House of Commons

Wednesday 13th January 2016 Commons Chamber

Wednesday 13 January 2016

The House met at half-past Eleven o’clock

Prayers

Wednesday 13th January 2016 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 13th January 2016 Commons Chamber

The Secretary of State was asked—

[Mr Mark Williams (Ceredigion) (LD)]

1. What discussions he has had with the Secretary of State for Culture, Media and Sport on future funding of S4C.

[Carolyn Harris (Swansea East) (Lab)]

4. What discussions he has had with the Secretary of State for Culture, Media and Sport on future funding of S4C.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

The Secretary of State and I have regular discussions with Cabinet colleagues which provide opportunities to discuss a range of issues, including matters related to the funding of services across Wales such as the future funding of S4C.

[Mr Williams]

The Prime Minister said last week at the Dispatch Box that he wanted to

“meet…the wording and the spirit of our manifesto promise”,

on S4C, which stated:

“We would safeguard the funding and editorial independence of S4C.”

In the light of last week’s commitment, may I invite the Minister to make it clear that the Government will abandon the proposed cuts to the DCMS part of S4C’s budget and undertake a review of the future funding needs of S4C?

[Alun Cairns]

We will meet our manifesto commitment to

“safeguard the funding and editorial independence of S4C.”

The hon. Gentleman will have heard the Prime Minister say that we would

“meet…the wording and spirit of our manifesto commitment.”—[Official Report, 6 January 2016; Vol. 604, c. 281.]

He will also remember that on the evening before there was a debate proposed by my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) to which the Minister for Culture and the Digital Economy responded by saying that he was looking at the arguments and keen to engage positively.

[Carolyn Harris]

I am grateful to the Minister for mentioning last Tuesday’s debate because I too want to talk about the wonderful consensus that broke out in the Chamber regarding S4C’s funding. Given that consensus, will he remind his colleagues at DCMS that he has a statutory duty to protect S4C’s funding? Will he also join us in offering his personal support for an independent review of S4C?

[Alun Cairns]

The hon. Lady took part in that debate and she will recognise the way in which the Minister responded. He said that he was listening to the arguments and that he wanted to engage as positively as he could. I hope that she recognises the spirit in which that was intended.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Last July, the Culture Secretary and the Treasury informed the director-general of the BBC in a letter that S4C’s grant might be cut by the same percentage reduction as the BBC itself and that:

“It will be up to the Government to decide how to make up the shortfall.”

This is therefore not the only Government-driven cut facing S4C. What additional funds will the Government be providing over and above these DMCS cuts?

[Alun Cairns]

As the hon. Lady knows, charter renewal negotiations and discussions are under way at the moment, and I do not want to pre-empt any of the issues that will come out of that. Clearly, there will be a widespread consultation and I hope that she and other Members will engage positively in it.

[Liz Saville Roberts]

I understand, of course, that we are facing the BBC charter consultation, but given the BBC’s response in the current situation there is surely now room for cross-party consensus on Silk II’s recommendation that the funding of the public expenditure element of S4C should be devolved to the National Assembly for Wales.

[Alun Cairns]

I do not accept the basis of the question. During my right hon. Friend the Secretary of State’s discussion that led to the St David’s day agreement, there was not agreement on this issue. We are keen to progress in consensus so that we can take everyone forward. We need to remember that it was a Conservative Government who established S4C, which has been a great success since 1982. I hope that the hon. Lady will share in and recognise that success.

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

What complete waffle from the Minister! The Tory party manifesto said only last spring that that party was committed in government to safeguarding

“the funding and editorial independence of S4C”,

yet now we are talking of a cut from the DCMS budget of a quarter of its funding. [Interruption.] The Secretary of State is asking for my question. It is simply this: why will the Government not safeguard the funding, and why is that quarter of the DCMS funding budget still under consideration? It is a disgrace. How can we trust them on any other commitment they make?

[Alun Cairns]

The hon. Lady will have heard my answers to the previous questions. I find it a bit rich that Labour Members are calling for extra funding for a Welsh language channel when this morning the First Minister in the Assembly is seeking to defend his position of cutting the budget to support the Welsh language by 5.5%. That is simply a disgrace.

[Karen Lumley (Redditch) (Con)]

2. What assessment he has made of the adequacy of Government support for small and medium-sized businesses in Wales.

[The Secretary of State for Wales (Stephen Crabb)]

Our nation’s small businesses are the true heroes of this economic recovery, and I am proud to be part of a Government who are on their side. SMEs have created two thirds of all the new jobs in the private sector in Wales since 2010. As we continue to reduce regulation and lower taxes, support for small businesses right across the UK has never been stronger.

[Karen Lumley]

This year is the British Chambers of Commerce year of action on exports. Will my right hon. Friend update the House on how he is helping small businesses in Wales to punch above their weight this year?

[Stephen Crabb]

My hon. Friend raises a very important point. We have set ourselves a really ambitious target of £1 trillion of exports from the UK by 2020. If we are going to have any hope of meeting that target, we need to engage with SMEs right across the UK, especially in Wales. That is why I will be in north Wales tomorrow, with my right hon. Friend the Minister for Trade and Investment, promoting everything that north Wales has to offer.

[Stephen Kinnock (Aberavon) (Lab)]

The Welsh steel industry plays a critical role in underpinning business right across the board, including SMEs, but global headwinds affecting the industry have been growing stronger. Will the Secretary of State join me and Welsh MPs from all parties in asking for a meeting with his right hon. Friend the Secretary of State for Business, Innovation and Skills to ensure that no stone remains unturned in the fight to save the Welsh steel industry?

[Stephen Crabb]

I thank the hon. Gentleman for his question and for the spirit in which he asked it. He knows as well as we do that the steel industry right across the UK, not least in Wales, faces a global crisis. He is aware of all the different actions being taken by the Government to try to help the British and Welsh steel industry face the global nature of the crisis. I am very happy to pass on his request to the Business Secretary. We are obviously in very close contact, as is the hon. Gentleman, with Tata, and especially the plant in Port Talbot in his constituency.

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

My right hon. Friend will know that one of the small businesses emerging in Wales is Tidal Lagoon Power Ltd, which has exciting plans for the Swansea bay tidal lagoon. The roll-out programme also includes Cardiff, Newport and north Wales. When can we expect to hear what financial support will be forthcoming from the Government so that this exciting project can proceed without delay?

[Stephen Crabb]

My right hon. Friend the former Secretary of State is right. The Swansea tidal lagoon proposition is very exciting and commands wide support across the business community in Wales, but we also need to recognise that the project is asking for a very significant level of public subsidy and intervention. It is absolutely right that my right hon. and hon. Friends in the Treasury and the Department of Energy and Climate Change should conduct very robust due diligence in making sure that such projects will deliver value for the taxpayer.

[Albert Owen (Ynys Môn) (Lab)]

One of the issues that small businesses raise with me in my constituency is the lack of connectivity for superfast broadband and, indeed, mobile connections. Now that the Government and the Prime Minister agree with me on the universal obligation for broadband, will the Secretary of State help me by supporting a pilot scheme on Ynys Môn, the Isle of Anglesey?

[Stephen Crabb]

The hon. Gentleman raises a very important point. We have discussed this many times in Wales questions and debates. Improvements are happening right across Wales, and we are seeing big improvements in internet connectivity and for mobile phones in his constituency and mine. There is much more that we can do. I am very interested to hear about a pilot project in Anglesey, which I am happy to discuss with ministerial colleagues.

[Dr James Davies (Vale of Clwyd) (Con)]

In early December, the UK Government announced £50 million of additional funding to address flooding issues. That figure has Barnett consequentials for Wales of £2.276 million. Since then, a further £90 million has been announced by the UK Government, and we await to see what, if any, Barnett consequentials will arise from that. On the new money to be allocated to Wales, will the Secretary of State join me in calling on the Welsh Assembly Government to allocate it to St Asaph? Many SMEs, as well as local residents, were flooded there three years ago, and there is currently a £4 million shortfall for the necessary flood defence works.

[Stephen Crabb]

I absolutely join my hon. Friend in making that suggestion and recommendation. It is worth putting it on the record that our sympathy and thoughts are with all the families and businesses in Wales, as well as with those right across the UK, that suffered damage due to flooding over the Christmas period. All the new money that the Government have announced to address flooding issues has delivered Barnett consequentials for Wales. It is up to the Welsh Government to decide how to use that money, but we certainly want them to use every single penny to help to address flooding issues. I am afraid that we will have to come back time and again to such issues and discuss them in this place.

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

Further to the question from the hon. Member for Aberavon (Stephen Kinnock), the Minister will undoubtedly share our concern about press reports over the weekend. What contingency plans do the UK Government have for a worse-case scenario? Would he support a Welsh public stake in the Welsh operations of Tata, as was afforded to the banks of London during the financial crash of 2008?

[Stephen Crabb]

I will not engage in the speculation about job cuts that we saw in the press at the weekend. Members from all parts of the House need to be responsible in how we debate these issues. We are in very close contact with Tata internationally and with regard to its operations across the UK, including in south Wales. We are discussing closely what its needs are at this moment. There are big issues and questions that need to be addressed.

[Nick Smith (Blaenau Gwent) (Lab)]

3. What steps the Government are taking to improve rail connectivity to south Wales.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

We are investing in the most ambitious rail upgrade programme since Victorian times. We are committed to electrifying the Great Western main line to Swansea and have agreed to contribute £125 million towards electrifying the Vale of Glamorgan and valleys lines. That will increase services and reduce journey times for passengers across south Wales.

[Nick Smith]

Blaenau Gwent needs good rail links down to Cardiff and across to Bristol for jobs. The flourishing Ebbw Vale to Cardiff line must be part of the core metro system for that to happen. How will the Minister help make sure that south-east Wales gets the modern transport infrastructure it so badly needs?

[Alun Cairns]

The hon. Gentleman has been a strong champion of investment in the Ebbw Vale railway line, including in the new station at Ebbw Vale and the UK Government’s investment at Pye Corner, which has improved access to Newport. The scope of the valleys lines upgrade is a matter for the Welsh Government, but the Department for Transport has made £125 million available specifically for that purpose. To my mind, the valleys lines upgrade stretches from Ebbw Vale to Maesteg and down to the Vale of Glamorgan.

[Byron Davies (Gower) (Con)]

The Government’s investment in the rail network is crucial to businesses and people across Wales and, in particular, in my constituency of Gower. Despite the negativity surrounding electrification from Opposition Members, will the Minister take this opportunity to reaffirm the Government’s commitment to the electrification of the line to Swansea?

[Alun Cairns]

The Prime Minister, the Secretary of State for Transport and the Secretary of State for Wales have confirmed that. Only last week, the Chancellor was in Cardiff and restated our position once again. We will electrify the Great Western main line the whole way to Swansea.

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

Given that UK commuters spend up to six times as much on rail fares as European passengers, has the Secretary of State made any assessment of the impact of the recent rail fare increases on the Welsh economy?

[Alun Cairns]

The hon. Lady should know that there were limits to the recent increases. We need to contrast that with the £3 billion that is being spent on improving rail services to and within Wales, as well as our efforts to ensure that Wales benefits from the national project of HS2 by making Crewe a central hub so that north Wales benefits too.

[Sir Simon Burns (Chelmsford) (Con)]

Does the Minister accept that this investment will revolutionise connectivity in the valleys and on the main line to Swansea? Will he share with the House what assessments have been made of the impact it will have on job creation and passenger journeys?

[Alun Cairns]

My right hon. Friend makes a very important point about the economic prospects that will be brought by the significant capital investment that we are bringing forward. It is worth remembering that the last Labour Government left Wales as one of only three countries in Europe, along with Moldova and Albania, without a single mile of electrified track.

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

5. What discussions he has had with the Welsh Assembly on the contribution of the M4 to the economy in south Wales.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

We regularly have discussions on a range of issues, including transport infrastructure. The M4 is one of Wales’s vital arteries. The need for an upgrade was identified decades ago by business leaders as a No. 1 priority.

[David T. C. Davies]

The Minister will surely be aware that the ongoing delays on the M4 are causing problems for the economy in south Wales. Will he outline what steps he is taking to enable the Welsh Assembly Government to make improvements to this vital piece of transport infrastructure?

[Alun Cairns]

It is hard to believe that the former right hon. Member for Richmond, Yorks was Secretary of State for Wales when the upgrade was first committed to, only for it to be cancelled by Labour Members. It was reconsidered later by a Plaid Cymru Welsh Government Minister, only to then be cancelled. My right hon. Friend the Chancellor of the Exchequer has made additional resources available, and we just want the Welsh Government to get on with it.

[Geraint Davies (Swansea West) (Lab/Co-op)]

In the light of the serious flooding caused by climate change, will the Minister ensure that the newly proposed M4 relief road will double as a flood defence for the Severn estuary?

[Alun Cairns]

The route is a matter for the Welsh Government, and we encourage them to consider all options. We want the project to start as soon as possible. Even if it started to the earliest possible timescale outlined by the Welsh Government, it would still not be completed until the end of 2022, which is unacceptable.

[Craig Williams (Cardiff North) (Con)]

6. What discussions he has had with his ministerial colleagues on proposals for a Cardiff city deal.

[The Secretary of State for Wales (Stephen Crabb)]

Last week my right hon. Friend the Chancellor of the Exchequer visited Cardiff and announced his desire to deliver a city deal by Budget 2016. We are now working with the Cardiff capital region to deliver on ambitious proposals that will increase economic growth, not only in the city but across the entire south Wales region.

[Craig Williams]

Last week the Chancellor brought a welcome sense of urgency to the Cardiff city deal process, with the deadline of March and a down payment of £50 million for a compound semiconductor catapult centre. Does the Secretary of State agree that with a semiconductor catapult at the heart of the city deal process, we stand a real chance of securing a long-term transformation of the south Wales economy?

[Stephen Crabb]

My hon. Friend is right, and I put on record my thanks for his work in championing the city deal for Cardiff. The Chancellor’s announcement last week was a massive statement of this Government’s confidence in Welsh business and our ambition for Wales. The £50 million is a down payment on the Cardiff city deal, and it is now time for local partners, Welsh businesses and the Welsh Government to crack on and conclude this transformational project.

[Jo Stevens (Cardiff Central) (Lab)]

We do not want just warm words from the Chancellor about the Cardiff city deal; we want to know whether the UK Government will match the £580 million that has been pledged by the Welsh Government for the Cardiff city deal. Can the Minister answer that?

[Stephen Crabb]

I am not sure whether the hon. Lady noticed, but during our visit to Cardiff last Thursday we were not just using warm words; we were investing £50 million of UK Government money in a new high-tech centre of innovation at Cardiff University. The Chancellor made it clear in his speech in Cardiff last Thursday that we will support in principle the infrastructure fund that will be at the heart of the Cardiff city deal project.

[David Rutley (Macclesfield) (Con)]

7. What recent assessment he has made of the economic effect on north Wales of the northern powerhouse; and if he will make a statement.

[Graham Evans (Weaver Vale) (Con)]

10. What recent assessment he has made of the economic benefit to north Wales of the northern powerhouse.

[The Parliamentary Under-Secretary of State for Wales (Alun Cairns)]

The northern powerhouse, which stretches from north Wales to Newcastle, is reviving the economic and civic strength of our great northern cities. It is central to our vision for rebalancing the economy, and north Wales is already benefiting from large-scale infrastructure investments.

[David Rutley]

Given the proximity of north Wales to the newly established Cheshire science corridor, the positive impact of infrastructure investment—including High Speed 2—and the 871 square miles of opportunity nearby in Cheshire and Warrington, does my hon. Friend agree that north Wales stands to benefit strongly from the northern powerhouse that is being taken forward by this Conservative Government?

[Alun Cairns]

My hon. Friend is absolutely right. North-east Wales and north-west England form one single economic entity, and businesses in north Wales see the opportunity that the northern powerhouse can bring. When the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Stockton South (James Wharton), and I met businesses last year in north Wales, they were keen to be a central part of that, and, as my hon. Friend said, HS2 offers great opportunities.

[Graham Evans]

Does my hon. Friend agree that the £10.4 million investment in the reopening of the Halton curve will provide a significant economic boost for north Wales, as well as for Cheshire and my constituency of Weaver Vale, not least because there is a direct link to Liverpool John Lennon airport?

[Alun Cairns]

I pay tribute to my hon. Friend for his work in securing that investment. He championed this project from the outset, and later this year the direct link from north Wales through Cheshire to Liverpool will be operational. That is a tangible demonstration of the northern powerhouse in action.

[Mr David Hanson (Delyn) (Lab)]

12. I, too, welcome the Halton curve and the direct link to Liverpool airport, but does the hon. Gentleman recognise that HS2 coming to Crewe is also important, not just for electrification and the link to north Wales, but to speed up contacts to Manchester airport from north Wales?

[Alun Cairns]

The right hon. Gentleman will be well aware of the rail transport summit that was held in north Wales last year. It talked about how we can best bring forward a bid to modernise the railway infrastructure across north Wales, and we look forward to that bid coming forward. Only last week I spoke to the chair of the north Wales economic ambition board to discuss the progress of that project.

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

When I have previously questioned my hon. Friend and his colleague about the potential benefits to north Wales of the northern powerhouse, I have been disappointed to be told of a total lack of engagement on the part of the Welsh Assembly Government. Will my hon. Friend say whether they have changed their stance and are now more plugged in to the process?

[Alun Cairns]

I am grateful to my right hon. Friend for championing the benefits of the northern powerhouse. What is clear is that business sees the benefits. Local authorities also see the benefits. We encourage the Welsh Government to engage positively, because business does not recognise the administrative boundaries between the two.

[Nia Griffith (Llanelli) (Lab)]

The Government’s so-called northern powerhouse will bring no benefit to north Wales unless we see the much-needed investment in infrastructure that the Government have so far failed to deliver. When the Chancellor visited Broughton in July, he promised he would look at rail electrification in north Wales. Six months later, has anything happened?

[Alun Cairns]

Yes, a considerable amount has happened in relation to investment in north Wales. I mentioned the summit that was held last year. We are keen to develop the signalling needed to improve the railway lines. The North Wales Economic Ambition Board is delighted with the support we are giving. We are keen to develop that even further.

[Nia Griffith]

Let us hope that the Government can get on a bit quicker with the electrification than they are on the Great Western main line. North Wales also needs better rail links to Manchester airport. Arriva Trains Wales has proposed a direct service from Llandudno to the airport. Will the Minister explain why, instead of investing in greater capacity on routes to Manchester airport, his colleagues at the Department for Transport have rejected Arriva’s plan, supposedly in favour of extra trans-Pennine services? If the Secretary of State’s place at the Cabinet table counts for anything, what is he going to do about that?

[Alun Cairns]

I do not recognise the premise of the hon. Lady’s question. Significant discussions are going on between the Department for Transport, the Welsh Government, rail operators and other partners about remapping and the franchises. We will happily take positive representations on that

[Craig Tracey (North Warwickshire) (Con)]

8. What assessment he has made of trends in the number of workless households in Wales.

[The Secretary of State for Wales (Stephen Crabb)]

In all parts of the United Kingdom our welfare reforms are working, transforming the lives of those from the most disadvantaged backgrounds. The number of workless households in Wales continues to fall, with 12,000 fewer in the last year alone.

[Craig Tracey]

Does the Secretary of State agree that the Government’s welfare reforms are improving the life chances of children in Wales?

[Stephen Crabb]

I absolutely agree with my hon. Friend. We on the Government Benches understand that work is the best route out of poverty. I am very pleased that in Wales the number of children growing up in a home where no parent works has halved, falling by 62,000 since 2010. I am clear that if we are to transform life chances, we have to go much deeper and address the root causes of worklessness, as my right hon. Friend the Prime Minister pointed out in his speech on Monday.

[Ian C. Lucas (Wrexham) (Lab)]

Four years ago, my constituent Margaret Foster was sacked from Remploy by this Prime Minister. Yesterday, I raised her case in a debate. Today, I have been approached by local employers offering her work. Why are the Secretary of State and the Prime Minister presiding over a system to support disabled workers so useless that it takes a Member of Parliament raising the issue in Parliament for anything to happen?

[Stephen Crabb]

The proportion of disabled people in Wales in work has increased under this Government. There was a time when Labour Members understood and talked the language of welfare reform. Maybe when they have stopped kicking lumps out of each other they will get back to addressing it.

[Derek Thomas (St Ives) (Con)]

9. What steps the Government are taking to establish a tidal lagoon in Swansea?

[The Secretary of State for Wales (Stephen Crabb)]

I recognise that the proposed Swansea tidal lagoon project has the potential to establish Wales as a major hub for tidal power, creating thousands of jobs and attracting millions of pounds of investment. Robust due diligence is, of course, essential in the interest of taxpayers, who would incur the cost of any subsidy through their energy bills.

[Derek Thomas]

Dean Quarry in my constituency is likely to be the source of stone for the tidal lagoon. For over a year, local residents have been concerned about that because it is an important tourist area and marine conservation zone, and we believe there are cheaper areas from which to source the stone. Does the Minister agree that the impact on the environment and the economy is too great and that other sources of stone are available? Will the Government look for places other than Dean Quarry to get the stone?

[Stephen Crabb]

I am aware of the issue raised by my hon. Friend, who is as ever a powerful and effective voice on behalf of his constituents. Planning applications in relation to Dean Quarry would be dealt with by the Marine Management Organisation and local authorities, which should absolutely take into account local concerns.

[Christina Rees (Neath) (Lab)]

Local businesses across Wales are eagerly anticipating the investment that the tidal lagoon will bring. It would be a travesty if the UK Government were to pull the plug on the lagoon, so can the Minister confirm that they remain committed to the project and to agreeing a strike price for the tidal lagoon?

[Stephen Crabb]

The hon. Lady is right: this is a big, potentially very exciting and significant project. It is also a project that is looking for a large amount of public subsidy and intervention, and it is absolutely right—not that we would expect Opposition Members to understand this—that when we are dealing with large sums of taxpayers’ money, there needs to be due diligence.

[Mr Speaker]

Last but not least, I call the Chair of the Environmental Audit Committee.

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

Swansea bay tidal lagoon and the other potential lagoons that may result from it provide amazing opportunities for exports of intellectual property, technology and supply chains across south Wales. Will the Secretary of State at least commit to making it happen and doing it as soon as possible?

[Stephen Crabb]

I repeat the answer I gave to the hon. Gentleman’s colleague. We recognise that this is a potentially very exciting and significant project, in delivering low-carbon renewable energy over a long period. We need to look carefully at the finances to ensure that it delivers value for taxpayers, who will be asked to put a large amount of subsidy into the project.

The Prime Minister was asked—

[Bill Esterson (Sefton Central) (Lab)]

Q1. If he will list his official engagements for Wednesday 13 January.

[The Prime Minister (Mr David Cameron)]

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

[Bill Esterson]

The Royal College of Midwives has called the Government’s plans to cut nurses’ student grants “appalling” and the Royal College of Nursing says it is “deeply concerned”. Meanwhile, the hon. Member for Lewes (Maria Caulfield), who is a nurse, says she would have struggled to undertake her nurse training, given the proposed changes to the bursary scheme. So why does the Prime Minister still think he is right to scrap grants for student nurses?

[The Prime Minister]

For the simple reason that we want to see more nurses in training and more nurses in our NHS. We believe there will be an additional 10,000 nurses because of this change. The facts are that two out of three people who want to become nurses today cannot do so because they are constrained by the bursary scheme. Moving to the new system, those who want to become nurses will be able to become nurses.

[Andrew Griffiths (Burton) (Con)]

Q2. The No. 1 responsibility of any Government is the protection of their people. Does the Prime Minister agree that Britain’s nuclear deterrent and our membership of NATO are key to our defences and that any moves that would put that at risk would jeopardise our national security?

[The Prime Minister]

My hon. Friend is absolutely right. It has been common ground on both sides of this House that the cornerstone of our defence policy is our membership of NATO and our commitment to an independent nuclear deterrent, which must be replaced and updated. They are necessary to keep us safe, and at a time when we see North Korea testing nuclear weapons and with the instability in the world today we recommit ourselves to NATO and to our independent nuclear deterrent. I think the Labour party has some very serious questions to answer.

[Jeremy Corbyn (Islington North) (Lab)]

This week the Prime Minister rather belatedly acknowledged there is a housing crisis in Britain. He announced a £140 million fund to transform 100 housing estates around the country, which amounts to £1.4 million per housing estate to bulldoze and then rebuild them. [Interruption.] My maths is perfect. This money is a drop in the ocean. It is not even going to pay for the bulldozers, is it?

[The Prime Minister]

We have doubled the housing budget and we are going to invest over £8 billion in housing, and that comes after 700,000 homes having been built since I became Prime Minister. We have a quarter of a million more affordable homes. Here is a statistic that the right hon. Gentleman will like: in the last Parliament, we built more council houses than in 13 years of a Labour Government.

[Jeremy Corbyn]

The Prime Minister has not thought this through very carefully. Every estate that he announces he wishes to bulldoze will include tenants and people who have bought their homes under right to buy. Will those people, the leaseholders, be guaranteed homes on the rebuilt estates he proposes?

[The Prime Minister]

I accept, of course, that this is not as carefully thought through as the right hon. Gentleman’s reshuffle, which I gather is still going on—it has not actually finished yet. We want to go to communities where there are sink estates and housing estates that have held people back and agree with the local councils and local people to make sure that tenants get good homes and that homeowners get rehoused in new houses. That is exactly what we want. Let us look at what we have done on housing. We reformed the planning rules, and Labour Members opposed them; we introduced Help to Buy, and they opposed it; we introduced help to save to help people get their deposit, and they opposed it. They have absolutely nothing to say about people trapped in housing estates who want a better start in their lives.

[Jeremy Corbyn]

I notice that the Prime Minister did not give any guarantee to leaseholders on estates. I have a question to ask on behalf of a probably larger group on most estates. A tenant by the name of Darrell asks:

“Will the Prime Minister guarantee that all existing tenants of the council estates earmarked for redevelopment will be rehoused in new council housing, in their current communities, with the same tenancy conditions as they currently have?”

[The Prime Minister]

We are not going to be able to deal with these sink estates unless we get the agreement of tenants and unless we show how we are going to support homeowners and communities. Is it not interesting to reflect on who here is the small “c” conservative who is saying to people, “Stay stuck in your sink estate; have nothing better than what Labour gave you after the war.”? We are saying, “If you are a tenant, have the right to buy; if you want to buy a home, here is help to save; if you are in a sink estate, we will help you out.” That is the fact of politics today—a Conservative Government who want to give people life chances, and a Labour Opposition who say “Stay stuck in poverty”.

[Jeremy Corbyn]

The Prime Minister does not seem to understand the very serious concerns that council tenants have when they feel they are going to be forced away from strong communities in which they live and their children go to school. Perhaps the Prime Minister will be able to help us with another issue. His party’s manifesto said:

“Everyone who works hard should be able to own a home of their own”.

Will families earning the Prime Minister’s so-called national living wage be able to afford one of his discount starter homes?

[The Prime Minister]

I very much hope they will. As well as starter homes, we have shared ownership homes. When I became Prime Minister, a young person trying to buy a home needed £30,000 for the deposit—

[Mr Speaker]

Order. I apologise for interrupting. [Interruption.] Order. I say to the hon. Member for Bishop Auckland (Helen Goodman) that her shrill shrieking from a sedentary position is not appropriate behaviour for a would-be stateswoman. I want to hear the Prime Minister’s answer.

[The Prime Minister]

When I became Prime Minister, people needed £30,000 for a deposit on a typical home. Because of the schemes we have introduced, that is now down to £10,000. I want people to own their homes, so let us consider this issue. We are saying to the 1.3 million tenants of housing associations, “We are on your side: you can buy your own home.” Why does the right hon. Gentleman still oppose that?

[Jeremy Corbyn]

I hope that that word “hope” goes a long way, because research by Shelter has found that families on the Prime Minister’s living wage will be unable to afford the average starter home in 98% of local authority areas in England—only 2% may benefit. Rather than building more affordable homes, is the Prime Minister not simply branding more homes affordable, which is not a solution to the housing crisis? Will he confirm that home ownership has actually fallen since he became Prime Minister?

[The Prime Minister]

There is a challenge in helping people to buy their own homes. That is what Help to Buy was about, which Labour opposed. That is what help to save was about, which Labour opposed.

Is it not interesting that the right hon. Gentleman did not answer the question about the 1.3 million housing association tenants? I want what is best for everyone. Let us put it like this. The right hon. Gentleman owns his home; I own my home. Why should we not let those 1.3 million own their homes? Why not? What is the right hon. Gentleman frightened of?

[Jeremy Corbyn]

The Prime Minister—[Interruption.] When the noise disappears—[Interruption.]

[Mr Speaker]

Order. The Leader of the Opposition will be heard.

[Jeremy Corbyn]

I thank Conservative Back Benchers for their deep concern about the housing crisis in this country. It is noted.

The Prime Minister has given no assurances to tenants, no assurances to leaseholders, and no assurances to low-paid people who want to find somewhere decent to live. May I ask him one final question? It is a practical question that is faced by many people throughout the country who are deeply worried about their own housing situation and how they are going to live in the future, and it comes from Linda, who has been a council tenant for the last 25 years. She says:

“I will eventually look to downsize to a property suitable for our ageing circumstances. Due to the housing bill being debated at present, if we downsize we will have to sign a new tenancy agreement. If we stay, we face having to pay the bedroom tax and debt. If we downsize, we lose our secure home.”

Linda and many like her are facing a real problem. If she were in the Prime Minister’s advice bureau, what advice would he give her?

[The Prime Minister]

The first thing I would say to Linda is that we are cutting social rents in this Parliament, so she will be paying less in rent. The second thing I would say, if she is concerned about the spare room subsidy, is that of course it is not paid by pensioners, which is a point that the right hon. Gentleman failed to make. Another thing I would say to Linda, and to all those who are in council houses or housing association homes, is “We believe in giving you the chance to buy your own home, and are helping you to do that.”

Is it not interesting what this exchange has shown? We now have a Labour party whose housing policy does not support home ownership, just as its defence policy does not believe in defence, and just as we now have a Labour party that does not believe in work and a Labour leader who does not believe in Britain.

[Oliver Dowden (Hertsmere) (Con)]

Q5. As someone who grew up in social housing, I welcome the Prime Minister’s commitment to tearing down poor-quality, soulless high-rise estates and replacing them with affordable homes. Will he seize this opportunity to make sure that those new homes are attractive, well-designed places in which people will want to live for generations to come?

[The Prime Minister]

My hon. Friend is absolutely right. If Labour wanted to have a constructive opinion, they would come along and say, “How can we help knock down these sink estates, rebuild new houses, help people to own their own homes?” That is what we want to do, and that is what we are going to see in this Parliament: one side committed to opportunity, life chances, helping people get on, and another side wanting to keep people trapped in poverty.

[Angus Robertson (Moray) (SNP)]

The economic and intellectual contribution of college and university graduates to the UK is immense. The Smith commission said that the UK and Scottish Government should

“explore the possibility of introducing formal schemes to allow international higher education students graduating from Scottish further and higher education institutions to remain in Scotland and contribute to economic activity for a defined period of time.”

Why did the UK Government this week unilaterally rule out a return of a post-study work visa without stakeholder discussions and before key parliamentary reports?

[The Prime Minister]

We have an excellent scheme that covers, of course, Scotland, England, Wales and Northern Ireland, and it is this: to say to the world’s students that there is no limit on the number of people who can come and study in British universities as long as they have two things—an English language qualification and a place at a university. That is an incredibly generous and open offer. The second thing we offer is that there is actually no limit on the number of people who can stay after they have graduated, as long as they have a graduate-level job. Again, I think that is an incredibly clear message that all of us—whether we are involved in the Scottish Government, the Northern Ireland Administration, the Welsh Administration or the United Kingdom Administration—should get out and sell around the world. It is a world-beating offer; we want the world’s brightest graduates to come here, study here and then work here—what a great deal!

[Angus Robertson]

The return of post-study visas is supported by, among others, all of Scotland’s 25 publicly funded colleges, Colleges Scotland, Universities Scotland, the representative body for Scotland’s 19 higher education institutions, many other organisations and businesses, and all parties, including the Scottish Conservative party, so why does the Prime Minister think they are all wrong and he is right?

[The Prime Minister]

For the reason I have given, which is that the clarity of our offer is world beating. There is a disadvantage to inventing a new post-work study route, where we are effectively saying to people coming to our universities, “It’s okay to stay with a less-than-graduate job.” Frankly, there are lots of people in our own country desperate for those jobs and we should be training them up and skilling them up. We do not need the world’s brightest and best to come here to study and then to do menial labour jobs. That is not what our immigration system is for. What we want is a system where we can advertise to the world—“Come and study here. Come and work here”—and that is the system we have and should keep.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

Q6. Will the Prime Minister join me in welcoming the fact that Aldi is in the process of building a distribution centre in my constituency, bringing the prospect of another 400 jobs to local people? That distribution centre is situated just off the A249, which is one of the busiest trunk roads in the south-east of England. Will my right hon. Friend encourage the Department for Transport to undertake a review of the A249 to ensure that it can cope with the increased traffic generated by the expanding business activity in my constituency?

[The Prime Minister]

I certainly join my hon. Friend in welcoming the investment in his constituency, where the claimant count has fallen by 39% since 2010. That is obviously welcome news. I will take up the point he makes, because obviously we are only going to continue to attract investment if we make sure our road and rail networks are up to date.

[Tommy Sheppard (Edinburgh East) (SNP)]

Q3. The Prime Minister will be aware that last week this House discussed the equalisation of the state retirement age between men and women. Does he feel the outrage of a generation of women born in the 1950s who feel robbed and cheated out of their state pension, and will he give an undertaking to look at further improvements to transitional arrangements, given the unanimous decision of this House to ask him to do so?

[The Prime Minister]

I know that many colleagues have been written to on this issue, and there are some important cases to look at, but what I would say is that we looked very carefully at this at the time and decided that no one should suffer more than an 18-month increase in the time before they were expecting to retire. What I would also say is that what we are putting in place—with the single-tier pension starting at over £150 a week, combined with the triple lock—is a very good settlement for pensioners. It is affordable for the taxpayer and it is generous into the future.

[Dr Tania Mathias (Twickenham) (Con)]

Q7. By 8 January—after just eight days—parts of London had exceeded the annual limit for nitrogen dioxide pollution. Given this medically serious news, will the Prime Minister ensure that the Department for Transport’s current consideration of airport expansion prioritises air pollution concerns, and will he pledge never to expand Heathrow airport while nitrogen dioxide levels are risking the health of millions of people?

[The Prime Minister]

My hon. Friend is absolutely right to raise this point. There are problems of air quality and pollution not just in London but elsewhere in our country. That is one reason we decided to delay the decision about airport capacity expansion—because we need to answer the question about air quality before we do so. That is what the Environmental Audit Committee recommended to the Government. It said:

“On air quality, the Government will need to re-examine the Commission’s findings in the light of its finalised air quality strategy.”

So the point she makes is directly being taken on by the Government.

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

Q4. The Prime Minister’s answer to the hon. Member for Edinburgh East (Tommy Sheppard) about transitional arrangements for women born in the 1950s was nothing like good enough. I was going to say that his own Ministers seem to have no idea how to rectify the injustice they have caused, but I do not think he does either. As he is talking to other EU leaders, will he ask why some countries are not implementing the changes until 2044, and will he also look at what transitional arrangements the Netherlands, Italy and Germany put in place to protect the people affected?

[The Prime Minister]

What other European countries do is a matter for them. We have the ability to make sovereign decisions on this issue, and that is entirely right. We have decided to put in place a pensions system that is affordable for our country in the long term and which sustains a very strong basic state pension right into the future. The single-tier pension is going to make such a difference to so many people in our country. We also have the triple lock, which was never put in place by Labour. We all remember that miserly increase to the pension under Gordon Brown. That can never happen again under our arrangements.

[Dr Phillip Lee (Bracknell) (Con)]

Q8. Since 2010, my constituency has seen the generation of more than 200 new businesses, while the claimant and youth unemployment rates have fallen to below 1%. With the £240 million investment in Bracknell town centre regeneration, full employment in the area is a genuine possibility. Does the Prime Minister agree that it is the Government’s sound stewardship of the economy that has led to this economic success in my constituency?

[The Prime Minister]

I am delighted to hear the news from Bracknell. In Britain today, we have low interest rates; inflation right on the floor; real wages growing, meaning people are feeling better off; people investing inwardly in this country in huge numbers; and business investment going up, because people are confident about the future of our economy—and all that is based on a long-term economic plan of dealing with our debts, getting our deficit down and making this a country where people can start, run and expand a business and therefore create jobs and prosperity for all our people.

[Dan Jarvis (Barnsley Central) (Lab)]

Q10. Over the past four years, according to excess winter death figures from the Office for National Statistics, a staggering 117,000 people have died unnecessarily as a result of the cold. Some 43,000 people tragically died last winter. Does the Prime Minister agree that that is not only appalling but avoidable? Why does he think so many people are dying needlessly in our country, and what will he do to stop it happening?

[The Prime Minister]

The hon. Gentleman is absolutely right to raise this point. The figures on winter deaths, which are published every year, are a standing rebuke to all Governments about what more needs to be done. First, we have maintained the cold weather payments. They are vital and may kick in if the cold weather continues. There are also the winter fuel payments, which we have maintained, and the increase in the pension, which will go up by prices, earnings or 2.5%. We also now have falling energy prices, because of the falling oil price, but I agree they are not falling as fast as I would like, which is why it is right we have this Competition Commission inquiry into the energy industry to ensure that it is a fully competitive industry. But the industry has come a long way in the last few years. When I became Prime Minister, the independent energy companies comprised just 1% of the market, but they now comprise 15%, so the big six are being broken down through competition. All those changes, plus home improvements and making sure people have good insulation, can make a difference.

[Seema Kennedy (South Ribble) (Con)]

Q9. The implementation of the Iran nuclear deal, in which British diplomacy was crucial, is imminent. Will my right hon. Friend tell the House what steps are being taken to ensure that Iran abides by its side of the deal?

[The Prime Minister]

My hon. Friend is absolutely right about this. Let me pay tribute to Secretary of State John Kerry for the incredible work that he did, and also to the Foreign Secretary, who was by his side all the way through the negotiations of what was a very tough and difficult deal. The adoption day for the deal was in October. Since then, Iraq—sorry, Iran—has started shipping 12.5 tonnes of enriched uranium to Russia. Now we are getting close to what is called the implementation day for the deal. The key point is that Iran has granted the International Atomic Energy Agency unprecedented access to ensure that it is doing all the things it said it would do in this deal. As I said at the time, it is a good deal, in that it takes Iran away from a nuclear weapon, but we should enter into it with a very heavy heart, a very clear eye and a very hard head in making sure that the country does everything it said it would.

[Paul Blomfield (Sheffield Central) (Lab)]

Q11. When the Government pushed through their changes to undergraduate funding four years ago, they said that providing maintenance grants for the poorest students was key to those students’ participation in higher education. No mention was made in the Conservative manifesto of ending those grants. Is it not therefore completely unacceptable to make that fundamental change tomorrow in Committee by the back door without a vote in this House?

[The Prime Minister]

This issue has been fully debated and discussed in this House, and it is absolutely right because our changes have shown, despite all the warnings from the Labour party, that more people are taking part in higher education and that more people from low income backgrounds are taking part in higher education. I am confident that that will continue to be the case.

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

Q12. Thanks to this Government’s long-term economic plan, unemployment in North West Leicestershire now stands at an all-time low of 522. This Saturday, East Midlands airport will host a jobs fair with 350 more positions available. Will my right hon. Friend join me in wishing all the businesses in North West Leicestershire more success with recruitment and retention than the Leader of the Opposition has had?

[The Prime Minister]

I am delighted to hear that there are only 522 people unemployed in my hon. Friend’s constituency. Let me praise him and the other Members on both sides of the House who have run jobs fairs in their constituencies. These have made a huge difference in terms of people being able to find opportunities. The truth is that, since 2010, 64% of the rise in private sector employment has taken place outside London and the south-east. Indeed, Scotland, the east midlands, the east of England, the south-west and the south-east all have higher employment rates than London. In growing terms, this is a balanced recovery, and we need to keep working at it to make sure that it is.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Q14. Last year, the Energy Secretary scrapped support under the renewables obligation for new onshore wind projects. This will impact Nissan’s £3 million investment in its wind farm in my constituency. Does the Prime Minister realise that his attacks on clean energy are detrimental to pro-green businesses such as Nissan? Will he look at this immediately and rectify the matter in the Energy Bill next week?

[The Prime Minister]

We had extensive exchanges about this in the Liaison Committee yesterday, and I can tell the hon. Lady that we are going to see another 50% increase in onshore wind investment during this Parliament. Also, Britain has the biggest offshore wind market anywhere in the world. The Leader of the Opposition raised the question of solar. Britain has the fourth largest solar installation of any country anywhere in the world. Indeed, my new favourite statistic is that 98% of those solar panels have been installed since I became Prime Minister. This is all good news, and it means that we have a genuine claim to be leading a renewables revolution. However, every single subsidy that is given to these technologies is extra money that we put on to people’s bills, making their energy more expensive. So it is right that we seek a balance between decarbonising our economy and making sure we do it at a low cost to our consumers and the people who pay the bills. That is what our policy is all about.

[James Cartlidge (South Suffolk) (Con)]

Q13. With the number of workless households in the United Kingdom at an all-time low and with 1.4 million more children being taught in schools ranked good or outstanding since 2010, does my right hon. Friend agree that the mark of a one nation Government is not the amount of money we spend on benefits, but what we do to tackle the root causes of poverty?

[The Prime Minister]

My hon. Friend is absolutely right about that, and it is what the exchanges earlier on proved. As far as I can see, Labour’s only answer to every single problem is to spend more money, so it ends up with more borrowing, more spending and more debt—all the things that got us into this problem in the first place. Our approach is to look at all the causes of poverty—all the things that are holding people back. Let’s fix the sink estates, let’s reform the failing schools, let’s give people more childcare, and let’s deal with the addiction and mental health problems that people have. In that way, we will demonstrate that this is the Government and this is the party helping people with their life chances, while Labour just want to stick you where you are.

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

The draft Wales Bill contains provisions that reverse the 2011 settlement, which was overwhelmingly endorsed at the last Welsh referendum. Unless it is amended, the National Assembly will unanimously—this will include Tory AMs—oppose the Bill during the legislative consent motion process, sparking a constitutional crisis. The veto and consent clauses do not apply in the case of Scotland and Northern Ireland, so why are this Government treating Wales like a second-class nation?

[The Prime Minister]

What this Government have done is, first, hold a referendum so that the Welsh Assembly has those law-making powers, Secondly, we are the first Government in history to make sure there is a floor under the Welsh level of spending—this is something never done by a Labour Government. And now, in the Wales Bill, we want to make sure that we give Wales those extra powers. That is what the Bill is all about. We are still listening to the suggestions made by the hon. Gentleman and by the Welsh Assembly Government, but this Government have a proud record, not only of devolution for Wales, but in delivery for Wales.

[Sir Alan Duncan (Rutland and Melton) (Con)]

Thirty dollar oil is great for petrol prices, but it is potentially catastrophic in other respects. If it goes on like this, we risk seeing regimes under pressure, dramatic corporate failures and financial default, enormous financial transfers out of our markets to pay for other countries’ deficits, a possible collapse in share prices and dividends for pensions, and a liquidity problem in our banking sector. May I invite the Prime Minister to initiate an urgent review across Whitehall to assess the effects of continuing low oil prices on our economy and beyond, and, in particular, to work out how we can avoid the destruction of our own oil industry in the North sea?

[The Prime Minister]

My right hon. Friend makes an important point about this very big move in the oil prices. It of course has a highly beneficial effect for all our constituents, who are able to fill up their cars for less than £1 a litre, which is a very big increase in people’s disposable income and wholly welcome. I think that a low oil price basically is good for the British economy as an economy that is a substantial manufacturing and production economy, but of course there are other consequences and he named many of them. We need to look very carefully at how we can help our own oil and gas industry. Of course, as we are coming to the end of Prime Minister’s questions, I should say that he did mention one other calamity that the low oil price brings about, which is that it has led to a complete and utter collapse of the Scottish National party’s policy.

[Carolyn Harris (Swansea East) (Lab)]

Recent press reports suggest that although some—[Interruption.]

[Mr Speaker]

Order. The hon. Lady must be heard.

[Carolyn Harris]

Recent press reports suggest that although some on the Government’s Back Benches would agree with me—despite the fact that my background would be what the Prime Minister would consider to be “menial”—in calling for a reduction in the stake from a maximum £100 a minute on fixed-odds betting terminals, the Cabinet Office seems reluctant to review this £1.6 million industry and refuses to bring it under scrutiny. Can the Prime Minister assure the public that his Government will undertake a review of this dangerous, addictive and ever-growing problem?

[The Prime Minister]

We have looked at the problem and at the industry, and we have made a series of changes, including planning changes, but we will keep that important situation under review.

[Craig Whittaker (Calder Valley) (Con)]

Although the floods over Christmas were bad for many areas in the north of England and in Scotland, Calder Valley residents were hit the hardest, with 2,100 homes and 1,300 businesses flooded, three bridges lost, four schools either flooded or part-flooded, and an old tip with asbestos that slid, keeping a further 20 families out of their homes. Will my right hon. Friend agree to meet me to discuss how we can help with the £20 million infrastructure damage, the shortfall in future flood defence schemes and the rebuilding of Todmorden High School?

[The Prime Minister]

My hon. Friend and I have discussed Todmorden High School on many occasions, and I think that we should meet again and discuss it again and try to make some progress on the matter. First, let me say that my sympathies, and the sympathies of the whole House, go out to those people and those businesses that were flooded, many of which were in his constituency, at that particular time of year. We will do everything we can to help communities get back on their feet. The very large flood investment programme is in place, and the maintenance programme has been protected in real terms, but there is a number of other infrastructure pieces of work that need to be done. I commend the Highways Agency for being so quick to examine roads and, in some cases, to take over the repairs to local authority roads because it has the capacity to act quickly. That is what we need to do in these situations. As I said last week, this time the Army was in faster, the money was distributed faster, and the Environment Agency worked even harder and even more round the clock, but there are always lessons to learn to demonstrate that we want to get these communities back on their feet as quickly as possible.

Points of Order

Wednesday 13th January 2016 Commons Chamber

12:36

[Lady Hermon (North Down) (Ind)]

On a point of order, Mr Speaker. I wondered whether, overnight, you have had an opportunity to reflect on the point of order that I raised at the end of last night’s debate. The certification process is a new procedure, so it is very, very important that we get it right, particularly as it has such negative and adverse effects for MPs from Northern Ireland and Scotland. I intend no criticism of you, Mr Speaker. However, I hope that you will accept that when the Government table a new clause, which mentions both England and Wales, and then a designation is made in a certificate that it applies exclusively to England, it is inherently ambiguous and contradictory. That is the point that I was making. I should like clarification on how we correct a certificate that is designated apparently incorrectly.

[Mr Speaker]

I thank the hon. Lady for her point of order. Moreover, I can of course confirm to her and to the House that I am aware of the point of order that she raised with the Chair yesterday evening—the First Deputy Chairman of Ways and Means was present at the time.

Let me say to the hon. Lady, who I know would never be guilty of any insult to, or display of discourtesy towards, the Chair, that she and the House can usefully benefit from an explanation, which, on this occasion—I will emphasise the relevance of this later—I am very happy to provide. It is understandable that she initially surmised that new clause 62 should have been certified as relating to Wales as well as to England, but the reality is, as close examination testifies, that the application to Wales falls into the category of minor or consequential as, crucially, it makes no change in the law applying in Wales. So, in the view of the Chair, which was informed by the combined advice of the Clerks and the Office of Speaker’s Counsel, it was rightly certified as relating exclusively to England.

I do not in general intend to explain my decisions in this way—that is why I emphasised that I was happy on this occasion to provide an explanation—but as this is the first occasion of a Legislative Grand Committee, and the suggestion, which I absolutely accept was honest and well intentioned, of error on the part of the Chair, is on the record, I have thought it best to put the matter straight.

That said, I should also like to take this opportunity to say to all Members that the whole point of my publishing provisional certificates is to give them ample opportunity to make representations, if they think that an error has been made or they wish simply to express a contrary view, before I am required to make a decision, which must then be regarded—for reasons with which the House will be well familiar—as final and not subject to further appeal. The appropriate channel for timely representations on the draft or provisional certificate is via the Clerk of Legislation in the Public Bill Office. I hope that that is helpful, both to the hon. Lady and, indeed, to the House.

[Lady Hermon]

Further to that point of order, Mr Speaker.

[Mr Speaker]

I am not sure there is anything further, but I hold the hon. Lady, who is a distinguished advocate, in the highest esteem, so we will hear from her.

[Lady Hermon]

It is related, Mr Speaker. I am enormously grateful to you for making that statement and I have noted that it was an exception on this particular occasion.

Bearing in mind what you have said, Mr Speaker, may I note for the record that there are four Sinn Féin Members who represent Northern Ireland constituencies but who do not take their seats? However, they do receive support for administrative and secretarial assistance. I sit as an independent Member representing North Down and am proud to do so. I receive no additional funding at all for secretarial or administrative assistance. In the light of the very complicated certification process that has now been introduced, which affects me and other representatives from Northern Ireland, could you give some consideration to the provision of additional support for Members such as me when we have to go through the provisional certification list? That would be very helpful.

[Mr Speaker]

The answer to the hon. Lady is twofold. First, it is not for me to consider the provision of additional support in the sense in which she implies it—that is to say, financially paid-for support. Secondly—I intend no discourtesy to the hon. Lady and I am not being pedantic; I am trying to be precise—there is a very real sense in which she does not go through the certification process. I do. That is the responsibility of the Chair, with which I have been invested by the House.

Thirdly—I am really trying to be helpful to the hon. Lady and to the House in the context of what is, let us face it, a new procedure—although it is not for me to pledge or to hint at any additional support of a kind that she might have had in mind, what she does have is the support of the Clerks and other procedural specialists in this House. The hon. Lady knows well the route to the Table Office and, if I may say so, I think she should take advantage of its expertise. Our bewigged friends have very considerable expertise in these matters. They are not only prepared to advise the hon. Lady and any other Member; they are positively excited by the prospect of doing so. [Interruption.] I say to the shadow Leader of the House that the fact that they are excited by the prospect rather suggests that they will have a smile on their face at the time.

[Chris Bryant (Rhondda) (Lab)]

They have now.

[Mr Speaker]

And they have now. I hope that will do for today. The hon. Member for North Down (Lady Hermon) and I know each other well, and if she has further difficulties in the future I am always pleased to hear from her and to try to assist her and any other Member in this or other matters.

English National Anthem

Wednesday 13th January 2016 Commons Chamber

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

12:45

[Toby Perkins (Chesterfield) (Lab)]

I beg to move,

That leave be given to bring in a Bill to provide for an English National Anthem for use at sporting events that involve individuals or teams representing England; and for connected purposes.

I am neither a republican nor an atheist, and nor am I am English nationalist. I shall say more about that theme shortly, but hon. Members should detect no hostility from me towards God, Her Majesty the Queen, “God Save the Queen” or the United Kingdom. Indeed, it is precisely out of respect for preserving many of those things that I believe that the time has come to consider the question of an English national anthem. I acknowledge the excellent work already done on the issue by the hon. Members for Leeds North West (Greg Mulholland), for Shrewsbury and Atcham (Daniel Kawczynski) and for Romford (Andrew Rosindell), which shows that this is a real cross-party campaign. The Prime Minister has also shown sympathy with the argument for an English national anthem.

The level of interest in the matter confirms that the movement for an anthem for England is one whose time has come. As is often the case, it is for us in Parliament to catch up with public opinion and allow the voice of England to be heard. I spoke to radio stations in all corners of England this morning, such was the interest in the debate about what our anthem should be. There were vox pops on the streets of towns far and wide, and each area reflected the specific differences of our multifaceted nation. I will not say which area thought that the most appropriate choice for an English national anthem would be “Heaven Knows I’m Miserable Now”—that will remain a secret between me and the listeners of BBC Radio Humberside—but that reflects the fact that each local area has its own sense of what Englishness means.

When England play against other home nations on the football or rugby field, I often find it incongruous that while the Welsh and Scots sing an anthem that reflects the identity of their nations, England sings about Britain. That reflects a sense that we see Britain and England as synonymous, and it not only denies us English an opportunity to celebrate the nation that is being represented, but is a cause of resentment among other countries within the British Isles, which feel that England has requisitioned the British song.

I deliberately have not referred so far to the Bill’s implications for Northern Ireland. While the measure is specifically about England and would have no jurisdiction over Northern Ireland whatsoever, I am aware of considerable interest from Northern Ireland, to which I shall respond shortly.

National anthems are a matter of convention. The British national anthem is accepted as being “God Save the Queen”, although that is not enshrined in law. The first team to sing a national anthem before a sporting contest was the Welsh rugby team in 1905, in response to the New Zealand haka. Since then, the Welsh tradition of singing “Land of my Fathers” has given an especially Welsh flavour to every sporting contest in which the team competes. The song “Flower of Scotland” has been used as the national anthem by the Scotland rugby team before each of their defeats—or should I say matches?

[Alex Salmond (Gordon) (SNP)]

What about the world cup?

[Toby Perkins]

I remember that there was an exception.

I recognise that matters of the constitution are keenly felt in Northern Ireland, but the Bill refers to only an English consultation. The Northern Ireland football team sings “God Save the Queen”. I have had considerable contact with the media and citizens in Northern Ireland. Interestingly, the callers to BBC radio in Northern Ireland seem enthusiastic about giving people a choice, but that would be a matter for Northern Ireland. England should not be forced to take a decision on the basis that that might put pressure on Northern Ireland to make a different decision.

On constitutional matters, it is always best to allow the voice of the people to be heard, rather than to dictate, if at all possible. Important steps towards making the Scottish Parliament the most devolved Parliament in the world and other devolutionary measures mean that we need a fresh settlement for England and Britain as part of re-establishing the distinct identities of the four nations that make up the United Kingdom of Great Britain and Northern Ireland. That does not mean that we should fear recognising England as an entity, but we should welcome the opportunity to re-establish the idea that the United Kingdom is four separate nations with their own identities that are part of a wider Union for their own mutual good.

It is remarkable to me to watch footage of the 1966 World cup. I am sorry if people are unhappy at the mention of that, but it was a proud occasion. Looking at the crowd, one saw the Union Jack everywhere. Even in the 1990 World cup, England fans predominantly took the Union Jack. It was in 1996, at the European championships—possibly because England were drawn to play against Scotland—that the flag of St George came to be seen as the flag of England. The Union Jack has now virtually disappeared from Wembley when England are playing.

In 2010 the Commonwealth Games Council for England conducted a poll of members of the public which decided that the anthem for the 2010 Commonwealth games should be “Jerusalem”. The three options were “God Save the Queen”, “Jerusalem” and “Land of Hope and Glory”, and “Jerusalem” was the clear winner with 52% of the vote. “Land of Hope and Glory” received 32% and “God Save the Queen” just 12%. Just as “Jerusalem” was the favoured choice of those who voted in the Commonwealth games poll, so it seems to be an early favourite among members of the public who have engaged with me. The campaign group England in my Heart is specifically campaigning for “Jerusalem” to be played before England rugby matches.

