressive conditions such as Parkinson’s, multiple sclerosis or motor neurone disease? There is no chance that people with those conditions will get better, but they have gone through the work capability assessment process and been placed in the work-related activity group. Are the Government seriously saying that this measure is going to incentivise that group of people into work? How many people with progressive conditions such as those will be affected? Given that, and the fact that in 2014 45% to 50% of ESA appeals were upheld, will the Government finally accept that in addition to being dehumanising, the work capability assessment is not fit for purpose and needs a complete overhaul?
The impact assessment has estimated that, by 2021, approximately £640 million a year will have been cut from social security support to disabled people, with £100 million a year to be provided in unspecified support to help disabled people into work. If the Government are serious about supporting disabled people into work, what measures are in place? This is exactly the point that my hon. Friend the Member for Islington South and Finsbury was making.
What measures are in place to ensure that there are jobs for those disabled people who are able to work? What are the estimates of the impact on the employment of disabled people, how this will impact on the Government’s target to reduce the 30% disability employment gap—it is actually 34% in my constituency in Oldham—and how many employers will be engaged? I hope that it is more than the current 68 active employers from the Disability Confident campaign. The campaign has been going for two years and yet only 68 employers are currently active in it; 33 of those are existing disability charities. I hope it will be more than that, but why was this not included in the impact assessment process?
What exactly is the “work” bit in the Welfare Reform and Work Bill? We have heard about reporting on apprenticeships and about different aspects of reporting. But what is the link to ensuring that disabled people are able to go into jobs before they have a third of their weekly income deducted?
On the Thursday before the August bank holiday, five months after the Information Commissioner had ruled that the Government must publish data on the people on incapacity benefit and on ESA who had died between November 2011 and May 2014, the Government finally published these data. They revealed that the death rate for people on IB/ESA in 2013 was 4.3 times that of the general population, and had increased from 3.6 times in 2003. People in the support group are 6.3 times more likely to die than the general population and people in the work-related activity group—the people whose support the Government are seeking to cut—are more than twice as likely to die. The figure is actually 2.2 times more likely to die than the general population.
The Government have, regrettably, continually maligned, vilified and demonised people on disability and other social security benefits. The language around calling people shirkers and scroungers has been picked up and used in many media outlets. In 2010 the instances of use of the term “scrounger” by the mainstream press increased to 572—more than 330% from 2009—and it has stayed at this level. Language is so important, and the way that social security claimants—particularly people with disabilities—are portrayed in the media is so important. The innuendo that people with a disability or illness might be “faking it” or are “feckless” is quite frankly grotesque and belies the epidemiological data. Incapacity benefit and ESA are recognised as good population health indicators. I can say that as a former public health consultant. I have experience of this and I have worked in this field. The release of the Government’s own data, which show that this group are more likely to die than the general population, proves that point. This group of people are vulnerable and need care and support, not humiliation, from us.
Once again the cart is being put before the horse: make cuts in support and cross your fingers that something turns up for disabled people. That also applies to people on low incomes. The policy flies in the face of the Conservative party’s pledge to protect disabled people’s benefits. All last week’s warm words at the Tory party conference are just that if they are not followed up by action.
With this cut to the ESA WRAG support without anything to replace it, the Government are condemning more people with disabilities and their families to living in poverty and I predict, unfortunately, that more tragedies will undoubtedly happen. I urge the Government and all members of the Committee to think again and vote against clause 13 standing part of the Bill.
The Minister for Employment (Priti Patel)
What a pleasure it is to serve under your chairmanship, Mr Streeter. I thank the hon. Member for Bermondsey and Old Southwark for starting the debate and for his contribution. He has made some very relevant points in terms of how Government can continue to support people with disabilities to get into employment. He has touched on the fact that the Government have made a very solid commitment to increasing the employment of people with disabilities. He and other hon. Members touched on many of the schemes that the Government have undertaken to support people with disabilities and health conditions to get back into work and to participate fully in society. That is why we made a solid commitment in this year’s Budget to spend more than £310 million over the next four years to support people. Coupled with the increase in work incentives in universal credit, this will not only help to make claimants affected by the changes move closer to the labour market, but will contribute to the commitment to halve the disability employment gap. There will be bespoke schemes that are tailored to claimants, to help them back into work. The Disability Confident campaign was mentioned. We have been working with employers to remove the barriers that might prevent disabled people from fulfilling their aspirations.
Neil Coyle
It is welcome to know that more big detail is emerging, but it is disappointing that that detail is not before the Committee, which I think would be right and proper. We had a case this morning where, similarly, there was not enough detail to make scrutiny possible. Will the Minister commit to a meeting with representatives of groups including the Disability Benefits Consortium, Scope and RNIB, to make sure that their views are genuinely taken into account?
Priti Patel
I would be delighted to do exactly that. I would like to emphasise for the benefit of the whole Committee that that is exactly how good policy is developed. It is developed through meeting stakeholders and hearing of their experiences, and of how we can put into implementation the practical support that people need. We need to understand how we can do that through our own current delivery mechanisms, whether through jobcentres or our work coaches or through some of our schemes.
I would also like to touch on the commissioning strategy that the Department holds right now. That includes how the Department approaches the market when looking at flexibilities for support provision, and also how the marketplace itself can develop to include stakeholders and disability organisations to provide that support. Setting out guidance on this in particular is impractical, and obviously the commissioning strategy strikes the right balance in terms of engagement and developing the right options.
Neil Coyle
Will those discussions, debates, consultations and engagement include specific proposals around the Work programme and Work Choice reform?
Priti Patel
The hon. Gentleman has raised a valid point. Obviously, with the 2017 date which he touched on coming up, this is about evolving the policy and looking at future provision, as well as existing provision. That is an ongoing discussion that we are having with stakeholders right now in the Department. The hon. Gentleman also spoke about devolution. Devolution provides new opportunities for further integration, and localisation that is based on collaboration, rather than setting out prescriptive approaches. As a Government, we are great believers that that is the appropriate way forward. That reflects the reality that local authorities have a good understanding of these issues, and they work with DWP and also with third parties and stakeholders at a local level.
The hon. Gentleman will be fully aware of many of the pilots that are taking place. Obviously we have the Working Well pilot in Greater Manchester with the combined authority, which is an excellent example of how support is being provided at a local level. There is much more in terms of other pilots in particular. By the time that pilot is rolled out it will cover not just individuals with disabilities, but also up to 50,000 individuals with a range of health conditions, to support them. That will involve a budget of in excess of £100 million. This includes something like £36 million from the combined authority alone.
Debbie Abrahams
The Minister and I met at the Select Committee on Work and Pensions, of which I was a member until a couple of weeks ago. I asked in that Committee about the concerns which unfortunately exist around that scheme, including that there was a mandation of claimants to the Working Well scheme. I asked for clarification about that, particularly before the pilot was due to be rolled out. The Royal College of Psychiatrists is dead against it; it flies in the face of its commitment to medical ethics. There are real concerns there.
Priti Patel
Devolution in itself means that local authorities, working with stakeholders and delivery partners, develop the right support and the right policies for implementation to support individuals. It is not for the Government to be prescriptive about that. This is about how we can tailor support for individuals. That is exactly the right approach. This should be completely focused on providing the right level of support for people with health conditions as well as with disabilities—yes, to help them get closer to the labour market and back into work. When I came to the Select Committee there was a broad discussion focused on the value of work and its importance, from the point of view of health and wellbeing, for people’s health conditions as well as for those with disabilities.
That brings me to some other points that were raised, such as employment and support allowance, the WRAG group and the support group, and people with terminal illnesses who, quite rightly, are being supported through the support group. The hon. Lady said she felt that they were at a disadvantage, given the Government’s policy. I suggest that in fact we are supporting them, through ESA, making sure they are being given the right level of support. There is no compulsion for them to go back to work; they are being supported by the system. Through all our welfare reforms we have made it clear that we will continue to protect and support the vulnerable. That of course includes those who have terminal illnesses or people with progressive illnesses who are unable to work. That is exactly what the employment and support allowance and the support group category, in particular, does.
Debbie Abrahams
When we met recently, I asked the Minister about the increase in sanctions for people on ESA WRAG, which has increased since 2012 by 300%. The Minister has just stated that there is no compulsion; yet these people on ESA WRAG are being sanctioned.
Priti Patel
Sanctions are part of the process that the claimant has with the jobcentre, in particular when it comes to the contract they have and their discussions. All the parameters are made perfectly clear to claimants coming to the jobcentres in terms of what is required of them. Those requirements are not unreasonable, given that they are work-related. In particular, they are there to help the individual to get back into work. No unreasonable requirements are placed on the individual at all.
Emily Thornberry
From my experience just of those who come into my surgery, what the right hon. Lady is saying is not in touch with reality. She has talked about the importance of listening to people and I really think that she should listen to this. For example, if someone has a mental health condition which is a variable one, they will be put on the lower component of ESA, so on the edge of being able to work, perhaps with support. If it is insisted that they go in for an interview, or that they do voluntary work or fill out CVs at a period when they are suffering depression or life is particularly chaotic, the experience of my constituents is that the local jobcentre is not sufficiently understanding and they will get sanctioned.
Priti Patel
I say to the hon. Lady that, first, sanctions are there for a purpose: they encourage jobseekers in particular to comply with reasonable requirements.
Priti Patel
I will not give way. That is the purpose of the claimant commitment. Secondly, ESA was introduced back in 2008—as I am sure the hon. Member for Islington South and Finsbury will remember, although I was not a Member of Parliament then—and was dubbed a radical reform package. The work-related activity component at the time was intended to act as an incentive to encourage people to participate in employment. Clearly, we know that that has not happened. We are therefore reforming our approach with DWP, through our jobcentres and work coaches, to support individuals to get back into work.
Specifically with ESA, the hon. Lady will be aware that the Secretary of State gave a speech just before the conference recess about how we can do more. It is absolutely right that we do more to support people with health and mental health conditions, and work is already taking place around the country. With that will come more co-location of health services with our jobcentres, as well as more support and signposting in our jobcentres.
To return to my point about sanctions, I have no idea what the Labour policy on sanctions is, but they exist as a reasonable requirement through the claimant commitment. Our jobcentre staff work with claimants to ensure that they are being supported in the right way to get into employment. Our work coaches help them and signpost them through universal jobmatch. They get the support required. That is part of the claimant commitment, which is made abundantly clear to the claimant when they come into the jobcentre in the first place.
Neil Coyle
On the reasonableness of sanctions, I have had a mum come into my surgery who was sanctioned for not attending an appointment at Jobcentre Plus because she was taking her daughter to hospital. Does the Minister conclude that that is reasonable?
When employment and support allowance was introduced, there were specific expectations about the number of people who would end up in the support group, in the work-related activity group and on jobseeker’s allowance. Those potentialities were not hit for some time, due to problems with the work capability assessment. Given that the Secretary of State for Work and Pensions has been discussing completely overhauling the work capability assessment, which was in our manifesto in May, is the Minister seriously suggesting that the system is perfect, and—
Priti Patel
Gosh, where to start? To answer the hon. Gentleman’s question about the case that he presented, no. If he would like me to pick it up, I would be happy to do that for him. With regard to the system being perfect, of course it is not; it is evolving over time, hence the Secretary of State’s most recent comment about how we can do more to support people with health conditions so that it becomes a case not of why people cannot work but of how we can support them to get back into work and with their health conditions in particular.
Naz Shah
I could reel off a list of people who have come to my constituency surgery. I am the former chair of the largest BME mental health charity in Bradford. Does the Minister agree that it is absolutely diabolical to apply sanctions after testing somebody with mental health difficulties and saying, “If you can tie your shoelaces, you’re capable of going to work”? Does she believe that the number of people who have committed suicide after sanctions have affected their mental health problems is acceptable?
Priti Patel
First, with regard to the hon. Lady’s long list of cases, she is welcome to present them to me, and I will look at each one individually. Secondly, the work capability assessment has evolved over time. The organisations that were originally contracted to undertake it have changed. The point is that people should be assessed for what they can do; it should not be about what they cannot do. Where people have particular health conditions, it is right that we as a society support them either to get back to work or to get the treatment that they need. On her latter point, there is no causal effect at all.
Debbie Abrahams
Again, this all emerged about the Minister saying that there was no compulsion. There clearly is compulsion for people on ESA WRAG. In my speech I raised points about people with progressive conditions such as MS, motor neurone disease and Parkinson’s who are included in that group.
This debate has extended. We as a Parliament are still waiting for the Government’s response to the report of the Select Committee on Work and Pensions on sanctions beyond Oakley, which specifically considered ESA sanctions. It made a number of recommendations that unfortunately support what has already been said.
Priti Patel
Thank you, Mr Streeter. I will bring it back to clause 13. Finally, I would like to say while speaking to the clause that we have touched on the level of support that is currently under way for people with health conditions and people with disabilities in particular.
Neil Coyle
It is important to reiterate the concerns about the language on who is protected and who is not. We had some discussion about that before conference recess. The sheet in front of me says that 244,250 people with mental and behavioural disorders in the work-related activity group will be directly affected. Disabled people have already experienced an impact—not that group specifically but more generally. Some 440,000 disabled people have to pay the bedroom tax or spare room subsidy and benefit rates have been frozen, including the vast majority of employment and support allowance benefit paid to disabled people. We have also had the change to disability living allowance. It is very frustrating to hear Ministers continue to claim that disabled people have been protected when they clearly have not.
Having made that significant point, it would be interesting to see in more detail the concrete proposals that the Government are introducing. I am glad they are committed to working with stakeholders, although I am a little bit concerned, having been a co-chair of the Disability Benefits Consortium policy group for some time and not really having been consulted or engaged by them. I hope the relationship has improved under this Minister and that those discussions are constructive. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question put, That the clause stand part of the Bill.
Debbie Abrahams
I appreciate that we have moved on, but there are many parallels between our previous objections and our objections to clause 14 and the reasons why we will not be supporting it. The clause relates to the limited capability for work element of universal credit. I do not intend to repeat my arguments from my previous speech, but having said that, very few if any of the questions that I posed were answered by the Minister. I would be grateful if at some stage she could write to me if she cannot provide the answers today. I shall pose a few additional questions, particularly about the analysis of how the cuts will affect 400,000 people with long-term conditions in the ESA WRAG—for example, those with lung disease, cancer or stroke. What do we expect the cost to be for the NHS? The Government are keen to make it a seven-day service but, with the additional demands, will that be achievable?
I have other points to make on the disability employment service, although my hon. Friend the Member for Islington South and Finsbury touched on some of them. The ratio of disability employment advisers in JCP is one adviser to 600 disabled people. How will that be addressed to enable those disabled people who want and are able to work to do so? How will we address the attitudinal issues that many disabled people face in trying to get into work, and ensure support for employers to employ disabled people? Given that 90% of disabled people used to work, what are the Government doing to support them leaving the labour market prematurely?
I have mentioned the Select Committee report on sanctions. Another Select Committee report—it has only just had a response from the Government—is particularly appropriate to the clause. The response on Access to Work from the Government was published, I believe, during the recess, or when we were about to go into recess, nine months after the Select Committee published its report. Last year, Access to Work supported only 35,000 people going into and at work, of a total working age population of 7 million. If there is a genuine desire to reduce the disability employment gap, how on earth is it going to be managed on those ridiculous levels of support? We heard from my hon. Friend the Member for Bermondsey and Old Southwark on the Work programme and Work Choice. The Government are currently retendering the Work programme contract. How will the need for specialist provision be addressed in the retendering process? I urge all hon. Members not to support clause 14.
Priti Patel
Clause 14 deals with universal credit and the limited capability for work element. The clause amends part 1 of the Welfare Reform Act 2012 to remove the reference to the limited capability for work element. The change broadly mirrors the ESA changes introduced in clause 13. The fact that a claimant has limited capability for work will no longer exist as a need or circumstance in which regulations may be made for an element to be included in the calculation of the amount of an award of universal credit. The change will apply only to those making new claims to UC and to existing claimants where they or their partners claim on the grounds of having a health condition or disability after the change is introduced. Those claims already eligible for the limited capability for work element at the point of the change will continue to be paid that element as long as their circumstances remain unchanged and they continue to be entitled to UC. Details of how the change will be applied to existing claimants receiving that element will be set out in regulations.
I cannot cover all the points that the hon. Lady has made and, if I may, I will write to her because there are a couple of points that are more data-based that I think I can come back to her on. She mentioned the Select Committee report that is currently being considered by the Department. We will continue to work with and respond to the Work and Pensions Committee. When I came to the Committee, we were discussing many areas such as the Work programme and, in particular, its next iteration. Of course, that is ongoing—it is not specific to the clause, per se, but discussions with stakeholders are ongoing.
I emphasise that Jobcentre Plus has around 400 specialist disability employment advisers supporting disabled people, particularly with regard to support packages such as Work Choice and Access to Work and other schemes. Much more needs to be done as part of the continuing reforms, including on the long-term grassroots approach that we take at our jobcentres to improve the level of support and engagement.
Employers have an important role. The Department is working with employers not just to make the case, but to encourage them to be much more active as employers and to engage in employing people with disability and supporting them in work. It is not just a case of getting people with disability into work, but about sustained employment outcomes. That is the long-term objective we are focused on achieving.
Debbie Abrahams
The report on Access to Work made a number of points about how it was not working. It was published in December, but we had a response only in September. We had Second Reading in July, which shows a total lack of commitment to supporting disabled people, and yet the Government are prepared to take support away from them before they have ensured adequate provision to enable them to work if they are able to do so.
Priti Patel
On the contrary, the measure is not about removing support. It is about what more the Government are doing in terms of our commitment to supporting disabled people to get them into employment. That is down to a package of measures.
Priti Patel
I will not give way.
It is very easy for Labour Members to claim that the measure is about taking money away. It is about providing the right kind of support for people with health conditions and disabilities. It may not be the appropriate answer that the hon. Lady wants to hear. The Government are committed to supporting more employment. Of course, this is a binary argument for her. We are supporting claimants with a limited capability for work through our employment provisions, our jobcentres and the specialist disability employment advisers.
Priti Patel
I will not give way. At the same time, we are working with employers through the schemes that we have, Access to Work being one example.
Question put, That the clause stand part of the Bill.
Neil Coyle
On a point of order, Mr Streeter. Before the conference recess, the Minister committed to provide additional information to my office about the monitoring of disabled people’s carers. I was reminded of that when the same offer was made just now. I do not believe I have received anything yet. Is there an update on when that will be provided?
The Chair
I am grateful to the hon. Gentleman for raising that point of order with the Committee. Would the Minister like to respond?
Priti Patel
I will, Mr Streeter. I thank the hon. Gentleman for his point of order. I have written to him and would be very happy to follow it up with him. I am not sure what has happened to the letter. I know that I have signed it.
Corri Wilson (Ayr, Carrick and Cumnock) (SNP)
I beg to move amendment 57, in clause 15, page 14, line 31, leave out paragraph (a).
This amendment would keep the “work-focused interview requirement only” for responsible carers of children aged one and two.
The Chair
With this it will be convenient to discuss the following:
Amendment 62, in clause 15, page 14, line 31, leave out paragraphs (a) to (c) and insert—
“(a) in section 19(2)(c) for the words “under the age of 1” substitute “who has not yet started primary school;”.
This amendment, taken together with amendment 63, would mean claimants in receipt of universal credit who are responsible carers are not subject to work focused interviews or work preparation requirements until their child starts school. From when a child starts school, relevant claimants would be required to follow all work requirements.
Amendment 58, in clause 15, page 14, line 36, after “2,”, insert “3 or 4”.
This amendment would retain the current position for responsible carers of children aged three and four.
Amendment 59, in clause 15, page 14, line 37, leave out paragraph (c).
This amendment would retain the current position for responsible carers of children aged three and four.
Amendment 60, in clause 15, page 14, line 40, leave out paragraph (a).
This amendment would keep the current prescribed age of three years in universal credit regulations on the “work-focused interview requirement” for responsible carers of children in receipt of universal credit.
Amendment 63, in clause 15, page 14, line 40, leave out paragraphs (a) and (b) and insert—
“(a) in regulation 91 (claimants subject to work-focused interview requirement only), for the word “3” substitute “5 or when the child starts primary school”;
(b) in regulation 91A (claimants subject to work preparation requirement) for the words “3 or 4” substitute “who has not yet started primary school”;”.
This amendment, taken together with amendment 62, would mean claimants in receipt of universal credit who are responsible carers are not subject to work focused interviews or work preparation requirements until their child starts school. From when a child starts school, relevant claimants would be required to follow all work requirements.
Amendment 61, in clause 15, page 14, line 42, leave out paragraph (b).ww
This amendment would keep the current age of child (which is three or four) in universal credit regulations on the work-preparation requirement for responsible carers of children in receipt of universal credit.
Amendment 140, in clause 15, page 14, line 38, at end insert—
“(d) in section 22(1) after “section” insert “, except if the claimant is the responsible carer of a disabled child aged 3 or 4.
(1B) The Secretary of State must lay regulations determining what a disabled child is for the purpose of this section and may include, but will not be limited to a child—
(a) in receipt of an Education, Health and Care Plan,
(b) in receipt of a Statement of Special Educational Needs,
(c) identified by their local authority as having special educational needs,
(d) with child in need status,
(e) meeting the definition of disabled under the Equality Act 2010.”
To exempt a responsible carer of a disabled child aged 3 or 4 from all work-related requirements.
Corri Wilson
The Scottish National party has tabled the amendments to mitigate the changes and to take the pressure off responsible carers with very young children who receive universal credit. Currently, lone parents need attend work-focused interviews or work-related activity only when their children are between the ages of one and five, rather than having to actively seek work. The clause will mean that all parents will be expected to be available for and actively seeking work by the time their youngest child turns three in order to claim universal credit. We wish to stop those changes to the work-related requirements as well as roll back the work-related requirement for responsible carers set out in the Welfare Reform Act 2012.
Amendment 57 would ensure that the work-focused interview requirement for responsible carers of children aged two and three would remain unchanged. Amendments 58 and 59 would remove the changes to the work-preparation requirement. Amendments 60 and 61 would remove the changes to the work-focused interview requirement and the work-preparation interview requirement. Amendments 62 and 63 would amend the Welfare Reform Act so that claimants would be subject to no work-related requirements until their child begins attending school.
A child’s most critical and vulnerable years should be based on a foundation of support and love, which can make all the difference to a child’s confidence and educational attainment in later life, not to mention the benefits of family and social cohesion. Forcing a parent to spend more time looking for work means they have no choice if they want to spend more time with the child in its formative years. Where most parents are keen to return to work and to maximise their income, the provision will deprive parents of the choice of what is best for their child in the crucial early years of their development. Forcing parents to return to work before they are ready can be counterproductive and lead to financial instability as parents move in and out of work. That may lead to undue stress on parents, causing them to struggle with balancing work and the care of their young child.
Increasing conditionality for universal credit is simply another ideological crusade against those who are in genuine need of welfare support. It is, of course, not ideal for an individual to be receiving benefits, but for many it is nevertheless essential and can mean the difference between independence and absolute poverty. The stricter conditionality requirements contribute to making life intolerable for benefit claimants. In effect, it condemns the lives of those on the benefits that enable them to live independently, such as severely disabled people.
The extra requirements will bring with them an increased risk of claimants incurring sanctions. The effect of benefit sanctions are bad enough on individual benefit claimants, but increasing conditionality for responsible carers, which puts them at further risk of incurring sanctions, will have the knock-on effect of condemning the children they care for.
Carers UK has expressed concern over the effects of the clause on responsible carers of disabled children, partly due to the documented lack of childcare for disabled children. Carers of children in receipt of the higher or middle rate care component of disability living allowance are exempt from the requirements, but that does not protect carers of very young children with disabilities when there are difficulties in identifying them in the early years.
It is imperative that lone parents and responsible carers are supported back into work, but not forced or sanctioned while their young child needs their support at home. The difficulties that present themselves—accessing affordable childcare, finding suitable support for a child or finding a stable job that allows a parent to have the time needed with a young child—are huge. The everyday challenges that face working families and young parents are not as black and white as the Government would have us believe. I therefore urge all Members to unite today with the SNP to remove the harsh conditionality elements placed on parents while their children are young and effectively just babies.
Emily Thornberry
May I comment briefly on the SNP’s amendments? Although I applaud the sentiment behind them, and if they are pressed to a vote, the hon. Lady can rely on our support, I want to put on record that it is not completely unconditional. The reality of life within jobcentres, unfortunately—it should not be like this—is that jobcentres have to be told that their job is to get particular groups of people into work. A constituent of mine came to see me and said, “My son is four. I would like to go back to work, but when I go to the jobcentre they don’t give me any help.” We should not need to choose between the extreme proposed by the Government and nothing. It should be possible to make jobcentres know that their primary job is not just to get people off jobseeker’s allowance at all costs and to sort out the statistics as best they can, but to ensure that they are sufficiently adaptable and flexible to help people who genuinely want to work to get into work, even if it means not fulfilling a target.
There will be people—particularly single women—who want help at an early stage, perhaps because their mum lives next door and they have good childcare, or perhaps because they have a skill level that will allow them to get work relatively easily with a bit of help from the jobcentre. They should not feel that the jobcentre believes it should not look after them because they are not part of the targets. I put in that caveat because the real world is not black and white; there are people in between who may be lost by the amendments. However, that is not to say that in principle we will not support the SNP’s amendments.
Neil Coyle
I rise to speak to amendment 140, which is about the intention expressed by the Government, including the Prime Minister, to protect disabled people. We have heard how the changes to disability living allowance and employment support allowance will affect disabled people directly. The amendment is designed to protect the parents of disabled children aged three or four.
The reason for tabling the amendment is that parents and carers of disabled children aged three or four would be allocated to the all work-related requirements group if the Bill is enacted as drafted, which would require them to look for and be available for work. It would be useful if the Minister could indicate whether that is an intentional provision, or whether it is incidental or accidental. I do not think I am going to get that acknowledgement at this stage.
There is an exemption for parents of children in receipt of the highest or middle rates of the care component of disability living allowance, but it will exempt only a very small number of parents, as few receive that benefit at that level. As many Members know, it is getting harder for parents to access disability living allowance. I certainly have experience of that from my postbag and surgeries.
Many parents of disabled children choose to care for their child, and they best know their child’s needs and abilities. Those who wish to work often come up against the lack of appropriate childcare for disabled children, as we discussed earlier. As the shadow Minister indicated, it is also more expensive to access tailored childcare for disabled children.
The rationale for the amendment is based on recent policy changes that require carers of children aged five to make a return to work. However, the Bill equates parents of children aged three and parents of children aged five. There are obviously significant differences between the two ages, which means that the Government’s assumption risks harming families, not least because five-year-olds are in primary education.
There is a read-across to the Childcare Bill, in which the Government are proposing to offer 30 hours of free childcare to working parents. That could help, but the Childcare Bill as drafted does not properly account for the barriers faced by families with disabled children when accessing childcare provision. For the same reason that we discussed this morning, it would be useful to know how the Government intend to identify that parents genuinely have access to 30 hours of appropriate childcare for a disabled child. They cannot just put a statutory obligation on a council to provide it, because we know it is not being delivered.
Many providers under the three and four-year-old offer are not able to meet the needs of children with more complex needs, and the additional cost of childcare for disabled children can limit the number of hours that can actually be accessed. The combination of those issues could severely compromise a parent’s ability to meet the conditions of looking for work, which would not be taken into account as the Bill is drafted. An offer of support is not the same as appropriate support genuinely being available in practice. This concern has been expressed by disability organisations in written and other evidence submitted to the Committee. Currently, carers of children in receipt of the highest or middle rate care component of DLA are exempted from the all work-related requirements group. The amendment would extend that protection.
Department for Work and Pensions figures suggest that there are currently just 53,000 claimants of DLA for children aged nought to five years. If the amendment is blocked, many carers of severely disabled children could be subject to conditions and sanctions, as we have already discussed, despite the fact that it can take a considerable amount of time for parents and carers of disabled children to be able to access disability living allowance. I do not think that it is the intention of Conservative MPs in particular to end up with the parent of a disabled youngster turning up in their surgery who is not able to access appropriate childcare, has work-related conditions in place and ends up being sanctioned, and then has absolutely nothing coming in. I hope that that is not the intention, and I do not believe that it is. I hope that the Government will consider this amendment.
My last point is that amendment 140 should be accepted to reflect the fact that a disabled child’s needs and the specific level of support that they require may be very hard to identify under the age of five. DLA is not a brilliant basis for the exemption of carers. It is not sufficient. It can take months or years to access disability living allowance—indeed, the Prime Minister has spoken of his own personal battle when trying to apply for disability living allowance for his son. Personal experiences should be taken into consideration when pressing ahead with this legislation. The amendment proposes using additional criteria to determine whether someone is caring for a severely disabled child which go beyond a sole reliance on claiming DLA at a certain level. These include statements of special educational needs, which a small number of children under five receive; replacement education, health and care plans; those defined as children in need; and those who meet the Equality Act definition of disabled.
Priti Patel
Clearly, this Government believe that there is much more that can be done to support all parents, including lone parents with young children, to prepare for and look for work. I will come on to amendment 140 and some of the points which have just been raised in a minute. Universal credit offers significant work incentives over the current system of benefits, with the structure of UC designed to encourage and reward work. As universal credit is paid both in and out of work, many of the barriers to work start to be removed. Claimants with young children in particular can try suitable work depending on their own circumstances in the knowledge that their universal credit claim will not automatically close and, importantly, that their payments are adjusted systematically to take account of their earnings.
The support that we provide through work coaches should help to make parents much more ready to move into employment—that, of course, is the point of work coaches and of Jobcentre Plus in particular. Jobcentre Plus plays a vital role in supporting parents to find work via the core framework and interventions with a dedicated work coach, helping those furthest from the labour market to return or move closer to it. Work coaches deliver a personalised service to best meet the needs of the parent in relation to the local labour market conditions. That is why the Government are investing in extra work coach support. Work coaches will be able to build a relationship with individuals, ensuring that work-related requirements are tailored to their particular circumstances and capability, and are compatible with their childcare responsibilities. Work coaches also provide a gateway to access much of the other support that is available, which includes skills training and sector-based work academies, as well as financial support through the flexible support fund, in order to remove some of the barriers.
The findings from the “Universal Credit at work” report shows that those on universal credit are working more compared with those on jobseeker’s allowance. Of course, universal credit encourages claimants to find work, to increase their earnings and support themselves. I know childcare has been touched upon in our broader debates today, but it is worth mentioning that parents of disadvantaged two-year-olds in particular are able to access to free early-years education. Parents may also have access to jobcentre funding to enable them to undertake the work preparation that is necessary while their children are at that young age.
Neil Coyle
The Minister says that individual circumstances will be taken into account. Will that include monitoring or testing to see that a parent is genuinely able to get access to the level of childcare that she says should be available?
Priti Patel
I will come on to that when I speak to amendment 140. If I do not answer that specific point, perhaps the hon. Gentleman will intervene on me.
Carers provide invaluable support for relatives, partners or friends who through whatever circumstances are ill or disabled. The carer element within universal credit is to support carers on a low income who provide care for 35 hours or more each week for a severely disabled person. That does not replace carer’s allowance, which will continue to exist as a separate benefit outside universal credit.
Importantly, for those with less substantial caring responsibilities, some work-related conditions may apply; but existing legislation is clear about how those should be limited. Requirements for each claimant will depend on their individual capability, circumstances and caring responsibilities. That comes back to my point that the expectation will be based purely on the individual’s personal circumstances. Most responsible carers of a disabled child aged three or four will not be subject to the conditionality associated with the clause. Responsible carers who receive the carer element will fall into the “no conditionality” group in universal credit, which means that no work-related conditions will be applied.
For carers who are not entitled to the carer element, different levels of conditionality will apply. Some who do not qualify for it will be placed in the “no conditionality” group. These include full-time carers of a severely disabled person who are unable to receive the carer element because they are not the main carer, and carers of more than one severely disabled person whose cumulative caring responsibilities mean that it would be unreasonable to impose conditions on them. Also it would be unreasonable to place requirements on a claimant who is a carer of a severely disabled person for at least 35 hours, or to do so where the care giver is responsible for a severely disabled person awaiting an assessment for a severe disability benefit.
I reiterate that it is important that there should be flexibility for other carers who do not fall into the “no-conditionality” group, because caring responsibilities may change from day to day; I think we all recognise that. Where there is a disabled child in the household, that will be factored into the decision making and the appropriate level of requirements. Any requirements will be tailored.
The hon. Member for Bermondsey and Old Southwark specifically mentioned childcare provision for parents of disabled children. He also mentioned the Childcare Bill, which is the responsibility not of my Department but of the Department for Education. More information will follow about the delivery of the childcare element, in particular the 15-hour and 30-hour delivery measures for local provision. We want to ensure that provision is in place for the parents of disabled children. We have to work with the providers on the ground, which is something that the Department for Education is doing now, working with stakeholders and consulting. That is part of a wide-ranging piece of work. The hon. Gentleman is right to raise this point, however, and I will I pick it up with my colleagues in the Department for Education to ensure that that is featured in and factored into their discussions with stakeholders.
Neil Coyle
Is the Minister suggesting that the Government’s expectation is that parents of a disabled child who are unable to access 30 hours of childcare would not be subject to the conditionality that might be imposed were such support to be in place?
Priti Patel
First, we have to ensure that the provision is in place, which is part of the wider childcare offering, and work is taking place through the Childcare Bill, including on delivery. Importantly, this is about working with the parents of disabled children. We have to look at individual cases to ensure that support is tailored for them. There should never be a one-size-fits-all policy—we all recognise that—so through Jobcentre Plus and our work coaches we will look at all the relevant circumstances of the individuals.
I urge the hon. Member for Ayr, Carrick and Cumnock to withdraw the amendment.
Corri Wilson
I was interested in the view of the hon. Member for Islington South and Finsbury on the jobcentre system. I worked in the Department for Work and Pensions for 20 years, and my experience is that jobcentre staff work incredibly hard to get claimants into work. The main reason that claimants cannot get off benefits seems to be that suitable jobs are not out there. Year after year, staff’s flexibility and autonomy have been diminished. Staff are tied up with sanctions regimes, at the expense of a focus on clients and getting them back into work. That is one of the reasons why we want more powers in Scotland, so that we can take control of our economy to boost economic levers that will help grow our economy and create jobs to get people off benefits. Universal credit conditionality and changes for carers will put an unacceptable and unnecessary pressure on families. We will therefore press the amendment to a vote.
Question put, That the amendment be made.
Emily Thornberry
I beg to move amendment 101, in clause 15, page 14, line 38, at end insert—
‘(d) Insert after section 18
“(18A) Guidance on lone parents
(1) The Secretary of State shall, by regulation, provide guidance to Jobcentre Plus setting out how it should support claimants who are lone parents in meeting the work-related requirements that they are subject to.”.’
To require the Secretary of State to set out in regulation how Jobcentre Plus should support claimant of universal credit who are lone parents meet the work-related requirements they are subject to.
The Chair
With this it will be convenient to discuss the following:
Amendment 131, in clause 15, page 14, line 43, at end insert—
‘(3) Claimants subject to new requirements as a result of the measures contained in subsections (1) and (2) of this clause must, at a time no later than three months before subsections (1) and (2) come into force, receive written notification of the lone parent flexibilities issued as guidance to Jobcentre Plus staff.’
To provide that anyone who becomes subject to new work-related requirements as a result of the measures in clause 15 must be provided with written notification of the lone parent flexibilities which the DWP issues as guidance to Jobcentre Plus staff.
Amendment 132, in clause 15, page 14, line 43, at end insert—
‘(3) The Secretary of State must, at time no later than three months before subsections (1) and (2) come into force, issue guidance on the lone parent flexibilities to Jobcentre Plus managers, such guidance must include provision on the training of Jobcentre Plus staff in advance of the new work-related requirements coming into force.’
To require the Secretary of State to issue up to date written guidance to Jobcentre Plus managers on the lone parent flexibilities, including provisions on the training of Jobcentre Plus staff.
Amendment 133, in clause 15, page 14, line 43, at end insert—
‘(3) The Secretary of State may not impose a work search requirement on any claimant in receipt of Universal Credit, who is a lone parent, in circumstances which include but are not limited to the following—
(a) the claimant’s adviser determines that there is an inadequate number of suitable employment vacancies within reasonable daily travelling distance of the claimant‘s home;
(b) the claimant is responsible for the care of a child during that child‘s school holidays, and it is not reasonable to expect the claimant to make alternative arrangements;
(c) the claimant is responsible for the care of a child during any period in which that child is excluded from school, or is otherwise not receiving education pursuant to arrangements made by a local education authority, and it is not reasonable to expect the claimant to make alternative arrangements;
(d) any child care expenses which would be necessarily incurred by the claimant as a result of carrying out the requirement imposed would represent an unreasonably high proportion of the income the claimant could expect to receive while carrying out the requirement in question;
(e) the claimant is enrolled on a course of study leading to a vocational qualification, or is otherwise undertaking engaged in vocational training;
(f) the claimant has become a lone parent within the last six months;
(g) any other circumstances in which the claimant‘s adviser may consider the imposition of a work search requirement to be unreasonable in light of that claimant‘s individual circumstances.’
To provide a statutory basis for flexibility to be applied in imposing work search requirements on lone parents in receipt of Universal Credit.
Emily Thornberry
It is a pleasure to serve under your chairmanship, Mr Streeter. I want to speak to amendments 131, 132 and 133. My hon. Friend the Member for Redcar (Anna Turley) tabled amendment 101, and to a certain extent the sentiment in that amendment is incorporated in the other three amendments, so it may not be necessary for me to speak specifically to it. In any event, my hon. Friend no longer sits on the Committee. For the sake of simplicity, I will focus on amendments 131 to 133.
Amendment 131 arises because we have noticed a couple of paragraphs in clause 15, at the bottom of page 14, which are short but not sweet. They could have been overlooked, but they should not be. They introduce sweeping changes to work search requirements placed on single parents with very young children and do so in a way that is extraordinarily unfair and poorly thought through. The Bill not only goes further than any changes introduced by previous Governments but severs the link between the time when a child starts school and the time when that a child’s parent is expected to start actively seeking work.
Successive Governments of both parties have introduced changes to expectations on parents, and the age at which a parent is expected to seek work has been progressively lowered from 16 down to 12, then to seven and most recently to five. To a certain extent, it was thought that there was a broad consensus to expect single mothers—it is usually single mothers—to work during term time while their children were at school, subject to appropriate childcare at a price they could afford and working hours that would fit in around school time. That does not seem unreasonable. That seems fine. It seems the sort of thing that very few single parents would object to and that most of the public and a lot of children would want. It is a deeply personal decision but, frankly, I think it would carry the majority of the public on what is a fair expectation of single parents.
Emily Thornberry
Good, I am glad. So, 39% of single parents are having their decisions overturned on appeal. My point is that the discretion given to Jobcentre Plus officials is not appropriate, and that it would be better, and right, to put the requirements into regulations instead, so that they are given legal standing. Discretion is not working. When nearly 40% of cases being overturned on appeal, there is something wrong with the system. That is not rhetoric, it is the evidence, and something needs to be done. The situation raises serious questions about the training of Jobcentre Plus staff and Work programme providers and their ability to make appropriate decisions. To illustrate that point I will give the Minister a few stories from single mothers. Their personal details are disguised, but their cases are real.
There is a women called Geri; she is single mother and has a nine-year-old daughter. Her jobseeker’s agreement sets out the requirements that she must meet as a condition of receiving her benefits, which are that she must apply for 21 jobs a week, either full or part-time, and be prepared to travel up to an hour each way for a job. Emma has a 10-year-old son and lives in Bristol. Her jobseeker’s agreement requires her to look for work in London, which is a 90-minute commute each way, despite the fact that the cost of a season ticket would exceed £5,000 a year. Furthermore, the extended hours of travel would make it impossible for her to take her son to school and pick him up at the end of the day.
A woman called Fiona had her jobseeker’s allowance stopped for three months because she turned down night shifts, which she had to do because she could not find suitable childcare for her daughter. Elaine was threatened with sanctions by her Work programme provider when she said that she could not attend back-to-work courses during the summer holidays. She has two young daughters whom she cannot leave on their own at home. She was offered no help with childcare costs by the provider of the voluntary work that she was supposed to be doing in order to make her fit for work.
I have heard stories of single parents being threatened with sanctions if they do not attend appointments that clash with the school run. I have heard stories from single parents who have been sanctioned for missing appointments in order to stay at home when their children are unwell. I want to point to the evidence and try to help the Minister to make the right sort of social policy, so I point out that Islington Law Centre has a 100% success rate when challenging sanctions imposed on my constituents, which I really think should give Ministers pause for thought. The centre represented, for example, a pregnant woman who was sanctioned for missing an appointment when she was so unwell with morning sickness that she was in hospital.
Debbie Abrahams
To add to my hon. Friend’s list, I have a constituent with three primary school age children, all at different schools. She was compelled to be at appointments when she was trying to get her children to those different schools—she was always given appointments that made it absolutely impossible for her to get to the jobcentre.
Emily Thornberry
Members on both sides of the House may well have examples of such sanctions from people who have come to their surgeries. In particular, single parents are being sanctioned in an attempt to push them into work that is completely inappropriate given their caring responsibilities.
I come back to the distinction between regulations and guidance, which I think is important. It may seem academic to some, but I can assure Ministers that it is not at all academic to the women who are feeling the impact of the lack of adequate flexibility within the system and the lack of understanding of what the rules really are. For our purposes as legislators, it is important to make the distinction between the legal force of regulations and of guidance. Regulations have the force of statute, as they are introduced through secondary legislation, but guidance does not. Guidance is really soft law, and these women do not need soft law.
The principle was summed up quite well in the Supreme Court judgment of R (on the application of Alvi) v. Secretary of State for the Home Department—it is known as the Alvi case—in which the distinction at issue was between immigration rules and informal guidance. Lord Clarke wrote in his judgment:
“It seems to me that, as a matter of ordinary language, there is a clear distinction between guidance and a rule. Guidance is advisory in character; it assists the decision maker but does not compel a particular outcome. By contrast a rule is mandatory in nature; it compels the decision maker to reach a particular result.”
As I say, guidance has been called soft law. As was said in Ali v. London Borough of Newham,
“the court should be circumspect and careful so as to avoid converting what is a non-binding guidance into, in effect, mandatory rules.”
We all know why we are talking about guidance and regulations. We all know that the couple of little paragraphs on page 14 of the Bill will be going to court and will be judicially reviewed, so we need to be quite clear about what the Government want to do. Our job, as Her Majesty’s Opposition, is to look carefully at what the Government intend and at what is fair. We all know that what is said in this Committee is of relevance to the future court cases that will be coming because of the manifest unfairness that will result from the clause.
Let us therefore be clear. I am sure the Minister will tell us how fair all this is, and how everyone is proceeding with good will. But we have heard that before. We had a promise that people in jobcentres would exercise discretion fairly, and so on. We have had enough of that. They have not been doing things fairly, and it has been going wrong. We would now like clear rules so that we all know where we stand—both the single mothers who are trying to balance their caring responsibilities and want to find appropriate work, and the people in jobcentres who quite often feel compelled to force women into work. Any new rules will not be properly understood unless they are made clear. If they turn out to be unfair, they can be challenged.
Under the system that we have, a single mother who puts her responsibility to her children ahead of her requirements under the claimant commitment could lose several weeks of income as a result of an unfair sanction. That means that that family—those children—will not have any money for food. That is a desperate situation, so we need to make sure that something like that is done only in extreme circumstances and that it can be properly justified. That sanction may well be overturned—as I say, if Members come to Islington Law Centre they will find a 100% success rate—but in many cases the damage will already have been done. Does the Minister not agree that regulations, which have the force of law, could protect against some of those injustices? If so, they are worth having.
I turn now to the amendments. As things stand, there are two problems. First, there is inadequate knowledge of lone parent flexibilities: it is not known what it is reasonable to expect from jobcentre staff and Work programme providers. Secondly, single parents themselves may lack knowledge of what would reasonably be expected, so it makes it more difficult to challenge the unreasonable demands that are sometimes placed on them.
Priti Patel
The hon. Lady has covered a number of points, but the one that I want to focus on is that it is right for us to support women into work. As the Committee must recognise, we have more women in work than ever before—the rate is now 68.8%. The purpose behind the Government’s changes is support for lone parents in particular to get into work without being prescriptive and in particular by recognising that our work-focused interview approach, with our work coach support, is a key enabler of the policy and, importantly, is investing in the quality of learning and development through our jobcentres. That will give lone parents in particular the right level of support and guidance that they require to find work.
Work coaches, as part of their role and when in discussion with claimants, and lone parents in particular, at the work-focused interviews, will identify the barriers to work and, importantly, the type of support required. That means taking into account the individual circumstances of lone parents and responsible carers, including care and responsibility for their child or children, and in particular identifying the type of work-related requirements possible as a result. The aim is to develop a relationship in which claimants can discuss their issues and circumstances as they emerge. People who have children recognise that circumstances change all the time. Helping to ensure that requirements remain reasonable and appropriate is our priority.
Furthermore, the parents should feel that they are involved in the development of the requirements, which of course are recorded and noted in the claimant commitment, by contributing the steps that they think will give them the best chances of finding work. We will of course only ever have requirements—based around work coaches and jobcentres—that are reasonable in light of the appropriate circumstances.
We recognise that where people are in training the requirements are tailored around that. Training itself can be part of work preparation requirements, so of course it will be relevant to the claimant commitment that is being established as well. It is also important to recognise that it would not be appropriate—and would be difficult and wrong—to set out a uniform level of support that would meet the needs of individuals. Universal credit has been constructed in a way that promotes discretion, tailoring and flexibility. The existing legislation provides work coaches with the flexibility to tailor, limit or even temporarily lift requirements that are entirely based on personal circumstances. The range of circumstances is broad. We will ensure that any work-related requirements are tailored to the individual’s circumstances and, importantly, are compatible with childcare responsibilities.
Neil Coyle
The Minister says that the Department will ensure that the requirements on individuals are flexible and sensitive. In our surgeries and case loads we are already seeing circumstances where that has not been the case to date. The Minister suggests that such individuals should not be experiencing sanctions or disincentives, but what additional safeguards or measures will be put in place to ensure that that does not happen?
Priti Patel
It is not about the guidance that goes out one day to jobcentres or work coaches. We are routinely working with our work coaches and our jobcentres to make sure that they are supporting individuals through the advice that goes down to them, through the guidance that is sent out, through what is being distributed from the Department and also through training. That training is absolutely vital, in particular with regards to work coaches. I emphasise that point. I know that comments have been made about jobcentres not supporting people to get into work, but I would argue against that. I have sat in on many interviews myself, including with lone parents, and I have seen commitments that are tailored to that individual’s circumstances. In fact, I was in Edinburgh two weeks ago; I go to jobcentres on a weekly, very regular basis. It is absolutely the right approach that the work coaches have the freedom and flexibility to support the individual, and also to recognise the labour market conditions locally.
Neil Coyle
The Minister is very generous in giving way. One of the concerns expressed by Jobcentre Plus staff—certainly those in my own constituency and those I have been chatting to elsewhere—is that once an agreement is in place with an individual, very little flexibility or adviser discretion is possible in order to prevent the imposition of a sanction where something cannot be met. The example I gave earlier has been resolved, and I am very grateful for the Minister’s offer to intervene. In that case, because there was an agreed number of job interviews that had to be attended, when the mother ended up having to go to hospital, she became subject to sanction. There is a point in the process where an individual becomes subject to sanction for not being able to meet an agreed requirement due to unforeseen circumstances, not due to deliberate non-compliance with a plan. That is where the challenge lies.
Priti Patel
The hon. Gentleman is right to raise that, and obviously that is a highly relevant and pertinent point. This is why we should not undermine the autonomy of those local decision makers by putting things in binding statutory guidance. They need to be supported, and the Department needs to support them to offer that flexibility as well. We all recognise that personal circumstances and individual circumstances change. I am pleased to hear that the case that the hon. Gentleman mentioned has been resolved, but of course we want to avoid such situations in the first instance. We can only achieve that if work coaches work with the individual claimant and understand their circumstances. Obviously, the claimant needs to be very up front and say that their circumstances are changing and explain what is going on, because life is not one-size-fits-all for everybody and obviously circumstances change.
Emily Thornberry
Of course I understand that local jobcentres ought to reflect local demand, but I ask the Minister to focus on the question of what would be wrong with having it set out in the regulations that a lone parent should not be obliged to go into work or look for work if there is an inadequate number of suitable employment vacancies within reasonable daily travelling distance of the claimant’s home. The six examples that I listed in amendment 133 give flexibility and at least give a baseline of fairness and do not allow people simply to have ultimate power over small children and single parents.
Priti Patel
I disagree with the hon. Lady’s latter point. Importantly, the labour market changes. Vacancies come up every day of the week. It is relevant to the individual, their circumstances and the ability for them to choose what they feel is best for them. They might want to be in training, which might be, for example, 30 minutes or an hour or require some travel. There might be a work placement or a work experience opportunity. It is right with the labour market flexibilities that we have those flexibilities in place. On the point raised by the hon. Member for Bermondsey and Old Southwark, if an individual is unable to meet the requirements—this relates to the local flexibilities—they would come into the jobcentre to explain why that is the case and that is therefore fed into the process.
Neil Coyle
The challenge is that the flexibility does not exist now for individual advisers because of the system imposed towards the end of the previous Parliament. Individual advisers’ discretion was removed in order to have a more automated system that has developed into the experience of more sanctions. Is the Minister suggesting that that process will be reviewed or changed? Without that, the good intention will not be delivered in practice.
Priti Patel
Work coaches have the flexibility in universal credit to respond to individual circumstances and are using their discretion—
Priti Patel
I will not give way. Work coaches are using their discretion to tailor appropriate requirements without the need to set the types of support in regulations or to make guidance statutory. I have touched on this already; the Department routinely upgrades guidance, advice and training, and shares those resources not just locally, but with stakeholders. We want to have the highest possible standards and we are working to achieve that. Universal credit responds to individual circumstances. Accepting the amendments would result in an unnecessary, costly and overly bureaucratic imposition. It would not enhance the individual claimant’s choice, opportunities and the support that is made available to them through work coaches. I therefore urge the hon. Lady to withdraw the amendment.
Emily Thornberry
We wish to push these amendments to a vote. I have listened carefully to the Minister and despite what she may say about local flexibilities, the national picture is that lone parents are having 39% of their sanctions decisions overturned on appeal. Therefore, the system is not fair. We want a better system in place with proper regulations that have legal standing.
The Chair
Just to be clear, amendment 101 would have to be put first. The hon. Lady could withdraw that and come to the others at the end of our deliberations on clause 15, which will only be a few moments away.
Emily Thornberry
That would probably be the best way of proceeding. We can vote on amendments 131, 132 and 133 but not on amendment 101. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Emily Thornberry
I beg to move amendment 108, in clause 15, page 14, line 38, at end insert—
‘(d) after section 24 (imposition of requirements) after subsection (5) insert—
“(5A) The Secretary of State must, by regulations, make provision to ensure that where a claimant is the responsible carer for a child who is aged under five they are subject to no work-related requirements unless it is possible to make arrangements for affordable and appropriate childcare for the claimant’s child.
(5B) The regulations in subsection (5A) must provide a definition of “affordable and appropriate childcare”.”’
This amendment would ensure that responsible carers of children aged under five would not be subject to work-related requirements unless they had affordable and appropriate childcare in place for their child.
The Chair
Amendment 93 will no longer be discussed with amendment 108. That might help the Minister in her response.
Emily Thornberry
We have begun to discuss some of the specific barriers faced by single parents who are looking for work, but we have not yet had a detailed discussion of what I, and I am sure most people, would consider to be the most significant barrier of all: childcare. It has been said that there is no such thing as a free lunch, and in many ways it is also true that there is no such thing as free childcare. Getting the universal entitlement to 15 hours, which in theory is available to all parents of children aged three and four, is often not quite as easy as it sounds. For a start, it usually is not free.
It is widely acknowledged that the difference between the rate at which the Government subsidise childcare providers and the actual cost of delivering care is substantial; substantial enough that charging for some services is the only way that providers can stay afloat. Parents know that that can happen in a range of different ways. Some are hit by hidden charges, such as being asked to pay for the cost of food or activities, while others—we have this situation in my constituency—are told that they cannot access their free hours unless they take additional paid hours as well, often at considerable cost.
The Lords Select Committee on Affordable Childcare completed an inquiry last year having heard extensive evidence. It concluded that
“parents are subsidising themselves, or other parents, in order to benefit from the Government’s flagship early education policy.”
I ask the Department for Work and Pensions yet again to look beyond the rhetoric at the evidence. The House of Lords Select Committee looked at this matter and said that it is serious.
In some cases, parents have even been told that the free 15 hours can be accessed only as part of a full-time placement. Full-time normally means 50 hours, which accounts for the early morning drop-off and early evening pick-up that is generally necessary for parents who work full time. To put in perspective the scale of the financial commitment that this could mean for parents, I looked at my local authority area in order to get a proper example. Childcare costs in Islington are among the highest in the country. A full-time place in a private nursery will set a parent back more than £18,000 a year, and what if you have two children? Let me tell Ministers that not all the low-income single parents from the Market estate have that kind of money to spare. Even if they worked full-time for the London living wage, fees at that level would exceed their pre-tax salary.
I wonder if I can save the Minister some time by anticipating some of the arguments that she is likely to rehearse in response to my concerns.
Neil Coyle
May I bring my hon. Friend back to a point about zero-hours contracts? There is a significant concern that some of the people affected will be forced to take work that does not have a consistent or guaranteed income, and that in itself acts as a barrier to being able to access childcare.
Emily Thornberry
My hon. Friend makes an excellent and important point. The fact is that the work that is likely to be available, particularly for single parents who have been out of the job market for some time and may well be vulnerable and lacking in confidence and who do not necessarily have the skills they need, is the sort of work that I illustrated my previous point with. It is likely to be peripheral work and zero-hours contracts. It is unlikely to be regular, and it is likely to be at the sort of hours when there are not a lot of nurseries open.
Jess Phillips (Birmingham, Yardley) (Lab)
Does my hon. Friend recognise that even the 15 hours of free childcare, which is to be extended to 30 hours, is only for three and four-year-olds? I had to go to work when my children were a lot younger than that. Also, the low-welfare, high-wage economy that the Government are trying to achieve—and who could argue with that?—will unfortunately not include anyone who is under 25, as they are not to be granted the living wage. So in my circumstances—I had a child when I was 22—there would have been no help available to me to pay for childcare.
Emily Thornberry
My hon. Friend makes a very good point.
I want to talk about the Government’s proposal to extend free childcare to 30 hours a week for some parents, and I will explain why I just do not buy it. To begin with, let me raise the most obvious problem with the proposal. It sounds wonderful, but how on earth do the Government intend to deliver it? How are they going to deliver 30 hours a week? There is the Childcare Bill—all four pages of it—and it offers no clue. I have looked at it—it can be read in a moment. It is the most extraordinary piece of legislation. To be quite honest, it is the Tory party manifesto on green paper. It does not have any detail to it. It does not answer any of the questions that people are understandably asking. A number of pertinent questions were put on Second Reading by Peers from all sides of the House, and they referred to it repeatedly as a “skeleton”. They are very polite in the House of Lords.
That view was shared by the Delegated Powers and Regulatory Reform Committee, which expressed the concern in its scathing report on the Bill that
“it contains virtually nothing of substance beyond the vague ‘mission statement’ in clause 1(1)”,
and concluded:
“The remarkable imbalance between the provision that appears in the Bill itself and what is to be left to regulations, and the scarcity of explanation in the memorandum, has led us to question whether Members will be in a position to contribute meaningfully to debates at Committee Stage and Report Stage.”
Leaving aside what that says about the Conservatives’ attitude to democracy, it also says a great deal about how serious they are. They seek to force lone parents back into work, on the promise that at some stage there will be sufficient childcare for them to be able to work, but they cannot even produce a Childcare Bill that means anything, or give us any details that mean anything. As I said, they are very polite in the Lords, and perhaps we should follow their example, but we do not. We say that it is absolute nonsense. It is yet another example of empty rhetoric. The Government are playing with people’s lives, and they should be held to account for it.
Likewise, we find ourselves debating the same promise now. Members of this Committee find ourselves ill prepared to judge the consequences of the proposals in clause 15, because we simply do not know whether the promised 30 hours of free childcare will be available when people go to work. It is immediately obvious when we start to scratch the surface of the 30 hours commitment that the policy is not funded to any meaningful level.
So we have a Bill that does not mean anything. Now let us look at the funding. The Government figures suggest, and the Minister has repeated in this debate—with a straight face, for which I commend her—that extending the entitlement to 30 hours of free childcare a week will cost £365 million in the first year, unless I am wrong. It seems that that is still the position. I do not know how that figure was calculated. We have a man from the Treasury here—the Exchequer Secretary to the Treasury—and I would be pleased to sit down and listen to his explanation of how all that childcare will be provided for £365 million a year. [Interruption.] For the record, no explanation is forthcoming.
Interestingly, that figure differs substantially from the estimate made by the Conservative party of my party’s quite similar policy proposal in 2013. When we said that we wanted to extend free childcare to 25 hours a week for working families, what did the Childcare Minister, the hon. Member for East Surrey (Mr Gyimah), estimate our costs would be? He did not say £365 million; he did not say £665 million; he did not say £1 billion. He said that it would cost £1.6 billion, yet the Minister has tried to persuade us today that producing 30 hours a week of childcare for so many children will cost a mere £365 million a year through her non-existent Bill. Please excuse us if we are somewhat sceptical of the Government’s promises that they can produce that childcare.
Although we can have a laugh about it, mothers of four-year-olds on the Market estate will be threatened with sanctions unless they are actively looking for work and get a job, on the promise that there will be childcare. There will not be childcare that is affordable for them on the wages that they can expect given the type of work that is available for them. That is the reality of life, and that is why policies should be made on the basis of evidence and not rhetoric. The truth is hard.
Neil Coyle
It is worse than empty rhetoric; it is empty legislation. We have seen the same thing in social care legislation. The Government committed to providing additional support for families desperately in need of social care, but when it came to implementation, there were delays. The difference in these circumstances is that many families will be left without sufficient support but with mandatory requirements and sanctions.
Emily Thornberry
That brings me back to the purpose of the amendment. If the Minister is as confident as she seems that it will cost only £365 million, not £1.6 billion —even though the Childcare Bill includes no plan for delivery and we have not heard any plan, she seems to think that it is backed up with sufficient funding and is entirely realistic—why not back our amendment? We are simply saying, “Don’t push single parents into work until there is childcare available.” If she is so confident that childcare will be available, what is the problem with supporting our amendment?
It is nonsense. In a report published last week, the Institute for Public Policy Research criticised the Government and their costing, saying that it was
“inexplicably low in comparison to other estimates, as well as to current funding.”
The inevitable outcome, the report suggests, is:
“The Government’s drastic underfunding gives rise to concerns that the hourly rates that it will give to providers to deliver this care will be too low, resulting in falling quality, poorer outcomes for children and less choice for parents as the market shrinks.”
The report also raises concerns that will be familiar to anyone who has followed debates on the issue in recent years, about the likelihood that the Government will seek to make up for the additional strain by simply loosening regulations. I have asked the Government how they can proceed with these welfare reforms without expecting families to live in cars, but I ask another question: how do they expect all those children to be looked after for such a relatively small amount of money without being put in barns? Perhaps there will be factory-farmed three-year-olds. How will the Government be able to look after all those youngsters on such a small amount of money? We have yet to see any plan for how it will be done, and we simply do not believe the Government.
Will providers be expected to relax their ratios of staff to children, spreading themselves even more thinly? It has caused some alarm among providers, to say the least, and it has caused quite a lot of alarm among parents and the wider public, unsurprisingly, given that we know about the link between the quality of childcare and low ratios of staff to children. If the Government press ahead with their proposals, even the best-qualified staff will struggle to provide an adequate standard of care.
Professor Cathy Nutbrown said in evidence to the Lords Committee last year that
“no matter how many PhDs you have, you can only hold so many babies.”
To put it simply, the Government are asking us in clause 15 simply to trust them. “Trust us,” they say, “We will provide 30 hours of free childcare. It will be available at some point in the future.” Well, we do not trust the Government on that. The Childcare Bill is not a credible piece of legislation, and the trust that we have been asked to place in the Government has not been earned. Frankly, they might as well have brought a Bill promising a land full of milk and honey, for all the credibility that the Childcare Bill has.
If I am wrong—I hope that I am—and the Minister is right, and if 30 hours childcare is about to be available free for all working parents; if everything is fine, and it is good-quality childcare that is available in the hours when people can work, then she should support our amendment. We have been discussing safeguards to prevent conditionality from being applied to parents in inappropriate circumstances, and amendment 108 provides a way to do so that is straightforward and clear. It provides simply that single parents will not be forced to look for work in the absence of affordable and appropriate childcare. If she is so confident, she should back up her confidence by supporting our amendment. There is no good reason to oppose it.
As I have outlined, there are many doubts about the promises that have been made. I understand that the Minister is leading the childcare taskforce herself, so she should be more confident than anyone else, and she should be able to say in this debate, “You’re right, Emily Thornberry. I’m going to show you just how confident I am. I’m going to instruct my Back Benchers to support the Labour amendment.” Not supporting the amendment will show that not even the Minister believes in her childcare policy.
Priti Patel
We have been very clear that to support our full employment ambition, the Government are committed to helping working families by reducing the cost of childcare and making it easier for parents to return to work and to work more hours while knowing, importantly, that their children will be well cared for. That is why we have introduced the Childcare Bill, which will increase the level of free childcare from 15 to 30 hours for all working parents of three and four-year-olds. That will be available in some areas as early as September 2016, with further roll-out from September 2017. Clearly, however, that is only one element of a comprehensive package of childcare support available to parents up and down the country.
The existing offer provides 15 hours of early years education for all three and four-year olds and for disadvantaged two-year-olds. That is in addition to the other Government support for childcare, including, as the hon. Lady mentioned, the universal credit childcare element, which will cover 85% of eligible childcare costs from April next year. Let me emphasise again to the Committee that no matter how few hours parents work, they will have their costs covered—that is 85%.
Priti Patel
I will not give way. That is expected to help about 500,000 additional families at a cost of £350 million a year—that cost is specific to the universal credit childcare element.
On top of that, parents will have the option to claim tax-free childcare, which will help up to 1.8 million families, who will be able to benefit by up to £2,000 per child per year, or £4,000 for disabled children. We have also secured additional funding to allow jobcentre work coaches to address barriers to employment and to support moves into work. The extra funding may be used in a variety of ways to pay for travel and childcare, to enable parents, such as lone parents, to undertake training, attend interviews or start work.
We recognise that we have to continue to do more, but—just to put this on the record—this Government has a proud record on childcare provision, in particular in the previous Parliament, when we increased the start-up grants to increase childcare supply in the marketplace. That totalled up to £2 million available to people to set up new childcare businesses. We now have about 32,000 good or outstanding childcare minders who have been supported and are now eligible through early education funding. We have made it simpler and easier for schools and childcare providers to work together to increase the amount of childcare available on school sites. Last week, we made the announcement of wraparound childcare. We have also legislated for the creation of childminder agencies, which will improve the support available for childminders and parents. We have simplified the framework so that nurseries may expand more easily.
On top of that, the Government are spending in excess of £5 billion in the childcare market, which is important first to increase the sufficiency of supply, and secondly to focus on quality. The quality continues to improve, with 85% of providers declared good or outstanding by Ofsted, which compares with 70% in 2010. The qualifications of early-years staff continued to improve in 2014. The National Day Nurseries Association reported that 88% of settings that it surveyed employed a graduate, up from 80%, and that 87% of staff had good A-level equivalent qualifications. Now we have the early-years foundation stage profile results for 2013-14, which show an 8 percentage point increase in the number of children reaching a good level of development by the age of five. That also applies to children from disadvantaged backgrounds.
It is fair to say, therefore, that we are not embarrassed at all. It is pretty sad to hear the Opposition, although they are entitled to their views, portray the Government as not doing enough on childcare and not supporting working families on childcare—
Priti Patel
I will not give way. The Opposition are completely wrong. The hon. Member for Islington South and Finsbury mentioned the childcare taskforce, which has been set up by the Prime Minister across the Department for Work and Pensions and the Department for Education. We are working with a wide variety of stakeholders, including childcare providers and the third sector—they are members of the taskforce. The Childcare Bill places a statutory duty on local authorities to publish information on childcare and other services available to parents locally, ensuring transparency for parents.
Importantly, funding was mentioned. Of course, funding continues to be one of the areas where more work is taking place in Government. A funding consultation is taking place, led by the Department for Education. Of course, we are working with the DFE. We made great progress in the last Parliament to increase parental employment, particularly with lone parents. The number of children in workless households has decreased.
Obviously, there is more we can do. We will continue to ensure that we provide affordable and appropriate childcare in the right settings, and that the availability is there. The Government firmly believe that we need to do more rather than less to support parents with young children to prepare for work. Childcare is one of those vital strands. Ultimately, it helps to improve children’s life chances as well. The clauses, together with our substantial investment in childcare, support that ambition. That is why I urge hon. Members to withdraw the amendment.
Emily Thornberry
I thank the Minister for her response. If I had been allowed to intervene, I would have asked her whether she could help us on a specific point, which is probably important. The commitment is to childcare once parents are working, but for many parents, particularly if we are talking about parents of a very young child, to be able to find work, it may well be that children will need to have childcare—from the 20 hours, or whatever the commitment is—so that their parents can apply for jobs, go to interviews, fill in CVs and do voluntary work to prepare for work. Will there be any childcare available for parents who are looking for work, particularly when their children are young? If she is not able to answer me today, could she write to me about that, because I am not clear from her earlier answer whether she covered that matter or not?
Neil Coyle
I thank my hon. Friend for giving way, particularly in light of the Minister’s refusal to give way to her. That was a shame, because some of the points that the Minister made are very welcome. What was frustrating was that there was no figure for the number of children. If £365 million is being provided, it would be helpful if the Government could indicate how many children that is expected to support.
Emily Thornberry
There might be another question. Although the Minister has raised tax-free childcare, it probably needs to be pointed out at some stage—perhaps I might point it out now—that tax-free childcare is available only for people not claiming tax credits. It is not of any benefit to people on low incomes.