With that level of support for “Jerusalem” the outcome may seem a foregone conclusion. I do not know whether there is a way of putting people off William Blake’s classic tune, but I suspect that driving round and round Parliament Square with a van blaring it out might be precisely the way to achieve that. One cannot always choose one’s friends in these matters, but I welcome the fact that hon. Members are enthusiastic.

Since I announced my intention to bring this Bill before Parliament there has been widespread coverage of it. Anecdotally, there has been a lot of support. A Daily Mirror poll found 71% in support of a separate English national anthem and phone-ins have shown a lot of support, but we need a more formal attempt to take the pulse of the nation. I want to underline the fact that my Bill will not specify what anthem should be chosen.

My Bill bestows a duty on the Secretary of State for Culture, Media and Sport to hold a consultation across England that will decide what the English national anthem should be, and will call on the Secretary of State at the end of that consultation to write to the Football Association, the Rugby Football Union, England Netball and any other sporting bodies that have athletes or teams of athletes representing England and inform them that the English national anthem should be used in the event that a piece of music is required prior to the contest or at the awarding of medals. Once the Bill has been passed it will be for the Secretary of State to decide what form the consultation should take and what the contenders should be.

Alongside the choices that were listed for the Commonwealth games poll, anthems such as “I vow to thee, my country” and “There’ll always be an England” have been suggested. Others believe that there could be an opportunity for some X Factor-style programme to combine traditional choices alongside some newly commissioned options. The opportunity for this to be a real moment of engagement with the English people about this specific aspect of our future direction is significant.

This idea has had many positive reviews, including supportive columns in the Daily Mirror and the Sunday Express. I was disappointed to read that a friend of Her Majesty the Queen has said that she considered the idea “rude”. Although I have the utmost respect for the intentions of the lady concerned, I fear that her response betrayed the extent to which the question of Englishness has passed her by. Now that two of the nations have chosen no longer to use the British anthem, it is too late for this to be a question of all the component parts of Britain acting in the same way, and it makes England the outlier.

I hope the House will support this important Bill. Although I accept that to some there should be more important issues for this House to consider, the issue of national identity is a powerful one, and my experience is that ignoring the issue only allows it to fester. I believe the consultation that my Bill proposes will lead to a national conversation across England, and ultimately the voice of England will be heard. Whatever choice the people make, it will be the majority view, and we in this House can do no better than make sure that the voice of England is heard.

12:52

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

I rise to oppose the Bill, though I congratulate the hon. Member for Chesterfield (Toby Perkins) on following in the footsteps of Flanders and Swann. Some years ago they proposed that England should have its own national anthem and they came up with “The English, the English, the English are best”. I will not go through all the lines because, although I am not a great advocate of political correctness, some elements of them may, in this modern age, cause some discombobulation to other hon. Members, particularly my friends in the Scottish National party, but there is an excellent line, “And the Greeks and Italians eat garlic in bed!”—something to be strongly advised against as an unpleasant and somewhat malodorous habit.

I oppose the proposal for deep and serious reasons. What greater pleasure can there be for a true-born English man or true-born English woman than to listen to our own national anthem—a national anthem for our whole country, for our whole United Kingdom, of which England is but a part, but an important part—and to listen to those words that link us to our Sovereign, who is part of that chain that takes us back to our immemorial history; to sing or, if one cannot sing, to listen to the tune that invokes our loyalty to our nation? That tune has been popular since 1745, when it is thought to have started in a response to the Jacobite rebellion. I am usually in favour of Jacobites for obvious reasons, but on that occasion they were traitors and not to be encouraged.

The words that developed then and have remained constant change only when we have a woman on the throne, rather than a man. It is a tune that encapsulates the patriotism that we wish to express when supporting a team. The hon. Member for Chesterfield said that now English crowds take St George’s flag rather than the Union Jack. To me that is a matter of pity, of shame, that we have given up viewing ourselves as one United Kingdom, whether we are supporting England, Scotland, Wales or Northern Ireland. These expressions of individual nationalism are a disuniting factor in our country, a country that we ought to want to make more united.

As the hon. Gentleman mentioned, English crowds have taken to singing “Jerusalem” at various sporting occasions. It is sung at the beginning of test matches in some grounds, though I am glad to say that this does not seem to happen at Lord’s, which is an indication of the proper ordering of things. I am not sure that singing a jolly tune at the beginning of a match is particularly dignified and represents the nation as the nation ought to want to be represented. The crowds have taken to “Jerusalem”, which has a good tone to it. It is a happy song for people to sing, and we should all be in favour of happiness, but does it really make that patriotic pride swell up in us in the way that we would like?

When we think of the words of “Jerusalem”, a highly speculative question is posed. In the words:

“And did those feet in ancient time”

a question is being asked, but I come from Somerset and I know the answer. It is well known that Christ was taken by Joseph of Arimathea to Glastonbury, so why in “Jerusalem” could anyone want to sing “did”, when we know that the truth is that Christ not only went to Glastonbury but, as in that old Somerset saying to assert the truth of anything, “As Christ was in Priddy”, Christ also went to Priddy, and as a young man Joseph of Arimathea probably did too. Could we possibly want to have an anthem that questioned this undeniable truth of God’s own county, the county particularly selected for visitation by our Lord when he was on Earth?

This proposed Bill seeks to regularise something that in our brilliant British way we have never previously needed to regularise. Our national anthem has come about over time without needing pettifogging regulation, bureaucracy or any of those things that we dislike, so that is a reason for opposing it. The proposal reduces the sense of devotion to our Sovereign that we ought to have, that it is proper to have and that we promise we will have when we swear in or affirm as Members of Parliament. That would be a sad thing to lose. It lacks the courage of Flanders and Swann to go the whole hog and be properly, eccentrically patriotic. It is a sort of second-tier level of national anthem, though when it was proposed that the anthem might be a song normally sung at the Labour party conference, I must confess I was relieved that the one chosen was not “The Red Flag”. Given the current trend in the leadership of the Labour party, though, it would not surprise me if in a year’s time we have a private Member’s Bill to make singing “The Red Flag” compulsory as well. [Interruption.] I am glad to get some support from Labour Members on the Front Bench below the aisle, who probably think that is a heartily good idea.

This would mean moving away to the wrong song—a song that offends Somerset sensibilities. It would be a bad thing to do. We should affirm our loyalty to our sovereign lady in the words of the British national anthem; and as for the hon. Member for Chesterfield, we should confound his politics and frustrate his knavish tricks.

Question put (Standing Order No. 23) and agreed to.

Ordered,

That Toby Perkins, Tristram Hunt, Greg Mulholland, Daniel Kawczynski, Ruth Smeeth, Sarah Champion, Mr Jamie Reed, Andrew Rosindell, Angela Smith, Bob Stewart, Michael Fabricant and Sir Gerald Howarth present the Bill.

Toby Perkins accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 4 March and to be printed (Bill 118).

Opposition Day

Wednesday 13th January 2016 Commons Chamber

[15th Allotted Day]

Trade, Exports, Innovation and Productivity

Wednesday 13th January 2016 Commons Chamber

13:01

[Stewart Hosie (Dundee East) (SNP)]

I beg to move,

That this House regrets the continuing lack of balance in the UK economy and the UK Government’s over-reliance on unsustainable consumer debt to support economic growth; notes in particular the UK’s poor export performance, which resulted in a trade deficit in goods of £123 billion in 2014; further notes the UK’s continuing poor productivity record and the lack of a credible long-term plan to improve it; and is deeply concerned by the UK Government’s change to Innovate UK funding of innovation from grants to loans, which this House believes will result in a deterioration of private sector research and development.

This is a serious debate, and it is appropriate that we have it today given the news published yesterday that UK industrial output has suffered its sharpest fall since 2013, and the further assessment that describes how real-terms earnings in the UK are still substantially lower than they were in 2009 and that even GDP growth over the past decade or so has been lower than that of Japan during its decade of stagflation. It is important that we recognise that the matters we are going to address are not short-term issues. This is not about a quick political hit; it is about trying to get to the root cause of a long-standing and systemic problem in the UK—the failure to address trade, exports, innovation and productivity, in total, over a prolonged period.

We have chosen to debate all these matters because they are linked. The debate is also, rightly, about the imbalance in the UK economy, because that is part of the equation. That imbalance, or, more accurately, those imbalances are recognised by this Government, but they cannot and will not be resolved, first, without the real political will to do so, and secondly, until the other areas that we are discussing are fully and properly addressed. The imbalances in the economy are not only between England and Scotland or London—a city previously described by a Minister as a black hole sucking resources and talents out of everywhere else in the UK—and the rest of the UK, but still, sadly, between manufacturing and services, businesses that export and those that do not, and companies that innovate and those that do not.

The impact of all this is most starkly seen in the balance of trade numbers. For the full year in 2014, the UK ran a balance of trade deficit of £93 billion. For the same year, the deficit in trade and goods was an extraordinary £123 billion—that is £123 billion in the red just in the trade in goods. The impact in GDP terms, as is well known and published by the Government, was negative, and unsurprisingly the summer Budget confirmed that it would remain negative in every single year of the forecast period in this Parliament through to 2020.

[Jeremy Quin (Horsham) (Con)]

The hon. Gentleman has referred to Japan. He will not have missed the fact that Europe has been in recession for much of the period in which our economy has been growing, and that has had an inevitable impact on our balance of trade with our biggest partners.

[Stewart Hosie]

If the trade deficit was simply a consequence of the deep recession, the hon. Gentleman would be right, but, as I will demonstrate, this has gone on not for five, 10, 20 or 30 years, but 50 years. We need to address that deep, underlying systemic issue.

As I said, the contribution to GDP is negative for the entire forecast period, as published in the summer Budget and again in the autumn statement. Worryingly, those figures were marked down—they were actually worse than the corresponding forecast published in the spring Budget before the election. We are not seeing a stabilisation, or a recovery that would allow us some sense of normality, but a continuing decline. That appears, as I hope to demonstrate later, in almost every metric that we look at.

[Lucy Frazer (South East Cambridgeshire) (Con)]

Does the hon. Gentleman accept that the Office for Budget Responsibility expects productivity growth to return to its historical average by the end of 2017?

[Stewart Hosie]

Yes, I have seen the OBR forecasts, and I will quote some of them later. However, I am taken by what the Chancellor said more recently than the latest OBR forecast, which is that it is no longer a case of “mission accomplished”, almost as if he is getting his excuses in first and preparing to blame other people. Despite the OBR forecasts, things are not all hunky-dory; everything in the garden is not rosy. As I pointed out, when we are looking at GDP growth over a decade worse than that of Japan’s lost decade, it would be wrong to be complacent like some of those in the hon. and learned Lady’s Government.

[Mr Dennis Skinner (Bolsover) (Lab)]

When the Chancellor said to the country at large, and to the Tory press in particular, that the economy was running into the buffers, was he not really demonstrating that the long-term economic plan was just a mirage?

[Stewart Hosie]

The hon. Gentleman is absolutely right. The long-term economic plan is just a soundbite. It was predicated on the deficit being reduced, the debt being reduced, and borrowing falling to barely £20 billion last year. Every single one of the targets the Government set, they failed to meet. The Chancellor did not meet a single one of the key fiscal targets that he set for himself in the previous Parliament.

The key thing about the impact of trade and exports on GDP is that the figures are negative and have been marked down. I ask the House to consider how different that reality is from the promise made by the Chancellor when he stated that exports would be a significant contributor to GDP growth, primarily to shift the economy away from a reliance on household consumption. As we saw in yesterday’s reports, because industrial output is down and exports are likely to continue to fall, and certainly not to grow in the way that he has promised, we will continue to see a dependence on household consumption and a rise in household debt that is inconsistent with a properly rebalanced economy.

[Alex Salmond (Gordon) (SNP)]

A great deal of private sector industrial investment over the past 30 years has been connected with the oil industry. I am thinking of the threat to jobs and working families in Scotland, in particular. Will my hon. Friend commend a system of exploration credits like those successfully introduced in Norway some years ago to kick-start exploration as a means of addressing this crisis? After 30 years of Governments raking in £300 billion of revenue, should it not be payback time for North sea workers?

[Stewart Hosie]

It certainly should in the sense that the sector is important not simply for Aberdeen or for Scotland, but for a supply chain throughout the UK. Indeed, the right hon. Member for Rutland and Melton (Sir Alan Duncan) set out, in his question at Prime Minister’s questions, the potential damage should the sector continue to suffer. This Government—indeed, all Governments, but particularly these Ministers, because many of them are believers—should do several things: continue to protect people who want to enter the sector by making sure they are properly trained; continue to support the supply chain in the North sea basin; and, to internationalise, look again at supporting the industry as it cuts its own costs and of course at the overall fiscal framework, which is a substantial cost. Essentially, as my right hon. Friend the Member for Gordon (Alex Salmond) said, the Government should look again at all the credits available, whether for exploration or production and whether for geographic areas or specific oil types, to maximise absolutely the longevity, employment and contribution to the economy of a sector that, as he rightly reminds the Government, has raked in more than £300 billion since oil started coming ashore.

[Sammy Wilson (East Antrim) (DUP)]

Does the hon. Gentleman see any inconsistency, in the answer he has just given to his colleague, between looking for ways to increase the output of North sea oil and the Scottish National party’s aim of totally decarbonising energy production in Scotland?

[Stewart Hosie]

No. The decarbonisation of electricity production is sensible for many reasons, which may well include carbon capture and storage. On a number of occasions during the past five years, and very recently under this Government, we have seen the cancellation of a competition to develop an industrial-sized testbed to show the efficacy of a technology which would make us a world leader.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Will the hon. Gentleman give way?

[Stewart Hosie]

I will not give way at the moment, because I have been quite generous. I will make a little progress, and then I will be happy to do so.

I was talking about exports. Let us remember what the Chancellor said in his Budget speech in 2012. He acknowledged the UK’s falling share of world exports, but still said that

“we want to double our nation’s exports to £1 trillion this decade.”—[Official Report, 21 March 2012; Vol. 542, c. 797.]

Total export sales in 2013 were £521 billion, which was a reasonable start, but that fell to £513 billion in 2014. The numbers are moving in the wrong direction; yet the Chancellor and this Government still expect us to believe that exports could in effect double over this Parliament. The OBR’s most recent forecast suggests that they will miss that target by about £350 billion, so the target set is simply unachievable.

That is not an abstract political or obscure economic point. The jobs of real people depend on a thriving and growing manufacturing export market. The hopes and aspirations of people in Scotland and throughout the UK for a real rebalanced economy depend on the rhetoric and pipedreams of an out-of-touch Chancellor. However, that was not the start and end of the Chancellor and the Government’s rhetoric on exports. They described how they wanted to

“make the UK the best place in Europe to start…and grow a business; encourage investment and exports as a route to a more balanced economy”.

The Chancellor said:

“So this is our plan for growth. We want the words ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward—a Britain carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

They were powerful words, but, given the reality, no more than rather empty rhetoric.

[Geoffrey Clifton-Brown]

The SNP spokesman is right to point out the importance of exports, although the current account gap has been falling consistently during the past two years. Does he not agree, however, that the way to increase exports in the long run is through innovation, new technologies and investment? By being part of a larger United Kingdom, Scotland is likely to get greater quantities of all of those—through the Technology Strategy Board—than if it was on its own.

[Stewart Hosie]

I agree with the hon. Gentleman’s assessment that we need more innovation, exports, technology and investment, all of which I will come on to. The Government and I can have a debate about precisely what they are doing, but his assertion that being part of the UK will allow such things in bigger quantities is tenuous at best and probably not confirmed by the reality.

To return to the Chancellor’s “march of the makers” speech, if those words appeared far-fetched when he first said them, they appear rather shallow and empty in the light of the reality of what is going on. In that regard, during the last Parliament—this is linked to the intervention about investment—another Tory-led Government, in a press release about business investment, a balanced and sustainable economy and all the matters we are discussing, boasted about investment in the UK Green Investment Bank. We supported that institution. We believed that it would deliver support for innovation and growth in a new industry, and indeed it has done so. Incredibly, however, it has been systematically undermined by this Government, while many of the changes they have announced since are undermining the commitment to the green economy generally.

[Robert Jenrick (Newark) (Con)]

One of the levers at the disposal of any Government to increase exports is to push aggressively for new free trade agreements. Does the hon. Gentleman agree that the SNP has been less than fulsome in its support for free trade agreements around the world, particularly the Transatlantic Trade and Investment Partnership, on which the SNP’s position is opaque at best?

[Stewart Hosie]

It is not opaque, so let me make the position really clear to the hon. Gentleman. We welcome trade agreements. We think that they are a good thing in general. However, we will not countenance a trade agreement that opens the door to the systematic undermining of our essential public services. That is not opaque; that is crystal clear.

We need rather more than words from the Government: we need action to reverse declines, particularly in manufacturing, and to ensure that the last quarter’s fall in manufacturing output—which I mentioned earlier—does not become a pattern. At least in part, that will require—again, this is a response to the intervention—more innovation.

[Lucy Frazer]

Will the hon. Gentleman give way?

[Stewart Hosie]

No. I have already given way to the hon. and learned Lady.

Innovation is as much a part of building a larger, more productive and faster growing manufacturing base as it is important in its own right. We know about the positive impact of innovation from many sources, not least the recent PricewaterhouseCoopers global innovation survey. It confirmed what it describes as a “direct link” between companies that focus on innovation and those that successfully grow faster. As I am sure the Minister will know, the UK’s most innovative companies grew on average 50% faster than the least innovative.

We also know that substantial problems need to be overcome. While 32% of UK companies saw innovation as very important to their success, the global figure was 43%, and while 16% of UK companies saw product innovation as a priority in the coming year, that was barely half the global figure. Most worryingly, although the UK—Scotland and the rest of the UK—has in many ways a clear competitive advantage in the university sector, a significantly lower proportion of our businesses planned to collaborate with academics than did their international competitors.

I want to say a little about the approach we have taken in Scotland specifically to deal with that issue. Funding has been approved for five new innovation centres in industrial biotech, oil and gas, aquaculture, big data and construction. That funding has been put in place to build on the original three centres that were launched three years ago, which covered the growing areas of stratified medicine, sensors and imaging, and digital health. There is the provision, essentially, of £78 million to help the development of 1,000 new inventions, products or services. That cash will also—this addresses the international comparison—support 1,200 businesses to work directly with universities.

The UK has Innovate UK and we have looked closely at its delivery plan. The SNP welcomes aspects of it, not least the £1.5 billion global challenge fund. However, the overall policy of changing Innovate UK’s funding model so that, by 2020, £165 million of innovation grants will be delivered as loans sends out all the wrong signals. We are concerned that it may suppress essential innovation even further compared with our international competitors. That fear was confirmed by KPMG’s head of small business accounting, who said that the measure was

“a false economy that threatens to stall the growth of small businesses across the UK.”

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

Does the hon. Gentleman agree that that measure sends all the wrong signals to companies that are thinking of investing, because what it really says is that the future is uncertain with this Government?

[Stewart Hosie]

Indeed it does. The quotes from businesses when it was announced were extremely clear. They are happy to seek bank funding and to use their own resources, but when they are undertaking what may be slightly risky innovation and R and D, they have an expectation of a little help from Government. If that is a grant, the work can proceed and the thinking can go ahead. If it is a loan that requires to be repaid, that might just tip the balance in favour of the risk being too great, which will drive down innovation even further.

The reason innovation is so vital, particularly in manufacturing—and why it is so important to encourage it—is that as it has fallen as a share of R and D investment over the past 20 years, manufacturing exports, jobs and output have also fallen. One can see the speed and length of that decline. Manufacturing has gone from making up 30% of the economy in the 1970s to less than 10% today; from accounting for more than 20% of all jobs in the 1980s to only 8% today; and from making up a quarter of all business investment in the 1990s to barely 15% today.

We see the reduction in global export market share in the OBR’s most recent fiscal forecast, in which it falls throughout the forecast period to the end of this Parliament. What is more worrying is that the figures in the November forecast were marked down in every single year from those in the July forecast. Everything is going in the wrong direction. The complacency from the Government and the limited plan they have are simply no longer enough. That is why we need an unrelenting focus on innovation in manufacturing in relation to trade and exports.

[James Cartlidge (South Suffolk) (Con)]

I welcome this debate and the hon. Gentleman’s focus on rebalancing the economy, which is undoubtedly a huge issue. However, when we talk about rebalancing the economy, we have to remember that because the recession in 2008 was a financial recession, it was inevitably followed by monetary policy hitting the floor, perpetuating higher house prices and all those other things we wanted to avoid, but which were an economic necessity. That being so, does he regret the role his party played in advising Royal Bank of Scotland to purchase ABN AMRO, which ushered in the huge financial crash and brought down our financial giant?

[Stewart Hosie]

There is a historical disconnect here. The fight over ABN AMRO was between the board of RBS and the board of Barclays. One of them called it wrong and one of them got lucky. I suspect that my input and that of my right hon. and hon. Friends had precisely no bearing whatsoever on Mr Goodwin’s decision to persuade his board to buy ABN AMRO. The suggestion is quite extraordinary.

I have said that we need an unrelenting focus on innovation in manufacturing in relation to trade and exports. Although manufacturing has suffered the largest falls, it still accounts for 44% of all UK exports because the deficit in trading goods is so large. Any Government who are serious about rebalancing the economy and correcting the trade deficit in goods must have a laser-like focus on encouraging innovation in manufacturing, as well as on supporting existing exporting businesses.

This debate is about more than innovation, manufacturing and exports; it is about boosting productivity. That is vital because—this is undisputed—both Scotland and the UK sit only towards the top of the third quartile of advanced countries by GDP per hour worked. We are below many smaller European countries and, importantly, below major competitors such as the US, Germany, France and even Italy. I am pleased that Scottish output is now 4% higher than pre-crisis levels. That is a good thing, but clearly there is substantially more to be done, not least because UK productivity growth is at 1.3% a year, which is barely half the level of the 2% pre-crisis rate.

Scotland has an economic plan based on four principles to boost productivity: investment in education and infrastructure; internationalisation and encouraging exports; innovation, which, as we have discussed, is essential; and—in many ways the most important aspect—inclusive growth. The latter point is vital because we know from the numbers—we have all seen them—that the UK lost 9% of GDP growth between 1990 and 2010 because of rising inequality. We are concerned that that mistake is being repeated by this Government, with their arbitrary surplus fiscal rule, which is requiring them to cut far more than is necessary to run a balanced economy and denuding them of the resources that are needed to tackle inequality and maximise economic growth.

[Lucy Frazer]

The hon. Gentleman referred with positivity to the figures in Scotland. Is he aware that, according to the BBC two hours ago,

“Scotland’s economy grew slightly over the summer but continued to lag behind the UK as a whole, according to official figures.”?

[Stewart Hosie]

Absolutely. I was describing the growth since the pre-crisis level. The quarter-on-quarter and year-on-year figures are undeniable. That is why I said that we all have far more to do. I will make criticisms of the UK Government where they are valid, but I certainly will not deny the numbers. I hope that the hon. and learned Lady will welcome the fact that we are 4% ahead of pre-crisis levels, notwithstanding the difficulties we have seen in the North sea. That is a quite remarkable achievement, when the limited powers of the Scottish Government are considered. In terms of the deployment of those powers—[Interruption.] The Minister for Small Business, Industry and Enterprise is chuntering away on the Treasury Bench, as she is wont to do. She will be throwing her arms in the air and harrumphing soon. If she wants to intervene, I am happy to have the debate—maybe not.

Returning to the powers that have been deployed in Scotland, we have a Scottish business pledge, which requires firms, in return for the support of Scottish agencies, to seek to innovate, to seek and take export opportunities, and to pay the living wage. That is part of the solution to tackling inequality and delivering inclusive growth that will enable us to avoid the loss of GDP output that we saw in the 20 years to 2010. I urge the UK Government to take a similar approach.

I do that not least because our concerns about a lack of balance and the need for action to tackle the ongoing productivity challenge are shared by the International Monetary Fund, which is often prayed in aid by the Government. The IMF has spoken of the need to lessen wealth inequality and the need for increased spending on infrastructure. It has also called for an enhanced focus on decentralisation.

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

The hon. Gentleman is making important points about inequality, and if we are serious about addressing sustainable equality—the Government do not seem to be—it is important to invest more in people on low incomes, and to reduce the gap between them and people on high incomes. I am particularly interested in his point about productivity. Since 2006, what has the SNP been able to do to reduce the productivity gap in the OECD?

[Stewart Hosie]

I do not have the figure for 2006 to date, but if I can get hold of that specific number I will happily provide it to the hon. Lady. The whole point of tackling the attainment gap, health, investment, supporting innovation, encouraging exports, and supporting, promoting and helping the delivery of the living wage, is so that everything that can be done is being done—as it must be. It is all part of a project of lessening inequality to deliver precisely the inclusive growth that avoids the shortfall in economic growth that we have seen from the UK Government.

I was making a point about some of the demands from the IMF, one of which was an enhanced focus on decentralisation. That is vital if we are effectively to use all tools at our disposal to tackle the economic challenges we face. To give one example, research and development tax credits to support innovation are a function of corporation tax. As corporation tax is not devolved to Scotland, one of the most important tools to help support that research is denied to the Scottish Government in their efforts to build on the work already being put in place. Given the challenges we all face, that is illogical.

[Andrew Gwynne (Denton and Reddish) (Lab)]

The hon. Gentleman is right to highlight the role that devolved institutions can play in helping to boost productivity. May I commend to him the work of the Greater Manchester combined authority, which in its new devolved functions has awarded funding to English Fine Cottons so that it can open a £5.8 million new cotton mill in Dukinfield in my constituency—the first cotton mill to open in Greater Manchester, or “Cottonopolis”, for more than 40 years?

[Stewart Hosie]

I welcome that intervention and the new cotton mill—I hope it is a huge success. The hon. Gentleman makes an important point: there is no point in devolving powers and responsibilities, whether to Northern Ireland, Scotland, Wales, parts of England, or anywhere else, unless the funding and ability and authority to raise the cash go with it. That is the weakness in some of the asymmetric devolution that the Government have put in place. We believe that the Government should look again at their decision to replace £165 million of innovation grants with loans, and that they should deliver real devolution—not least of corporation tax and its associated credits—so that those tools are available to all the devolved Administrations to maximise R and D support.

[Jim Shannon (Strangford) (DUP)]

Northern Ireland now has record employment and higher levels of international investment than at any other time in our history. Does the hon. Gentleman agree that having a strong devolved aspect to trade, enterprise and investment helps to boost the competitiveness of the UK regions, particularly Northern Ireland?

[Stewart Hosie]

Yes, absolutely. The more we can devolve, including authority and real power, the more that people on the ground can do—that is self-evident. The talk of record employment is good, and I think there is near record employment almost everywhere. The issue, however, is that real-term wages have fallen and remain five points lower than before the crisis. If we are to drag living standards up, we must do all those other things as well, but—in general terms—the devolution of real power is absolutely right.

On the transfer of power, the Government should recognise that a comprehensive solution to boost productivity is required, which covers investment and education infrastructure, internationalisation, innovation, and the policies to deliver inclusive growth. They should recognise that rebalancing the economy needs a focus, not just on London versus the rest of the UK, but on the growth benefits from those firms and the whole economy, and we should export, innovate, and support more of them to do so. That focus should be heavily weighted to manufacturing because the fall in R and D, jobs, exports and output from that sector cannot be allowed to continue.

Above all, although we believe and agree with setting ambitious targets, unrealistic and unachievable export targets that fly in the face of reality will simply weaken the Government’s credibility, in exactly the same way that failing to meet debt, deficit and borrowing targets did in the last Parliament. To set a target of doubling exports without the means being put in place to deliver that is bad economics and bad politics.

Let me turn briefly to what the Government have said in this Parliament. In July they published, “Fixing the foundations: Creating a more prosperous nation”, which was supposed to cover many of the areas that we are discussing today. It is very thin. Their approach to raising productivity is covered by two bullet points, a paragraph, and a little chart. The section on long-term investment merely confirms that long-term investment, going back as far as the 1960s, has bounced along the bottom of the OECD average—the 10th to 90th percentile range for those who care about these things. It hit that average in one year around 1990, but has fallen off the bottom of that for many years since.

Investment is primarily in transport. I welcome transport investment, as well as the increase in capital investment in the summer Budget. Let us be under no illusions, however, because that change came about only after the Government were discovered cutting capital spending for every year of the forecast period in the spring Budget. They have the audacity in the “Fixing the foundations” report to talk about:

“Reliable and low-carbon energy, at a price we can afford”,

while systematically undermining the sector and the Green Investment Bank. On innovation and industry, which is at the heart of the solution to a long-term problem, we have three small paragraphs.

The document was published only six months ago—[Interruption.] I am sorry if the Minister is slightly bored hearing about her Government’s failings. It mentions £1 trillion of exports by 2020. That shows a modest rise in exports to BRIC countries, a modest rise in exports to the rest of the world, and a catastrophic decline—the Minister is shaking his head—in exports to the richest OECD countries. That document was published by the Government in this Parliament. A sense of reality is probably a good starting point for a debate.

Each of the areas that we have started to discuss today could form a debate in its own right, but we believe that the motion is a starting point to begin properly to understand and address UK Government policy weakness in the areas of trade, exports, productivity, innovation, and a fundamental rebalancing of the economy. I commend the motion to the House.

13:38

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

I am grateful for the opportunity to debate a number of the Government’s key economic priorities. I will begin, however, by singing the praise of my Cabinet colleague the Secretary of State for Scotland. Not only is he outstanding as a Secretary of State, but today he made a very important announcement about what in many ways should be his private life, although it is not because it is in the public domain. It took great courage, and I am hugely proud to sit in the Cabinet with him. I can see nods all around the Chamber in support of our Secretary of State at what might be a difficult time for many, but I am sure for him is a very happy day. Finally, he can be the man he has always been, and can sing out and be proud of being that man. I pay tribute to him and I am pleased we all agree on that.

[Stewart Hosie]

It is absolutely right and appropriate for the Secretary of State for Scotland’s Cabinet colleague to announce her support in the Chamber, and Scottish National party Members welcome what has been said. In terms of the debate, however, and notwithstanding that we hope he is happy, may we say that we fundamentally disagree with his politics?

[Anna Soubry]

I took that as read! I put it on the record that the First Minister for Scotland has tweeted her support. Frankly, I am not surprised. In this day and age, I think most people will just shrug their shoulders and say, “Yeah, whatever. Am I bothered?” Of course we are not. We celebrate what is, and should be, a happy day for my right hon. Friend.

Let us get on with the debate. The motion before us refers to the United Kingdom economy and economic growth. I wish to take a very quick trip down memory lane to put this debate into context, because that is important. The hon. Member for Dundee East (Stewart Hosie) talked about the Government’s record. I want to talk about the past six or seven months, but I also want to talk about the previous five years, notably to remind everybody of the situation we faced back in May 2010. It is important to remind everybody that at that time we were in the worst recession that our nation, the United Kingdom, had faced for 100 years: the biggest budget deficit in our peacetime history and over half a million more people on the dole. That was the situation that we on the Government Benches had to pick up: an economy brought to its knees and on the brink of bankruptcy from Land’s End to John O’Groats, and from London to Inverness and Bodmin. All across our nation, we saw a country on its knees.

To save us from that economic mire we had to take some very difficult decisions to control spending, reduce the deficit and rescue our economy. Those decisions, every single one of them, were opposed by the parties sitting on the Opposition Benches, notably Labour and the SNP. Each and every decision was opposed. How wrong they were. It is thanks to the hard work of the British people that our economic plan has worked and continues to work. The deficit is down by more than half, there are over 2.2 million more people in work, and there are over 900,000 more businesses. The United Kingdom has been the fastest-growing economy in the advanced world. That is a record of which Government Members are proud.

Scotland has been part of that success story. It is unfortunate that the hon. Member for Dundee East has just made us a long speech full of doom and gloom, trotting out this, that and the other and talking down the Scottish economy, because it is part of the United Kingdom economy. That is wrong and sad, because there is a success story.

[Richard Fuller (Bedford) (Con)]

Although the SNP spokesman spoke for over half an hour about trade, export, innovation and productivity, he did not once mention free markets, entrepreneurship or the power of deregulation. Is it not this Government’s priority to focus on those issues to ensure we can achieve the goals we are setting?

[Anna Soubry]

I absolutely agree with my hon. Friend; I could not agree more. There was lots of moaning and complaining, but no solutions, no ideas and no fresh ways of thinking—not one. It was all doom and gloom, and talking down our economy.

[George Kerevan (East Lothian) (SNP)]

In the Minister’s history lesson on the long-term economic plan, to which plan is she referring? Is she referring to the plan from the first two years, when the Chancellor desperately tried to reduce public spending, or the one that followed the first two years when he listened to those on the Opposition Benches and loosened up on public spending, with the result that the economy then started to grow?

[Anna Soubry]

I am sorry the hon. Gentleman did not hear me, so I will repeat what I said. I am referring to the long-term economic plan that delivered a deficit down by more than half, 2.2 million more people in work and 900,000 more businesses, and the long-term economic plan that made this country the fastest-growing economy in the advanced world. That is what I am referring to, and I do so with pride.

Scotland has been a part of that success story. Since 2010, we have 178,000 more people in work and over 60,000 more businesses in Scotland—economic growth that has all occurred north of the border. This has been a recovery based on private sector growth, employment and living within our means. Both the SNP and the Labour party are wedded to abandoning fiscal responsibility and putting our economic security at risk. Government Members know the job is not done. We know we must oppose Opposition Members who would return to the bad old ways and days of spending beyond our means.

We know that to lock in our future economic security and prosperity, we need our businesses to increase their exports, boost productivity and continue to innovate to stay ahead. We believe in cutting red tape, as my hon. Friend the Member for Bedford (Richard Fuller) told us. We believe in all the good strong parts of a free economy, an economy that does not believe in over-regulating people but allows businesses to get on and do business—the thing that they know best. That does not mean to say I am an ideologue who is absolutely wedded to a free market without any constraint. Of course not. I am absolutely a caring, compassionate Conservative. I do not believe in monopolies. I do believe in responsibility among all who do business, which is why I am so proud that the Government are bringing forward the living wage. That is a true benefit to workers across our country, especially the lowest paid. I am very proud of all we have achieved on that.

[David Rutley (Macclesfield) (Con)]

rose—

[Alison Thewliss (Glasgow Central) (SNP)]

rose—

[Anna Soubry]

I will give way to my hon. Friend and then to the hon. Lady.

[David Rutley]

Does the Minister agree that Government Members are equally committed to encouraging first-time entrepreneurs, first-time employers and first-time exporters to be able to do things that perhaps their parents have never done before, and that in that way we are also encouraging social mobility?

[Anna Soubry]

Absolutely. My hon. Friend makes a very good point. New small businesses and start-ups that scale up are absolutely at the heart of everything we seek to achieve, because we understand their value. It takes great courage for somebody to start their own business. We do what we can to assist them, for example through start-up loans. By devolving right down to a local level, through local enterprise partnerships, business growth hubs and the other measures we have put in place, we are ensuring that help, assistance and advice are available to them as they start up and begin to grow their business. In particular, we are doing the right thing by small businesses by reducing the regulatory burden. We achieved a lot in the past five years in government. We have more to achieve. It will be tough, but we are absolutely determined to do that.

My hon. Friend makes another important point. Starting up one’s own business is a great way for somebody to shake off their past—and the things in their background perhaps in danger of holding them back—and advance in the way that we want people to do. That is what brought people like me into politics: a desire to make the lives of everybody, especially those from less-advantaged families and backgrounds, better. I believe that our economic policy will continue to achieve exactly that.

I said I would give way to the hon. Lady.

[Alison Thewliss]

I thank the Minister for giving way; I am glad she has not quite forgotten about me. Does she agree that there is actually no comfort in the new minimum wage for workers under the age of 25, as they will not qualify for it? They will still languish on about £3.87 an hour, which is not good enough.

[Anna Soubry]

What is very interesting is the number of companies introducing the new living wage, irrespective of the age of their employees. I absolutely welcome that. For every good thing we do, however, there is always somebody who knocks us and wants something more. There is nothing wrong with wanting more, but people should give credit where credit is due. This is a huge achievement, and I am proud the Conservative party has done it.

I have to say that I really struggle to take lessons on the economy from the Scottish National party. It is a party that built its whole idea of independence, which mercifully the good people of Scotland rejected, on the idea that oil was going to be the lubricant—the foundation—of their independent economy. Goodness me! Oil is now $35 a barrel, and it is accepted that if the SNP had been successful, the cost would have been somewhere in the region of £5,000 for every single household. Scotland would have been in the most atrocious economic place if it had voted for independence—thank goodness the good people of Scotland took the wise decision that we were undoubtedly better together. It is therefore really difficult for me to take lessons from this rag, tag and bobtail SNP, which encompasses everything from tartan Tories to tartan Trots. It is going to be very interesting, as the Smith report—

[Debbie Abrahams]

rose—

[Anna Soubry]

I will give way in a moment; I’m on a roll.

As the Smith report is implemented and the Scotland Bill comes into force, the SNP will finally have the powers it seeks—it will be the most devolved Government in the world—and it will be interesting to see—

[Stewart Hosie]

rose—

[Anna Soubry]

In a moment.

Then the SNP will have responsibility, and we will see whether it will be able to deliver. I would bet good money that it will not be able to.

[Debbie Abrahams]

The Minister is making an interesting speech, but I must challenge her on this flailing economy. The Government were meant to have eradicated the debt by 2015 and they have only halved it. They are borrowing £73.5 billion this year, so the Minister is obviously putting a positive spin on this economic plan. Let us see how long it lasts—the Government have been giving warning signs that it might not. To pick up on what the hon. Member for Dundee East (Stewart Hosie) said, the IMF has said that if we invest more in the 20% on the lowest incomes, we will boost economic growth—something that the Government have singularly failed to do. Why have they not done that?

[Anna Soubry]

The IMF has been wholesome in its praise of our economic plan and the successes we have had. Much as I may like the hon. Lady on a personal level, I really struggle to take lessons from her. The last Labour Government doubled debt, whereas we have “only” halved the deficit. I am rather proud of “only” halving the deficit, while we see from her words that the poor old Labour party cannot learn from the mistakes of the past. Goodness knows the route it is now embarking on under its current leadership, but it looks set to be in opposition for a long time.

[Mark Tami]

Will the Minister just answer one question: has debt gone up under this Government?

[Anna Soubry]

Our debt has gone up; I am not—[Interruption.] All right; it is not about scoring cheap political points, as the hon. Gentleman knows—obviously I would never engage in such a thing—but he cannot deny that 2 million more people are in work. That is part of our proud record. He should be praising that. The Labour party would do well to do that when we do the right thing. Over 2 million more people in work—why can the hon. Gentleman not give credit where credit is due?

[Stewart Hosie]

It only took the Minister 12 minutes to revert to type. “Rag, tag and bobtail” if she likes, but that is as nothing compared with how the Scottish people describe her party. However, let me clear up just one little fact about the oil price, which I thought she might raise. Yes, we said it would be $110 a barrel. That is absolutely correct, but can we be absolutely clear that the UK Government’s Department of Energy and Climate Change had the barrel price at between $114 and $127, and at the very least admit that the UK Government got it wrong?

[Anna Soubry]

But the point is that the hon. Gentleman and his party were basing the whole of Scotland’s economic future on oil. How mad was that?

[Several hon. Members rose—]

[Anna Soubry]

I will give way in a moment; I just want to say something about trade and exports, because it is important. Otherwise, I will be speaking for far too long and Madam Deputy Speaker will admonish me, and rightly so.

In considering trade and exports, we should recall the importance of the United Kingdom’s large domestic market and the benefits it brings to all parts of the UK. The rest of the UK is by far and away Scotland’s biggest economic partner. Sixty-three per cent of all Scottish exports go to the rest of the UK. The biggest threat to Scottish exports is the SNP, which would put up barriers between Scotland and the rest of the UK. Trade and exports are a key element of continuing to grow the UK’s economy, which is why this Government are committed to making it easier for companies to export. We provide support to companies wanting to export, through UK Trade & Investment, and work with other Governments to reduce barriers to trade. Our trade deficit narrowed by £0.3 billion in the three months to November, and the number of companies exporting both in the UK and Scotland is up since 2010, but we know we have a lot further to go.

Delivering on all the EU’s trade negotiations could add £20 billion to the UK economy annually. We know that trade agreements work. In the four years since the EU-Korea free trade agreement came into force, the value of UK exports has more than doubled. We have seen a 1,000% increase in the value of jet engine sales. The UK sold just 2,315 cars to Korea in the final year before the FTA was agreed. Last year, that number reached 13,337, and it is not just the big companies that benefit. One Scottish business was able to sell 100,000 jars of jam in Korea last year, after the FTA slashed import duties. That is why this Government are committed to delivering freer global trade, concluding major trade deals with the United States, Japan and many other trading partners.

That, as hon. Members might imagine, brings me to the Transatlantic Trade and Investment Partnership. Last year I responded to the debate in the House about TTIP. I am not going to repeat all the things I said, but it really is disingenuous of those on the SNP Benches—and, indeed, on the Labour Benches—to oppose TTIP on the utterly false premise that it would threaten our public services, in particular the NHS. It is not true. There are so many letters, including—I think a number of hon. Members were in that debate, so they will remember—the letter from the EU, which was written in December 2014, to the Chair of the Select Committee on Health, who had asked specific questions about whether TTIP posed any threat to our national health service. Every time the answer was an overwhelming no. Everybody who could have said, “There is no threat from TTIP to any of our public services, especially the NHS”, has said it, over and over again. It is grossly unfortunate that Opposition Members and Opposition parties peddle these untruths about TTIP. It is simply not right or fair to mislead people as they are.

[Debbie Abrahams]

There does seem to be some ambiguity, because despite the letter to the Select Committee, we have evidence saying completely the opposite. In view of that ambiguity, why does the Minister not say that the NHS will be exempt from TTIP and rule it out completely?

[Anna Soubry]

I do not know how many times I have said it, but I am going to send all the information to the hon. Lady. It will say all these things and make it absolutely clear that TTIP is not a threat to our public services and our NHS. In fact, on the contrary, it will deliver billions of pounds of wealth to our economy, because it will free up trade between us and the USA. I think Opposition Members have got to be honest about it. I think the real problem is their prejudice against the USA. They should fess up and be honest about it, because they are creating bogeys that do not exist.

[Callum McCaig (Aberdeen South) (SNP)]

If I may return to the oil price and the sheer joy that Members in the Chamber expressed at the collapse in the oil price—I look at the hon. Member for Rugby (Mark Pawsey), who is sitting directly behind the Minister, and the joy and almost delight that were on his face. In the real world, in the constituency I represent, that means jobs are being lost. The Minister has expressed her delight at Scotland staying in the Union, so can she explain to me what the Union is doing to help Scotland at its moment of need?

[Anna Soubry]

It is not for me to speak on behalf of others, but I can assure the hon. Gentleman that there was no joy on the Government Benches at the fall in the oil price. The joy, I would like to think, was at the point I made, and made rather well. The hon. Gentleman is in a party that put all its faith in the oil price as the salvation of Scotland’s economy and it was absolutely wrong. I hope the hon. Gentleman will forgive me for not knowing the constituency he represents, but I suspect it is in the north-east of Scotland. He makes a good point, and this is the only good point, about the concerns we all have about the future of the oil and gas industry.

I am well aware of the importance of the oil industry to north-east Scotland. I am also well aware of the redundancies announced yesterday by BP, and I agree that there is much that we—the hon. Gentleman should note the “we” bit—can do. It would be so good for the UK Government to work with the Scottish Government to make sure that we do all we can. We have a fantastic oil industry, based largely in Aberdeen, that is one of the finest in the world. There is much that we can do, working together, to make sure that we do not see further job losses, especially on the scale we have seen.

[Stewart Hosie]

rose—

[Anna Soubry]

I will give way to the hon. Gentleman, but then I want to make some progress.

[Stewart Hosie]

I thank the Minister for what she has just said, which was helpful. However, she has twice made the incorrect and false assertion that we based any forecast only on oil, which was never true. The Minister has accused others of misleading the public over the approach to TTIP; I hope she does not want to mislead the public over her assertion that the economy is based solely on one industry.

[Anna Soubry]

I am afraid I do not agree.

[David Mowat (Warrington South) (Con)]

It is a fair challenge to remind the Government how important the oil industry is to our country. That is why on Monday we will debate the Energy Bill, which enacts the findings of the Wood review. The review was much required and greatly sought by the industry, and I very much hope, as I am sure does the Minister, that Labour Members will support it.

[Anna Soubry]

I cannot add to my hon. Friend’s extremely good and well-made point.

Let me now move on to deal with the important issue of productivity. Delivering a return to productivity growth is one of the key economic challenges for this Parliament and the route to raising living standards for everyone in the UK. We have lagged behind other major economies—let us be honest about it—for decades, and productivity in Scotland is still 2.5% below the UK average. That is why we are determined to fix it, although I shall not pretend that there are any short-term measures. This is going to take some time and a lot of hard work.

In last year’s summer Budget, the Chancellor set out the Government’s ambitious plan, “Fixing the foundations: creating a more prosperous nation”. That ensures that we do everything possible to deliver higher productivity in the UK. Skills and education are, of course, key to improving productivity, and we have invested in skills, delivering 2 million apprenticeships in the last Parliament, with 3 million to be delivered in this Parliament.

Our education reforms are already raising standards. Unfortunately, under the SNP, standards of numeracy and literacy in Scotland have been falling, and fewer of Scotland’s most deprived children attend a university compared with any other part of the UK—just 10.3% of the poorest 20% of Scots attend university, compared with 18.1% in England, 16.3% in Wales and 16.3% in Northern Ireland. We have also protected science spending, with £4.7 billion per year in resource and £6.9 billion in infrastructure to 2021. We continue to invest in our catapult centres.

We are delivering one of the largest and most ambitious infrastructure programmes in recent memory, with projects such as HS2, which I have no doubt everybody should back because it will bring huge benefit to our country, especially to my constituency, as we hope to have the east midlands hub in Toton. In addition there is Crossrail, a huge project across the capital, and the largest investment in our roads since the 1970s. We are beginning to see signs of improvement. Output per hour grew by 0.5% in the third quarter of 2015 compared with the previous quarter, and was 1.3% higher than for the same period in 2014. UK productivity has exceeded its previous peak by 0.7%.

Alongside trade, innovation is another pillar on which our economy is built. Innovation is an important lever for increasing productivity. The excellent work of my colleague, the Minister for Universities and Science, has ensured that science spending is protected in real terms, with record investment across the UK—£4.7 billion per year in resource funding, rising with inflation, and record investment in our country’s scientific infrastructure, at £6.9 billion to 2021. The Government will protect all that in cash terms, with total spending on business-led innovation coming through Innovate UK.

We recognise that access to finance remains an important challenge for innovative enterprises, which is why we are committed to introducing new types of finance products to support companies to innovate. New products such as loans will replace some existing Innovate UK grants, and will reach £165 million by 2019-20. In 2014 alone, more than £2 billion was raised in venture capital in the UK—up 50% on the previous year. I see no reason why the UK cannot be Europe’s number one destination for innovation finance.

[Sammy Wilson]

I understand why the Government might want to change the way in which some research and development is financed, but does the Minister accept that, given the long lead-in time for many R and D projects, loans are not appropriate and will lead to innovation and research either going outside the UK or stopping altogether?

[Anna Soubry]

We are taking time to bring them in. It is, of course, a mix. In some instances, providing loans is absolutely the right thing to do, whereas in others we might well provide a grant. Flexibility is the right approach, and this allows us to put in the necessary money, even in these difficult times. I think we are doing the right thing about that.

[Debbie Abrahams]

The Federation of Small Businesses report on productivity identifies late payments to small businesses as one of the key issues. Will the Minister commit to addressing cash retention in the construction industry—a key issue that is due to come before us again in the Enterprise Bill?

[Anna Soubry]

I realise that there is a good argument in favour, but we are conducting a consultation. As the hon. Lady knows, my door is open. I would be more than happy to discuss it with her because I know about the powerful arguments in favour, but there are also strong arguments against it. The consultation might allow us to make some progress.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

rose—

[Anna Soubry]

I must make some more progress on my speech, but I will give way to the hon. Gentleman first.

[Roger Mullin]

I thank the Minister. Is she aware that yesterday the Medical Research Council issued a briefing paper about the move from grants to loans? It said that

“the Biomedical Catalyst may not continue”.

[Anna Soubry]

I have not seen that paper and I am not going to pretend that I have. I always view it as important not to comment on things that have not been read or on issues that might have been taken out of context. Perhaps I will drop the hon. Gentleman a letter, when I have had the opportunity to read the paper.

[Richard Fuller]

The Minister makes a good point about innovation. One change that the Treasury has made is to enable ISAs to be used to provide peer-to-peer lending. Will she therefore have some conversations with her colleagues in the Treasury about making it possible within ISAs to make equity investments to small private companies?

[Anna Soubry]

That is a very good point, and the straight answer is simply yes. If my hon. Friend would like to continue the conversation after this debate, I would be more than happy to do so.

This Government continue to encourage business investment in research and development through tax incentives. Take-up of this scheme continues to grow, with 18,200 companies claiming £1.75 billion of relief from £14.3 billion of innovative investment. In Scotland, there were 1,045 claims, giving a total relief of £55 million. That means more investment in R and D, more high-value jobs and greater productivity.

The Government continue to invest in our catapult network, and the first seven catapults are now operating from their established facilities with total public and private investment exceeding £1.6 billion over their first five years of operation. These include Offshore Renewable Energy in Glasgow and the Advanced Forming research centre in Strathclyde, which is part of the high-value manufacturing catapult. As we have taken the difficult decisions to fix Britain’s finances, we can afford to continue to invest in science and innovation, investing in Scotland’s future and helping to ensure Scotland punches above its weight.

That is the point. If we have a good, solid and sound economy that is growing, we will be able to do all this type of work. We will be able to spend taxpayers’ money to support our great British businesses and particularly the ones that are so innovative in their approach and in the work they do.

To conclude, Madam Deputy Speaker—

[Jessica Morden (Newport East) (Lab)]

rose—

[Anna Soubry]

Oh, go on, then.

[Jessica Morden]

Before the Minister concludes, may I ask her to address the issues that are currently affecting the steel industry? During the steel summit back in October, UK Steel presented a strong case for the urgent action it needed the Government to take. Some recognised the Government good will in relation to energy prices and energy costs, but I must impress on the Minister that this is a very difficult time for steel, particularly in the south Wales area I represent. Yes, the Government have acted on energy costs, but what are they doing about the other issues that were raised at the summit?

[Anna Soubry]

We are absolutely delivering, and not just on energy costs. I am hugely proud of the way in which we have changed the procurement rules. The hon. Lady knows that we are determined to continue to do everything we can to keep what the Prime Minister has called a vital industry in production. We do not want to see the blast furnaces close at Port Talbot any more than we want to see them close at Scunthorpe. I note that the hon. Member for Redcar (Anna Turley), as ever, is present. No doubt she will want to intervene at this point, but I must move quickly on; perhaps she will join in the debate later. Let me say to her that if we could have done anything to secure SSI, we would have, because we recognise the importance of the steel industry to the British economy. She can have that assurance. Indeed, the same is true at Dalzell and at Clydebridge. I pay tribute to the Scottish Government: I have been pleased to work with the Deputy First Minister in trying to ensure that we do all we can to keep those two plants open in Scotland.

Trade, exports, innovation and productivity are vital components of the Government’s strategy. That is why we have developed a clear plan of action, and why Scotland, and indeed all parts of the United Kingdom, benefit from our continued commitment to those key priorities. Scotland has been a part of the economic and jobs success story of the last six years as our economic plan for the whole United Kingdom continues to deliver economic security and prosperity for all our people. The biggest threat to businesses, growth and jobs would be a Scotland isolated and cut off from the United Kingdom, led by a party that wants to return to the failed policies of more spending and more borrowing that led us to economic oblivion last time.

Let us stick to the plan that has rescued our economy from the brink and turned it into the fastest-growing economy in the advanced world, and is now tackling the long-term structural issues head-on to ensure that there is a more secure future not just for our children but, notably, for our grandchildren. I will not support the motion, and I urge other Members not to support it either.

14:12

[Bill Esterson (Sefton Central) (Lab)]

Let me begin by conveying apologies from the shadow Business Secretary, my hon. Friend the Member for Wallasey (Ms Eagle), who is in Brussels today meeting members of the European Commission and the European Parliament to discuss, in fact, many of the issues that we are discussing here today.

In her speech, the Minister indulged in something of a history lesson about what happened in 2010. I fought that election as a candidate for the first time, and I well remember making the case that in 2010 we faced half the levels of unemployment, repossessions and business failures that we had faced during the comparable Tory recessions of the 1980s and 1990s. The Labour Government had a record of protecting jobs, businesses and people’s homes. The economy was recovering in May 2010, when the coalition took office, but that recovery was choked off by the Chancellor’s emergency Budget in June. I am afraid that ever since then, as other Members have pointed out and as we know from the figures that were discussed earlier, the recovery has been the slowest on record. That is the true record of this Government when it comes to the economy. The Conservatives blew the growth that was steadily happening when they came to power as part of a coalition.

[Kwasi Kwarteng (Spelthorne) (Con)]

The hon. Gentleman is making some quite bold statements, but how do those statements tally with the fact that Britain is now the fastest-growing country in the OECD?

[Bill Esterson]

Of course, after the slowest recovery on record, growth is going to be the fastest in the world at some point, is it not? That comes as no surprise.

[Jeremy Quin]

Will the hon. Gentleman give way?

[Bill Esterson]

I am not going to give way too many times, because mine is the second Opposition party in this debate.

As was pointed out by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), the Government have failed in their own terms to eradicate the deficit. The Chancellor promised that it would be gone by last year, but the Government have borrowed more in five and a bit years, and had borrowed more before the election, than Labour did in its 13 years in office. So, in their own terms, they have failed.

If the Minister wants Opposition Members—from whichever party—and members of the public to be reassured that she is not just producing warm words on TTIP, she can exempt it from public services and we will then be sorted.

[Robert Jenrick]

I thank the hon. Gentleman for giving way. He is very generous. Will he acknowledge that the United Kingdom has signed 110 other bilateral investment treaties with other countries around the world, none of which excludes public services, and all of which include the investor-state dispute settlement mechanism? I do not believe that it is the policy of either the Labour party or the SNP for Britain to withdraw from any of those important bilateral investment treaties.

[Bill Esterson]

And, as I have said, the Minister and the Government could relieve the concerns of many people in the country, not just in the Chamber, by undertaking to exempt TTIP from public services.

When it comes to boosting productivity and growing our economy, the interests of workers and the ambitions of businesses are not at odds with one other. Workers do well when there are successful businesses to give them secure employment; businesses do well when they can draw on a skilled workforce, and when they are selling products and services in a high-wage economy. We have many fine businesses which are making some of the best products in the world, delivering some of the best services, and developing many of the best new ideas. Those successful businesses have highly committed and skilled workers who are competing with the very best, but too many of our 5.2 million businesses face headwinds that make business more difficult than it should be, and too often lead to closures and job losses that are entirely avoidable.

We can learn from the success that exists in this country, in science, in digital, in engineering and in our universities, and we can learn from other countries as well. Success leaves clues. As for the countries that are outperforming us, one striking reason for that is the relationship between Government, business and workforce. What often works in successful countries, and in successful companies, is a three-way partnership for growth and productivity. That means secure, skilled, well-paid workers, businesses working with the infrastructure and the workforce that they need in order to expand, and a Government who build the stable foundations on which the partnership between business and workers can grow.