In light of the response that the Government have given us, we will not withdraw the amendment, and I wish to put it to a vote.
Question put, That the amendment be made.
The Chair
Colleagues, we now come to a little bit of a vote-fest. I have a note that amendments 140, 63, 131, 132 and 133 can now be put in that order. Is anyone aware of any other amendments that they are looking to press to a Division?
The Chair
You cannot speak again, I am afraid; just move it formally.
Amendment proposed: 140, in clause 15, page 14, line 38, at end insert—
“(d) in section 22(1) after “section” insert “, except if the claimant is the responsible carer of a disabled child aged 3 or 4.
(1B) The Secretary of State must lay regulations determining what a disabled child is for the purpose of this section and may include, but will not be limited to a child—
(a) in receipt of an Education, Health and Care Plan,
(b) in receipt of a Statement of Special Educational Needs,
(c) identified by their local authority as having special educational needs,
(d) with child in need status,
(e) meeting the definition of disabled under the Equality Act 2010.”—(Neil Coyle.)
To exempt a responsible carer of a disabled child aged 3 or 4 from all work-related requirements.
Question put, That the amendment be made.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
I beg to move amendment 110, in clause 16, page 15, line 4, leave out “pay mortgage interest in relation to property” and insert—
“make owner-occupier payments in respect of accommodation”
This amendment replaces the description of the payments for which loans may be made with a reference to “owner-occupier payments” relating to the accommodation that persons occupy as their homes. The term will be defined in regulations (see amendment 116). This amendment also ensures that there is flexibility to provide support as regards all possible dwellings.
Mr Vara
It is a pleasure to serve under your chairmanship, Mr Streeter. For the sake of good order, may I refer colleagues to the Register of Members’ Financial Interests to the extent that anything therein applies and ought to be declared?
I welcome the new members to the Committee and I wish well those who served on it before, particularly the right hon. Member for East Ham, who spoke eloquently in his contributions here and will be sorely missed on the Front Bench of the Labour party.
The clauses will change the way in which claimants with outstanding mortgages receive help from income-related benefits. I will be absolutely clear at the outset. The Government remain committed to helping owner-occupiers in times of need to avoid the risk of repossession. However, we believe it is wrong that taxpayers who are unable to afford to buy a home of their own are subsidising claimants who own their own homes. Taxpayers support a significant asset from which many homeowners are able to profit. It is our intention that help towards mortgage interest payments should be taken in the form of an interest-bearing loan that will be recovered from available equity once the property is sold. In that way, we will be able to provide a better deal for the taxpayer while ensuring that claimants receive the protection from repossession that they currently enjoy.
Moreover, the amendments will ensure that we do not exclude claimants who have non-standard financing arrangements from the offer of a loan, for example where a person has entered into what are referred to as alternative financial arrangements for purchasing their property rather than a traditional mortgage.
Emily Thornberry
I am listening with care to the Minister because the change is radical compared with how things were done until now. I want to be clear about this. He has talked about the importance of protection from repossession, but can he confirm that the clause extends the period during which there is no assistance available when someone becomes unemployed from 13 to 39 weeks? Would it not make it more likely that homes will be repossessed if mortgage companies get no money at all for 39 weeks?
Mr Vara
I am grateful to the hon. Lady for giving me the opportunity to make that point. She will be aware that, before the introduction of 13 weeks in 2009, the period was 39 weeks. There was a specific reason why it was reduced by the then Government to 13 weeks: it was the height of the recession. It was very difficult to get jobs and it was felt necessary to make that adjustment. The economic climate now is a lot different from what it was in 2009. When there are record levels of employment —unemployment is very low—and when we have the prospect of an economy that is recovering, we feel the time period should be brought back to what it was previously. There was no concern when there was a 39-week period when there were better economic circumstances. With the economy picking up, we feel that, as 39 weeks was fine in the past under a Labour Government, there is no reason why it should not continue under a Conservative Government.
Emily Thornberry
The Minister says that he feels 39 weeks will be fine because it was fine under a Labour Government before the recession, but is the change to policy based on any evidence? Can the Government point us to any impact assessment or other information that will reassure us that homelessness will not be increased?
Neil Coyle
It is interesting that the Minister has absolute confidence in economic stability, but it is not shared by everyone. House prices are rising and falling at different rates, and different job opportunities are available, in different parts of the country. May I be the first to offer the Minister the moniker of Minister for repossessions?
Neil Coyle
It has been a long day. My point is that the Minister will become known as the Minister for repossessions as a result of a retrograde step. Labour changed that policy in government to ensure that, having contributed to benefits through national insurance, people had support if and when they needed it. The Government are taking that support away and the Minister will become known as the Minister for repossessions.
Mr Vara
May I gently say to the hon. Gentleman, who is new to the House of Commons, that, if he wishes to survive, he will have to get used to being called a lot of things?
We intend to ensure that, through the regulations, we cover financial arrangements alternative to traditional mortgages. The amendments will also ensure that claimants who live in non-traditional homes, such as houseboats or caravans, will also be offered a loan. It is important that support is available to protect the homes of all individuals, regardless of the type of accommodation they occupy. The amendments ensure that the technical detail about calculating the amount of a person’s liabilities to make owner-occupier payments, and the maximum amount of those liabilities that can be met with a loan, will be set out in regulations.
The amendments ensure that regulations made under clause 16 requiring security for a loan may make provision for situations where there are alternative financial arrangements for a home, and ensure that the security can be taken in respect of a legal or beneficial interest in the person’s home.
Clause 17 allows for the detailed framework within which loans may be made to be put in place by regulations. That will allow for the tactical operation of support for mortgage-interest loans, which will provide fairness for taxpayers along with protection from repossession for claimants. It will also continue the current administrative arrangements that mean that payments of support for mortgage interest go directly to the mortgage lender.
The amendments to clause 17 are consequential to the amendments to clause 16. They replace the description of the payments for which loans may be made with a reference to owner-occupier payments, which will be defined in regulations. They will ensure that the loan scheme will be available to eligible claimants who have acquired their home through alternative finance arrangements rather than through a traditional mortgage.
Amendment 120 seeks to clarify what requirements a person will have to meet before receiving a loan. It ensures that regulations under the clause may make provision about entering into agreements with persons receiving loans. The Secretary of State will be able to specify terms in the agreement that he thinks fit, subject to any terms set out in the regulations. That will ensure that the regulations do not have to include every term that is needed in the loan agreement.
Emily Thornberry
That is why I am trying to clear this up. I was asking whether the impact assessment contains anything in particular on the effect of the changes in this clause, particularly with regard to extending the time that will be available. People will have to wait 39 weeks before they get any assistance with their mortgage. Will that increase the amount of homelessness? That is an important piece of evidence that is sadly lacking when the Government are making proposals to extend the time period.
Although the Minister talks with great glee about full employment and this and that, he is changing the legislation so that, instead of people being given assistance to pay the interest on their mortgage, which has always been the system—the assistance pays not for the equity in a property but merely for the interest payments in order to keep people safe, warm and secure in a home—people will have to take out a loan against that property. Furthermore, the Government are changing the legislation so that people have to wait for an extraordinary, scary period of 39 weeks, during which they have to keep off those who actually own the property and who have mortgaged it to them. A person who has lost their job will suddenly have to fight off those who want to repossess the property.
In the real world, we all know that there may be a grace period, but 39 weeks is a very long grace period. My concern is that it will increase the amount of homelessness. Wrapping that together with the Government’s other housing policies, which are also having an adverse effect on homelessness, will increase the amount of homelessness. That is why I asked whether the impact assessment is helpful to the Government in reassuring all of us that the measure will not increase the amount of homelessness.
On the face of it, making a mortgage company wait 39 weeks will increase the number of repossessions. Frankly, if a mortgage company hears that someone has lost their job—the person might be in their late 50s—it might make an assessment and decide that that person is unlikely to get another job. There may be areas of Buckinghamshire, London and the home counties where it is relatively easy to get a job, but there are other areas across the country where, frankly, there are no jobs. The tragedy of Redcar, of course, is that when people lose their job, the chances of their being able to get another are practically nil. They certainly will not be able to get a job at a level that will help them to continue paying their mortgage.
Debbie Abrahams
My hon. Friend has hit the nail on the head. In fact, the Money Advice Trust has made exactly the same point and has expressed its considerable concern about extending the period from 13 weeks to 39 weeks. The experience of all lenders and advice agencies is that early intervention is the key to resolving—
The Chair
Order. The hon. Member for Islington South and Finsbury has tabled an amendment that we will consider later in our proceedings on this very issue. She may not necessarily want to emphasise the point at this stage. The intervention has gone on long enough that she may want to respond to her own colleague and then perhaps give way to the Minister.
Emily Thornberry
I am grateful to my hon. Friend. I appreciate that I sound like a cracked record, but it is about evidence, evidence, evidence. What is the evidence that this change will help us? What is the evidence that this will not increase the number of repossessions? Give us evidence and we would be interested, glad and reassured to hear it.
On the face of it, if someone does not pay back any mortgage for 39 weeks, their mortgage company will kick them out. A steelworker in Redcar might have a good mortgage, a family home and a good family wage one week, but the next week, they could be made redundant and no longer be able to pay their mortgage. The Government will not give them any assistance for 39 weeks. They would have no job and no prospects, and things could suddenly turn very nasty and difficult. Thirty nine weeks is a long period. They might be able to get a zero-hours contract. All I can say to that is: good luck with paying off a mortgage on a zero-hours contract.
As we said at the beginning of these proceedings, although the Government want to use the terms of clause 1 to be able to get up and brag about full employment or the progress towards that, we know that the definition of employment seems to be any work at all. The definition of employment is not the living wage, a wage that a family can live on or a wage that people can use to pay their mortgage..
Mr Vara
I would make two brief comments. The Council of Mortgage Lenders has not said that the 39-week wait will drive repossessions. That is an eminently respected organisation, and it would have said if it felt that was the case. May I gently remind the hon. Lady that though she was not an MP at the time, the Labour Government from 1997 to 2009 maintained a 39-week waiting period? It seems ironic that what was suitable for a Labour Government for so many years is now felt to be inappropriate for this Government, particularly when our economic record is on the up and far better than it was under the previous Government.
Emily Thornberry
I was an MP in 2005, and the difference was that there was real investment going on, homes were being built and the economy was working properly as opposed to fumbling along as it currently is and seemingly being fuelled entirely by rhetoric. It is all very well for the Minister to assert until he is blue in the face that everything is well, everyone is working, everyone is getting a great wage and there are no problems, but that is not the reality of people’s lives.
Mr Vara
That is very helpful. As the Government amendment deals with houses, what I am about to say will be very relevant, particularly given what the hon. Lady said. She spoke about the huge amount of house building under the Labour Government when she was a Labour Member. May I remind her that the past five years have seen more affordable housing built than in the 13 years of the Labour Administration?
Emily Thornberry
No. I do not agree. I am grateful for the Minister’s comments about the Council of Mortgage Lenders and its statement. I counter him with a statement from the Money Advice Trust:
“We strongly support the tabled Amendment 19, which would require that the waiting period before an application for a loan for mortgage interest can be made is retained at 13 weeks, instead of the proposed 39. Lenders and advice agencies alike know from experience that early intervention is the key to resolving financial difficulty. The proposed 39 weeks will mean that claimants will be well over six months in arrears with their mortgage by the time SMI starts to be paid—by which time it will be significantly more difficult for them to resolve their financial situation.”
There are arguments both ways.
It is important that we look at what will happen. The Government have said a great deal about pensioners, about how they will look after pensions, about the triple lock and about this Government being friendly to pensioners. Is not there a problem that this measure will affect pensioners as much as it will affect anyone else? The particular difficulty with pensioners is that if they are expected to take out a loan against their property instead of getting relief on the interest, increasingly they will lose ownership of that property. As pensioners it will be even more difficult for them to work. In fact, the idea of a pensioner is that they do not work. The policy will increasingly eat away at an asset that cannot be expanded.
Is that not an asset that, as a matter of social policy, the Government expect pensioners to use in many other ways? I will not get into a detailed debate about the cuts in social care. Let us just say that I think there have been cuts in social care. I am sure that the Minister thinks that social care is marvellous so let us leave it at that. Are not pensioners expected to be paying for their long-term care out of the asset that is their home?
Many pensioners may have been tempted by the Government’s deregulation of access to pension pots. Memorably, the previous Pensions Minister said that he would be intensely relaxed if people were to take their money out and spend it on a Bugatti or whatever it was. Of course, deregulation and the access to pension pots means that people will have access to their pension funds, which they will be able to spend in advance of their pension. They will be expected to use their houses to pay for social care and if they need assistance with paying off their mortgage, that mortgage will not be available for them in any other way; they will be expected continually to take out more of a loan on the equity of the property.
It seems that pensioners are getting it from every angle, which is very far from the rhetoric we heard at the party conference about how much the Tory party is a friend of pensioners. It is interesting that this is the first—I suspect it will not be the last—occasion in which the Government are changing the game. The Government say they want to help people make the right choices. Pensioners, of all people, may be unable to make choices. They are coming towards the end of their lives and their options are limited. They are expected to take yet another charge on the one asset of value that they have—to continually take out a loan on their property, which their children may be expecting to have to help pay off their student loans or to set up in life.
We have heard that the average age for people to set up their own home now is in their 30s. Quite often, they rely on their parents to be able to help. The rules are being changed for pensioners. This is blow No.1; we will see how many other blows there are for pensioners in the future. We will certainly ensure that pensioners hear the truth, which is that, despite the rhetoric, this Tory party which claims to be the friend of pensioners, is not. This is the first step in undermining all the promises the party made in its manifesto and at the last general election.
Mr Vara
I simply make two responses. On pensioners, the hon. Lady conveniently overlooks that it is often the case that the asset is increasing in value. She also overlooks that the loan will eventually be paid when the house is sold. It is therefore a question of balance, and we have to ask whether it is fair that those who do not own a property of their own are through their taxes helping to pay others who own an asset that is increasing in value.
As for healthcare, I simply say to the hon. Lady that for many of those securing help in healthcare there is unlikely to be an overlap in terms of the equity in their property, as many of them are mortgage-free and sometimes have a second income or another income. They would not probably qualify for SMI in the first place.
Amendment 110 agreed to.
Amendments made: 111, in clause 16, page 15, line 13, leave out
“amounts secured by a mortgage”
and insert “liabilities”.
This amendment and amendments 112, 113, 118, 122, 123, 124, 125 and 126 are consequential on amendment 110 which replaces the reference to mortgage interest payments with a reference to owner-occupier payments.
Amendment 112, in clause 16, page 15, line 16, leave out
“the mortgage relates to amounts used”
and insert
“a person’s liability to make owner-occupier payments was incurred”.
Amendment 113, in clause 16, page 15, line 18, leave out from “about” to “in” in line 19 and insert “—
(a) determining or calculating the amount of a person’s liabilities;
(b) the maximum amount of a person’s liabilities”.
Amendment 114, in clause 16, page 15, line 24, after second “a” insert “mortgage of or”.
This amendment ensures that regulations under clause 16 about requiring security for a loan may make provision for situations where there is no pre-existing mortgage over the person’s home.
Amendment 115, in clause 16, page 15, line 24, at end insert
“a legal or beneficial interest in”.—(Mr Vara.)
This amendment makes clear that regulations under clause 16 about requiring security for a loan may make provision for security to be taken in respect of a legal or a beneficial interest in the person’s home.
Ordered, That further consideration be now adjourned.—(Guy Opperman.)
Trade Union Bill (First sitting)
(9 years, 1 month ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Good morning, ladies and gentlemen. I have a few preliminary points. Welcome to this Bill Committee. Today, we will consider the programme motion on the amendment paper. We will then consider a motion to allow us to deliberate in private about our questions before the oral evidence sessions. We will then have a motion to enable the reporting of written evidence for publication. Please turn off your mobile phones. Banned substances such as tea and coffee are not allowed. I am sure that, in view of the time available, we can take these early motions without debate. As we are now sitting in a public session, it might be a good point for anyone who wishes to make a declaration of interest to do so now.
Chris Stephens (Glasgow South West) (SNP)
I declare my membership of Unison and my trade union activity over the past 20 years as a trade union activist prior to my election.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I declare my membership of Unite the union and my trade union membership and representation as a senior rep over the past 14 years.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I am a former Community trade union officer, current Community trade union member and chair of the Community parliamentary group.
Julie Elliott (Sunderland Central) (Lab)
I am a member of the GMB and a former trade union official.
Jo Stevens (Cardiff Central) (Lab)
Prior to the election in May, I was a director and partner of Thompsons Solicitors LLP, which is giving evidence to the Committee. I am also the partner of the chief executive of Thompsons, who is giving evidence to the Committee. Clients of my former firm included the Royal College of Midwives, GMB, Unison and Unite, which are giving evidence to the Committee. Finally, I am a member of GMB and of Unison.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I am a member of the GMB union, and I draw attention to my declaration on the register of interests.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25am on Tuesday 13 October) meet—
(a) at 2.00 pm on Tuesday 13 October;
(b) at 11.30am and 2.00pm on Thursday 15 October;
(c) at 9.25am and 2.00 pm on Tuesday 20 October;
(d) at 11.30am and 2.00 pm on Thursday 22 October;
(e) at 9.25am and 2.00 pm on Tuesday 27 October;
(2) the Committee shall hear oral evidence in accordance with the following Table:
TABLE
Date | Time | Witness |
|---|---|---|
Tuesday 13 October | Until no later than 10.15 am | Confederation of British Industry; British Chamber of Commerce; Arriva |
Tuesday 13 October | Until no later than 10.45 am | Community; Union of Shop, Distributive and Allied Workers |
Tuesday 13 October | Until no later than 11.15 am | Thompsons Solicitors; Chartered Institute of Personnel and Development |
Tuesday 13 October | Until no later than 2.30 pm | 2020 Health |
Tuesday 13 October | Until no later than 3.15 pm | London Travel Watch; Transport Focus |
Tuesday 13 October | Until no later than 3.45 pm | Amnesty; Liberty; Blacklist Support Group |
Tuesday 13 October | Until no later than 4.15 pm | TaxPayers’ Alliance; Abellio |
Tuesday 13 October | Until no later than 5.00 pm | Welsh Government; Scottish Government; Scottish Trade Union Congress |
Thursday 15 October | Until no later than 12 noon | National Police Chiefs’ Council; Police Federation |
Thursday 15 October | Until no later than 12.30 pm | SITA UK; London Fire Brigade |
Thursday 15 October | Until no later than 1.00 pm | Trade Union and Labour Party Liaison |
Thursday 15 October | Until no later than 2.30 pm | Professor Keith Ewing, Professor of Public Law, King’s College London |
Thursday 15 October | Until no later than 3.00 pm | Royal College of Nursing; Royal College of Midwives; Public and Commercial Services Union; Fire Brigades Union |
Thursday 15 October | Until no later than 4.15 pm | Unite; Unison; GMB; Trade Union Congress |
Thursday 15 October | Until no later than 5.00 pm | Department for Business, Innovation and Skills; Cabinet Office |
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 14; Schedules 1 and 2; Clauses 15 and 16; Schedule 3; Clauses 17 and 18; Schedule 4; Clauses 19 to 22; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 27 October. —(Nick Boles.)
The Chair
On the basis of the motion, the deadline for amendments to be considered at the first line-by-line sittings of the Committee on 20 October is Thursday 15 October.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Nick Boles.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Nick Boles.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room. We will now go briefly into a private session—I apologise to the people sitting in the Public Gallery—to decide our line of questioning.
The Chair
Good morning and welcome to the Trade Union Bill. We are joined by John Cridland, who is the director general of the Confederation of British Industry, Dr Adam Marshall, who is executive director of policy and external affairs at the British Chambers of Commerce, and David Martin, who is chief executive of Arriva plc. This session will last until 10.15 am, so it will be fairly snappy. We will go from Opposition to Government side, and Members will take this as they wish.
Stephen Doughty
Q 1 First, may I say it is a pleasure to serve under your chairmanship, Sir Edward? I welcome all members of the Committee to the evidence sessions and thank the witnesses for making themselves available this morning.
I have a few questions. My first is to the CBI and the BCC. The CBI specifically says in its written evidence that
“Business backs plans to modernise our industrial relations framework.”
Can you explain whether you think there is a unified view across business and industry in support of all the measures in the Bill? Given that you specifically refer to modernisation, do you—perhaps the BCC can answer this as well—support measures to introduce e-balloting and secure workplace balloting to increase participation in the most modern ways possible?
John Cridland: Thank you for that question. I believe the CBI does support the Bill, and I think the business community as a whole supports the Bill. Increasingly, the positive and constructive employee relations that we have built up over the economy are based on direct engagement with the workforce. We believe that there is a valuable role for trade unions but that the nature of trade union law needs to reflect the modern workplace in the way that I described—direct engagement.
I think the provisions in the Bill that are of most concern to businesses are those that ensure that where there is strike action—particularly in public utilities, education and health—it reflects a significant voice from the workforce. The fact that we are coming in with provisions similar to those in the statutory trade union recognition legislation, which has worked well and effectively for a number of years, reflects the sort of mandate of support that business, if it is to be significantly disrupted by the action I described, needs to see reflected. In principle, I think these are the right provisions.
On your particular question of e-balloting, we do not think at the moment the evidence is there that e-balloting can be secure and effective. We do not have a problem in principle with e-balloting, but it is probably premature to have it available.
Stephen Doughty
Q 2 May I follow up on that point? Even though e-balloting is used by a number of banks, building societies and other organisations, you do not believe that it is secure.
John Cridland: The need to protect the privacy of an individual trade union member voting is important to their employer, and we would want more assurance that that could be effectively conducted. Clearly, even in relation to some of the professional services that you just described, there are significant issues about data privacy.
Dr Adam Marshall: Thank you for the opportunity to be here this morning and to answer the question. It is our belief—fairly similar to that of my colleague from the CBI—that the right to withhold labour needs to be balanced in its application with the right of others to continue to work or to receive essential services, so we support strongly the provisions in the Bill that raise thresholds, for example, and ensure that essential public services are subjected to additional thresholds. It is our belief, however, that questions around the method of balloting are probably for the Government, the trade unions and the Opposition to have a debate over, rather than for us in business to have a debate over. Our concern is principally about the elements of the Bill that help to raise thresholds and ensure that the right to work is balanced with the right to withhold labour.
Stephen Doughty
Q 3 Do you accept that industrial action is at a 30-year low? Therefore, why is there a need to tighten up the legislation in such a draconian way as the Bill proposes?
Dr Adam Marshall: I think the statistics measure the number of days lost directly to industrial action. They do not measure the number of days lost indirectly because of industrial action, and what our members have asked us to represent is that those days lost to industrial action are significant. They affect business, productivity, the right of individuals to earn a living and access to public services. Were one able to make the argument that the number of days lost both directly and indirectly had gone down, that might be different, but a lot of people are significantly affected by strike action, hence our support for those provisions in the Bill to raise thresholds.
Stephen Doughty
Q 4 Mr Martin, can you tell us about your experience of industrial relations? There have been a number of high-profile cases where there have been findings against Arriva in its relations with union members and others. Can you tell us a little bit about your company’s experience and why you think this Bill is so necessary?
David Martin: Good morning. Arriva recognises that employees have the right to belong to trade unions, and we recognise a number of different trade unions. We pride ourselves totally on the fact that we are there to deliver highly satisfied employees to deliver services to highly satisfied passengers. We carry about 6 million people a day across the UK on buses and trains.
Frankly, I am extremely proud of the fact that we work very closely with our trade unions on the overall strategic direction of the business. We paint out and include them as a deliverer in the context of developing the strategy over a three-year or five-year timeframe, and that has worked extremely well for us. We all recognise the issues in the overall UK economy and the global economy, and the impact of fuel prices and so on. The ability to work closely with our trade unions has generated a situation where we have had a very low level of disputes over the past 30 years, certainly to my knowledge.
The only interesting disputes, which lead me to support the Bill, have been the London bus strikes this year and the issues in London in 2012 surrounding the Olympics, where the whole issue was union-led rather than membership-led. It was not a dispute within the membership. The fact that 17% of my staff voted and 50% of the buses did not run in London over that period of time shows us that we need a failsafe, and this Bill delivers that failsafe. In the event that industrial relations issues arise, there needs to be a clear mandate from the trade unions.
Stephen Doughty
Q 5 Do you accept broadly, though, that the vast majority of strikes in the transport sector have met the thresholds as envisaged by this Bill, including those in the rail and bus sectors?
David Martin: In the rail sector, yes, I would say that they probably have, so I do not think that it will make that much difference. In the bus sector, no; it is very different.
The Chair
I do not want to be too formal and restrict people to one question, and the main Opposition spokesman needs some latitude, but just keep an eye on the time everybody, and if you can just ask one question, fine. All three witnesses do not have to answer everybody; you can divide it up between yourselves.
John Howell (Henley) (Con)
Q 6 It is a great pleasure to serve under your chairmanship, Sir Edward. The Bill has already been described by Mr Doughty as “draconian”. Can you give me your impression of how much this is a fundamental change to the way that trade unions operate and how much you think it is more of a step-by-step increase in the modernisation of the trade union movement?
John Cridland: I echo Mr Martin’s comment about a failsafe. In most workplaces, relations are harmonious. Most workplaces are now not unionised, but in the unionised part of workplaces, most relationships are harmonious, and employers recognise that. There is a small minority of situations, which we have already described, where many people—businesses and consumers —are significantly disrupted. If that is to happen, and if the right to strike is to be exercised, I think it is reasonable, given the level of disruption involved, that there is clear evidence of a significant mandate. That is a modernisation of a system that is broadly working well.
Dr Adam Marshall: I would probably agree with my colleague and simply add that having an expiry for ballot mandates is an important thing in this day and age, given that we are in a more complex world for both business and industrial relations than perhaps ever before. Having a clear mandate renewed on a regular basis is very important.
David Martin: I again echo the comments. I can only refer to what I said earlier—that in the event of a breakdown in industrial relations, which does not happen very often, let us have a very clear mandate that reflects the wishes of the membership as a whole, and let us have a situation where we can minimise the overall impact on the travelling public and the UK economy at the same time.
Chris Stephens
Q 7 It is a pleasure to serve under your chairmanship, Sir Edward. My question is for the CBI. First, I was a bit unclear in your answer to my colleague about secure workplace balloting. You have said that trade union recognition ballots work well, but in trade union recognition ballots there is scope for secure workplace balloting. Can you clarify that?
Secondly, in your submission, you say that you are looking to extend the notice periods from seven days to 14 days on either side. That is 28 days in total, even without a ballot period. Do you not think that seven days’ notice to ballot and seven days’ notice to strike, with a period in between of at least 14 working days, is sufficient for a business to look at what they need to do and the steps that need to take place for disruption and any industrial action?
John Cridland: Thank you for the question. On your first point, the analogy I was using for trade union recognition was with ballot majorities. That is a relevant point, I think, about the ballot majorities and thresholds that the Government are proposing for the Bill. The current notice periods are inadequate. Many corporate members of the CBI faced with these situations simply do not feel that they have enough time to provide information and to put in place mitigating measures. I think the business community does want to see longer notice periods.
Chris Stephens
Q 8 Part of the difficulty, though, is that the notice for compulsory redundancy is now 45 days. The danger of the Bill—I am curious to hear your views on this—is that trade unions will have to ballot right away when an employer issues a statutory redundancy notice, because it is now 45 days. Given the timescale, does it not worry you that there will actually be more balloting, rather than less?
John Cridland: For employers, we are trying to get the principle of clear consent. If a trade union and its members are going to withdraw their labour, which is clearly their right, we want to see evidence of consent in those situations. The difficulty with the current legislation is that it can leave employers faced with a situation where there is a low turnout—we have already heard the situation that Dr Marshall described of a ballot, prior to a situation where the ballot was some period before. These are not giving clear signals to the employer. So the spirit of our evidence is, “Can we have a system that both in time and in signalling makes it much clearer to the employers the nature of the dispute, and allows the employer to deal with that?” That is what we are after.
James Cartlidge (South Suffolk) (Con)
Q 9It is a pleasure to serve under your chairmanship, Sir Edward. Dr Marshall, you raised the point about productivity, and I just want to ask about some of the wider economic impact of the Bill, if it is passed—in particular, the impact on investment, including inward investment, and on making the UK an attractive place to invest, and perhaps, Mr Martin, in terms of your industry, on whether having greater confidence about industrial relations will enable you to have stronger management and therefore attract more investment into it.
Dr Adam Marshall: Many thanks for the question. Undoubtedly, businesses that believe that the framework for industrial relations is modern and secure will be more confident when it becomes time to invest, particularly in those industries, such as the one represented by Mr Martin, that are affected by some of the enhanced thresholds that this Bill puts in place.
We have been very supportive of the definition of which areas should fall under those enhanced thresholds, in part because those businesses are extremely capital-intensive and do things that are extremely important to the functioning of the broader business community. So whether we are talking about transport, the delivery of energy supplies and indeed—vis-à-vis the supply of future skills—whether we are talking about the education sector, these are things that have a huge knock-on effect on the rest of the economy. So we believe that these measures are proportionate to help with that particular challenge.
Vis-à-vis our attractiveness to overseas businesses, one only needs to look at the media impact of transport strikes in London—how they are reported—and what you see are the knock-on effects on the economy of this particular area, and of course we have seen that played out in other cities as well, right across the UK. That has a deterrent effect on would-be investors, and I think that we would see that deterrent effect being lessened with a modernised system.
James Cartlidge
Q 10 Mr Martin has obviously had some experience of industrial action. If his management were more confident in the future that there would be less disruption, would that enable his company to attract more investment, to expand and all those things that we want to see across industry?
David Martin: Undoubtedly. It is an obvious statement but investment is all about confidence, and confidence breeds a situation where, from my viewpoint, effective trade union relationships and effective employee relations are a fundamental part of what we do. We employ 60,000 people all across Europe—25,000 people in the UK—and those relations are fundamental to us. And we deliver passenger journeys to more than 2 billion people a year, so we are fundamentally a massive part of overall GDP in local areas and in national areas. Clearly, if confidence is higher, then investment undoubtedly will reflect that.
Would that be a major issue? Frankly, I would say that it would not be, because it would not stop us investing. It is up to us as a management team to manage our industrial relations practices, but if it all goes wrong and it comes to it, I think it is absolutely fair that a proper mandate is there with our trade union colleagues to leverage their position on behalf of the employees.
The Chair
If you want to ask a question, try to give us plenty of warning, so that we can fit you all in. It is going well at the moment; I hope that we will get everyone in.
Ian Mearns
Q 11 It is a pleasure to serve under your chairmanship, Sir Edward.
From the perspective of the three witnesses, what are the main drivers of supporting this Bill? We have heard that industrial action involving strike action is at a 30-year low, but the witness from the British Chambers of Commerce has said that industrial action has an impact, for instance, on productivity. Does strike action have a detrimental impact on productivity that is as bad as other factors in the economy, for instance, bearing in mind that, overall, British workers are about 25% behind French workers in terms of productivity? Is it factors such as industrial action that are causing that 25% gap? I doubt it, given the 30-year low in strike action. I also wonder whether you are really supporting this Bill just because it is an opportunist-type thing—the opportunity presents itself, and therefore we might as well go gung-ho and support it.
The Chair
You can answer any way you want.
David Martin: I will happily respond to that one. In my sector, which is the delivery of a public service, passengers rely on buses or trains to get to work, school, leisure activities and retail outlets, where they spend money. I think it is fundamentally wrong if there is not a clear mandate from the workforce when taking up a dispute with the employer. Assuming that the legislation goes through, the modernisation of the process to provide clarity and a practical, working situation can only be beneficial.
Ian Mearns
Q 12 But in your evidence you gave two London examples. Are we using a national sledgehammer to crack a London nut?
David Martin: From my perspective, it is a failsafe. If things go wrong and disputes arise, having a strong trade union relationship, and a strong trade union leadership with a strong mandate, leverages the employee’s position to negotiate with the employer. I think it is a win-win, frankly.
John Cridland: The concern in the business community has always been about disruption. I have the privilege of speaking for an organisation that represents 190,000 companies, and clearly the overwhelming majority of those companies are small. As small businesses, they are consumers, too. When getting their products to market and their employees to work, disruption is the factor that impacts on their business. That has been CBI policy for more than five years, so it is not opportunistic. We have advocated this sensible modernisation for more than five years.
Ian Mearns
Q 13 Do you agree that the CBI has a major concern about the impact on productivity and that there are clearly other factors in the economy that are impacting more on productivity at the moment than industrial action?
John Cridland: I would not underestimate the impact of significant disruption in the running of an economy on the overall performance of the economy, but the argument I have made is one primarily related to disruption. I agree that productivity relates to a range of factors. It is a cocktail of factors, of which this is only one.
Dr Adam Marshall: I would simply add that the vast majority of my members are in 52 accredited chambers of commerce the length and breadth of the United Kingdom outside the M25, so business support for some of the measures in the Bill is not a London phenomenon.