The Business Secretary is unwilling even to utter the words “industrial strategy”, but that is what is needed. An industrial strategy is nothing more than a Government's willingness to enter into a partnership with business and workers, matching their ambitions by looking beyond election cycles and investing in the infrastructure and training that they need in order to flourish. Businesses are clear about what they need from the Government. They want the Government to take a long-term approach to capitalising on new technology, and to nurture sectors that will boost exports, create jobs, and generate sustainable growth.

From green and renewable energy to high-end manufacturing and digital technology, the United Kingdom is not short of opportunities. It is not short of innovative entrepreneurs who want to put it at the global forefront of those emerging sectors. Under this Government, however, the UK spends less on research as a share of GDP than France, Germany, the United States and China. It has embarked on real-terms cuts to Innovate UK; it has axed the Business Growth Service, including the Manufacturing Advisory Service and the growth accelerator programme; and it is stifling game-changing innovation by converting grants for bold start-up companies to loans.

Those are not the actions of a Government who are committed to playing their part in the creation of opportunities for the next generation of entrepreneurs. The growth accelerator programme alone assisted more than 18,000 businesses. A great deal of the £100 million in finance that the programme helped SMEs to raise went into the development of innovative new products and services: products and services that create jobs and boost productivity. If the Government had wanted a partnership with business, they would not have completely shut down the long-term dividends to the economy that those schemes were already beginning to deliver, for the sake of scraping together short-term cuts for the Chancellor. The decision to axe these schemes is not just a knee-jerk reaction to departmental cuts; it speaks volumes about the Government’s real lack of long-term vision and commitment to businesses. Productivity cannot improve and sustainable growth cannot be secured as long as this Government’s message to entrepreneurs and innovators is “You’re on your own.”

Businesses want a trained workforce and a steady supply of skills to expand their operations. In a recent survey by the EEF, the manufacturers’ organisation, half of manufacturers pointed to a skilled workforce as the single most important factor in boosting growth and productivity. ManpowerGroup UK says that more than 30% of the largest construction companies have had to turn down work due to a shortage of skilled labour. For all the Chancellor’s talk of skills, more than two thirds of businesses say they are badly in need of more high-skilled staff. The engines of growth in the UK—construction, manufacturing, science, engineering and technology—all face chronic and growing skills shortages. Once again, there is a gulf between the Government’s rhetoric and action; their £360 million in cuts from the adult skills budget would dampen the ambitions of people hoping to learn the skills they need to enter the workforce and take skilled jobs.

While we on the Opposition Benches agree with the principle of an apprenticeship levy to increase funding to tackle the skills shortage, we will be carefully examining the details. It is vital that the policy is used to drive up the quality, as well the quantity, of apprenticeships. It is important that it meets the ambitions of learners, as well as the needs of employers. It is also important that it does not become, as Seamus Nevin of the Institute of Directors, puts it, a “payroll tax” that hits medium-sized businesses. The payroll threshold laid out by the Government could mean that the cost spills over from larger companies, so the details need to be watched carefully as they emerge, to ensure smaller companies are exempted.

Businesses want decent infrastructure, strategic road networks, improved broadband and cheaper energy supplies. These businesses will create jobs, boost productivity and generate growth, but Government’s role in that partnership is to build the physical infrastructure they need to operate in. A recent CBI survey of businesses showed that nearly two thirds are worried about the slow progress of infrastructure projects, and they are right to be concerned. The gulf between the Government’s rhetoric and the projects they have actually delivered is widening. The quality of our infrastructure is now the second worst in the G7. Capital spending has more than halved as a proportion of GDP since 2010.

The Government seem to be missing two simple facts. We have world-beating innovators and businesses that want to expand and create jobs. They cannot do that without roads, broadband and good rail and air links. That is the Government’s responsibility, and they are failing to deliver. If the Chancellor still claims to be leading a “march of the makers,” I am afraid the evidence over the last five and a half years shows he is leading in the wrong direction entirely.

Goods exported last July reached their lowest levels since September 2010. In the three months to November 2015 the trade deficit stood at £7.7 billion. The truth is the trade deficit is a problem that this Government and the previous coalition Government have said a number of times they would address.

[Anna Turley (Redcar) (Lab/Co-op)]

Will my hon. Friend join me in welcoming the fact that in the north-east the balance of trade is positive, and a large contributory factor in that was the steel industry on Teesside? Does he share my disappointment—in fact, my anger and frustration—that the Government failed to do anything to step in to save steelmaking on Teesside? Looking forward, will he also help to put pressure on the Government to ensure that China does not get market economy status, which could put the final nail in the coffin of the national steel industry in this country?

[Bill Esterson]

This is the first opportunity I have had to congratulate my hon. Friend and her colleagues from the steelmaking areas on the fine work they have done in representing, and attempting to save, the steel industry. I will talk about the steel industry in more detail later, but I completely agree with the point that she makes.

The Chancellor said he wants to double exports to £1 trillion by 2020. Office for National Statistics forecasts show that he is set to miss this by more than £350 billion—in other words, he will be 70% short of his target. In 2011 the Prime Minister said that he intended to increase the number of UK exporters by 100,000 by 2020, and in its annual business survey the ONS found that the number of UK exporters actually fell by 8,600 last year.

The risk to long-term growth and productivity of failing to increase exports is stark. Failure to boost exports means slower long-term growth, depressed wage growth and an even more depressed rise in living standards. As David Kern, chief economist at the British Chambers of Commerce, said last year,

“unless radical measures are taken to strengthen our export performance, our trade deficit will continue to be a threat to the country’s long-term economic performance”.

But just as serious is the threat posed by a Government divided over whether or not to pull the plug on UK businesses’ main trading partner. Trade with the EU was worth £227 billion to the UK economy last year. It is a lifeline for many businesses, and for many workers. The risk we face is from a Government that fail to unite in wanting to honour a partnership with those businesses and workers who rely on EU trade for their livelihood. Instead they are divided over whether to kick the legs out from under UK business, not least in respect of relationships that account for almost half of UK trade and which are especially important for many SMEs.

The problem of UK exports is compounded by our lagging productivity. ONS statistics show that, as of 2014, productivity as output per hour worked in the UK was 21% lower than the average for the rest of the G7 countries. According to the ONS last year,

“the absence of productivity growth in the seven years since 2007 is unprecedented in the post-war period.”

Productivity has been revised down next year, the year after and the year after that, and the gap between UK productivity and that of the rest of the G7 is now the widest since 1991.

A long-term strategy to boost productivity, trade and innovation is a partnership. That partnership cannot ignore the workforce; on the contrary, they can be one of our most powerful assets. A partnership between workers, businesses and Government to boost productivity is a long-term vision that requires a commitment to long-term investment from Government—one that stretches over many Parliaments and one that requires a large degree of political, as well as industrial, consensus.

If we truly want to boost the UK’s productivity, manufacturing is a good place to focus our attention for a number of reasons, not least because the productivity benefits of industry reach far beyond itself, to benefit growth, skills and productivity in the UK as a whole. Manufacturers improve efficiency at a pace and intensity that outstrip almost any other sector. In fact, they currently inject three times the amount of their output share of the economy into improving machinery. An EEF survey conducted in 2015 showed that 80% of its members intend to invest in machinery with the aim of increasing productivity. That technology, again, filters out. The investment and innovation of one manufacturer becomes a tool to boost productivity across a host of sectors and in the wider economy as a whole. Investment in processes and systems improves efficiency and accelerates the diffusion of technology.

Generating sustainable growth, raising skill levels, and dispersing opportunity to every corner of the country: prioritising manufacturing should be the cornerstone of a strategy for increasing productivity. But this Government’s track record shows that they either do not understand this or else they are simply not willing to do what is necessary to support the industry. As my hon. Friend the Member for Redcar (Anna Turley) said, the tragic situation that unfolded in the steel industry is a case in point. The UK steel industry ran a trade surplus in all but three of the last 17 years. Steel exports were worth £6 billion to the UK in 2014, not to mention the 20,000 families the industry supported. Serious challenges coalesced: a glut of global supply, energy costs, a strong pound. These were difficult challenges, but surmountable for a Government.

[Anna Soubry]

Does the hon. Gentleman accept that the fundamental problem was that the price of steel has almost halved and no Government can change that?

[Bill Esterson]

Of course the Minister is right that the price has halved, but other countries in the EU chose to intervene while we said we would not. I am afraid the Government’s record on this has been woeful.

[Anna Soubry]

Will the hon. Gentleman send me details of other EU Governments who have intervened to save their steel industries? If so, I will pass them on, because they must be in breach of the state aid rules.

[Bill Esterson]

We have debated this so many times. The Minister knows that some countries choose to operate the state aid rules far more beneficially than we do. It is about time the Government chose to do the same.

The industry needed the Government to play their role in what should have been a partnership. The situation demanded that the Government see the long-term strategic value of steel production and do what other EU Governments did: move swiftly to protect their industries. Instead, they have lacked a strategy and shown themselves unwilling to make strategic interventions to support the industry with practical steps well within their capabilities, such as tackling business rates through the supply chain, dealing with electricity costs and ensuring better procurement practice to favour British steel. They failed to step up to the plate as a partner of industry, and in doing so turned a temporary, toxic mix of challenges into a permanent gap in our industrial make-up.

We have to take that lesson seriously. UK productivity will continue to lag as long as Governments sit on the sidelines and wash their hands of responsibility for safeguarding key industries. The aspiration is one that everyone in the House will agree with: an economy with high-skilled, well-paid jobs in which businesses can grow, export and invest to boost productivity. Agreeing on the aim is one thing, but how we go about it is another. It requires a long-term partnership championing the workforce and business; investment, not cuts; an industrial strategy, not laissez-faire dogma; and an economy that creates wealth, instead of relying on consumer borrowing. We need a strategy in which workers, business and the Government work together for Britain. The Government’s role is not that of an observer but to make sure our exporters get the help they need; to take action to boost productivity; to tackle the skills emergency; to safeguard key industries; and to build the infrastructure that growing businesses need.

The Minister and the Government have failed on each point. They cannot deliver and they will not be an active part of that partnership because they do not believe in intervening. Their empty rhetoric will get our economy nowhere. Only a long-term industrial strategy will deliver the high-value economy we all want. We need a strategy of partnership that is both pro-business and pro-worker.

14:32

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am delighted to be called so early in this important debate. I was particularly keen to catch your eye, Madam Deputy Speaker, because we have so few debates on exports, but I believe that if we are to grow our economy sustainably, we must increase our exports.

Given the importance of this debate, it is a great pity that our politics produces such negativity from all the Opposition parties. That is in total contrast to the Minister for Small Business, Industry and Enterprise, my right hon. Friend the Member for Broxtowe (Anna Soubry), who is positive and outward looking and produces good policies that the Government have been pursuing, both in the last Parliament and this one. I am passionate about exports. With my hon. Friend the Member for Newark (Robert Jenrick), I have the honour to chair the all-party trade and investment group dealing with exports. I want to see this country exporting more.

I just want to champion some of the Government’s achievements, which, unlike the Opposition parties, help exporters considerably. They have committed to cutting £10 billion of red tape in order to back British business and put resources into more productive use—and that is on top of the £10 billion we cut in the last Parliament. We have cut corporation tax to 20%—one of the lowest rates in the G7—and have an aspiration to cut it further. We are boosting skills and productivity by improving the quality of apprenticeships in England and increasing their number by 3 million in this Parliament, on top of the 3 million in the last Parliament. As my right hon. Friend the Minister has said, we are investing, up to 2021, £6.9 billion in UK research infrastructure and, in particular, protecting the science budget of £4.9 billion per annum. All that will help innovative companies in this country, as will building stronger links with emerging markets, especially China and India. I was therefore delighted to see the leaders of those countries—the most populous nations in the world—visit this country in the last year. And what successful visits they were.

My right hon. Friend the Business Secretary, launching the Government’s productivity plan, “Fixing the foundations: Creating a more prosperous nation”, said:

“Britain is home to some of the world’s most innovative and dynamic businesses, staffed by incredibly talented, hardworking individuals…And higher productivity means higher incomes. When productivity rises, standards of living rise too. So today I’m proud to publish ‘Fixing the foundations’. It’s our plan for productivity, and our blueprint for creating a more prosperous nation.”

Hon. Members on both sides of the House have commented on productivity, and it is true that we lag behind some of our major competitors. Many economists have puzzled over this, but I think the reason is simple. In the list of achievements I gave just now, I omitted the fact, which must be hugely welcome to all Members, that a record number of people are in work thanks to our flexible labour laws. In this country, 32 million people are in work—more than ever before—and that number is rising. I believe that, because more people are employed, some companies might not have invested as much as they might have done in labour-saving capital equipment, as has happened on the continent, where their labour laws are much more difficult and therefore they have higher unemployment. Greece, for example, has 50% youth unemployment. It is no wonder those countries have such problems, yet here, I am grateful to say, youth unemployment is dropping. It is a terrific achievement for this country.

Let us look at where trade is going around the world. In 2014, the UK’s exports of goods and services totalled £513 billion and its imports totalled £548 billion. The EU accounted for 45% of exports and 53% of imports, meaning the balance of trade with the EU is against us. In other words, we are importing more than we are exporting. There is no reason, therefore, not to look elsewhere in the world to see where we can export more. I commend that approach to the Minister. It is against a background of UKTI’s policy of increasing trade by 2020 to £1 trillion and the number of companies exporting by 100,000. There is no reason why we could not do much more.

UKTI has been transformed in the last few years. I was delighted to take one of my successful medium-sized companies to see the trade Minister, the right hon. Lord Maude, the other day to examine how we might get UKTI to do even more to encourage medium-sized businesses. The one in my constituency employs 45 people, exports to 40 countries around the world, makes it products in China and exports them directly to Australia, without their ever touching this country, and yet it remits its profits to this country and pays UK corporation tax. That is precisely the sort of medium-sized company we ought to encourage to export more.

That company told me there was too much emphasis on people in UKTI and not enough on the tradeshow access programme. Trade shows are a particularly important part of manufacturing businesses’ exporting programme. We need to encourage, via greater incentives from UKTI, such companies to go to these tradeshows, particularly where they have a record of success. At the end of my speech, I will make five or six suggestions to the Minister on how to encourage exporting, but one of them is to extend TAP from three to four years. As this company pointed out, the first year is about exploration and the second is about getting to know the customers, and only in the third year, if it is lucky, does a company begin to make a profit. It therefore needs an extension from three to four years. It is in its third year and about to be cut off just as it is becoming profitable, so it would be useful if we could give it a bit of extra help.

[Jeremy Quin]

I am delighted that my hon. Friend saw my constituency predecessor, Lord Maude, recently. We have a number of manufacturing firms in Horsham. Does my hon. Friend agree that such firms are now getting a better service from the Foreign Office and from our ambassadors abroad to help British exports? That should be put on record and welcomed.

[Geoffrey Clifton-Brown]

I am sorry to say that I only partially agree with my hon. Friend. I am not going to name the embassy in question, but a representative of the company I have been describing went to one of the nearer embassies to this country and was distinctly unimpressed by the trade representatives there. He described them as spotty youths who were just out of university. He felt that we needed people in our embassies and in UKTI who have a good track record in the private sector, and that we should incentivise such people. If they have had a good record in the private sector, it is likely that they would be successful in UKTI in helping companies to export.

There are approximately 1 million small and medium-sized companies in this country. UKTI helped 48,000 companies to export last year, but I suggest to the Minister that there is still much to be done. Far too many companies still do not understand what it means to export and do not understand the advantages of exporting. The figures are well known. Once a company has exported for the first time, its productivity goes up by 7%. So not only will its profits go up—one hopes that it will do profitable export business—but its productivity will go up as well because that activity sharpens the whole operation through dealing with an extra dimension. We could do much more, in collaboration with UKTI, with UK Export Finance and with the local enterprise partnerships. We should make them all come together much more closely.

Another suggestion I have for the Minister is that Innovation UK and UKTI could get much closer together so that some of our best seed-generated companies, including high-tech companies, could be encouraged to export right at the beginning of their existence rather than waiting until they are established. They should be encouraged to think about exporting as one of the first things they do.

[George Kerevan]

I concur with the hon. Gentleman about the importance of UKTI. Unfortunately, in the autumn statement, the Chancellor slashed UKTI’s budget. So outraged was the organisation that its chief executive resigned. Clearly, this Government are not helping UKTI to help exports.

[Geoffrey Clifton-Brown]

I think we all have to encourage UKTI to operate within the financial climate that exists. I have to say that I would put the money into UKTI in order to expand exports, but I would make sure that it was operating as well as it possibly could. Another suggestion that I have for the Minister is that UKTI should be benchmarked against the best export agencies in the world to see how it is doing. We should never be complacent in this life, and benchmarking is one way of getting that information.

Despite what the company in my constituency said when we went to see Lord Maude, I think that what my hon. Friend the Member for Horsham (Jeremy Quin) has just said is right. Our ambassadors are some of the best trained in the world, and we have one of the most comprehensive networks of embassies. After all, it was the Conservatives, in this Parliament and the last one, who started opening embassies where the previous Government had closed them. We have the network, but in some places we need to sharpen up the expertise. However, we have a good foundation on which to build.

We have the British brand and the British language and we exercise our soft power through the BBC World Service and the British Council. We are very well established in many of the major markets in Brazil, Russia, India and China—the BRIC markets—and in other smaller markets where we need to concentrate our efforts. We need to concentrate on the high-growth markets, as opposed to on Europe, which has lower growth. I am delighted that our exports to China are growing in such big quantities, albeit from a very low base. UKTI is putting significant resources into China, and it is paying dividends. The visit by China’s Premier, Xi Jinping, last year will only help to cement those efforts.

I do not want to make too long a speech, but I want to outline some things that we could do to help companies to export. I have some specific ideas for fiscal incentives to give to small and medium-sized businesses. We could give them fiscal help with export-related activity. That could be a better way of alerting many companies to the possibilities. Companies are very astute about ways of saving tax, and we need to find the best ways of encouraging all small and medium-sized businesses to export. It would also be helpful to inform them that finding out more about their potential export markets need not involve huge costs.

A further suggestion, which I have already mentioned, is that we should extend the TAP programme from three to four years where success has already been demonstrated. If a company cannot achieve success within three years, it is unlikely to do so, but if it has already demonstrated success, as that company in my constituency has done—[Interruption.] I wish that my right hon. Friend the Minister on the Front Bench would listen. Please! If the Government extended the TAP programme from three to four years where success had been demonstrated, it would be helpful.

My third suggestion is that we should buddy a successful exporting SME with one that is exporting for the first time. That would be really helpful, because there is a real fear of the unknown for a small company with only a few employees. It has to deal with the VAT, the national insurance, the marketing and the manufacturing, and that can be quite frightening for a small company. It can be quite off-putting. Buddying such a company with one that is in the same market—although not one that is directly competing—would be helpful.

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

In regard to the plea that the hon. Gentleman made a few moments ago, if he cannot get his own Minister to listen to him, what hope do we have of doing so?

[Geoffrey Clifton-Brown]

I think I will ignore that intervention. I could have come up with something a little better myself.

My fourth suggestion is to give local enterprise partnerships a stronger exporting role. I believe that we in Gloucestershire run one of the better LEPs, but it is still not sufficiently focused on exporting. It has nine divisions, and every one of them should be utterly focused on exporting. I would also propose a much stronger connection between UKTI and Innovate UK, as I have mentioned. Innovate UK is developing the technology forward strategy and helping companies to expand their ideas. It often helps them to incubate ideas from the best universities. This is an area in which the greatest companies can grow from little acorns, and we should encourage export activity there.

I would also reinvigorate UKTI by encouraging it to employ more people from the private sector, particularly those with a record of exporting in their own company. Those people should be properly paid and incentivised; otherwise, the private sector will always continue to employ the very best people. We have made good progress in the last Parliament and in this one, but there is much more to be done. Our all-party parliamentary group on trade and investment will help the Government whenever possible by putting people in touch with UKTI and with their LEPs. As we go round the world, every Member of Parliament should be alert to the possibilities of export markets and to which companies in their constituency might be able to export to those markets. We should then put the companies in touch with those possibilities. In that way, we could all become trade and export ambassadors, which would help the exporting effort of this country considerably.

14:48

[Callum McCaig (Aberdeen South) (SNP)]

It is a pleasure to take part in the debate, and to follow the hon. Member for The Cotswolds (Geoffrey Clifton-Brown), who has made some sensible suggestions. His proposal for buddying businesses is one that all the agencies involved should take on board. I was not expecting to speak quite so early in the debate. This topic is clearly of interest to some Members, but the memo about it does not seem to have been passed to the official Opposition. Some Labour Members are here, providing an honourable exception, but it is surprising to see so few here, given the importance of these fundamental tenets of the economy not only to the economy itself but to the services that they provide the money to pay for. If we do not get the economy right, we do not have the services.

I am really pleased to take part in this debate, and I am going to focus on one area where the UK, and in particular Scotland, has strong natural and competitive advantages: energy. I thank the Minister for a positive response to my question about oil and gas. It would be more helpful if we focused on what could be done to help the situation, rather than getting into some of the politics around it. I accept fully that we are in a political environment here, but we need to reflect on what message this place is sending to the folk in Aberdeen who are being laid off when we are having knockabout about the oil price—it is not helpful. Having said that, I respect, accept and am thankful for the positive comments made.

It would seem that the Government have turned over a new leaf in 2016 in their approach to oil and gas. Today, I have had positive conversations with the Energy Minister, who also gave a positive response to the questions from my hon. Friend the Member for Livingston (Hannah Bardell) about incentives for oil and gas at Energy and Climate Change questions last week. We are in an incredibly difficult position with the oil price, and jobs are being lost, but there is still a bright future. The industry is doing what it can to reduce costs—unfortunately, in many cases that will require job losses—but it is also innovating, and I will come on to discuss that. Help from the Government is, however, required in order to bridge over what we hope will be a temporary downturn. Most people expect the oil price to rise at some stage, but it is not clear when or by how much.

Aberdeen is a city of innovators—there is no doubt about that. Some of my SNP colleagues may be surprised to learn that the city in Scotland that filed most patents in 2014 was Aberdeen. It filed more than Edinburgh, whose population is twice the size of Aberdeen’s, and more than Glasgow, whose population is almost three times as large. These patents were primarily in oil and gas, but they were also in life sciences, biosciences and food and drink, and so the city is thriving. It is, however, unquestionably an oil and gas and energy hub, and the job losses announced by BP yesterday, coming on the back of 150 announced by Petrofac the day before, are genuinely heartbreaking for those involved. As I have said, the industry is taking the steps it can to innovate. Innovation is one of the hallmarks of the oil and gas industry, and it was heartening to see the level of innovation and of renewed collaboration that is taking place in the industry, as it works to deal with the lower oil price.

Some of the issues the oil and gas industry faces pre-existed the oil price fall but they have been exacerbated by it. There are three sides to the coin in terms of the costs and changes in income that oil and gas companies face. The first is the oil price, and none of us can do anything about that. The second is the costs that the industry is exposed to, and it is doing what it can there. The third is taxation, and I am pleased that it would seem Ministers have an open mind on that. I plead with them to look at oil and gas taxation in the round to see what can be done to help.

The important issue of the apprenticeship levy has been raised. We wholeheartedly support the levy, provided it has the investment coming to Scotland. There have been questions asked, again by my hon. Friend the Member for Livingston, about the potential double imposition of an apprenticeship levy-type scheme on oil and gas companies, which already pay significantly into training schemes through a number of industry levies.

As part of maintaining and progressing Aberdeen’s position as an innovative hub, our local authorities—Aberdeen City Council and the Aberdeenshire councils—are exploring a city deal. They are looking at significant investment in infrastructure, which is obviously an important part of this debate and a key way of securing economic growth, and very much at how they can continue to make the best of the expertise in innovation that the city of Aberdeen is proud to host. There are proposals within the city deal to create an innovation hub around the two universities, bringing together industry and universities in a way that has already been discussed today. Measures are required to protect the north-east of Scotland and provide the bridging for the oil industry that I mentioned, and the Aberdeen city region deal is a very important part of that toolkit. I commend it again to the Government, hoping that they will look upon it favourably and act quickly.

Even in these times of difficulty, there are many ways in which innovation in the oil industry can provide a massive support to the UK economy. Enhanced oil recovery is one such way, as is looking at being one of the first movers on decommissioning. We would not want to see that happening prematurely, but if it is inevitably going to happen, we have the ability, as we have one of the more mature oil and gas basins in the world, to take our expertise and export it globally. We cannot afford to miss that opportunity.

Let me move on to exports, the north-east of Scotland and the oil and gas supply chain, which is about much more than Aberdeen, as it goes the length and breadth of the UK. That situation is good and it is getting better; Aberdeen relies much less on the North sea, in terms of supply companies based there, for its income. I wish, however, to draw the House’s attention to something announced at the tail-end of last year. In principle, I support this, and I am not criticising it, but it needs to be taken in the round, with a more supportive approach being taken to oil and gas. I refer to the announcement that there would be an export credit agreement of $500 million for a couple of UK-based companies for exports to Petrobras, the Brazilian state-owned oil major. That is good in and of itself. It helps support exports from the UK—from Aberdeen—but when we are looking at these things, we need to be careful. If we are providing exports to something like the oil and gas industry elsewhere without providing the same at home, we may inadvertently end up requiring greater imports of oil and gas in the future. We do need to get the incentives for exploration right. Again, I do not mean to criticise, but we have to have both sides there; we have to have support not only for exports, but for the domestic industry.

Aberdeen, and Scotland more widely, have huge natural advantages on green energy, and the Paris deal cements the opportunity we have in that regard. There is a sad irony here, in that the deal comes at the same time as the UK Government have taken the hatchet to a number of green energy policies, undermining the opportunity to truly embrace what will be one of the biggest global growing markets of this century. In her much-heralded “reset” speech, the Secretary of State for Energy and Climate Change said:

“At the same time, we are building new interconnectors to make it easier to import cheaper electricity from Europe.”

I support the building of interconnectors, as does my party, because an integrated European market for electricity will be a good thing, but the ambition shown there and the logic for making this move is the wrong way round. We should not be doing this to import electricity; we should be doing it to export the green electricity that can be produced from the wind and the waves—the sea and the tides—in Scotland. That is what we should be doing. That is the opportunity interconnectors provide; the opportunity is not about importing cheap electricity, but about building an industry that we can be proud of, in order to develop the skills that we need.

The renewables sector is an important part of rebalancing the economy, in geographical terms as much as anything else. The criticism often made of renewables, particularly of onshore wind, is that they do not provide that many jobs. The reality is that onshore wind does provide a lot of jobs, doing so in places where without the wind industry it is likely that there would be no jobs at all. We cannot overstate the importance of a small number of highly paid jobs in an area where they did not exist.

[Sammy Wilson]

Does the hon. Gentleman also accept that many of the studies in Scotland have shown that the onshore wind industry and the way that it despoils the landscape have taken away many tourist jobs?

[Callum McCaig]

I have heard that asserted year in, year out, but, as far as I understand it, the tourist sector in Scotland is doing very well. It continues to do well and it is a major sector of growth in the Scottish economy, so I do not quite understand those assertions. I have read that there is anecdotal evidence—it is no more than that—of somebody saying, “I came to Scotland. I drove up the A9 and didn’t like the wind turbines, so I am never coming back.” Well, somebody else is there to take their place, and there always will be, as Scotland offers world-class tourism that is not in any way “despoiled”—in the words of the hon. Gentleman—by wind turbines.

It is not overly negative to say that genuine critiques can be made. On green energy policy, for example, various things have been done, but the most damaging to the United Kingdom’s reputation and to the financial and investor confidence that is required to secure investment in the UK was the decision at the 11th hour—actually it was even later than that—to pull the plug on carbon capture and storage. Two projects—Peterhead and White Rose in Yorkshire—took part in a CCS competition. Big companies invested significant time and resources on the basis of the supposed good word of the United Kingdom Government. Before they had even had the opportunity to submit their bids, the plug was pulled and the damage was done. We cannot underestimate the impact that that and all the other incremental attacks on green energy policy have had. We are missing a major trick here. As I have said, this is a huge opportunity to grow our economy and our skill base and to do it in differing parts of the United Kingdom. To send out such damaging messages really brings into question the commitment of the UK Government not just to green energy, all the talk at Paris and the global climate change deal, but to the economy and investment more widely.

Finally, let me touch on the Green Investment Bank, which was mentioned by my hon. Friend the Member for Dundee East (Stewart Hosie). It was supported by this party and also by the entire Chamber when it was debated—clearly, that was before I was elected to this place. The bank is a shining example of how we should address market failure. It is how we can ensure that investment is directed to the right areas, and that support is given to nascent industries to help them get off the ground. We have repeatedly criticised what is proposed. Again I say that we will oppose the privatisation of the Green Investment Bank if we do not get cast-iron assurances that its green remit will be protected.

After Paris, the rules of the game have changed, and the UK and Scotland have a chance to seize the benefits. Scotland is ready, but I fear that, as part of Tory Britain, we are being left behind.

15:03

[Amanda Milling (Cannock Chase) (Con)]

I am grateful for the opportunity to speak in this afternoon’s debate.

I agree with the Minister for Small Business, Industry and Enterprise and my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown): Opposition Members have painted a pretty gloomy picture this afternoon.

The UK economy has improved significantly since Labour’s great recession, and is now, thanks to rising employment, growing faster than that of any other G7 nation. I hope that all Members welcome that rise in employment. Economic growth is not, however, the result of improved productivity. As my right hon. Friend the Minister said, we are looking at addressing productivity not only because it has been a long-term problem affecting our economy and one that successive Governments have failed to tackle, but because our productivity has consistently lagged behind that of other major economies.

I challenge the motion before us today, as I believe that the Government have rightly recognised the productivity gap, publishing the productivity plan last summer. There is recognition that addressing that gap will be key to ensuring a sustainable recovery and a long-term successful economy, delivering our long-term economic plan for Britain. We must recognise though that that will not happen overnight.

The productivity plan outlines 15 key areas that need to be addressed and are based on two pillars—encouraging long-term investment and promoting a dynamic economy. It includes measures to promote and encourage trade and exports, on which I wish to focus my remarks this afternoon.

The “Exporting is GREAT” campaign will, I hope, inspire and support thousands of new businesses to export. Firms that export are more productive, more innovative and less likely to go out of business. It is for that reason that I shall jointly host an export event in Cannock next week with UK Trade & Investment and Chase chamber of commerce. This will be an opportunity for local small and medium-sized businesses to understand what global opportunities exist; the benefits of exporting; and what practical help is available.

The export experiences of ATP Group are an excellent example of the power and opportunities available in the export market. I invite my right hon. Friend the Minister of State to visit ATP with me. Based in Cannock Wood, it is Europe’s largest independent re-manufacturer of automatic transmissions and vehicle electronics. Essentially, it rebuilds car parts—for instance, gearboxes—to the specifications of the original product, using re-claimed, re-engineered and new parts. Its clients include Ford, Land Rover, and Volvo, to name but a few. Exports make up two thirds of its business, and it is exporting to around 35 countries. During the past year alone its international trade has increased by more than 57%.

ATP has shown that one of the best ways to address productivity and increase exports is by investing in skills development, new technology, and research and development to support specific customer requirements.

[Anna Soubry]

I would be absolutely delighted to visit ATP. It sounds like an excellent success story, with many lessons to teach other companies, so, yes, I gladly accept the invitation.

[Amanda Milling]

I am thrilled that my right hon. Friend will join me in visiting ATP. I know that the company will be incredibly pleased. I shall send it a message this afternoon.

The Government have set out an ambition plan to narrow the trade deficit, and are taking the issue of exports very seriously, with an ambitious £1 trillion export target to be met by 2020, and the aim of seeing 100,000 more companies exporting their goods and services.

[George Kerevan]

I take what the hon. Lady says about ATP in her constituency, but the UK is clearly a net importer of automotive products. Our largest engineering industry is a net importer from Europe. The plan has not worked.

[Amanda Milling]

The point I was trying to make is that we want to increase exports. I will highlight a few points relating to that.

The productivity plan outlines several measures that will help to meet that target, including building stronger links with emerging markets, especially China, India and Brazil. The plan also sets out a range of funds and initiatives designed to promote and encourage exporting. Let me echo the point that my hon. Friend the Member for The Cotswolds made about extending the tradeshow access programme.

Based on ATP’s experience of exporting, I want to raise a number of other issues and challenges faced by exporters that I would like the Minister to consider. They fall into three key categories—uncertainty, red tape and competitiveness—each of which presents real obstacles and barriers to exporting.

Uncertainty comes about partly because of currency markets, but the particular issue I want to focus on is that of Her Majesty’s Revenue and Customs impounding shipments for random checks. That can make it really difficult, both from an importing and exporting perspective, when a “just in time” ordering mentality is commonplace. Are there ways in which we can balance the understandable need to monitor shipments and at the same time provide more certainty to firms that are importing and exporting?

Businesses, both in the UK and abroad, regularly refer to the issue of red tape. I welcome the Government’s commitment to cut £10 billion of red tape, to back British business and put resources to more productive use. Customs warehousing is a facility for importers to delay duty and import VAT payments until the goods leave the customs warehousing facility or enter another customs procedure. According to ATP, it is an excellent service for importing parts, but the red tape associated with it is cumbersome. As such, ATP no longer uses the facility, as the amount of paperwork outweighs the benefits. That means that an excellent facility is underutilised. Will the Minister therefore review the facility and consider ways in which the paperwork could be reduced and simplified so that it can be used by SMEs, which have less capacity to deal with red tape than larger organisations?

[The Minister for Universities and Science (Joseph Johnson)]

My hon. Friend makes an important point about bureaucracy at our borders and the role of border control. I reassure her that the Government are reviewing that with their one government at the border programme. At present, 92% of consignments at customs are cleared within five seconds, but her constituents are clearly encountering difficulties. I will talk on her behalf to the Minister for Trade and Investment and look into the specific problems she faces.

[Amanda Milling]

I am grateful for the Minister’s update on the review and look forward to receiving more information over time. I will also feed back his comments to ATP, which is not using the facility at the moment but might want to start using it again.

On competitiveness, the costs and risks of exporting can be off-putting. If we are really serious about encouraging exports, surely we should be considering ways to incentivise businesses to do so, potentially through tax breaks. One tax that can be a burden to exporters is air passenger duty, which, in reality, is a tax on exports. ATP, for instance, spends thousands of pounds a year on air taxes alone. Every time it signs deals, it has to travel abroad and the costs over a year are significant.

We have to realise that ATP, like many businesses, is competing in a global market. Therefore, onerous air passenger duty makes it less competitive on contract delivery compared with other companies bidding for the same contract. With some companies actively trying to avoid the tax by booking tickets abroad, the Treasury is already missing out.

Given that APD is going to be a devolved matter and the Scottish Government have announced that they will cut it by 50%, with a view to abolishing it altogether, the need for us to consider our position is probably more urgent than ever. Will the Minister consider ways in which we could provide tax breaks on air passenger duty for those who are exporting? I appreciate that, at face value, that will cut tax revenues, but I believe that that will be overcome by the economic gains of more of our businesses exporting their goods and services.

In conclusion, given the need to address the productivity gap, and given the role that exporters play in closing it, it is important that we do everything we can to encourage businesses to consider exporting. That is why I would like the Government to consider ways in which we can address the three overriding obstacles of uncertainty, red tape and competitiveness.

I do not support the motion, because it does not reflect the current picture and the Government’s commitment to productivity and exporting.

15:14

[Mr Iain Wright (Hartlepool) (Lab)]

It is an honour and a privilege to follow the hon. Member for Cannock Chase (Amanda Milling), who is a valued fellow member of the Business, Innovation and Skills Committee and provides real insight and personal wisdom to our inquiries.

Unlike the hon. Lady, though, I do support the motion, because, to be frank, I agree with every single word of it. It gets to the heart of the worrying structural imbalances in our economy, including our reliance on consumer spending based on debt, at the expense of investment; our reliance on domestic consumption, at the expense of potential and growing international markets; the priority given to short-term value extraction, at the expense of long-term value creation; and our reliance on the service economy, at the expense of manufacturing, which can inject real innovation and productivity gains across the country, thereby raising living standards for all of us and all of our constituents.

In addition to the points raised by the Opposition motion, I would also like to mention the geographical imbalance in our economy. As a north-eastern MP, I am here in London for half the week and back in God’s own country for the remainder of it. The economies of London and the south-east are overheating, which is in turn putting pressure on infrastructure and housing supply in the capital, at the expense of sustainable economic growth elsewhere in the United Kingdom.

I welcome the motion’s focus on productivity. The BIS Committee’s first inquiry of this Parliament was on the Government’s productivity plan and we shall produce our report, I hope, shortly. I also welcome the motion’s reference to the change of research funding from grants to loans. As has been said, that is of deep concern because it could undermine our country’s competitiveness. Capital is global, and firms will see where they will get the best return. They could leverage in public sector investment as a result of their own private sector investment. This country could lose out on foreign direct investment. It is incredibly important that when we attract foreign direct investment into this country—to be frank, this and previous Governments have been very successful at that—we make sure that we remain at the cutting edge of doing so. The measure puts that at considerable risk.

[Jeremy Quin]

The hon. Gentleman will recognise that that is all part of a package, as is 20% corporation tax, which will be reduced further. I am sure he welcomes that.

[Mr Wright]

A good, competitive tax rate is vital. Global firms consider a dashboard of different metrics—including tax rates, regulation, flexibility in labour laws and capital allowances—in a holistic manner in order to decide where they are going to put their capital investment, the returns on which they might not get back for 10, 20 or 30 years. It is important not only that we have stability, but that we make sure that, if a particular firm is putting in investment, we address what the Government are doing. Other countries recognise that and ensure that there is a partnership, but I am worried that we do not have that.

[Neil Carmichael (Stroud) (Con)]

rose—

[Mr Wright]

I will give way to a fellow Select Committee Chairman.

[Neil Carmichael]

It is an honour to participate in this debate. The hon. Gentleman’s Select Committee and mine are doing a joint inquiry on productivity and it will focus on skills. Does he agree that, given the fact that more than 50% of foreign direct investment comes via the European Union, there is a really strong case to remain in the EU to encourage even more FDI in the future?

[Mr Wright]

That is incredibly important. Firms make investment decisions not just because of the UK domestic market, but because they see the UK as a springboard into the largest consumer marketplace—500 million consumers—on earth. Japanese firms such as Nissan and Hitachi are not just here for the domestic market; they are here because we are a springboard into the whole European market. We risk that at our peril.

Trade performance is a good barometer of economic health at both the macro and micro levels. At a macro level, a buoyant trade performance contributes to economic growth and helps to provide a surplus on the country’s current account. As the hon. Member for Dundee East (Stewart Hosie) mentioned, the motion cites a

“trade deficit in goods of £123 billion in 2014”.

However, in that year, the current account deficit widened to 5.1% of national income, which was its largest in post-war history. For much of the past 30 or 40 years, the trade deficit has been offset by investment income from overseas. However, and most ominously, net primary income derived from assets abroad has fallen from 3.3% of GDP to 0.1% in 2014. The Minister should outline the Government’s view about that because they have been quiet about this crucial economic issue.

At a micro level, exporting is positive, especially for firms, and it is good for the wider economy and society, too. Evidence suggests that an exporting business tends to be successful, sustainable and socially aware. Such a company tends to employ more workers and to offer better wages than an equivalent non-exporting company. Companies that export have been shown to be more productive and to invest more in research and development. There is a strong link between exporting and innovation. More often than not, a business with a desire to export overseas has the discipline, ambition and entrepreneurial flourish to develop new products and services that will better serve new export markets. Such companies will be sensitive and responsive to customer wishes, which is always the hallmark of a successful business. There can be a virtuous circle for exporting businesses whereby they become exposed to new demands, fresh ideas and increased competition, which in turn makes them more productive and outward looking, and better disposed towards thinking about new products and improved profitability.

On average, according to the British Chambers of Commerce, businesses that export grow 20% more than those that do not. We need to encourage such activity much more because far too few excellent British firms providing great goods and services that could be offered throughout the world export. Only one in five British firms do so, whereas the average figure for the EU is one in four.

The motion refers to the UK’s “poor export performance”, but with the greatest respect to the Scottish National party, I would go further. I think that our trade performance over the past 30 years or so has been dire and woeful. It has declined markedly over that period with no genuine prospect of improvement. The UK accounted for one in 10 of the world’s exports in 1950, but now the figure is less than 3%. Of course, with the development of emerging economies, it was inevitable that there would be a relative decline in the market share of UK goods and services, but not at the rate that we have unfortunately experienced. Given the forecast that world trade will expand by $250 trillion by 2050, there should be a co-ordinated effort—in the House, across the country and in government—to ensure that we capture as much as possible of the growth in the world economy for British firms.

[David Rutley]

The hon. Gentleman is making important points in his impassioned speech. He is right that there is a challenge for more business to step up to the plate and move into exporting, but does he agree that the situation shows that we need a real cultural change involving not only the Government, but businesses examining what they have done in previous years and moving further forward?

[Mr Wright]

The hon. Gentleman has a fantastic track record of talking about trade and investment, and how we ensure that we boost our sales of exports throughout the world. I will deal with his important point about what we can do in a moment.

In November 2015, the UK’s trade gap was £3.2 billion, while the trade deficit in goods was £10.6 billion. In 2014, UK goods exports fell by 4.1%, which represented the lowest growth rate since the recession in 2009. We were the only G7 economy to experience a negative growth in exports, although it is not all doom and gloom because the north-east still has the only consistent trade surplus in goods. However, as the hon. Member for Dundee East said, there is precious little evidence of a “march of the makers” with modern manufacturing at the heart of a rebalanced economy and providing export-led growth. That is reinforced by yesterday’s Office for National Statistics publication showing that the UK manufacturing sector is now back in recession. I fear that we are sleepwalking back to the long-standing British model, which has been prevalent over the past 40 years or so, of debt-fuelled customer consumption based on an assumption of ever-rising house prices. That did not work in the past—it never has—and it cannot be a model for sustainable and competitive economic growth.

As we have heard several times during the debate, the Government have set a target of £1 trillion of exports by 2020. I genuinely want them to achieve that because it would be good for firms and the country, and would bring about economic growth and broadening prosperity for everyone. However, it is now more or less a given that the Government will fall spectacularly short of their target. Few expect it to be achieved, including the Secretary of State when he gave evidence to the Select Committee. The Office for Budget Responsibility’s “Economic and fiscal outlook” that was published at the same time as the autumn statement forecast the cash value of exports in 2020 to be £647 billion, which is 23% lower than its March 2012 forecast and 35% lower than the Government’s ambition. It is not acceptable for the House, the Government or the country simply to shrug our shoulders and say, “Do you know what? It was a tough target and it’s unachievable, but at least we had a go.” We must be more ambitious than that, but the evidence suggests that the Government have not even had a go. A strong export performance matters, which was why the BIS Committee launched an inquiry into exports and the role of UK Trade & Investment.

I think that I speak for all members of the Committee, several of whom are in the Chamber, when I say that we all want the £1 trillion target to be achieved, but given the enormous shortfall that is forecast, we need a vigorous focus on changing course and embarking on policies that will bring about an improved performance, yet I have not seen the Government demonstrating that there will be such a step change. Will the Minister outline what is being done differently to ensure that we get as close to the £1 trillion target as possible? What active steps are the Government taking to ensure that 100,000 more companies are exporting by 2020?

To respond to the intervention made by the hon. Member for Macclesfield (David Rutley), while the Government do not control this, they can put in place a framework and facilitate the environment. We need to think about what firms are doing. They might have a good domestic market in which they feel comfortable, but how do we ensure that they can put their toe in the water of exports? Businesses will be concerned about whether they know the regulations and laws of a particular country and if they will get paid, so they might think that exporting is too much hassle and that they will stick to the domestic market. However, we need to encourage them to export, and that brings me on to the role of UKTI.

[Sammy Wilson]

The hon. Gentleman accepts that the target is challenging, but if the Government know, given the OBR forecast, that it might well be missed by 35%, we have early-warning signs four years in advance showing that something needs to be done, so action should be taken.

[Mr Wright]

The hon. Gentleman is right. Given that we will fall spectacularly short of the target, how will the Government revise their policy on trade and exports to ensure that we do not miss it by 35%, but get as close to £1 trillion as possible? Is UKTI sufficiently proactive about working with British firms to identify and navigate foreign markets? It has been affected by turbulence, with cuts in funding and disruption at the top of its management. Do the Government think that it is fit for purpose?

[Anna Soubry]

To answer that directly, I think there is much reform that can be achieved. Does the hon. Gentleman agree that the hon. Member for East Lothian (George Kerevan) was wrong when he said that the former CEO of UKTI had resigned because of the budget cuts, and that Mr Jermey moved to the Foreign and Commonwealth Office to take up a new appointment as the international counter-extremism co-ordinator? Does the hon. Gentleman agree that the new head of UKTI was appointed before there was any change in the funding? Will he confirm that the amount that UKTI received from BIS in 2014-15 was £264.1 million and for 2015-16 is £338 million?

[Mr Wright]

It is important that the right hon. Lady clarifies the reasons for the personnel changes.

The hon. Member for The Cotswolds (Geoffrey Clifton-Brown), who is no longer in the Chamber, spoke about benchmarking UKTI against other comparable trade organisations around the world to see whether we are getting value for money for the taxpayer and whether sufficient money is being provided. The Select Committee’s inquiry can look at that.

This is not an academic exercise. In the past a trade deficit was so significant that it could bring down a Government. I am far too young to remember the 1970 election. I was not born then, but I have read about it in history. Some of those present may have been in the Chamber talking about it. That is an example of how important trade performance used to be. In the modern age, and in news reporting for the 21st century, it seems to have lost that impact. We should return to highlighting the importance of trade deficits for the general prosperity of this country. Poor performance in overseas markets acts as a drag on competitiveness, productivity and rising living standards for all. The Government should focus more attention on that and demonstrate how they will change track to achieve their targets. The whole House would be behind the Government if the Minister could demonstrate that tonight.

15:30

[Richard Fuller (Bedford) (Con)]

It is always a great pleasure to follow the Chair of the Select Committee on which I am proud to serve, the hon. Member for Hartlepool (Mr Wright), who gave an interesting speech with a fair balance of criticism and positive views. It was in contrast to the speech from the Opposition Front-Bench spokesman, the hon. Member for Sefton Central (Bill Esterson), which in both content and delivery reminded me of the Brezhnev era with its catalogue of unremitting misery. I shall spare the blushes of the Chair of the Business, Innovation and Skills Committee and just say that unremitting misery is clearly what one gets with socialism, which is why this country has decisively and continuously rejected it.

I shall add to the positive views we have heard by making some comments of my own. I do this with some humility. We are debating some extremely important matters. The Chair of the Select Committee must be embarrassed that he has only two Labour colleagues in the Chamber, including the Whip, who is supposed to get people into the Chamber to take part in debates. Let us hope that as the debate progresses, we see a little more commitment from the Labour party to the entrepreneurs, the small businesses and the wealth creators in our country.

As the hon. Member for Dundee East (Stewart Hosie) rightly pointed out when opening the debate, we have to understand Government policy and the matters we are debating today in the context of long-standing issues. We should recognise that in the global economy we are going through a period of substantial overcapacity in production and the transition of some major economies from a production to a consumption sector. That will have an impact on the ability of companies everywhere in the world to export. We have reached a point where—we may disagree on this—the British Government and the British economy have to start living within our means, which has been summed up by the Chancellor as seeking stability and security.

On trade, innovation and productivity, entrepreneurs and business people think about that every day. Low down their list of possible solutions to the issues facing them will be the words, “I had better go and ask my Member of Parliament.” The innovations that we make and the trade and exports that we do will be done by those individuals. I am a strong believer in free market capitalism and in entrepreneurship, and I want a Government and a Business Secretary who believe in that. One of the benefits of the election was a change in the leadership of the Department for Business, Innovation and Skills to someone who understands the motivations of the person who does not talk in billions and perhaps does not talk in millions, but is taking the first step and the first risk by investing their own money to start their business. Whether they are in Scotland, Bedford or other parts of the world, that is extremely important.

A number of hon. Members have talked about the persistent current account imbalance in the UK. We should bear in mind two things about that. First, if the issue has been there for so long and we have not all fallen apart, something about it must be hidden or going okay. Secondly—lies, damned lies and statistics—we must remember that trade statistics do not include value added. One of the important changes in global trade over the past 30 years has been a shift in the value added in various sectors. The statistics on that may paint a different picture.

[Stewart Hosie]

The hon. Gentleman is making a thoughtful speech, as ever, and much of what he says is interesting and potentially accurate. However, I am sure that even he would agree that it is worrying when the contribution to GDP growth from exports is continually marked down in forecast after forecast. While there may well be good, hidden things, the general trend is working against growth in the economy.

[Richard Fuller]

I was just about to agree entirely with what the hon. Gentleman was saying because I thought he was talking about forecasting accuracy—a topic on which, of course, the SNP has a very good track record. The issue of marking down does point to the frailty of setting targets. It is a fair criticism of all Governments that they find it very easy to set targets and then very difficult to meet some of them.

Let me talk about what the Government are doing. First, a number of hon. Members have referred to the very broad nature of the Government’s productivity plan. I see that plan as being more about how we implement things than the variety of outcomes they will have in terms of the overall impact on productivity.

Secondly, the Government’s policy on the living wage will provide a substantial increase in productivity, specifically labour productivity. The living wage is, in essence, a 38% pay increase for the lowest-paid workers in our country. I am sure that the Government and the OBR have factored into their statistics the implications for comparability with other pay rates within the economy. A Conservative Government pushing to increase the wages of some of our hardest-working but lowest-paid workers will have, in a market economy, a positive impact on improving labour productivity.

[Hannah Bardell (Livingston) (SNP)]

It is important to clarify that, as has been discussed previously in this House, the increase in the national minimum wage by the UK Government is not the same as the living wage that has been set by a number of independent bodies. Conservative Members must recognise that.

[Richard Fuller]

The hon. Lady is of course factually correct, but unfortunately that is like having a beautiful sunny day where someone consistently wants to put a cloud on the chart. This is a major and very significant change in the British economy. We should all be looking to the businesses that now have to pay the increase in wages to ensure that they are able to do so without it leading to unemployment. If we could co-ordinate our efforts around that, then, as she rightly says, we can think about the other level that we should move to. Let us join together, support what the Government have done, make sure that our businesses can deal with it, and then look to the next stage. I think there is common agreement across this House that the disparities have gone too far and now we are doing something about it.

The squeeze in the public sector is identifying new ways to improve productivity. We do not talk enough about that positive impact on the economy. Personally, I would be happy if the Secretary of State had accepted a larger reduction in the Department’s budget in doing his bit to get the deficit down, but I do understand that perhaps he is holding something back for later. Another positive on productivity is that the Government are focusing on the sharing economy, which our Committee is also considering.

On innovation, I am very pleased that the Minister said she would talk to the Treasury about looking at new ways in which tax policy can support equity investment in private companies, particularly involving individual savings accounts, as proposed in the excellent “High Growth Small Business” report launched by the hon. Member for Hartlepool.

May I tell the Department that I took to the previous Secretary of State the idea of a Bedford business fund? The idea is that people who care about a community—in this case, my constituency of Bedford—could put money into a fund to support the growth of businesses there. We do not have the advantages of Milton Keynes, Cambridge or Northampton, which have large businesses or science parks; we have to grow our own small businesses to create prosperity in our community. The idea of having a business fund in which people can invest tax-efficiently to grow businesses in their community could not just be followed in Bedford, but replicated across the country. I ask the Business Secretary to look at that again.

Building on the success of the Bedford business fund and having, happily, been re-elected in May, I am taking forward the idea of a Bedford community business school. In conjunction with Bedford College, there will be a series of courses over four weeks. Anyone in the community who is interested in starting a business can learn about public relations and marketing, and about accountancy and getting finance from business. Again, community business schools are a good idea that could be replicated across the country.

I want to make some points about the Department. I have already spoken about the potential for further reductions in its budget. I know that the Minister is a little more fond than I am of spending taxpayers’ money, but she is a true Tory and will look for efficiencies wherever she can. One thing we hear constantly from business is: “The Government do a lot of stuff, but where do I start.” Decluttering and providing some focus for what the Department does would be helpful.

May I make one specific suggestion? I understand that with the Treasury, through Her Majesty’s Revenue and Customs, people will be able to log on and see their own tax accounts. Why is it not possible with the Department for Business, Innovation and Skills for a company, with a company tax identification number, to be able to log on to a website and see in one place all possible ideas that are suitable for the business, tailored to the specific interests of the company? Through the tax identification number, the Department will know whether it is a large or a small company and what sector it works in. With today’s technology, the Department should therefore be able to provide, up front and quickly, the Government measures that are available to support them. On deregulation, the issue for many companies is not how much money is saved, but how much time is saved.

[Anna Soubry]

I find it amusing that my hon. Friend is now encouraging me to spend taxpayers’ money on such a service. It sounds like a great idea, but does he agree that the private sector could do it even better, particularly for small businesses? In effect, the website would be a one-stop shop where they could access all the various forms of support available to them. We do not need to use taxpayers’ money to achieve that.

[Richard Fuller]

The Minister is somewhat ingenious in suggesting that I want taxpayers’ money to be spent on such a website. The issue is not about the money, but about the access to the Department’s information, which is of course privileged information within the Government. If the Minister is today committing herself to force the Department to deal with private sector companies wishing to create such an access portal and giving them free rein to do so, I am sure private capital will flood in. However, that will require a commitment and it will require access, which is her decision, not mine.

[Anna Soubry]

I will think about the idea, because it has many attractions, although there may be data protection considerations. Why do we not agree to meet to have such a discussion and see what we can achieve?

[Richard Fuller]

I am looking forward to the Minister coming back to the House with a recommendation, and I will of course be happy to meet her when she has that recommendation. [Interruption.] People may say that is unfair, but the truth is that this is a very positive initiative. The one thing we know about the Minister is that when she sees a problem to be tackled, she goes for it, and heaven help anyone who stands in her way. I am highlighting the fact that this is an opportunity for her. She is the right person to go for it, and I will of course encourage and support her all the way.

The most important thing highlighted by the motion—unfortunately, I do not support it—is that SNP Members are bringing forward ideas on some of the most important issues affecting the wellbeing of our country. Even though Members of Parliament may be low on the list of people entrepreneurs want to call to get answers, SNP Members, as well as others who have spoken, have done a service to the House and I commend them for it.

15:44

[George Kerevan (East Lothian) (SNP)]

The last six years have seen an amazing deterioration in Britain’s external trading position. The purpose of this debate is simply to get on the record how bad it is and to encourage the Government to do something about it.

The Government’s default position is to say, “Well, there’s been a global recession” and, “Our biggest trading partner is in the EU so we were bound to lose some traction in the markets.” The point is that in the six years since the Government came to power, world exports have increased by 30%. The world market for sales has grown extensively. If we have lost market traction in that situation, what will we do if the global economy starts to contract overall?

Normally, when there is a recession in domestic demand, a country’s industry is forced to export. Strangely enough, therefore, the core eurozone countries that suffered the worst from the euro crisis have done well in exporting. They had nowhere else to go, so they had to export. Spain and Italy have doubled their exports since 2010. Ireland, which had a catastrophic fiscal implosion, is selling more in exports than ever before in its history.

The point that we are trying to make to the Government is that their insouciance and their pretence that everything is all right in the international sector belies the fact that in the six-year period when they should have been concentrating on turning around British exports, increasing them and grabbing a bigger market share, they have failed totally. They keep putting it off. They keep thinking, “Well, we’ll have another paper plan and it will get better.”

If we look at the numbers, which have been repeated in a number of speeches, in 2014—the last year for which we have the full figures—the UK current account deficit came to 5.1% of GDP. The hon. Member for Bedford (Richard Fuller) asked whether that mattered, but if a country runs a current account deficit, it has to fill it somehow. It has to either borrow foreign currency from other countries or sell its assets into the ownership of other countries. It is no surprise, therefore, that large chunks of British industry and the British property market are owned abroad. The Government’s obsession with trying to cure their own fiscal deficit has only resulted in the deficit being transferred to somebody else.

Everybody knows that when a country’s current account deficit hits something like 5% or more of its GDP, the warning signs flash up in marketplaces all over the world. It is unsustainable. If a country runs that for two, three or four years, a quarter of its GDP will be in hock. We cannot continue to do that. In normal circumstances, the UK has typically run a current account deficit, but at a tiny fraction of its GDP. In 2014, the UK’s current account deficit had the worst performance in peacetime. That is the problem that the Government simply refuse to recognise.

Far from our economy being rebalanced towards manufacturing in order to export more, the numbers on that are just as bad. Let us take the total production data for the UK and strip out the most important components. UK manufacturing output is now less in value than it was in 2000. During the last 16 years, Germany has managed to increase its manufacturing output by that definition by 22%. It would be reasonable to say that we are almost back to a second wave of deindustrialisation. A lot of that has happened since 2010, although it goes back a little further. In fact, UK manufacturing output is barely ahead of where it was in 1990, so we have had a generation of marking time.

Over the last six years there was no national emergency and something could have been done, but the Chancellor did not focus on rebalancing the economy as he said he would. In 2012, he belatedly came up with a target—he is good at making targets—to double exports by the end of the decade. That was a ridiculous promise then, as it is now. If Government Members would just say, “Okay, let’s lay that target aside and concentrate on the practical nuts and bolts of expanding our exports”, we might move forward, but as long as the Chancellor comes up with these fancy proposals and does not deliver, Opposition Members can reasonably say, “You are not serious.”

[Jeremy Quin]

What nuts and bolts does the hon. Gentleman think are missing from the Government’s package at the moment? He is long on rhetoric about the shape of our export performance—I can understand that—but the Government have done a huge amount to support those exporters, and we have been languishing in the depths of a European-wide recession.

[George Kerevan]

I take the hon. Gentleman’s general point. I do not gainsay a number of the micro-decisions that the Government have taken, but we are not seeing the wood for the trees. Let us understand why we cannot get more investment into the manufacturing industry, and why the whole tenor of the economy is anti-export. It goes to the heart of how the Chancellor has conceived his job. He tells us that we have growth, but where has that growth come from in the past six years? It has come from pumping up domestic consumption, not from investment or selling abroad. Where does that extra consumption come from? Does it come from wages? There has been some wage growth in the past few years, but in the most recent statistics, pay growth has slumped to its lowest rate in two years. The growth is coming not from pay but from borrowing.

Let us consider the latest consumer borrowing figures. We do not have to go back a long way—let’s look at what is happening now. Consumer borrowing on credit cards and overdrafts is expanding at its fastest rate since the financial crisis. Unsecured consumer credit was up by 8.3% in November—consumers borrowed an extra £1.5 billion of unsecured credit in November alone in the run-up to Christmas. While we are facing a potential rise in interest rates, we have merely returned to unsustainable consumer debt in order to carry growth forward into 2016. Yes, there has been growth, but it has come from borrowing. All that the Government have done is to transfer a fiscal deficit from the public sector to private individuals who are even less able to bear it.

[David Rutley]

I understand the point that the hon. Gentleman is trying to make, but it is too strong to say that Government policy is anti-export. That is not the case. The Government have been trying to navigate their way through a difficult economic situation, as I am sure the hon. Member for Dundee East (Stewart Hosie) would agree. Being anti-export is not the intention, and the hon. Gentleman is overstating his case.

[George Kerevan]

I am glad that we have moved on from me being wrong to me merely overstating the case—we are making progress. I repeat: in the depth of a crisis such as this, we will move on from unsustainable debt by moving towards export-led growth. That is what some of the countries that suffered worst in the recession and from the crisis with the euro have done. We have not even begun to do that, and if we do only one thing today and persuade Government Members that that is the case, we might have made progress.

[Kwasi Kwarteng]

The hon. Gentleman makes some interesting points. Does he recognise that those countries have had far more severe fiscal consolidations that we have had in Britain?

[George Kerevan]

I do—that was my point. However, Italy, Spain and Ireland have still managed to double their exports, which is the one thing that the Chancellor said he wanted to do but has not yet even begun.

Why has the Chancellor not been able to rebalance the economy? What has gone wrong? In truth, although previous Chancellors began this, under this Chancellor Britain has a taxation system that favours investment in physical property, rather than long-term investment in manufacturing. It has continued to have a banking and financial system that prioritises gambling—to use an extreme word—money, and foreign exchange markets, rather than supporting manufacturing and innovation.

Let me give Members an example that goes to the heart of the matter. Britain’s premier engineering company is Rolls-Royce, a company we would need to rely on as our flagship if we were to rebalance the economy towards manufacturing and exports. Let us look at the tragic history of Rolls-Royce in the past two years. Just over a year ago, Rolls-Royce sold off its gas turbine business to Siemens for £1 billion. Gas turbines, by the way, are the third largest export sector in UK manufacturing. What did Rolls-Royce do with the £1 billion? Did it invest it in a new wave of innovation? Did it invest it in new technology? Did it do more research? No. The nature of the fiscal taxation system, reinforced by cuts to corporation tax, meant it was easier for Rolls-Royce management to use that £1 billion to buy back its shares.

I am not in favour of raising corporation tax—I think fiscal incentives are good for industry—but the Chancellor continued to cut corporation tax when he knew that most of the money from many companies would actually go on share buy-backs. Rolls-Royce, by dint of buying back its own shares, pushed its share price to something like £10 in the early part of last year. Where is the share price now? It is half that. Our premier engineering company is now in a disastrous commercial state. In fact, the halving of the share price means that the shareholder value of the £1 billion it received from selling off its key turbine business to Siemens has been wiped out.

Meanwhile, the market has caught up with Rolls-Royce. Its key sales of engines for large, wide-bodied jets have started to dry up. The market has moved on to new jet engines for narrower-bodied jets. The Americans are cleaning up because they had the product ready to go into that market. Rolls-Royce is now in serious trouble. In fact, there is now talk in the City of it being taken over.

[Anna Soubry]

Does the hon. Gentleman agree it is very important that in this House we do not talk down one of the most outstanding British success stories? Given that he has already given the House incorrect information about the moving on of the head of UK Trade & Investment, will he please agree that it is very important that the information he continues to put on the record is accurate? It has not been so far. Will he agree to withdraw his comments about Dominic Jermey and his moving on to the Foreign and Commonwealth Office?

[George Kerevan]

I will continue with what I was saying. I am not talking down anyone. I am trying to get the Government to admit there is something seriously wrong.

[Anna Soubry]

Will the hon. Gentleman give way?

[George Kerevan]

No, I will continue.

[Anna Soubry]

On a point of order, Madam Deputy Speaker. Is it not important for all Members, when they make a mistake, to correct that mistake so the record can show when they have given an inaccurate account to this House, especially about someone who does not have the ability to speak in this place? If somebody else gives a contrary view based on sound information, is it not beholden on the Member to accept it? We all make mistakes. An hon. Member who has made a mistake should just accept it.

[Madam Deputy Speaker (Natascha Engel)]

I think the right hon. Lady knows it is entirely up to the hon. Member who made the statement whether he wishes to withdraw it or correct the record. She has herself now twice corrected the record, so we shall move on.

[George Kerevan]

Thank you, Madam Deputy Speaker. I am always willing to bow to the Chair. If ever I am found to have made erroneous remarks in this Chamber, I will always withdraw them. We can come back to that.

The Minister intervened because she wishes to continue to say that those of us who raise serious points about our poor economic performance are talking down British industry. Far from it. I am passionate about British industry. I want industry to grow. It is the fact that the Government are not doing their job that is the problem. I have a profound respect for Rolls-Royce, its history and what it has contributed to this country. During world war two, Rolls-Royce’s main aero engineering factory was in Glasgow. The engines that powered the Spitfires that saved western Europe and democracy in 1940 were produced in Glasgow by Rolls-Royce. I am second to none in my admiration for the company and its engineering history, but I am worried that we are now talking about it being taken over by American aerospace companies because of the situation it is in. I am now worried that the Government may have to consider taking over parts of Rolls-Royce—this has been a matter of press comment in recent weeks—in particular its nuclear engineering division. If anything went wrong and, God forbid, Rolls-Royce were taken over by a foreign company, the Government would be talking about nationalising bits of the company. That is quite a serious pass to have come to.

[Stephen Kinnock (Aberavon) (Lab)]

The hon. Gentleman is making an interesting and important point about foreign takeovers, particularly hostile takeovers. One of the important ones recently was Pfizer’s attempt to take over AstraZeneca. I am sure he agrees that that case concluded in absolutely the right way, by protecting one of the great British assets and enabling it to continue its long-term strategies of investment in innovation and technology. Does he agree that this issue should perhaps be seen as a case for reform of the Companies Act 2006, so that we see far more long-termism built into the UK’s corporate culture and a move towards investing in innovation, R and D, and skills? If we do not do that, we will never change to a more sustainable business model.

[George Kerevan]

I could not agree with the hon. Gentleman more. One of the things that has led to the short-termism over the last 20 to 30 years is precisely the fact that companies are not in a position to think long term themselves, because the way that the City of London and the casino economy work means that their shares are always in play. We need company reform to allow investment to take place without it being subject to shares being shorted and without share buyback activity by Rolls-Royce or other companies when the money should be going into real investment.

[Neil Carmichael]

This is an interesting issue, and the hon. Gentleman is making an important point about long-term investment. Of course, it is already on the agenda, not least in the Bank of England, where Andy Haldane, the chief economist, has raised the issue of long-term investment, contract law and the need to effectively encourage firms to think not just about shareholding, but about long-term investment. Does the hon. Gentleman agree that that is the kind of thing we need to encourage smaller firms to become bigger firms, especially given the nature of the Mittelstand-type firms that we need to see in the manufacturing sector?

[George Kerevan]

I could not agree more that what is clearly missing from the UK industrial structure is those medium-sized Mittelstand companies that export and create a value chain, and instead we have a dumbbell shape, with a small number of very large companies and a large number of small companies. One of the reasons we have been unable to do that is because as companies grow to a certain level, they have consistently needed to sell out, usually to foreign ownership, in order to raise capital.

That brings me to another issue—I shall not be long, Madam Deputy Speaker—which the hon. Member for Bedford raised when he referred to the current account deficit. We have normally been able to fill the current account deficit, even though on a smaller basis, thanks to the financial remits coming in from assets owned by British companies or British citizens abroad outweighing the money from assets owned by foreign concerns leaving the UK. What has changed dramatically since 2010 under the auspices of the Government is the balance between the ownership of assets in the UK and the remit of funds abroad, and UK assets owned abroad and money coming back here. The total value of British-owned overseas assets since 2010 has slipped down to about £1.2 trillion. In that period, the value of UK assets held by foreigners has soared, from £1 trillion to £1.4 trillion. In other words, we are now a net debtor nation. What we own abroad is less than what is owned here, so the net outflow of money will mean in the balance that we cannot cover our current account deficit.

In the last year for which we have figures—2014—there was a bare surplus of £2 billion of positive foreign direct investment coming in versus money going out. That could go like snow off a dyke. That has led the Chancellor into what I think are dangerous grounds. Here we need to link up another aspect of financial wheeling and dealing in the UK with the need for manufacturing investment.

The fundamental way in which we have recently covered our current account deficit is via a huge inflow of money for buying up property in the UK and particularly in the City. Wealth investors have acquired about £100 billion-worth of property in London, using blind overseas companies in just the last six years. Since 2008, something like 28,000 individual purchases of homes, buildings and lands in the capital have been made by corporate structures registered in external tax havens. One in 10 properties in Westminster is owned by an offshore firm. We are funding our current trade deficit by allowing a vast influx of cash from offshore companies coming in to buy property here, yet in many cases we do not know the ownership or where the money has come from. The Chancellor has now developed into an art form the attempt to find ways to get money in to cover the current account deficit, and it is partly connected with his new cunning plan for China.

[Kwasi Kwarteng]

The hon. Gentleman makes a good point about inward investment and foreign capital acquiring assets. Is he proposing some form of capital control? Does he have any suggestions about how to meet the problem that he has identified?

[George Kerevan]

I might start by ensuring that we actually know who the beneficial owner is when anybody buys property in the UK. That might resolve part of the problem—we could find that some of the money coming in previously no longer continues because people do not want to reveal its source.

The Chancellor’s latest wheeze is to open the door to Chinese cash. China has no track record of building nuclear power plants, yet the Chancellor has offered massive subsidies over the next 20 years in the hope of encouraging Chinese state companies to invest in our nuclear power industry. So much for encouraging British manufacturing! I believe that the Chancellor’s cunning plan has little to do with energy security, and everything to do with getting China to cover Britain’s disastrous current account deficit. With Chinese money coming in, foreign currency will stay here and cover the deficit. Unfortunately, China is already eating into its capital reserves in a desperate bid to shore up its own currency and stop its rocky banks from imploding. What I think we are likely to see in the next five or six years is running out of the foreign currency to fill the trade gap, which will have big implications for interest rates and our trade surplus.

What we really need is an industrial policy, which my hon. Friends have mentioned, to revive domestic manufacturing. Instead, the Chancellor has slashed the budget for the Department for Business, Innovation and Skills by 17% in the autumn statement. I chide the Minister on the fact that the budget for UK Trade & Investment is being cut over the next four years by £42 million. Yes, it is going up marginally this year, and if the Minister is selective in choosing which years to look to for the budget, she can pretend that there has been an increase. Over the four-year period, however, UKTI funding announced by the Chancellor in the autumn statement will go down by £42 million.

How can this Government pretend to support exports and promise to double them when they are cutting the budget of the very agency we rely on to liaise with our companies to assist our exports? The Chancellor promised to double exports, and he has form in making similar promises about eliminating the annual deficit—but he did not keep them. This Chancellor has no clothes; if he had, he would have had to import them.

[Several hon. Members rose—]

[Madam Deputy Speaker (Natascha Engel)]

Order. We have plenty of time, so I shall not apply a time limit, but 13 more Members are seeking to catch my eye. That works out at about 10 to 12 minutes per speaker. I would be grateful if Members could keep within those informal limits.

16:09

[Kwasi Kwarteng (Spelthorne) (Con)]

I am happy to announce, Madam Deputy Speaker, that I shall not speak for 24 minutes, unlike the hon. Member for East Lothian (George Kerevan). I am, however, very pleased to follow the hon. Gentleman, who made a very interesting speech. You will be glad to know, Madam Deputy Speaker, that I did not agree with everything he said. I thought that some aspects of his speech were wrong. Although his points were made in the right spirit, some of his conclusions were wrong.

Let me begin by registering my own interest in the debate. My constituency is a hub of local business and private enterprise. Indeed, Staines was the No. 1 area for business start-ups last year, and we wish to continue that tradition and record of achievement.

During this interesting and important debate, a number of Members have spoken about the need for an industrial policy or strategy, without, in my view, spelling out the details of what such a strategy would be. Yes, it is true that we could be doing better with exports, and it is certainly true that we could be increasing, or trying to increase, our productivity; but the general remarks that Members have made have not been fleshed out with concrete proposals. I make one exception: my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) did come up with some concrete suggestions and interesting points about the Government’s role in UK Trade & Investment, and about the function of UKTI.

What I want to focus on, however, is the general economic context. The hon. Member for East Lothian said that, across the eurozone, the current account figures had improved. He suggested that that was largely a consequence of increased exports, but those of us who followed what went on in the eurozone will know that those countries had drastic fiscal consolidations, in the course of which they killed off domestic demand. They tipped their economies into recession, and, as everyone knows, if an economy is in recession, imports will fall considerably.

[Jeremy Quin]

Does my hon. Friend, like me, welcome the fact that 2 million extra jobs have been created in this country, whereas—as we heard from the hon. Member for East Lothian (George Kerevan)—there are record levels of youth unemployment elsewhere in the European Union?

[Kwasi Kwarteng]

I take that intervention in the spirit in which it was made. My hon. Friend makes a very good point.

It is not right or fair to argue that our friends in the eurozone have succeeded where we have failed. Their success, in terms of the current account figures, is actually a measure of failure. It is a measure of the fact that their domestic demand was completely crushed by very tight fiscal consolidation measures. Notwithstanding the political rhetoric, we have avoided much of the very severe fiscal consolidation that those countries have experienced.

[Sammy Wilson]

Does the hon. Gentleman accept that we have suffered partly because of that? Exports to Europe have fallen, while our growing economy has sucked in imports from the countries where domestic demand has been suppressed.

[Kwasi Kwarteng]

That is an excellent point. It is clear that if domestic demand in those countries has been sharply contracting, their capacity and ability to buy our exports has diminished commensurably, and that has unquestionably made life much more difficult for our exporters. I believe, however, that when it comes to British exports and our trade missions, the most fundamental thing that any exporter or manufacturing concern will seek is a degree of economic stability in the home market, along with a degree of visibility and a degree of responsibility on the part of the Government to ensure that there is some economic stability, and that our problems are being dealt with in respect of such matters as fiscal consolidation and deficits.

Those who speak to businesses, as I do in my constituency and as I am sure many other Members do in theirs, will hear from them that, broadly, the Government’s policy, although not perfect, has been conducive to a degree of economic stability. Policies such as those on apprenticeships and the significant reduction in corporation tax have made life easier, or more attractive, for exporters and business-people in general. When we tackle a debate of this nature, it is very difficult to divorce the issues of trade, the current account and innovation from the general economic strategy the Government are pursuing. It is clear that although many challenges lie ahead a large section of people feel comfortable that the Government are taking the right approach to the economic management of this country. That is an important point to make at the beginning.

As I have noticed in this debate, we talk about abstract concepts such as exports and trade deficits as though we were living in the 1960s or earlier. This language evolved in a period when Britain was the industrial motor of the world—the factory of the world—and it was very much a Victorian model of the economy, which arguably persisted until 1939. But in the economy of 2016 it is very difficult to disaggregate exports in goods from exports in services and from hybrid exported products that are manufactured but have a degree of service element to them. The hon. Member for Hartlepool (Mr Wright) referred to the trade deficits of the 1960s which he had learned from his reading brought Governments down. Every day in the 1960s people looked at the trade figures; that was the big number. The model of the economy today, however, is completely different from that of 1967 or 1970, yet many of our debates are couched in the language, and reflect the concerns, of a bygone era. It has been almost 50 years since the 1967 devaluation and it is crazy for us to conduct this debate as if nothing has happened in the last 50 years.

We should consider the British economy—how wealth is created and distributed, the role of exports, the role of manufacturing. It is true that manufacturing has diminished, for instance, but I would argue that that is in large part a function of the evolving nature of the British economy. The economic history of Britain shows we have gone through lots of different phases. The phase of industry in which we manufactured huge amounts has gone, sadly.

The hon. Member for Sefton Central (Bill Esterson) mentioned the steel industry and said how terrible it was that the Government had not subsidised and protected it. Wolfgang Eder is head of Worldsteel. Current capacity in Europe is about 200 million tonnes, and he says that for it to be sustainable it should be halved. There is overcapacity among European steelmakers. The idea that we can somehow subsidise things endlessly on an unproductive basis is simply wrong.

[Stephen Kinnock]

Nobody is asking for subsidies. The UK steel industry is asking for a level playing field. We are seeing the massive dumping of heavily subsidised Chinese steel—70% of Chinese steelmakers are state owned—dragging down the price of steel and crippling the British steel industry. This is not about subsidies but about smart regulation, proactive Government intervention and taking action and answering questions afterwards. I am seeking reassurances that the Government will not support China’s application for market economy status, because that would completely undermine any anti-dumping efforts. This is about proactive regulation and intervention, not subsidies.

[Kwasi Kwarteng]

I accept the hon. Gentleman’s intervention, and he makes a good point about China’s export practices, but I was making the general point that the steel industry believes there is overcapacity in Europe. This is not a British but a European problem. No Government action in the world will push water uphill or militate against that broad trend.

I digress from my main point. This has been a helpful and interesting debate, but my main concern is that we are not taking into account the different nature of the British economy. In terms of the phraseology, the context of the debate, and the words in the motion, we are reflecting circumstances that have not existed for two generations.

[Hannah Bardell]

On the steel and indeed other manufacturing industries, does the hon. Gentleman not recognise there is a place for protecting high-end, highly skilled manufacturing, particularly in the steel industry, for which there is a clear market?

[Kwasi Kwarteng]

There is always a case for Government supporting industry by setting the table, by setting the context—making sure the economic management is good and the regulation tolerable. I am reminded of the phrase of Adam Smith—I mention him not simply because he was Scottish but because he made some good points—about easy taxes and a tolerable administration of justice. These are the things Governments can affect. It is difficult, however, for Governments directly to subsidise individual industries exposed to the vagaries of international markets and massive price fluctuations.

This has been a valuable debate with some very good speeches, but I suggest we think more about how the British economy has evolved, instead of using terms that date from the 1960s and before, when the structure of British industry was very different.

16:23

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am delighted to follow the hon. Member for Spelthorne (Kwasi Kwarteng), particularly because he said this debate was about a bygone age. In talking about innovation, I intend to bring things a wee bit further up to date by talking about the situation not only today, tomorrow or in four years’ time, but in 10 or 20 years’ time. In doing so, I hope that a ray of light will fall upon the Government Benches and that the scales will fall and tip in favour of innovation.

The Government have underplayed innovation. It is about imagination, vision and determination—words often applied to leaders and leadership. We all agree that innovation is a good thing. I have heard many times people describe the digital economy as one of the key tenets of innovation. Members have talked about the opportunities throughout the nations of the UK for small and medium-sized enterprises to help us grow and develop the economy and about the contribution they already make across rural and urban areas. New technology is available to assist businesses here and now, including the opportunities offered by superfast computing. That involves wiring together many high-speed computers to perform in just minutes actions that would normally take days or even weeks, and companies can get hold of that technology. An example of its use would be rendering an animation for industry. That kind of technology is available now but its availability is limited because companies need to be able to connect to it.

The new levels of hand-held technology available to business and industry today can transform not only business and the economy but public services, allowing us to invest more in providing better services for people. When I was a boy, I used to watch a television programme on the BBC called “Tomorrow’s World”. It was about the things that were going to happen tomorrow, but things are moving faster now. The developments that we are talking about are already here. An example is driverless car technology, which could transform the way in which we use our roads. It could transform aspects of industry and of rural connectivity. Suddenly we have an opportunity to connect people in a different way, but that innovation is not being discussed enough by this Government or by Members of this House in general. These things are available to us here and now.

Let us imagine one side benefit of looking at these issues properly. There is an opportunity for driverless technology to be used across the nations of the UK. An individual road traffic fatality costs £1 million or more— leaving aside the tragic loss of human life—but we could avoid that kind of thing by deploying new technology. We might then start to see the benefits of embracing such technology.

Members might also have heard about the internet of things. It is a real thing. We are now connecting appliances, apparatus and machinery over great distances to enable them to operate automatically. Also, 3D printers are now able to do mind-boggling things that would not have been considered possible just a few years ago. We have the opportunity to revolutionise our cities through the proper embracing of smart city technology. We have a golden opportunity vastly to reduce emissions to help our position on carbon use.

New technologies can spur growth and create great benefits for the economy. They can revolutionise and democratise things for us, including teaching and learning, allowing greater access to the subjects that are currently available only to the few. They can grow high-quality jobs and provide opportunities for people who are still locked out. These include opportunities for our young people, for young girls and for women to get into industries that they have traditionally been unable to get into—such as science, engineering, technology and IT. As my hon. Friend the Member for Dundee East (Stewart Hosie) said earlier, these new technologies can provide opportunities for inclusive growth. In 2013, the digital economy was worth £11 billion in Scotland alone. That is a substantial business.

Entrepreneurs are already leveraging digital technologies to create successful businesses and significant economic impacts, but that number could be increased. This is especially true given that small businesses grow two or three times faster and create new jobs when they embrace new digital technologies. The hon. Member for Bedford (Richard Fuller), who is not in his place just now, talked about encouraging growth in small businesses. We can encourage such growth in rural areas and places that are difficult to get to by helping them to embrace digital technologies. With the aid of technology, small businesses can also go global from day one, reaching overseas markets and talented potential employees.

Those opportunities are there to be embraced, but let us consider some of the barriers that are being created by the UK Government. We heard again from my hon. Friend the Member for Dundee East about the head of the small business operation at KPMG saying that we are talking no longer about grants for innovation, but about loans. That is a barrier to success, although I will not repeat the many arguments that have been well made in this House on that already.

Barriers also arise from the technology that is available to people across the nations of the UK at the moment. I welcome a commitment to universal broadband, as that is a good thing and it should be embraced fully. What is being proposed by the UK Government at the moment, however, is at best—I am being very kind here—a bare minimum for the future. A speed of 10 megabits per second is technology from a bygone age now and it is not good enough for communities in the future, as we see particularly when we look in detail at the plans. A lot of the bridging is going to be done by satellite technology, which is good where there is nothing else, but it is affected by the weather; it has a high latency potential, it suffers from poor uploads; and, in general, people can get up to—that is the key term—only 6 megabits per second with it. That is what is being proposed for rural areas. The costs of satellite broadband also present a considerable barrier, as people are looking at £30 to £100 a month for these contracts in order to take advantage of it.

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

The hon. Gentleman is discussing businesses in rural areas. Does he agree that many small and medium-sized enterprises throughout the UK that have relocated from town and city centres to rural areas on a cost basis now find themselves disadvantaged, precisely on the broadband access grounds he talks about? That needs to be addressed by the Government.

[Drew Hendry]

I am very grateful for the hon. Gentleman’s intervention, as he hits on a key point. There is a vibrant, intelligent, work-ready employee base in rural areas, and people there are ready to take advantage of opportunities presented by employers. He rightly describes, however, what people may suddenly find when they move to a rural area, and I have some personal experience of this. When I was working in Windsor, lots of things were available to me by way of technology, but when I then moved to the highlands, I suddenly thought, “Ah, I might have made a mistake here.” I am glad to say that I did not make a mistake and we worked through it, although at some expense. Broadband access is a real barrier to people being able to set up businesses in rural areas. If the UK Government want to take a view for the future, they have to consider people across all parts of the regions of the nations of the UK and make sure that people in rural areas have the same opportunities to engage in business as those in urban areas.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Does my hon. Friend agree that we need not only a much higher specification for the universal broadband commitment, but provision of a better service level by broadband suppliers so that a customer gets what they know they are signing up to and so that once they have signed up they continue to get it? Customers sometimes suffer a drop-off when other people connect without even being aware of it or how they go about dealing with it. Robust service level agreement provisions must be put in place, too.

[Drew Hendry]

I thank my hon. Friend for that intervention, and I completely agree that the service level is important. I am pleased that the UK Government seem to have accepted that, and I believe they will be making sure that contracts are able to be changed or cancelled if the service does not live up to what was promised. I am also pleased that they have accepted my suggestion that that should also apply to mobile phone contracts, and let me give due notice now to the Minister that I will be chasing up on that shortly. I am grateful that they have accepted my point that mobile phone contracts should as quickly as possible come under the same terms.

I wish briefly to discuss mobile signals, because one opportunity for all the nations of the UK is for universal coverage to be undertaken properly in terms of forthcoming technology, specifically 5G. The 5G spectrum is due to be launched in around 2020. Now this is very important. We will hear Ministers and others say, “Oh, but it’s coming in the future. We can’t deal with it now because it is not yet real.” The same was said about the 4G spectrum when it was launched, and the same was also said about the 3G and 2G spectrums when they were launched, and yet the failures continue. It has been a failure for business and for people on 4G, 3G and 2G across the piece. There are still parts of the UK that do not have any mobile signal at all. Mobile telephone companies could have been challenged on that during the licensing regime. The UK Treasury has made billions of pounds out of these licences. It is not beyond the wit of the Government to look at those things and ensure that, in future, when the contracts come up and when they are applying the licences, they insist that there is full coverage not only for urban areas, but for rural areas as well. Not dealing with those issues leads to an enduring digital divide.

There is also a bigger threat to these isles from cyber-security failures than there is from nuclear threat, and yet we are not encouraging enough people, particularly young people, to get into the industry to ensure that we are in a position to put our defences in place. The living wage, which has been mentioned in this Chamber a few times today, actively disadvantages young people. It is an absolute scandal that we treat our young people with such contempt and that we do not encourage them to be part of the overall journey to economic success. Such encouragement should be given to all our people regardless of where they live in this country. They should feel involved and part of the culture. We need to stimulate, guide and help them to get involved in new technology and in other industries such as engineering and science. We need to ensure that they are involved in life sciences so that they can get jobs that will be more worth while to them and their families in the future. We need that competitive edge and to be able to innovate into the future. Such encouragement is particularly pertinent for young girls and women who, in the 21st century, still do not have the same opportunity to get into those industries. We need to work hard across the piece to innovate and to ensure that we challenge that behaviour.

In Scotland, the curriculum for excellence is encouraging young people from primary school through to secondary school to look at outcomes of education in the round. I am pleased to be part of the Highland Science Skills Academy, which is directly challenging the norm. It is working with private companies, Government agencies such as Highlands and Islands Enterprise, The Highland Council, the NHS and other bodies to encourage young people, particularly girls and young women, to understand and to be able to interact with these skills. It is that kind of innovation that we must put in place to ensure that we are embracing the digital economy and allowing people to take part in it.

I will finish on this point. People are embracing the digital economy, and they are using the technology now. They are grasping the opportunities in their business and they must have support. The world is moving ahead. There is a choice: we can follow or we can lead. I always remember the words, “Where are all those people going because I need to lead them?” I do not know where I heard them, but they remind me of the UK Government.

16:38

[David Rutley (Macclesfield) (Con)]

It is an honour to participate in this debate and to follow the great speeches of my hon. Friends the Member for Spelthorne (Kwasi Kwarteng) and for Bedford (Richard Fuller), who is a great friend. It is also an honour to follow the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), who gave a thoughtful speech on innovation, and that is a fact. I had better inform the House that two very important exports from Macclesfield are helping his local economy. Two players from Macclesfield Town football club are now playing for Inverness Caledonian Thistle and helping them in the Scottish premier league—good luck to them.

This has been a very thoughtful and at times serious debate, with passionate speeches by Members on both sides of the House. I congratulate the hon. Member for Dundee East (Stewart Hosie), with whom I served briefly on the Treasury Committee. He is a very thoughtful Member and is right to raise the subject. We have benefited from the debate. I also welcome the contribution of my right hon. Friend the Minister for Small Business, Industry and Enterprise, who brought to the debate her characteristic robustness and energy, which are absolutely needed for the work required.

Our long-term economic plan for Britain is right and fair. It provides opportunities for this country’s businesses and individuals for the years ahead. Ministers are not only ensuring that we continue to get our public finances in order, but protecting frontline services through the way in which funding is allocated. We are, of course, taking no chances with our national security or, for that matter, our national economic security. We have a clear plan not only to make sure that Britain once again lives within its means, but to deliver an economy that generates more means within which to live. Those two sides of the same coin are very important.

In the summer Budget debate, I noted the importance of rebalancing our books after Labour’s spendthrift years; of rebalancing incentives in favour of work; and of rebalancing economic geography towards a northern powerhouse. It is interesting that the Conservative Government in London are as committed to decentralising power away from Downing Street as the Scottish National party is to centralising power to Bute House, whether it relates to the police, fire services or further education.

[Drew Hendry]

Does the hon. Gentleman agree that the Scottish Government have done a fantastic thing this week by supplying £500,000 to encourage local communities to partake in participatory budgeting, thereby allowing them to make their own decisions? That is a real example of decentralisation. Similarly, the first thing the SNP Government did was remove ring-fencing for councils, to allow them to make their own decisions.

[David Rutley]

I am pleased to hear that the SNP is rectifying its trend towards centralisation and I give it credit for doing so.

[Alison Thewliss]

The hon. Gentleman might be interested in my experience of serving on the Strathclyde joint fire board. When we tried to raise local issues on the board, we were told it was not the time or the place to do so.

[David Rutley]

SNP Members may justify their position, but what we are committed to doing for this country is to decentralise. It is vital that we do that, because it will give further power to local communities to come up with their own solutions on a broader scale. I think that there are lessons for Scotland to learn from that—that is my opinion.

It is fundamental that we do that, because it will encourage economic growth and ensure higher rates of productivity and exporting, and, indeed, success in innovation, which the hon. Member for Inverness, Nairn, Badenoch and Strathspey was so keen to stress. If we do that, it will help us move on from those reckless years of boom and bust delivered by the Labour party.

To unlock that local dynamism, we are advancing important initiatives, including local economic partnerships, city regions and—this has been vital in the Macclesfield area—strategic deals between city and county, such as that involving Alderley Park, to turn the tide in favour of civic renewal and increase the rates of growth and economic activity across the country.

That will build on what we have already done to achieve record levels of employment in this country, to reform welfare and make sure that work pays, and to incentivise tens of thousands of households to transform their lives. That is what we want to do—we want to help people to transform their lives and get on their own two feet.

The Government are committed to getting the balance right and to getting the job done. That is why we have set challenging targets on exports and raising productivity. We are doing all we can to promote entrepreneurialism and to lower the barriers that for too long have stood in the way of people who want to set up their own businesses and move on with their lives.

As I have said several times in this Chamber, I believe that economic success and growth rest on the four Es: entrepreneurs, employers, exporters and, of course, employees. They all need to be given the opportunity to succeed in the important work they do. In order to have the enterprising economy that we need, we have to help in particular those who are seeking to fulfil those activities and roles for the first time. We are making progress in that area. For example, the new enterprise allowance has enabled thousands of people who were previously unemployed to get on to the rewarding path of self-employment and enterprise. I am especially pleased that the Department has taken forward an initiative with Julie Deane, the founder of the Cambridge Satchel Company, to review how we can help the self-employed. The move to self-employment is an undeniable trend in our labour market and Conservative Members are committed to helping the self-employed.

My hon. Friend—my great friend—the Member for Bedford highlighted key community initiatives such as the business school in Bedford. We were lucky enough to be at business school together, where we learned much. Great lessons can be learned in the community and, through our Make it Macclesfield organisation, we are privileged to have Enterprising Macclesfield, a community-led initiative that involves local businesses working together to help more businesses to succeed and flourish, and to get the advice that they need to move forward. If we are to crack down on the blockages that have led to social immobility in this country for too long, we need to help people to establish themselves in first-time employment, or to become first-time employers or, importantly, first-time exporters.

The hon. Member for Hartlepool (Mr Wright), the Chair of the BIS Committee, who is no longer in the Chamber, highlighted the deep cultural change that is required to get more businesses exporting. We are committed to addressing this deep-seated situation, which is why we have set such high targets. It is not always easy to get someone to do something for the first time, and those of us who have been involved in marketing know—I have first-hand experience—that that can be one of the hardest tasks. As we have heard, only one in five businesses exports anything, but the figure for Germany is one in four. We are behind countries such as Belgium and the Netherlands, so it is not just that we are being held back by Brussels bureaucracy, although that is the case too often. There are wider, deep-seated issues that we have to address. We therefore need to ensure that we get behind businesses and help them to learn how to crack new markets. We need to demystify the exports process, and that is a role not just for the Government, but for business.

There is no question but that we are playing our part by setting ambitious targets and taking the challenge of exports seriously. I welcome Lord Maude’s appointment to his key ministerial role because he has a great track record of taking forward a change agenda and getting the job done, which is exactly what we need for exports. The Treasury and BIS have taken great steps to de-risk the exports process. Last year, through UKTI’s exports work, more than 48,000 business were supported. The new first-time exporters initiative, which offers training and advice to businesses that really need it, will be vital in moving that work forward.

Export finance for smaller businesses has been improved and it is critical that we make it easier for businesses to pitch for high-value opportunities. UKTI should be providing not only information, but opportunities that businesses can hook into to ensure that UK plc has more success in export markets. I am pleased to note that UKTI has a new chief executive, Dr Catherine Raines, who is a neighbour of mine—I said that Macclesfield exports many good things. The focus on exports is improving significantly, and the “Exporting is GREAT” website identifies the good work that is done each day and provides the signposts that businesses need to succeed.

There is more that we need to do, however. People ask what we should do to help on exports, but the Prime Minister and the Chancellor are leading the way, not least through their trade missions to China. I am sure that my hon. Friend the Member for Gloucester (Richard Graham), the chair of the all-party group on China, welcomes—he will probably mention this in his speech—the phenomenal things that we are doing to make contacts, to help to add value and to win market share in countries that are sometimes difficult to get into. From a local perspective, I am very pleased to see the Chinese invest in Airport City Manchester. They have experience in that. When I went to China a couple of years ago, I found out that they had built 45 airports in the previous five years. They know what they are talking about and we can link in with not only their funding, but their experience.

[Richard Graham (Gloucester) (Con)]

It may be useful for hon. Members, including those from the SNP, to be aware that many of those new airports in China were designed by a great British company, Arup, led by the head of its airport and aviation sector, who is a Scotsman based in Edinburgh.

[David Rutley]

I am pleased to hear it—good things come from Scotland, as well as from Macclesfield. When I was in China I met representatives from Arup, which is doing phenomenal work. Again, we are in a global economy and the interactions that we have with the Chinese are vital.

Trade shows cannot be just about having a shop-window. They are an opportunity to initiate contacts, enabling businesses to find a way to seal the deal. UKTI’s role has to be even more proactive in this arena and help roll out the red carpet for businesses that are taking those risky decisions to move into new markets. We cannot focus solely on traditional export markets such as north America and Europe, which has been all too comfortable for businesses in the UK since the second world war. I was massively disappointed a couple of years ago when I held a UKTI conference, which was incredibly well supported in north-east Cheshire. UKTI did a tremendous job, but I said, “Let’s bring along representatives from China and from India to support this.” UKTI would not do that. I asked why not, and it said, “Because the businesses are so focused on the US and Germany.”

We have to shake things up. Government have a role to play and business has a role to play as well so that we have the right focus on emerging markets, as well as on traditional markets. We need a bit more of the buccaneering spirit that the Minister for Small Business, Industry and Enterprise has demonstrated in the Chamber today and throughout her ministerial career.

Like a falling tree, we might ask, “If help for businesses is available and only a few businesses hear about it, is it effective enough?” Communications do matter, not just Government-to-business communication, but business-to-business communication. We need a better way of communicating to businesses if we are to step up a gear and become better at exporting goods, just as we have shown the world that we can lead the way in exporting financial services. In services we have the leading role. That should point the way forward for the opportunity to export goods. Let us make sure that Ministers in BIS and across Government make an extra effort to get those banks that have been successful at exporting their services to help their customers in the UK become better exporters of goods. There is a leading role for those banks to play.

When we say that we need to do more, it is not just about what the Government do; it should include businesses as well. I know the Government have been doing a huge amount of work to encourage exports. We are leading the horses to water. I see prime-time TV ads promoting the benefits of exports. Those horses now need to drink and businesses need to take a lead in exporting.

We are a great trading nation, but we need to do more to reach our current export potential. By focusing on the needs of first-time exporters and spreading the lessons of our trading history across more businesses for a vibrant and noteworthy trading future, we can spread opportunity across the country and revitalise the old British trading spirit—can-do policies for a can-do generation in a can-do United Kingdom.

16:53

[Hannah Bardell (Livingston) (SNP)]

It is a huge pleasure to speak in a debate that is of such great importance to SNP Members and to our SNP Government. I am sorry that the numbers on the Labour Benches are so deficient, but I pay tribute to those who have been present since the beginning, those good souls who have stuck with us.

It is always difficult at this stage of a debate to produce new ideas. I shall focus on productivity, innovation and investment in the context of inclusiveness and equality, which have not been mentioned much from the Government Benches. My hon. Friend the Member for Dundee East (Stewart Hosie) spoke passionately of the work that the SNP Government have done in this arena and of the importance of productivity and inclusive growth in closing the trade deficit, and I would like to expand on that. I will also highlight the importance of equality, diversity and inclusiveness in any nation’s drive to be productive and innovative and to encourage investment.

Nobel laureate Professor Joseph Stiglitz, who is part of Scotland’s fiscal commission working group under its chairman, Crawford Beveridge, has said that

“countries which are more unequal do not…grow as well and are less stable…A concentration of income restricts economic growth by limiting the potential of people to contribute productively. At the same time inequality may restrict government investment in infrastructure, education, and technology.”

He points out that since 1975 the income gap has grown faster in the UK than in any other developed country, stating:

“Such patterns of inequality will continue to have a negative impact on growth and prosperity over the long-term.”

If we want to make the UK and its nations an attractive place to invest in and to export from, we must have a stable and equal society. Yet all too often the policies pursued by this Government point in the opposite direction. In contrast, the Scottish Government, with much more limited powers, are developing a more egalitarian economic model. Professor Stiglitz has praised this model, saying:

“Tackling inequality is the foremost challenge that many governments face. Scotland’s Economic Strategy leads the way in identifying the challenges and provides a strong vision for change.”

Meantime, the Conservative Government are pursuing policies that attack our fundamental freedoms and civil liberties and risk widening the gap between rich and poor and the gender pay gap while, worst of all, marginalising the most in need. Those policies come in the form of the repeal of the Human Rights Act 1998, the anti-worker Trade Union Bill, and welfare cuts that take us back to a Dickensian era. Ultimately, the Government are balancing their books on the backs of the poor. If they are serious about boosting productivity, innovation and investment, they should not pursue policies that damage the very fabric of the society they seek to build and develop.

[Huw Merriman (Bexhill and Battle) (Con)]

Could the hon. Lady assist me by telling me how creating 2 million new jobs can be marginalising those most in need?

[Hannah Bardell]

While we welcome the creation of any jobs, productivity is not just about paid employment—it is also about how people can contribute to society and what those from all sections of society can contribute, whatever their ability, race or gender.

Investment in what has become known as our human capital and the engagement and happiness of our people should all be part of a rounded strategy. We must ensure that across the nations of the UK we can positively engage with our people, whatever their race, gender, sexuality or ability, in ensuring that they get the opportunity of good-quality, long-term sustainable employment and, with that, boost our productivity levels. We must operate in a society where inclusiveness and diversity are central.

I recently met members of the Scottish Centre for Voluntary Organisations who spoke of the work they are doing on how we look at employability and productivity. The SCVO has undertaken extensive work on taking a rounder view of the contribution that people can make to Scotland’s economy. It is exploring the notion that being productive is not just about being in full-time, well-paid employment but about what kind of contribution people across the social spectrum can make as volunteers, activists or carers, to name but a few examples.

I do not think we would find any disagreement across the House, or indeed in society, about the fact that not everyone can always be in full-time paid employment. Many women, in particular, will take a break from their careers to have children; men may take a break to share parental care; and many men, although generally more women, may have to take time out later in their careers to care for elderly parents or relatives. These breaks may result in a change of career direction, the setting up of one’s own business, or long-term care of a child or elderly parent. Whatever the case, these roles all play an important, and indeed productive, part in an inclusive society.

I reference the experience in my own family. When my sister-in-law returned to work after having her first child, she could not get the flexibility in her work that she would have liked. She set up her own photography business and decided to go full time with it. I am sure that we all have across our constituencies such cases of women—and men—starting their own businesses because they could not find the flexibility in the workforce that they would have liked.

For some women, these breaks or diversions in their working life can often have detrimental impacts on pay and progression. We have debated and discussed much in this House the reasons and remedies for the gender pay gap. In the UK, the gender employment gap is currently 10 percentage points, but I am pleased to say that the gender employment gap in Scotland has narrowed from 10.6 to 6.3 percentage points since 2007. That is evidence that a greater sense of equality, inclusiveness and egalitarian values are helping in many areas of Scottish society.

How we innovate—not only in technology, but in our workforce—is of critical importance if we are to drive up productivity. We must work hand in glove with businesses and create the circumstances in which they can flourish, innovate and develop. No Government or policy maker has a monopoly on wisdom or a silver bullet, but listening and engaging must be at the forefront of our minds as we set policy and create legislation.

Many Members have spoken about the oil and gas industry and the challenges that it currently faces. Before I came into politics, my last professional job was in the oil and gas sector in Aberdeen. As I have often done recently, I think today of my friends and former colleagues whose jobs are under threat or those who have already lost their jobs. I urge Members on both sides of the House to put aside politics, where appropriate, and look at constructive ways in which we can help the industry.

I learned a great deal in one of my roles working in an oil and gas company. It was partnered with a Scottish technological company, which was a spin-off from Heriot-Watt University. Its technology provided the intelligence for an autonomous underwater inspection vehicle, while the company I worked for provided the hardware and investment. To give the House a brief flavour of the technology’s potential use, there was a significant gas leak offshore while I was in that role. If that technology had been advanced enough, it could have been used to stop the leak much sooner. It was stopped only when it was finally safe for humans to go in and fix the issue manually.

It is some time since I left that role, but I recall that the Scottish tech company was acquired by an American firm shortly after my departure. Such tales are all too familiar across the UK. I am sure all involved felt that it was a positive move, but I would like to think our historical reputation in Scotland as a great nation of innovators means that our developing tech firms will not see acquisition by American firms as a trademark of success. I am sure we all hope that we can retain and develop as much home talent as possible. After all, in the words of American writer Arthur Herman, Scotland “invented the modern world”. From the television to the telephone, penicillin and even the overdraft, we are a proud nation of innovators. Every day, in labs, workshops, offices and classrooms, the imaginations of our young people, academics and entrepreneurs are innovating and designing products that may be tomorrow’s solution to some of our greatest challenges, so why can we not bridge the gap between ideas, academic excellence, innovation and productivity?

The world rankings for universities were released yesterday. With Scotland hosting three of the world’s leading universities and the UK overall hosting 18 of the world’s top 100 universities, we punch above our weight as a family of nations. Yet at a recent CBI round table discussion I attended, the issue of the day—why productivity was lagging—had many scratching their heads, given how well the UK does in academia. I suggest that financing, access to funds and this Government’s failure to listen on funding for innovation has something to do with the challenges that the UK faces.

We have discussed manufacturing and the need not only to continue to drive it, but to modernise. For the steel industry in particular, the Scottish Government have invested and done all they can to protect jobs in that sector. We hope that the UK Government will continue to push the EU on energy tariffs.

Carolyn Fairbairn, the director general of the CBI, has said that

“the shift from grants to loans for Innovate UK could dampen bold and game changing innovation, particularly amongst smaller businesses.”

In Scotland, we have the example of CodeClan, which is supported by the Scottish Government. It encourages young people or people retraining to come into the area of coding.

In Scotland, output per hour has grown 4% since 2007, compared with zero growth in UK productivity during the same period. The result is that Scottish productivity has caught up significantly with UK levels, rising from 92% of the UK average in 2007 to 98% in 2013. These trends are encouraging, and the Scottish Government are committed to improving them further, with measures such as the living wage, the Scottish business pledge and more encouragement for businesses to focus on improving productivity.

We have many great examples of companies innovating and deploying their expertise in the UK or exporting across the globe, but we must sustain investment to encourage more to do so. Among such companies are Craneware in Edinburgh, which specialises in software for healthcare billing, and Waste Switch Ltd in my constituency, which is engineering and designing innovative waste management systems across the UK. We could all cite a raft of fantastic local and national success stories, but we must work together to ensure that we create the right policies and an environment in which businesses and people can innovate, export and boost productivity.

In her book, “Difference Works”, Caroline Turner argues that

“retention, productivity and profitability can be boosted through inclusion.”

Arianna Huffington, the founder of The Huffington Post, wrote compellingly in her book, “Thrive”, about the third metric and stated that redefining success was about:

“Creating a life of well-being, wisdom and wonder.”

I was particularly struck by her comments about the race to the bottom and the burn-out that are driven by male-dominated cultures, particularly in corporate business, which are about who can be in earliest and leave latest. It reminded me a little of this place.

If we are to succeed across the nations of the UK, we must put inclusive growth at the heart of our drive to innovate, be productive and narrow the widening export gap. Today, more than 100 disabled people will lobby Parliament about their concerns over the Welfare Reform and Work Bill, although I probably will not get there because I have been in the Chamber all day. Those people represent a very important section of society that contains unique perspectives, skills and talents. They may have a range of physical or other disabilities, but they are equal members of our society who can, and no doubt want, to play an active, engaged and productive role.

I feel passionately that whatever a person’s gender, race, sexuality or ability, they represent hope and opportunity in some form. Although some may not fit into this Government’s view of what productive work means or be able to tick a specific box, it does not mean that they cannot play an active and productive role. We must, across all party boundaries, work together to ensure that we have an inclusive society that gives everyone the opportunity to contribute and be productive.

[Several hon. Members rose—]

[Madam Deputy Speaker (Natascha Engel)]

Order. Before I call the next speaker, I note that time is getting a bit tight. I will not put a time limit on, but if Members restrict themselves to 10 minutes, I will be able to get everybody in.

17:06

[Jeremy Quin (Horsham) (Con)]

It is a pleasure to follow the hon. Member for Livingston (Hannah Bardell), with her list of Scottish innovations. I had no idea that the overdraft was developed in Scotland, but one learns something new every day. I do not know what that great Scottish innovative thinker, Adam Smith, would have thought of her speech, but it was interesting none the less.

It was interesting to hear the tour d’horizon of the proposer, the hon. Member for Dundee East (Stewart Hosie), setting out what he thought was the root of the problems identified in the motion. In response to my intervention, he said that our problems were 50 years in coming. To go through the problems of the last 50 years might be pushing it in a 10-minute speech or in the much shorter contribution that I intend to make, Madam Deputy Speaker, but it is worth touching on some of those issues.

Over the past 50 years, we have seen the decline of empire, on which my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) is an expert. We have seen our entry into the European Union and the rise of China, India, South Korea and eastern Europe, to name but a few. Of course, those huge macro changes have had an enormous impact on our manufacturing base, the shape of our economy and the pattern of our imports and exports. At the same time, there has been a revolution in the service sector across the world and in technology—two things in which this country is at the absolute forefront.

In proposing the motion, the hon. Member for Dundee East said he would not deny the numbers, and I know he would not. He dwelt, understandably on the circumstances, on the manufacturing figures for the last quarter. They are not a happy set of figures, and no Conservative Member would suggest they were. Equally undeniable is the fact that over the last year our economy grew by nearly 3%, making us the fastest growing economy in the G7. This year, the OECD forecasts that our growth will equal that of America at 2.5%—again, the fastest rate of growth in the G7.

To build on that success and to grow exports and innovation, we need thriving small companies and, of course, investment. That is why I have no doubt that Members on both sides of the House will be delighted by the record of smaller business creation under this Government, particularly the 300,000 that were created in 2014 alone. I am sure that those on both sides of the House would also be delighted to recognise that, with the general election safely out of the way last summer and a new Government established, investment by business grew 7% in the third quarter of 2015, compared with the same quarter in the year before.

Equally, as a result of that general election we have one of the lowest rates of corporation tax in the OECD at 20%. That is down from 28% under the Labour Government, and it is falling still further. In response to the hon. Member for Hartlepool (Mr Wright), I recognise that that is only part of a package, but it is important in bringing foreign direct investment to our country, and the Government should be congratulated on that. Another part of that package is the benefit of being—according to the World Bank—the sixth best place to do business in the world.

The motion addresses the rebalancing of the economy, and no one would underestimate the importance of manufacturing, or our disappointment with the recent figures to which the hon. Member for Dundee East referred. However, we can go to business districts in London, Manchester and Glasgow, and in just those areas we will find more tech start-ups than in the whole of some of our EU partner countries. The UK is rated second in the world for global innovation for a reason.

I commend and congratulate the Secretary of State on his paper, “Fixing the foundations”, which back in July tackled head on many of the issues raised in this debate. We have heard today that the paper was too short, but I do not think that British businesses want “War and Peace”; they want simple, workmanlike solutions, and that is what they are getting from the Government. I welcome the £7 billion of committed investment over the next five years in research infrastructure, the protected science budget, and the £14 billion benefit from R and D credits that is being provided to 14,000 companies. As the hon. Member for Dundee East was gracious enough to acknowledge, the £1.5 billion global challenge fund will also bring benefits. Those measures, combined with a Government who have a clear sense of economic purpose, imbed confidence.

One example of that confidence is found in my Horsham constituency, and I am delighted to announce the deal made last week between Novartis and the county council, and the creation of a new science park in the heart of our town.

On exports, the Government’s focus on the emerging markets is reaping dividends. Companies in my constituency say that a new generation of ambassadors is pushing our export drive. They have had that direct experience, and they are grateful for it.

The hon. Member for Hartlepool and my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) referred to UKTI and said that we are not yet all the way there. I think that is recognised across the House, and I look forward to the report on UKTI that the Business, Innovation and Skills Committee will produce. I know that Ministers on the Treasury Bench, and Lord Maude, are at the forefront of ensuring that UKTI is working its hardest for our exporters. The level of that support is witnessed in what the Prime Minister and Chancellor have been doing on their visits abroad, and in the visits of the Prime Minister of India and the Chinese Premier. Above all, it is witnessed in the 68% increase in exports to China from this country since 2010.

On exports, I counsel some caution, as I did earlier in the debate, because—as the hon. Member for East Antrim (Sammy Wilson) eloquently put it—we have real problems in exporting at a point when our economy is booming in relative terms, and when an extra 2 million people are in work and spending money, yet our main trading partners on the other side of the channel have been in recession. That will inevitably cause problems for our export record.

The hon. Member for Sefton Central (Bill Esterson) referred to our productivity, and it will not have escaped his attention, or that of other Opposition Members, that what the Government have done to tame the excesses of the City, and the sad consequences of what has been going on in the North sea and with oil prices recently—the hon. Member for Aberdeen South (Callum McCaig) spoke eloquently about that—has of course impacted on two of our highest value sectors, and that in turn has impacted on our productivity statistics. Given those two existential impacts, I hope that the whole House will congratulate the Government on the conditions that they continue to create to allow UK plc in general, and particularly its many new small businesses, to be productive, to export, and to flourish.

17:14

[Sammy Wilson (East Antrim) (DUP)]

In any debate of this nature, there is always a tendency of Opposition Members to emphasise the negatives. In her headbutt-the-Opposition-and-kick-them-when-they’re-down speech—I do not mean that as an insult; I am congratulating her, and I quite enjoyed it—the Minister emphasised that we should not talk the economy down. That is true. She highlighted, as many other hon. Members have, the very positive things that have happened: high growth, the creation of a lot of jobs and inflation under control. We should not knock the economy, but equally, I have to say, we should not be complacent about its performance. Some of the headline figures have been good, showing that the Government have achieved some success in their plan for the economy. Nevertheless, there are very worrying underlying trends, and the Opposition and the hon. Member for Dundee East (Stewart Hosie) are right to identify them.