On productivity, I raised the statistics very early because arguments are made about this Bill using only statistics that count direct days lost to industrial action. Had National Statistics been collecting information on the indirect effects of industrial action for many years, we could have a much more informed argument. I know that when millions of people are out of the workplace because they cannot get to work, and when millions of people are at home because their children are out of school, for example, there will be a productivity impact. I completely agree with you that that does not mean that the productivity per hour gap between the average British worker and the average French worker is entirely down to this, but there is certainly an impact.
Ian Mearns
Q 14 In the aftermath of this session, will you write to us to present us with the evidence you have to back up those statements?
Dr Adam Marshall: I would be very happy to look at what evidence is available. As I say, the statistics collected by National Statistics are not acceptable.
Rishi Sunak (Richmond (Yorks)) (Con)
Q 15 Thank you all very much for being here. I am sure that everyone here agrees that the intimidation of non-striking workers and illegal activity on picket lines is wrong and that it is concerning to read reports of that. What are your experiences of picketing from an employer perspective? What are your thoughts on the current status of the code of practice and the provisions in the Bill to put that on a statutory footing? Do you think it does enough to reduce the concerns that some of us might have about behaviour in this area?
John Cridland: The principal concern of business is where picketing action does not fit in with the code. Generally, I think the code works well. The Bill contains a sensible provision to bring legal recognition to the part of the code that it covers, and I think the major provision in the Bill that would impact on picketing is the requirement to have an official who is clearly responsible, and who the employer knows to be responsible, for the actions of the picket line, which is something that employers welcome. I think that is a relatively moderate change to the existing legislation. It builds on a code that has served us well.
Julie Elliott
Q 16 As ever, it is a pleasure to serve under your chairmanship, Sir Edward.
Dr Marshall, I want to come back to something you have just said. What evidence are you referring to when you talk about all the indirect days lost? You have referred to that quite considerably in your evidence, but you then said that you looked to see what there is. Do you have any evidence?
You have also talked at length about what your members think. Can you advise the Committee on what surveys or interaction you have had with your members on the Bill and what came out as their top five priorities? Do the features in the Bill figure in that?
Dr Adam Marshall: Thank you for the question. The point that I have been trying to make and will make again is this: I would very much like the Office for National Statistics to begin collecting more data on the indirect impact of industrial action on the wider economy.
Julie Elliott
Q 17 So you have no statistics?
Dr Adam Marshall: The point that I made right at the beginning was that I want those statistics to be available. Vis-à-vis member surveys, we have not surveyed on this specific topic.
Julie Elliott
Q 18 And the second part of my question about your membership?
Dr Adam Marshall: I said that, vis-à-vis member surveys, we have not surveyed on this particular topic.
Julie Elliott
Q 19 To follow that up, you have said at length in all your evidence on this point that you are representing the views of your membership on this, but how can you say that if you have not surveyed members and asked them the question?
Dr Adam Marshall: We have a range of submissions and a range of comments made to us by chamber councils up and down the country. Like other business organisations, we take both formal and informal soundings of our businesses and we have done so on an informal basis.
Julie Elliott
Q 20 So this is subjective evidence that you are talking about? You have not specifically had any direct comments on this because you have not asked the question?
Dr Adam Marshall: We have had direct comments to us.
Julie Elliott
Q 21 Have you asked the question?
Dr Adam Marshall: Not in a survey format. Not in a quantitative format, but qualitatively, yes.
Julie Elliott
Q 22 So this is subjective evidence, with no objective evidence to back up what you are saying?
Dr Adam Marshall: That is your characterisation of it.
Julie Elliott
Q 23 Is that correct?
Dr Adam Marshall: I am sure there is evidence.
Julie Elliott
Q 25 It does not exist?
Dr Adam Marshall: As I said, it is evidence that has been gathered through qualitative means and not through hard evidence.
Julie Elliott
Q 26 Does it exist to present to the Committee, to write to us about, to show us?
Dr Adam Marshall: I have nothing to present to you in writing at the moment.
The Chair
Normally, we would go to the Government and then to Labour, but I do not want to be too formal. If somebody is bursting to ask a really telling supplementary, they can come in. I think Steve Doughty is burning to ask a question.
Stephen Doughty
Q 27 Just to follow on this point specifically, I am also concerned about the lack of evidence. We have a bit of evidence here that findings from the 2011 workplace employment relations survey revealed that despite an increase in public sector strikes in 2010-11, only 3% of managers were experiencing any disruption as a result of strikes in another workplace. So that is a piece of evidence and I wonder if you or the CBI have any comments on that: very low levels of industrial action and then very low levels of disruption shown in an actual survey, actually evidenced in figures, unlike some of the comments that we have heard from the panel.
John Cridland: If you think of a strike in education, for example, like last year with schools, most employees in most workplaces in the affected area have to provide alternative childcare arrangements. How is that caught in national surveys? It is very difficult to capture—a point that Dr Marshall made. How is that aggregated in employer surveys? It is very difficult.
Stephen Doughty
Q 28 With respect, you are saying that it is very difficult, but you and Dr Marshall are making some very broad statements about this issue without having evidence to back them up. That is what I do not understand. It is a very broad assertion to make.
John Cridland: I think it is just a law of common sense that if a school is closed, every working parent in that school has to make alternative arrangements.
Stephen Doughty
Q 29 But we are talking about the economy as a whole.
John Cridland: With respect, I was using the illustration of a strike in education. Most working parents have to make alternative arrangements.
Nusrat Ghani (Wealden) (Con)
Q 30 You talked about work environments modernising and work practices modernising. I think one of the big changes in the last decade or so is the fact that people want more confidence in companies and public bodies, which means that they have to be more transparent and accountable. One of the clauses in the Bill wants to bring trade union practice up to date with existing best practices as public bodies have to publish all spending over £500. Do you agree with that?
John Cridland: The CBI has concentrated on the core parts of the Bill that most affect our membership, which are the strike thresholds and the confidence around strike arrangements. We support the Bill as a whole but we would leave those other arrangements for the Government to determine through Parliament and the certification officer. Those are probably not the aspects of the Bill that most employers would have at the front of their minds.
Tom Blenkinsop
Q 31 Going back to Stephen’s question about the clause, where you are saying that you want trade unions to support a Bill that has a clause providing that there should be more transparency on trade union spending. That is possibly one of the areas in this country which shows the most transparency on spending. You have then come here, and Dr Marshall has given evidence to this Committee, providing no evidence for your statements. Do you think that may undermine your argument in support of the Bill? You are asking for that type of legislation to be put through, but we still have not been given any objective evidence.
Going back to an earlier comment, Mr Cridland, you talked about concern about disruption and said that, to provide more confidence, you wanted to support this Bill to stop potential trade union actions, yet you also said that it was too difficult to investigate an illustrative example about striking workers in the education sector. Your colleague, Dr Marshall, also said that those investigations had not been conducted. What is the Committee supposed to believe? We are getting subjective statements, but not one of you can show us any objective investigation into your own members’ views on this matter.
John Cridland: With respect, I think that there are two separate points there. There is the mandate that we have to speak for the CBI as a representative body of the views of our companies. There is a separate issue of how the Office for National Statistics captures the impact of industrial action on the economy. I am responsible for the first. I am not responsible for the second.
Tom Blenkinsop
Q 32 But you have not asked your members at all or done any objective studies among your own members, either of you. Has the CBI?
John Cridland: The CBI operates under a royal charter. We are a democratic body. We have elected regional councils. Those councils formulate the opinion of the CBI. We have 140 trade associations, which contribute to that policy-making process. We formulate a point of view which is reflected in the submission we have made on the Bill. That is a process of policy formulation, where employers judge the impact on the economy of disruption and come to a view on how we can promote positive industrial relations.
Tom Blenkinsop
Q 33 Here is a question that you may have asked your members. At the moment I do not think that you have asked your members any question whatever, but here is a question. Have you asked your members about the potential for the rise in wildcat strike action by non-unionised workforces?
John Cridland: Yes, we have discussed wildcat action. There is already concern in the business—
Tom Blenkinsop
Q 34 By non-unionised workforces? Because in the private sector, of course, the vast majority of workplaces are non-unionised.
John Cridland: That is correct. Indeed. That is a matter which is regularly discussed in the relevant CBI governance bodies.
Tom Blenkinsop
Q 35 What would your interpretation be in relation to this Bill?
John Cridland: The overwhelming view of British business as formulated by our own policy and decision-making process is that—using the phrase that Mr Martin described—it is sensible to provide a failsafe against a small number of pieces of industrial action where there is not currently a strong enough mandate from the workforce through trade union ballot. That is the part of the Bill that we are most concerned about.
Tom Blenkinsop
Q 36 So there is no concern about rising wildcat action at all?
John Cridland: Yes. We discuss those issues, we look at the implications and we come—as an independent organisation entitled to form its point of view—to a conclusion. I reiterate that we were advocating this change five years before this Government brought it forward. This is not something where we have simply come to a conclusion on the basis of the draft proposals of the current Government.
Tom Blenkinsop
Q 37 That conclusion was based on no objective evidence from your members.
John Cridland: That is where I think you are, with respect, mixing two different matters. I have explained to you carefully how we formulate policy.
Tom Blenkinsop
Q 38 I am just a member of the Committee trying to get objective answers to questions.
The Chair
Let him answer the question.
John Cridland: It is quite different from the Office for National Statistics having information on the impact on the economy.
Tom Blenkinsop
Q 39 So to reiterate, still no objective evidence yet?
John Cridland: I stand by the CBI’s evidence. That is my evidence. That is what I am presenting to you.
Seema Kennedy (South Ribble) (Con)
Q 40 It is a pleasure to serve under your chairmanship, Sir Edward. Thank you to the witnesses. We have spoken about certainty and clarity in business. Of course, the most essential component of any business is the employees. Will the clear description of the trade dispute and the planned industrial action, which will now appear on the ballot papers, provide more clarity for union members and help them to know what they are or are not voting for?
Dr Adam Marshall: I am happy to begin on that. We support clauses 4 to 6 of the Bill and the requirement for greater information so that everyone can have that information. The point has been made very well through the course of this process that a very small proportion of the private sector workforce are unionised, so this impacts only a small minority of my membership but the point has been expressed to us that they want employees who are being balloted on the possibility of strike action to have maximum information available to them in order to take a decision on the way that they choose to vote.
David Martin: I have nothing to add. Speaking on behalf of my organisation, I do not know the exact percentage. Recognition reflects about 98% of my workforce, I would think. It is not something that I have delved into.
Seema Kennedy
Q 41 I do not understand what you mean.
David Martin: I mean that 98% of my employees are members of trade unions.
Seema Kennedy
Q 42 So you think that it is better for them to understand exactly what they are voting for—to give everybody in a business clarity. That would help to cement better relations between employers and employees.
David Martin: Absolutely. Communication with the workforce is fundamental, from an employer viewpoint and a trade union viewpoint.
Seema Kennedy
And this would be part of it.
David Martin: As part of it, it is fine.
Jessica Morden
Q 43 Can I ask the CBI and the British Chambers of Commerce, are your members concerned about the proposals in the Bill that mean that details of disputes between employers and unions will be posted on the certification officer’s website?
John Cridland: No, we believe that transparency would be helpful in providing the clarity that I gave in my previous answer.
Dr Adam Marshall: Our members have expressed opinions on clauses 2 to 8 rather than clauses 9 to 17—the clauses that reflect directly to the duties of the certification officer in that respect.
Jessica Morden
Q 44 So have you consulted with your members on this at all?
Dr Adam Marshall: They have said to us, through our own policy-making processes, that these are matters that they did not wish to comment on. They wished to restrict their comments to a different portion of the Bill.
John Cridland: My answer was that I am comfortable—the CBI is comfortable—with the proposed changes.
Jessica Morden
Q 45 Does that mean that you have consulted?
John Cridland: Yes. We have consulted on the Bill as a whole.
Victoria Prentis (Banbury) (Con)
Q 46 It is a pleasure to serve under your chairmanship, Sir Edward. As a former Government lawyer, compliance is always of enormous interest to me. Do you feel—this is for all of you—that the enhancements to the role of certification officer are really sufficient and that they will make a difference?
John Cridland: We look to harmonious employee relations. It is very important to us that we work with recognised trade unions and that we work strenuously, as trade unions nearly always do, to avoid these strikes. If there are strikes, they need to be properly and fairly regulated. Compliance is therefore important. You cannot have rules that are not properly enforced. We think these are sensible provisions to strengthen the compliance requirements but I put my answer to your question, if you will allow me, in the context that I have because I think we all want to see these rules applied in the smallest possible number of circumstances.
Dr Adam Marshall: I have nothing to add given my answer to the previous question.
David Martin: Likewise, it is not a provision that I understand in full detail. I need to spend a lot more time to understand the implications of it, so I have nothing to add.
Victoria Prentis
Q 47 The CBI, I know, feels strongly about this, as you have indicated. Do you feel that anything further could be done?
John Cridland: No, I am comfortable with the provisions that I have read and consulted our members on.
Dr Cameron
Q 48 Is it reasonable that clause 13 would give a Minister the power to overrule agreements made by trade unions and employers about the appropriate amount of facility time? Are your members concerned that that could undermine partnership working in the workplace and lead to further disruption?
John Cridland: If I may answer that, it is certainly the case that facility time is best agreed between employers and trade unions. It is primarily an issue of concern in the public sector, not in the private sector. This is not a matter that the employers in the private sector that I speak for have strong views on.
David Martin: I would be quite adamant that I would not want to see it cut across the existing effective working relationships that have built between trade unions, employees and employers.
Dr Adam Marshall: We have a very small number of members whom this affects, so we do not have a mandate to come forward with comments on that.
Dr Cameron
Q 49 You spoke about the importance of communication with your workers and harmonious employee relations. Have you consulted the workforce at all about their views?
David Martin: Not in its entirety. I have certainly had conversations with the full-time representatives that we have within the organisation in this context. I could not say that I have consulted 25,000 people in the UK.
Stephen Doughty
Q 50 I just want to push John on whom he is representing. I would contend that there are actually a number of voices in business and industry who are concerned that the Bill will do the opposite and will promote less positive industrial relations, which could have an impact on productivity and the ability to negotiate. A whole series of measures in the Bill could foster dissent rather than the agreements and constructive relationships that lead to avoiding industrial action in the first place. I was on a panel with a CBI representative a couple of weeks ago and a representative of a major industrial employers’ organisation said, “Let’s put it this way: we didn’t call for this Bill.” Could you just explain, very clearly, whom you are representing and whether there is an absolute consensus of view across business and industry that this is a good thing for business and the economy as a whole?
The Chair
After this one brisk answer, we have one more question and we must then wrap up on time.
John Cridland: I do appreciate that there are a variety of organisations and a variety of voices speaking for the business community. The CBI is an important one, but it is not exclusively the voice of business. Our own organisation has consulted fully and widely through our open and transparent governance processes, and this is the view that we have come to, as reflected in both my written and oral evidence.
Edward Argar (Charnwood) (Con)
Q 51 Thank you for allowing me to ask a question just before the end, Sir Edward.
You have all rightly made clear your views about the important and positive role that you see trade unions playing. Equally, you have touched on the impact that stoppages have in terms of the economy, productivity and people’s lives and how it disrupts them. I agree that the ONS being able to collect statistics around indirect impact would be a benefit to all of us, wherever one stands in this debate, but it is clear and self-evident that any stoppage in a vital public service will inevitably have an impact indirectly on days lost.
As a final, broad-brush question, do you think that, given all that and given the discussions that we have already had with you, the Bill strikes the right balance between the rights of unions and members and a recognition of their positive role and the rights of businesses and the public to get on with working and producing?
David Martin: From my perspective, that balance is the absolute key to ensuring that we maximise and protect the interests of employees and passengers alike. In many respects, the Bill itself, if it comes into practice, has to be extremely transparent, very clear, very workable and not subject to legal disputes at all stages of anything happening in the future.
The Chair
Thank you, gentlemen. That concludes our evidence session with you. Thank you for answering our questions in such a competent and brisk way. We are very grateful.
Examination of Witnesses
Roy Rickhuss and John Hannett gave evidence.
The Chair
Good morning. Our next session will last for half an hour. We have got Roy Rickhuss, general secretary of Community, and John Hannett, general secretary of the Union of Shop, Distributive and Allied Workers. You are very welcome to our morning session. Members will ask you questions, and they may ask you a supplementary question—it is quite relaxed. We will try to get everyone in who wants to ask you a question in the next half an hour.
Stephen Doughty
Q 52 A question first to Roy and then one to John. In terms of the steel industry’s history and industrial relations in the industry as a whole over the past 20 years, where do you think positive industrial relations have helped for both employees and employers in what are clearly difficult times? I particularly commend your work on the situation at SSI, but will you speak in general terms about what benefits a positive relationship between trade unions and employers can have in a crucial industry?
Roy Rickhuss: Perhaps I should start by explaining that my union, Community, was formed in 2004 as a merger between the Iron and Steel Trades Confederation and the Knitwear, Footwear and Apparel Trades. The ISTC was predominantly the steelworkers’ union and KFAT was predominantly textile and footwear. My background is within the steel industry. I was a steelworker when I left school right up until when I started to work full time for the union.
To answer the question on the steel industry, since 1980—incidentally, that was probably when we had the last major dispute in the industry and that was a good many years ago, so we have not done too badly in terms of industrial relations. When you look at and consider the massive changes that have gone on not just in the steel industry but in a lot of our traditional industries that are now in the private sector, we have seen massive changes: job losses; restructuring; reorganisations; flexible working; upskilling; and team working. Change is constant, and throughout that process, my union, like other unions, has been at the forefront of ensuring that that has happened smoothly, in the best interests of employees and the employer, and I think we have done a pretty good job.
I think we have also done a pretty good job in terms of trying to protect the industry. You mentioned briefly the SSI situation, and that is an absolute tragedy. We have a steel summit on Friday where we are meeting with the Minister, Anna Soubry, and we are doing everything we can to try to save steelmaking on Teesside. I do not know whether that answers your question, Stephen, but clearly we would not be where we are today in terms of having any steel industry left in the UK if it was not for the good industrial relations that we have enjoyed for 30 or 40 years.
Stephen Doughty
Q 53 Do you think that the Bill risks worsening industrial relations across the economy as a whole?
Roy Rickhuss: I do, because industrial relations—the previous speaker was interesting—is about getting the balance right. At the moment, if I am honest, I think the balance is not right; I think it is probably weighted slightly on the employer’s side already. So we need that balance and we need good industrial relations.
We have been calling on the Government for some time to look at reviewing and overhauling industrial relations in this country and trying to develop more of a partnership approach where employee representatives and trade unions work in a positive way with good employers, because, at the end of the day, that is what we want. I have never met anybody in my career who does not want to work for a successful company or be part of a successful business, because that gives stability and job security and allows people to do the things in their lives that they want to do. So it is about getting the balance right and working in partnership.
Stephen Doughty
Q 54 John, as you represent a significant number of members in a diffuse sector, what are the Bill’s specific problems and challenges for your members? I wonder in particular what your views are about the Government’s proposals on check-off.
John Hannett: USDAW is the fourth largest union, as you may know, with more than 440,000 members. In fact, it has grown by 100,000 members in the past 10 years. I have spent the past 12 years as general secretary, and seven before as deputy general secretary, promoting the partnership model that Roy referred to. The Bill, in a sense, feels to me more like a control mechanism than a fostering of good industrial relations. What do I mean by that? If you look at the agreement we have with some of the biggest private sector companies, those agreements and those relationships have been informed by, and developed based on, trust, understanding the business and honest representation.
The problem with the Bill is that it sounds like something that is highly political and intended to control behaviour more than foster good industrial relations. We have the biggest private sector partnership agreement in the country, with more than 180,000 members in one of the most successful businesses. All those negotiations take place in a spirit of trust, of building up the relationship and of understanding the sector.
In terms of check-off, this is interesting. If you look at the agreements we have within the biggest organisations in the country, these check-off arrangements have worked. They have been negotiated with those individual companies. To be perfectly honest, without check-off, it would be extremely difficult for a union like mine, which operates in a seven-day, 24-hour sector, where people are working short hours and long hours, and trying to collect union contributions. There is also something significant about check-off. It is a kind of identity between the employer and the union that we co-exist and work together. It is part of their commitment to the union, as we commit to some of the changes.
Roy referred to the many, many changes he has had to oversee. The biggest company we have the agreement with now is going through difficult times. The union is here now, operating and dealing with those issues—not just the good times, but the difficult times too. Is the Bill intended to help industrial relations? I have not seen the evidence. The best way to improve industrial relations is between the employer and the unions where they are represented, in consultation with their employees.
John Howell
Q 55 Can I move you on to some questions about the political levy? It seems to me that there is a fundamental principle of fairness in this. Voluntary funds, which is what the political levy is, should not be taken out of someone’s pay packet without their consent. Do you agree with that?
John Hannett: My union has a very clear position on this that has been in place since the union merged in 1947. First, our rulebook is very explicit about the right to be paying the political levy. On our membership form, when somebody joins the trade union, there is a very explicit clause that says, “If you do not wish to pay the levy, you do not have to.” Some of our members exercise that right, so we already cover it with our form and we are transparent about this in all our communications with our members.
John Howell
Q 56 Do you think that offers the sort of consumer protection that others outside of the trade union movement would expect in being able to deal with the political levy?
Roy Rickhuss: It is a fair question, but I also believe that trade unions are so transparent and democratic—we are probably the most democratic organisations in the country. Our members decide whether they want to have a political fund. Our rulebook and our constitution is voted on by our members—we have to re-ballot them every 10 years, but we have rule changes in between. We have conferences where members can put forward motions and debate issues, so I really do think, democratically, that the fact we have a political fund and we use it for political campaigning is well understood by our members. They vote for it positively time and time again, so I think we are covered. I fully agree with John—people are aware of the unions’ activities because we make them well known. We publicise them, and people do opt out of paying the political levy if they want to do so.
John Hannett: I am conscious of other questions, but I should remind you that in terms of our own levy, the political levy has to be balloted every 10 years. We had a 93% vote in favour, and we communicate that through all our journals.
John Howell
Q 57 Do you think that is applicable right across the board, to other trade unions? You have said what the position is in your own union.
John Hannett: I do. It is very difficult for a trade union to not be transparent in an issue like this, because if you are politically active and campaigning, you have to demonstrate how you spend your money to not only the certification office but also to your members. My union has an annual conference. The idea of not being transparent to an annual conference plus regional conferences would be impossible. As Roy said, it is the most open, democratic process you can have. Our members are not silly. They know where the money goes; they know how it is spent. And if you get a 93% vote in favour, I think that is pretty conclusive in agreeing that they should pay it.
The Chair
Okay. We have a long list of questions. You are warming up your audience, gentlemen, so we will be as brisk as we can.
Chris Stephens
Q 58 Gentlemen, both of you have extensive trade union experience. In your experience, what factors lead to low turnouts when it comes to ballots? Do you support the modernisation of the ballot process—for example, secure workplace balloting? Do you think that it is going to be more difficult to obtain industrial action on issues where there are now 45-day notices of changes to terms and conditions and voluntary redundancy? Lastly, do you think that the picket proposals will lead to more blacklisting?
Roy Rickhuss: There are a lot of questions in one there and it is difficult to answer. I am not sure why there are low turnouts in ballots. We do not experience that. In our union, we recently had a ballot on a pensions issue in one of our traditional industries and we had a well over 75% turnout. I think one issue is the way ballots are currently run. There are already significant, onerous conditions on trade unions in terms of balloting.
One issue in our response to the Bill has been the use of modern technology and electronic balloting. For the life of me, I just cannot understand why there would be any objections to that sensible move forward. I have seen some commentary saying, “Well, it’s not safe and secure.” That is so ridiculous, in fairness. You have to realise that people are not stupid; they do everything online these days. You can do all your banking, you can sign legal documents—you can do everything possible online. To suggest that you cannot vote in a ballot because it is not safe and secure undermines the whole principle of the debate. I think if we had a sensible debate about how ballots are conducted, we might make some serious progress.
Blacklisting is not an issue that my union has experienced significantly. Other unions, predominantly in the building and construction industry, obviously have major concerns about that, so yes, I would imagine that for some unions, it would be a serious concern.
John Hannett: A union like USDAW organises completely in the private sector. We operate in sectors that operate 24/7, seven days a week. My experience when I was particularly active as a union representative was that we had workplace arrangements whereby you could ballot. That used to enable people to go and vote. Of course, the world has changed and it is difficult to facilitate that kind of arrangement, but in terms of the technology, we know that the number of members who join online and who are communicating with the union online is increasing on a regular basis, so the idea of providing a new form of voting is, I think, a sensible one. Like Roy, I have heard nothing that persuades me it could not be done.
The other thing is the industrial relations side that you are picking up. We have a big productivity challenge in the UK. Everybody understands that. What I fear with many of these issues, including the argument about making it harder to run these events, is actually going the other way. So if you are really serious about turnout, you would consider electronic balloting. And in terms of engineering and encouraging good industrial relations, it is not about control mechanisms; it is about engagement, partnership and talking. In fact, if anything, I think this makes it harder for the employers, because this is seen more as controlling mechanisms than constructive relationships. I think it will have a negative impact.
The Chair
I still have seven people who want to ask questions, so from now on we will have one question and one brisk answer, if you do not mind.
Rishi Sunak
Q 59 Thank you, Sir Edward. I very much echo the comments in your submission that responsible trade unions are a force for good in the workplace and the community, so thank you for that.
I just want to return to the topic of the political levy. I was glad to hear that both of you, on your membership form, specifically provide members with the information to opt out. It turns out that that is not as common as you would think and many other unions do not do that. Given what you have said about the importance of transparency and the reason for you to have put that on the form, do you think that it is appropriate that other unions do not include that information?
John Hannett: Well, you are going to be speaking to other unions and they will give you their answer, but for me, it is right to do it, because I think that if I am going to recruit somebody into the union, I have a responsibility to tell them what they get for their money; I have a responsibility to tell them where their money is allocated. Our form is very clear, and we can certainly give you copies of the form. It is explicit that if you wish to drop out, you can. I think that is honest and the right thing to do. I think that is honest and the right thing to do.
Jessica Morden
Q 60 Can I ask Mr Hannett a specific question? You have run campaigns such as “Freedom From Fear”, which is about highlighting abuse against workers in retail and other such sectors. Can you tell the Committee how the measures in clause 11 might affect your ability to run such non-political campaigns?
John Hannett: I am sure that the Committee is aware that there are two separate funds. One is the political fund, which allows us to do political campaigns, so where there is a political link clearly we identify the campaigns as such. For instance, that one is linked politically; it is also linked industrially. On one level we engage with employers about providing good, safe environments for people to work in, but there is also a political impact when we want to campaign for new legislation to protect shop workers. Therefore, we need the resources to do that. We need the right balance, and the political levy and the combination of general and political funds enable us to do that. Without that kind of resource what you are doing is effectively making it harder for unions such as mine to campaign on such issues.
What is really important for me in the question though is the transparency. In a sense, when we go for that 10-year ballot we make it absolutely clear what we spend the money on and we also, of course, let the certification officer see clearly where we spend it. I suppose that unions such as mine and Roy’s are confused about why we are in this situation when we have had a highly successful model.
Roy Rickhuss: We also ran a fairly successful campaign around betting shops and against violence towards workers and staff in those shops, and I am pleased to say that it had all-party support. It was a successful campaign. It is questionable, and I do not know the answer at this stage, whether we would have been able to run those campaigns if they had been deemed to be political and the money had needed to come out of a political fund.
We also ran a fairly successful campaign on pensions when the last Labour Government was in power. We had a company in Cardiff that went into receivership—administration—and our members lost their pensions. We ended up taking the Labour Government to the European courts to establish the financial assistance scheme. Again, would we have been able to do that had we not had a political fund? That was about holding the Government to account in terms of protecting our members and their pensions, and we did it—and always will do it—irrespective of the colour of the Government. Whether it be Labour or Conservative, we will use our funds to protect our members’ best interests and that is what it is about for us.
Edward Argar
Q 61 You have been very reasonable and measured in your evidence, so I thank you for that. Going back to the importance of thresholds, do you agree with Mr McCluskey when he writes to the Prime Minister:
“No one, of course, can be happy when strike action takes place—especially in services on which the public depend—on the basis of the active endorsement of only a minority of trade union members affected”,
and that that clearly helps to make the case for the proposed thresholds?
John Hannett: My view on that is, first, that the obvious thing is that industrial action is a last resort. I spend most of my time as a trade unionist problem solving rather than problem causing. Also, for a member to vote to take industrial action, it has to be a last resort. I could give you statistics, but given the time I will not. We can say that we certainly solve problems more than we go on strike.
The Chair
If you want to add more you can always write to us. Do not feel constrained in that sense. We are anxious to hear the whole story.
John Hannett: Thank you, Chairman. The point I would make is that if you want thresholds and turnout to be the case, you must help as much as you can to get turnout—the access, the facilities and the objective of talking to employees before they participate. But the interesting thing is that if you look at the world of work —I mentioned seven-day, 24-hour sectors—reaching out to those people is very difficult. Our members expect us now to communicate in a way we did not some years ago when people would be released from work when branch meetings took place. Now we have to use the technology to do it. You will get the thresholds up, providing you give the opportunity for people to participate.
In conclusion, it is very difficult, today, even where we have legislation for unions to be recognised, to get access to employees. The private sector is only 15% organised, and that in itself creates a problem. I have no problem with thresholds, but it is the facilities and the access that is the issue.
Jo Stevens
Q 62 It is a pleasure to serve under your chairmanship, Sir Edward. Mr Rickhuss, I have a question about the related consultation on agency workers. Have you received any assurances from the Minister that insufficiently trained workers will not be used in safety-critical positions in your industry during industrial action?
Roy Rickhuss: Well, no, we have not but, in fairness, we have not had that discussion with the Minister at this stage. We have put our evidence to the Committee and we are here today. In terms of agency workers, that is a major concern for all of us. Across all our traditional industries, it seems such an easy thing to say, “We’ll bring in agency workers”, but it just cannot happen. People get killed in every industry and health and safety is paramount and so fundamentally important to all of us—to employers as well. I do not think employers would want this if you speak to them, because what employer is going to put people into a position where there is potential danger? It is not going to happen. These workers are not aliens from another planet; they live, breathe and work in our communities, they are part of our communities, they are people’s sons, daughters, family friends and relatives. It is, potentially, a very divisive clause in this Bill, to say that employers can bring in agency workers.
Briefly, the other impact, which I do not think has been thought through properly, is that we currently have really good agreements with employers—most employers—for the use of agency workers. They are brought in to supplement the workforce if there is a peak or a blip in an order book or a blip in terms of absenteeism. So we already have really good agreements with employers, where we co-operate fully with the use of agency workers to the point that our members—direct employees—will help to train and support those agency workers. My feeling on this, and this has not been said to me, so it is just a feeling at this stage, is that one of our direct members will now say, “Why are we co-operating with the use of agency workers if, if ever there was a dispute—which none of us wants—these agency workers can now be used against us to do our roles?”. My feeling is that some of those good agreements will be ripped up. We will have to give the required notice, but they will be ripped up and binned. Our members will say, “Why are we training agency workers to potentially do our jobs in the event of a dispute?”. I think that this is a really counterproductive measure.
The Chair
I know that our next question will be very brief and to the point and our trade union team will give just one quick answer.
James Cartlidge
Q 63 I want to ask John Hannett—I know you are on the Low Pay Commission and that you have many workers at Tesco, many of whom will be mums, who work part-time, probably at the lower end of the pay scale. I am sure that you will agree they are precisely the sorts of people who suffer when the local school closes or when buses are on strike and that—going back to the thresholds, which is the most important part of the Bill—it is in their interests that we have very reasonable thresholds. On that basis, would you agree that the thresholds that we are putting forward are reasonable?
John Hannett: Well, I think you have to look not just at the thresholds in isolation but at access and balloting arrangements and that was the answer that we gave before. In terms of Tesco and people on low pay, the reality is that strikes are very small in number in the UK, which has been demonstrated over many years. What I think is missing, which is the general point that I would make—and I made the point about control mechanisms—is encouraging good industrial relations, partnership and the stuff that Roy and I are doing. It is all about a race to the bottom. The people who work in Tesco, of course they want to be able to take their children to school but the fact that there is a dispute means that the best emphasis is on how you resolve the dispute.
Everything that I heard in the Bill is about thresholds, mechanisms, control mechanisms—I have also been on the ACAS council for a number of years and all my training, which I believe applies to trade unions, is to solve the disputes. The first thing you do when you go on strike is to try to avoid it by using your mechanisms and your procedures. However, if you do end up in a strike position, there is not a trade union leader I know—or there should be no trade union leader—who takes strike action easily or recommends it. It is a very serious position to take; people lose money, or potentially lose their jobs. That is why think you will find, overall, unions are problem solvers, not problem causers.
Tom Blenkinsop
Q 64 Good morning, Roy and John. I wanted to ask your opinion of the CBI’s evidence, in which they talked about facility time being more of an issue in the public sector than in the private sector. Roy, you know—being general secretary for workers represented in companies such as Tata, Celsa, Outokumpu, Forgemasters or Caparo—and I know, that the facility time agreed on those sites provides health and safety reps trained by the unions, who often become the next health and safety managers on site—for free for those companies. Will you go into the facility time implications that could become apparent on COMAH site safe workplaces?