First, we have a problem with our balance of payments. The hon. Member for Bedford (Richard Fuller) asked whether we should worry. Well, of course we should worry. If more money is being taken out of the economy as the result of a balance of payments deficit, that will be deflationary. As was pointed out, the difference has to be paid. The sale of assets or borrowing money from abroad has long-term consequences. If we are not exporting as much as we should, one measure that has been shown to improve the productivity performance of firms is exposure to foreign markets. Productivity and exports are therefore linked and we need to be concerned about them.

The fact that we have a huge deficit with the rest of the European Union answers those who say that, if we decided to leave, the EU would close the door on us. It could not afford to close the door on such a lucrative market as the United Kingdom. That is an important point to bear in mind in the wider debate about EU renegotiation.

Our export performance has been poor. Our productivity performance has been poor. Indeed, it has been described as abysmal. We have been meeting only a tenth of the long-term 2% trend in recent years. That in turn affects our competitiveness and the Government’s ability to bring in tax revenues, so productivity has an important role to play. The fact that we are one from the bottom of the seven major industrial nations in the world should cause us concern.

Another underlying trend we should worry about is the decline in our manufacturing. It is not enough to say the economy evolves and we are moving towards service industries, or that there is less of a distinction between service and manufacturing industries. Manufacturing is important. The Government, in their plan, accept that manufacturing is important. Yet we find that manufacturing output has actually fallen. Measured against the Government’s own criteria, this is another factor we cannot be complacent about.

Finally, as has been well documented in today’s debate, there is a dependence on consumer demand for growth. Even the Chancellor seems to have either ignored this or tried to play it down. Why we should be concerned about Government debt, which is 80% of GDP, yet have no concern about consumer debt, which is 145% of gross disposable income, is beyond me. If public sector debt is not a good basis for growth then private sector debt is not a good basis for growth either, unless of course we can say it is going into the kinds of areas that are productive and yield a high return. We cannot afford to be complacent, and it is wrong of Conservative Members to attack those who raise the issue today by saying they are somehow or other being disloyal or hurting the economy. We have to try to get these things in perspective, and although there have been successes, which I hope I have at least acknowledged, there is no cause for complacency.

Let me look at the issues that need to be addressed, the first of which is productivity. The Government’s seven-point plan in “Fixing the foundations” highlights a whole raft of issues. There will be an important role for the private sector in some of them—investment by the private sector and training workers—and the apprenticeship scheme is putting more and more emphasis on the private sector, but many of the measures listed will require public investment. We need to make a distinction when we talk about borrowing and Government spending. If public investment can yield a return, why is borrowing for that purpose a bad thing? Borrowing is not a bad thing for firms or households to do if it provides a return, so why should that kind of borrowing somehow be lumped with all general Government borrowing, so that the Government can say, “Look, we can’t afford to do it”? If it brings a return, it is important. Whether the Minister has admitted it or not, “Fixing the foundations” indicates that substantial public investment will be required to build up the infrastructure needed to increase productivity.

Increasing exports is the second issue. Ministers in the House of Lords have

“pledged to mobilise the whole of government behind exporting, working alongside a more effective UKTI and better export finance.”—[Official Report, House of Lords, 21 July 2015; Vol. 763, WA15.]

I wonder whether the Government have really lived up to that rhetoric. Yes, there are difficulties with Europe, but Europe is not the only market. Indeed, let us look at the growth in world trade. Why do we have such a small proportion of that additional trade? Firms would tell us one of the reasons for that. Eighty per cent. of them do not export anyway, sometimes because of regulation. Some of it cannot be avoided if it is overseas, but some of it could be dealt with by changes here. The Government could make regulations on exporting goods less onerous.

How much do we use our network of embassies across the world when it comes to introductions to markets? There is a role for regional government to play in that. In Northern Ireland, our exports have gone up by 4% in the last year, but that has been the result of hard work by Invest NI, and there are lots of different ways of doing it. We now have the friends of Northern Ireland—expatriates and people who have studied in Northern Ireland and then gone back home—to look at contacts in markets that we want to target. Can we use that network on a more UK-wide basis? Do we make full use of the contacts that our embassies have? I know that trade missions from Northern Ireland have sometimes found embassies to be less than helpful. How can we take those initial steps? Many firms will say that they need to go out to a market two or three times before they start making contacts, which is expensive, especially for small and medium enterprises. What help can be given with that?

The last issue is boosting manufacturing industry. A number of contributions today have highlighted the issue of energy costs. The steel industry is only one example, and in Northern Ireland recently we have lost a lot of jobs from huge employers who cited energy costs as one of the main reasons. There appears to be a schizophrenic attitude, even from the Government. Although they are removing subsidies from the most expensive form of electricity generation, even today at Question Time the Prime Minister, while on the one hand saying it was more expensive to produce green energy, boasted about the amount of green energy in the pipeline that would be introduced in future. If that is the aim, let us be honest: we will find that we make it difficult for some kinds of manufacturers. It is significant that onshoring in the US has occurred as energy prices have come down. That is a lesson for us.

I shall try to abide by your ruling, Madam Deputy Speaker. I have had my 10 minutes. I trust that the Government will take this debate seriously. I accept that there is a role for regional government to play in Northern Ireland. We are reducing corporation tax, for example, and we believe that the devolution of air passenger duty for long-haul routes has been important in extending our ability to attract inward investment and bring inward investors into Northern Ireland by reducing the cost of travel. We have undertaken some other measures, but only the central Government can deal with the national measures that are beyond our control.

17:25

[Richard Graham (Gloucester) (Con)]

It is a pleasure to follow the hon. Member for East Antrim (Sammy Wilson), with his enthusiasm for what can be done to help boost exports and growth in Northern Ireland. In declaring an interest as the Prime Minister’s trade envoy for the Association of Southeast Asian Nations in Indonesia, I welcome this Opposition day debate. It focuses on important issues such as the balance of our economy, our export and productivity challenges and the financing of business research and development. These are important, although sadly not important enough to attract more than five Labour Members, but I should highlight the presence of both the hon. Members for Hartlepool (Mr Wright) and for West Bromwich West (Mr Bailey)—former and current Chairmen of the Select Committee on Business, Innovation and Skills, and now lonely champions of business in a party more committed to strikes and reshuffles than innovation and exports.

The hon. Member for Dundee East (Stewart Hosie) led us off on today’s debate. Although he made some interesting points, his speech was overshadowed by what I can describe only as an overwhelming gloom or an extended rendering of the lament from Private Frazer in Dad’s Army—“We’re all doomed”. I waited, pen poised, to hear some of his proposals to lift us from this gloom. The UK economy, he said, should have more manufacturing. I agree—we all do—as it halved under Labour and is still recovering, but no suggestions came. He highlighted the UK’s relatively weak productivity, but offered no solutions. We await the BIS paper and Select Committee recommendations. He felt that there might be a deterioration of business R and D funding, but he gave no recognition of the importance of the R and D allowances, the capital allowances and, indeed, the explosion of venture capital funding for smaller companies. We know the answer, alas, from the hon. Member for Dundee East—“We’re still all doomed.”

Today, I want to try to offer some shafts of light amidst the encircling gloom. Here I have to disagree slightly with the fellow Eeyore of the hon. Member for Dundee East on the Labour Benches—the hon. Member for Sefton Central (Bill Esterson). He suggested that Britain’s rise to head the G7 growth table within a few years of the great recession was inevitable. I do not believe that any recovery is inevitable, and certainly not one that generates more jobs than the other 27 countries of the European Union put together. Both are driven by a determined partnership between Government and business, with MPs across the House playing our part by hosting jobs fairs, hiring apprentices and helping businesses to export.

Let me say a few words about Gloucester, where I hosted in 2011 the first constituency and county-based China seminar with the China-Britain Business Council. I shall mention some of the manufacturing products that we export from Gloucester to bring some cheer to the SNP Benches about the state of our manufacturing. We export cylinders that are in every Dyson vacuum cleaner across the world. We export giant valves into the oil and gas sector, and we export dental drills predominantly to China and America. Both those companies are almost 100% exporting. We export gantrails for container ports and marine diesel engines for customs and other marine boats. We even make shirts, which are sold both directly from the factories in Gloucester or via Jermyn Street in London. We have a series of manufacturers who are subcontractors in the world of aerospace, especially to Airbus, with the landing gear for every Airbus, several Boeings and every Eurofighter made just outside Gloucester.

It is true that we have not yet sold our “made in Gloucester” cricket bats to China. I am working on that, but what I can confirm is that our “Gloucesterpreneurs” have sold flavoured tea back to China. This is part of an overall UK growth in exports to China and Asia, now generating more than £500 billion of exports a year—up some £80 billion since 2010. I pay tribute to Ministers, and to UKTI. They have added to resources in China, although I would add that some modest rebalancing towards south-east Asia would be very welcome.

There is always more to be done in relation to exports and growth. As the hon. Member for East Antrim said, we cannot and should not over-egg the current situation. Here are a few suggestions.

First, we need a restructuring of UKTI resources to focus on where value can be most added. I believe that that is happening as we speak, and I believe that value is best added not by the writing of otiose reports, but by a serious, customer relationship-driven approach.

Secondly, we need additional trade envoys for markets where nothing is easy but everything is possible, and doors need to be opened by representatives of the Prime Minister. The model is proven, and it provides continuity with Governments overseas.

Thirdly, we need to focus on the industries of the future. The honourable exception to the tale of gloom on the SNP Benches was provided by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), who did say a little about that subject. We should be focusing on creative media, cyber, FinTech, aerospace and marine technology, as well as on some of the current great exports, which, by the way, include education.

Fourthly, we need closer relationships with universities, not just because of their export potential—important though that is—but because of their research output. For example, Bristol University’s research produced the wonderful electronic and driverless robot “pods” that deliver some people to their flights at Heathrow’s terminal 5 from the car park.

Finally, we need greater use of technology to capture the success of our SME exporters, and to communicate it remotely via film to seminars as far away as Portaferry, Pembroke, Plymouth or Perth.

What cannot be doubted, however, is the Government’s commitment to business and exports, led by the Prime Minister himself—as my hon. Friend the Member for Macclesfield (David Rutley) rightly pointed out—and by successive Trade Ministers. That commitment can be seen in the expansion of the capital that is available from UK Export Finance, the reduction in red tape and corporate tax, and the increase in the allowances to which I have referred, as well as in new sector-specific funds such as the skills investment fund and the video games prototype fund. It can be seen in the patent box, the new investment allowance which is so important to the oil and gas sector in Scotland, and—last but by no means least—the creation of the GREAT campaign from No. 10 itself. I believe that its creator was awarded the OBE in the new year’s honours, and rightly so.

All that makes for a strongly export and growth-focused Government, but there is another aspect of UKTI’s work that has not yet been mentioned: inward investment. Given our mountains of inherited debt, we need others to finance our infrastructure growth, and we have been successful in almost doubling foreign direct investment in the last five years. Why, and how, does that boost UK manufacturing? The question was raised earlier by the hon. Member for East Lothian (George Kerevan), and the answer is that so much of the design, construction, servicing and operation of the new Hinkley Point power station will be provided by British companies and British expertise.

While those figures do nothing for our exports in themselves, they boost our manufacturing and our growth. The same will be true of Crossrail, HS2, and other key infrastructure projects. They also act as a catalyst for the growth in our services, which are the one part of our exports that is growing sharply, and play a key role in our overall growth.

Another aspect that has been missing from the debate so far is the impact of tourism to Britain, driven by our heritage and boosted by important incentives for film makers and those in the creative arts—some of which, incidentally, were introduced by the current Secretary of State when he was Secretary of State for Culture, Media and Sport. Tourism follows another great success: our bids to host great sporting events. The Labour party can take pride in the successful bid for the 2012 Olympics as well. I have first-hand experience, from the great rugby world cup of 2015 and the impact of the games at Kingsholm on the city of Gloucester. I pay tribute to the role of the captain of the Scottish rugby team, Greig Laidlaw, who is Gloucester’s scrum half. The athletics championships are coming soon, and Scotland itself will surely remember—this is, after all, an SNP-driven motion—the importance of those great sporting events from the Commonwealth games in Glasgow, which took place only about 18 months ago.

This is a Government who are trying to do their bit for growth in a series of different ways, which brings me to my last point about Scotland. In the 18th century, when Scotland joined England in what has arguably been the world’s most successful union, the land of my ancestors was full of entrepreneurs. They exported not just products but themselves, all around the world. They set up what is still the largest non-Government employer in Hong Kong, Jardine Matheson, started a still-flourishing tea business in Bangladesh and Kenya, Finlays now owned by Swire, created teak merchants in Burma, railroads in Canada and helped Raffles himself establish Singapore, and much more besides. My ancestors exported themselves to Northern Ireland and helped create the linen business over there.

My point about these great Scotsmen is that they did not advocate a welfare state or an ever-increasing role for the Government or belong to the International Marxist Group like the hon. Member for East Lothian; they were innovative and they got on with the business of business. So where are they today? The two giant Scottish banks crashed, oil and gas is struggling, nuclear defence is disdained. It is time for the SNP to get behind the new entrepreneurs and increase Scotland’s share of UK exports, which is currently 7%, slightly less than that of the east midlands. I believe the land of my ancestors can punch significantly better than that.

The UK is here to help. UKTI has offices in 200 countries abroad and in 2013-14 helped 2,300 Scottish companies to export, and all of us involved in exporting are ready to help. I have twice spoken to groups of businesses and universities in Edinburgh and I will happily come up again, and I know my right hon. Friend the Minister will do her bit, too.

[Chris Stephens (Glasgow South West) (SNP)]

The hon. Gentleman mentioned the Commonwealth games and I was curious about that. Can he tell me how much money the UK Government put into the Glasgow Commonwealth games?

[Richard Graham]

The hon. Gentleman and his colleagues will know the answer to that question better than me, but I think he will find that the expertise involved in setting up the Commonwealth games largely came from the 2012 Olympics held in London, so it was a perfect example of how the UK can work together for the greater good of everyone, including Scotland.

[Hannah Bardell]

I am sure the hon. Gentleman would not seek to mislead the House, so let him answer the question my colleague asked: the answer is zero. In terms of the Olympics, Scotland—along with many other parts of the UK—had its lottery funding sucked away into that project and did not for quite a considerable period of time get the returns it was promised.

[Richard Graham]

The hon. Lady, of whom I am a great fan, risks sounding as if she is carping on the issue of the Commonwealth games. I did make the point that that was a really good example of working together. [Interruption.] She will know of the input from all the people who made such a success of the Olympics. [Interruption.]

So let me now to the final bit of my speech—despite the chuntering of the right hon. Member for Gordon (Alex Salmond), who is welcome to intervene if he wishes. [Interruption.] He is still chuntering; we still do not know if he wishes to intervene. He has his chance. [Interruption.] An hon. Member says he is not allowed to speak from the Bench he is currently occupying; well, there we have it—we will keep his chuntering for another day.

We can surely all agree today that there is a great deal more to be done. I hope the report from the Business, Innovation and Skills Committee and the Education Committee will contain helpful recommendations to Government, and I know the Ministers are working on their own productivity plan. I hope the Government will take note of the suggestions made both by my neighbour my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) and me.

Sadly, I have not heard many positive ideas from the SNP Benches, with the honourable exception of the hon. Member for Inverness, Nairn, Badenoch and Strathspey, as I mentioned earlier. I do believe that Scotland needs to rediscover her entrepreneurial spirit, and find more Tiggers and fewer Eeyores to promote business, and I am sure the hon. Members for Livingston (Hannah Bardell) and for Ochil and South Perthshire (Ms Ahmed-Sheikh) can do this and get that brave heart playing its full role in the revival of the growth of the UK, with a drive for all of us to increase our exports and our inward investment.

17:38

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

It is a pleasure to follow the hon. Member for Gloucester (Richard Graham), not least because I am an expatriate Gloucestershire person myself—and I have to say my late father made a significant contribution to the Gloucestershire economy near to him as a former aircraft fitter with Gloster Aircraft Company and more lately with Dowty company.

I do not have a lot in common with the hon. Member for Dundee East (Stewart Hosie), but I did mean to start my speech with the very quote he started his with. One part is worth repeating because it sums up the issue. The Chancellor, in his Budget of March 1911—I mean 2011; it is just me who’s old, not the Chancellor—said:

“We are only going to raise the living standards of families if we have an economy that can compete in the modern age.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

Our export performance and balance of payments figures are perhaps the most accurate measurements of how effectively we are competing in the modern age, and on that basis the Government have done very badly indeed.

That is partly as a result of problems that are long standing. I do not pretend that they all started with this Government, but some of the better things they have done did not start with them, but have built on foundations laid by the previous Labour Government. However, the Chancellor said that in pursuit of their objectives they would secure £1 trillion of exports by 2020; rebalance the economy away from the service sector towards manufacturing; ensure that economic growth was no longer fuelled by consumer demand based on unsecured credit but the outcome of rising real wages; and rebalance the economy away from London and the south-east to the regions. Those are all hollow words.

[David Rutley]

I recognise the hon. Gentleman’s expertise and the important work he did in the previous Parliament, particularly on life sciences, as Chair of the Business, Innovation and Skills Committee, but before he turns into an Eeyore, which I know he is not, will he not acknowledge—this is something he actively supported in the last Parliament—that life sciences are moving forward, including, notably, in Macclesfield, where the AstraZeneca site accounts for 1% of all UK goods exported?

[Mr Bailey]

If the hon. Gentleman will be patient, I will mention some of the things I think require recognition.

The triumphalism and overstatement of the Government’s so-called economic successes mask the sheer scale of the problem and leave us in danger of understating the change in Government policy necessary to address those problems. It is no consolation to be given a diatribe on increased employment and so on, when we have companies desperately seeking investment to invest and grow and workers on zero-hours contracts and when millions have seen their real wages reduce over the past five or six years. Ultimately, this all stems from our lack of productivity and weak exporting performance.

The 2008 recession was a serious one, but the Government do not mention, of course, that it has taken far longer for this economy to come out of it than any other comparable economy and that, most unusually, productivity has failed to increase, as it normally does when an economy comes out of recession. It has also failed to increase in comparison with other economies. Figures from the Office for National Statistics show that in 2014 output per hour worked was 21% lower than the G7 average. The reasons are not simple, but one main reason is that the primary driver of productivity is manufacturing, and our manufacturing output has stagnated over the last five or six years, despite the Chancellor’s claim to be backing the “march of the makers”.

In response to the intervention by the hon. Member for Macclesfield (David Rutley), I would emphasise that we have world-class manufacturing companies in automotive, defence, civil aviation, biosciences and so on. I often feel that the argument about services versus manufacturing is an artificial one: both are important. When we say that we no longer manufacture, what we are really saying is that manufacturing no longer occupies such a high proportion of our national output as do the service industries, but manufacturing is still vital to the jobs of millions of people in this country and above all to our productivity and export levels.

[Kelvin Hopkins (Luton North) (Lab)]

I appreciate what my hon. Friend is saying, but does he agree that a factor in low productivity growth is low wages? Companies will invest in capital investment if they have to pay high wages, and low wages and low productivity go hand in hand.

[Mr Bailey]

I certainly do agree with my hon. Friend. The Government’s original optimistic projections were based on totally unrealistic assessments of their ability to invest and export.

In the limited time available to me, I would like to mention some areas that the Government should look at in order to improve productivity. The three areas that are crucial to productivity are investment, skills and infrastructure. On investment, despite the Government’s best efforts to encourage banks to lend to small businesses, there is still a problem. Even projects such as Project Merlin have failed to address the scale of the needs of small businesses. The Government also need to look at the wider issue. We have heard a lot in this debate about long-termism. We have a financial services market that is geared to short-termism rather than to backing industry. When my own Committee looked into the Kay proposals for changing that situation, we detected no enthusiasm on the part of the Government to adopt them. One thing the Government could do to change this culture is to look at our financial services industry.

It is ironic that a Government wedded to a free-market capitalist economic model have had to resort to asking a communist state-interventionist country to provide the necessary investment for our energy infrastructure. On business support, we heard earlier about the closure of the Business Growth Service, which had been of enormous benefit to small businesses. Its closure is not only a great loss to small businesses; it also sends the wrong signal about the Government’s support and appreciation of them.

On the tax regime, I have heard a lot about corporation tax. Yes, it is part of the mix that is necessary to attract foreign direct investment, but in order to encourage investment by companies that are already here, we need to do something about business tax. We have an absurd position in this country wherein we offer tax breaks for capital investment but when a company invests in new capital, it finds that its business rates promptly go up as a result. There is obvious incoherence and inconsistency, and they are a major deterrent to the investment that is needed to drive up our productivity performance.

On skills, I recognise that the Government are anxious to promote apprenticeships. They are saying all the right things about boosting apprenticeships, but the reality is that in those areas where the shortage is greatest, such as engineering and manufacturing, and where there is the greatest dividend in terms of productivity and export potential, there is still an acute shortage in apprenticeship recruitment. That cannot be cured simply by putting apprentices on courses. It has to come from a change in culture in our education system that makes schools recognise the importance of getting young people into vocational education. That can be done by the Government ensuring that schools have to liaise with local businesses and have to measure where their students go in vocational training, as well measuring their exam results and university entrance. I say again that an incoherence in the Government’s performance is the cut in further education funding, as that is potentially the greatest provider of vocational education.

I am running out of time, so I will just quickly make a comment on infrastructure, which others have mentioned. Any regional economy will tell us that a lack of transport infrastructure is a major handicap for local businesses, and some 62% of businesses complain about this issue. Capital spending on infrastructure has been halved in the past five or six years, and that has to be addressed. The Government have not got this prioritised correctly.

Let me finish by saying that I have highlighted some of the issues we face, many of which need to be prioritised by Departments other than the Department for Business, Innovation and Skills. The cuts in BIS are a clear indication that this Government do not recognise the importance of an industrial strategy, and of having a Department that has the capacity to lead it and to make other Departments work towards the business priorities that are necessary and that are outlined by BIS.

[Rebecca Pow (Taunton Deane) (Con)]

I must take issue with the hon. Gentleman, as my constituency has recently had a massive infrastructure investment in its roads and railway stations. That is paving the way for a new strategic employment site, which will open up the opportunity for thousands of jobs, all of which is helping the economy and our productivity. I am sorry but I disagree with very much of what he is saying.

[Mr Bailey]

The hon. Lady is quite at liberty to do so. I welcome the investment in Taunton, but I would welcome that investment even more if we could have it in the black country, which is the heart of British manufacturing.

Let me conclude by saying that we need a strong Department for Business, Innovation and Skills, we need an industrial policy and we need other Departments signed up to the priorities that will ultimately deliver on our exports and on our productivity, and that will get the tax revenues, which will enable those Departments to invest in their particular priorities. That is not happening at the moment.

17:52

[Lucy Frazer (South East Cambridgeshire) (Con)]

The motion suggests that there is a lack of a long-term plan to improve productivity and it is also critical of the Government’s approach to innovation. The motion is not only inaccurate, but unnecessarily pessimistic and bleak. Like the hon. Member for East Antrim (Sammy Wilson), I think it is important to celebrate what is good.

The hon. Member for Dundee East (Stewart Hosie) stressed the importance of innovation, and we ought to recognise the great work we are doing in Britain at the moment in science and technology. The UK is ranked fourth in the business world for business and university collaboration; it attracts more research and development funding from abroad than Finland, Russia, Canada, Japan and China combined; and the UK produces 16% of the top-quality published research findings with less than 1% of the world’s population. The Government are ensuring that we maintain this position by investing almost £7 billion in UK research infrastructure up to 2021.

I represent an area at the forefront of technology and innovation. The east of England is one of the highest investors in R and D across the UK. We have companies such as ARM, which creates the processors found in most mobile phones across the world and which in its short 26-year history has joined the FTSE 100. We have more than 100 businesses at the Cambridge science park, providing more than 500 jobs, developing our science and technology. Having spoken to many of those businesses, it is clear to me that what we need to do to continue this great work is to be constantly more ambitious and to invest in our human capital. It is fundamental that we teach children in schools the right skills, and I am delighted that we now have a commitment from the Chancellor to a fairer funding deal.

It is disappointing that, in an area of academic excellence so close to Cambridge University where we have the potential for world-class education, we have not as yet had a fairer funding arrangement. However, I am delighted that this Government have committed to creating 17,500 more teaching posts in science, technology, engineering and maths. We must ensure that our teaching is inspiring students as young as seven and eight, because research has shown that that is the age at which children decide whether technology and science are for them. We also need to ensure that, once inspired, there is advanced technical education that will enable students to have the much-needed and sought after skills for their employment.

I welcome developments such as the University Technical College Cambridge and I applaud Anglia Ruskin University for teaching an international trade two-year course. Recognised as the first of its kind, the course was developed in partnership with the Institute of Export and is taught online by university tutors and international trade experts. We need to encourage our students to learn not just technical expertise, but languages, including Mandarin. In 1990, only 500 students were studying Mandarin. That number has now grown to about 3,000, though, recently, the numbers studying Mandarin have fallen. If we are to continue to increase our exports, we need that trend to change.

I applaud the work of this Government and of our regions in encouraging innovation and enterprise, but, at the same time, emphasise that what we need to do is to continue to offer support to maximise the potential of our workforce. We need to give people the skills that they need to thrive as individuals and to ensure that productivity in the UK grows. Since 2010, we have increased exports to China by 72%. By continuing to upskill our workforce, we will ensure not only that that figure goes up, but that our exports go up elsewhere, allowing the UK economy to continue to grow and to maintain its position as the fastest growing economy in the G7.

17:56

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a great pleasure to speak with you in the Chair, Madam Deputy Speaker. I am also delighted to follow the thoughtful speeches of so many Members from all parts of the House. Indeed, it has been a very fine debate, and I thank my hon. Friend the Member for Dundee East (Stewart Hosie) for securing it. Some matters have been quite enjoyable as well as enlightening. I am sorry that the hon. Member for Spelthorne (Kwasi Kwarteng) is not in his place, because I particularly enjoyed the part of his speech when he was berating our Members for harking back as far as the 1960s, and then immediately moved forward to quote Adam Smith from the 18th century. It was a remarkably fine performance.

The hon. Lady for South Cambridgeshire—

[Lucy Frazer]

South East Cambridgeshire.

[Roger Mullin]

Is it close? [Laughter.]

The hon. Lady opened her speech by mentioning the hon. Member for East Antrim (Sammy Wilson) who is also not in his place. I was going to compliment him, because what he brought to this debate was a recognition that criticism is not always a negative thing; indeed, it can be helpful. When he said that, I immediately thought of an old teacher of mine, Professor Tom Burns, who, in the 1960s, along with his colleague Graham Stalker, wrote the famous book, “The Management of Innovation”. In it, he pointed to several factors that are essential for the development of innovation, some of which are extraordinarily pertinent to this debate. For example, one was that there are two types of ideas that we need to mobilise—creative ideas and critical analytical ideas. It is the forging together of those two types of ideas that becomes very important. He also said that one of the fundamentals in driving the rise of the industrial revolution was the creation not only of those types of ideas, but of the means of disseminating the ideas. That was fundamental. We saw it in Scotland with the sharing of ideas, flowing as they did from Edinburgh to Glasgow and Glasgow to Edinburgh. It seems a small thing to say in the modern era, but at that time it was fundamental to getting the sharing of ideas going.

To move on from my teachers, a few years ago I attended a fascinating lecture by Professor Tom Stonier. He pointed out that more people worked in pure research in the last 25 years of the 20th century than did so in the entire pre-history of the world. Let us think about that for a moment—there has been huge growth in the number of people undertaking research. If we combine that with the growth in new technology, such as IT and computing power—whereby an Einstein no longer needs to take years to work out his equations by longhand, and ideas can be processed so quickly—we will see that they are fuelling huge growth in innovation throughout the world.

I shall not dwell, as the hon. Member for Gloucester (Richard Graham) likes to do, on doom and gloom, but I shall point out some of the challenges we face. On the growth in the rate of research and the ideas coming into our world, the countries that will remain in front will be those that can capture and develop those ideas, put them into play and own them for themselves. That is the key challenge, which is why I am worried about recent trends in the UK.

Some days ago, the Chancellor of the Exchequer rightly pointed to a “cocktail of dangers” in the global economy. One of the dangers is that we are not investing enough in the type of research and development and innovation needed to keep us at the forefront. My hon. Friend the Member for East Lothian (George Kerevan) pointed out in his fine contribution that this country has a problem of a lack of long-term investment in business. That is true of many sectors, and part of the problem is that, compared with some of our major competitors, we are generating less investment from the business sector than we did in the past.

I am delighted that the Minister for Universities and Science, whom I met in a previous Westminster Hall debate about science, will sum up for the Government this evening. In 2010, the previous Government froze the science budget for five years, which meant a 10% cut in real terms, at a time when it was already at a modest level compared with those of our major G8 comparators. In 2012, UK public investment in science fell to less than 0.5% of GDP. As my hon. Friend the Member for Glasgow North West (Carol Monaghan) pointed out in the debate at which the Minister was present, that is a lower rate than any G8 country has invested in the preceding 20 years. The G8 average is now about 0.8%, compared with the UK’s 0.44%.

If we look at broader measures of research and development, we see that a generation ago the UK was one of the most research-intensive economies in the world—and didn’t we benefit from that? Now, however, as with science, we are one of the least research-intensive economies. My late brother was at one time chair of the OECD committee on science and technology policy, and in recent years, before his sad passing, we would regularly discuss the failure of the UK—and his homeland of Scotland—to keep up. In terms of broad research and development measures, we have slipped from leading the OECD countries in 1979 to trailing behind all our major competitors. The US invests 2.8% of its GDP in all forms of research and development. On average, the OECD and EU countries invest 2.4% of their GDP, but the UK now spends only about 1.7% of its GDP on research and development. That is not going to keep us at the forefront or allow us to face some of the challenges and competition of the future. The hon. Member for East Gloucestershire—

[Richard Graham]

Gloucester.

[Roger Mullin]

Apologies again; I am quite happy about apologising to the House.

The hon. Member for Gloucester pointed out several of the challenges that he felt we faced, but I want to suggest several things that could be done, given that he berated us for not coming up with ideas. If he gives me a few moments, I shall suggest a number of points that I would like the Government to address.

I am especially interested in how some of the Government’s decisions on this front do them no good, because this is about not just funding, but strategic choice. When faced with an opportunity to be a world leader in the development of carbon capture, it is just insane to pull the rug on that if the Government are trying to say that we want to ensure that we are at the forefront of such development. Several Members may have received emails from one of my constituents—he emails many people, and he recently wrote to the Prime Minister—about smart meter technology. When I spoke to him, he echoed what others have said about our technological choices, including on smart meters. He wondered why we were not investing in the most up-to-date technologies to ensure that they are the very best to meet the country’s needs, rather than going for what seems to be good enough at the moment.

Recent work, most notably by Dr Stephen Watson of Glasgow University, has pointed out the huge importance of infrastructure spend to the Government’s investment in science, and research and development. Our universities in Scotland punch well above their weight in attracting funds from the research councils, but we do poorly compared with elsewhere in the UK, especially the golden triangle of Oxford, Cambridge and London, in attracting UK Government infrastructure spend on research and development, which is fundamental to the future of a healthy research and development community. We need to map out such investment much more, both thematically and territorially, although that has never been done by any Government.

Let me give hon. Members an example of the problem, although I will speak about something that the Government are doing that is good, not bad. I applaud the way in which they have invested large sums to create the Francis Crick Institute, the biomedical research centre in the heart of London that is a consortium of three London universities—Imperial College, University College and King’s College. It is funded by the Medical Research Council and bodies such as the Wellcome Trust. Its initial investment was £650 million and the operating budget is £130 million a year. On one level, this is to be applauded, but is it not strange that Dundee University, in the city of my hon. Friends the Members for Dundee East and for Dundee West (Chris Law), is the world leader in biomedical research, yet is not part of the Crick Institute? Indeed, no one in the north of England is part of the institute. My first suggestion to the Government is that when they consider infrastructure spend for research and development, they would do well to think about the distribution of such investment throughout the whole UK.

[Simon Hoare (North Dorset) (Con)]

I understand what the hon. Gentleman says, but would it make sense and would it produce as much bang for the Government’s buck, if that is not an unparliamentary phrase? Would it not be better to have geographical centres of excellence specialising in various things, rather than dotting institutions around the UK to meet some sort of regional agenda?

[Roger Mullin]

One alternative would be to base the centre in Dundee. That would solve the hon. Gentleman’s problem.

In addition to university research, there is business research. The need to encourage business investment has been mentioned, particularly in manufacturing, where we have fallen behind. I mentioned earlier the UK spend on research and development at 1.7% of GDP. We all know our manufacturing sector faces some real challenges. North Korea’s manufacturing sector is doing pretty well by comparison with many countries in the world. Its GDP spend is 4%. [Hon. Members: “North Korea?”] Sorry, South Korea.

[Rebecca Pow]

I am interested in what the hon. Gentleman is saying. The Government are offering many budgets and grants and I will highlight one, which is the agri-tech budget. That is seedcorn money for linking agricultural projects with business. In my constituency, for example, we have a wonderful clothmaker, Fox Brothers, which has received money to do research with the local agricultural college to come up with the right wool on the right sheep to produce beautiful clothes. That will help business, and perhaps the Scottish might learn from it, as I know they also have a lot of sheep.

[Roger Mullin]

I thank the hon. Lady for that.

I am not denying—nobody could accuse me of doing so—that the UK Government have been spending on research and development. My argument is that given the future challenges that we face, we are potentially lagging behind nations that will be our major competitors in the future. I am not denying what the hon. Lady says.

Earlier I gave the Minister an incomplete quote from the Medical Research Council on the problem of moving from grants to loans. The full quote is:

“Converting grants to loans may mean that existing schemes such as the Biomedical Catalyst—which has been well received in the sector, supporting 180 business-led research projects and leveraging over £100 million in private match-funding over the course of three years—may not continue in their existing form.”

We have real challenges that need to be faced.

18:12

[Huw Merriman (Bexhill and Battle) (Con)]

This being a debate on productivity, may I be innovative by delivering my output in less than the 10 minutes you, Madam Deputy Speaker, have given me?

I congratulate the SNP on the choice of debate. I have learned much—for example, from the hon. Member for Livingston (Hannah Bardell), that the overdraft was created in Scotland. That could be the death knell of a thousand jokes referring to the frugal habits of the Scottish people.

I am disappointed, however, by the motion’s negativity about the UK’s trade and export performance. Between 2009 and 2012, the UK’s exports increased by 23%, despite the global recession making it a horrible time for world trade. These results have been delivered through the Government targeting exports to new growth markets such as China, Brazil, Russia and India, where the British kitemark for quality is recognised and revered. The Prime Minister and other Ministers have made export trips across the globe with businesses from UK plc. That shows the commitment of this Government to trade and exports across the globe. I welcome the ambitious target from my Government of doubling the UK’s exports to £1 trillion by 2020. This will require an extra 100,000 companies to be exporting by 2020.

This having been a five-hour debate, I will avoid repetition by referring to what we have done in my constituency to advance a new product that we hope will be the poster child of exciting new export growth. Within these shores, we produce one of the great liquor exports—a drink that puts colour in the cheeks and rings on fingers, and is toasted across the world. I refer of course to English sparkling wine. The English sparkling wine industry is growing rapidly, making £78 million in 2014 and £100 million in 2015. There are now 470 registered vineyards in England and Wales. In 2014, we produced 6.3 million bottles of sparkling wine—an increase of 42% on the previous year.

Plans are currently in place to register the name “Sussex” as a kitemark brand to compete with champagne across the world. In blind tastings we are beating the great champagne houses at their own game. We would not find the French Government hosting an export reception in Spain and pouring cava, but that is what the UK has previously done in its embassies across the world. I am pleased that under this Government that attitude has changed. Our Government and our embassies are now promoting English sparkling wine as well as other food and drink produce from across the UK.

By reducing corporation tax, setting a permanent investment allowance and providing a research and development tax credit scheme, this Government are allowing businesses such as the wine sector to invest, innovate, export, and grow.

[Rebecca Pow]

Might my hon. Friend make reference to the Great British food unit that the Department for Environment, Food and Rural Affairs is setting up and our long-term plan for promoting British food abroad? That has already made great strides, with chicken legs going to China and pigs’ trotters following, and I have to mention cider from Taunton Deane. There is so much scope to what he is discussing, and perhaps he could include a bit more of it.

[Huw Merriman]

I thank my hon. Friend for placing that point on the record. I am very happy to be the market trader for every single constituency food and drink product, but perhaps I should move on because time does not allow.

I welcome any debate that allows the House to consider how we can make UK plc more productive. I also welcome the Minister’s recognition that UK productivity needs to be enhanced. I take the firm view that a Government who recognise that more has to be done will be a Government who deliver on that front. The UK’s productivity is—to coin an unfortunate phrase, currently, in my vocabulary—our Achilles heel. I welcome the Business Secretary’s launch of a productivity plan to correct this. While the UK’s productivity rate means that it takes a UK worker five hours to produce what a German worker could deliver in four hours, it is also fair to reflect that the UK’s growing employment numbers could be seen to distort productivity rates. As productivity is the measure of production output over input of employees, it is no surprise that the creation of 2 million additional jobs in the UK in the past five years has rendered our productivity lower than that of France, which has produced a lower number of new jobs in the same period than the region of Yorkshire. The key is to upskill these new jobs to become more high skilled and more productive, and this will occur over time.

As a member of the Transport Committee, I would like to focus on the role that capital investment in transport can play in increasing the UK’s productivity. The £60 billion of capital investment dedicated this term to road and rail investment has the ability to improve productivity by enhancing connectivity and bringing workers and businesses closer to their workplace and marketplace. In this respect, it is essential that we look to these projects not just for their transport benefits but for the regeneration that they can bring. In my community, my right hon. Friend the Member for Hastings and Rye (Amber Rudd) and I have been campaigning to deliver high-speed rail from London to Hastings and Bexhill. On that route, it takes two hours to travel from London, while the similar distance to Milton Keynes from the capital can be covered in just over 30 minutes.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

Will the hon. Gentleman give way?

[Huw Merriman]

I give way to my colleague on the Select Committee.

[Stewart Malcolm McDonald]

The hon. Gentleman is a fine member of the Select Committee. On high-speed rail, will he say from the Government Benches that it would greatly benefit Scotland if we had such a connection to London, our closest global financial hub?

[Huw Merriman]

My colleague has put that matter on the record on more than one occasion in the Select Committee and in the House.

As our regeneration report will show, the new rail link would unlock economic growth in our community, increase productivity and allow for new business expansion to pay for, among other matters, the higher than average adult social care bill that East Sussex faces. However, Network Rail’s decision about whether to invest in this project will be solely determined not on the boost to economic productivity it would undoubtedly bring, but on rail-user feasibility. In addition, another bar to productivity is that the bill for the project has increased because of the number of licensing and planning consents required from numerous agencies and authorities and because of the enhanced regulation brought in for new rail projects.

If we are to enhance our productivity, we must commission public projects on the basis of which ones can, to employ the term used by my hon. Friend the Member for North Dorset (Simon Hoare), deliver the best bang for the buck, and we must hammer down costs by making the building process simpler. In a similar vein, I implore the Government not only to make a decision this year on which airport will be expanded, but to ensure that the shovel goes in the ground immediately, rather than lying idle for years while petitions are heard in this place and in our courts.

To conclude, I welcome this opportunity to debate how the UK’s export market and productivity rates can be improved. I welcome the Government’s recognition that more can be done, and the ambitious targets that the Government have set themselves during this term to ensure that more will be done.

18:21

[Michelle Thomson (Edinburgh West) (Ind)]

Thank you, Madam Deputy Speaker, for giving me the opportunity to be the final speaker before the debate is summed up. I must say that I have enjoyed it immensely. The quality of speeches by Members on both sides of the House has been fantastic.

I have a little warning for the hon. Member for Gloucester (Richard Graham) on the use of the term “doom”. In Scotland, we say that facts are chiels that winna ding. The facts brought out by my hon. Friend the Member for Dundee East (Stewart Hosie) at the start of the debate stand and are very important. Such a reality check about some of the serious issues in the UK economy must be acknowledged.

Let us turn to the issue of balance. The Chancellor commented in a lecture in 2010:

We have to move away from an economic model that was based on unsustainable private and public debt. And we have to move to a new model of economic growth that is rooted in more investment, more savings and higher exports.”

How did that work out?

Such a sentiment does not extend to the present Government. During an open Business, Innovation and Skills Committee sitting, I questioned the Minister for Small Business, Industry and Enterprise about whether she regretted successive UK Governments lack of a cohesive industrial strategy. I make that point because SNP Members sometimes sit listening to the biff-boff from either side of the Chamber, but I think there has been a lack of strategy year on year, regardless of whether it has been under the Tories or Labour. One of the significant benefits in Scotland of constantly having an SNP Government, which I hope will be re-elected, is that we can see the signs of a strategy that has been put in place and acted on, and of the resulting commensurate benefits.

[Lucy Frazer]

Does the hon. Lady accept that, according to figures from UKTI, a Government body, there was a small fall in the number of inward investment projects in Scotland in 2014-15, while the number rose in England and Wales?

[Michelle Thomson]

Yes. As I said at the start, facts are chiels that winna ding, but there is a much bigger picture.

My hon. Friend the Member for Dundee East said that the downsizing in manufacturing has been going on for decades, not just for a small snapshot in time. I do not propose to go through the figures that have been quoted extensively in this debate, but I will quote an apt point that was made by the well-known economic journalist who writes in the Scottish newspaper, The National, and who, for the benefit of the House, is also known as the hon. Member for East Lothian (George Kerevan). He has referred to the issues with manufacturing as

“a full generation of stagnation.”

I want to pick up on a few comments. The first was about infrastructure. I gently point out in respect of HS2, which apparently will now cost roughly £42 billion, although I am not sure that is correct, that Scotland will pay its population share of that. We will pay roughly £4 billion, for which we will get no benefit. Indeed, a couple of years ago, Aberdeen chamber of commerce pointed out that it might cost its local industry money.

It is fair to say that probably no one in this Chamber is as focused on the importance of business in growing our economy as I am. There are still significant issues that I will personally address in the lifetime of this Parliament in the ability of businesses to get started, access capital, which is critical, and grow to a significant size. The Mittelstand model would be a good fit, but such companies are promptly sold. We need to do much more on that front.

John Longworth, director general of the British Chambers of Commerce, has made significant comments on consumer debt:

“It’s time to get real. The UK has been too reliant on consumer spending”.

That is an external body making that point. The household debt to income ratio could reach 172% by 2020. I am worried that with increased austerity and more uncertain prospects, more and more people are turning to credit as the only accessible way to plug the gap. Interest rate rises are a when, not an if, and I have grave concerns about how they will affect people who are already struggling.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

Given what has been said about household debt, does the hon. Lady agree that it is extremely important that children receive financial education at school that includes budgeting and planning?

[Michelle Thomson]

Absolutely. We can probably all agree that we should look to do better on that.

Productivity has been discussed at length. A solution to the so-called productivity puzzle remains as elusive as ever. We know that the component parts are complex. Not only does the UK perform badly when compared with the G7, but it does even worse when compared with what I call the M8—the top performing medium-sized countries such as Norway, where productivity is 77% ahead of the UK. In Sweden, the figure is 18% and in Denmark, it is 26%.

The National Institute of Economic and Social Research considered that puzzle and noted that

“analyses of the panel reveal that workplaces that experienced an increase in union density between 2004 and 2011 also improved their performance relative to the industry average”.

That is an important point. I would suggest that it is not just union density that influences productivity, but mature workplace relationships based on mutual respect and consideration, and the routine representation of workers on boards, which we see elsewhere. My view is that the rest of the UK is slipping backwards in that respect, particularly given the dangerous trade union proposals.

I will consider export performance before I finish. Rather than going through the facts, I had a quick conversation with the owner of Witherby Publishing, which is a successful Scottish SME whose exports account for about 80% of its business. I asked what she considers to be the primary inhibitor of UK companies exporting. Her answer was succinct. She said it was attitude, it was ambition, it was looking outwards. The practical considerations of cost distribution, differing tax structures, VAT and so on were secondary. The UK must be very careful in the message it sends out to the world as it grapples with the debate about Europe. Is the UK open for business or not? I’ll tell you what: Scotland is open for business.

Finally, let me reiterate what was said by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) because I have serious concerns about plans to replace grants with loans. I challenged the Minister and asked about the rationale behind that move, and the response was:

“A number of businesses that I meet would be quite happy to have a loan rather than just a grant because they get that that would mean they would have to pay it back.”

I am sorry, but we need to do better than that. This is a competitive world, and that response is beyond complacent. We must compete, invest, and support research and development. Given all the factors that I have mentioned, the report card for the long-term economic plan is poor. It is not working, it is stifling growth, and it will affect us all going forward. Quite simply, this Tory Government cannot be trusted to deliver on the economy.

18:30

[Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)]

I rise to speak in favour of the motion in my name and that of my SNP colleagues, and I declare an interest as vice-chair of the all-party group for trade and investment.

I thank all Members for their contributions to this interesting and varied debate, and I will try to mention everybody if time allows. The Minister spoke of a long-term economic plan and of caring and compassionate Conservatives, but those worn-out phrases mean nothing to poor and vulnerable people up and down this country who this Government have targeted in a relentless onslaught through austerity of choice, not necessity.

I agree with the hon. Member for Sefton Central (Bill Esterson) that the NHS should be exempt from TTIP, and we must always protect our public services. I agree with the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) on the importance of UKTI, but unfortunately the Chancellor slashed the budget for that in his autumn statement. My hon. Friend the Member for Aberdeen South (Callum McCaig) made an excellent speech about the bright future for our oil industry, but it requires help from the Government during what we hope will be a temporary downturn. He spoke of Aberdeen being a city of innovation that filed more applications for patents in 2014 than anywhere else, and he mentioned the importance of the Aberdeen city deal, and called on the Government to consider that quickly and favourably. He said, however, that the UK Government had taken a hatchet to one of the biggest global growing markets of the century: renewable energy. We should build on an industry that we can be proud of, and develop the skills we need—ambition, Mr Speaker.

I wholeheartedly agreed with the hon. Member for Cannock Chase (Amanda Milling) when she spoke about the need for investment. She quoted from the Treasury document, “Fixing the foundations”, but failed to mention that UK investment as a percentage of GDP has been well below the OECD average since 1960, only surfacing briefly in 1990, as per the graph on page 15. I was pleased to hear her support for the cut to air passenger duty, which the Scottish Government will introduce, and she suggested to the Minister that that measure be considered elsewhere.

The hon. Member for Hartlepool (Mr Wright), Chair of the Business, Innovation and Skills Committee, agreed with every word of our motion, and we are delighted to have that support. He went even further and spoke of the value of our relationship with the EU, and its importance for trade. He also referred to the “dire and woeful” performance of the Government, who are sleepwalking back to the old British model, which cannot be a model for sustainable and economic growth.

The hon. Member for Bedford (Richard Fuller) suggested that this country had consistently rejected socialism. Not in Scotland—just look at the SNP Benches. He also seemed to suggest—surely this must have been in jest—we have not gone bust so things must be okay. Such poverty of ambition. My hon. Friend the Member for East Lothian (George Kerevan) spoke of the success of Ireland’s export record, and said that although we should have been turning around our export performance, we have failed in that. As he said, given the current account deficit as it stands, all warning lights should be flashing brightly.

The hon. Member for Spelthorne (Kwasi Kwarteng) spoke of the challenges ahead and the diminished role of manufacturing. He sees that as part of the evolving nature of the British economy, but we should be looking to revive manufacturing, not making excuses for where it is just now.

We heard from my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), who spoke fluently and with much passion about the digital economy. Innovation is indeed about imagination. He spoke of driverless car technology as an opportunity to connect people in a different way and how very important it is for women and girls to have the chance to seek opportunities in new areas of technology.

The hon. Member for Macclesfield (David Rutley) said that only one in five businesses in this country export, compared with one in four in Germany, and that there were deep-seated issues that needed to be addressed. He did say that good things come from Scotland—many thanks to him.

My hon. Friend the Member for Livingston (Hannah Bardell) spoke with passion, ambition and great intellect about productivity, innovation and investment with a focus on inequality, diversity and inclusiveness. It is worthy of note that not one Government Member spoke about tackling inequality. Investment in human capital is important, too. It is not just about paid employment but the contribution of others in different ways: as volunteers, carers and activists. Some may not fit, she said, into the Government’s view of what is productive, but that does not mean that everyone does not have something to offer.

The hon. Member for Horsham (Jeremy Quin) paid tribute to some of Scotland’s inventions, in particular the overdraft, which he had been unaware had been invented by a Scot. Well, thank goodness for that. What would the Government do without it?

The view of the hon. Member for East Antrim (Sammy Wilson) was that while we should not knock the economy, we should not be complacent about it either. He acknowledged that we have a problem with our balance of payments.

We then heard from the hon. Member for Gloucester (Richard Graham). He spoke, in his opening lines, about the doom and gloom of speeches. I was certain he was talking about his own colleagues, but he then directed his comments at SNP Members. Surely, there must be some mistake! He did, however, mention the Commonwealth games and highlighted their success, for which we are very grateful. He started to mention the financial contribution of the UK to the games. For those not in the Chamber at the time, the answer is: nil.

The hon. Member for West Bromwich West (Mr Bailey) spoke of the overstatement of the Government’s success, in particular in relation to zero-hours contracts, owing to the lack of productivity and the weak export performance. The hon. and learned Member for South East Cambridgeshire (Lucy Frazer) talked about expertise in universities, but failed to recognise that a smaller proportion of UK businesses intend to collaborate than is the case with our international competitors.

My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) delivered an excellent speech, in his own inimitable fashion, on science and innovation, and the need for investment in that respect. The hon. Member for Bexhill and Battle (Huw Merriman) spoke about the importance of high-speed rail, but did not go far enough to suggest that Scotland should have access to it. Why ever not?

My hon. Friend the Member for Edinburgh West (Michelle Thomson) spoke of the lack of a UK strategy and the comparison with the Scottish Government’s strategy, the benefits of which we can see in action. It is about attitude and ambition, she said. I could not agree more.

Scotland is the best place in Britain to do business. The SNP Government have delivered success for Scotland’s economy. The value of Scotland’s international exports has increased by about 40% from £20 billion to £27.9 billion. In each year since 2006, the Ernst & Young attractiveness survey has ranked Scotland in the top two regions outside of London for foreign direct investment in terms of number of projects secured. In the past six years, business research and development spending in Scotland has increased by 29% in real terms to £797.7 million, compared with just 3% in the UK in the same period. I appear to have lost the attention of some Government Members. I do hope I can regain it quickly.

The cornerstone of Scotland’s successful economy, of course, has been our membership of the European Union. Scotland’s EU membership has been a vibrant source of social, cultural and economic benefit for Scotland over the past 40 years. It is a vital export market, so why would the Tory Government take our country to the brink of leaving this successful partnership?

[Jeremy Quin]

As I understand it, about 17% of Scots exports go to the rest of the EU and about two-thirds go to the rest of the UK. I am sure the hon. Lady will be equally fond of retaining the better Union—better together.

[Ms Ahmed-Sheikh]

It actually works both ways. It is not just Scotland exporting to the rest of the UK; exports come up the other way too, but I thank the hon. Gentleman for his intervention none the less.

Scotland is ready to do business with the world, but this Government are giving the impression that we, along with the rest of UK, are closed for business. What message does it give to the world when our UK Government talk a good game about our commitment to the historic climate change agreement reached in Paris, but simultaneously pull the plug on millions of pounds of investment in our renewables industry through their actions on the renewables obligation? How badly is the reputation of Scotland’s world-class universities damaged in the international market to attract the brightest and best by a regressive position on post-study visas? We seem to be moving from one extreme to another, closing the doors to some and opening them to others in the name of trade at all costs, whether that is in relation to arms that may be being sold illegally or not ensuring that human rights are at the top of the agenda when we negotiate trade deals.

[Lucy Frazer]

rose—

[Ms Ahmed-Sheikh]

I am afraid I cannot give way.

The poor international reputation created by this Government is one of the reasons why the UK’s overall current account deficit in 2014—which includes investment income and transfers, as well as trade—was a record £92.5 billion, up from £77.9 billion in 2013. As a percentage of GDP, the current account deficit now stands at 5.1%, the second highest annual figure since world war two.

As we have heard today, the SNP Scottish Government have an economic plan based on investment in education, internationalisation, innovation and inclusive growth that will release Scotland’s economic potential. In contrast, what do we have here? We have this Chancellor and the UK Government failing on their own key economic indicators, missing the targets they set for themselves. They have proven beyond all doubt that the Tories’ claim to economic credibility now lies in tatters.

That is why the Chancellor must urgently put in place a comprehensive plan for trade, exports, innovation and productivity to genuinely rebalance the economy. On trade, the Chancellor said that trade and exports would underpin his strategy for growth, but the UK’s current account deficit is a record £93 billion, its highest ever cash amount. On exports, the Chancellor promised a doubling to £1 trillion by the end of this decade, but with exports falling to £503 billion last year, he has missed his own targets and the figures are moving in the wrong direction. On innovation, we compare poorly with our competitors, and the Chancellor’s decision to change innovation grants into loans sends out all the wrong signals. On productivity, the UK lags behind other major economies and is at barely half the level of growth in the pre-crisis trend. The Chancellor’s plan is failing the UK and failing Scotland. We need urgent and radical action to rebalance the UK economy. I commend the motion to the House.

18:42

[The Minister for Universities and Science (Joseph Johnson)]

In winding up this extensive and excellent debate, during which we have explored the vital themes of trade, innovation and productivity, it is worth reminding ourselves of the context of Government actions. When we came to office in 2010, the country was borrowing £150 billion a year. It had the largest deficit of any country in the OECD and unemployment had risen by half a million.

Since 2010, we have taken steps to secure the economic recovery, ensure that we are better placed to withstand future shocks, and provide security and opportunity to people across the whole of the UK. Our actions have borne fruit, and as a result the UK has been the joint fastest-growing economy in the G7. The deficit is down by more than half, there are 2.7 million more people in private sector jobs and there are 900,000 more businesses trading today than in 2010. It is because we are taking the difficult decisions to fix our public finances that we are now able to prioritise investment, boost productivity and rebalance our economy.

Today we have heard some of the ways in which our long-term economic plan is doing just that, with excellent contributions from all parts of the House, even if some were much better represented than others—the Labour Benches were particularly sparsely attended throughout this afternoon’s proceedings. I will answer as many points as I can in the limited time I have, but I want to acknowledge, at least in passing, the strong contributions from my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) and my hon. Friends the Members for Cannock Chase (Amanda Milling), for Bexhill and Battle (Huw Merriman), for The Cotswolds (Geoffrey Clifton-Brown), for Macclesfield (David Rutley), for Horsham (Jeremy Quin), for Gloucester (Richard Graham), for Spelthorne (Kwasi Kwarteng) and, last but not least, for Bedford (Richard Fuller).

Let me start with productivity. Yes, of course the UK’s productivity has lagged behind that of other major economies for decades. That is precisely why the Government have set out a clear plan, “Fixing the foundations”, with a clear timetable for implementation all the way out to 2025. Recent signs are encouraging. Output per hour grew 0.9% in the second quarter of 2015, and 0.6% in the third quarter. With output per hour continuing to increase, this shows our approach is working. Indeed, the independent Office for Budget Responsibility confirmed that in its 2015 economic and fiscal outlook, which forecasts that productivity will return to trend by mid-2018.