Roy Rickhuss: Just briefly, obviously I am aware that facility time is probably more of an issue for the public sector—again, there is nothing to say whether that is politically motivated or not—but certainly in the private sector, in the industries that we work in, facility time is agreed with the employer, so the employer is happy and comfortable. It is interesting that employers, again, would probably say, “It’s agreed, it allows people to do a job of work both for the employer and the employee”—so they are attending meetings, doing planning strategy, representing people and ensuring that all the good industrial relations that we talked about are happening and working. Anything that impacts on or tries to interfere with that relationship will be detrimental to good industrial relations.
Tom Blenkinsop
Q 65 Would you also say that they get the technical expertise from the shop floor, which improves efficiency on site?
Roy Rickhuss: Absolutely. People who have worked in a job or industry for a number of years know that job and that industry as well as anyone, so the fact that they are able to sit down with their supervisors and team leaders, or for team brief and so on, and they are able to give of that experience and give across that help and advice is invaluable.
I am not sure where all this fits with the ACAS code of practice, which is excellent and has been used as a good benchmark for decades. Trade union activist officials have the right to paid time off to do their duties, which has never really caused a problem. I am not aware of anyone objecting to that or trying to change the ACAS code of practice. It has worked reasonably well for a long time.
Seema Kennedy
Q 66 Mr Rickhuss, in your written submission you bring out the point that you think that the Bill is going to put too much power in the hands of employers, but would you not agree that those affected by strikes in education and transport have no power at all? Also, when we have very low turnouts, those people are disproportionately powerful, because they can still bring a city to a standstill or close down an entire education system.
Roy Rickhuss: Again, you are talking about the public sector. I do not believe that anyone should be inconvenienced by strikes—that is not my position and I would not say that. What I do say is—back fully agreeing with John—it is about having proper industrial relations and having a partnership approach. I do believe a threshold of 50% plus one is fair and reasonable, because that is what we have—that is our democracy.
It works both ways. If we have a proposal from the company or the management to change a particular working practice, which we deal with almost daily, that is the threshold for whether that working practice or change in terms and conditions is accepted or not. We do not say to our members, “We are going to have an onerous condition that says you have to vote by 60% or whatever to accept a change in your working practices.” The companies are quite happy with that. When they want to change a working practice, introduce some flexibilities and so on, they are quite happy for the union to consult its members, and come back and say, “Yes, that has been accepted by the members.”
The Chair
Okay. I have to stop you there—I think the Minister wants to have the last shout.
The Minister for Skills (Nick Boles)
Q 67 Gentlemen, thank you very much for coming. We are obviously not going to agree on every point in the Bill, but I salute you both as absolute exemplars of trade unions working at their best. In particular, Mr Rickhuss—I do not know whether I have pronounced your name correctly—I wanted to say that as well as having responsibility for the Bill I am the Skills Minister, and if there is anything I can do to help you in dealing with the dreadful situation for the thousands of your members in Redcar, please come directly to me, as I would like to do whatever I can.
Roy Rickhuss: Thank you.
The Chair
Q 68 Do you want to say anything in conclusion, gentlemen?
John Hannett: I have one quick comment. I would impress on the Committee the need to look at some of the best practice as well. Sometimes it feels like a lot of this is perhaps being driven by the worst examples. It would be worth looking at some of the biggest partnership agreements, particularly in the private sector. That would be a much more constructive way forward on industrial relations than just looking at the negative stuff. The model we should be looking at is the biggest private agreement in the country, with 180,000 members in one of the most successful businesses.
The Chair
Thank you, gentlemen, for the impressive way you have answered our questions. That concludes this part of the sitting.
Examination of witnesses.
Stephen Cavalier and Mike Emmott gave evidence.
The Chair
For our last session this morning we have Stephen Cavalier, chief executive of Thompsons Solicitors, and Mike Emmott, senior policy adviser at the Chartered Institute of Personnel and Development. We have half an hour.
Stephen Doughty
Q 69 I have two questions each for you. Mike, your organisation has been very clear about its concerns about the Bill, which has been described as counterproductive and as having potential unintended consequences. Given your representation of members working in HR who obviously have daily front-line experience of dealing with trade unions, industrial disputes and individual disputes, will you explain why you came to those conclusions about the Bill?
Mike Emmott: Thank you very much for that question. Basically, we think it targets a problem that was more evident several years ago than it is today. We do not really have any evidence that the problem has become more acute or needs tackling. In particular, we do not know that, if there is a problem, it should be tackled in this manner. We do not really see the need for legislation on this topic. We do not believe it is likely to have the intended effect of reducing industrial action, or that it is likely to contribute to greater productivity, innovation or performance generally, because it does not really address the issue of relationships on the shop floor, which we see as being at the heart of productivity.
We are more interested in the relationship between employer and employee or workforce and we are a bit concerned that the Bill does not address that in a constructive way. Those are our main reasons. We feel that, particularly in the public sector, the issue of employee engagement—the word “partnership” has been used—the attitude of looking to develop trust, is the way that the Government should tackle the continuing, quite real problems that they will encounter, in the public sector in particular.
Stephen Doughty
Q 70 Okay. That is very helpful.
Steve, you and Thompsons have said that significant aspects of the Bill are essentially unworkable. Will you explain why you believe that to be the case and whether you believe that the Bill will actually lead to an increase in probably expensive litigation if, as you say, parts of the Bill are unworkable or unenforceable?
Stephen Cavalier: Thank you for the question and thank you to the Committee for the opportunity to give evidence today. First, I endorse the evidence given by the witness from Arriva that it is necessary for the Bill to be clear and workable. Putting it bluntly, it is not. It is unworkable in several respects. We heard from the CBI about the law of common sense, which seems to have gone out of the window in some aspects of the Bill. The Bill needs to be workable but it is unworkable in several ways and, in fact, some aspects seem to be designed deliberately to make it difficult, if not impossible, to comply with the provisions. I shall give the Committee a couple of examples.
On the 40% threshold, the Government kick off by saying that the unions must ballot all members who are affected by the dispute. That is simply wrong; it is a wrong statement of the law. They have to ballot those they expect to call upon to take action. They build on that by trying to introduce these thresholds in a way which is very unclear. The thresholds apply where people are normally engaged in important public services—those are not defined—or in ancillary services. The consultation paper for the consultation, which concluded on 9 September —we have obviously not seen the Government’s response—tries to list a whole load of jobs which are included in “important public services”. The Government recognise the difficulty in doing that—it is very unclear—and it is exceptionally difficult to see how a trade union, when balloting, is able to decide whether or not a particular member or group of members is covered by that definition when the information is in the hands of the employer. You may have a mixed constituency, some of whom are covered and some of whom are not. For example, in a school where some teachers are teaching pupils of under or over the age of 16—so they are partly covered and partly not—it is complete chaos as to whether they are actually going to be covered.
On the ballot paper point, an earlier question mentioned the importance of clarity on the ballot paper. It will be a lot less clear if we have ballot papers as proposed by this legislation. What on earth is a reasonably detailed indication—it is an oxymoron, it is internally inconsistent —of the matters at issue in a dispute? As everybody who knows about industrial relations will know, often one of the issues in dispute in a dispute is what actually is in dispute, so I do not know quite how that is going to be stated clearly. This is not about providing information for members; it is about providing ammunition for employers.
The intention here is clearly to encourage a lot of litigation and that is going to be expensive. It is very unclear and an awful lot of detail needs to be sorted out, even, for example, in terms of describing types of industrial action. We had a meeting with Government lawyers and I felt rather sorry for them. They were trying to explain what the provisions meant—I happen to have a lot of time for Government lawyers and the work they do—and they could not explain what types of industrial action they were talking about. They said, “Overtime bans, work to rule”. Well, those are not legal terms of art. That creates more confusion, rather than less.
Stephen Doughty
Q 71 May I ask a specific question about clause 14 and the certification officer? Wide-ranging powers are being suggested with regard to changing the role of the certification officer. Essentially, the certification officer will be able to bring a complaint, investigate it, decide on which witnesses, make decisions over the matter, impose fines and enforce them. Do you think that creates a very unwelcome blurring of the lines between investigator and adjudicator?
Stephen Cavalier: I am not sure that it blurs the lines; I think it probably removes them altogether. There will be a lot of applications to be certification officer on that basis, I should imagine, given the sheer range of powers. The pity is that the certification officer does a very good job of arbitrating in disputes between union members and the union—so, the individual member and the union as a collective. This completely changes that role. It means that the certification officer himself has to initiate investigations, can demand documents and demand immediate explanations of documents, and can appoint investigators, who may not actually be employed by the certification officer—they may be from accountants, for example, at enormous expense to the unions themselves, who then have to pay a levy for it.
It is interesting that unlike in employment tribunals, where applicants have to pay a fee to bring a claim, no one seems to be suggesting that a complainant needs to pay a fee before they go to the certification officer. Then, to extend that, to be able to impose fines and the fact that enforcement orders by the certification officer can be enforced not just by the certification officer but by individual members as well, goes well beyond any rule-of-law or natural justice considerations.
John Howell
Q 72 We heard from the CBI and the British Chambers of Commerce that all this Bill does is modernise the way in which trade unions behave. It does not introduce a fundamental change in the trade union rules that apply, so it is very difficult in that circumstance to understand why you describe the Bill as unlawful and unwarranted. In the example that you use of not being able to tell what the nature of the dispute is, surely it is in the interests of transparency that that should be settled and be clearly on the ballot paper.
Stephen Cavalier: The problem here—I was in a meeting with some employers’ lawyers and they were expressing it this way—is about forcing such a detailed description of all the matters at issue in a dispute at the start. The lawyers’ concern is that unions will be forced to draw the dispute as broadly as possible to include every single aspect, and moreover, that it is likely to escalate matters because unions will feel reluctant to compromise on individual issues in the dispute, as employers will otherwise argue that consequently the dispute has changed and that there needs to be a re-ballot. It forces extreme behaviour, if you like, and it is likely to mean that a dispute escalates.
In terms of being unlawful, we mentioned in our submission the areas where we believe it contravenes the European convention on human rights and the International Labour Organisation code. The other point to make is that, as the Regulatory Policy Committee said in its response to the impact assessment, there is absolutely no evidence that it will work. In terms of modernising industrial relations, the Regulatory Policy Committee has said that there should be separate assessments of the 50% threshold and of the 40% threshold. It completely rejects the analysis of the likely impact of the threshold on the outcomes of disputes, because there is no analysis of the impact of a threshold on voting behaviour and turnouts in the elections themselves.
Dr Cameron
Q 73 The Government are consulting on draft regulations that would repeal the restriction on providing agency staff during industrial disputes. What are your views on these proposed changes? Could they further undermine industrial relations?
Mike Emmott: Our view is that the consultation paper overstates the likely impact of removing the prohibition on employment agencies supplying workers on a temporary basis during industrial disputes. It is already possible for employers to recruit temporary labour without any difficulty, provided that they do it directly. For some of the reasons that emerged from the last witness session, we think that issues of training and safety, never mind the availability of qualified staff, will very considerably reduce the impact of this, which is the third of the consultation issues. It is likely to be pretty much a non-event, except possibly in some cases where employers—maybe large employers—have close relationships with agencies, and on a daily basis they take on quite a lot of temporary labour. It might be difficult to know whether or not particular workers were engaged in replacing workers who are on strike. But in general, we do not think that this particular part of the Bill is likely to have any major impact. I do not speak for recruitment agencies or recruitment businesses, but I think that many of them will be quite reluctant to get sucked into industrial disputes.
Stephen Cavalier: Indeed, the recruitment businesses’ own organisation, the Recruitment and Employment Confederation, has said that this is a very dangerous proposal which it does not support. The Regulatory Policy Committee itself said that there was absolutely no basis for the Government’s assertion that 22% of days lost would be solved by this. Moreover, there are very good emergency arrangements in place to ensure that cover is provided in the public sector, certainly in the fire service and in midwifery. I am sure that people would much rather have those arrangements than agency workers brought in to put out fires or to deliver babies.
Victoria Prentis
Q 74 My questions really relate to the certification officer, which you present in your evidence as a sort of big bad wolf, and you seem very concerned about the prospect of the additional powers. I put it to you that really the prospect of having a certification officer is surely a sensible solution to difficulties with compliance, and an appropriate response to situations where non-compliance may have occurred. What strikes you as so outrageous about having to produce documents?
Stephen Cavalier: Well, first, the certification officer is not a big bad wolf, and his current iteration is doing a very good job. I would be very interested to hear from the Government what consultation there was with the certification officer about his own powers and his current arrangements, and whether he felt that his powers needed to be extended, and indeed what consultation there was with other agencies on the impacts of these powers. The purpose of the certification officer was to enable individual union members who felt that they were getting the wrong end of the stick from a collective issue to have a voice, which they would otherwise not have had. It is not about allowing outside agencies to influence the state regulator or to put pressure on the state regulator to initiate action. I cannot see how a state regulator can be impartial if they can be prevailed upon externally to take action. Also, if they were funded in the way that is suggested, that would completely alter the nature of the role.
Victoria Prentis
Q 75 But would you agree that the purpose is to establish whether or not there has been non-compliance?
Stephen Cavalier: Well, I am not sure that it is to establish whether there has been non-compliance. Non-compliance with what? At the moment if there is an issue to do with rules or statute, a member can complain to the certification officer. What is actually changing here is to take it beyond that and start, for example, requiring unions to report to the certification officer details of industrial action, which are really none of the certification officers’ concern. A certification officer is essentially there to deal with internal matters within unions to do with disputes and rights within unions, whereas here they are talking about the possibility of any person initiating a complaint with no written notice, and calling on unions immediately to produce documents and immediately to explain documents—it is difficult to see what the purpose of it is. It is very intrusive. This would certainly impact on unions’ own regulation and their democratic right to organise and be accountable, which is likely to call into question the European convention and ILO matters.
Victoria Prentis
Q 76 It is not unreasonable, though, to ask that the certification officer be able to have documents produced to him, is it?
Stephen Cavalier: Well, if there is a complaint made to the certification officer by an actual member about a real concern—
Victoria Prentis
Q 77 Forgive me, if the certification officer has a concern, he should surely—
Stephen Cavalier: The certification officer does not range around the country investigating trade unions and looking at what they are doing to find out whether he has a concern. Where are the concerns going to come from? At the moment, the certification officer is dealing with complaints that are made to him from legitimate concerns about individual union members or groups of members. If he thinks that that complaint has some grounds, he can deal with that, and in the course of that hearing, he is entitled to ask for documents and to have documents produced in the same way as an employment tribunal.
Victoria Prentis
Q 78 But you are not happy for him to self-generate concerns.
Stephen Cavalier: For example, were you suggesting that there should be a labour inspectorate that could decide whether it thought there were poor labour practices going on around the country and could call for employers to produce and explain documents, like a health and safety inspector can, that would be a very different situation. The proposal here completely alters the role of the certification officer from deciding on legitimate complaints to going out and fishing around to try to find issues. Where would the certification officer make these decisions? Why would they be making these decisions? The Law Society is very concerned about the complete change in this role and the fact that it fundamentally alters the nature of his role.
Ian Mearns
Q 79 I am grateful, Sir Edward. I understand from social media links that I read yesterday that many of the suggestions in the consultation on the Trade Union Bill are likely to be withdrawn, although we have not had that confirmed yet. I find that disappointing, because I was personally looking forward to a sustained bout of wildcat or secondary tweeting. The Government’s proposals treat abstentions as no votes. How would it impact, for instance, on the likelihood of a trade union ballot reaching a threshold if everyone who wants to vote no just abstains? Would that raise any prospect of legal challenge, given that the ILO has confirmed that only votes cast should be taken into account in industrial action ballots?
Stephen Cavalier: On the point about thresholds, as the Regulatory Policy Committee has said, the likelihood is that the existence of the thresholds will have an impact on turnout and behaviour. In terms of modernisation and coming back to the previous question, if we are genuinely looking to modernise trade unions, electronic and workplace balloting are essential for that and for increasing turnout. You are absolutely right that the provisions under the ILO convention specifically say that an abstention should not be treated as a no vote, and that is a clear area of potential illegality. There are not similar thresholds in any other European Union member states or Council of Europe convention states. The Bill introduces a new requirement that is likely to be found to be unlawful. In particular, the treating of an abstention as a no vote is likely to be subject to legal challenge.
Ian Mearns
Q 80 In terms of an international comparator, who would this provision put us in line with?
Stephen Cavalier: I think the only threshold is in Bulgaria, where there is a 50% threshold, which is likely to be under challenge.
Ian Mearns
Q 81 So, for UK, read Bulgaria.
Stephen Cavalier: Quite possibly.
Rishi Sunak
Q 82 Thank you both for giving up your time today. I want to turn to the clauses about the transparency of political donations. Stephen, I noticed that in your submission you made the point that you do not think any other bodies are subject to similar provisions. I am not a lawyer, so perhaps you can help me, because my understanding from my business life is that the Companies Act 2006 requires the annual disclosure of political donations by companies and, further than that, requires active shareholder consent and a resolution to be passed, rather than an opt-out system, which is obviously a higher threshold than what we have today. I think you used the language “oppressive”. Would you consider the system of corporate donations we have today to be oppressive?
Stephen Cavalier: I would like to see a lot more transparency around corporate donations—things such as the Midlands Industrial Council, which is the major contributor to one of the political parties—and funds that are channelled through intermediaries into political parties. I would like to see shareholders having a real say in whether there are political donations. We have heard the point about the wider political implications of the political fund rules on broader campaigning. There is already complete transparency of the donations that are being made.
It is extraordinary to suggest that every trade union whose total donations exceed £2,000 per annum has to give details of every single individual donation, what it is used for and to which recipient on an annual return each year. That is an extraordinary intrusion of privacy on the individuals who make those donations. I do not see any equivalent provisions in relation to companies. I defer to you if there are such provisions.
Rishi Sunak
Q 83 The difference would be that a company cannot just take money from shareholders, give it to political parties and ask shareholders to opt out; they have to acquire active shareholder consent. Unions today do not have to do that. Do you think that balance is right?
Stephen Cavalier: Well, that is not a correct characterisation of the situation. At the moment, unions have to ballot every 10 years for a political fund. You have heard from Mr Hannett already; 93% of USDAW members voted in favour. That is quite a common percentage among trade unions. Every single union must have a political fund ballot every 10 years. Every single member is legally required to have a notice when they join that gives them the opportunity to opt out of the political fund if they want to. Those provisions already exist.
The measure suggests that that should be changed, by the way, on the basis that within three months of the Bill becoming law, every single trade union member who pays the political fund will have to write in by post or by hand to opt in, with no opportunity to do so electronically. It completely fails to take into account that, as matters stand, unions are required by law to have a political fund rule adopted under their own constitutional provisions, which is approved by the certification officer. If you change the law in this way, every single union will need to change their rules, have those rules approved by the certification officer and get their members to sign up, which they simply cannot do within three months. To my mind, it is another example of a deliberate attempt to draft the legislation in such a way as it cannot be complied with by trade unions.
Rishi Sunak
Q 84 This is the basic issue of fairness—of people’s contributions being taken without their active consent at the time of membership. We heard in earlier evidence that some unions support that but it is very much not the widespread practice among all unions to provide that information to their members. If you support transparency, it is clear today that that transparency does not exist across the entire board.
Stephen Cavalier: It is a legal requirement to tell members that they have the right to opt out of the political fund. If they wish to, they do so.
Chris Stephens
Q 85 I have several questions. First, do you agree that there is a danger in introducing thresholds—the impact that it will have on some gender equality issues, for example? Shift changes impact workers trying to pursue equal pay issues and the like. Secondly, is there a new danger of public bodies having to reissue new, individual contracts on the basis of opportunities to check-off and those sorts of issues? Do you see any impact on the devolved Administrations given that your organisation has offices across the UK?
Stephen Cavalier: First, on the equality point, the TUC has already submitted evidence. There is a disproportionate impact of thresholds on women workers; it is absolutely clear that there is a discriminatory impact. On the question of check-off and facility time, we are also a large employer. We have check-off and facility time and we are pleased to do so. It is something that we have agreed with our workforce and it works very well for us. I very much endorse the comments made in a 2012 paper by called “Stop the Union-Bashing” by Robert Halfon MP, who says that Whitehall should not dictate to employers and that it should be a matter for employers to agree facility time. I commend that paper to the Committee. It is certainly right that employers should agree facility time and check-off. It is a matter for them.
There are serious issues here associated with the devolved Administrations. As I understand it, they have the right to determine these arrangements within their own spheres. This does cut across that, and it does so in a very negative way. It is very concerning that the impact assessment itself—in fact, I think the European convention assessment that the Government have produced says specifically that this removal of existing contractual arrangements and collective agreements may have retrospective effect. That is a serious potential breach of article 1, protocol 1 of the European convention.
James Cartlidge
Q 86 Thank you both for coming. You have both spoken about thresholds and their potential impact, but neither of you seem to have focused on the key point that matters to the country at large, which is that it is so unfair to our commuters, our parents and so on that their public services can be brought down for days on low turnouts. We heard earlier from Arriva that on a 17% ballot, 50% of their buses were out for a day, causing massive disruption to its passengers. Do you not accept, in principle, that it is right to deal with that?
Mike Emmott: Our view is that although it is conceivable that the increased threshold will influence the outcome in some cases, it is quite unclear whether it is going to make striking more or less likely. There are lots of way of causing problems. We do not have a view on whether or not the thresholds are right in principle. We simply take the view that they are just as likely to cause more trouble as they are to reduce it.
James Cartlidge
Q 87 The point is not whether it makes it more or less likely, in my view. The point is that if the strike goes ahead with the sort of turnout we will require, the public are much more likely to accept it. That is surely the point. At the moment, these strikes are happening on a very low turnout. Do you accept that we are right to deal with that?
Stephen Cavalier: Can I come in on that premise? The Regulatory Policy Committee has said that there is no evidence that the thresholds would have that impact. Strikes are not going ahead on those low thresholds. One particular example was given by a colleague from Arriva, and what he said about inward investment in response to the question was very interesting. The fact of the matter is that the current legislation and the current situation have not prevented the Governments of France, Germany, Holland and other countries from investing in the UK rail network and owning train operating companies. There simply is not that problem.
James Cartlidge
Q 88 So you do not think we should be doing anything about thresholds. You think it is right that schools, buses and other major public services can be brought down for a day or more on the basis of very low turnouts. In principle, do you think that is fair?
Stephen Cavalier: There is not a problem on low turnouts, and the way to tackle turnouts that has been suggested is workplace ballots and electronic ballots.
Mike Emmott: Simply, if you have a ballot, the unions are going to take into account the likely response by members and choose situations where they are more likely to win rather than lose, and why not? Once you get a big majority in favour and it is clear and transparent, I think that legitimises the action. Whether it makes it more acceptable I am quite doubtful of, but you have to take account of the fact that you may be pulling in members who actually support the action that is being called rather than appealing to some supposedly moderate majority who do not want it.
Stephen Doughty
Q 89 We have heard a lot about schools, hospitals and transport. Obviously, those are devolved matters. We are hearing from the Scottish and Welsh Governments later on today. In your view, is there a fundamental breach of the devolution settlement here and potential legal proceedings as a result of some of the measures in the Bill impacting on decisions that are actually fully devolved to those Governments and, indeed, in a number of cases, to local governments across England?
Stephen Cavalier: Yes, I think that is absolutely right, in relation to facility time and check-off and to these matters to do with the threshold.
Stephen Doughty
Q 90 Do you agree with that, Mike? Do you think there is a risk here? You deal with Governments, public services and businesses across the UK. Do you think there is a problem here in terms of devolution?
Mike Emmott: I do not know what the devolution settlement would say specifically about these collective issues. I understand something about individual conflicts, tribunals and so on. We have not consulted members, but I think it is appropriate for these issues to be dealt with on a national basis. It is going to be quite odd for employers dealing with different rules applying in different jurisdictions, where there may be issues that go across the whole of the UK.
The Chair
We have come to the end of our time. Thank you for speaking to us. I thank the Members. We are going to adjourn until 2 pm, when my colleague Sir Alan Meale will take the Chair. He is a very kindly gentleman, so I hope you will be equally well behaved with him. It has been a very good session, and everyone has got in who wanted to.
Ordered,
That further consideration be now adjourned.—(Stephen Barclay.)
Trade Union Bill (Second sitting)
(9 years, 1 month ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Order. We will now hear oral evidence from 2020 Health. Ms Manning, Members on either side of the room will be asking questions, but please give us a brief introduction first. We have to finish at 2.30 pm.
Julia Manning: Thank you for the invitation. My name is Julia Manning, chief exec of 2020 Health. We are a think-tank whose mission is to make health personal. That is very much about information, education, understanding and confidence for individuals to make decisions for themselves.
My background is that I served in the NHS for 19 years as an optometrist, firstly in the high street and then in hospital, in research practice and finally with people who are housebound, disabled, end-of-life care and also working in prisons with people who are sectioned under the Mental Health Act. So I have an NHS background and I continue to be involved in research. I am a research associate at UCL in medical anthropology looking at the impact of digital health technologies on behaviour and wellbeing.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
Q 9191 Thank you Sir Alan. I welcome you to the Chair and hope that you will enjoy proceedings with us over the coming weeks.
Julia, I was not aware of your organisation before seeing you were giving evidence today. Could you clarify if you have ever had any associations with any political party in the past? Does your organisation or anybody in a senior position or present directors have any political affiliations?
Julia Manning: Yes. After 10 years in the NHS I was very frustrated that a lot of what I did was influenced and dictated by politicians. I had no prior engagement in party politics at all. I looked at what the different political parties were doing in health inequalities, and at that time, under the leadership of William Hague, the Tories were doing more than any party, so I joined the Conservative party.
I stood as a councillor and stood in the 2005 general election. During that period I became increasingly concerned that the front line of the NHS—whether managerial, clinical, research—did not have a voice when it came to policy formation, so I gave up my parliamentary ambitions and set up 2020 Health, which is about having vision for the future and not our sell-by-date.
Stephen Doughty
Q 92 Am I correct that your current president is a former Conservative MP as well? Is that right?
Julia Manning: Are you referring to Dr Thomas Stuttaford?
Stephen Doughty
Yes, Thomas Stuttaford.
Julia Manning: He has been ill for some time, so we have not had any contact with him for some years.
Stephen Doughty
Q 93 But he was involved?
Julia Manning: Yes, he is notionally still our president.
Stephen Doughty
Q 94 And he is a former Conservative MP. Is that correct?
Julia Manning: Yes.
Stephen Doughty
Q 95 Why do you think this Bill is necessary, particularly given the lack of industrial action in the health sector? The RCM has obviously not authorised industrial action before; it was the first time the RCM had gone on strike in its 134-year history. Given that, why is this Bill so needed in the health sector?
Julia Manning: I think you are right that the health sector is part of the public sector that has set a very impressive record of not taking industrial action. You cannot speak for everyone—there is over a million employees—but the ethos has been very much one of focusing on caring for the individual and doing everything possible to keep that as your primary focus. That is the perspective that I am coming from.
Stephen Doughty
Q 96 I am interested in that because you are talking about the relationships that exist in the health service and that ethos of patient care and so on. I am well aware that concerns about the Bill have been expressed to Ministers in writing and submissions from senior figures in the NHS, who have made a point of emphasising their strong partnership arrangements with trade unions and the fact that they are worried that the Bill is going to put that at risk—in jeopardy. In one letter that I have seen they say that it will make us less able to agree solutions locally to manage any potential impacts of any actions in the future. Would you agree that there is a serious risk that the Bill will put at risk those type of partnership arrangements that have ensured that patient care is the focus, even when there are industrial disputes?
Julia Manning: No, I do not agree, and I do not really see where that concern comes from. My understanding is that the Bill ensures that everything possible has been done in terms of sorting out issues at the front line and that it ensures that there is a large majority of opinion that action needs to be taken, rather than a few vocal proponents of action being allowed to have their head.
Stephen Doughty
Q 97 Even though there has not been such action, as you have accepted, in terms of the RCN and the RCM and many other bodies?
Julia Manning: The RCM, I believe, was going to take action in 2014, and then at the last minute—
Stephen Doughty
Q 98 For the first time in 156 years.
Julia Manning: Absolutely. Prior to that, there was some action in 2001, and in 1982. It has been rare in health.
Stephen Doughty
Q 99 Okay. I have a specific question about devolution. Do you operate just in England, or do you operate across the UK?
Julia Manning: We operate across the UK.
Stephen Doughty
Q 100 What do you make of the position of the Welsh Government, and, I believe, the Scottish Government as well, that significant parts of the Bill cut across the devolution settlement? These are fully devolved matters—health is a fully devolved matter, and yet the Bill effectively interferes in relationships that the devolved Governments have with the health sector.
Julia Manning: I am not an expert in devolution, but I think that the general direction of travel is a greater emphasis on local relationships and local negotiations, and the Bill reflects that.
Stephen Doughty
Q 101 So you would agree that the Welsh Government and the Scottish Government should have the freedom to be able to determine those local relationships, rather than being interfered in by the Bill?
Julia Manning: I think it is a conversation that needs to take place across the country—across the devolved nations.
John Howell (Henley) (Con)
Q 102 The health service would be subject to the 40% threshold for strikes. Do you think that that has been drawn widely enough, and would you like to see any other bits of the health service included in that?
Julia Manning: In terms of detail, I have not clocked all the amendments, and one of my concerns was that certain areas would be excluded. Maybe you can tell me, for instance, what the terms are for some of the critical services, such as intensive care and emergency services, and whether they are different.
John Howell
Q 103 So you would like to see those included.
Julia Manning: I would like to see them excluded. I do not think, if you are working in intensive care or emergency services, you should have the right to strike.
John Howell
Q 104 What do you think the effect of the Bill will be on patients seeking healthcare?
Julia Manning: Thinking about the Bill, the wider context is really interesting in terms looking at the trends for our ageing population, the greater proportion of people who will have long-term conditions, who will be dependent on interventions and who will have been lined up potentially seeking to have treatment and then feel that that might be jeopardised by industrial action. There is a volume issue here.
For me, the Bill raises the discussion that I feel we should be having around the changing nature of the workplace for the NHS as a whole, because of the impact and influence of technology, which is changing many of the duties and roles that people have and the opportunities for the public to look after themselves. It feels to me as though we are still talking about skills and the workforce as it is now, but what is it going to look like in five or 10 years’ time? It could be very different.
John Howell
Q 105 Would you like to give us a view of what you think it will look like, and how the Bill would affect that in five to 10 years’ time?
Julia Manning: Again, I will try not to get too technical or philosophical. The Bill does not go into the detail of the many different NHS roles and responsibilities, but those are going to change. As patients, as the public and as what we call “participatients”, we will have information and access to all sorts of things that we currently do not have access to, which have been the preserve of the NHS. Down the line, the impact of action could be quite different because of what we as the public will have access to, which will no longer be within the control of NHS professionals. That is something we should be mindful of.
Chris Stephens (Glasgow South West) (SNP)
Q 106 It is a privilege to serve under your chairmanship, Sir Alan.
I would first like to ask: are you aware that the current law in terms of trade unions participating in industrial action is that they must provide life and limb cover? If so, does that assuage your fears? In addition, what surveys have you taken of the members in your organisation? You did intimate to Mr Doughty that you are organised across the UK. Also, do you believe that, with any changes at all within any of the health services across the UK, there has to be a negotiated change and a mutual partnership arrangement between employers and the trade unions?
Julia Manning: On the first point, in terms of like for like—
Chris Stephens
Sorry, it is life and limb cover. Trade unions are legally obliged to provide life and limb cover in any industrial action.
Julia Manning: Sorry, could you repeat the question?
Chris Stephens
Basically, are you aware that trade unions have to provide life and limb cover in an industrial dispute? Does that assuage your fears of what is currently taking place in the workplace? Are you more relaxed that because a trade union under current law has to provide life and limb cover that you are comfortable with that? You have raised a lot of points on some of the earlier questions about the impact on patients.
Julia Manning: My concern with that is about the projected increase in the number of patients and, therefore, the workforce we will potentially need. We already have shortages in skill sets in all sorts of areas. If I understand you correctly, the opportunity to provide cover is going to be harder.
Chris Stephens
Q 107 Do you know what life and limb cover actually is?
Julia Manning: Give me your definition.
Chris Stephens
Q 108 In an industrial dispute a trade union is obliged to maintain services while workers are on strike, and to provide cover in case of emergencies: health and safety emergencies, for example. In the NHS, there would have to be some sort of provision for those who are critically ill. Have you considered the life and limb cover issues that are in existing trade union legislation?
Julia Manning: As an organisation, no we have not.
Victoria Prentis (Banbury) (Con)
Q 109 Going back to devolution, on which I recognise you are avowedly not an expert, take it from me that health is a devolved issue. I think my colleague mentioned that. Do you view the Bill as being concerned more with employment and industrial relations than health? Obviously, you look at it from a health perspective, but in your mind, what is the Bill concerned with?
Julia Manning: The Bill from my perspective and the interest I have in it is how patient experience would be affected by the Bill and has been affected by strikes. When we already have a scenario of shortages in the workforce and treatment being curtailed and postponed for other reasons, it is another consideration for us that would mean that people are not seen when they expect or need to be. That is my interest in the Bill.
Jo Stevens (Cardiff Central) (Lab)
Q 110 Can I ask you about clauses 12 and 13? They propose to change the current arrangements for facility time, and facility time operates within the NHS. What do you know about the current arrangements and what do you consider their benefits?