Of course, success will not be achieved overnight, and will require a truly national effort from Government, business and working people. Key to that will be working through the plan for productivity we have set out. This means investing in skills by delivering 3 million apprenticeship starts during this Parliament, building on the 2 million of the last Parliament. It means protecting our vital science spending in real terms until the end of the decade and expanding our important network of catapult centres. It means delivering infrastructure projects such as HS2 and Crossrail and the largest investment in our roads since the 1970s. It means rolling out superfast broadband to 95% of premises by 2017. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) will, I hope, welcome the productivity plan’s commitment to extending development rights to taller mobile masts. It also means setting out a plan for future infrastructure challenges, with the creation of our National Infrastructure Commission. The Government have a clear productivity plan; we have a plan for the whole of the United Kingdom. It is a blueprint to fix the foundations of our economy and is a vital step towards securing the prosperity and livelihood of generations to come.

The rebalancing of the economy is another central theme of this afternoon’s debate. The profound changes we want to see in the structure of our economy will not take place overnight, and there is of course much work to do. Already, however, we can see significant progress in key areas where we want to see rebalancing. Job opportunities are being spread much more evenly than before. Opportunities for people have burgeoned outside our booming capital city and the south of the country, with some of the fastest rates of growth in job creation seen in the north of England. Indeed, since 2010, three out of four jobs have been created outside London.

Scotland has been a big part of the national story. In Scotland, 178,000 more people are in employment than in 2010, with the private sector up by 150,000.

[Stewart Hosie]

The Minister has prayed in aid very heavily the productivity plan, “Fixing the foundations”, and he read out a large number of its component parts. Will he do something that his right hon. Friend the Minister for Small Business, Industry and Enterprise did not do and commit to repeating that the Government intend to double exports to £1 trillion by 2020? That is also in the plan, so can we take it that that target has now been abandoned?

[Joseph Johnson]

I shall come on to exports shortly, but we remain strongly committed to that target. It is right that we set ourselves a challenging and ambitious target for exports. The whole Government are working towards achieving that goal.

Our regions are at the centre of our plan. A crucial part of the Government’s plan is to devolve powers to local leaders and enable them to drive growth, attract investment and create jobs, as we are doing with the development of the northern powerhouse and the midlands engine. We have secured an historic city deal for Glasgow and the Clyde valley, and I am pleased that discussions are under way for Aberdeen and Inverness, too.

The manufacturing sector is a part of this renewal. While our manufacturing sector faces headwinds, as we have seen in recent statistics, from the sharp fall in the oil price, a strong pound and slowing external markets, manufacturing output since 2010 has expanded by 18.5%, and by 17% in Scotland. Quite contrary to the assertion of the hon. Member for Dundee East (Stewart Hosie), there are more manufacturing jobs, too, than in 2010. There are 90,000 more of them in our economy today than in September 2010.

While we are about it, let us not miss an opportunity to celebrate the remarkable growth in motor vehicle manufacturing. The 6.4% increase over the past year underscores an historic transformation in that key industry’s fortunes which has been under way since 2010. The Government need no lessons from Opposition parties on manufacturing generally, given that, as many know, it suffered its fastest decline on record as a share of GDP under Labour.

Business investment is increasing too. It has been growing by well over 4% a year in real terms since 2010. Specifically, investment in research and development rose to £19.9 billion in 2014, well up on where it was in 2010. The record levels of support that the Government are providing for innovative businesses through our R and D tax credit are a big part of the reason for that. Our support rose from £1.1 billion in 2010 to £1.75 billion in 2013-14, and the tax credit is helping more than 18,000 businesses to engage in innovative R and D investment.

The hon. Member for Dundee East said that there was a missed opportunity for Scotland. I disagree; the evidence shows otherwise. The hon. Gentleman should, perhaps, note that there were 1,045 successful claims for R and D tax credit from Scottish businesses in 2013-14. He should also recall that the five parties in the Smith commission agreed that corporation tax and its associated reliefs should not be devolved, on the basis of a strong body of evidence that such a move would not be in Scotland’s interests. It was striking that neither Opposition party joined businesses in welcoming our plan to cut corporation tax to 18% by 2020. Companies throughout the United Kingdom will benefit from that, just as they are benefiting now from our R and D tax credit.

The hon. Member for Livingston (Hannah Bardell) mentioned the important issue of equality. We are active in that respect as well. There are more women in work than ever before—a record 14.6 million—and the number has risen by nearly 1 million since 2010. We are also taking steps to eliminate the remaining gender pay gap through new transparency requirements, and, as part of our broader goal of achieving full employment in our economy, we recently set out our aim of halving the disability employment gap. This is not the uncaring, uncompassionate Government that the Opposition parties seek to portray.

Let me say something about the business environment. As part of our economic plan, we want to make Britain the best place in Europe in which to do business, with a business environment that supports investment, productivity, growth and job creation. When Labour was in government, corporation tax stood at 28% and national insurance was set to increase, which would have had a devastating impact on jobs. By contrast, this Government have shelved the planned national insurance increase, increased investment allowances, and introduced the most competitive corporation tax regime in the G20. While we are about it, we are deregulating too, building on the steps that have been taken since 2010. We are committed to cutting the cost of red tape by a further £10 billion during the current Parliament. It is no surprise that Britain has just leapfrogged others in the World Bank’s global ease of doing business rankings to become the top country in the G7 in which to do business.

Let me now turn to another aspect of today’s debate: trade and exports. Our long-term economic plan will enable us to move towards an economy with a stronger export performance. While we are, of course, facing real global headwinds, including a slowdown in China and continued weakness in the eurozone, we are backing British businesses with global ambitions. The number of United Kingdom companies that are exporting is growing strongly—it has increased by 18% since 2010—and Scottish companies are also exporting more. In 2011 there were 9,300 Scottish exporters; now there are 11,100. Our trade deficit is responding, and narrowed in the three months to November.[Official Report, 27 January 2016, Vol. 605, c. 2MC.]

As Members have noted, our £1 trillion export goal is rightly ambitious, and much depends on factors that are out of our control. What we can do as a Government is offer effective support for exporters, and push for ambitious trade agreements that will help them to break into new markets. That is why the Government have recently established the cross-Government exports implementation taskforce to drive a new and tough whole-of-Government approach in support of our export target and our aim to increase by 100,000 the number of UK firms exporting by 2020. The Government are also pushing hard for ambitious trade deals that will remove tariff and non-tariff barriers facing British exporters and open up new markets.

[Bill Esterson]

A number of Members have mentioned the steel industry. The Minister for Small Business, Industry and Enterprise questioned my comments about state aid rules so will the Minister confirm that the European Commission has now said that energy-intensive industries, including steel, can benefit from state aid rules, and that Belgium, France, Italy, Germany and Spain have all benefited in this way?

[Joseph Johnson]

The Government are working hard with our European partners to give the support that is possible to the steel industry, and are working hard with all the companies involved to assure good outcomes in line with our competition regime.

I shall return to the subject of the trade agreements. TTIP holds tremendous potential for the British economy; it is potentially worth up to £10 billion a year to the UK economy. Let me be clear in response to Members’ concerns on this point that there is no threat whatever from the TTIP deal, or any other trade and investment agreement, to the NHS and our other vital public services. The Government, the European Commission and the United States—in fact all of those involved—have been 100% clear on that point. We have over 90 bilateral investment treaties and there has never been a successful claim against the UK. There is no evidence of the kind of regulatory chill that some fear will materialise in the event that we successfully conclude TTIP. TTIP is of course just one of a number of such deals, and we are also supporting ambitious deals with Japan and China.

Members have mentioned support for science and innovation. It is precisely because we are taking the difficult decisions to fix Britain’s finances that we can now afford to prioritise science and other areas that support growth. As the Chancellor announced in the spending review, the Government will protect the science budget in real terms to the end of the decade. That means £4.7 billion in resource funding, rising with inflation, and it also means we are able to deliver on our manifesto commitment of record investment in our country’s scientific infrastructure at £6.9 billion all the way out to 2021.

I hope the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) will welcome the fact that researchers and universities across the UK will benefit from a decade of protection for science under this Government. With respect to his specific concerns for the biomedical catalyst, which is jointly funded by the Medical Research Council and Innovate UK, I am unable to comment on individual budget allocations while we are still in the middle of this process, but the MRC will of course be a big beneficiary of the fact that we have had a massively successful science settlement during the spending review.

Let me also point out to SNP Members that Scotland is punching well above its weight in getting access to this science money, securing 10% of Innovate UK funding and 11% of research council funding, much more than its 8% share of the UK population and 6% share of UK businesses. A few months ago I was pleased to open a world-class medical imaging centre in Glasgow, which has benefited from £16 million of UK Government funding through the MRC, illustrating precisely this point.

On innovation support, different businesses need different forms of financial support to innovate and grow. The lack of available financing at acceptable terms is an obstacle we want to address, learning from countries such as France, Finland and the Netherlands that use a variety of financial instruments. The hon. Member for Sefton Central (Bill Esterson) wrongly painted a gloomy picture of Innovate UK funding, which I must correct. Overall, core funding for Innovate UK has increased from £253 million in 2009 to £453 million in 2016-17, and will reach £471 million in 2019-20. It is this positive settlement that is enabling us to deliver on our manifesto commitments to protect and expand our catapult network.

Raising productivity and balancing the economy are the key economic challenges for this Parliament and are central to our long-term economic plan. Thanks to the hard work of the British people, this long-term economic plan is working: the deficit is down by more than a half, 2.7 million more people are in private sector jobs and over 900,000 more businesses are trading today than in 2010. But there can be no complacency. The Chancellor has already pointed to the dangerous cocktail of risks—

[Mike Weir (Angus) (SNP)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

19:00

Division 164

Ayes: 241

---

Labour: 186
Scottish National Party: 43
Liberal Democrat: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 2
UK Independence Party: 1
Green Party: 1

Noes: 299

---

Conservative: 291
Democratic Unionist Party: 5
Ulster Unionist Party: 2

Catastrophic Sporting Injuries: Steven Cox

Wednesday 13th January 2016 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Margot James.)

19:12

[Mr Alan Campbell (Tynemouth) (Lab)]

I am grateful for the opportunity to raise the case of my constituent Steven Cox, a young man who received catastrophic injuries during a rugby match almost 10 years ago to the day. I want to preface my remarks by saying that this is not a campaign against rugby or against contact sport. I accept and welcome the fact that thousands of my constituents, and millions of people across our country, watch and play rugby. I have a number of successful rugby clubs in my constituency, including Rockcliff, Percy Park and North Shields. I acknowledge that catastrophic injuries occur, and not just in rugby. Thankfully, they are quite rare, but they do happen too often. I believe, and Steven Cox believes, that when they do happen, they should be investigated properly and lessons should be learned, in the hope that the game can be made safer for those who follow it.

Steven Cox was 21 years old when he was catastrophically injured. He was a Durham University student, and was playing for St Chad’s College against St Cuthbert’s. It was an evening match held at Durham City rugby football club ground. Steven was playing tighthead prop in the front row of the right-hand side in the scrum. St Chad’s were losing an eagerly contested match; by all accounts the St Cuthbert’s team were heavier and stronger. The match was nearing the end of the second half when a scrum was called. What happened next is, to an extent, contentious, not least in terms of the speed of the engagement of the teams and how it was called. What we do know is that when the front rows came together, Steven was forced up and out of the scrum, before going to ground having sustained a serious neck injury. He was taken to University Hospital of North Durham and then transferred to a specialist unit in Newcastle general hospital. Steven had two major operations; two of his vertebrae were crushed. In stark terms, he lost the use of his limbs. He has to use a wheelchair and is significantly disabled.

[Jim Shannon (Strangford) (DUP)]

I have asked permission to intervene. Does the right hon. Gentleman agree that there needs to be better education of the risks of catastrophic injuries in sport? Some of my constituents have experienced such risks in horse riding. The participants need to be fully aware of how they assess the risk and how they deal with the injuries should they arise.

[Mr Campbell]

I do agree with that, but the education must be based on evidence. Presumably, some of that evidence will come from an investigation, which is the point I am making. We need to know whether this case was properly investigated.

Steven was aware of what happened, because he remained conscious throughout, but, unsurprisingly, when the time was right, Steven and his family sought answers to what had happened and what the outcome of the investigations were. They looked to the Rugby Football Union, because the game had been played under the International Rugby Board’s code of conduct, and the referee was RFU-qualified to level 5. There were two touch judges who were also qualified to level 5. The game was on an official ground and was floodlit. A number of Steven’s teammates made statements. There appears to have been a referee’s match report, but it contained little detail about what had happened. There was a statement from one of the touch judges, which was made three months after the event, to the insurers’ solicitor, but there was no statement from the touch judge nearest to the incident.

There was a group of RFU officials, including an RFU referee coach, who gave a statement, but did not comment on the accident. An RFU referee assessor submitted a referee assessment, but did not give a statement describing the mechanics of the accident. In short, there was no shortage of expert witnesses, but there has been a shortage of statements from those witnesses. It was not unreasonable for Steven to ask what further investigations were made, not least whether an official investigation had been carried out by the RFU. To find out whether such an official investigation had taken place and, if it had, what conclusions it had reached, Steven had to begin a legal case. From the outset of that process, it was unclear whether there were other documents, including statements by other RFU officials at the game.

It was also very clear at an early stage that the RFU, or at least its legal advisers, was unwilling to give access to information unless it was forced to do so by a court. It also emerged that the RFU itself had little information in its possession as any documents appear to have gone to its legal team or to solicitors representing the insurers, and in some cases those were the same people.

Steven did receive a significant no-faults insurance pay-out after the injury. It is a significant amount to someone looking from the outside, but we should bear in mind that he was just 21 years old, and that the amount was hardly more than one of the solicitors involved could expect to earn in a few years, let alone a lifetime.

It was not unreasonable for Steven not to risk what could be a substantial legal bill should the case fail. After all, he was actually seeking the truth of what happened above anything else. My point is that organisations responsible for investigating catastrophic injuries may also have to take into account their insurers’ interests, and when the legal team at the organisation or the insurers—in this case it was both—come into play, progress is very slow and very defensive. The RFU’s procedure for catastrophic injury clearly instructs anyone involved to speak to no one but the RFU’s solicitors. Members of Parliament are all too well aware of the practice of big organisations with considerable legal support hanging out against a settlement on the basis that the person bringing the case would not risk the cost, not have the resources or run out of money.

Despite that, Steven and his family were determined to get to the truth. Let me place on record my respect for Steven’s parents, Margaret and Tom, and his sister, Rachael, who have pursed this case doggedly. They began a protracted campaign to persuade the RFU to release the information or at least to confirm that it had it. It was a deeply frustrating experience. A freedom of information response confirmed only Steven’s name and that the incident had occurred. At one point early on, the RFU’s legal advisers rejected the very idea that there was a dispute between them and Steven Cox.

Steven and his family came to see me in order to see what further could be done. I will not go into every aspect of the story but, to give a flavour of the RFU’s attitude, I was offered a telephone conversation in which the RFU legal representative would merely “reiterate their position”. I urged the RFU to meet Steven and I offered to be there or not to be there—whichever would help. The RFU invited Steven to a rugby match at Twickenham, 270 miles away from his home, where the deputy head of legal affairs and the head of international and public affairs would speak to him after the match. I was offered tickets for myself and a guest. I was not convinced that that was the way to do things in relation to such a serious issue and, perhaps understandably, Steven and I declined the offer.

Communication went backwards and forwards, with long periods of inaction and silence from the RFU in between. It seems that part of the delay stemmed from the fact that, at every stage, the RFU’s legal department reviewed any response.

To the RFU’s credit, in September 2014 a meeting did take place in North Shields in my constituency. At the meeting, there was a positive discussion, particularly with those who seemed to come from the playing side of the game, but once the meeting was over, normal service resumed, with any meaningful progress being prevented by the legal representatives. Once again, any communication or complaint was, in effect, taken off RFU officials and taken on by its legal team and insurers.

Apart from seeking co-operation from the RFU, I also drew the case to the attention of successive sports Ministers. One of the current Minister’s predecessors met the Cox family and helpfully suggested referral to Sport Resolutions, which was extremely helpful. It actually offered to pay for a review, but again the legal affairs team rejected that, saying that it did not believe that there was a dispute and, therefore, that there was nothing to resolve.

The current sports Minister, the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Chatham and Aylesford (Tracey Crouch), met Steven and his family last month in what I thought was a helpful meeting and for which I am grateful. On the back of that meeting, I asked for this debate, partly out of frustration with the RFU, but more importantly to see what could be done in the context of lessons learned. I had been thinking about calling for this debate for some time, but the Cox family insisted that I did not do so while the world cup was on, given how important they believed it to be to this country. That is the measure of that family.

I want to ask the Minister three questions. What can be done to counter the lack of independence in investigations when organisations charged with investigating incidents of catastrophic injury also have an interest in protecting their insurers? They are able to use their position as arbiters of the release of information and influence the process. Should there not be a way in which incidents leading to catastrophic injury can be independently investigated, or at least a mechanism by which investigations may be independently reviewed so that safety can be improved?

Secondly, should there not be a body to look after care in sport and to help to ensure that sports in which every participant accepts an element of risk are nevertheless as safe as possible? As Steven Cox observes, there is a Health and Safety Executive for the workplace, but no such overarching body for sport.

Thirdly, why is it that while the RFU receives significant amounts of public money for its sport, it seems indifferent to engaging with my constituent and indeed me to discuss the perfectly reasonable request that we find out what happened on that day and why, and the way in which the case has been handled? Even at this stage, should not the RFU engage meaningfully with Steven Cox to try to bring closure to the case?

I know that the Minister is passionate about sport. I and Members on both sides of the House hold her in high regard, and I wish her well in the weeks and months ahead. I hope she can reassure me about how the investigation of catastrophic injuries may be improved to make playing safer for those who love the game.

In conclusion, let me return to Steven Cox—or, to give him his proper title, Dr Steven Cox. He is now a postgraduate from Durham University who is embarking on a career in engineering. This remarkable young man wants to know fully what happened and to play his part in ensuring that lessons are learned from his experience. I and he hope that this debate will move that forward.

19:27

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Tracey Crouch)]

I thank the right hon. Member for Tynemouth (Mr Campbell) for securing this debate on such an important subject. Discussions about such events are always challenging, but I am in no doubt that everyone in the Chamber is on the same side and wants a safe and secure environment for everyone taking part in sport. Not just as a Minister, but as a long-term participant in contact sport, I am well aware that things can sometimes go horribly wrong. I have been on the field when players have had their sporting choice finished for good due to a horrific injury. While we all do everything that we can to prevent these misfortunes, we accept that sport brings with it an element of risk, but that risk must be mitigated when possible.

It is right that player safety is primarily a matter for the national governing bodies, as the designated authorities with responsibility to regulate their sport, and I expect each governing body to make that its highest priority. That should be not simply for good public relations, but a fundamental aspect of the organisations’ role in delivering their sport.

While there is consensus that everyone wants sport to be safe, I believe that everyone will also agree that when there is an injury in sport, whether catastrophic or otherwise, that should be properly investigated. In Steven’s case, as the right hon. Gentleman made clear, there is a perception that that did not happen.

The right hon. Gentleman eloquently set out Steven Cox’s case, so I will not take up time by going over the incident again. I will say, however, that despite the horrific reason, it was an absolute pleasure to meet Steven and his family in December, thanks to the right hon. Gentleman’s efforts. I know that Steven and his family have gone through very difficult times, but I was extremely impressed by Steven’s perseverance, and by his enthusiasm for and commitment to promoting this important issue and campaigning for greater safety in sport. In fact, it was the meeting with Steven that reinvigorated my and my Department’s energy to push harder on the issue.

Unfortunately, due to the timing of our meeting, which was just before the publication of the sports strategy, I was unable to say how I could make progress on some of these points. However, as the strategy has now been published, and in the light of today’s debate, I can reveal further details. First, however, I wish to deal with a number of the issues relating to the RFU. Following my meeting with Steven, I wrote to the RFU chief executive, Ian Ritchie, and I am pleased to say that he will personally meet Steven. A letter to Steven offering such a meeting to discuss player safety has been or is about to be sent. I know that this will not be the first time that the RFU has met the Cox family, but I hope a meeting with the chief executive is seen as a positive step and one which will help in future.

That meeting will, I hope, be an opportune moment for the RFU to reassure the hon. Gentleman and Steven on his third point—that lessons have been learned in some respects about how to respond quickly and effectively to injuries sustained during games. The RFU has in many respects reassured me, but it needs to do so too for Steven, his family and the wider rugby community.

It is important to acknowledge that the RFU has developed a number of programmes to ensure player safety. Last year it introduced the RugbySafe scheme ,which includes all the RFU’s player safety and wellbeing projects to support clubs, schools, colleges, universities and all other participants in the game. I know that the RFU continues to update guidance as required, and I encourage it and all other national governing bodies to ensure that safety is at the heart of all sporting activities.

On the new sports strategy and what I was unable to say in the meeting with the hon. Gentleman in December but can say now, the strategy explicitly recognises the importance of safety for players and spectators at sporting events, all the way from the grassroots to the elite. The strategy included a commitment to a new duty of care review to consider these issues more fully. Baroness Grey-Thompson, who brings with her a wealth of personal and professional experience, has agreed to lead an independent working group to carry out the review.

The complete remit of the review is yet to be finalised, but I have discussed Steven’s case with Baroness Grey-Thompson and she has already agreed to two things. First, she will meet Steven, hear his views on duty of care and discuss his case. Secondly, the review will consider how we investigate catastrophic injuries in the future. I am not going to prejudge the outcome of the noble Baroness’s review, but I have enormous sympathy with the right hon. Gentleman’s point about independence of investigation. Duty of care, to me, is therefore not just about preventive measures; it is also about confidence in investigation and honest lessons being learned.

Finally, I was interested to note the suggestion this evening from the right hon. Gentleman that we establish a body to look at safety in sport, along the lines of the Health and Safety Executive. He will be aware that, as I stated earlier, safety in sport is generally the responsibility of the national governing bodies, although the relevant sports councils also play a role. It is certainly worth considering the merits of the current system and whether establishing an alternative one would be beneficial, so I will ensure that the duty of care review also considers this suggestion.

I will, of course, update the House as the work on duty of care and safety in sport progresses, and I am grateful to the right hon. Gentleman for securing the debate this evening. I know that what happened to his constituent Steven was horrific, but through his campaigning and that of others, alongside progress in guidance and changes to play, I am confident that we can prevent injuries like his from occurring in future. If, unfortunately, they do occur, we can try to ensure better investigation. What we can certainly do is ultimately make sport much safer for everyone in the future.

Question put and agreed to.

19:32

House adjourned.

Riot Compensation Bill

Wednesday 13th January 2016 Public Bill Committees

The Committee consisted of the following Members:

Chair: Mr George Howarth

† Burrowes, Mr David (Enfield, Southgate) (Con)

† Dromey, Jack (Birmingham, Erdington) (Lab)

† Foster, Kevin (Torbay) (Con)

† Heaton-Harris, Chris (Daventry) (Con)

† Hoare, Simon (North Dorset) (Con)

† Huq, Dr Rupa (Ealing Central and Acton) (Lab)

† Knight, Julian (Solihull) (Con)

† Lammy, Mr David (Tottenham) (Lab)

† Mahmood, Shabana (Birmingham, Ladywood) (Lab)

Mulholland, Greg (Leeds North West) (LD)

† Penning, Mike (Minister for Policing, Crime and Criminal Justice)

† Reed, Mr Steve (Croydon North) (Lab)

† White, Chris (Warwick and Leamington) (Con)

† Williams, Mr Mark (Ceredigion) (LD)

† Wood, Mike (Dudley South) (Con)

† Wragg, William (Hazel Grove) (Con)

Joanna Welham, Committee Clerk

† attended the Committee

Public Bill Committee

Wednesday 13 January 2016

[Mr George Howarth in the Chair]

Riot Compensation Bill

14:00

[The Chair]

It might be helpful if I make a few preliminary observations. As normal, please switch any electronic devices off or to silent. Tea and coffee are not allowed in the sittings. Members may remove their jackets, if they so wish.

These proceedings are rare; they relate to a private Member’s Bill. We will proceed in the normal fashion without a programme motion and with our business governed by my selection and grouping for any decisions of the Committee. In general, the procedure is similar to that of any Public Bill Committee. The Member with the lead amendment in a group will open, then I will propose the formal question, and then there will be a debate on the whole group. The Member with the lead amendment will then respond and tell us whether he or she wishes to withdraw the amendment or press it to a Division. We will deal with any votes requested on the grouped amendments formally when we get to the affected lines of the Bill. We will then move on to the next group or to clause stand part, as required.

There is no formal finish time for this sitting. Proceedings will be concluded by finishing our business and reporting the Bill, or by a Member who has the Floor—not someone intervening—moving that the Committee do now adjourn, which is itself a debatable question. If the Committee agrees to adjourn, I will invite the Member in charge of the Bill to move a sittings motion.

Clause 1

Claims for compensation for riot damage etc

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

[Mike Wood (Dudley South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Howarth. This is my first Bill Committee, and for it to be on my own Bill is a particular pleasure.

I would like to express my gratitude to the people who have helped the Bill get this far. In particular, I have received support from the Home Office in drafting and preparing the Bill, both officials and Ministers, as well as from shadow Ministers and other Members in all parts of the House. They approached Second Reading in an extremely constructive fashion. I am very grateful for the widespread support for the principle that we are trying to achieve.

The Bill seeks to update the existing legislation, the Riot (Damages) Act 1886, and make it fit for the 21st century, not only to deal with factors that naturally would not have been considered when the Act was passed, but to adapt it for the changing nature of riot and riot damages. Particular thanks are also due to Neil Kinghan, the independent reviewer, for his extremely valuable work in preparing the review that forms the basis for the Bill.

Clause 1 is a straightforward attempt to update the definition of a riot with more approachable language while maintaining the existing principle that police forces have some liability for damages caused during riots. As we will address under later clauses, however, that should not be unlimited liability.

[Jack Dromey (Birmingham, Erdington) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth.

The riots in 2011 saw disorder on a scale unprecedented for a generation, threatening life and limb, with businesses and homes burnt down and communities laid waste. What happened was nothing short of outrageous. I pay tribute to the police, fire and ambulance services for the role they played in the most difficult circumstances. I also pay tribute to the local communities that stood together in what were tough times. It was right that many people paid the price for what happened with their liberty, but there was then a price to be paid to the victims.

As the hon. Member for Dudley South has said—I pay warm tribute to him for pioneering the Bill, which we strongly support—the Bill is about updating the 1886 Act. There were many moving contributions on Second Reading about the severe losses of those affected by the riots in 2011 and how compensation was woefully inadequate, particularly in terms of the speed with which it was paid, as well as the scale of what was paid. My hon. Friend the Member for Ealing Central and Acton spoke movingly of her constituent, Ravi, a small business owner. It took 18 months for his shop to reopen at half the size, and he and his family were forced to live off their savings in the meantime.

My hon. Friend the Member for Croydon North spoke of the nine businesses and 40 flats that were destroyed in his constituency, putting poorer victims in severe financial difficulty. Some victims have not received the compensation that they are due to this day. The losses to people such as Ravi show that it is right that the legislation is updated to ensure that those who suffer the catastrophic consequences of riots are compensated fully and in a timely fashion.

Equally, there are other changes that we will come to shortly that necessarily deal with flaws in the existing legislation. For example, there was no mention of motor vehicles in the 1886 legislation, unsurprisingly, and no consideration of interim compensation for victims while claims were processed. There was no consideration of new-for-old replacement of damaged goods and no powers for the police to delegate administering the compensation process to experts. As a result, several years on from the 2011 riots, some victims are still waiting for more than £40 million to be paid out.

The Bill is a necessary update to very old legislation, and the broad thrust is welcome. There will be contributions during the passage of the Bill on particular issues to seek clarification and to address concerns from hon. Members who have constituency interests, but the Bill is welcome because it modernises the language of the 1886 Act and includes cars and other vehicles. It provides for much-needed interim payments and creates a new body to deal with insurance claims to avoid massive delays and the kind of bureaucracy seen last time around. The Bill proposes the capping of payments by police forces. It is right that they are not asked to promise a blank cheque, not least because of the immense financial pressures on police forces.

In conclusion, my right hon. Friend the Member for Tottenham has spoken movingly in previous debates and on Second Reading about the impact of what happened on his community and many others. “Never again” is our determination, but we need to ensure that the victims of what happened are finally properly and fully compensated, and we need to learn the lessons of the inadequacies of the 1886 Act and bring arrangements up to date to ensure that victims are compensated. I am pleased that we are in agreement on this welcome measure, which has the support of the Opposition.

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

It is a pleasure to serve under your chairmanship, Mr Howarth. This private Member’s Bill is a first for me as a Minster. I congratulate my hon. Friend the Member for Dudley South on piloting the Bill through. It has support from across the House. Tone is important when trying to persuade colleagues, and he is a champion of that. I apologise for not being in the House on the Friday when the Bill was debated on Second Reading, but I have read the Hansard report. I was not the duty Minister on that day, but my colleague, the Minister for Immigration, did very well to ensure that he read every note I gave him in the right tone.

I join the hon. Member for Birmingham, Erdington in paying tribute to the emergency services that were so valiant and brave in 2011 and in the other riots that sadly we have had over the years. We do need measures in statute to ensure compensation for those who need it; some would argue that we should have done that sooner, since this was first put in statute in 1886.

As someone born in Enfield and brought up in Tottenham, Mr Howarth, I found it very difficult to watch the riots on TV and later to visit the area where I have so many friends and relatives. That part of the world had done so much over the years, particularly since the terrible things that happened at Broadwater Farm. Politicians are supposed to be hardened, but we are not because those are our communities. I pay tribute to the right hon. Member for Tottenham, my hon. Friend the Member for Enfield, Southgate, Nick de Bois and other hon. Members now here who had their communities blighted and devastated by the riots. I say as the Minister that it is right and proper that we are here today to help the Bill through.

I have looked extensively at the amendments and spoken to hon. Members from across the House to see how we could help. I also pay tribute to my officials, who have given an extensive amount of time to ensure that we debate the Bill and get it right so that we can enact it and help our constituents in the way they need.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Property in respect of which claims can be made

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

[Mike Wood]

I will be brief, Mr Howarth. The main purpose of clause 2 is to clarify the property within the confines of the scheme, primarily extending it to motor vehicles. As has been said, 1886 was the year the first diesel engine was pioneered, so it would be too much to hope that those considering that legislation might have foreseen the extent to which the motor would come to dominate so much of our lives. The clause would explicitly extend the riot damages scheme to include motor vehicles. It also clarifies the position of mobile businesses and the equipment stored within them.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Regulations about claims procedure

[Mr David Lammy (Tottenham) (Lab)]

I beg to move amendment 5, in clause 3, page 3, line 12, at end insert “, which must be no shorter than 132 calendar days from the day on which the riot ends”.

This amendment would ensure that a person has at least 132 days from the end of the riot to make a claim for compensation.

[The Chair]

With this it will be convenient to discuss amendment 6, in clause 3, page 3, line 14, at end insert “, which must be no shorter than 132 calendar days from the day on which the riot ends”.

This amendment would ensure that a person has at least 132 days from the end of the riot to submit details and evidence in relation to their claim.

[Mr Lammy]

I am grateful to serve on this Committee but sad that we find ourselves here because my constituency has seen two riots in a generation. It is right to update this legislation, and I, too, pay tribute to the hon. Member for Dudley South for his work on the Bill.

I have tabled some probing amendments that I suspect will go to regulations. The Committee will understand that these matters are of great concern to my constituents, but many hon. Members might also want to raise these issues. Amendments 5 and 6 relate to the kinds of areas that experience riots in our country and the kinds of people and businesses that find themselves having to make a claim. Hon. Members might remember that the original legislation allowed for 30 days in which to claim compensation. After much lobbying by Members and others, that was extended to the 42 days that has been landed on.

14:15

Many Members across the House will recognise that many small, high street businesses were in a state of utter shock after the riots. I ask the Minister, the hon. Member for Dudley South and others to stop for a second and imagine what that must have been like. I know that all Committee members will recognise that those who run small businesses on our high streets are, by and large, people who do not rely on the state for much. They are people who get up very early in the morning and finish work very late at night. On my high street, those are independent businesses, rather than big chain stores; if they are chain stores, they are usually franchises. These are some of the most hard-working people in this country. Surprisingly, even though they do customer-facing jobs, they are a long way from the Government.

In a constituency such as mine, many small business owners are part of Britain’s ethnic minority population. Many of them speak English as a second language. Many of them did not expect their businesses to be burnt to the ground and for vicious looting to take place through the night, leaving their stock gone. On the Sunday morning after the riots on the Saturday, I remember many constituents standing in just their pyjamas, holding their children in their arms.

These are people who, understandably, did not even realise there was a riot damages Act. Despite the work that this Committee might do and the Bill that will follow, those people still may not know—God forbid—in 10, 15, 20, 30 or 40 years, long after we are all gone, that there is a riot damages Act. This business of the length of the notice period is therefore very significant indeed.

I think of one individual who ran an auto repair shop that was totally flooded because it was next door to the grand department store—the Union Point building—that was burnt down in my constituency. He could not get into the shop for weeks, and a heart attack ensued. The state of shock would have been so deep that I do not think he would have met the 42-day limit. I am sure hon. Members can think of constituents who are too busy dealing with the total shock of what has happened and with basic things to meet that limit—“How do I get a new credit card, now that it’s gone in the fire? Where’s my passport? Where have all my phone numbers gone? I’ve lost my diary. My identity is completely gone. I’ve got to claim this and claim that. I haven’t got a driving licence. I can’t get into the car.” Those things take weeks and weeks to sort out, never mind getting a business back into a state in which it can get moving again.

The purpose of the amendments is to extend that limit to 132 days, adding to the extra 90 days inserted by the Bill, and to probe whether, in regulations, there will be exceptions and an understanding of the medical conditions that can fall upon individuals. I am talking about small businesses, but a number of individuals lost everything, and in some ways they have even less capacity. We must think about where riots have sadly happened in the history of our country, what kinds of communities typically see them and what capacity they have to respond in such catastrophic circumstances. Given that this Committee is sitting during a period of serious flooding in our country, it is easy for Members to understand the total destitution of the people who experience such catastrophes. People are going through a similar process at the moment.

[Jack Dromey]

Birmingham was one of the cities hit hard by the riots, and the constituency of my hon. Friend the Member for Birmingham, Ladywood was particularly affected. I want to draw a distinction between, on the one hand, big retailers such as Next or supermarkets, which have the capacity to submit a claim quickly—they understand the process and can take advantage of the 1886 Act—and, on the other hand, smaller businesses. Business organisations have said to us—we are sympathetic to such representations—that some individuals were traumatised, some were injured, some faced financial problems and some literally faced bankruptcy. For those people to learn about the procedure, compose an application and submit it, they need time. I sense that the Government are sympathetic to the arguments that my right hon. Friend the Member for Tottenham has powerfully deployed, so I hope that the Minister will be flexible. This amendment might usefully be made.

[Mike Penning]

I fully understand the thought process behind the amendments and their tone. Of course, there was an extensive consultation process, but we have to draw a line somewhere. I fully understand the points made by the right hon. Member for Tottenham and the shadow Policing Minister, as I am sure other Members do. I will commit to putting exceptional circumstances into the regulations.

The Bill is for people who have suffered and the most vulnerable. It is a safety net; that is what it is there for. The regulations will cover exactly what the right hon. Gentleman has asked for. Exceptional circumstances could easily cover medical conditions, residential properties and small and medium-sized enterprises. The Bill is rightly not about the Nexts of this world. Given what I have said and will say, I hope that Members and other people will realise that we have listened. We will do this in the regulations, which is where it should be. That commitment is now on the record, so I hope there is no need for the amendments.

[Mr Lammy]

I am grateful to the Minister for that undertaking and, if those regulations are forthcoming, am pleased to withdraw the amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Mr Lammy]

I beg to move amendment 3, in clause 3, page 3, line 17, leave out “may” and insert “must”.

This amendment would require the Secretary of State to require that any estimates of the cost of repairs are to be prepared by approved contactors.

The amendment deals with the approved contractors that act on behalf of the Secretary of State, engage with individuals who find themselves having to make a claim under the Riot (Damages) Act 1886 and estimate the cost of the repairs. It would be remiss of the Committee if we did not put on record the substantial findings in the months after the riots. That comes up time and again in the House, and it will come up in relation to the floods being experienced across the country.

The London Assembly committee chaired by John Biggs did very good work and published a very good report in 2012 on the riots. The committee took evidence from a range of people. The report said:

“Loss adjusters who were involved in assessing insurance claims after the riots faced a complex situation. Nevertheless, some loss adjusters behaved insensitively in handling claims, and lacked the skills needed to deal effectively with some owners of small businesses.”

As I said at the time, there is no point asking someone to provide receipts for their stock if their business has been burned to the ground. There was an inability, frankly, to understand where those small businesses were coming from and what they were facing. There were challenges in such areas as Croydon, Birmingham and Tottenham, where businesses—they are often independent, ethnic minority businesses—were made to feel like they were criminals attempting to defraud the state. I had an Adjournment debate after the riots where I expressed my concerns about the insurance industry and some—not all—loss adjusters.

I tabled the amendment to probe the Minister to say a little more about the nature of those approved contractors and how we might deal with the issue. I pay tribute to the independent review of the Riot (Damages) Act by Kinghan, which laid the foundation for much of the work that led us here. He recommended that a riot claims bureau be developed with the agreement of the Home Office and the insurance industry. He also recommended that a manual be prepared, as soon as is practicable, to provide guidance on the types of claims likely to follow a riot, including how to deal with clients unused to making claims and other issues. That is a part of his report that is pertinent to the issue raised by the amendment.

Members will understand that floods occur more often than riots in the United Kingdom, because of the nature of our geography. In 2011, much of the expertise simply was not there. The country had not seen widespread riots in the 10 years since Bradford and Oldham, and it is easy to lose the expertise, the necessary sensitivity and the understanding that the context in the communities experiencing such events is very different.

Kinghan also recommended that, in their emergency plans, local authorities should be asked to include planning for riot recovery services to provide co-ordinated advice and support. I do not know whether that recommendation relates to all local authorities, but that, too, goes to the point about expertise. It would be wrong if I did not mention loss adjusters at this point. Will the Minister say something more about the approved contractors and how we can avoid the situation that caused real concern in the communities affected?

[Mr David Burrowes (Enfield, Southgate) (Con)]

Clause 3(4) is also about trying to prevent fraudulent claims, but I am just trying to understand what the amendment, by making this mandatory, would preclude. With approved contractors on an approved contractors list, it might be hard to identify a local authority or others outwith the approved process of the Secretary of State or local policing bodies. Is there an important flexibility that may help to a degree with timeliness? I know that the right hon. Gentleman was concerned, as I was, about the timeliness of compensation for our constituents’ businesses.

14:30

[Mr Lammy]

The hon. Gentleman makes a good point. In a sense, this is a probing amendment to get to the substance of what we are really talking about. The “must” probably goes too far; I accept that. I hope that I will get some comfort from the Minister shortly.

No one can predict when the next riot will be and no one can entirely control the individual loss adjuster who is behaving insensitively, but what one can guarantee is that, by and large, it will be in a deprived area and, if it is a high street area, it will involve independent shopkeepers. We have had a long history, over successive generations since the Windrush, of independent shopkeepers largely being of refugee and immigrant stock. I think of the parts of my constituency that are still Orthodox Jewish and of the émigrés who ran the shops many decades ago. Over the decades, different communities have run the shops. Shopkeepers find themselves in a situation where, if they have been ransacked, they are not getting understanding from parts of the insurance industry, particularly loss adjusters, about providing receipts, for example. That is why I make the points that I do.

[Mike Penning]

I fully understand and also respect, not least because of the conversation that we had outside, the right hon. Gentleman’s probing amendment. I have to agree with him that “must” goes a bit too far, but I fully understand exactly where the amendment is coming from.

May I say at the outset that we are looking to put together an approved list of loss adjusters who will be responsible should riots take place? Obviously this is different from the insurance side, because these measures are for people who are uninsured.

[The Chair]

The Minister mentioned the issue of insurance and I wanted to raise that issue in this regard. The areas that tend to be worst affected by riots tend to be poorer areas, as my right hon. Friend the Member for Tottenham has described. One of the issues that affected businesses in the London Road area just outside the town centre of Croydon—it was the London Road that was hit the hardest; that is where businesses tend to be poorer and to be led by ethnic minority owners—is that after the riots insurance premiums grew so rapidly that many of those businesses became uninsurable. That led to further pressure on those businesses to close down. The last thing that we want to see is areas that are already poor, and where businesses are starting to grow and bringing life back into those areas, being hollowed out and shops closing down. Do the Government have any intention of addressing the issue of insurance becoming unaffordable in areas that have previously been hit by the riots?

[The Chair]

Order. Before the Minister resumes, I want to say that I have exercised quite a bit of latitude so far in these proceedings. The hon. Member for Croydon North could well have made a very good speech consisting of exactly the words that he has just used. Interventions should be much briefer than that. I say that very gently, but advisedly.

[Mike Penning]

It might have been a long intervention, but I think it was very useful to the course of the debate. I am sure you would agree, Mr Howarth, even if we need to keep interventions short. Should I need to intervene on anyone, I will try to keep my intervention short as well.

I say to the hon. Member for Croydon North on that specific point that I have just had the 10th anniversary of Buncefield in my constituency, which was the largest fire and explosion in this country since the second world war. The quality of the loss adjusting in some companies was brilliant; the quality in others was appalling. The insurers were very good in some areas and did not boost the premiums, while other premiums, particularly for smaller companies, were extremely harsh. It is something I have been working on with other Departments. If the right hon. Gentleman wants to join me outside the Committee in working on that issue, I will be more than happy to do so.

With regard to the probing amendment, there are two things we have to ensure. This is taxpayers’ money, so we have to make sure—this is a safety net for people who are uninsured—that fraud and other events do not in any way mean that taxpayers’ money is misused. However, we do not want to say that everybody will be a criminal and try to defraud; they are after help in 99% of cases. We also do not want to slow down the process of making the payments. If we look at the sheer scale of the riots in 2011—we have heard today about the myriad different communities across the country that were affected—we can see that to have all the estimates done by approved contractors would be enormously difficult.

The point about guidance was very well made; for want of a better word, on paper, it would say, “This is what should happen, should these terrible events happen again”. That was a recommendation of the review. That is something I will take away from the Committee, work on and make sure it happens.

With regard to the loss adjusters, an approved list is exactly where we need to go. On the need for this provision and the need for the word “must”, I am sure the right hon. Gentleman will agree to meet me and consider the comments I have made.

[Mr Lammy]

With that statement from the Minister, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn

Clause 3 ordered to stand part of the Bill.

Clause 4

The decision-maker on a claim

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

[Mike Wood]

Neither police and crime commissioners nor local police forces are experts in processing claims, which is why it is important to allow those bodies to delegate the functions, particularly to loss adjusters. Provisions in clause 4(3) allow the Secretary of State to specify the persons to whom those functions may be delegated, which will hopefully achieve the objectives that the right hon. Member for Tottenham was trying to achieve through amendment 3.

[Mr Burrowes]

This Bill is particularly important to my constituents in Enfield, who suffered great loss. It is an area that would not have dreamed of being caught up in a riot, but was. I want to draw on situations where, instead of there being huge riots that transcend many regions, there may be an issue as to whether a riot takes place at all and whether what happens comes within the definition of riot.

In Enfield, as elsewhere, even though it was obvious that there had sadly been a riot, there was a concern and nervousness among the authorities about mentioning the word “riot”, because they would then click into a conversation. The Bill has rightly dealt with the antiquated language of the 1886 Act and the definition in the Public Order Act 1986, but there is still the same issue that liabilities follow from definitions; I know that, as a lawyer. We may not have such an obvious situation of riot on the streets of London, Birmingham or elsewhere. As a lawyer I know that when 12 or more people gather together in a public order incident, there is an issue as to whether it comes under the strict definition of a riot or whether it is an affray or another Public Order Act incident.

When a claim is considered, the responsible person or authority is the policing authority, the appropriate decision-making body. We need to look at the process and ensure that there is not an undue conflict and that we do not wait on cases to go to court to see whether anyone mentions the word riot or wait for a determination and court judgment that says that those responsible have been convicted of riot. We do not want our constituents and businesses to have to hang on for that process, which could take a long time and be subject to further appeals and criminal court proceedings before a decision is made.

I ask the Minister whether that has been considered and whether it may be appropriate not necessarily to delegate the matter away from a policing authority, but to get an independent view from a separate prosecutorial authority. That could separate the prosecutorial function of those responsible for a public order incident from the function of determining the claim to ensure that a conflict cannot get in the way of a timely response and compensation.

[Mike Penning]

Obviously, that was looked at extensively. We have to be slightly careful. Unlike my learned Friend I am not legally trained, but the authority is the police—it is the police who decide and no one else. That is the definition. From the police’s point of view, if a criminal offence has taken place, a riot is defined as such by the police, who have the training and expertise to do that.

I fully understand the sensitivities of local authorities and others, but it is not their decision and it must not be. It must be the police’s decision. The wording in the Bill makes it simple as to how we define that. I understand the concerns, but they were looked at extensively.

[Mike Penning]

That is a fundamental point. The Minister will understand that that goes to the heart of our policing model: that is, policing by consent. Unlike other police forces in the world, our police do not routinely carry guns; we, as citizens, police alongside the police. Therefore, given the policing by consent model, he will understand that in some scenarios the police authority may be reluctant to declare a riot. What are the safeguards in those circumstances?

[Mike Penning]

The right hon. Gentleman makes an important point, but that is the same as any other decision that the police make. We have an independent police who make independent decisions based on their best knowledge at the time. To say that no policeman is ever influenced by events going on is wrong. Of course they are. They can listen to arguments, but it is their decision. We looked carefully at that to ensure that the police have and can keep powers to make the decision as to what is a riot and what is not. There is a whole debate to be had about that, but the definition in the Bill is important in allowing the police to continue to have the powers that they have had. That is why I support the clause.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

Clause 6

Delegation of Secretary of State’s functions

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

14:45

[Mr Reed]

I will be brief. The proposal for the Secretary of State to be able to set up riot claims bureaux is welcome and a sensible move forward.

First, after the 2011 riots one of the problems was that communities did not have a voice in decisions taken about compensation or about models of reinvestment in affected areas. For example, in Croydon the council set up an independent riots panel with the community, but three years later, when I held a review meeting with people who had participated in the panel and with businesses and agencies affected by the riots, I found that not one of its recommendations had been implemented in full. That was extremely disappointing for the community, who had been told that they would be listened to and that action would be taken, although, regrettably, subsequently it was not.

Secondly, the riots recovery fund allocated by the Greater London Authority, a sum in excess of £20 million, was handed to the council, but half the money was spent in an area that was not among the worst affected by the riots and the other half was simply left in the bank account for several years until the GLA asked for it back—reasonably, if the money was not going to be spent. The businesses and property owners in the affected areas again felt severely let down, because not only had they been promised additional support, but it had been made available and never used.

If riot claims bureaux are to be set up, are the Government minded to ensure community representation on them? The needs and wishes of the community should be fully represented in decisions taken in the aftermath of riots, if we are ever unfortunate enough to see a repeat of the disturbances that happened in 2011.

[Mike Penning]

That is an important point. From my own constituents’ point of view, I understand the frustration when money is sitting in a bank account and not being used by the local authority. I cannot comment on why that happened, because I do not know, but I fully understand the frustration.

If we are asking local people to take part in and to be part of their community—if we believe in localism—it is critical that they are listened to. Perhaps the hon. Gentleman and I could meet after the Committee. I will look into the recommendations that were made—I was not in post at the time—and we can see the reasons why they were not implemented and whether those reasons were logical. The Secretary of State wants the power to do something with the local community—localism in action—which is exactly what he will do.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7 ordered to stand part of the Bill.

Clause 8

Amount and payment of compensation

[Mr Lammy]

I beg to move amendment 1, in clause 8, page 5, line 19, leave out from “compensation” to “that”.

This amendment would remove the £1 million compensation cap.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 4, in clause 8, page 5, line 29, at end insert—

‘(3A) Money received by the claimant from emergency or recovery funds, whether funded publicly or privately, in the aftermath of a riot must not be taken into account by the decision maker when deciding the amount of compensation to be paid.’.

This amendment would ensure that money received by the claimant from emergency or recovery funds in the aftermath of a riot does not reduce the amount of compensation a claimant receives.

Amendment 2, in clause 8, page 6, leave out lines 16 and 17.

This amendment is consequential on amendment 1.

[Mr Lammy]

The amendment relates to the £1 million cap that the Government have landed on. I am probing what is behind the £1 million limit.

Someone who sets up a small business on Tottenham high street might buy the shopfront and have a home of sorts above the shop. In London the average price of a house is estimated to be £470,000, and the average price of a shopfront is a little more than that. A number of individuals on the high street found that they were underinsured, or not insured at all. The issue of insurance premiums in the kinds of areas affected by the riots is very real.

In response to my hon. Friend the Member for Croydon North, we do not want to see parts of our country looking like areas of America, such as the city of Detroit. That city has experienced successive riots, has a falling population and was effectively declared bankrupt a few years ago. Showing great sensitivity to those areas that experienced riots, we do not want them to become failed communities. We want them to be communities where people can set up businesses and thrive. Successive Governments in our country have been in the business of regeneration and improvement. We do not currently have areas in our country that are like Detroit.

The question of where to set the cap is in the context of the ability to find insurance, its cost and whether some of the big players on the high street decide not to come to the area. We lost easyGym, the post office and Carpetright from our high street; all were really important for us. The big issue is whether they are going to come back. If they do not come back there is no footfall for the small independent retailers and shopkeepers. How did we arrive at the £1 million cap?

We also have to look at the regional context. The cost of running a small business in Croydon is different from the cost of running one in Salford. There is currently no regional variation before us to indicate an understanding of that.

[Mr Reed]

My hon. Friend is making an important point. In a riot, police resources are necessarily overstretched and they have to prioritise, and they tend to prioritise the wealthier areas. Once again it is the poorer businesses that can least afford the loss that suffer. It is those areas that would be affected by the inability to claim above the cap. What is my right hon. Friend’s view on that?

[Mr Lammy]

My hon. Friend makes a good point. He and I are regular soldiers in the fight for very poor areas. With regard to the £1 million cap, I would say that the 2011 riots were unusual. As a Londoner born and bred, I would never have imagined that on the second day I would see the constituency of Ealing Central and Acton caught up in the riots.

[Mr Burrowes]

Or Enfield.

[Mr Lammy]

The profile of Enfield is changing slightly. Colleagues in Clapham Junction were caught up in the rioting, as of course were those in Enfield, Southgate.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

The word on the street in Ealing, once known as Queen of the Suburbs, was that our police were diverted to Westfield, which is a shopping centre of high-value, high-end designer shops. That is why we were left empty-handed when the riots hit.

[Mr Lammy]

My hon. Friend makes a serious point. There was a similar context in Salford. That goes to the point about the £1 million cap meaning different things on the high streets of Tottenham, Ealing, Salford and Croydon. It goes to the cost of running a business, to the detail of loss of stock as a result of flooding or following fire damage because a business has been burnt to the ground, and it goes to insurance. We want businesses to be insured and not to have to rely fully on the legislation. Given that we do not want to have areas in our country that cannot recover because of under-insurance or no insurance, the point about the £1 million cap is very important.

I go right back to the very good Kinghan report, which of course suggested the cap in the first place. Options were explored in Kinghan’s review. His first option was that we set a percentage—say, 25% or 50%—as the limit of compensation that the police or Government would pay in respect of claims paid by insurers to their customers. His second option was that we put an absolute limit on any single claim that the police or Government pay to an insurer—say, £500,000 or £1 million. The third option was that the limit be set by reference to the size of the insured business, so that the insurer receives compensation only for claims made by businesses with a turnover below the limit. I liked the third option a lot and thought it was fair, because it allowed for an understanding of the differences between small businesses.

In drafting the Bill and landing on the figure of £1 million, were the Minister’s officials in touch with the Federation of Small Businesses or with high street businesses, for example small retailers and newsagents? Where did they get their estimates for the cost of running a business? Will the Minister say more about the claims we saw as a result of the rioting across the country?

[Jack Dromey]

If one looks back at the experience of the 2011 riots, one sees that the overwhelming majority of claims subsequently lodged were for under £1 million. Having said that, there were claims—albeit a small minority—for more than £1 million. We can understand the argument for capping the costs that fall on the police, but there is a strong argument, which my right hon. Friend the Member for Tottenham put powerfully, that we should not have an arbitrary cap of £1 million and that if losses exceed £1 million, compensation should be paid. The question in those circumstances is: who pays?

On Second Reading my right hon. Friend the Member for Tottenham made a very powerful case indeed. It is not difficult to see that for a small or medium-sized family business with, for example, substantial stock, depending upon the nature of the business, the losses sustained might exceed £1 million. I was impressed by my right hon. Friend’s argument that the kind of successful high streets we want to see in our communities is a combination of the big and the small.

I remember debating at length in this very room the Localism Bill in 2010-11, which led to the initiative by Mary Portas on regeneration of our high streets, and what constitutes a successful high street. What we want is for businesses of all kinds, big and small, to come to and make a success of high streets—high streets where people want to go. Crucially, we then need confidence on the part of those businesses that in the unlikely event of a riot, they will not suffer as a consequence and that insurance cover will be provided. One therefore comes back to the cap.

We think that there is an argument for payment of compensation beyond £1 million. There is an argument that compensation of up to £1 million should, in line with historical practice, continue to fall on the police. Beyond £1 million, in circumstances where the police are under immense financial pressures, there is clearly an argument that compensation should not be paid by the police. We would ask the Minister to consider the Home Office accepting responsibility for the payment of compensation over and above £1 million as the Bill progresses.

15:00

[Mike Penning]

If I may, I will speak to amendments 1, 2 and 4. I know, because I spoke extensively to the right hon. Member for Tottenham before the Committee, that he has some concerns about amendment 4 that he did not have an opportunity to talk about, but I am more than happy to take an intervention.

[Mr Lammy]

I am grateful. I want to raise the question of the high street funds that were set up after the riots. I pay tribute to Sir Bill Castell, chairman of the Wellcome Trust and one of our great industrialists, for all the work he did to encourage big business to fund small business. I put it to the Minister that it cannot be right that any payment from charitable interests—a high street fund helping small business on the high street—is somehow offset against the riot damage. I want reassurance. Sir Bill raised this a lot at the time and I spoke to him today. We hope that that is not to be the case.

[Mike Penning]

I can immediately alleviate the right hon. Gentleman’s concerns. No matter where the charitable donation comes from it will be outside the £1 million, and I will set that in regulations.

[Mr Reed]

Croydon, of course, is the king of the suburbs. The mayor of Croydon set up a fund immediately after the riots. Many of the generous citizens of Croydon donated to that and were aghast to see that the money that was handed out to businesses and individuals that had suffered was deducted from the compensation payments made. I hope the proposal that the Minister now makes will also address such circumstances.

[Mike Penning]

It will. I completely agree morally that charitable donations should stay outside, whether from a lady putting 50p in a tin on the high street, as I know took place, or from some of our great businessmen coming together to offer help. I will set that in regulations. I hope that alleviates concerns on amendment 4.

On the £1 million cap, we have to be honest about what the Bill is for. It is a safety net for those who are not insured should a riot affect them and their businesses. Of course, if it is taxpayers’ money a limit has to be set somewhere, and 99% of all claims following the terrible riots that took place across the country in 2011 were below that limit. I am happy to share that information with colleagues before Report.

In looking at where to set the cap, we should not encourage people not to be insured or insurers to take the view that the state will pick up the cost for which they and businesses have responsibility. That is why we set the cap at £1 million. I will make the commitment today that that will be continually reviewed within regulations without the need for primary legislation. At the moment we have very low inflation nationally, although building and residential inflation is quite high, particularly in London. We will keep a close eye on that but there has to be a limit. There cannot be a blank cheque from the taxpayer; I think we all accept that.

In response to the shadow Minister’s point, if the money comes out of the police or Home Office budget, it is still taxpayers’ money and there is a limited amount available. I think £1 million is fair and we will keep it under review. We will also ensure that charitable donations, no matter where they come from, are exempt, and I will place that in the regulations for the Bill. I hope that the amendment will be withdrawn.

[Mr Lammy]

I am grateful for what the Minister said about the charitable donations set up after the riots and the points I made about the high street fund. I am still a little concerned about the £1 million figure because regionality has not really been addressed by the Minister. There are big differences across the country.

[Mike Penning]

Perhaps I could offer an olive branch. I will write to members of the Committee explaining the logic and thought processes behind the decision, rather than putting the question to a vote now, which would prevent it being brought back on Report. If the right hon. Gentleman is still concerned on Report, options will be open to him then.

[Mr Lammy]

I am grateful for that undertaking from the Minister. With that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clauses 9 and 10 ordered to stand part of the Bill.

Clause 11

Regulations

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

[Mike Wood]

Earlier, I referred to mobile businesses being within the scope of the Bill. To clarify, they are not in the Bill but the intention is to include property contained within mobile businesses in the regulations. I hope that the Minister will take that on board.

Question put and agreed to.

Clause 11 accordingly ordered to stand part of the Bill.

Clause 12 ordered to stand part of the Bill.

Schedule agreed to.

Question proposed, That the Chair do report the Bill to the House.

[Mike Penning]

On a point of order, Mr Howarth. May I take the opportunity to thank my hon. Friend the Member for Dudley South on his excellent work in bringing the Bill through Committee, and to thank colleagues across the House for their tone and attitude? They have represented their constituents brilliantly. When the Bill becomes law after Report and Third Reading, I hope that people will not need to use it any time soon. We all hope and pray that riots will not take place in our constituencies. Sadly, they sometimes do, but we will now be better prepared to compensate those who are not insured when that happens. I pay tribute to the independent reviewer—who is, I am sure, listening intently—for their excellent work, and I pay tribute to the Bill Committee.

[The Chair]

I think that that was a point of order. I will happily accept it.

[Mr Lammy]

On a point of order, Mr Howarth. May I put on record my gratitude to Mr Kinghan for all his work on the review, and for spending time with me? This has not come up in Committee, but there were five fatalities during the riots in 2011, and I am sure all hon. Members would want to send their sympathies to the victims’ families. Such fatalities are not the sort of thing that we associate with riots in this country. This is a very serious matter, and for that reason we are all grateful to have served on the Committee under your chairmanship, Mr Howarth.

Question put and agreed to.

Bill accordingly to be reported, without amendment.

15:09

Committee rose.

Westminster Hall

Wednesday 13th January 2016 Westminster Hall

Wednesday 13 January 2016

[Mr David Nuttall in the Chair]

Universal Credit: North-West

Wednesday 13th January 2016 Westminster Hall

09:30

[Marie Rimmer (St Helens South and Whiston) (Lab)]

I beg to move,

That this House has considered the effect of the roll-out of universal credit in the North West.

It is a pleasure to serve under your chairmanship, Mr Nuttall. This is the first Westminster Hall debate that I have secured, and I will endeavour to observe the correct procedure. I am pleased to have secured this debate on such a critical subject for my constituents in St Helens South and Whiston and for people across north-west England.

I am sure that no hon. Member would disagree that the recent debate on changes to tax credits has been one of the most important in this Session. Following pressure from Members on both sides of the Commons, the Lords and the public at large asked the Government to think again. The Chancellor announced in the autumn statement that planned changes to tax credits had been scrapped, saying:

“I have listened to the concerns. I hear and understand them. Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit.”—[Official Report, 25 November 2015; Vol. 602, c. 1360.]

However, for many people in the north-west of England the change to universal credit is a reality. The huge changes to our social security system have been trialled with people in the north-west.

Simply because of where they happen to live, many people in my constituency and neighbouring constituencies face dramatic drops in income from April 2016. For 77,378 people in the north-west, or 53% of the 155,000 currently in receipt of universal credit, this is a deeply worrying time. Some 51,000 of those people are in employment, and any of them experiencing changes that warrant a fresh application are seriously concerned. That issue of reduced work allowance is at the forefront of the minds of my constituents and the constituents of many other Members. I urge the Minister to take that away and think again.

The Office for Budget Responsibility expects the universal credit case load to be 330,000 in 2016-17, and many of those claimants will be in the north-west as those who get into work go on to universal credit. If families move from tax credits as part of their managed migration, they will be eligible for transitional protection until such time as their universal credit award catches up or the family experiences significant change to their circumstances. Transitional protection will apply only to families moved over through managed migration. Details on transitional protection have not yet been announced, and I ask for transitional protection to be put on a legal footing.

We know from the House of Commons Library that there will be no transitional protection for lone parents aged 25 or over with two children and no housing costs who are working full time—35 hours a week—on the minimum wage in 2015-16 or on the Government’s national living wage in 2016-17. Such a family will lose £2,384 in 2016-17. The same family with the housing element of universal credit will lose £309, and a disabled family with no housing costs will lose £3,000. Many families will face drops in income of between £2,000 and £3,000. That is the effect of these cuts on those whose circumstances have changed and warrant a fresh application.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Does my hon. Friend agree that, with cuts to universal credit already being planned, there will be greater demand for transitional funding when current tax credit claimants are migrated on to universal credit?

[Marie Rimmer]

Yes, there will. How can it be right that anyone should be subject to a great injustice based on a postcode lottery determined by arbitrary decisions and the serial failings of the Department for Work and Pensions in delivering the programmes thus far? We have all heard the arguments on tax credits, and Members on both sides of the House were in agreement. Surely the change of terminology to universal credit from tax credit does not justify or warrant these cuts. It is simply indefensible that some people should be cast aside in this incompetent administrative experiment.

We have experienced other issues during the roll-out of universal credit. It would be unreasonable to assume that such a large scheme could be implemented without hiccups and a certain level of teething problems. The Government were forced to slow down the roll-out of the programme dramatically compared with their original aim. The OBR forecast in March 2013 that there would be 6.1 million claimants, but it is now expected that 330,000 people will receive universal credit during 2016-17. However, the problems that we have experienced in the north-west go well beyond what could be put down to normal problems that can be ironed out as the system beds in.

A range of administrative issues have had a terrible impact on people in receipt of universal credit. Many of the issues were highlighted in a report by Citizens Advice published in the summer of 2015. That report, “Waiting for Credit,” was drawn from 16 citizens advice bureaux, the majority of them in the north-west, including St Helens CAB. It detailed a range of issues faced by people claiming universal credit and by those trying to access it. For instance, universal credit is paid monthly in arrears. Following a new claim, the aim is for the claimant to be paid within five weeks—that is a total of nine weeks. The time lag causes claimants huge short-term financial difficulties, even when that aim is adhered to. However, the report found that 30% of claimants had to wait even longer.

[Graham Evans (Weaver Vale) (Con)]

I am grateful to the hon. Lady for securing this important debate. She mentioned that people are paid monthly in arrears. Does that not apply to everybody who works for a living and pays taxes, which is what ultimately pays for the welfare?

[Marie Rimmer]

It can take five weeks for people on universal credit to be paid—that is the Government’s aim. If the hon. Gentleman listened to my point, he would know that the report found that 30% of claimants had to wait even longer than the nine-week total. Those people suffer from income deprivation, which is why they are eligible for universal credit and why they are different from those in normal, well-paid work.

The report found that many claimants faced continuing difficulties in getting the right amount, even when their claim had been processed. Basic administrative problems, such as being asked repeatedly for the same documentary evidence, were cited.

[Fiona Bruce (Congleton) (Con)]

The hon. Lady talks about administrative problems, but was not the key problem when we had a Labour Government that many people were left languishing on welfare and given no help at all to find work, some for as long as 10 years? Is that not the key difference from what we now have under this Government? Hundreds of thousands of people are now being supported into work. Is that not better for them, their families and their communities, and for the income that their households earn?

[Marie Rimmer]

No, I do not agree. People knew what was coming and knew that the funds were available. There are 155,000 people on universal credit now, and I am talking about the problems that they are experiencing now. For most people, not getting paid on time will cause at least some level of difficulty. For people on universal credit, not getting paid can be a catastrophe that makes it impossible to manage everyday living and responsibilities such as heating their home, eating, or clothing their children. Increased numbers of people are in rent arrears.

In my experience, there have been other cases of people facing great hardship through the incompetence of the programme so far. Basic work with different agencies has not taken place. For example, one of my constituents was previously in receipt of jobseeker’s allowance and was subsequently moved on to universal credit. Upon going to the dentist he required treatment, which was free under the NHS. When he was filling in the usual form, he was advised to tick the box marked “income-based jobseeker’s allowance”, as there was no box for universal credit. Subsequently, he was billed and pursued by the NHS Business Services Authority and threatened with county court action for a false declaration. If that is the level of co-operation between different agencies at this stage, what hope is there for the future?

I must highlight the DWP’s use of sanctions in the case of universal credit. It has thus far been largely concentrated on those who are on jobseeker’s allowance or employment and support allowance. We have all heard of the cases of people who have had their benefits stopped, often for absurdly spurious reasons such as selling poppies or not searching hard enough for jobs on Christmas day—that is true. We have come across many tragic cases of constituents who are literally starving and unable to turn on their heating because they have no money. Sanctions are sometimes imposed for the crime of arriving only a few minutes late for a jobcentre appointment following a hospital appointment.

There is no confidence in the current sanctions regime. It is both incompetent and brutal. There needs to be a full and independent review to restore some kind of confidence in the whole system. It is therefore completely irresponsible to expand the use of sanctions under universal credit to claimants in work.

Conditionality of benefits is being trialled for some of the in-work elements of universal credit. The New Policy Institute published a report into sanctions last year, which said:

“The expansion of conditionality under Universal Credit could see a substantial increase in sanctions: if sanctioning occurred at the same rate as for JSA claimants, then the number could almost double, with an additional 600,000 sanctions.”

It is surely inconceivable that people in work could be left in such a situation because of a Government policy that is supposed to support them for doing the right thing, but that is what will happen unless the Government think again.

To say the least, there has not been a smooth transition to universal credit for people in the north-west region. I do not have enough time to outline the range of problems that we have faced as a result of being the guinea-pig region for the Secretary of State for Work and Pensions.

[Mary Robinson (Cheadle) (Con)]

Does the hon. Lady not agree that behind the roll-out of universal credit is the desire to help working families, to get people back into work and to fulfil the aspirations that people have for their lives and their families, and that it would be much better for us to support that aspiration, support universal credit and iron out all the operational difficulties that she has highlighted?

[Marie Rimmer]

Universal credit was supposed to simplify the benefits system and increase incentives to work. It has not simplified the benefits system. People have to wait longer, and very often the assessments that they receive are wrong. How does it incentivise people to work if they are subjected to cuts that they would not have been subjected to previously? We have experienced neither benefits being simplified nor incentives to work being increased.

The cuts to the work allowance will destroy the basis of the new system and any incentive or encouragement to work. The Minister said that no one would lose a penny, but now the Government are saying that people should work for three to four hours more a week—200 hours more a year—to be no better off. How does anyone find three to four hours more a week for an adviser to help them when they are in full-time employment anyway?

This change will hit the people who most need help. I urge the Government to stop, think and implement something that will work. They should think again before pursuing these devastating cuts, and, importantly, they should put transitional protection on a legal footing. Until someone’s earnings reach the universal credit work allowance scheme limit, their transitional protection should be put on a legal basis. That is what I ask for.

09:44

[Graham Evans (Weaver Vale) (Con)]

Thank you, Mr Nuttall, for calling me to speak in this important debate. It is a pleasure to serve under your chairmanship.

I pay tribute to the hon. Member for St Helens South and Whiston (Marie Rimmer) for bringing this important debate to this Chamber today. In the last Parliament, it was my privilege to work for three years on the Work and Pensions Committee. We conducted an investigation and produced a report on the introduction and roll-out of universal credit, and we visited jobcentres in the Greater Manchester area. Indeed, we also conducted an investigation at about the same time into jobcentres themselves, which was overwhelmingly welcomed by the people at the sharp end—the people who work in jobcentres.

A couple of weeks ago, I visited two local jobcentres—one in Runcorn and one in Northwich—and the staff told me that universal credit made it a lot easier to help people to get into work, particularly the long-term unemployed. Together with the changes that the Government have introduced to tax, which effectively take some of the lowest-paid people out of tax altogether, universal credit helps people who have been unemployed for a long time. There is a clear incentive to work, because people can keep more of their pay. The Government intend to introduce a system whereby people can earn £12,500—just over £1,000 a month—before they start to pay income tax.

[Chris Green (Bolton West) (Con)]

Does my hon. Friend agree that this change marks a profound shift in the welfare system? As many people would expect, the welfare system is now a mechanism to help people into work, as opposed to a catchment for people to remain unemployed.

[Graham Evans]

I absolutely agree with my hon. Friend; he hits the nail on the head. This change is about enabling people to stand on their own two feet and to get away from the welfare culture that grew under the 13 years of the previous Labour Administration. When Labour introduced tax credits, they were going to cost £4 billion; the figure is now £30 billion. That is simply unaffordable. As a nation, do we pay money to people for not working or do we encourage them to stand on their own two feet and get a job? And as I say, the tax incentive means that people can earn about £1,000 a month before paying tax, because Conservatives believe that people should keep more of their earnings.

[Fiona Bruce]

Perhaps it is also good to remember that this Government are going to double the amount of free childcare to 30 hours a week, which for working parents of three and four-year-olds is worth about £5,000 a year per child. More than that, even for those on universal credit there is help. Universal credit currently covers up to 70% of eligible childcare costs, but from April that will increase to 85%. That is a huge difference, worth £1,368 per year for every child.

[Graham Evans]

I am most grateful for that intervention; my hon. Friend makes a very powerful point. As I have said, jobcentre staff say that the changes that the Government have introduced to simplify welfare and benefits, and the incentive to work, enable those people who are unemployed to get into work quickly. And for long-term unemployed people who have been on benefits for many years, there are now clear incentives to get into work, because they will keep more of the money they earn; universal credit enables them to keep more of what they earn.

[Nick Thomas-Symonds (Torfaen) (Lab)]

It has emerged clearly from this discussion that there needs to be greater awareness of the cuts to the universal credit work allowance that are coming in this April. Let me just give the example of a single parent—say, a single mother—with one or more children. That allowance will be halved from April from £8,808 to £4,764, which is a reduction of £4,044. In cash terms, that working mother will lose £2,628 from this April. How on earth is that an incentive to work?

[Graham Evans]

We have to look at the whole scheme. We have to look at the fairness to those in receipt of welfare and benefits, but what we never hear about from Labour Members is that the scheme has to be fair to the people who pay for it, who are the hard-working taxpayers. If we look at people who are working—[Interruption.] I know it is controversial to talk about the people who actually contribute and pay for welfare, but we have to look at the people who make the decisions to work hard and work full-time. The examples that people always look at are of people who work part-time, and their income is topped up. Well, we have to look at the decisions of people who work hard every day. They have to work full-time—work, work—and make those decisions and pay taxes, which go into the welfare system.

[Several hon. Members rose—]

[Graham Evans]

I will give way to the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) and then I want to make some progress.

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

I intend to make a speech, and I appreciate the hon. Gentleman’s courtesy in giving way. I gently say to him—this is important in a debate on universal credit—that Britain is not divided into two groups of people: those who pay taxes and those who receive welfare benefits. It is a lot more complicated than that. The point of universal credit was actually to allow a seamless transition between the two to support people. The point of this debate should be to point out that that transition is not working so far in the initial roll-out of universal credit. That is where the attention needs to lie in a discussion such as this.

[Graham Evans]

As always, the hon. Gentleman makes a powerful point. I am not saying that the system is perfect. Under the Labour Government, the welfare system was very complicated. In the previous Parliament, the Government tried to make it simpler and fairer for people in receipt of welfare while also making it fairer for the people who pay for it—hard-working taxpayers. Not for one minute am I saying that the system is perfect, but the people who work in Jobcentre Plus tell me that universal credit makes it a lot easier and simpler for them to help people, particularly the long-term unemployed, to get into work. That is the evidence in my constituency.

[Jim Shannon (Strangford) (DUP)]

Will the hon. Gentleman give way?

[Graham Evans]

May I make a bit of progress first? I have actually got a speech here.

Everyone with the ability to work should be given the support and opportunity to do so. The previous system wrote too many people off for too long, and too many people were left in a cycle of welfare. The point behind the reforms is to break that cycle. The roll-out of universal credit will fundamentally transform the welfare benefits system in Britain and the north-west, making 3 million people better off and bringing £33 billion in economic benefits to society. Universal credit will simplify and streamline the welfare system, improve work incentives, tackle poverty among low-income families and reduce the scope for error and fraud.

The hon. Member for St Helens South and Whiston gave some powerful examples. I am not saying that errors do not happen; of course they do. Things are not perfect, but other nations around the world are looking at the welfare reforms that the previous Government introduced and are considering doing the same. Since the introduction of universal credit, unemployment in the north-west has fallen by 50,000—more than 30%. Unemployment in my constituency has more than halved in the same period. While that fall cannot be solely attributed to universal credit, its roll-out has had a part to play in that success, and it will continue to play a major part in entrenching that success as the roll-out continues.

[Jim Shannon]

The hon. Gentleman is making powerful points, but I am sure that he recognises the concerns of those of us on this side of the Chamber. Government Members may share those concerns, to be fair. Society is marked by its attitude to those on low incomes and the less well-off. In this House, we have a duty to them as well as to taxpayers, who provide income. Does he accept that universal credit is causing undue delays for many of my constituents and those of other Members in the Chamber? There is a knock-on effect on those receiving benefit with the changes to their income tax, tax credits and housing benefit. Some people are without money for periods of seven, eight, nine or even 10 weeks. There has to be something wrong with a system that cannot respond to the needs of those on low incomes when they need it most.

[Graham Evans]

I am most grateful to the hon. Gentleman. There is a lot of evidence that delays are there, and those delays are unacceptable for the individuals concerned. I will not attempt to defend that. The system is not perfect, but any individual cases should be brought perhaps to the attention of the Member of Parliament, but certainly to the attention of Jobcentre Plus and the benefits agency. Those cases should be looked into and investigated.

People claiming universal credit are 13% more likely to be in work than people claiming jobseeker’s allowance. They are earning more money and are more willing to take a job. One constituent of mine, a hairdresser, was complaining. She said, “At this time of year, I usually get a rebate on income tax, but because I now have a far better personal allowance, I do not have that problem.” She is keeping more of her hard-earned money. That is what the Government are helping the lowest-paid to do.

Employment has been the Government’s real success. A thousand jobs were created each and every day during the last Parliament. That represents 2 million jobs over that period. The Office for Budget Responsibility predicts that a further million jobs will be created over the next five years. This country is the economic powerhouse of Europe. Yorkshire is creating more jobs than France, and that is why so many people want to come here. We have good quality, well-paid jobs, and the living wage is being introduced. We have a far better working environment than many other countries in the European Union. That all indicates just how successful the Government have been at getting people off benefits and back into work. There are so many opportunities in all our communities, and it is important that we expose those opportunities to those looking for work.

Crucial to the Government’s success has been the support towards childcare costs for parents, as my hon. Friend the Member for Congleton (Fiona Bruce) pointed out. Under universal credit, there is additional cover for childcare costs for parents, with up to 70% of childcare costs covered regardless of hours worked. That will be increased to 85% this year, with a monthly limit of £646 for one child and more than £1,000 for two or more children, helping more parents into work. When my children were younger, I remember Mrs Evans saying, “It is pointless me going back to work because of the childcare costs.” I know that the cover for childcare costs is an important step forward in helping working mums to work longer and keep more of their money.

The ethos of “It pays to work” is built into the DNA of the Government’s reforms, particularly universal credit. I have no doubt that as universal credit is rolled out further, we will continue to see more and more people getting back into work. The hon. Member for St Helens South and Whiston referred to the region as a guinea pig, but I am comfortable and proud that the north-west has led the way. I was particularly pleased when universal credit started in my jobcentres in Weaver Vale, because it made a massive difference. I pay tribute to the hard-working staff at Runcorn and Northwich jobcentres for the fantastic work they do helping people back into employment. They are a great example of best practice, and their hard work was recognised by the Secretary of State for Work and Pensions when he visited the jobcentre in Northwich at the end of last year. He gave the staff an award for the number of people they had helped back into work. The staff at Northwich jobcentre have told me that the introduction of universal credit has made their job easier.

A lot of people come into Weaver Vale to work. As the MP, I am puzzled why people travel great distances to work in my constituency yet I still have unemployed people. One of my challenges is to get my constituents to take the jobs that are virtually on their doorstep. That is why, when I became the MP, I started my jobs and apprenticeship fairs. The fifth will take place next month. The first time I did it, there were a lot of unemployed people, but that number has halved over the past four or five years. It is the harder-to-reach people who are left. The companies that come to my jobs fairs are fine-tuning their job offers for people who perhaps have not been in work for a long, long time.

I was most privileged to have the John Lewis Partnership come into Northwich. I am sure Members will agree that Waitrose is a fantastic organisation. When it came, it said, “We will guarantee that 30% of interviews will be for local people.” That was only an interview, not a job, but it was so impressed with the calibre and the quality of the interviewees that it ended up with more than 50% of its employees being local people. Some of those people had been long-term employed, but Jobcentre Plus had worked with the local authority and Mid Cheshire College, training the people for job interviews, CV filling out and what retail employers are looking for. That was a great example of organisations working together to get the long-term unemployed working for the great company that is the John Lewis Partnership. That 50% figure is an achievement of which we can be proud. The reforms are transforming the lives of some of the poorest families in our communities and giving people the skills and the opportunity to get on in life and stand on their own two feet.

I am keen to move Weaver Vale—indeed, Great Britain —from a low-wage, high-tax, high-welfare economy to a higher-wage, lower-tax, lower-welfare country. I support the Government’s reforms in welfare and universal credit. The system is not perfect, but it is far better than that attempted by the previous Government. I believe it is working, as proved by the reduction in unemployment, the growth in wages and the quality of the jobs now available in this country.

[Mr David Nuttall (in the Chair)]

Will people who wish to catch my eye please stand?

10:00

[Yvonne Fovargue (Makerfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. I congratulate my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) on the eloquent way in which she put the concerns of her constituents—indeed, all our constituents—about universal credit, particularly the changes to the working allowance, which will disadvantage working people. That bears saying once more. Such people are taxpayers. There are not two groups—people who pay tax and people who get benefits—because people move in and out. They pay tax and they deserve support, but they will lose money. Some 20,000 people working full time in my constituency will lose money by 2020. That is appalling.

However, as I represent a pathfinder authority, I want to move on to the difficulties caused by the universal credit roll-out and the lessons we can learn to make sure that it goes more smoothly in the rest of the country. Call me cynical, but I worked in the Citizens Advice Bureau from 1986 and I saw the change from supplementary benefit to income support. We now have universal credit. The aim was always to simplify, not to make things more complicated. The basic fact is that people’s lives are not simple. Lives are complicated and a system has to be devised that deals with the complications and issues that people have at different times of their lives. Certain problems with universal credit have been highlighted in the roll-out, such as the mismatch in budgeting periods and the six-week universal credit waiting period. I take issue with what the hon. Member for Weaver Vale (Graham Evans) said about everyone who is in work being paid monthly. In fact, only half of low-paid workers are paid monthly. Many are paid weekly or fortnightly, so they do not have a cushion to rely on when they first claim universal credit. Anyone who is paid weekly will have one week’s money to manage on for five or six weeks.

There is some difficulty in claiming advance payments, and people are loth to do so. We have seen a rise in debt of 42% over the past six months. People go to payday lenders and suchlike to cover that period of time. There are other delays, without the additional delays in receiving payments. According to the Citizens Advice report, three in 10 have experienced a delay of more than a week beyond the standard five weeks. One in 10 wait more than nine weeks and some wait four months, owing to administrative problems. I accept that things go wrong, but we can look at what happens when things go wrong and at how we can improve that for people.

Confusion about the council tax reduction needs to be looked at, but the major effect of delayed payments has been the increased use of food banks. My local food bank, the Brick, has reported that the majority of people visit because of sanctions and waiting for universal credit—that includes people who are in work. That is a key finding of the survey, which found that 80% have difficulty paying essential household bills such as rent and utilities during these periods. Wigan and Leigh Homes has said that rent arrears have gone up since universal credit came in. People do not realise that they are getting all their money, which is another issue. Many people have been pushed into debt simply because of universal credit.

My local citizens advice bureau reports a much greater level of debt among universal credit claimants compared with the claimants of the past legacy benefits. Some 63% of people say that they have difficulty buying food and feeding their families—a basic human need—which means that the rise in food banks is related in some way to universal credit. I do not think that that can be denied.

I remember claiming a benefit when my husband walked out on me and I had a young child. The whole situation was appalling. I went to the Benefits Agency and felt pretty bad at having to claim benefits. If I had had to go to a food bank as well to feed my family, how would that have incentivised me at that particular period in time to seek work? I was fortunate. I managed to find work within three months, but if I had had to rely on a food bank and wonder where the next meal was coming from for me and my daughter, I am not sure I would have been able to concentrate as much on finding work.

A claimant in my constituency went to my local CAB because they were sanctioned for hundreds of days—not a short period—because they were passed backwards and forwards between jobseeker’s allowance and employment and support allowance. Both teams said my constituent was not eligible for benefit. Ultimately, that person received £4,000 in backdated benefits, and universal credit was put back into regular payment. It is very nice that they got £4,000 in backdated benefits, but how on earth did they manage to feed their family during the time when they were owed £4,000 by the Government?

We need a way to resolve such problems. I would like a universal credit claimant champion, as recommended by Citizens Advice—someone who can look at difficult cases and take responsibility for them. Part of the problem is the fact that no one takes responsibility and people are passed back and to. I do not know about other hon. Members, but I have certainly seen an increase in the number of people coming to my surgeries about universal credit problems since we became a pathfinder. They have to go to their MP because we have a helpline, but advice agencies should have a dedicated helpline. I want to plead for extra funding for advice agencies. Since the changes to legal aid in 2010 when welfare benefits were no longer seen as a legally aidable necessity, less advice has been available from such agencies. Indeed, welfare benefits specialists are having to find other work. We are losing our expertise.

We should have a review before the full roll-out to make sure that when things go wrong, they are quickly resolved and we do not get into a situation in which people are paid huge sums of money backdated, but wonder how they live in the meantime.

The helpline has an 0345 number, which is charged at a fairly high rate on prepaid mobile phones. Constituents have told me that they have run out of credit using their mobile phones to ring an 0345 number, because they have been passed back and to. As I have said before, we need a local number. There should be a freephone number. There should be more phone lines available in offices. Freephone numbers should be available so that people can use the few phone boxes that are available to ring the universal credit number.

[Mr Nigel Evans (Ribble Valley) (Con)]

I fully accept what the hon. Lady says. It is absolutely right that we should have a system whereby people are not penalised for phoning to get information or assistance. Perhaps a system should be set up where the person is able to use a freephone number. If not, perhaps they could send an email and be called back free of charge. I do not believe people should be penalised.

[Yvonne Fovargue]

I agree, but, as for sending emails, the local authority did a survey to see how many people in Wigan use the internet regularly and found that 30% have never accessed or even looked at the internet. We need to think about those people. When we look at digital by default as a way of claiming, we need to provide more help for people to claim in other ways and not penalise them with a delay.

[Graham Evans]

The hon. Lady is making powerful points and I do not disagree with a lot of what she is saying. My hon. Friend the Member for Ribble Valley (Mr Evans) also just made a very good point. On digital by default, when I left school there were no computers. I have had to learn how to use computers throughout my life, so I know how difficult it is for people of a certain age to gain access to the internet. Even now, I am not perfect—my children are far better. Does the hon. Lady agree that, in the 21st century, if someone is unemployed and looking for a job but is not very good with the internet and computers, they will not find many jobs in which some form of computer use would not be required at a basic level? It may be that 30% of the hon. Lady’s constituents have never accessed the internet, but as much help as possible should be given to that 30% to enable them to apply for jobs, because I am pretty sure that computers will be involved.

[Yvonne Fovargue]

I do not disagree, but in the meantime people should not be penalised by having to seek help to claim the universal credit benefit because it is digital by default. If they want help to claim, there are agencies that can help, but there is often a delay in receiving an appointment for that. People should not be penalised because they have to wait to claim universal credit simply because they do not have access to a computer. That is another issue to look at.

When claims are refused, people are sometimes confused about why. Again, a helpline number—an 0800 number—would be extremely helpful for those people. When it gets complicated, there should be a named person to help them. I do not think anyone would disagree with the idea that we want to make the system as simple as possible. We know that people’s lives are complicated and that they move in and out of work, particularly those in low-paid work. Anything that makes the transition more simple should be looked at carefully.

[Fiona Bruce]

The hon. Lady has made a number of valid points, and I have great respect for her. We worked together as councillors on Warrington Borough Council and I know that she has in-depth knowledge of the subject, beyond that of many Members, but as I understand it, as part of universal credit a named personal contact is now being offered to help individuals to seek work, as well as to ensure that they access the right benefits.

[Yvonne Fovargue]

Although there is someone available to help them to seek work, I am looking for someone to help when things go wrong—someone with a detailed understanding of the universal credit system, not someone who perhaps has more knowledge of the work environment. People need someone to talk to about the complexities of the universal credit system and how it relates to council tax benefits and local authorities—all the major issues—rather than simply a work adviser.

Trying to make things simpler with universal credit is a laudable aim. We need to look at what has happened in the pilots and how the system can be made to work. I cannot finish without also saying that we need to look at how universal credit can incentivise people to work, which is certainly not done by cutting the work allowance and giving people less incentive to find work.

10:13

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

It is a pleasure to see a fellow north-west MP in the Chair for this important debate, Mr Nuttall. I congratulate my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) on securing the debate, and indeed on the impressive work she has done since being elected to Parliament. St Helens is a place with similar issues to my borough, Tameside, so it is excellent that she is raising them.

My hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) is also present. She, too, represents Tameside, which was a universal credit pathfinder area, so we were one of the first parts of the country to experience some of the problems related to it. No matter what political perspective a person has going into the debate on welfare rights and the welfare system, it is important to listen to relevant experience, where it exists, of how universal credit has functioned so far. I should say at the outset that I completely support the goal of simplifying our welfare system—I do not think anyone in this country would not want that.

Like many Members, I use the Child Poverty Action Group handbook to help constituents when they come to me with problems. The handbook is sometimes referred to as the bible of welfare rights; indeed, it is the same size and written in a similar font as the Bible. That indicates the complexity of the system, so of course people should be trying to simplify it. However, as my hon. Friend the Member for Makerfield (Yvonne Fovargue) said, we cannot get away from the reality that many people lead complex lives and have complex needs. The system must function in a way that gives them the support they need.

A number of the issues that come up at my constituency surgery that I wanted to raise have already been mentioned, but they are so important that I want to reiterate why they are key to making the system work properly. The first one is the first payment that people get. In my experience, there are immediate problems for people when they try to access universal credit because of how the system is designed. It is not a teething problem with the roll-out, but a structural flaw in how universal credit has been created. A lot of people are immediately put into a position where they struggle to afford food and heating. That simply does not seem to tally with the goal of supporting people into and out of the workplace. Instead of giving them a professional and efficient service when they need it, it often robs them of their dignity and puts them into crisis.

Like other Members present, at times of my life I have had to access support from the welfare system, particularly the tax credit system, which is almost always the case for those who have children at quite a young age. It did not lead me into a life of welfare dependency—it arguably led me to a worse life, as I ended up here in the House of Commons. Nevertheless, that is an important point, because so much of the Government’s rhetoric is based on the assumption that there are two sets of people in the country: an underclass of welfare recipients who must be punished and whipped back into the workplace, and everyone else who suffers from having to pay for the system. If that is the Government’s mindset going into the designing of a welfare benefit, the welfare system will simply never be designed in an appropriate fashion to meet the objectives of the people who have been described in this debate.

[Mr Nigel Evans]

I am glad that the hon. Gentleman has brought up the question of whether that is what the Government intend, because the answer is clearly no. The greatest dignity that we can give to anyone is the dignity of work and employment. That is the main thrust of what the Government want to see. Getting people off benefits and into full-time work will provide them with dignity and give their children a role model to follow.

[Jonathan Reynolds]

I do not doubt the hon. Gentleman’s motivation. Before the debate we exchanged some comments about that sense of there being a group of taxpayers paying for the welfare system and a group of people in receipt of welfare benefits. That is not the way to design a welfare system. We cannot do it in a way that divides the country so simply into those arbitrary classifications. Indeed, if we do that, it is impossible to design an effective system.

I mentioned the issues relating to the first universal credit payment. People have to wait a long time, because it is designed to be paid five to six weeks in arrears. As the hon. Member for Weaver Vale (Graham Evans) said in an intervention, the assumption is that they are in the workplace and receiving a monthly salary in arrears, so they will have that support before receiving universal credit. I say this completely genuinely: that is not how the economy of my constituency works. A great many people are still paid weekly or fortnightly. A lot of people have different levels of income week by week because of zero-hours contracts. That does not seem to have been considered in the level of detail required to design how and when people will receive the support that they need.

Delays occur in any bureaucratic system, but there is an even bigger structural flaw in universal credit that I have heard about several times in my constituency surgeries. If someone applies for universal credit on the wrong day—perhaps one or two days before they really “should” apply; in other words, when they have lost their job but before they have received their final pay cheque from their former employer—the system becomes disastrous for them. We must bear in mind that a lot of people, on finding out that they are going to be made redundant, would go to the jobcentre to look at the available support. If they apply for universal credit but receive a further pay cheque from their employer, they will wait not five to six weeks but 10 to 11. That is an enormous problem that must be looked at. If that happens—if someone has to know exactly when to apply for the support to which they are entitled—it will go far beyond the current level of complexity. That would have to be sorted out before any national roll-out.

I have raised those points because we have to find a way to get a supportive system that copes with people going into and out of the workplace—regular or temporary work—in a way that does not completely reset the system and cause all kinds of problems if they then go back into work. That is what I mean when I say that we should not split the country with an arbitrary classification of those in work and those out of work and receiving welfare benefits.

Whenever problems with universal credit are raised, the Government say that advance payments can sort out all the problems, whether with housing arrears, heating or food. That is the first question I ask people who come to see me with problems with universal credit, and a lot of them tell me that they have not been told about the advance payments system. I do not know what the experience of other hon. Members is, but advance payments do not seem to be programmed into the initial assessment. If a person does not know about the advance payment system, they have an even bigger problem, because they cannot claim an advance payment if they are a number of days past their initial assessment. If people accessing unemployment benefits for the first time face a confusing system that does not give them the funding they are entitled to, given that they have paid into the system, and that prevents them from getting back into the workplace, that is not an improvement on the current system. There has been a lot of party political advertising of the employment rate, the Government’s successes, childcare and all that, but we need to look at these genuine, serious problems.

Despite the objective of simplifying the system, the roll-out would have been disastrous in my area if it were not for our welfare rights advisers. To my mind, the staff of Tameside citizens advice bureau are absolute heroes. The reality is that that kind of support is being stripped from all communities. Law centres and citizens advice bureaux are closing. If the system is to work, we have got to give people impartial, fair advice. The hon. Member for Ribble Valley (Mr Evans) made a fair comment about how people can get in touch with welfare advisers. That is important, and it is sad to see welfare advisers going at a time when people need them.

Universal credit is a big change, and if people do not have support to access it properly, their perception of it will be negative. We have to ensure that that is not the case. From my casework and experience, from what is happening in other parts of the country and from people’s testimonies, my overwhelming impression is that, despite the scale of the bureaucratic challenge of moving to universal credit, we are not tackling the big problems of our social security system. We are not providing sufficient support for people who have lost their job for the very first time—particularly during the global finance crisis—and who never thought they would be unemployed. When they find out what their national insurance contributions will buy, they are often frankly disgusted at the level of support available to them.

We are not tackling the sanctions, the conditionality and the job search criteria. Frankly, I think we are treating a lot of people like children and robbing them of their dignity. We are not giving them what they should reasonably expect when they access the welfare system. Most of all, the system is unable to cope with the flexible working patterns that are so common in our economy. Many people do not have jobs for life; often, they do not even have jobs that last for years. The system has to reflect that, but I do not think those things have been priced in. Despite the bureaucracy and our overall level of spending on the social security system, people in my constituency have been left genuinely destitute and reliant on charity and food banks to survive. That cannot be right. Given the resources we put into the system, there has to be a better way to do it.

I think we need an even more radical approach. We should look to other countries for best practice. Concepts such as basic income do not lead to a taper problem and do not disincentivise people from going back into the workplace; rather, people are supported in different stages of their lives and everybody gets something out of the system for what they pay into it. That is the direction in which we have got to be looking. We need something more radical than universal credit. Universal credit, if it worked properly, would be welcome, but at the moment there are huge teething and design problems. Even once those problems are sorted, it will not tackle the big problems of the welfare system. Let us sort those problems out, but let us not end the conversation about welfare reform here. Let us address the challenges and create a system that truly works for everybody.

[Mr David Nuttall (in the Chair)]

We now move to the winding-up speeches. I gently remind the shadow Minister, the Minister and the Scottish National party spokesman to leave a couple of minutes at the end of the debate before 11 o’clock for the hon. Member for St Helens South and Whiston (Marie Rimmer) to wind up.

10:24

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to contribute to this important debate under your chairmanship, Mr Nuttall. I pay tribute to the hon. Member for St Helens South and Whiston (Marie Rimmer) for securing this debate. It is primarily focused on the north-west of England, but as it concerns the roll-out of universal credit across the isles, the implications of what is said this morning stretch much further than the north-west. I congratulate her on her very good speech. She rightly did not shirk the opportunity to give the Government a kicking on their record on this matter. I pay tribute to other hon. Members who contributed. In particular, the hon. Member for Makerfield (Yvonne Fovargue) delivered a very powerful speech.

There are a great many issues at play around the changes to universal credit and the roll-out in the north-west and further afield. SNP Members are fundamentally concerned about the removal of the work allowance, which underpins the potential success of universal credit and the aim to support people into work and make work pay. We are also concerned about the monthly payment regime. Support for housing benefit recipients will not go directly to landlords, and payments will be made to households, rather than individuals.

[Graham Evans]

Will the hon. Gentleman give way?

[Neil Gray]

I will make some progress; I am just starting.

Pilot projects across the country have shown that those areas of concern are problematic. That has been highlighted by a raft of third-sector organisations in reports on this subject. In principle, universal credit sounds tempting. We are told that it is a smooth, streamlined system to assist low-income families. However, as has been emphasised today, in reality it is fraught with flaws, and low-income families are the casualties of the Tories’ poor economic choices and ideologically driven cuts. The ineffective and costly roll-out of the system to date highlights the need for an urgent rethink of these draconian policies.

Universal credit was first introduced as a pathfinder in Ashton-under-Lyne in April 2013. New claims were taken from single unemployed people who satisfied the gateway conditions. The pathfinder was then extended to three other areas in the north-west—Wigan, Warrington and Oldham—in July 2013, and in the summer of 2014 universal credit was expanded to a further 29 areas in the north-west for single people and couples who satisfied the gateway conditions. After a relaxation of the constraints on single people claiming between September and December 2014, universal credit was expanded to cover all parts of the north-west of England. New claims from families with children have been accepted in some areas, and since last January new claims from families with children have been accepted throughout the north-west.

The north-west was the first area in which universal credit was rolled out to all jobcentres. Of the 155,568 claimants at mid-November 2015, 77,378 were in the north-west, and of those, 26,521 were in employment and 50,855 were not in employment.

[Graham Evans]

May I go back to a point that the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) made about treating people like children? The hon. Member for Airdrie and Shotts (Neil Gray) mentioned paying housing benefit directly to the landlord. Are we not treating people like children if we do not think they are able to pay their housing benefit to their landlords? Surely people in receipt of benefits are perfectly capable of paying their landlords.

[Neil Gray]

Actually, I do not accept that.

[Graham Evans]

It is treating them like children.

[Neil Gray]

It is not treating people like children. I totally disagree with that. People in such circumstances often live chaotic lives. Sometimes, although not always, they do not wish to have the responsibility for managing that extra level of financial responsibility. A great many people in my constituency have told me that they would far rather know that they have a roof over their head that is secure regardless of what happens elsewhere, and that they would rather see their benefit paid directly to their landlord. People should be given the choice over that matter, and at the moment they are not. It is being paid to them, and they are being given the responsibility, which is not always welcome.

[Jonathan Reynolds]

I want to clarify for the record that my comment about treating people like children referred to people who have worked for 20 or 30 years and are forced to fill in a graph to show how many jobs they have applied for that day and that week. I do not think that is an appropriate way of treating people who have been in work for a long time and have lost their job; they should be treated with respect and dignity. On the point about paying housing benefit directly to landlords, I believe that there should be a choice. If people want to manage their money themselves, that is fine. There has been a huge increase in housing arrears in every area in which universal credit has been rolled out, which causes huge problems for everybody else because it has to be covered in some way. If that can be alleviated by paying housing benefit directly to landlords, I see no reason why that option should not be available to people.

[Neil Gray]

I appreciate the hon. Gentleman’s intervention.

The New Policy Institute’s report “The rise of sanctioning in Great Britain”, which was mentioned by the hon. Member for St Helens South and Whiston, states:

“The expansion of conditionality under Universal Credit could see a substantial increase in sanctions: if sanctioning occurred at the same rate as for JSA claimants, then the number could almost double, with an additional 600,000 sanctions.”

That is very concerning. The Institute for Public Policy Research, an independent think-thank, found that low-income families in Scotland will face an £800 a year cut in their income by 2020 following the UK Government’s cuts while the richest 40% will see their incomes rise as a result of tax cuts.

A number of National Audit Office reports have come to damning conclusions about the ongoing universal credit transition, highlighting the early setbacks, missed targets and overspending. The numbers simply do not lie: 17,850 claimants were on universal credit in October 2014, but the Government had planned to have 500,000 claimants on universal credit by April this year and 7 million by December 2019. Not only does that show that the Government are completely missing their own targets, but they are spending huge budgets, wasting vital funds that could be better spent supporting poor families who are struggling to make ends meet. Indeed, the NAO published a report in May 2015 entitled “Welfare reform—lessons learned”. Speaking about the report, Amyas Morse, head of the NAO, said that the DWP,

“has had to learn some hard lessons with significant financial and human costs.”

[Fiona Bruce]

The hon. Gentleman has reeled off reams of statistics during his speech, but the key statistic is the legacy of the previous Labour Government: nearly one in five households in our country had no one working at all. That in no way brought dignity to those households, those families or their communities. Should we not be addressing that statistic as a priority?

[Neil Gray]

Where people are capable of working, it is right that we should encourage them to do so. However, the problem with the changes that the Government are implementing through universal credit is that they are removing the work allowance, which is the only incentive to work in universal credit. It underpins the incentive to get into work and to remain there. Taking that away removes the premise that work should pay, which is a sad situation.

The DWP has said that universal credit will be simpler for claimants and will be treated like a wage for individuals, readying them for work. In reality, there are complex problems that will ultimately see less money in people’s pockets and more difficulties accessing adequate financial support. Analysis of the autumn statement by the IFS found that the benefit system is still much less generous in the long run, pointing out that universal credit now represents an additional cut on top of other changes, including the cut to benefit entitlement, of £3.7 billion a year in the long run. Some 4.5 million working families will be affected by the introduction of universal credit, and 2.6 million will lose an average of £1,600 a year.

This is where I must disagree with the hon. Member for Weaver Vale (Graham Evans) and where he missed the point in his contribution. People are being encouraged into work, which is right for those who can work, but removing the work allowance aspect of universal credit takes away the only incentive to work. He also made the point that the social security system needs to be fair for those who pay for it, but he perhaps forgets that those in receipt of the universal credit work allowance are in work.

[Graham Evans]

They are taxpayers.

[Neil Gray]

Absolutely. They are taxpayers.

Some 1.8 million non-working families will be affected by the introduction of universal credit, and 1.2 million families will lose an average of £1,000 a year. Over recent months, the focus of much discussion has been on tax credits, but changes to universal credit will also have profound effects. The Government’s so-called U-turn on tax credits is nothing more than a delay tactic, with the pain to be felt in the next few years under universal credit. Support for working households on low incomes getting universal credit was also reduced in the summer Budget. Ian Mulheirn of Oxford Economics said that,

“this may be a U-turn in April 2016, but it doesn’t look like a U-turn by 2020.”

In conclusion, the Scottish people voted in May 2015 for an end to austerity when they voted for the SNP. They deserve the leadership they voted for and not to face the social security storm that the Tories are brewing. The failures of the UK Government to give us full power over universal credit have left our country picking up the tab for the Tories’ poor economic choices and shoddy governance once again.

10:34

[Nick Thomas-Symonds (Torfaen) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. I warmly compliment my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) both on securing the debate and on the dignified, cogent and passionate way in which she put her case this morning.

The hon. Member for Weaver Vale (Graham Evans) spoke well about the staff to whom he had spoken at a Jobcentre Plus office in his constituency. My hon. Friend the Member for Makerfield (Yvonne Fovargue) made an excellent speech, drawing on her experience at Citizens Advice in the 1980s and speaking powerfully about the sad explosion in the number of food banks in this country since 2010.

I am grateful to my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) for his speech, in which he spoke well about the complexity of the modern economy. He made a powerful point about our need to draw on experience, and any well thought out, coherent and simple policy is to be welcomed. I may even give him a shorter book to read in due course. There were also interventions from my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) and the hon. Members for Congleton (Fiona Bruce), for Cheadle (Mary Robinson), for Bolton West (Chris Green), for Strangford (Jim Shannon) and for Ribble Valley (Mr Evans).

Much of today’s discussion has been about the language with which the debate is conducted, and I am extremely concerned about the language framework that the Government use. The Chancellor of the Exchequer said on the “Today” programme on Monday 8 October 2012:

“It is unfair that people listening to this programme going out to work see the neighbour next door with the blinds down because they are on benefits.”

Those are his actual words. He presumably thinks that that type of stuff is popular at the Tory conference. The real problem with that sort of language is how divisive it is. There is no sense that the person behind those blinds might be vulnerable or disabled. The Minister has an opportunity today to condemn such divisive language, and I sincerely hope that she feels able to do so.

Even if one accepts the abysmal logic, which I do not, the real problem is that the Chancellor is so lost in tactical mazes of his own construction that he is actually on the wrong side of his own dividing lines. He is attempting to separate people into the workers and the non-workers—that is precisely what he was trying to do in that quote. However, what we saw with the cuts to tax credits, which the Chancellor eventually caved in on, we are also seeing with the cuts to the universal credit work allowance from this April.

[Mr Nigel Evans]

What was appalling under the previous Labour Government was the high level of unemployment, which meant more people spending time with the blinds down. Under this Government, employment has reached record levels, unemployment has dropped, and far more people are earning more money than ever before. Is that not bringing dignity to the British people?

[Nick Thomas-Symonds]

I will come to people earning more than ever before in a moment. I make no apology for a Government who introduced the national minimum wage or for wage growth in the Labour years. This decade risks becoming the lost Tory decade, with wage growth lower than at any point since the 1920s.

The hon. Gentleman wants to talk about money in people’s pockets. I have already spoken about the effects of the cuts to the universal credit work allowance on single parents from this April, so shall I use some other specific examples? Take a couple, living and working together, one or both of whom has limited capacity to work as they are disabled. For them, the work allowance will be cut from £7,700 to £4,700, a loss in income of £3,000. That is for people who are actually in work. To take another example, single individuals will essentially lose everything, with a reduction of £1,332, at a net loss to income of £865.

When universal credit is damaging and attacking people in work, it is in danger of undermining the aims that it was set up to achieve. If Government Members do not want to take my word for that, let us take the word of the Social Mobility and Child Poverty Commission’s “State of the nation 2015” policy paper, published on a big date for dumping things just before Christmas, 17 December 2015. The paper is available on the Government website if any Members want to see it. The commission stated:

“The immediate priority must be taking action to ensure that the introduction of Universal Credit does not make families with children who ‘do the right thing’ (in terms of working as much as society expects them to) worse off than they would be under the current system. That means reversing the cuts to Universal Credit work allowances enacted through the Universal Credit (Work Allowance) Amendment Regulations 2015 before they are implemented in April 2016.”

That is what the commission says should be the priority from this April.

[Graham Evans]

The hon. Gentleman is right to point out that the Labour Government introduced the national minimum wage. I supported that outside this place, as did many of my Conservative colleagues. This Government, however, are introducing a national living wage and—this is the key thing, which is lost on the Opposition—are keen for people to keep more of their own money. That is why the personal allowance has increased, taking the lowest-paid out of income tax altogether. He might remember Gordon Brown’s fiasco with the 10p tax rate, which penalised the lowest-paid workers in the country. The system is complicated, yes, but the underlying mantra is that it always pays to work. Getting low-paid people out of tax altogether is the best way of doing things, so that they keep more of their own money.

[Nick Thomas-Symonds]

I am interested in history, as the hon. Gentleman might know, but I do not recall the Conservative party in the 20th century supporting a national minimum wage. His personal view might well have been different, but I do not recall his party voting for a national minimum wage—rather, at the 1997 election I remember the Conservatives saying that it would cost jobs. They seem to have changed their position significantly since, which is to be welcomed.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Almost 20 years ago.

[Nick Thomas-Symonds]

If the Parliamentary Private Secretary wishes to intervene, he is welcome to do so.

[Alec Shelbrooke]

If I was allowed to, I would.

[Mr David Nuttall (in the Chair)]

Order.

[Nick Thomas-Symonds]

Perhaps the hon. Gentleman has special permission—I will take it up with him another time.

Another unfortunate pattern is the Conservative party putting forward various mitigations for its Government’s cuts. The latest one was on 6 January, when the Under-Secretary of State for Justice, the hon. Member for North West Cambridgeshire (Mr Vara), tried to defend the cuts to the work element of the universal credit, saying,

“let us not forget, the fact that every time we fill up our tank with petrol there is a saving of £10 because of the freezing of the fuel duty.—[Official Report, 6 January 2016; Vol. 604, c. 342.]

Back in the 1980s the Conservatives’ answer to the unemployed was, “Get on your bike,” but in 2016 it seems to be, “Fill your car.” That is the level of debate we have reached.

Confidence in the roll-out is another enormous issue, as my hon. Friend the Member for St Helens South and Whiston indicated. Let us not forget what the Secretary of State for Work and Pensions said in a press release on 1 November 2011:

“Over one million people will be claiming Universal Credit by April 2014.”

The actual number reached by November 2015 was 155,568. The hon. Member for Weaver Vale said with delicious understatement that that was not perfect. I have to agree—less than one fifth of the target had been reached. According to the independent Office for Budget Responsibility, the number will not exceed 1 million until April 2018, four years late. Does that not show the situation that we are in today? Given the cuts to the work element of universal credit and the sheer scale of incompetence with the roll-out, are we not in the worst of all worlds, where the Government lack both compassion and competence?

10:44

[The Minister for Employment (Priti Patel)]

It is a pleasure to serve under your chairmanship this morning, Mr Nuttall.

I congratulate the hon. Member for St Helens South and Whiston (Marie Rimmer) on securing the debate and on her contribution. I thank all Members present for their good, strong and wide-ranging contributions, including my hon. Friends the Members for Weaver Vale (Graham Evans), for Congleton (Fiona Bruce), for Cheadle (Mary Robinson), for Bolton West (Chris Green) and for Ribble Valley (Mr Evans) and the hon. Members for Stalybridge and Hyde (Jonathan Reynolds) and for Makerfield (Yvonne Fovargue), to name but a few. I hope to cover many of the points they raised.

The debate has been interesting because of its content and the nature and variety of the issues raised. My opening remarks, however, will focus on what the hon. Member for Torfaen (Nick Thomas-Symonds) said. I, too, welcome him to his new role. He rightly highlighted language and its use, which are incredibly important when discussing people, welfare, benefits and access to welfare. However, I do not accept his assessment that the Government use divisive language. I do not see the Government’s focus of ensuring that work always pays and that Britain moves from being a low-wage, high-welfare and high-tax society to being a higher-wage, lower-welfare and lower-tax society as divisive. Nor do I see as divisive the language used by the Prime Minister this week when he announced our life chances strategy, which is to do with this very issue of welfare and transforming people’s lives.

This Government and the Conservative party are focused on helping people with multiple barriers to their life chances, or with difficulties in life, so that they can get back into work or secure their routes to employment, which the debate has touched on. Importantly, we are securing the right kind of opportunities for all individuals. That is the right thing to do and is what all hon. Members seek to do when they are elected as Members of Parliament to represent their constituents.

[Fiona Bruce]

I am sorry to interrupt the Minister when she is in full flow, as she often is. Will she clarify one point that arose earlier in the debate when the hon. Member for Makerfield (Yvonne Fovargue) spoke about a “named contact”? I confirmed that, under universal credit, as I understood it, a named personal contact will not only act as a work coach, but also, according to the Under-Secretary of State for Disabled People in a debate on 6 January,

“help them to deal with their individual case when they are navigating complicated benefit systems”.—[Official Report, 6 January 2016; Vol. 604, c. 302.]

Will the Minister confirm that the named contact will supply the support necessary for people both to access their benefits and to get into work?

[Priti Patel]

My hon. Friend is absolutely right. Claimants have access to personalised and dedicated support via a named work coach. Indeed, I have been to many of our jobcentres and sat in on universal credit interviews with claimants and work coaches. There is additional support available for claimants who require help with housing and other benefits, arrears payments or even budgeting.

It is therefore worth highlighting how much our welfare system has moved on, compared with the complex and distorted system that existed previously. Many years ago we had a number of benefits but, fundamentally, universal credit has rolled six benefits into one to streamline our system and to make it less complicated. The more complex a benefits system is, as we saw in the past, the more difficult it becomes to support individuals—they spend more time navigating the system than looking for or being supported into work.

All that goes back to some of the fundamental principles of the universal credit: it can support individuals and families not only in having a job, but in their journey to employment. Once they are in work and achieve sustained employment, they get support to secure long-term employment or to work more hours, which removes the barriers that existed under the previous system.

As we have said, universal credit supports individuals to make progress into work in particular. Yes, people are supported by the wages that they earn and benefits they receive at the same time, but, unlike in previous systems, we do not have the barrier of a 16-hour work requirement that may have caused people to restrict their working in order to avoid losing benefits. That is part of the changes brought in by universal credit, which stays with the claimants when they move into work and gradually reduces as their earnings increase. Therefore, people—in particular those on low incomes—do not lose their benefits all at once.

[Nick Thomas-Symonds]

Lord Freud has said that there will be an automatic movement from tax credits to universal credit in two situations: “repartnering” and a

“new member joining the household”.

Will the Minister confirm that, if someone gets married or has a child, they will be moved from tax credits to universal credit?