Julia Manning: Of facility time? I do not know about that.
Jo Stevens
Q 111 You do not know anything about facility time?
Julia Manning: No.
Rishi Sunak (Richmond (Yorks)) (Con)
Q 112 Concerning patients’ access to healthcare, as you mentioned, when there are strikes in other sectors outside healthcare, for example, in transport or schools, presumably that impacts a lot of people who are employed by the NHS or other healthcare operators. Do you have any thoughts on the disruption that strikes in those sectors have caused in healthcare and in the NHS, and do you think that this Bill will at all improve patients’ access to healthcare in those circumstances?
Julia Manning: That is an interesting question, particularly in the light of the recent strikes that we have experienced in London and on London transport, which we know have had a significant impact on the ability to run clinics in hospitals across the capital. That is the extent of our interest. Again, I take that back to the patient experience and either their managing to get there and then not being able to be seen, or their being told that they cannot be seen because of that action—the influence that has on someone who requires urgent treatment for sight loss or on someone who is isolated, has had a fall and then had their hip replacement postponed again.
Our interest is very much at that personal patient level, but the repercussions go beyond that individual’s experience, because of those around them and the other circumstances that have had to be arranged. Your point is very valid in terms of the influence of other industrial action on the ability of the health service to do its job and, quite practically, for staff to be able to be on site.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
Q 113 I wonder what your views are on the opinions of the Royal College of Nursing, the Royal College of Midwives, the British Medical Association and the Society of Radiographers, which all state that there are aspects of this Bill that are deeply concerning to them with regard to patient care. What would your response be in that regard?
Julia Manning: Can you give me an example of one of their concerns?
Dr Cameron
Q 114 Yes. For example, the RCM has spoken about the use of agency workers, which it describes as being potentially detrimental to patient care, in relation to those workers’ ability to understand patient care regulations within the workplace and so on.
Julia Manning: I agree that use of agency workers is always sub-optimal, but it happens all the time for other reasons. There are bigger issues, and issues that occur more frequently, which create the need for agency workers to be brought in. Those issues need to be addressed outside of this.
Dr Cameron
Q 115 The RCN opposes the Bill. If the Bill is enacted, the RCN says, it
“could have serious consequences for productivity and morale in the NHS”,
and therefore it poses a threat to patient care.
Julia Manning: That has to be looked at while considering the balance between the ability to take action and other factors, so you could argue from both sides that patient care will be affected if action is taken or if it is made more difficult to take action. Patient care is a concern that needs to be at the forefront of all decision making. Looking at the RCM in particular, it was very much at the heart of the call for action a couple of years ago but then stepped back, and I think that it did absolutely the right thing.
Dr Cameron
Q 116 But you have no concerns that your views appear to be in opposition to all these bodies, which represent medical and nursing staff and which are concerned about patient care, as well as the impact on it?
Julia Manning: I do not see it as being in opposition. I am as concerned as they are about agency workers, but there are many more issues that require agency workers to come in.
James Cartlidge (South Suffolk) (Con)
Q 117 It is a pleasure to serve under you for the first time, Sir Alan.
Thank you, Julia, for coming in. I have read many of your organisation’s reports; they are incredibly authoritative and look at many wider issues of health, including stress. The nub of this Bill—the biggest issue—is when cities and economies are paralysed by major strikes that are called on a low turnout. I think that is the biggest issue out there for the man or woman in the street. Those days are incredibly stressful for people who have to reorganise their childcare and who cannot get a train, so that they have to stand in a rugby scrum to get on a bus. But it is a serious point—commuting is one of the most stressful activities that we now do—and so I would like to have your thoughts on whether we can make life easier for people and have less stress by having fewer such disturbances.
Julia Manning: Yes, I agree with you, and that stress applies not only to those who are working in the system, but to those who expect to be treated on that particular day. There are known risks already. I can draw from my own experience of people who have been referred, for instance, for cataract operations for sight loss and have had them postponed again, either because the staff cannot get there or because other staff—usually not directly the doctors, but those who facilitate the care—have taken action.
I recognise that that has been the exception rather than the rule in the NHS. I see that the repercussions of action taken by others, for instance in the transport sector, have a greater knock-on effect and a more direct impact than any action taken by the health service personnel themselves. But the scenario in which someone does not get treated for whatever reason and then has a fall—the worst-case scenario being that which results in their death—can be prevented. If we can put something in place so that that is less likely to happen, I would welcome that.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Q 118 I was going to ask a question, but you actually answered it in your previous response about the exception to the rule in relation to how industrial action might affect access to services for patients. How often, in your opinion, do the exceptional circumstances that you are coming out with actually happen?
Julia Manning: I only looked back to 1982, I think; so for prior to 1982, I could not tell you.
Stephen Doughty
Q 119 Going back to the fundamentals of why you are appearing and giving evidence today, why did you think you were called to give evidence on the Bill? Why were you asked as a Government witness? Has your organisation lobbied for the Bill and the measures in it? Have you been meeting with Ministers arguing for the measures in the Bill?
Julia Manning: No, but we have a strong record on representing patient interests, talking about the patient experience and considering the wider landscape of change in legislation in terms of trends in population—
Stephen Doughty
Q 120 Sorry, but just to clarify, you did not ask for the Bill before it was published? Your organisation has not published a report or given a submission?
Julia Manning: No.
Julie Elliott (Sunderland Central) (Lab)
Q 121 You just said that your organisation has a strong record on representing patient interests. In what way do you engage with patients? How representative are you? Are you represented across the country? How do you conduct that information-gathering exercise? How can you validate what you are saying in terms of representing people? Representation is a strong word.
Julia Manning: I agree, and right from the start it was something that we thought seriously about in terms of engaging not just with the front-line people who are doing the job and delivering services, but with those who receive them as well. The way in which we engage in all the research we do is that we have steering groups. We engage with the relevant charities. We do polling. We do a lot of one-to-one interviews with people who are either on the receiving end of services or involved in delivery. There is a lot of dialogue with people who know what they are talking about, either from a position of being at the front line of delivering services or of having received treatment.
Julie Elliott
Q 122 To follow up on that, I represent a constituency in the north-east of England. I am not aware of anything you have done with patient interest in the north-east of England. You might have done something. How have you looked at things in the north-east, for instance, in terms of engaging with representing patients? Not speaking to charities or anything else, but representing patients, which is the term you used.
Julia Manning: The one thing we did in your area was to hold a workshop looking at the emergence of health and wellbeing boards and how they would engage with the local population.
Julie Elliott
Q 124 About 30 out of a population of 4 million? Out of a population of 4 million in the north-east, about 30 people attended a workshop about one specific thing. Would you say that that represents patient interest?
Julia Manning: What I would say to you is that we are a small organisation focusing on particular areas of research. When we undertake research we make every effort to make people aware that we are doing it and encourage people to get involved.
Julie Elliott
Q 125 I totally accept that, but you said you represent patient interest. Would you like to amend that? Is it still your view that a workshop of 30 people out of a population of four million—
Julia Manning: That was my answer in response to your question about what we have done in your area. Let me give you another example. We did a piece of work that came out last year, looking at people with HIV in the population. We worked alongside all the major HIV patient charities and we specifically looked at the needs of older people, because more than half the people in the country now who have HIV are aged 50 or older and services are still organised for 25-year-olds. That is the kind of work we do, where we are thinking about the needs of under-served populations whose concerns have not been represented. This is the kind of thing that we will pull together and put into a policy document to present to those who are commissioning services and campaigning for improvement on behalf of patients.
Julie Elliott
Q 126 That is absolutely fine, but I question whether that is actually representing patient interest, which is what you said your organisation does. I struggle with the concept that your organisation is a representative body of patient interest. That is the point I am getting at. I am not having a go at any of the work you have done or how you have done it, but I struggle to reconcile what you said your organisation is there for—representing patient interest—with what you outlined that your organisation actually does.
Julia Manning: I welcome you to look at the reports on our website and see the work we have done over the past eight years.
Edward Argar (Charnwood) (Con)
Q 127 Clearly it is in patient interests not to have treatment disrupted by action taken in respect of stoppages with a very small turnout. We heard this morning, and I think we all agree, that it would be useful if there were statistics—and we are not aware of any—that quantified the indirect consequence of stoppages in terms of days lost and disruption. In your experience, and recognising that we have not got those figures, would you assess, from your research, your conversations and the work you have done, that the impact on patients has been significant in the past?
Julia Manning: I think it has been incredibly significant to every individual who has been affected by this. The figures I have show that in 2011, when action took place, about 7,000 people had their operations cancelled and tens of thousands of people had an appointment cancelled. I think that for every one of those, it was significant.
The Chair
Thank you, Ms Manning, for giving evidence to the Committee.
Examination of Witnesses
Janet Cooke and David Sidebottom gave evidence.
The Chair
We will now move on to the next section of our investigation and take evidence from Janet Cooke, chief executive of London TravelWatch, and David Sidebottom, the passenger team director at Transport Focus. You have 45 minutes to answer questions, and it will be a question and answer session throughout. Before we start, I will just ask you to give a quick résumé of your situation and why you are here—briefly, if you can, for the members of the Committee, so that we can get on with the job of asking the questions. Ms Cooke, would you like to start?
Janet Cooke: I am Janet Cooke, and I am the chief executive of London TravelWatch. We were set up, in our current guise, under the Greater London Authority Act 1999. We are funded and supported by the London Assembly. We are run by a board who are appointed by the London Assembly following a public advertisement.
We are small organisation; our budget is just over £1 million, most of which is spent on staff. We have fewer than 16 full-time equivalent staff. Our role is to represent all users of Transport for London Services. That includes the tube, the underground and the buses, but also dial-a-ride and cyclists on the red route. Everything that TfL does, we represent the users of. We also represent all passengers using rail services in the London railway area, which is wider than the GLA area. The best way of putting it is that it extends to take in access to all of London’s five major airports, so we go down to Gatwick airport. We have a fully multi-modal role in representing those passengers and transport users.
We are an appeals body, so if people are dissatisfied with how a complaint they have made to an operator has been handled, they can come to us and appeal. That is for all the modes that we represent. We do some primary research, but with a very limited budget—we do very little primary research. We are, however, experts at looking at other people’s research and recycling it. We are also a statutory consultation body, so if you want to change the bus service or whatever, you have to consult with us.
Our entire remit is to act as the voice of transport users. There are two values that are particularly important to us. The first is independence. It is vital for our work that we are not only independent, but seen to be independent. Although we are funded through the political process, we are accountable to the London Assembly but our board make their own decisions based purely on the passenger interest. We are independent of operators and independent of the transport union. I have been chief executive since 2008.
David Sidebottom: Transport Focus is a non-departmental public body with statutory remits under the Railways Acts to represent Britain’s rail passengers, and under the Local Transport Acts to promote the interests of bus, coach and tram passengers in England outside of London. More recently, we were provided with powers in April to represent users of the strategic road network in England. Similar to Janet’s description, we take on individual representations from unhappy rail passengers and try to get a better outcome for them. In addition, we have a budget that we use to spend extensively on research to give us the evidence base to provide useful information to Government, train operators, bus operators and other stakeholder organisations.
Stephen Doughty
Q 128 Recognising what you have both said about independence and the role of an NDPB, have you, on behalf of those you represent, made representations to the Government arguing for the measures that are set out in the Bill?
Janet Cooke: No.
David Sidebottom: No.
Stephen Doughty
Q 129 And have any of the individuals or groups that you represent commented on any parts of the Bill, to your knowledge, in any great detail?
David Sidebottom: No.
Janet Cooke: No. Transport for London has put a submission in, and we sent some evidence to you saying that as a consumer body, we have no view on industrial relations policy.
Stephen Doughty
Q 130 So why do you think you have both been invited here today?
Janet Cooke: Presumably to talk about the impact that industrial action, or threats of industrial action, has on passengers.
Stephen Doughty
Q 131 But you do not have a view on how those should be dealt with.
David Sidebottom: No.
Janet Cooke: No.
Stephen Doughty
Q 132 There was a report from the GLA in 2011 and an independent review, both of which said that there needs to be an emphasis on the employer creating the conditions for dialogue to improve industrial relations, particularly in the transport sector, and thereby reducing disruption to service users. Are you able to comment on any progress in implementing those recommendations from the 2011 report from the GLA?
Janet Cooke: No. From time to time we try to follow up recommendations that the GLA or the Transport Committee in particular have made, if we have the resources to and if we think it is a particular issue that we should follow up. In terms of industrial action, however, we would not, although we would agree that there should be as much dialogue as possible so that it does not impact on passengers.
David Sidebottom: I cannot comment on the GLA, as our role is specifically outside of London. I will quickly mention one particular view that we have, which is about the impact on passengers of threats of action and the impacts of action directly. In the last five or six years, we have seen the emergence of rest-day working patterns and how short-notice voluntary action—that is probably the best way of describing it—can create uncertainty among passengers.
Stephen Doughty
Q 133 I assume you both also deal with complaints about passenger fares, increases and issues around ticketing and so on. Would you be able to comment on the role that trade unions have played in highlighting passenger concerns similar to those you are representing on the rise in fare complexity and so on?
David Sidebottom: Particularly through the research that we have done, we know that value-for-money ratings on Britain’s railway are a lot lower than overall satisfaction with rail journeys among passengers. As we get around to January, the time of year when regulated fares increase, we will see the unions do what they do and be quite vocal about the need for reinvestment in the railway. What we articulate is the view of the passenger, particularly through poor value-for-money ratings. That is something we challenge the Department on, in terms of franchising, individual operators and improving the lot for passengers.
Janet Cooke: In terms of the unions, we do not formally engage with them, but the unions have done good work over the years in essentially being proxy passengers if you cannot talk to passengers themselves. Our board has never called them to give evidence or to speak to the board formally, but if there is a board meeting—particularly one where we are looking at such things as applications to change ticket office opening hours or, more recently, TfL’s proposals to close ticket offices—it is usual for the unions to attend and be in the public gallery. At the chair’s discretion, they might be invited to say something giving the passenger perspective through the unions’ eyes, and our chairs have usually allowed them to do that. It has probably been helpful.
Seema Kennedy (South Ribble) (Con)
Q 134 It is a pleasure to serve under your chairmanship, Sir Alan. This is a question for both witnesses. You have spoken about the threat of action on the railways in particular. Do you have experience of people saying to you, “I am worried about the strike”, and perhaps changing their travel patterns and pushing traffic on to the roads and off the railways and the underground—all parts of TfL and the commuter lines—because of the threat of action?
David Sidebottom: On the slightly broader subject of disruption generally, we know that passengers crave timely information that is targeted at them specifically. In the early part of the summer, with the potential strike by Network Rail, both sides were able to negotiate right to the wire. The railway planning system is not sophisticated or agile enough to get emergency timetables up on the system and taken off again at short notice.
People are trying to make decisions about whether to take a journey. I have no evidence of people shifting on to the road, although I suspect that they probably did. They were thinking, “I need to be somewhere in two weeks’ time and there is a threat of a strike on that day.” That is the slight difference with the threat of strike action—bargaining seems to go right to the wire, which is probably inevitable in the game that is played, but for passengers that creates more uncertainty than engineering works on a bank holiday weekend. At least with engineering works, passengers know that it will happen, although they may not like it, and information can be put out to help them.
Seema Kennedy
Q 135 So you think overall that the threat of strikes can have a much broader effect that is perhaps difficult to quantify.
David Sidebottom: Passengers may innocently go on to websites to book a train ticket, unaware that there will be a strike. They may buy their ticket in advance for a day when there might be strike action. They can get their money back and that is sorted out, but if you are aware of the strike, you are damned if you do and damned if you don’t. I am not speaking on behalf of the train industry, but it is equally difficult for them. They can put all the emergency planning in place, but at what point do they allow it on to the systems to give passengers a definitive answer as to whether they can make a journey?
Janet Cooke: In outer London people are able to use their cars—certainly, looking at the BBC reports, there was a big increase in congestion—but for most commuters travelling into central London the car is not a realistic option because there is too much congestion. So there is crowding onto other modes. You made comments earlier about being packed in like sardines; that is the London commuter experience already. So if during peak times you have further congestion because one mode is unavailable that makes things very difficult. The threat of strikes is almost as disruptive, because people change their plans for the day.
Seema Kennedy
Q 136 In what people submit to you, do they talk about crowding, the stress in terms of organising their lives, business things and childcare, and about travelling on very crowded buses?
Janet Cooke: Yes, we have never done any formal research, so I have no sound evidence that I can quote, but we do get feedback from passengers. I think that 25 people contacted us during the summer specifically about the threat of the tube strikes. That is a lot for us. It gets mentioned in other activities and, by and large, people are not happy about it, but they tend to put up with it. They see it as part of London perhaps—I do not know.
Jo Stevens
Q 137 I must apologise, Sir Alan. I did not say in my previous intervention that it was a pleasure to serve under your chairmanship.
I have a question for Janet, if I may. You did some research, in May 2014 I think, about the dangers presented by overcrowding on the London underground. Many employees on the underground share those concerns. Do you think it is right that they should have the right to take industrial action to address their and passengers’ health and safety concerns?
Janet Cooke: As I said earlier, we have no view on whether staff should be able to strike. Yes the underground is overcrowded, but I think that London Underground closes the network—restricts access, as you will all have experienced at Victoria station—if they think that the platforms are getting dangerously overcrowded. It is a measure of whether you think it feels very overcrowded. It is certainly very uncomfortable, but I am not sure that London Underground would run the system if it felt there were an absolute health and safety risk.
Jo Stevens
Q 138 Would you accept that trade unions have a role to play in highlighting those sorts of issues, including health and safety?
Janet Cooke: Trade unions definitely have a role. They have a close working relationship with passengers. They work with passengers so they can certainly highlight things to management.
Jo Stevens
Q 139 Do you also accept, if I do not push you too far into areas into which you do not want to stray, that facility time in the workplace— trade unions having time to carry out trade union duties— helps in generating those issues and resolving things such as health and safety concerns about overcrowding?
Janet Cooke: I think that we would expect Transport for London to be a good employer and to allow, as a good employer should, the appropriate legal time for the trade union activity that is required. I do not think I can go any further, I am afraid.
John Howell
Q 140 Do you think that the balance is right in the Bill? Is it likely to have an adverse effect on industrial relations?
Janet Cooke: I do not think that I have a view on that and, I will be honest, I am not sufficiently familiar with exactly what you are proposing to be able to comment. Without doing proper research, I could not give a view.
David Sidebottom: I think the same. We do lots of research into how passengers are disrupted, with Network Rail, train operators and passengers. If there were more frequent strikes and disruption on the railway caused by industrial action, we would perhaps be prompted to spend time and do some research on the impact felt by passengers. Like Janet, I have not formed a particularly strong view based on any evidence that we have gathered.
One point that I picked up from doing some background reading was notification of strike action. For rail passengers, whether it is seven days or 14 days, the issue of getting the information is the key thing. It is not just social media and websites, it is posters at stations and that kind of thing. That is probably the best help I can give in terms of answering the question.
John Howell
Q 141 I am slightly surprised that you do not have a firmer view on that, and on the balance between people’s ability to strike and the enormous impact on the travelling public.
David Sidebottom: I am interested, as a representative of a consumer organisation, in the impact on individuals of planned or unplanned engineering work or disruption such as industrial action. I am interested in the quality of information and how passengers are empowered to make a decision about where to go and how they make an alternative journey.
One thing we ask is for passengers to rank their priorities for improvement. We often see nothing in our research about information on the back of industrial action. It is about the things that are important to them: a punctual, reliable railway, good value for money and getting a seat.
Janet Cooke: Having done a little research on the internet on strikes that have been reported, certainly in the past six months there seems to have been an increasing amount of industrial activity in the London area, which has an impact. In the past six months we have had five actual strikes—three on the underground and two on Great Western—and four threatened strikes—three on National Rail and one on the tube. We have just had the last strike, which in the end did not have that much impact on passengers because Transport for London continued to run the service on the Waterloo and City line. Now DLR workers are balloting about strike action, so there certainly has been an increase in the amount of activity.
John Howell
Q 142 Would you like to sum up the overall impact?
Janet Cooke: It is the attrition. For the first strike, people can often make other arrangements. Strikes have a particular impact on people in jobs where they do not have flexibility. I could work from home if I could not get into work or I could start late and finish late, or whatever. People working in critical, front-line jobs, who do not have that flexibility, are affected disproportionately, because they have no options.
David Sidebottom: Back in 2009-10, London Midland inconvenienced passengers as a result of its inability to roster railway staff to work on Sundays. That is a traditional working pattern that was provided largely through overtime and informal arrangements. We have seen a bit of that with one or two other train operators in recent years, but not on a large scale.
The bigger impact for passengers is short notice and cancellations. It is not a week’s or two weeks’ notice. The ability of a train company to buy out those working arrangements is very much between it, the unions and the staff. It seems to be something that is not quite cured yet. I do not know how that would fit with the Bill, but it does come across as inconveniencing passengers slightly more.
Chris Stephens
Q 143 I just have one question for the organisations. If for any reason existing staff, in this case train drivers or bus drivers, were replaced by agency workers, who would be inadequately trained, that would cause both your organisations concern for passenger safety.
David Sidebottom: If that manifested itself to us through representations from passengers, it would of course, yes.
Janet Cooke: Whether they were staff employed by the operator or agency staff, if they were not properly trained, it would be inappropriate for them to work.
James Cartlidge
Q 144 I want to focus on the point about timing of ballots. You may be aware that the Bill introduces a four-month time limit. You are talking about the uncertainty caused by striking. It seems that it is on the transport network that these long-standing ballots have been used. What is your view? Do you support that time limit, so that there is greater certainty for yourselves and your passengers?
David Sidebottom: The message that we get loud and clear from passengers whenever there is any disruption, whether it be industrial action, bad weather, or engineering works is, “Get me out of the mess that you are putting me into. Give me the options, give me the information on which I can make choices. When I get up in the morning, is my train going to run, because there are three inches of snow outside and the wind has been blowing, or is there a threat of industrial action?” The requirement for quality information comes across loud and clear.
James Cartlidge
Q 145 When a strike actually takes place, does your organisation have an active role in that communication?
David Sidebottom: We scour the websites for information provided by a train company, whether it relates to weather, engineering works or strikes. I was talking with colleagues about this a couple of days ago. We were trying to count instances of action, leaving aside the industrial action with Great Western over the course of the summer. They were few and far between. There have been lots of threats of action, and that causes the uncertainty. As we have seen, particularly with weather disruption, the ability of a train company, Network Rail and bus operators to get information out to passengers in a timely, clear and effective way is the bigger challenge.
Janet Cooke: We would expect operators to provide that information. We just put information on our website. As David says, we keep a very close eye on the information that the operators are putting out and, particularly in London, information about alternative routes that people can take.
I suppose the one thing that we notice is that we get anything from double to five or six times the number of people visiting our website when industrial action is threatened. That is one of the few indicators that we have. So, people are desperately looking for information and it needs to be kept up to date. That is the other thing. The threat of strike action is obviously intended to be disruptive; it is the amount of services that actually run that matters. And obviously the operators will want to be as optimistic as they can be, but sometimes the strike action is not as had been intended, so it is also about keeping passengers up to date with accurate information throughout the day. It is not just the spin about which services are running. So, if people have got to work, they might be able to get home by the mode that they usually use. It is about that up-to-date information through the day as well.
Stephen Doughty
Q 146 Janet, you were quoting some statistics a moment ago about industrial action apparently increasing in London in recent years. Are you aware that London Underground and Transport for London use a statistical measure called lost customer hours?
Janet Cooke: Yes.
Stephen Doughty
Q 147 Obviously, that can reflect either lost customer hours due to industrial action or it can relate to other causes. Now, I accept that in the last four years there has been an increase in lost customer hours due to industrial action, but what is very telling is that in only four out of the last 12 years has the proportion of overall lost customer hours as a result of industrial action been larger than 10%; it has never been larger than 20%. So, the vast majority of lost customer hours are due to impacts other than strike action or other industrial action; I imagine that it is due to defective equipment, overcrowding, signal failures, adverse weather and so on. Therefore, do you agree that when you look at the overall customer experience, as you are doing, industrial action and its impacts must be kept in perspective?
Janet Cooke: I would agree with that, but the work that is essential in London is to keep London moving, because there is an ageing infrastructure and so many people are using it. The work to upgrade the tube lines, the new trains that the train companies are running and the works to upgrade the lines into London Bridge should make services more reliable and lead to a reduction in lost customer hours. So, the danger is that industrial action will represent a higher proportion of lost customer hours, when lost customer hours should be going down.
Stephen Doughty
Q 148 I agree, but even in the last four years—in 2011-12 and 2012-13, it barely registered. In 2011-12, 1.3% of lost customer hours resulted from industrial action; in 2012-13, it was 4.9%. I accept that the figure has been higher in the last two years, but these are relatively small numbers; I am not saying that they are not important, but they are relatively small compared with all those other things.
Janet Cooke: I agree, but I would also say that there is, quite rightly, intense media interest in anything like this. So, the headlines really big it up when industrial activity has an impact on passengers, which is probably part of what is meant to happen from the union perspective, but that all adds to passengers’ feeling that disruption is increasing.
Stephen Doughty
Q 149 But do you agree that there is a danger that if we make national Government policy and legislation for a very, very large area based on media feeling about something—the kind of rhetoric that we hear from some of us around this Committee table—?
Janet Cooke: We said earlier that we did not have the formal evidence to give you, but how the media reacts to things helps to inform passenger opinion; I think that that is probably as evidence-based as I can get.
Stephen Doughty
Q 150 David, I do not have the statistics for the rest of the UK transport network, but do you accept that there is a similar thing here, and that we should keep industrial action in perspective, taking into account other reasons for lost customer hours?
David Sidebottom: I think so. We have specifically asked passengers what the priorities should be for improvement, and we also ask whether they are satisfied with what they have got now. We have focused on those areas where there is high priority for improvement and a low level of satisfaction. Information provision is the key driver of dissatisfaction for Britain’s rail passengers, so we focused on that and how the problem manifests itself.
The challenge that we saw over the summer with Network Rail and the “will they/won’t they?” strike situation caused a dilemma for the industry as much as it did for passengers. That is when we put emergency timetable information on to websites and make it available to the public.
Rishi Sunak
Q 151 Following on from the comments of the hon. Member for Cardiff South and Penarth, if the numbers and the percentages seem small, I am puzzled, as you said before, that Londoners seem to have accepted that strikes are just part of London. It makes me think that the constant talk—are they going to happen, are they not going to happen?—and the uncertainty adds to the disruption to people’s lives, as well as the strikes themselves. Would that be a fair comment?
Janet Cooke: Yes, it does add to the uncertainty. My comment was not intended to be flippant, but from the feedback we get there is an air of resignation about commuting in the London area. It is going to be overcrowded; it is great when it works, but it does not always work as well as it might. Maybe my point was slightly inappropriate, but it is part of an overall feeling. I think that, as commuters into London, you just accept, if you commute a long distance into London, what the experience tends to be like.
Rishi Sunak
Q 152 Picking up on something you said earlier, I am interested in how different types of people on different income levels are affected by strikes. You mentioned that people in certain jobs are probably more easily able to work from home—for example, people in office jobs—than people in shift work and lower-paid jobs, where that is more difficult. Will you talk about your experience of that?
Janet Cooke: We at London TravelWatch have not done much research on that. The only thing I could say is that we are in the middle of doing some focus-group research—not on strike action, but things sometimes emerge in focus groups that you are not necessarily expecting—and certainly one or two that I observed a couple of weeks ago were talking about the travel experience in the London area and ways of getting to work. Spontaneously, because there have been quite a lot of tube strikes, there was a lot of discussion about strikes and their impact on people’s lives. These were people on very low incomes whose employers had paid for taxis to get them to work. This is not necessarily statistically accurate; it just happened to be spontaneously coming up in focus groups I was observing.
Julie Elliott
Q 153 You have both talked about your organisations representing passenger feelings. My hon. Friend the Member for Cardiff South and Penarth said that the overwhelming numbers of days lost through delays and everything else—even in London, the figure is about 80%—is not down to any form of industrial action. I have to say that, outside London, I have not had any lost journey in my regular commute from the north-east in the past five or six years due to industrial action, although I have had many for other reasons. Have you got anything to say about whether the causes of a lost day makes any difference to the impact on the life of a passenger, a member of the community? Secondly, are you aware that nothing in the Bill would impact on any of the rail stoppages that have happened in recent years in London, because they would meet the thresholds on the ballot that they had already held?
David Sidebottom: On the general point about impact, the national rail passenger survey that we run gathers around 60,000 passengers’ views about their journey every year and the biggest driver of dissatisfaction is not just about the fact that there has been disruption but about the way it is managed. It is back to the information story and how you get me out of the situation you have put me in. So there is an impact there.
In answer to the earlier question about the impact on individuals, it is quite telling that when I was at Piccadilly station trying to travel home a few weeks ago on a delayed journey, listening to some conversations that were going on among passengers—people on zero-hours contracts, for example, who were not going to get paid that day because they could not get to their job—it does not just affect people who work 9 to 5. The level of impact can vary.
Julie Elliott
Q 154 I am well aware that not all people work 9 to 5. I travel 300 miles from my home every week to come to work—at least, the London part of my work—but I was asking whether it makes any difference to the impact on somebody’s life what has actually caused the delay or disruption, bearing in mind the tiny percentage that is caused by industrial action?
David Sidebottom: Not from the research that we have done, no.
Janet Cooke: I do not have much to add. If your service is not running or you are delayed excessively, it really does not matter. With a strike, you think, at least it will be over tomorrow. If it is a problem on the network, then you might not be so hopeful.
Dr Cameron
Q 155 To what extent is the evidence you are presenting today applicable to the experience in Scotland and, perhaps, Wales, given that much of your work appears to be in England and particularly in London?
Janet Cooke: By definition, we represent transport users in and around London and its commuter belt. The experience is probably not dissimilar, but I could not comment.
David Sidebottom: On rail in Scotland and Wales, we are a GB-wide body on rail passenger representation. The information that we gather covers England, Scotland and Wales. We work very closely with Transport Scotland and provide information there. In fact, the rail passenger satisfaction survey is a key target with the new franchise arrangement between Transport Scotland and Abellio ScotRail.
Dr Cameron
Q 156 In terms of your own work, such as underground journeys, there is nothing about tube journeys in Scotland or anything like that that you can say.
Janet Cooke: No. We have never looked at that, to be honest.
The Chair
There are no further questions. We thank you both for attending; it has been very informative. We will now move on to the next session.
Examination of Witnesses
Shane Enright, Sara Ogilvie and Dave Smith gave evidence.
The Chair
May I thank you for coming in before your time? It is always a bit nerve-racking for anybody. We will move on to the oral evidence session for Amnesty, Liberty and the Blacklisting Support Group. This period runs up to 3.45 pm. I will invite you to come forward and give us a short address, a résumé of your role in this. We will then move on to questions and answers from both sides. If you can make your answers fairly succinct and brief, that would be helpful, because we can get more in if we do it that way. Without further ado, Ms Ogilvie, would you like to introduce yourself?
Sara Ogilvie: My name is Sara Ogilvie. I am a policy officer at Liberty, the human rights organisation. The reason why we care about the Trade Union Bill is that we think that trade union rights are a fundamental part of the human rights framework. They are part of freedom of association, which is article 11 of the European convention on human rights. We also care because we think that membership of a trade union helps individuals to enforce some of their workplace rights and the workplace entitlements conferred on them by Parliament. That is our general interest in this area.
Shane Enright: I am Amnesty International’s trade union campaign manager. I am also the global trade union adviser to Amnesty International. We share the concerns that Liberty has expressed. Amnesty International firmly believes in the right to form and join trade unions, to collectively bargain and to strike. They are universal human rights and critical enabling rights that facilitate people to defend their livelihoods and working conditions and to protect the public services on which the vulnerable are most often dependent.
Dave Smith: I am an ex-construction worker who was blacklisted because of my trade union activities by some of the largest construction companies in the UK. I am now the secretary of the Blacklist Support Group—the justice campaign set up after the blacklist files were discovered in 2009. I am also the co-author of the book, “Blacklisted: The secret war between big business and union activists”, which goes into the detail of the links between the police and big business against trade unions. Because of our experience as blacklisted workers and because of the research I have done for the book, I have grave concerns about some of the elements of the Trade Union Bill.
Stephen Doughty
Q 157 I have a couple of questions that are more directed towards Sara and Shane, and then I have a question for Dave. I have carefully read what Liberty and Amnesty have had to say on this. The British Institute of Human Rights made some strongly worded statements. I understand that there are particular concerns on the intrusion of the state into freedoms of association and assembly for trade union members; the undermining of the right to a private family life in some aspects; and the jeopardising of the UK’s history and the precedent of supporting peaceful protest and the right to express views. Could you just take each of those issues briefly and explain where your key concerns lie and which international conventions and UK laws you think we are calling into question with the Bill?
Sara Ogilvie: As I said at the start, article 11 of the European convention on human rights is the right to freedom of association, and that includes an explicit protection for joining trade unions. That is also the article that protects our right to freedom of assembly, which is essentially the right to protest. I am concerned about the proposals in the Bill and the associated consultation because of the impact they will have on the right to picket and protest. For a picket to be lawful, clause 9 of the Bill would require the union to appoint a picket supervisor, to name that person in advance and to give their contact details to the police in advance. It would also require that individual to wear an armband on the day and to carry a letter of authorisation that they would have to show to the police or to anyone else who asked to see it. That is extremely concerning to me.
The thought that we would require a person in 2015 to wear an armband and carry a letter of authorisation at the behest of the state in order to exercise their rights does not seem right. In the particular context of trade union rights, I am sure that colleagues here will be able to talk in more detail about the concerns on blacklisting, but I think that the collaboration of the police in the process of blacklisting gives strength of feeling to why trade union members would not want to provide advance information to the police about who they are and how they can be contacted.
On the one hand, I worry that the provisions are discriminatory. Why would they apply to people on a picket, rather than to anyone attending a protest in general? But when you think about that, it is even more worrying: what if the proposals were applied to everyone who wanted to protest? It is ridiculous that they would have to undergo such processes. It seems to me that that is certainly going to bring us into conflict with the European convention on human rights because it is an absolute violation of the right to peaceful protest.
Shane Enright: I would like to expand on that a little. Article 11 of the European convention allows freedom of association and particular trade union rights to be circumscribed only in very particular cases. I am particularly disappointed by the impact assessments associated with the Bill because it seems to me that absolutely no case is made for the legislative provisions. Simply to assert, as the Department for Business, Innovation and Skills does, that the provisions are compatible, while providing absolutely no evidence or justification of where in law that compatibility exists, risks opening up a very serious legislative and legal conflict if the measures proceed as intended.
I would like to touch on the collective bargaining implications of the Bill. It seems to me that the provisions to limit facility time and the proposals to ban check-off arrangements in workplaces would be entirely without precedent in peacetime Britain. As you will know, the provision of facility time is governed by collective agreements between unions and employers on behalf of employees in the workplace—such matters are not determined by the state. It seems to me entirely unprecedented for the Government to retain reserve powers in clause 13 to interfere—it is interference—with what effectively should be a matter for agreement, through collective bargaining, between employers and workers in a workplace, facilitated, of course, by their union.
Facility time is critical. We know from all the evidence—I am sure that the Committee will hear more in due course—that effective industrial relations in the workplace are facilitated by union representatives who can assist in many ways and in many domains. The amount of facility time that is appropriate can vary according to circumstances. For instance, when a workplace is undergoing substantial change—for example, where there is reorganisation, or where redundancies are being faced—it is not unusual for an employer to agree with a union to increase facility time so that representations can be made on behalf of employees in a free and collective way to facilitate that change. It absolutely beggars belief that the Government are making that proposal.
On check-off, I cannot see why it is the Government’s responsibility to interfere, yet again, in a voluntary arrangement between employers and employees. For instance, in my own workplace, we have not only a check-off arrangement that is voluntarily entered into and governed by the collective agreement between the employer and the union, but bicycle loans to encourage staff to travel to work healthily. We also have computer loans—a loan of which I have taken advantage—which of course supports efficiency when I choose to work from home.
Stephen Doughty
Q 158 And of course, as MPs we also have the ability to check-off on our own salaries for various purposes. You are obviously both keen observers of the legal framework in other countries around the world. These measures are being described as some of the most restrictive globally. What sort of league would the Bill put us in? With what countries would we be roughly comparable in terms of the level of restriction on basic rights?
Shane Enright: There are no universal comparators by which I can give a simple percentage, but I will refer to the digest of decisions and principles of the Freedom of Association Committee of the governing body of the International Labour Organisation. The jurisprudence of the ILO is absolutely clear and unequivocal in relation to a number of elements in the Bill. On the question of ballot thresholds of 50%, paragraph 556 states:
“The requirement of a decision by over half of all the workers involved in order to declare a strike is excessive and could excessively hinder the possibility of carrying out a strike, particularly in large enterprises.”
In paragraph 592—by the way, these are summaries of the decisions of the supervisory body of the ILO—a really important point is made about the economic impact of strikes. The ILO says:
“By linking restrictions on strike action to interference with trade and commerce, a broad range of legitimate strike action could be impeded. While the economic impact of industrial action and its effect on trade and commerce may be regrettable, such consequences in and of themselves do not render a service ‘essential’, and thus the right to strike should be maintained.”
There is more and more jurisprudence that points to the inadequacy of the legislative proposals.
Sara Ogilvie: From the perspective of the European convention on human rights, the way the court that is responsible for that system looks at the issue is to see whether the essence of the right is infringed and whether the right is rendered illusory. My concern is that the proposals in the Bill would absolutely render the right illusory, largely by creating a system of bureaucracy and hurdles that people have to overcome. In doing so, that would put us on the side of those countries that have fallen foul of the human rights system, rather than on the side of the people who come up with a system that is effective and that works.
The Chair
Before you move on, would you like to add anything here, Mr Smith?
Dave Smith: My case is actually at the European Court of Human Rights now. During my case, the British Government intervened when it was at the Court of Appeal and admitted in their admission that article 8 and article 11 had been engaged during the process of blacklisting. I am concerned that there are restrictions on trade unions already, and outside of the existing legal framework, we clearly have large multinational companies breaching the human rights of British citizens—hard-working British citizens, I hasten to add. If there are to be restrictions on what is going on—there are scandals in industrial relations that need legislation—it should be primarily on the side of big business that is breaching our human rights, rather than on the side of construction workers who have basically been standing up for bog-standard legal rights.
The Chair
Can I just point something out to you? I said at the beginning that we need to be succinct in both the questions and the answers, and we have recovered all the time that we had to gain. This is fascinating and interesting stuff, but it is your time and the Committee’s time to ask questions of you. We only have a small amount time remaining, so if you could make your answers a little bit more succinct, that will be helpful to you and the Committee.
Stephen Doughty
Q 159 Dave, you might be aware that there were a number of debates on blacklisting in the previous Parliament that revealed quite shocking revelations, particularly in the construction sector. We heard about current and former Members of the House who had been blacklisted and their horrific experiences. I know that other Governments across the UK have taken measures to deal with the matter. Is your primary concern that there are a whole series of measures in the Bill that could essentially make it easier to blacklist workers? I am particularly thinking about the provisions around picketing.
Dave Smith: Very specifically, the issue that I am concerned about as a blacklisted worker is the undoubted police collusion in blacklisting. It is not even a question anymore. Peter Francis, the undercover police officer who spied on Stephen Lawrence’s family, has given statements that were read out in Parliament in which he admitted spying on the Fire Brigades Union, Unison, the National Union of Teachers, the Communication Workers Union and a number of unions in the construction industry. Having seen the blacklist files that were seized by the Information Commissioner’s Office, Peter Francis said that some of the information came directly from the special branch registry database.
There is another undercover police officer called Mark Jenner from a section of special branch called the special demonstrations squad. In the 1990s, I stood on picket lines with him and attended meetings with him. The man actually chaired some union-based meetings when he was an undercover police officer sent to spy on trade union activists. There is a section within the special branch called the industrial division, and its entire purpose is to spy on trade unions and give the information to big business. It is quite open about that; it has been on BBC documentaries. I am not a conspiracy theorist; this stuff has all been published.
The Chair
Can I just point out that we have a very small window of time—
Dave Smith: Okay. My point—
The Chair
Would you just let me finish? You have gone wide of the mark. You have to try to stick to the question in hand, if you can.
Dave Smith: Very quickly, when we put in a complaint the IPCC said that every special branch in the country provided information about prospective employees to businesses and blacklisting organisations. My concern about the Bill is geared around the concept of picket supervisors having to have their names provided to the police. If the names have to be provided, it is inevitable that the police will collate them and that they will appear on some kind of database somewhere. I am very sceptical about the state keeping a list of picket supervisors. Any member of the public is allowed to come and ask for the picket supervisor authorisations as well, so it could be that employers are also coming and picking up the names, and members of the public. Potentially, you have three separate lists of trade union activists being developed by members of the public, employers and the state, and that could clearly be turned into a state-sponsored blacklist.
The reason I am saying that is that once the police information about trade union activists is written on a database or a computer somewhere, give me any possible way that you could exclude special branch from finding the information. There is a section there that gives the information to big businesses; they are quite open about that. That is my fear—that this will turn into a state-sponsored blacklist.
The Chair
Thank you very much. This is your time and the Committee’s time and we have little of it left, so could you shorten your answers? The Committee members are already in the mood to ask shorter questions.
James Cartlidge
Q 160 I will try my best. I welcome the three of you. We respect your passion for all your principles and none of us here is against the right of people to belong to a union or their right to withdraw their labour. The key concern that we, and the Government, have is that there have been a number of strikes in recent years called on very small turnouts and with small percentages of support, which have caused huge disruption for commuters and for people wanting to take their children to school. It is about that disruption.
You talk about workers’ rights. Do you at least accept that commuters and parents have rights as well and that the rights should be balanced within the legislation that we bring forward?
Shane Enright: Let me first say that strikes are technically a matter of absolute last resort. They tend to represent a breakdown in good industrial relations in workplaces and to that extent it is clearly regrettable when situations reach that point. But I have cited ILO jurisprudence and international law and, under the provisions of ILO convention 87 in particular, inconvenience to the public is not a legitimate basis upon which a state can restrict the right to strike.
I also make the point that the numbers of strike days that have taken place annually in the past decade are the lowest for many years. The number is currently at 0.8 million per year, which equates, across the entire workforce, to each worker taking strike action for one day every 15 years. That is a historically low level. If we compare that to the benefits that trade unions can add through effective collective bargaining in the workplace, I would say that the public are convenienced by having strong and effective trade unions.
James Cartlidge
Q 161 I shall try to be concise, by taking one fact. In 2011, 62% of England’s schools were closed by an ATL teachers union ballot with a 25% turnout. Do you think that that is fair on the parents and pupils?
Shane Enright: Absolutely. We have a democratic arrangement in this country whereby people in the political sphere are elected by a majority of those taking part in a ballot. We do not have an arrangement in this country, in this sphere or in any other sphere, where absentee voters—people who choose not to vote—are counted as voting against, which is precisely the proposal in this Bill.
Sara Ogilvie: Focusing on the issue of thresholds in particular, it is important to remember that, regardless of what the turnout is in a vote, trade union members are entirely entitled under law not to participate in strike action if they do not support it. So they can exercise their discretion to choose at the moment of the strike. Similarly, they cannot be penalised by their union if they do choose to strike. I worry that if we focus on the issue of thresholds and then say, “Actually, that doesn’t show whether people wanted to strike or not,” that is not really an accurate reflection of what is going on.
I support what has been said here: strikes absolutely cause disruption. That has always been the case and will always be the case, but—
James Cartlidge
You do not have a problem with that.
Sara Ogilvie: Of course I have a problem with it. I have to experience it, but, actually, human rights cause a bit of disruption. They are not always enforced in situations in which the whole of society would want that to happen. But I am trying to think of other human rights and I cannot think of another situation whereby if I wanted to exercise my right, I would have to go to a vote and all of my peers would also have to vote to exercise their right and that would be the system you would have to go through. This seems to be something that we would not accept for other human rights and it is not clear to me why we would impose it in this situation and not others.
Dave Smith: My concern about the thresholds and the turnouts that people are talking about is that a 50% threshold is being asked for in order to have a strike action, which might be about unpaid wages or asbestos. Of course, with a 50% threshold most of the people sitting in this room asking questions would not have got elected into Parliament, because most of you have not got more than 50%.
The Chair
May I stop you for a minute, Mr Smith? It is not really your duty to question the role of the Committee and Members of Parliament. We have decided and agreed to invite you in to give evidence to the Committee. You cannot then criticise the whole process of allowing you to do so.
Dave Smith: I do apologise. My point really was this question about why it is that the trade unions exercising a democratic right—a human right under the European convention on human rights—are penalised to such an extent, exactly as Sara said. Nobody else in any other circumstances in the country is being given this. If there is disruption because of strikes about asbestos or unpaid wages, the people responsible for it are the employers, not the trade unions.
The Chair
Can I just help you? We have got a lot of names down to ask questions and you have got a very short period of time to answer. If you feel that you want to give a fuller answer than you can on the floor, it is open for the Committee to receive written documentation. If, on any of the questions put to you, you do not think that you fully replied, you are more than entitled to submit more evidence in writing to the Members of the Committee, who will read that and take it into account in their deliberations.
Chris Stephens
Q 162 I want to ask Amnesty and Liberty if they have done any analysis on the basis of thresholds and the impact that would have on gender equality issues. For example, female workers are probably more affected by shift changes than male workers. Have you done any analysis on the democratic mandate of the devolved Administrations and other public bodies in terms of check-off and facility time as proposed by the Government?
Mr Smith, a lot of people watching these proceedings will wonder what a blacklist is. What are the consequences for a picket supervisor who is put on a blacklist?
Sara Ogilvie: On the issue of gender inequality, this was a surprising statistic to me: there are more female trade union members than male trade union members. So it seems likely that reducing the right to strike of trade unionists will impact more on women. Certainly, when we look at low-paid jobs across society, many more women are employed in them than men.
I am ashamed to say that I do not know a huge amount about how much it will impact on the devolution settlement. I am aware, however, that the proposals in the Bill do not seem to reflect adequately the make-up of government, local authorities and other public bodies in Scotland and Wales. If the proposals are to be introduced—I hope that they will not be—there will need to be much further thought about how they will work in practice.
Shane Enright: Briefly, I have seen figures—I do not have them in front of me—from the TUC that indicate that 72% of those who will be affected by these public sector strike thresholds are women. Women represent a greater proportion of employees in the public sector and, as mentioned, are now a majority of trade unionists overall in our economy. Inevitably, there will be a disproportionate impact on women workers and their ability to defend their interests, pay and conditions in the public sector.
Dave Smith: Blacklisting is not a myth. When we talk about this, people sometimes think we are making it up. The impact on the 3,213 people whose files were found in the construction industry has been that every time they applied for a job, because their name was on this list—this is the key thing for us: the police are going to be holding a list, and the police have been complicit in the blacklisting that has been going on in the building industry. The building industry will not be something special; it will happen everywhere. The impact was that every time we applied for a job, our name was checked to see if it was on this list. If it was, you were dismissed or not given a job in the first place. It means that people had massive periods of unemployment, even though they were very skilled workers, and, prior to becoming involved in a union, had unblemished unemployment records. It means that people lost their houses. It means family breakdowns and divorces, and in some cases, we have reported that there have been suicides.
To be crystal clear about this, I would like to quote something put out last week by Balfour Beatty, Carillion, Costain, Kier, Laing O’Rourke, Sir Robert McAlpine, Skanska and VINCI. They changed their defence to say that they were actually involved in blacklisting and have produced new documents. The statement from their PR people says that the new documents
“contain a full and unreserved apology for our part in a vetting information system run in the construction industry first through the Economic League and subsequently through The Consulting Association; we recognise and regret the impact it had on employment opportunities for those workers affected and for any distress and anxiety it caused to them and their families.”
My fear, which I keep repeating, is that blacklisting exists and that police involvement in blacklisting is a fact. Last week, I was at the High Court. Theresa May has set up the Pitchford inquiry—
The Chair
Mr Smith, I have been really quite kind. You went very wide of the mark. If you get the documentation you refer to and wish to submit a new written piece to the Committee, I will more than willingly distribute it, but I am going to move the Committee on at this stage. We need to get more questions in, because we have little time left.
Victoria Prentis
Q 163 Amnesty and Liberty are both doughty defenders of human rights around the world in terms of abuses such as torture and execution, particularly in the case of Amnesty. I do not know if you have the Bill in front of you, but subsection (8) of new section 220A, inserted by clause 8, states:
“While present where the picketing is taking place, the picket supervisor must wear a badge, armband or other item that readily identifies the picket supervisor as such.”
Are you telling me that the wearing of an armband really concerns you?
Shane Enright: Absolutely. It is a way of singling people out. It is a requirement that is absolutely unique to this group of protesters. Why should trade unionists be required to undertake a process of identification when they are protesting that others are not required to? It is discriminatory.
Victoria Prentis
Q 164 I understand that the current code of practice says that everybody should wear an armband. That is not normally enforced, of course. Normally, the organisers of protests do wear an armband, but that has not caused particular difficulty.
Sara Ogilvie: There is quite a clear distinction that it is important we draw between when something is in a code of practice or when we do it because it is good practice and we think it will make things easier, and when there is a legal requirement for something to happen. When there is a legal requirement, there are legal consequences. The consequences of this would be not only the person identifying themselves and all the concerns we have heard about blacklisting, but also, if that requirement is not complied with, it is a reason to void the entire strike. That is a secondary consequence of this. It seems a very disproportionate response. It is those two elements.
Victoria Prentis
Q 165 I am glad you used the word “proportionate”, because the Government could, of course, have carried on from the code and said that everybody had to wear a badge or an armband.
Sara Ogilvie: And that is in the consultation document.
Victoria Prentis
Q 166 Which would have been difficult if someone had left them at home; it would not have been proportionate to have voided the whole strike. But surely for the organiser of a particular event, it is not too much to ask them to identify themselves.
Sara Ogilvie: I think we have to be honest about the fact that it is quite a big issue. There are so many human rights issues that we think, “Maybe these are trivial”; there is quite a lot of talk about that at the moment. But for individuals who have wanted, for example, to wear a chain with a crucifix on, that is something that the courts have said is not a trivial human rights issue. When Rosa Parks was asked to sit at the back of a bus, some people then would have said that that was a trivial human rights issue. I absolutely think that asking people to identify themselves, to risk going on a public list, as a result of which they might be discriminated against, and to jump through lots of hoops in order to exercise their rights, that really concerns me; it is not me feigning affectation.
Victoria Prentis
Q 167 And you feel that this is completely different from a code?
Sara Ogilvie: When people choose to do something, and when people are required to do something and there are very strong consequences because of that requirement, I think that is a difference, yes, and it is a significant one.
Seema Kennedy
Q 168 I want to go back to this picket supervisor code. If you have large public assemblies—even on things such as school trips, which I have supervised, I have to wear an orange tabard. Is it the actual armband that is causing the great objection? You might have thousands of people on the streets. Surely, just for public order, somebody needs to be able to identify who is in charge.
Sara Ogilvie: If we want to compare it, there are rules in place that govern marches and other kinds of protest. There are not rules about demonstrations; there are rules about marches. If you have a rule about a march, then the organiser must be known to the police. But that organiser could be, if you take the union example, Frances O’Grady; everybody knows who she is. If you have someone who is in a local trade union, they might not want to be known; as we have heard, there are really serious consequences. It is not so much about the organisation; it is about the identification, and the fact that that can then be used to void a whole strike.
Seema Kennedy
Q 169 Nobody wants to condone blacklisting—absolutely not—and it is very much to be welcomed that in the building industry we are moving away from that. [Interruption.] I sense some scepticism, looking at the Benches. But of course we want to move away from that; people should have the right to strike. I wonder whether there is an objection to the use of an armband particularly.
Dave Smith: What there is an objection to is that if you are on a school trip, you are not being asked by the police to provide your name, and if I am on a picket line, I am not breaking any laws. I have not done anything illegal, and without any suspicion, or due suspicion that I have broken laws, the police will come and take my name.
A number of people have mentioned the London underground during this debate. For the London underground, you might need a picket supervisor on every single station; on large stations, you might need a picket supervisor on different entrances. And for the RMT or whichever union, they would have to provide a list of possibly hundreds—literally—of picket supervisors to the police, and they have not committed any crime. That information will be collated and will be put on a police database, and we have fears where that goes. How can you stop it being given to special branch?
Seema Kennedy
Q 170 I understand that, but this is a side issue of blacklisting, which the Government are consulting on—[Interruption]—they are.
Just on the school trips issue, there are checks that one would have to go through; you need Disclosure and Barring Service checks, and things like that. Okay, perhaps it was not the best analogy. All I am saying is that in terms of public order—
Sara Ogilvie: In terms of public order, the usual rules that would apply to public demonstrations or public protests already apply. These are specific additional requirements that are being placed on pickets, and pickets tend to be pretty small as well, so the requirements seem disproportionate. As I say, the normal rules apply; these are additional ones.
Shane Enright: Can I add something, and I will do it in one sentence? I do not understand what problems this Bill is seeking to solve. I simply do not see the evidence before me of disruptive pickets, of intimidation or violence on picket lines; there is simply very little evidence of it. Twenty million days a year are lost through workplace injury or workplace illness; 0.8 million days a year are lost through strikes.
Seema Kennedy
Q 171 The thing is, we want to get rid of all days lost. Yes, of course it is a small proportion and getting smaller, and we want to tackle days lost through workplace injury and things like that as well, but even though it is a small proportion, it is still having an effect on our economy and it is still disrupting people’s lives, the way they organise their families and their travel. That and the idea of threshold is the whole thrust of the Bill. I know that Liberty has spoken about the balance between employers and employees, but we go back to the people whose lives are disrupted and who have not taken part in that ballot. They cannot say whether their schools or trains are not running on that day.
Shane Enright: I appreciate that there is disruption, but what is entirely absent from the Bill is any recognition or acknowledgement of the positive roles that trade unions play in the delivery of effective and efficient public and private services for the common good. I understand that the Royal College of Nursing has done an impact analysis of the role of trade unions in the health sector that comes to the conclusion that effective industrial relations involving trade unions has substantial positive impacts on safety, on the levels and quality of workplace training and across a range of key issues. So rather than talking about trade unions as necessarily being civil actors that have negative economic consequences—
The Chair
Sorry, can I stop you? We have very little time left and this is not the place for a conversation; it is a question and answer session for Members to ask questions of the witnesses. I am going to draw this section to a close and move on.
Stephen Doughty
Q 172 I want to go back to the beginning. Obviously, Liberty and Amnesty have outlined a whole range of issues with the Bill that they are not happy with. In terms of the potential for legal challenge, do you think it is inevitable, given the concerns we heard from Thompsons Solicitors earlier today, that aspects of the Bill, if not its entirety, are going to be subject to legal challenge?
Shane Enright: I think it is utterly inevitable. The European convention and the European Court exist for a reason, and I cannot see that the rights holders concerned would not challenge this at the European Court. Let us be clear here: trade unions are effectively the voice of workers and workers have universal human rights.
Stephen Doughty
Q 173 Sara, do you share that view?
Sara Ogilvie: Yes, I share that view in terms of the protesting and picketing elements we have discussed. I also think that when we look, perhaps not at individual elements of the Bill—we have spoken about thresholds; we could talk about a lot more if we had the time, but we obviously do not—but the cumulative impact of those proposals will create so many bureaucratic obstacles and hurdles that you have to get through to call a strike that the right to strike will be illusory. That is a key area on which there will be challenge to the legislation. I should also just say that even if we ignore human rights arguments, the fact of the matter is that when we create lots of rules and laws, the people involved—trade unions and employers—who want to get these enforced will go to court. That is going to be expensive for them.
Stephen Doughty
Q 174 So in that way it is very similar to the gagging Bill and other measures that have been taken by the Government?
Sara Ogilvie: Certainly, we have seen a number of trends whereby the previous Government had different pieces of legislation that looked like they were trying to shut down various parts of civil society from engaging in public debate. What I am concerned about with the Bill is that it attacks freedom of association from a number of angles, but it will just create a lot of cost and a lot of regulation for the whole spectrum of actors involved.
The Chair
In the couple of minutes we have left, we have two Members still to go, so I ask them to make it very short. If we run out of time and the witnesses want to reply to the Committee, they can certainly email us.
Ian Mearns (Gateshead) (Lab)
Q 175 I am very grateful, Sir Alan, and very happy to serve under your chairmanship this afternoon. I apologise for being late: I was on the Backbench Business Committee. The Bill covers the whole of industry, but we have heard from Government Members this afternoon that they are particularly concerned about measures impacting on public transport and schools. What impact on public transport, on the closure of a school or on families would the closure of a factory in Gateshead have, for instance?
Sara Ogilvie: Perhaps I can interpret your question to mean, what advantages do trade unions and the right to strike bring to society? I think we get a lot of advantages. The right to strike is perhaps the most vilified and obvious tool in the trade union toolkit, but it is just the stick in the carrot-and-stick analogy. Actually, the substantial part of trade union work is helping to resolve workplace disputes, which keeps our industries up and running, helping people deal with their problems and helping to ensure that we do not escalate to a strike. Those activities can be undertaken only if there is a reason for recalcitrant employers to participate in debates. Without strikes, they will not.
The Chair
I am afraid we have run out of time. We have to stop here because there are more witnesses to come in the next session. We thank you all for your attendance. If there is any other matter that you want to raise with members of the Committee, please put it in writing to the Clerks and we will certainly distribute it. Thank you very much for your attendance.
Examination of Witnesses
Jonathan Isaby and Tony Wilson gave evidence.
The Chair
Q 176 Thank you both for attending the hearing to answer the questions that Committee members will put to you. It is a strange way of doing things, but we want to ask you to introduce yourselves in a very short, precise manner and tell us about your backgrounds and why you are here. We will then move to a question-and-answer session, with Members asking you questions and you giving replies. Without further ado, Mr Wilson, would you like to start?
Tony Wilson: My name is Tony Wilson. I am managing director of Abellio London and Surrey. We are one of the London bus operators running red buses. We operate about 650 buses in London and employ 2,600 staff, about 2,200 of whom at least are represented by Unite the union under a recognition agreement.
Jonathan Isaby: My name is Jonathan Isaby. I am the chief executive of the TaxPayers Alliance—an organisation founded in 2004 that seeks to represent taxpayers across the UK. We have tens of thousands of supporters—about 80,000 supporters across the United Kingdom. We want to see lower, simpler taxes and less Government waste. We have conducted a lot of research over the years into how taxpayers’ money subsidises trade unions, and we have campaigned for that subsidy to be reduced as far as possible. Hence, I am delighted to have the opportunity to help the Committee with its deliberations today.
Stephen Doughty
Q 177 My first question is for Jonathan. I have asked this of the TaxPayers Alliance previously. You stated that you have 80,000 supporters, but how representative of the UK are they? How do you consult them? Do they pay you money? How are they distributed across the geographical regions of the UK, income brackets and so on? Give us a flavour of the people you claim to represent.
Jonathan Isaby: I think you asked me exactly the same question when I appeared before the Select Committee on Welsh Affairs the other year.
Stephen Doughty
And you could not answer it.
Jonathan Isaby: I will give you exactly the same answer, which is that we have a broad swathe of support from across the whole United Kingdom. We regularly talk to our supporters through weekly email bulletins. We hold events up and down the country, and we engage with politicians across the political divide.
Stephen Doughty
Q 178 I am surprised that you cannot answer, given that I have asked you this before. How have you consulted them about the Bill, and how many of them have lobbied you to see the Bill and all its provisions introduced?
Jonathan Isaby: I have a daily email dialogue with supporters from across the country.
Stephen Doughty
Q 179 How many have written to you about this out of the 80,000?
Jonathan Isaby: I have not kept a tally, but it is an issue that exercises supporters. They have given me great encouragement to campaign on it.
Stephen Doughty
Q 180 Okay. You spoke a minute ago about transparency in political funding—the funding that unions give for political causes and so on. Given that you speak out on those issues, would your organisation like to be subject to the rules that the Bill will impose? I have been looking at a very interesting website called “Who Funds You?”, which basically says that the TaxPayers Alliance does not display funding information on its website, does not name its organisational funders, does not declare amounts given by organisational funders, does not name individual funders and does not declare amounts given by individual funders. Why is it one rule for you and one rule for trade unions?
Jonathan Isaby: Well, we are subject to zero subsidy from the taxpayer. We are entirely funded by private individuals. We take the view that when taxpayers’ money is being spent, there needs to be a very high standard of transparency, so that taxpayers can see what is being doing with their money. We have a very broad base of support—thousands of people are financially supporting us. We do not publish their names and we are not obliged to do so. We respect their right to privacy. Some individuals decide to identify themselves as supporters.
Stephen Doughty
Q 181 So why should trade unions be subject to very intrusive explanations of all sorts of levels of funding? The Bill goes well beyond the established consensus on political funding and transparency. Why is it one rule for trade unions and a different rule for you?
Jonathan Isaby: As the Taxpayers Alliance has shown before, trade unions get a taxpayer subsidy in excess of £100 million a year. That is more than £100 million earned by your constituents that is effectively being handed to trade unions.
Stephen Doughty
Q 182 Sorry, how can you justify that? Can you explain that?
Jonathan Isaby: How can I justify that figure?
Stephen Doughty
Q 183 Yes. Can you break it down?
Jonathan Isaby: In the report that we published in 2013 or 2014, our most recent figures were that there were direct grants of about £23 million to trade unions from Government Departments and other public sector bodies and facility time was time worth at least £85 million a year, which is an underestimate, because a lot of public sector bodies are not properly recording facility time. There are some very good measures in the Bill that will crack down on that.
Stephen Doughty
Q 184 Would you accept that the unions pay the public sector money for the provision of check-off, for example? There is money going in the opposite direction.
Jonathan Isaby: Well, that is another issue in the Bill. Only 22% of the public bodies that offer check-off are charging for that service, so, again, millions of pounds are being lost every year, which is basically a taxpayer subsidy to the unions through the provision of that kind of service. That is before we get into office space, telephone lines and other things that are not covered in the Bill but that I hope the Government will look at adding to it. Perhaps the Committee would like to add those things to the Bill because that is another subsidy that is totally unjustifiable in our view.
Stephen Doughty
Q 185 So you are not willing to tell us how many people have lobbied you on this or where your money comes from, but you are willing to come here and make statements about what should happen to other civil society organisations. That is the nub of it.
Jonathan Isaby: There are hundreds or thousands of campaign groups and campaigning charities that will appear before such Committees and are not subject to intruding on the privacy of those who support them.
Stephen Doughty
Q 186 But others should be.
Jonathan Isaby: If they are in receipt of taxpayers’ money, yes. That certainly goes for—
Stephen Doughty
Q 187 In all aspects of their work, not in proportion to that funding or at any other level?
Jonathan Isaby: When millions of pounds of taxpayers’ money is being handed to an organisation, whether it is a trade union or, indeed, a charity—a lot of charities are in receipt of huge amounts of taxpayers’ money—there needs to be a very high standard of transparency to justify to taxpayers where that money is going.
The Chair
Before we leave this subject, Mr Isaby, you made a lot of claims there about large amounts of money—£100 million and £85 million. Would you be able to write to Committee members outlining where those funds come from, because they have been a source of information that I think would—
Jonathan Isaby: The grants to the unions and so on?
The Chair
You claimed that the figure is £100 million and £85 million—
Jonathan Isaby: It is in the written evidence that I have already provided to the Committee.
The Chair
Will you elaborate on that in writing and send it to all Committee members on both sides, so that they might further digest your claims?
Jonathan Isaby: I will happily do so. It was in our report last year and it is in the evidence that I submitted to you, but I will happily do that.
John Howell
Q 188 I have a question for Mr Wilson. Can you describe the strike that your company faced? What was its effect on the travelling public and what are the likely effects of the thresholds?
Tony Wilson: The most recent strike was in relation to Unite’s quest for sector-wide collective bargaining across London. They obviously had to try to co-ordinate many legal entities. They managed to do that and we had a very low turnout in terms of our own workforce actually voting yes for the strike. It was even lower among union members as a proportion of the number of employees.
We were quite successful in the marketplace in terms of operating services. On the first day of operation, we got between 30% and 40% of the service out, but that is the peak-time service, which is what is mostly going to affect commuters both in the morning and afternoon. On the second day, 5 February, we got up to nearly 50% of our peak-time service out on the road. In any respect, that is a major disruption to the travelling public and it was not a great day for anybody who was trying to catch a bus. We were one of the most successful companies in terms of turning out services. Others varied at certain depots around London from zero to all the way up to similar levels to us. As a proportion of the total network, however, it was less than 50% out, certainly on the second day, which was the better of the two.
John Howell
Q 189 And the effect of the thresholds in the Bill?
Tony Wilson: To me, the thresholds are all about proportionality. We rely entirely on collective bargaining within our organisation. We have a very good relationship with Unite. Across many years, I have never had any great issue with them. For us, it is the fact that very low numbers of the organisation can dictate to the mass. Some of that is to do with the fact that our particular company has quite a low percentage of union members in the first place, but even they do not all go and vote. I think something like 12% of the total bus driver workforce actually voted yes and dictated to the vast majority.
I heard something earlier on about picket lines. On 13 January, there was no police presence on our picket lines, but there were a lot of people, and a lot of staff who would otherwise have come to work were deterred from doing so. Most pickets were not particularly antagonistic—some were a bit different—but the sheer number of people that they had to pass to get into work was a barrier to them. At one depot, the roadway was blocked, so we could not actually get buses in and out. On the second day, co-ordinating with Transport for London, we had a large police presence on all of our sites. It was far more organised and there was a lot less disruption. It was noticeable that people do not want to come to work and cross that barrier. Whether on the day or the stigma afterwards, they do not feel comfortable.
Chris Stephens
Q 190 This is a question to the TaxPayers Alliance. I know from my previous employment that your organisation is well-versed in freedom of information. In relation to facility time, what do you consider to be a trade union duty and what do you consider to be a trade union activity? When you have done research into facility time, have you been able to establish how many trade union activists have had either part or all of their salary paid by a trade union?
In terms of check-off, why is it correct that public sector employees—even those who would be in a staff association—can pay council tax, rent and charitable donations via check-off, but not a trade union?
My last question goes back to the taxpayers and the democratic mandate. If a political party has been elected in a devolved Administration or a public authority and it has a democratic mandate to carry out good industrial relations by providing check-off, either charitable or free, or good facility time, who is anybody to interfere in that? Surely, it has the democratic mandate and the taxpayer has made that decision.
Jonathan Isaby: There are quite a few points there. You talked about the difference between activities and duties. Those things are defined, are they not? ACAS has defined them and our most recent report quotes exactly what they are.
Chris Stephens
Q 191 Have you specifically asked employers what duties and activities are in a major freedom of information request?
Jonathan Isaby: No. I am not sure of the wording of the exact request that we put in, but the difference is that employees can take paid time off for duties, while the time off for activities is unpaid. What we are concerned about is the paid time off when it is taxpayer-funded time that is being used.
Obviously, in that respect, we are talking here about duties rather than activities, although this comes back to the point that we uncovered. I think I am right in saying that it was 344 public sector bodies, of which 154 were local authorities, 122 were NHS trusts and 37 were quangos, that either did not record facility time or only recorded it partially. That comes back to the whole issue that this Bill is seeking to address: it is unclear how much additional subsidy unions are getting and whether time is being spent on activities rather than duties, which is absolutely not what the current law envisages. That is why it is right that the law should be seeking to better define this.
Chris Stephens
Q 192 But you are making an allegation—I want to be clear about your answer—that in the public sector what is being allowed to happen is that activities that should be unpaid are being paid. Is that what you are alleging?
Jonathan Isaby: We do not know. The fact that so many bodies—literally hundreds of public sector bodies—are not properly recording this means that we have no idea. They are not recording it. Therefore, I think the Bill is absolutely right to be saying that this should be recorded properly, so that there can be proper accountability and knowledge that there is absolutely no abuse going on.
Chris Stephens
Q 193 So have you established that the trade unions make a contribution to employees on facility time?
Jonathan Isaby: Obviously, trade unions have people that they employ and they are not solely funded by the taxpayer, but there is clearly a big subsidy here.
Chris Stephens
Q 194 Trade unions give money to public sector employers for some trade union activists who are on facility time, usually in cases of full-time facility time. You have not been able to establish that?
Jonathan Isaby: I do not know off the top of my head the extent of that; I do not know is the honest, quick answer.
The Chair
Mr Isaby, in the context of the request that I made for Committee members, when you submit material could you also submit a paragraph or two on your view on that and how you arrive at those estimates or projections? If you can do that, it would be helpful to members of the Committee.
Jonathan Isaby: Yes, happily.
Chris Stephens
Q 195 I asked questions that I do not think I have got an answer to, in terms of check-off, and obviously the taxpayer and who represents the taxpayer in the democratic mandate.
Jonathan Isaby: If there was a check-off, I simply do not think that it is for the public sector—that is, a taxpayer-funded employer—to organise its employees’ memberships of any organisation, whether that be a trade union, a political party, the National Trust, the Royal Society for the Protection of Birds, or whatever it might be. It is a private decision that people need to make. With direct debits and banking these days really making these things very easy for individuals to handle, there is no justification for that to be done by the employer.
Chris Stephens
Q 196 Surely, it is a contractual obligation. Have you established that in many public sector bodies there is a contractual obligation between the employee and the employer to have a check-off?
Jonathan Isaby: I simply do not accept that there should be. It is not the role of the public sector—whether it be a Government Department or a local council—to organise those things.
Chris Stephens
Q 197 That might be your view, but surely if a public body that is democratically elected has decided to put that in individual employees’ contracts, who are we to argue with that?
Jonathan Isaby: I think you are to disagree because you are the Parliament of this country, and if you change the law and say that you can no longer do that, then that will stand, surely?
Rishi Sunak
Q 198 Mr Wilson, I have a question for you. One of the things that the Bill will do is to put in place a four-month ballot mandate for industrial action. I think we have heard earlier today that industrial action has been called on ballots that were two years previous, so there ought to be a meaningful change. I would be interested to know how that would impact your business, and how you think about your population of employees and how that changes over the time, and whether this would be a helpful or sensible measure.
Tony Wilson: I think it is a very appropriate measure. Going back to the incident of the strike in January and February, the ballot for that was prior to Christmas, in December 2014. We are still not out of the woods on that. The action has not been called off; it is not over. There have been numerous discussions in the intervening period. We have a turnover rate of 14% or 15% per annum in our bus driver workforce, so by now, the workforce is very different to the one that actually balloted. Clearly, there could be other people who would come in and vote in the same direction, but it is not right to say that the same populace that voted the first time is there today; it simply is not.
I think it is appropriate that ballots run out of time. Purely from a fairness to proportionality perspective, to have a refreshed vote with a new look by the people who are in employment at the time and are now going to be affected by it seems perfectly appropriate to me. I do not think the unions themselves—I do not think Unite would see that as a particular barrier. I think they recognise that even if the legislation changes in the way set out, they will just have to try a bit harder to mobilise their workforce, and they are very effective at that. I do not know that in practice, things will actually change too much. I think they will get more people voting, personally, and we will have a slightly different scenery.
Julie Elliott
Q 199 In your answer to a previous question from a colleague on the Committee, you made great play of the collection of information. Would you accept that for the local authorities or other public bodies that do not do that, there will be a cost to the taxpayer from collecting that information?
Jonathan Isaby: In terms of the amount of time?
Julie Elliott
Q 200 It is a straightforward yes or no answer.
Jonathan Isaby: Clearly.
Julie Elliott
Q 201 Thank you. In your figures, which you quoted earlier, what percentage of trade union income are you implying comes from the taxpayer?
Jonathan Isaby: I do not know the total trade union income across the UK, so I cannot tell you what that is as a percentage.
Julie Elliott
Q 202 Well, it is very publicly available. It is the most transparent money in politics and campaigning, so I would have thought you would have looked up what percentage it is.
Jonathan Isaby: I do not know off the top of my head what that number is, but I do know that £108 million-plus a year is a large chunk of taxpayers’ money.
Julie Elliott
Q 203 So you are making a lot of assumptions despite not knowing all the facts. What grants were you referring to that trade unions get?
Jonathan Isaby: As I said to Sir Alan, I will happily give you the specifics on that. In terms of direct payments to trade unions, the Department for Business, Innovation and Skills gave the TUC £20 million in 2012-13.
Julie Elliott
Q 204 Can I just interrupt? You specifically said that trade unions receive grants. I am not aware of any grants that trade unions receive. I think you will find the BIS figure is to do with the contracts that were won regarding trade union learning, which was something that lots of organisations applied for and deliver a service for. What grants do trade unions gain from the Government or the taxpayer? I am a taxpayer, as are many trade union members.
Jonathan Isaby: I presume they all are. We are all taxpayers. They are amounts of money that have been given to trade unions—
Julie Elliott
Q 205 Yes, but you specifically referred to grants. Are you aware of any grants that trade unions receive or did you use the wrong word?
Jonathan Isaby: I do not know how you want to define the word “grant”, but I am talking about amounts of money that are handed directly to trade unions from public sector bodies, quangos, local authorities and Government Departments.
Julie Elliott
Q 206 Can I take from that that you are not aware of any grants that trade unions actually receive? A grant is something applied for and given. Are you aware of any grants that trade unions receive from the taxpayer?
Jonathan Isaby: Any grant given to a body would have to be something where you have to account for how it is spent, so it is a grant in that sense.
Julie Elliott
Q 207 But are you aware of any grants?
Jonathan Isaby: It depends whether we are disagreeing about the definition of “grant”. I am talking about money being given to trade unions from these bodies.
Julie Elliott
Q 208 So you are not referring to grants. Can we move on to your big bugbear of the afternoon, which is facility time? You seem to have a real problem with that. Would you accept that any agreements on facility time are made directly between employers or their representatives and employees or their representatives?
Jonathan Isaby: Yes.
Julie Elliott
Q 209 That is therefore working in both people’s interests. The employer, whether it be public sector or anyone else, and the employee or their representative body, the trade union, are happy and come to that agreement freely, without anyone putting pressure on them to do so. They want to make that agreement because they think it works in both people’s interests.
Jonathan Isaby: It may well work in both people’s interests, but at what cost? An important point to raise—
Julie Elliott
Q 210 No, I am asking whether you would agree that that is the situation.
Jonathan Isaby: Clearly it is agreed by both sides, but I should point out that the amount spent in the public sector on facility time is three and a half times the amount in the private sector. There is clearly an imbalance there. We have always said that we should be seeking to get the amount spent by the public sector in the same proportion as it is in the private sector.
Julie Elliott
Well, all I can say is that my anecdotal evidence—actually, most of what you are talking about is anecdotal evidence—as a trade union official for 12 years is that there are as many people on full-time or partial release in the private sector as there are in the public sector. That is my experience. I cannot back it up with factual information, but you cannot back up what you are saying with factual information.
The Minister for Skills (Nick Boles)
I am sorry, but we have now had three separate sessions where Opposition Members have asked about 17 questions in a row. We have had a grave imbalance in the questioning. The Committee is meant to be impartial in its questioning and evenly balanced between Government and Opposition. I have not taken any of the Committee’s time to ask questions in this entire sitting, nor do I intend to, but I do intend to insist that there is a balance between Government and Opposition.
The Chair
May I say to the Minister that if he goes back in the report of this sitting, he will see that I switch from speaker to speaker and side to side, and that I only switch to the other side when a Member stops asking questions? It is not a question of the Opposition getting too much time. They are asking the questions, and your side, Minister, are not asking questions in the same numbers. I do, however, admit that it is time on this particular portion. Mr Isaby has promised to put forward all the information to members of the Committee in written form. We have dealt with how much we can deal with today. We still have two or three Members to call. I call Mr Cartlidge.
James Cartlidge
Q 211 Thank you, Sir Alan. The key thing for me, Mr Wilson, is that you are clearly at the coalface of all this. You have experienced what it is like running a firm with major industrial issues and disputes. I am interested to hear you talk about having harmonious relations with Unite. In your opinion, will the key measures in the Bill in any way worsen or be likely to worsen industrial relations at your firm?
Tony Wilson: I do not think so. I have had discussions with our regional officer about before and after and what will make the difference. I think what I said about them just trying harder is absolutely true. What I have noticed over my years—many, many years now—is that it is the incidents of postal ballot that have gone up, and not necessarily the strike action. That is where we have faced more threat, in the softest terms. There is more likelihood that the workforce will go to the postal ballot. They will not necessarily go to strike action.
The only two strikes that we have faced in the London bus market have been over the Olympics and the sector-wide collective bargaining. If our business had voted on its own, there would not have been strike action on either of those issues in reality. I do not think our harmonious relationship will be affected by the Bill; we will just have a fairer process for the workforce at large in reality.
Tom Blenkinsop
Q 212 I have a question for Mr Isaby. Basically, are you aware that large private sector companies use check-off quite regularly?
Jonathan Isaby: Yes, of course, but that is their affair. They are private companies, so it is not taxpayers’ money.
Tom Blenkinsop
Q 213 Are you aware that companies such as Tata and other large industrial companies use it?
Jonathan Isaby: Yes.
Tom Blenkinsop
Q 214 Mr Wilson’s company, Abellio, is a private-sector company that provides a public service. Would it be counted under your logic as liable or able to use check-off?
Jonathan Isaby: I think it is a very interesting area, which TPA is keen to look at. You have private-sector bodies delivering using taxpayers’ money. This gets into the realms of freedom of information. Organisations that are spending taxpayers’ money should be subject to similar rules and standards as in the public sector.
Tom Blenkinsop
Q 215 A final question, just so that the Government Whip does not get too irate. Mr Wilson—Mr Isaby, you can give your response as well—commercially, would you prefer to deal with one central voice that represents a collective bargaining unit or undergo individual consultation with every single employee?
The Chair
Order. Just before we finish, Mr Argar, you can ask a quick question, which can be replied to in writing, but please keep it brief.
Edward Argar
Q 216 That is what I was going to offer with your permission, Sir Alan. The question is to Mr Wilson. You touched on the 2014 dispute and ballot with Unite. Can you remind us what percentage of Unite members voted to significantly disrupt the working and daily lives of huge numbers of Londoners? I am happy for you to write if you do not have this to hand. Do you have any estimate of how many Londoners’ and others’ journeys were affected by that action over those two days?
Tony Wilson: For the second point, I would ask Transport for London, because it will give you the answer across the whole network, not just for our organisation.
Edward Argar
I was thinking about your firm’s services in particular.
Tony Wilson: I do not know. We are 7% of the market—
The Chair
Order. I am bringing this session to a conclusion now. For the last two questions, I would be grateful if you could submit written answers if you wish. Also, Mr Isaby, you could put together your paper of queries and forward that on to the Clerks or the Members directly. We will now suspend the sitting for five minutes to get the video link ready. Thank you very much, Mr Isaby and Mr Wilson. We are grateful for your attendance today.
The Chair
Q 217 We now hear oral evidence from the Welsh Government, the Scottish Government and the Scottish TUC via video link. For this session we have until 5 o’clock. Of course, Members know that we are at the mercy of technology. I warn Members that, not only in the House of Commons but everywhere, technology often fails, so if it does please bear with us—we will figure a way out. I aim to start with Cardiff and suggest that we divide the time equally between the witnesses. Do we have contact with the Welsh Minister?
Leighton Andrews: Good afternoon, Sir Alan.
The Chair
Q 218 Will you introduce yourself for the record?
Leighton Andrews: I am Leighton Andrews, the Minister for Public Services.
Stephen Doughty
Q 219 Leighton, it is Stephen Doughty, speaking for the Opposition. Croeso. I have here the 9 September statement from the Welsh Government in the name of the First Minister, which very clearly states that the Welsh Government believe
“that significant elements of the Bill relate specifically to public services which in Wales are unambiguously devolved responsibilities. I therefore do not accept the suggestion that the Bill must be regarded as concerned exclusively with non-devolved issues.”
It seems very obvious to me where this sits in relation to health, education of under-17s, fire and a number of other potential areas. You have a range of concerns, so will you elaborate on where you feel the Bill breaches the devolution settlement? Given the First Minister’s statement, will you outline what consultation was undertaken between UK Government Ministers and Welsh Government Ministers?
Leighton Andrews: Well, I suppose our starting point would be, what problem is the Bill seeking to solve? We believe that the Bill contrasts sharply with the constructive social partnerships brokered in Wales. We have good relationships with the trade unions. We value our workforce and believe that they contribute proactively to the development of strong public services.
The First Minister communicated with the Minister in charge of the Bill in Westminster via letter on, I think, the day the Bill was published. The First Minister subsequently wrote a long, detailed letter to the Prime Minister outlining our concerns, as a Government, with the Bill. Those concerns, as you rightly say, reflect the fact that the Bill addresses devolved public services—health, the fire service, education under 17 and potentially other areas, such as some transport staff. Clearly, under the devolution settlement, it is for us to make policy in respect of education under 17, health, fire and rescue, and so on.
The First Minister’s letter to the Prime Minister also raised a fundamental constitutional issue in respect of our right to defend legitimate devolved interests. He said in that letter that we have great concerns that the nature of the Bill would cut across the devolution settlement, which is of great concern to us. We recently received a short reply from the Prime Minister, but we do not regard it as dealing with the key issues that we set out.
Stephen Doughty
Q 220 Have you had specific replies on the issues—particularly check-off—that have been raised as concerns?
Leighton Andrews: UK Government Ministers have not yet written to the Welsh Government about proposals on check-off. We know, of course, that the UK Government made a statement in August, subsequent to the introduction of the Bill, that they are planning to take forward proposals on check-off. They are of great concern to public service employers as well as trade unions in Wales. Indeed, those issues were discussed at our workforce partnership council only last Thursday. Public service employers in local government, the health service and, indeed, the further education sector expressed their discontent with the Bill. As I say, we have not formally heard from the UK Government in respect of check-off yet.
Stephen Doughty
Q 221 Lastly, the UK Government clearly have form on this. You will recall, of course, the case that was before the Supreme Court regarding the Agricultural Wages Board. What is the Welsh Government’s wider experience of the UK Government’s legislating on matters that are devolved and have been found to be so by the courts?
Leighton Andrews: Well, I think you raise an important issue. Obviously, the judgment of the Supreme Court in respect of the Agricultural Sector (Wales) Bill confirmed that, provided an Assembly Bill fairly or realistically satisfies the tests set out in section 108 of the Government of Wales Act 2006, it does not matter whether it might also be capable of being classified as relating to a subject that has not been devolved, such as employment rights and industrial relations.
The policy background of the explanatory notes to the Bill sets the context of the Bill in respect of essential public services. That, of course, takes us into public services that are devolved, such as the ones we have discussed. There is a clear divergence in approach to delivering public services between England and Wales, and we think the proposals in the Bill, far from protecting public services, will be more likely to provoke confrontation.
We also find it somewhat odd that a UK Government Bill of this kind seeks to specify, for example, how much union facility time employees have saved local authorities in Wales. We have been going through, for example, a local government reform programme, which might not be supported by trade unions in local government. Their access to facility time will be a very important element for us in ensuring harmonious relations with the workforce as our reform programme goes ahead.
Nusrat Ghani (Wealden) (Con)
Q 222 I hope you can hear me okay. We took evidence earlier from Mr Wilson, who operates more than 700 buses. He stated that on a ballot turnout of 12%, two days’ industrial action was called. The 12% of people requesting industrial action may no longer be involved in his company now, because the decision was taken much earlier in the year. You spoke about schools earlier, and we also discussed the fact that on a 25% turnout in 2011, 62% of England’s schools were closed. I wonder what you think is a decent turnout for a ballot, considering that we are talking about accountability and transparency, and about making sure that the voice of every individual who is a member of a union is heard.
Leighton Andrews: I am sorry if you have had problems with strike action in England’s schools, of course, but let me say that in Wales we have been very successful in reaching agreements with trades unions that have avoided the need for strike action. For example, in respect of the firefighters’ dispute over pensions, we reached a solution and the Fire Brigades Union put off strike action in Wales. In respect of junior doctors, the British Medical Association’s advice has confirmed that the ballot for industrial action will not be taken in Wales. In respect of the agenda for change in the health service, the inclusive approach that we adopted led to the acceptance and successful application of a two-year pay deal in Wales, avoiding the threat of industrial action. In respect of education, we had constructive discussions with the trades unions and avoided the rolling strike action that was due to take place in Wales in 2013, while strike action was taking place in England.
So I suppose I go back to my opening comment: what is the problem that the Bill is seeking to address? The reality as far as we can see is that we have good relationships with trades unions in Wales and with our workforce. We have good relationships with public service employers in Wales and with our workforce. Public service employers in Wales do not support the Bill and do not see the need for it.
The Chair
Minister, before you go on any more, there are still three Members seeking to ask questions. I would ask you to be a bit more succinct. After this next question, I may see whether I can take all those three questions together, which might help you be as succinct as possible.
Nusrat Ghani
Q 223 One of the points that Mr Wilson raised about the 12% ballot calling for industrial action where he worked was that other members who wished to come into work felt intimidated. You talk about good industrial relations, which is what we all want to see, but there is also a feeling that when a minority of people has asked for industrial action, that has put pressure on other employees in a workplace who could not go into work that day or who felt intimidated. That is one point that Mr Wilson raised. I will go back to my original question: do you think that a turnout of 12% or even of 25% is representative of all the workers in a workplace?
Leighton Andrews: Well, I think that you would want the maximum turnout that you can achieve. I do not know Mr Wilson or the circumstances of that dispute. The point I am seeking to make here is that we are dealing with a matter that we regard as a fundamental constitutional question. This Bill seeks to impose conditions on Wales in public services that are devolved, where we have a responsibility to deliver public services. There is a major constitutional question at stake here. This is not a matter that we feel is going to improve industrial relations in Wales. It is not going to improve industrial relations within our public services; nor do we believe, at the outset, that there is a fundamental problem that needs to be addressed.
Jessica Morden (Newport East) (Lab)
Q 224 In response to Stephen Doughty’s previous question about the Welsh Government’s previous challenges to things like the Agricultural Sector (Wales) Bill, can I ask you—without expecting you to reveal the content—to confirm whether you have sought advice from the Counsel General about the Trade Union Bill and its potential breach of the devolution settlement?
Victoria Prentis
Q 225 My question ties in quite well. It was held by the court that the agricultural wages case concerned agriculture. There is no way that this Bill could possibly be concerned with anything other than employment and industrial relations. It was argued that the agricultural wages case concerned wages but it clearly did not: the court held that it concerned agriculture. This is quite different, is it not?
Jo Stevens
Q 226 Have you had any discussions with your counterparts in Scotland and Northern Ireland about the measures in the Bill and their application?
Leighton Andrews: I start by saying that I am not in front of this Committee to divulge any conversations that have been held with our own legal advisers in respect of our position as a Government. We will reach our own conclusion as to whether this Bill from the UK Government requires a legislative consent motion. That is something we are currently considering.
In respect of the Agricultural Sector (Wales) Bill, I think we need to be clear about that Bill. It went beyond what was said by the questioner. What it confirmed in that case was that where an Assembly Bill fairly and realistically satisfies the test set out in section 108 of the Government of Wales Act 2006 and is not within an exception, it does not matter whether it might also be capable of being classified as relating to a subject that has not been devolved, such as employment rights and industrial relations. The Trade Union Bill very clearly relates to devolved public services—that is the three obvious ones: fire and rescue, health and, of course, education under 17, but potentially others as well. This clearly cuts across the devolution settlement, and we have very strong issues that we will be raising in that regard.
In respect of relations with Scotland and Northern Ireland, officials certainly have had contact with Scottish Government officials. The legal situation in Northern Ireland is slightly different from that in respect of Scotland and Wales, but I think that there is considerable unease among the devolved Administrations about this Bill.
The Chair
Thank you very much for your time, Minister. You are obviously a very busy man. We will now move on from you to the Scottish Minister.
Examination of Witnesses
Roseanna Cunningham and Grahame Smith gave evidence.
The Chair
We are very grateful to you for coming online for this session of the Committee. Would you like to introduce yourself and state your position for the record?
Roseanna Cunningham: I am Roseanna Cunningham, MSP. I am the Cabinet Secretary for Fair Work, Skills and Training.
The Chair
What we are going to do is introduce Members to ask questions and then you will reply to those questions with your answers. [Interruption.] Thank you very much indeed, Minister, for staying with us. Technology, at times, is a bugger. I know that that will go on record, anyway. What we are going to do is to put questions to you from Members, and then hopefully you will give us the answers and we will hear them.
Stephen Doughty
Q 227 Fantastic. I will ask you a similar question to the one I have just asked the Welsh Government Minister. Given the quite clear constitutional implications of the Bill cutting across the devolution settlement in terms of issues and services that are provided by the Scottish Government, the Welsh Government and others, what consultation did the UK Government have with you about the Bill, and what consultation have they had with you during the process? I know that concerns have been raised.
Roseanna Cunningham: I am not aware of there being any formal consultation in advance of the introduction of the Bill. While I have had some correspondence backwards and forwards with the relevant Minister, there has not really been much in the way of a discussion and we are still trying to establish exactly how it would impact on us. We share a lot of the concerns that the Welsh Minister expressed to you.
Stephen Doughty
Q 228 I do not expect you to share the detail of this, but have you taken legal advice from your own counsels and legal advice team on the implications of the Bill?
Roseanna Cunningham: We are looking at that, because we feel that it ought to require an LCM—sorry, a legislative consent motion—given the extent of the interference in what are clearly devolved policy areas. We are looking closely at that, and, yes, it will involve taking some legal advice, but I am obviously not going to share it.
James Cartlidge
Q 229 On the constitutional point, given that industrial relations are reserved—they are a UK matter—is it not the case that any industrial legislation that comes out from any Government of any type and that potentially affects public services will have ramifications for devolved areas?
Roseanna Cunningham: You are reaching right into the operations of our Government and, in fact, into a significant policy area for us as well. You will have heard the title of my job, which is fair work, skills and training, and that ought to tell you something about the approach that we are trying to take in Scotland, throughout the work that we do. It principally means the way in which we behave as a devolved Administration in terms of our own employment, our relationships with our employees and the way in which we conduct our business. This is now directly reaching into, and attempting to change, the way in which we conduct our business.
James Cartlidge
Q 230 But with respect, Mr Doughty raised a constitutional point and I am simply asking whether you accept that industrial relations is a reserved matter? [Interruption.]
The Chair
Thank you for bearing with us, Minister.
Roseanna Cunningham: I think that I probably said what I wanted to say.
James Cartlidge
Q 231 I had better ask the question again. Do you accept that industrial relations—trade unions matters—are reserved for the United Kingdom Government?
Roseanna Cunningham: They are currently reserved, but we consider that the effect of this is such that it should require an LCM and we are taking advice on that.
James Cartlidge
Q 232 Okay, but the impact is on public services such as schools, which have been devolved. We accept that. But do you not have a concern, therefore, in relation to schools? Admittedly the statistics I have are for England and I am sorry about that, but we have had school closures in England on ballots with relatively small turnouts, such as 25%. Would that be of concern to you?
Roseanna Cunningham: I cannot speak to the industrial relations record that exists in England. I can speak only to the industrial relations record that exists in Scotland, and that is not happening in Scotland. In fact, we have a better industrial relations record here than in any other part of the United Kingdom, with the lowest number of days lost to industrial disputes. I would argue that that is the way we conduct our business here, and have done since 2007. The proof of the pudding is in the eating. What we are concerned about is the negative impact that this Bill will have on relationships in Scotland, in an area where we are making a far better impact than there appears to be south of the border.
Chris Stephens
Can you hear me, Minister?
Roseanna Cunningham: Yes I can. I cannot see you, but I can hear you.
Chris Stephens
Is Mr Smith there, too, from the STUC?
Roseanna Cunningham: He is sitting beside me.
Chris Stephens
Q 233 I will ask you a question first from the STUC point of view. Can you outline for the Committee what discussions the STUC has had with the Scotland Office on the Trade Union Bill? Do you have specific concerns in relation to check-off and facility time?
Grahame Smith: Perhaps I should introduce myself, given that Members may not know who I am. I am the general secretary of the Scottish TUC. I have had a meeting with the Under-Secretary of State at the Scotland Office to discuss a variety of things, among which was the Trade Union Bill.
Victoria Prentis
Q 234 Presumably, you do not think that industrial relations should be an English, Welsh and Scottish issue. You think they should be devolved.
Roseanna Cunningham: Yes, I do think they should be devolved. I would offer as evidence the different industrial relations picture here from what is happening south of the border.
Victoria Prentis
Q 235 And there was a great deal of discussion about this before the devolution settlement, was there not, and Smith came down in favour of them not being devolved?
Roseanna Cunningham: That does not change my position though. My position is that in an ideal world, they would be devolved. One reason why I am arguing for that is because, quite apart from anything else, there is a different relationship in Scotland. To have our relationship adversely affected by what is going through the Westminster Parliament is unfortunate to say the least.
Victoria Prentis
Q 236 But the fact is that they are not a devolved issue.
Roseanna Cunningham: The fact is that you are choosing not to listen to what I have to say about the different relationship within Scotland, in terms of industrial relations, and why, in our view, it would be preferable if this Bill simply did not apply to Scotland.
The Chair
Thank you very much for sticking with us through this very tumultuous experience.
Dr Cameron
Q 237 Can I ask the STUC—I hope you can hear me—about your views on whether or not industrial relations should be a devolved matter?
Grahame Smith: The position of the Scottish TUC on industrial relations and the major employment protections is that they should be devolved to the Scottish Parliament. We believe that that would fulfil the pledge that was given in the so-called extensive devolution agreement, or devolution settlement. Given the major powers to be devolved to Scotland under the Smith commission proposals, including powers over employability, various tax powers and other powers that impact on economic development, it would make sense, in our view, to have powers on employment protection to be devolved to the Scottish Parliament to give us that meaningful and clear devolution settlement. Our concerns about the Bill are about its impact on workers and trade union members across the whole of Britain. The members of our Scottish Trades Union Congress represent members across Britain and are concerned about the impact that this Bill and its proposals will have on all the members of our affiliated trade unions.
Dr Cameron
Q 238 Do you have any particular concerns regarding check-off?
Grahame Smith: We are concerned about the Bill in its entirety. First, we are concerned about the lack of scrutiny by Parliament over the arrangements for check-off. It seems to me unacceptable and, in fact, pretty dangerous and damaging that Ministers in Westminster can, for example, determine whether check-off arrangements apply to public services in Scotland. In many respects these are contractual matters that are agreed between unions and employers in the public services in Scotland.
Check-off and facility time arrangements are an investment made by public service employers in stable and effective industrial relations. They contribute towards the provision of quality public services and stable relations between employers and unions. Any proposal to remove check-off arrangements or reduce the amount of facility time—that is, time that workplace reps can spend representing their members, working constructively with public service employers to address the range of challenges faced by public service employers and workers in Scotland—seems to me to be not only wrong-headed but, as I said earlier, particularly damaging and against the spirit not only of devolution in Scotland and Wales but decentralisation in England. To require local authorities to abandon check-off arrangements is certainly not consistent with the devolution of power to a local level to allow local authorities to be responsive to the needs of their local communities, including their local workforces.
Rishi Sunak
Q 239 Thank you both for your time. You spoke earlier about the good state of industrial relations in Scotland. With that backdrop, if a national strike in Scotland was called with only 20% turnout and a ballot that was two years out of date, would you consider that fair to the ordinary families up and down the country trying to get their kids to school or to get to work?
Roseanna Cunningham: Who is that question to?
Rishi Sunak
To both of you.
Roseanna Cunningham: The point I am making is that the situation in Scotland is such that I would be pretty close to being able to say that we would not allow it to get to that position in the first place. Reaching that position would be a catastrophic failure. We should be ensuring through all the practices—including things such as check-off and facility time—that the proper time is afforded to ensure that the relationship between employer and employee and trade union works effectively so that you do not get into that position.
Grahame Smith: The proposals for facility time and check-off raise the possibility of unfortunate conflict and disagreement in our public services. I would simply point to the statement that was made by the Conservative councillor who is the HR spokesperson for the Convention of Scottish Local Authorities. He said that he was opposed to the proposals on check-off and facility time for public services, including local authorities. He said that the current arrangements work well for the employer and the trade unions and that
“the costs…are already covered by direct contributions from the trade unions”.
On whether industrial action is legitimate, if a ballot is a measure of legitimacy, I suggest that a number of councillors and Members of the European Parliament would not pass that legitimacy test. On whether a ballot indicates a significant level of support, unions take into account not only the outcome of the ballot, including the majority or the turnout, but union workplace reps know the views of their local members and the feeling of the workforce. A union would not call a strike if it was not confident of the support of the workforce.
On disruption in public services, when I talk to our members, not only are there those who work in public services, but our members are users of public services. Their concerns about the problems in public services are not about strike action. There are very few strikes in public services across the UK and very few in Scotland. They are concerned about underfunding and the lack of investment in staff and staff training, and about the impact of austerity and the pressure that that has on staff who deliver quality public services. That is much more of an issue that needs to be addressed rather than the proposals in the Bill that, frankly, have no evidence base and are questionable in terms of their democratic legitimacy.
Ian Mearns
Q 240 I wonder whether I could also pose the question about check-off and facility time to the Minister. Do you expect the Government’s proposals to apply to the public sector in Scotland? Do you believe that there are any mutually beneficial elements coming from check-off and facility time for both employees and employers in the public sector in Scotland?
Roseanna Cunningham: We value both. We consider that the investment in facility time pays you back in terms of the handling of issues and problems before they get to become major disputes. That is an extremely important aspect of the relationship that we have within the public sector in Scotland. On check-off, we can understand what the problem—[Interruption.]
The Chair
Thank you, Minister. Did you conclude your answer?
Roseanna Cunningham: Pretty much. There was a phrase at the end that I suspect you did not hear, but I am fairly sure that the members of your Committee understand the position that we are taking on both check-off and facility time. We do not see the need for—
Stephen Doughty
Q 241 I have one last question for the Minister. Looking at clause 9, the provisions on picketing have implications for police officers and police involvement in picketing. Policing is another area that is wholly devolved to Scotland. What conversations have you had with your ministerial colleagues and representatives of the police in Scotland about the provisions, including whether they put the police in an invidious position regarding involvement in industrial disputes?
Roseanna Cunningham: I certainly think that this is a situation that the police do not want to find themselves in. I have had some brief conversations with relevant colleagues. One of our difficulties is with the way that the Bill is drafted. So much is so uncertain at this point that we are almost having to wait and see until regulations appear to discover the practical outcomes of some of what is being vaguely suggested. We have some concern that what is being proposed will be simply exacerbate the situation, rather than help to calm it down. I cannot repeat often enough that if this is fixing a problem, I do not know where that problem is. It is certainly not a problem in Scotland.
The Chair
Minister and Mr Smith, we are very grateful to you for sticking with us through all the difficulties that we had today. It has been extremely useful and we will send you up a copy of all the minutes that we put together about this session. Thank you.
Roseanna Cunningham: Thank you.
Grahame Smith: Thank you.
Ordered, That further consideration be now adjourned. —(Stephen Barclay.)