[Priti Patel]

We are clear that people being moved on to universal credit from tax credits will be supported and will not lose out. A fundamental principle of universal credit is that it removes barriers that may have existed and, importantly, it gives people the support they need when they come on to it. That is different from previous systems. It is different from tax credits, for example, which did not provide support for people when they wanted to increase their hours and earnings.

The previous system was fragmented and there was little incentive for people to take up even a few more hours of employment, but under universal credit people can benefit as soon as they start to work. It is a simpler system to understand. It comes back to the point that we have support in our jobcentres to help people to extend their hours of work or, when they are moved on to universal credit, to understand the system and support them.

That is different from what existed before. Under universal credit, no one will have to worry about the Government asking for money back because the real-time information system connects the employer and Her Majesty’s Revenue and Customs on the number of hours worked. That is dramatically different from the situation when tax credits was introduced and millions of low-income families faced uncertainty about owing money back to HMRC at the end of the year. I am sure all Members have dealt with many examples of casework in that area.

I want to come on to the points raised, because I am conscious of time. There is evidence that universal credit is getting people into work and helping them stay in work. We have reviewed universal credit and, as a result of the support that people are given, we see that they spend 50% more time looking for work. We now see more universal credit claimants moving into employment compared with JSA claimants thanks to the focused support they get through their single point of contact, their work coach and other means.

[Mr Nigel Evans]

Is not the point—surely this helped win us the general election—the message that no one should be better off out of work than in work? With the national living wage and higher thresholds, we have ensured that far more people who are in work will keep more of their money.

[Priti Patel]

My hon. Friend is absolutely right about people keeping more of the money that they earn rather than going through the process of having more taken away and then recycled through benefits such as tax credits. It is also worth reflecting on the point made by my hon. Friend the Member for Weaver Vale. He mentioned Northwich jobcentre, which has done a great deal of work to support people on universal credit. The award that the Secretary of State gave to staff members there shows how they are supporting people and transforming lives, which is fundamental to the welfare reforms that we are bringing in.

Many comments were made about universal credit in terms of the process, the roll-out and delays. I do not agree with some of the assessments and analysis given, and those with reference to the OBR in particular. We are rolling out universal credit as planned. Importantly, we no longer believe in the “big bang” model used in previous systems such as tax credits, which when introduced brought a great deal of chaos to jobcentres and the welfare system. We have adopted a test-and-learn approach to ensure safe and secure delivery and, importantly, to ensure that we can learn from individuals as they go through the process.

We have an enhanced digital service, which makes it clear immediately that a claim has not been progressed and that further information is needed. Jobcentre Plus and work coaches speak well of the system. I have seen it in action, with the immediate way in which data are exchanged and claims are processed. We have faster electronic payments to allow the Department to make payments via BACS on the same day to minimise further delays, because of course people need to be supported.

I do not agree with the comments made about the report from Citizens Advice, because we know that the research for that was based on anecdotal evidence from a small group of current UC claimants—the sample was less than 1%. Even Citizens Advice said that that was not representative of all claimants on universal credit.

We have universal support working alongside universal credit, which offers wraparound support for those who need it. That comes back to the points raised about no two individuals being the same. Situations are different for claimers and no one can count for the life circumstances of individuals, so universal support provides that wraparound support.

[Jonathan Reynolds]

It sounds a little inconsistent to say that the Government did not want a big bang approach and want to learn from the roll-out, but then the Minister immediately dismissed one of the most useful and authoritative reports on the roll-out in our area. That report includes a number of cases that, based on my constituency surgeries, are spot on in the problems identified.

[Priti Patel]

We are clear that we have an agile test-and-learn system. That is not a big bang approach. With all due respect to Labour Members, previous Governments went for the big bang approach on welfare systems and there were consequences: I highlight again the tax credits example.

I will wrap up, because I am conscious of time. In terms of incentives and support, from April we are increasing the amount of eligible childcare cost in universal credit to 85%. That will make a remarkable difference to families. Welfare is about much more than just giving people money. It is about removing barriers for individuals, understanding circumstances and giving people the support they need to get on in life.

10:57

[Marie Rimmer]

I am deeply disappointed that the Employment Minister has not taken the debate seriously. Does she not accept that the language used by the Chancellor and indeed the Prime Minister is unacceptable? The trouble is, their words are at odds with the outcomes of the Government’s policies experienced by people in this country. She has not accepted that significant changes will remove people from the transitional protection arrangements. She should look at the Library briefing.

I ask the Minister to stop and think again. I ask her not to implement the cuts to work allowances. She should examine and address the real problems experienced out there in the pilot areas, as outlined so eloquently today.

The cuts in the work allowances remove the incentive to work. Transitional protection is not secure, because it is removed if one person leaves the household. There is more inequality and the dividing line is widening. The experience of people in our communities is worsening. There are examples of that in the report commissioned by the Minister’s Government, produced just a couple of weeks ago. She should read that report.

I ask the Minister to take seriously what is being experienced out there in the community and not to make the mess even worse. We are trying to help to improve roll-out across the country. She must examine and address the inequality and outcomes in the pilot areas before that. She should stop and address the problems, and not cut work allowances. Otherwise, there will surely be an outcry right across the country.

Motion lapsed (Standing Order No. 10(6)).

Defence Procurement

Wednesday 13th January 2016 Westminster Hall

11:00

[Mr Douglas Carswell (Clacton) (UKIP)]

I beg to move,

That this House has considered defence procurement.

I am grateful to be having this debate, and I thank the Minister for coming here to discuss a subject that he and I have talked about on a number of occasions.

British defence policy should be exclusively aimed at keeping Britain safe, but is it? Instead of serving the national interest, it too often serves the interests of a cartel of defence contractors. Britain does not get military bang for the taxpayer’s buck. We spend about one tenth of what the United States does on defence, yet we have far less than one tenth of the Americans’ capability—in many areas, we can barely field 1% or 2% of their capability. We are the second-largest defence spender in NATO and the fifth-biggest defence spender in the world, but we are simply not getting value for money.

What is going wrong? The problem is procurement. Major projects routinely come in late and way over budget. To be fair to the Minister, it is not his fault; it is not even the fault of his predecessors. The problems are the culmination of successive Governments’ policies over many decades. Starting perhaps in the 1960s, successive Governments attempted to consolidate the defence-industrial base. They thought consolidation would deliver economies of scale and make the UK defence industry more viable. At a time when deindustrialisation was feared, it was believed that ensuring that different defence suppliers amalgamated and merged into one would somehow make them viable. The problem is that consolidating the supply base in any market means that the seller ends up setting the terms of trade, and so it is in defence.

I have often heard Members of Parliament say that defence inflation is somehow higher than inflation in the rest of the economy. That is often described as a fact of life—somehow inevitable—but why do defence costs and prices rise faster than prices in the rest of the economy? Higher defence inflation is a reflection of problems in the procurement process, where too much money chases too restricted a supply of goods. Restrictions on supply are fundamentally the problem. Procurement is the problem.

Some projects, such as the Nimrod MRA4—we cannot possibly blame the Minister for that fiasco—never get off the ground at all. Despite constant cock-ups, however, the MOD keeps going back to the same contractors; we keep seeing the same pattern of dependence on a handful of contractors and bad value for money. Yet, the same contractors keep getting the lion’s share of the defence budget.

The MOD should be sourcing the best equipment possible to keep our armed forces and our country safe. Too often, unfortunately, procurement ends up being protectionist. Protectionist procurement produces huge inefficiencies; it means less competition—it cuts competition —and as we know, competition drives down costs and raises standards. Without competition, contractors ended up being rewarded for failure. Protectionist procurement means we spend years designing and building new equipment from scratch, instead of buying cheaper, better, readily available off-the-shelf alternatives.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for giving way, and it is good to see the Minister in his place. I look forward to a very positive response from him, because we have discussed this matter before. The hon. Gentleman is right. Defence is very important to our economy in Northern Ireland, where it provides high-tech, skilled jobs for the workforce. It is important that defence procurement is equally shared across the whole United Kingdom of Great Britain and Northern Ireland, and that regions such as mine can receive the benefit. If that is done right, we all benefit.

[Mr Carswell]

The hon. Gentleman makes a powerful point. I have to say that I am a little nervous about looking at the defence budget through the prism of what it means for jobs. Clearly that is important, but the defence budget’s primary purpose is surely not to act as some sort of Keynesian demand stimulus for a regional economy, but to make sure that our armed forces have the equipment they need to defeat our enemies and keep us safe.

[Jim Shannon]

We already have established companies in Northern Ireland that deliver the best and give value for money. The point I am trying to make is that they could do more if defence procurement was regionally spread.

[Mr Carswell]

I agree. If we allocated the defence budget on the basis of value for money, I am sure companies in Northern Ireland would get an enhanced share. However, if we create a system where public money is allocated on the basis of something other than value for money, we open the door—the revolving door—to lobbying and all sorts of nefarious influences. Not only is that bad in itself, but it has negative consequences in terms of giving us value for money as part of what will, by definition, always be a finite budget.

Those in the defence establishment will claim that providing Britain’s defence protection base is a strategic industry, and of course our defence industry is a strategic industry. However, they seek to justify giving privileged contractors the privileges they get on the grounds that that maintains our defence industry and that it is critical to our national security. However, let us assess that argument a little further.

The idea that Britain is self-sufficient in defence production is a myth. We need to import defence equipment and materiel. We did so throughout the last century, and it is thanks to our ability to do so that we won wars we would not have otherwise won. In fact, during the Napoleonic wars, we imported materiel and equipment from overseas through Harwich, near my constituency, to ensure that we prevailed in that struggle. Not for centuries have we been entirely dependent for our defence on equipment produced exclusively on this island, and it would be naive to assume we ever could be.

Today, British defence manufacturers cannot produce equipment without international support. There are few systems anywhere—from mobile phones to jets to missiles—that can be built and manufactured without some sort of international trade. I would say that that is a good thing. International dependence and complex international supply chains are a good thing; apart from anything else, they help to keep the peace and to enhance international co-operation. However, many supposedly British procurement options, which are sold to politicians, civil servants and Ministers as the most British option, actually mean we end up being ever more dependent on other Governments.

Let us take the example of the RAF’s new transport plane—the Airbus A400M. It is partly manufactured in the UK, and a very good thing that is too—I do not denigrate that at all. But it has a shorter range, a lower top speed and a smaller payload than the comparable Boeing C-17 Globemaster, and it is considerably more expensive to boot. However, here is the really shocking thing: if we bought the C-17, we would need the support, compliance and good will of only one Government—the United States Government. But the A400M option requires the compliance and support of the Governments of France, Spain, Belgium, Germany and Turkey, as well as that of the United States. The supply chain is even more interdependent. Far from giving us so-called sovereignty of supply, the A400M is an example of procurement that is protectionist and, at the same time, makes us more dependent and less operationally sovereign.

Defence protectionism has also created a contractor cartel. In an attempt to prop up the defence industry, successive Governments have promoted the supply side and consolidated it. That has created what economists call—this is a rather clumsy term—a monsopoly, which is a monopoly of supply. That means that a limited number of suppliers, not the state, control the terms of trade. Britain is paying over the odds because a tiny group of producers sets the terms of trade.

Big business is not the only vested interest that distorts procurement, either. Perhaps inevitably there is inter-service rivalry, so that projects serve the interests of different sectors rather than the defence interest overall. We have unenforceable anti-lobbying rules, which mean that former defence personnel can pursue what I would regard as inappropriate contacts on behalf of clients, without censure. Protectionist policy and those various crony corporate vested interests are undermining our national security. They are preventing our nation state from being able to turn whatever fiscal power we have into military muscle. We are simply being less efficient than we ought to be. We need a procurement policy that puts the national interest first and allows us to convert the fiscal power that we have into the maximum possible military muscle.

A few weeks ago, the UK Independence party parliamentary resource unit published an excellent paper called “Rethinking Defence Procurement”, in which we set out some ideas and suggestions—I think they are rather sensible, soft suggestions—on what we can do to get things right. First we suggest that the default—though not the exclusive—approach should be to buy a weapons system off the shelf. I grant that there are some weapons systems that we need to make in-house; we need that capability. However, if we want the best value equipment possible we need to be prepared to buy off the shelf.

It would be perfectly possible for us as a nation state to build smartphones that would be manufactured exclusively in the United Kingdom. Probably, they would be the size of a brick, there would be a waiting list for them and they would run on clockwork. It makes much more sense for us to buy smartphones that are the result of international co-operation, with chips built in South Korea, design from California and software from India. International co-operation enables us to have smartphones with a higher level of technology for less cost every year. We should apply a similar principle to defence procurement. We might think of off-the-shelf procurement as being almost like urgent operational requirements—which I know the military rather like. In other words, the military can buy what it wants, from whom it wants. We can think of it as an urgent operational requirement, but without the guddle and the rush.

Secondly, we need to start consolidating not the supply side but the demand side. By working with our allies we could initiate joint procurement projects. That is not a case of our building and manufacturing things jointly; that would be a supply solution. Rather it would be a matter of putting in procurement bids collectively with our allies, ensuring that in many areas we would have a buyers’ market, where the buyers collectively could set the terms of trade. We could do that with a number of countries—not just European countries and NATO members but countries such as Australia and India. If they and we needed a weapons system, why not put in joint procurement bids with our Anglosphere allies? That would drive down prices and ensure both we and our allies got better value for money.

Thirdly, I would like Parliament to have real oversight of the procurement process. Instead of just reviewing the annual report from the Ministry of Defence, the Select Committee on Defence should be required to oversee and authorise major projects. We should take back as a Parliament the power to scrutinise what the Executive spend on our account. Specifically in relation to defence, the Defence Committee should be required to approve and sign off on particular large projects. That sort of oversight would ensure that there was genuine accountability on procurement.

Finally, anti-lobbying guidelines need to become law. I was delighted to hear my hon. Friend and neighbour the Member for Harwich and North Essex (Mr Jenkin), as Chair of the Public Administration Committee, making some suggestions about that the other day. I think that is exactly what we need to be prepared to introduce, to make sure that, yes, the expertise that exists in Government Departments can be shared with contractors, but that there are public records of those contacts and that where there is a revolving door there is some accountability to ensure that nothing untoward happens.

Britain needs a defence strategy that aims above all to keep our country safe. In an era of growing threats and constrained budgets, misspending is no longer a luxury that we can afford. We need real reform. I know that the Minister recognises the need to improve the way we spend our defence budget, and that he is a reformer. I also happen to know, too, that in his Department reformers do not always get an entirely easy ride. I look forward to hearing what changes he has in mind to improve things, and whether he will consider going further and recommending any of the measures I have outlined.

11:14

[The Minister for Defence Procurement (Mr Philip Dunne)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. It is all too infrequent that we have the opportunity to debate defence matters—and particularly defence procurement—in Westminster Hall, so I am especially grateful to the hon. Member for Clacton (Mr Carswell) for securing the debate, and I congratulate him on doing so. The subject is one of great interest to me, and to him, but of somewhat less obvious interest to other Members. It is a pleasure to see the hon. Member for Strangford (Jim Shannon) here; he takes a personal interest in the subject on behalf of his constituents and Northern Ireland.

It is a good time to have such a debate, not least because it comes two months after the Government published the gratifyingly well received strategic defence and security review in November. The review was comprehensive and ambitious, and when combined with the Chancellor’s summer Budget announcement it was good news for defence. Defence procurement is central to our plans to deliver our national security objectives, and that was precisely the point on which the hon. Member for Clacton opened his remarks—that the purpose of defence procurement must be to provide the capability for our armed forces to keep us safe. That is the primary duty of Government, as has been recognised in the priority that the Government have given defence and in the reform of defence procurement processes, in which the hon. Gentleman takes such a keen interest.

By giving us an increasing budget, the SDSR will help us to protect our people with more new planes, ships and armoured vehicles over the procurement cycle. It will help promote our prosperity. An additional task for defence—an additional strategic objective—of contributing to the economic prosperity of the country has been emphasised through the SDSR in a way that has not happened before. That has a number of implications for how we go about procurement.

Promoting prosperity provides a stimulus for innovation, which is essential for maintaining technological superiority over our adversaries. It provides the opportunity for the Department to become a champion of small business, which in many respects is where innovation originates. It also allows us to encourage defence exports, which means that we can allow our defence supply chain to be competitive internationally, from which we benefit through our own procurement. All in all that is a good thing, as I am sure the hon. Gentleman will agree as we explore the issue in this debate and on future occasions. We are on the right track. We may not have gone as far as he would like or necessarily as fast as we would like, but in my view we are making great strides.

Before I look to the future and address some of the hon. Gentleman’s comments, it is worth acknowledging the enormous achievements in the previous Parliament. I want to preface my comments on the document prepared by his party, which he referred to and which he has in front of him, by saying that many of the criticisms it makes—in many respects rightly—relate to a period that we are now some way beyond. They relate to the defence industrial strategy that was authored in 2005-06 under the previous Administration, which no longer prevails. Part of the disagreement that there may be between us will be about the extent to which today’s policy has moved on beyond the defence industrial strategy, rather than being grounded in it.

In 2010 we inherited a defence procurement position that was unquestionably unfit for purpose. It was not delivering to time, performance or, above all, cost. That is why, at a time of heightened pressure on the national finances, we had to make some tough decisions. We did not shrink from cancelling overrunning and massively expensive programmes such as the Nimrod MRA4 programme, to which the hon. Gentleman referred in his remarks. We embarked on the most radical series of defence reforms in decades, and I am pleased to say that those reforms meant that defence ended the last Parliament in a markedly better state than it began it in.

The National Audit Office’s major projects report for 2015, which was published before the end of last year and covered the most recently available material we had, recorded a fall of £247 million in the forecast cost of defence projects—the second successive year of reductions in the major projects it reviewed. That compares with a £1.2 billion in-year cost overrun reported for 2009 by the NAO in its major projects report.

The 2015 report builds on the success of the 2014 report, which reported the best cost performance since 2005 and the best time performance since 2001. That is powerful evidence of how far we were able to progress in improving performance during the previous Parliament. Indeed, Lord Levene of Portsoken said in his 2014 report on the Department as a whole that,

“a leopard really can change its spots”—

rare praise indeed from Lord Levene.

If I may reflect on the comments of the hon. Member for Clacton and the document to which he referred, we recognised the glaring inadequacies of the defence industrial strategy of 2005-06. That was why we determined to overturn it in a White Paper published in 2012, “National Security Through Technology”, which set out our thinking on industrial policy. It replaced outdated concepts of industrial sovereignty at any cost with a much more nuanced approach, saying that the sole aim of defence procurement was to equip our armed forces with the best capabilities we could afford at the best value for money. That meant putting an end to unaffordable gold-plated requirements and instead increasingly buying things off the shelf, from the global market where possible and appropriate.

“National Security Through Technology” highlighted the benefits of working with other countries, as the hon. Gentleman seeks to do, to open up each other’s defence markets and, where we share requirements, collaborate on international acquisition programmes. The best live example of that new way of collaborating on procurement is the F-35 programme—the largest defence procurement programme in the world ever. Eleven nations are pooling their demand signal to provide as large an order as possible to the contractor consortium—at the moment in annual buys, but in the future it will be multi-year buys. That order is for three different variants of the aircraft type, but it is essentially the same aircraft type for each customer, in order to avoid the bespoking that, as the hon. Gentleman said, becomes so expensive in defence procurement. We are already doing that, and we are doing it in a big way.

The White Paper also recognised that defence procurement is different from other procurement, so for some aspects of capability, we still need to take special measures to maintain our operational advantage and freedom of action, but we stated that those would become the exception rather than the rule.

Having pointed out some of the areas where we agree with the hon. Gentleman’s critique, I will have to disappoint him by saying that I do not see the document prepared by his party as a valid critique of today’s policy and the important work that has been done over the past five years. The White Paper that we published heralded a series of sweeping reforms to defence procurement, which went hand in hand with the much-needed reforms we made to the wider Ministry of Defence. We adopted the proposals outlined by Lord Levene to overhaul the structure and management of the Ministry of Defence. We have thereby created a much leaner, more strategic head office, devolved responsibility and accountability to the single services and, crucially, stood up a Joint Forces Command to look after cross-cutting areas such as helicopters and ISTAR—intelligence, surveillance, target acquisition and reconnaissance. Far from being dominated by single service rivalry, the Department is now more joined up than at any time in its history. That was amply demonstrated by how we handled defence’s contribution to the SDSR, with virtually no trace of the behaviours that had so coloured the exercise five years before.

Nowhere has the extent of our transformation been more ambitious than in our procurement entity, Defence Equipment and Support. DE&S provides vital support to the armed forces, without which they simply could not operate, and I pay tribute to the civilian and military staff employed in that endeavour for their dedication. Re-formed as a bespoke trading entity in April 2014, DE&S now has the freedom to make the changes needed to transform it into a world-class acquisition organisation. DE&S staff numbers have already reduced by around 18,000 since 2007 and, through transformation, we will continue to professionalise it and focus on the people and skills we need.

[Mr Carswell]

Of those 18,000 people, how many have been re-hired in a contractor or arm’s length capacity?

[Mr Dunne]

I cannot give the hon. Gentleman an exact number, but some of the activities previously held within DE&S have been outsourced. One example is the operation of the Royal Navy operating bases, which had, for some historical reason, been managed within DE&S. That has now gone back to the Navy, so those jobs by and large remain, but a large number of the 18,000 are a reduction in individual roles, to become more efficient.

Turning to how we obtain equipment, it is not as simple as making direct comparisons with other nations’ defence procurement models. Structures, roles, operational commitments and, consequently, equipment needs vary. For the past three years we have published a comprehensive and fully costed 10-year forward-looking equipment plan that takes account of our defence priorities and the capabilities needed to support them.

Our £178 billion investment in equipment over the next decade will support all three services, including committing to the F-35 joint strike fighter, which I have mentioned, and to new maritime patrol aircraft. Incidentally, we have decided that those aircraft should be procured off the shelf, to take advantage of the existing production line in the United States, to maximise interoperability with the United States and the other allies that will be procuring that capability, and to minimise bespoking, so that the cost is as plain vanilla as it can be. Through the equipment programme, we will also invest heavily in the Navy through the Type 26 frigates and in the Army through forming the new strike brigades with its equipment, which will be state-of-the-art.

[Mr Carswell]

Excellent.

[Mr Dunne]

That will allow us to acquire the capability we need, with minimal costly bespoking, in the timescale required. The hon. Gentleman has just indicated from a sedentary position that he supports those initiatives.

We share the hon. Gentleman’s view that protectionism is not good for defence or for the UK in the long term, not because we do not want to support British industry—we do—but because we recognise that protectionism provides no lasting solution. It does not give us the capabilities we need when we need them, at a price we can afford. Above all, it does not help industry. It stifles innovation, saps productivity and suppresses competitiveness.

That is why we focus on competitive procurement, with one of the most open defence markets in the world. It is why, for example, we decided to procure the new fleet of Royal Fleet Auxiliary tankers from South Korea, which the hon. Gentleman touched on in his remarks. The fleet will come into operation later this year and draws on key British technology, with some 25% of the supply chain for the vessels coming from the UK. There is still a strong UK component to an international procurement, demonstrating that having an open defence market helps to sustain a competitive defence industry in this country.

We recognised that we needed to reset the relationship with industry, particularly on the large single-source projects of which the hon. Gentleman is so critical. For that reason, we used the Defence Reform Act 2014 to reform single-source procurement. It established a statutory governance framework to ensure that costs are fair to us and to our suppliers. We have also set up the Single Source Regulations Office as an independent review body, and it has now been operational for 12 months. No longer will suppliers have carte blanche to set the terms of the trade. We believe that that will help to address the hon. Gentleman’s concern about defence inflation by imposing a much greater spotlight of transparency on individual single-source contractors and the bill invoices they submit, which we think will put downward pressure on inflationary pressures.

I point out gently to the hon. Gentleman that some of the cost comparisons in his party’s document confuse different things, often comparing apples with pears by not taking into account some of the additional costs that appear when we procure in the UK, other than on an off-the-shelf basis. We tend to include the cost of support, training and simulators alongside the cost of the capital equipment itself, which can often distort a like-for-like comparison with an off-the-shelf purchase.

Question put and agreed to.

11:29

Sitting suspended.

Care Homes: England

Wednesday 13th January 2016 Westminster Hall

[Mrs Anne Main in the Chair]

14:30

[Peter Kyle (Hove) (Lab)]

I beg to move,

That this House has considered care homes in England.

It is an honour to serve under your chairmanship, Mrs Main. It is the second time I have done so; the first was on my first Bill Committee, and this is now my first Westminster Hall debate, so I seem to be following you around the corridors of the House of Commons.

I take pride in the fact that my first Westminster Hall debate is on the care that we as a society provide for older generations. Care homes are an essential part of our social care network, providing support and residential care for more than 400,000 older people. We must reassure older people, families, carers and society at large that we are a country that will continue to offer sustainable, quality, statutorily supported care in what is about to become an extremely difficult funding climate for them.

This is not the first time that I have raised this topic; the Minister will be familiar with the many parliamentary questions I have tabled on the subject. As he is personally dedicated to quality care for older people, I know that he will welcome the opportunity to discuss this matter in more detail than would often be the case for a humble Back Bencher such as me going through the normal channels of parliamentary protocol.

In many ways, it is strange that we need to have this debate at all. With an ageing population and estimates that the number of people aged 85 and over is set to double over the next 30 years, people would think that having a well-funded and secure network of homes to provide care for later in life would be a given. This is the 21st century after all, and we meet in a Parliament of one of the world’s largest economies—an economy that was built through the graft and ingenuity of the wartime generation, our security delivered through their sacrifice.

However, evidence and testimony from care providers points to a sector in a perilous state, primarily for two reasons. First, a significant amount of the funding for older people in residential care who lack independent means comes from local authorities, so the significant cuts in local council funding have led to a 17% reduction in real terms in local authority spending on adult social care for older people since 2009-10.

[Paula Sherriff (Dewsbury) (Lab)]

I recently took part in a conference organised by the GMB trade union along with carers and people who run care homes. Those who run care homes expressed specific concerns about the fact that they were aware of people—and particularly older people—sometimes being kept in hospital when there was no real medical need for them to be. If we compare the costs, it costs a couple of hundred pounds a day for them to be staying in hospital—

[Mrs Anne Main (in the Chair)]

Order. The hon. Lady’s intervention is becoming a speech.

[Paula Sherriff]

Okay. Does my hon. Friend agree that we should speed up the transitional process and put pathways in place, so that the move between hospital and care homes can happen much more efficiently?

[Peter Kyle]

I am extremely grateful to my hon. Friend for raising an incredibly important point, and I know well from conversations that we have had both in the Chamber and outside it how much she advocates for her constituents who are in care homes. The fact is that the so-called bed-blocking problem is often caused not by a lack of beds, but by a lack of capacity out in communities, for various reasons. One of those involves communities and the care home sector itself. The fact that people are ending up in hospitals is indicative of the much broader problem of caring for people where they need to be cared for most, which is in their homes and communities. My hon. Friend makes that point very well.

The significant cuts to local council funding have led to a 17% reduction in real terms for local authority spending. Industry research cited by ResPublica points to a shortfall between the cost and provision of the average weekly fee paid by local authorities, which worked out as £42 per resident per week in the period between October 2014 to September 2015.

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

As the hon. Gentleman may know, I have been a great champion of care homes and the need to meet the challenges over many years. Does he at least, despite being absolutely right to raise these problems, feel some comfort from the 2% precept? I understand that many of the county councils are going to take up that precept, which has been introduced to alleviate some of the challenges that he alludes to.

[Peter Kyle]

I am very grateful for that intervention. I will come to the precept in a moment, when I would welcome further interventions as we talk about the detail of the precept and how it actually, while being welcome on a surface level, will be rolled out in different ways and impact on communities differently. I will keep my eyes open, as the hon. Lady might well want to come back to this when we tackle those issues.

The pressures on care providers will only be exacerbated by the increases in the minimum wage that will come in from this April. However, let me restate my position on the rising minimum wage for the avoidance of any doubt: I believe that those working in the caring professions deserve a pay rise for the fantastic jobs that they do, especially considering that it has sadly become a low-pay sector. I am glad that there is now cross-party consensus on the ambitious rise that is deserved by all those on low pay. However, we must make this work, and it will only work if we are aware of and prepare for what will happen in the areas that this will impact on hardest.

The National Care Association, for example, has estimated that the rise will add at least 5% to payrolls this year and a further 7% year on year by 2020. Without extra resources, local authorities will end up pushing independent, statutorily funded care homes closer to the brink. The excellent ResPublica report from November laid bare the startling and shocking fact that an unfunded living wage could end up with the loss of 37,000 care home places. I know that the Minister and his colleagues will point to two actions that they think will mitigate that, so let me address both of those in turn.

First, there is the social care precept. Introduced in the autumn statement, it gives local authorities the power to raise council tax by an additional 2%, the proceeds of which are ring-fenced for social care. Although all additional funds are welcome, that is a drop in the ocean compared with the additional resources needed. Following the autumn statement, the King’s Fund estimated that the funding gap for social care could be as high as £3.5 billion by the end of this Parliament.

What is more, the precept may well end up generating extra revenue where it is least needed. At present, residential care home funding is split between people who pay for their care themselves and those who have it paid for by their local authority. Self-funders pay 50% more than those funded by councils so, in effect, they subsidise those paid for by the public purse. It is not hard to work out that the homes with a smaller number of self-funders are the ones who are most at risk financially from the cut in funding rates from local authorities. The split varies across the country, but on the estimated figures put together by LaingBuisson in its “Care of Older People UK Market Report”, the number of self-funders in 2014 was only 18% in the north-east, with the majority of other regions hovering around the 40% mark. It is pretty obvious that the power to raise council tax will generate the most revenue in the areas with a higher council tax base, namely the southern regions of England, which—you guessed it—have a higher number of self-funders.

[Anna Turley (Redcar) (Lab/Co-op)]

Does my hon. Friend share my opinion that council tax can be a regressive tax, and that for areas such as mine, which have levels of deprivation and are already hit by a tax that is not particularly fair, this precept is not a progressive tax? Those areas that have already been hit hardest by cuts in local government funding will be hit yet again by this tax.

[Peter Kyle]

I am very grateful to my hon. Friend for making that point. In representing Redcar, she knows better than anyone that people in residential care homes that are heavily reliant on statutory funding will be hit the most because of the cuts that are going into local authorities, and they will be hit again by the precept, which, because of the process that I have just outlined, will be front-loading resources into the areas that need it least. Her area of the country will have people who are more dependent on statutory funding for care home places. The 2% is based on a lower percentage of people paying council tax in the first place and will have to cover more people. That is why the precept is not fair and will not get to the people who need it most.

[Anne Marie Morris]

The hon. Gentleman is being incredibly generous with his time. He raised a point about inequality. Does he agree that we should be asking the Care Quality Commission to look at how much funding is being supplied in each county to each home? At the moment, it seems that it is a bit of a lottery, for all sorts of reasons, which may or may not be part of his argument. At the very least, we should agree the standard of care and it should be equal across the country.

[Peter Kyle]

I will always be generous with my time for the hon. Lady because, early in this debate, we have found common ground. Later in my speech, I will call for assessment of exactly those areas. We need to understand how the funding changes and the new mechanisms are impacting on the ground and geographically across the country. We must make sure that any revenues generated, particularly in these times of restraint, are going to the parts of the country that need it most. My hon. Friend the Member for Redcar (Anna Turley) made the point well from the Opposition Benches. In this case, the support promised by the Government will simply not end up where it is needed most.

Secondly, on the better care fund, Ministers have belatedly recognised some of the flaws in simply relying on a precept to generate the extra funds needed for social care. There is simply not enough revenue being generated in poorer areas. The Government have said they will take that into account and use a formula for allocating extra funds for these areas taken from the better care fund. That was announced less than a month ago and we wait to see exactly how the details will operate in practice. There are murky areas and a lot of detail is coming. We must make sure we know exactly how this will impact providers in the front line.

Care England, a leading representative body for the independent care services, has already voiced its concern. It doubts whether the funding will get to the care homes that need it most. It is more likely that it will be used on other unfunded projects across the social care budget. It is worth remembering that the initial funding for the better care fund was not new money; it was funding to assist health services which was re-allocated to local authorities. I want to give the Minister the opportunity today to confirm whether the £1.5 billion is new money, or is again taken from existing health service budgets.

Local authorities will not see any of this money, whether new or recycled, until 2017-18 and even then it will be only £105 million. It could be too little, too late to prevent parts of our care home sector catering for the most vulnerable people in our society collapsing or withdrawing from the market and focusing on self-funding residents. Initial better care fund plans have been signed off by local authorities and NHS England. It would be great if an evaluation was conducted into how the funding to date has helped to support residential care homes, if at all.

I think the Minister can now see that there is cross-party support for this kind of independent evaluation into how funding mechanisms are impacting on front-line care provision. It could act as a best practice guide for authorities going forward, even when the extra resources the Government referred to become available. Will the Minister commit to this evaluation covering the impact of funding on the sector? Both Government and Opposition Members would find that helpful.

The majority of media coverage of the sector has been about the state of big providers, such as Four Seasons Health Care and HC-One, and speculation about their future viability. It is important to realise that the 10 largest providers account for about only 25% of the market, the rest being much smaller, independent providers. In my constituency there is a small family home, Wilbury rest home. Last year I sat down with the owner, Graham Dean, shortly after the Chancellor’s announcement on the living wage. Graham is the second generation of his family to run the home and, remarkably, he was born in it. Listening to him and other local independent care home managers talking with kindness, compassion and outright professionalism about the people they care for day in and day out has left a deep impression on me. They provide the kind of loving, caring environment that every human being deserves into their old age.

There are countless homes like that dotted around the country, but they are being pushed to the limit. Indeed, a survey from the National Care Association shows that almost a quarter of providers could exit the market altogether. That would be a tragedy for residents and society, and a crisis for the Government.

Another issue that is putting pressure on the sector is the national shortage of nurses, which has resulted in the increased use of agency nurses. In some cases that costs double the amount for permanent staff. To the Government’s credit, they have recognised that there is an issue and have been working with the care sector and with the Government’s skills body to develop a new training scheme to create a career ladder into caring professions. Sadly, that project was axed last December, just weeks before it was due to be launched. I understand from written answers that I have received that that was not a decision taken by the Department of Health. As a member of the Select Committee on Business, Innovation and Skills, I am happy to take up this cause with the relevant Ministers in that Department if the Minister feels that would be helpful. I would like to aid his work and I hope that his officials have already been doing much work behind the scenes to fight for its reinstatement.

As I move to my closing remarks, I would appreciate some reassurance from the Minister that the Government have a plan—dare I say it, a plan B—that is ready to be implemented should the worst-case scenario predicted by ResPublica and other respected think-tanks in the health sector come to pass. Do the Government have in place a robust contingency plan should the statutorily funded care home sector collapse, resulting in the nightmare scenario of 37,000 older people becoming homeless?

When Southern Cross Healthcare went bust in 2011, there were just enough resources from other providers in the sector to take over. Due to the current state of the industry, no private provider has the capacity to respond to a shortfall of 37,000 beds.

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

I congratulate the hon. Gentleman on securing this debate. He is outlining the scenario that might lie ahead if the Government do not increase their intervention. Does he agree that, for the first time in history, the UK is reaching a stage where, in addition to senior citizens being dependent on care they receive in care homes, some of their sons and daughters are of such an age that they, too, are senior citizens, so the level of dependence is even greater?

[Peter Kyle]

I am extremely grateful for that intervention. I had not considered that and I will take it on board. I am grateful to the hon. Gentleman for pointing it out and putting it on the record.

It may not be a Southern Cross that fails first. In fact, it is most likely to be the smaller, independent providers in areas that are most dependent on local authority placements. Can the Minister reassure us that his Department and local government have the capacity to respond to any piecemeal closures that are likely to occur?

[The Minister for Community and Social Care (Alistair Burt)]

indicated assent.

[Peter Kyle]

The Minister is nodding and I look forward to testing the argument in his statement.

Everyone here wants to ensure dignity for all later in life. That can be assured only if there is a properly resourced residential care sector with stability and financial security. I look forward to hearing the Minister’s response and receiving reassurances that all Members, of whatever party, want to hear, and I look forward to being able to work with him and care home providers in the months and years ahead to ensure that that type of residential care sector becomes a reality.

Mrs Anne Main (in the Chair): I shall call the Scottish National party’s Front-Bench spokesman at 3.30 and then the Opposition Front-Bench spokesman and the Minister. Quite a few hon. Members want to catch my eye and if they divvy up the time between them that will be helpful.

14:49

[Huw Merriman (Bexhill and Battle) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Main. I thank the hon. Member for Hove (Peter Kyle), one of my constituency neighbours, for securing the debate and permitting me to consider the role that care homes play in my constituency.

Some 27,000 of my constituents are aged over 65 years. The hon. Gentleman mentioned the ResPublica article, which states that by 2050 the proportion of people in the UK aged 65-plus will have risen to 25%. In my constituency it is already at 28%, against a national and regional average of 17%. Indeed, Bexhill and Battle has the fifth highest proportion of people over 65 years old in the UK.

As a result, many of my constituents live or work in care homes. Before and since my election, I have visited many of those care homes and been hugely impressed by the levels of care and devotion afforded to that most special group of constituents. It is therefore right today to celebrate the role that care homes play in our country and to say thank you.

There is an unfortunate perception of care homes, which regular visitors such as myself try hard to dispel. Although many people feel negatively towards hospitals, they are considered to be places where improvements in outcomes are possible. The same is not often said of care homes. The perception is of a place that people move to when their lives have deteriorated and will continue to deteriorate. That perception means that the public rarely hear about the improvements in outcomes that care homes deliver, the innovative treatment that residents are afforded and the compassionate care that owners and their staff deliver to residents. I hope that we can use this debate to celebrate what care homes do for our constituents.

However, it is right to highlight some key challenges for care home providers, and I shall list two that require the support of the House and the Government. The first, which the hon. Gentleman mentioned, is local authority funding. The gap between local authority care home fees and the cost of care home places in real terms continues to grow. That has represented a drop of almost 5% for council-funded residents over the past five years. That situation could be exacerbated by the welcome announcement of the Government’s new living wage, which will give care home staff a wage of £9 an hour by 2020. I was glad to hear the hon. Gentleman celebrate that pay rise for hard-working care home staff, who, as he mentioned, have been underpaid for many years.

Many of my local care home providers have approached me with concerns that they may have to cease operating if margins continue to be squeezed. On their behalf I have lobbied Ministers to highlight the funding gap, and I am pleased that the Government have now given local authorities the right to add a 2% council tax surcharge for adult social care. In East Sussex, local authorities and the NHS are delivering our “Better Together” integrated healthcare programme. Although I continue to lobby for lower taxes for my constituents, I hope that they will embrace that new tax levy as a means to support the funding of care for our elderly community. I therefore hope that the gap will be plugged, at least in part. It will be interesting to hear the responses of my right hon. Friend the Minister to the other questions that the hon. Gentleman asked.

I would like to touch on staff recruitment. In the care home sector, the staff turnover rate is 32%, which is incredibly high. It is clear that the sector has issues in recruiting and retaining staff. Reliance on staff recruitment from abroad is very strong. I am delighted that the Government have added care home nurses to the shortage occupation list, albeit temporarily. Those who criticise net increases in immigration to the UK need to understand that our population is getting older and needs more care, which means more carers. I welcome the desire of the care home industry to win more contracts from our clinical commissioning funders, because I hope that that will make jobs in care homes more fulfilling, skilled and desirable. I also hope that it will allow us to rely less on staff coming from abroad—from countries that are underdeveloped and whose own residents may need care and assistance even more than people in this country do.

I will conclude, to allow other hon. Members to speak. I welcome the debate, and I celebrate the role that care homes play in this country. I have visited care homes where dementia sufferers are taken on incredible journeys back to their childhoods, where schoolchildren are invited in to go through their exercise books with residents, where residents play games and sing and where there is a great celebration of the rich lives that they have experienced and will continue to experience. I look forward to visiting more care homes and championing their owners, staff and residents in the years to come.

14:54

[Joan Ryan (Enfield North) (Lab)]

It is a pleasure to follow the hon. Member for Bexhill and Battle (Huw Merriman). I echo what he said about some of the excellent care that we see in care homes.

I congratulate my hon. Friend the Member for Hove (Peter Kyle) on securing an important and timely debate. He highlighted many of the key concerns of care providers in the UK. One is the current funding crisis in social care. Over the past five years we have seen social care budgets across the country cut by almost 11%. In Enfield, the local authority has had to deliver net savings in its adult social care budget of 16% over the past four years, and by 2019, the savings requirement that the council will need to initiate will further reduce the budget by £19.8 million, from £80.8 million this year to £61 million. That is equivalent to another 25% reduction in the net budget. How do the Government seriously expect local authorities such as Enfield to cope with a cut of that level?

[Andrea Jenkyns (Morley and Outwood) (Con)]

I have been a councillor, so I know that budgets have been quite tight in local authorities over the years. A care home in my constituency, Siegen Manor, is possibly due to close. Does the right hon. Lady agree that we need to look at the way councils spend money? In my new city council, there is a lot of wastage. We need to look at how councils spend their money, because I could give a lot of examples of how they could—

[Mrs Anne Main (in the Chair)]

Order. I call Joan Ryan.

[Joan Ryan]

It is always important that we have a weather eye on how any public authority is spending its money and that we get the best value for money; that goes without saying. However, I think—I do not believe the hon. Member for Morley and Outwood (Andrea Jenkyns) was disagreeing with me on this—that we need to hear from the Government how local authorities can be expected to cope with the size of cut that has been happening and is continuing to come their way. I thank the hon. Lady for her intervention.

Spending reductions of the size that my local authority is facing will almost inevitably result in cuts to the services that Enfield delivers to some of the most vulnerable people in the borough. Given the huge pressures on shrinking resources, I commend Enfield Council for its nationally recognised standards of best practice and the gold accreditation that it has received for its safeguarding work. Enfield has a wide range of care homes, which provide support to older and disabled people not only from the local area but from other areas. However, the deep cuts from central Government have already seen care homes close, and a significant increase in the number of people placed in the borough by other councils has meant that nursing home provision, particularly for people with dementia, is under severe strain. As a result, an ever increasing burden has been placed on our local NHS services and family carers. In those circumstances, it can be no great surprise that there is difficulty in recruiting and retaining staff to work as care providers.

Front-line care workers are all too often grossly undervalued. They offer vital support to people with ever more complex conditions, yet in return they often receive very poor wages. So although I welcome the introduction of the national living wage of £7.20 from April 2016, that figure is nowhere near the current London living wage of £9.40. Many care workers working in Enfield and elsewhere in London need that hourly rate just to get by. However, the Government have yet to explain how the care sector will be able to cope with the increased pressures on payrolls when funding has been so drastically cut. It is estimated that the introduction of the national living wage will add at least 5% to payrolls from 2016-17 and a further 7% every year until 2020. That will drive even more front-line care providers out of business and make a bad situation even worse.

I would like to draw to the Minister’s attention a letter I received from the Enfield Carers Centre in August last year. It read:

“Dear Joan Ryan

I am writing to you on behalf of Enfield Carers Centre to ask if you will support us in an urgent call that we are issuing to the Chancellor George Osborne in advance of the 2015 Spending Review.

In the Summer Budget, the Chancellor announced that, as of 2016, there will be a new compulsory National Living Wage of £7.20 per hour. We welcome support for care workers who deserve decent pay. However since we are dependent on local authorities paying us enough to pass this on to our valued care workers this increase therefore has to be reflected in the hourly rate paid by local authorities for care and support.

A report by the UK Homecare Association (UKHCA) has found that councils are going to need an additional £753 million to ensure their local care providers can meet these new pay requirements. Without that funding, care services risk closing down entirely…Care services have been badly affected over recent years by cuts and this is a financial stretch which we cannot meet. Quite simply the home care market, is at risk of collapse.”

I do not think that the Enfield Carers Centre got the answer it was looking for from the Chancellor, and I hope that it will hear some better news today from the Minister. I agree with the National Care Association when it states:

“UK Care Services are an irreplaceable part of the fabric of the NHS. There should be no doubt that what is under threat is a UK support service which is essential to local government and NHS care provision.”

I would like to know how the Minister will address those concerns and what steps the Government intend to put in place to provide a transparent and sustainable funding settlement for social care. The older and disabled people who rely on the service, their families and the all too often unsung heroes who work in it deserve no less.

15:02

[Simon Danczuk (Rochdale) (Ind)]

It is a pleasure, as always, to serve under your chairmanship, Mrs Main. I thank my hon. Friend the Member for Hove (Peter Kyle) for securing this important debate. Proper funding for care homes and social care can go a long way to reducing the pressures faced by our NHS. We must continue to do all we can to integrate social care and the NHS. I am worried that under this Government, it is becoming increasingly difficult to do so, and care homes are becoming increasingly underfunded and overstretched.

Last November, figures were published showing that 5,247 patients were stuck in hospital beds. They were well enough to be discharged, but doctors and nurses felt they could not discharge them because of the lack of care available to the patient. The majority of such people are elderly. They cannot leave hospital because there is no space in their local care homes, and there are not the facilities or staff to look after them in their own homes. Our adult care facilities are not adequate for many people up and down the country, and the problem will only get worse, in many places, under the Government’s proposals.

I have some concerns about the new proposal to give councils the ability to raise council tax by 2%, which they will be able to spend only on social care. It looks like a good initiative at first glance, but council leaders and healthcare professionals can see that it is simply smoke and mirrors. The social care precept, as it has been labelled, will disproportionately affect poorer councils. Councils such as Rochdale will be worse off, while richer areas will be better off. The leadership of Rochdale Borough Council have rightly raised concerns about the policy. Because much of Rochdale’s housing is in council tax bands A and B, the proposal will raise only an extra £1.3 million. That is why poorer councils will be worse off. Rochdale council has already faced cuts to its budget of up to £200 million since 2010. We are struggling to cope, and services are being stripped to the bare bones.

The precept is welcome, but it will barely scrape the surface of the problem. The funding gap in social care and care home provision is getting worse. The Local Government Association estimates that it is growing by £700 million a year, and the King’s Fund estimates that it will be £3.5 billion by the end of this Parliament. The 2% increase will raise the least money in the areas of greatest need, so it will only increase health inequality, and it will vastly increase funds for councils that are already wealthy.

The most vulnerable have already seen their social care provision cut. The Joseph Roundtree Foundation points out that during the last Parliament, spending on social care fell by £65 per person in the most deprived communities, compared with a rise of £28 per person in the least deprived communities. The Government must do more to help the most vulnerable.

In the autumn statement, the Government announced that from 2017, funding expected to be worth £1.5 billion in 2019-20 will be available to local government. That funding will be included in the better care fund, as my hon. Friend the Member for Hove pointed out. It will go some way to addressing the funding gap and the disparities that will be caused by the 2% rise, but it will not be enough. The director of adult care for Rochdale, Sheila Downey, has made it clear to me that she does not know how much of that money will arrive in Rochdale, or how the funding gap will be filled until 2017.

The increase in the minimum wage will also have an effect on social care services and care homes, as has been pointed out. I welcome the raising of the minimum wage, but it must be accompanied by increased funding to allow for it. Care workers are some of the most underpaid, and they deserve their pay rise, so let us fund it properly. Rochdale’s director of adult care has raised that with me, because she is concerned about how she will find that money in her budget. She is working with local providers on the fees that will be required, but she is adamant that the pressure of the wage increase on social care budgets will not be fully met by the 2% increase. The widely cited ResPublica report from November, which my hon. Friend the Member for Hove mentioned, suggests that 37,000 care home beds could be lost if we do not fund the increase properly, because care providers will simply not be able to remain open. Alarm bells should be ringing. The loss of beds will need to be made up, and it will simply be made up in the NHS.

I finish by saying that I share the vision of an integrated health and social care system. We must achieve that if we are to have a health system that is fit for the 21st century. To achieve that, however, we cannot simply plug the gap; we need to invest in our social care and care homes now. Investment in care provision and homes can take the stress off the NHS. We saw all too recently in the case of the floods what a lack of investment can do. Let us not make the same mistake when it comes to social care.

15:07

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mrs Main. I thank my hon. Friend the Member for Hove (Peter Kyle) for securing today’s timely and important debate. As a country, we need to give deep thought to the importance we place on social care. We have heard in this debate that constrained finances are skewing the opportunity to do that. I have always said that we can judge a country by the way it treats its older people, and I wonder how we really think we are doing against that test. Those who have served our country in so many different ways deserve the very best care, and I am not sure that our system is built on that model. In fact, the model is now built more on minimal provision as opposed to optimal provision. I wrestle with that approach, and I believe that we really need to think about the direction in which we are going.

The current black hole in state funding for care has been made more challenging as the years have gone on by local authority cuts. We have heard clearly about the impact of a 10.7% budget cut over five years, and the fact that care providers have to pay more has added further challenge. I really welcome an uplift in the pay of care staff, because they are paid a ridiculously low amount of money. They are also faced with pension uplifts, and they have had to wrestle with the rise in national insurance and steep rises in the cost of energy, food and other services. That has all happened at the same time as they face the increasing demands of a challenging and changing demographic, including people with multiple needs, and tighter budgets. What we are seeing is unrealistic: the demand is greater, but the money is less.

[Joan Ryan]

Will my hon. Friend add to that list the fact that the CQC rates more than 50% of nursing homes as inadequate and needing improvement? The people living in those homes are therefore living in inadequate situations. How will that change, given the circumstances she outlines?

[Rachael Maskell]

My right hon. Friend makes a really pertinent point. There has to be a debate about safety and about providing good, secure homes for individuals. If people are living in substandard conditions, that is simply unacceptable. If there are not the resources to put that right, we obviously fear for the future.

Another thing we know is that the pressure being put on so many care organisations will make older people far more vulnerable. As we have heard, tens of thousands of beds could be lost. If people do not have security in later life, it can have a real impact on their wellbeing.

As others right across the Chamber have said in the debate, the autumn statement has left many question marks, and one of the issues we are going to see as a result is inequality. Some of the communities with the most demand for investment in social care will get the least money from the precept the Chancellor set out. Taken with the further cuts that local authorities will experience, that will have a cumulative negative impact on the provision of social care. That is happening at the same time as the NHS is really struggling with discharges, because the provision is not there in the community. In my constituency of York Central, some of the transitional beds will be lost because of a care home closure programme, which I will return to.

Cuts to support services for the elderly, such as day care placements, are happening because of the cuts to local authorities, and they are having a detrimental impact. The little things that local authorities could provide that kept people safe in their homes and connected in their communities are now very much part of history, as opposed to part of the solution. We keep hearing that finances are tight, but we must remember that it was not the people in our care homes who caused the financial crash—but, my, how they are paying for it.

A care provider in my constituency has highlighted the challenges of the new minimum wage rate and asked how on earth they are going to pay it. They already have staff who are engaged on zero-hours contracts. They tell me they cannot pay for staff to travel between visits. I obviously question that, and I support paying staff proper wages, but I really worry about how providers will deal with these issues in the future and how they will survive. I have written to the Government to raise those concerns.

The issues I have outlined are particularly challenging in a city such as York, which has a high cost of living and high housing costs. When those are combined with low wages, it is virtually impossible to recruit care staff, and that adds to the sector’s challenges. As a result, the care model we have does not really address people’s needs. That has had a real impact on discharges from the NHS and on being able to give individuals timely care in the community. We are now seeing the cumulative impact of these things, as the care home closure programme across York means that fewer beds are available.

The problem we have is that care is seen as a zero-hours, minimum wage, low-esteem industry, when it should be regarded as a high-skilled, professional service and the funding should match that. Those who have the means can afford to pay for what they get—only just, but they can. However, for the rest, care packages are being driven to the absolute minimum. It would therefore be appropriate for us all to agree that current provision is totally unacceptable. We need to draw a line under that and to have a real debate about what needs to be done. After all, who are we talking about? Who are we providing care for? It is our mums and dads. It is the most vulnerable in our society—those with multiple disabilities, those with learning challenges, those with mental health challenges and those whose bodies are not quite working as they once did. One day, it will be us.

Who do we expect to care for those individuals? It is highly trained professionals—the very best—who are rewarded appropriately, motivated and driven to learn more and deliver more. Like everybody else, I have met care workers right across the sector—in fact, I spent time doing care work myself—and I know the passion they have for providing the optimum care for individuals, but if they are not given the time to care, how can they deliver that service?

The Kingsmill review “Taking Care”, which Labour brought forward before the last general election, set out a clear programme for improving care standards and providing training and remuneration. It also dealt with the important issue of registration. It is really important that care workers are state-registered to ensure public safety. The steps the review set out show how we can secure high standards in care and safeguard service users.

We then need to think about how and where care needs to be provided. Of course people have different needs, including physical needs. In my own clinical practice as a state-registered physiotherapist, I would often get people’s confidence up and get them back on their feet, only for them to go home and lose the support and stimulation they had had, because support was not available continually in the community. Falls prevention work, which really puts in investment upstream and provides care, means that individuals avoid things such as a fractured neck of femur, which is so expensive to treat, putting more pressure on the health service. Little steps can make such a difference in the community and in care homes, keeping people well and addressing their physical needs.

Likewise, we know that so many people have mental health challenges in later life—two thirds of the occupants of care homes experience some form of mental health challenge. It is really important that the setting individuals are placed in appropriately addresses those needs. We need to start thinking big on these issues. The Dutch—I hope I say this right—Hogeweyk dementia care village is a fantastic scheme. It is about state provision. We need that kind of investment and that imaginative, big thinking around how we provide care in our country.

The issues I have mentioned are exacerbated by some of the most prevalent diseases in our country—loneliness and isolation, and the social and emotional health of the most vulnerable in our society. The tightening of budgets is having a major impact on the wellbeing of old people. Investment in the issue can mitigate the worst aspects. I am totally passionate about that. It is heart-breaking that older people are just given 15-minute appointments, often with a stranger, as opposed to a full support network and a real life. Our goal should be helping people to live, not preparing them to die.

On the challenges we face, we need to take a step back and think about what we want from care provision in future. These are political choices and are possible if somebody believes they can deliver them. I talk to carers who share the vision I have outlined and who want the very best for the people they serve. I also talk to people in residential care, who want hope in their future. Those people would give momentum to a Government who would dare to grasp the nettle to make sure that we provide appropriate care in future.

I want quickly to set out the situation we have in York. I have had many conversations with the residents of care homes, their families and the staff. We are going through a transition. That has already resulted in two care homes closing, and a further two—Oakhaven and Grove House—are set to close early this year. Residents and their families are distraught about the fragmentation that that is causing. Residents are being moved to placements across the city and away from their families. Some placements are on the other side of the city from where their families live, so family members can no longer just pop in to see mum as they do at the moment. Residents are being moved away from their friends in the care home—for some, these are the only friends they have in the world. Staff are also being moved away from their homes. Residents feel that they have not been listened to and that they have been ignored, which is unacceptable.

The council has put its plans ahead of the support that it purports to want to deliver. It is remodelling social care. I very much support the last Labour Administration’s vision for that. However, the sequencing of the changes is detrimental. It is about putting money before people’s needs. We need to hold back on the transition that is taking place, to make sure that there is investment upstream, as opposed to making people fit the system and sacrifice some of the only bonds that they have.

We have gone badly wrong in many areas of social care, and do not currently place the value on care users and staff that we should. As I have said, this is about political choices and political priorities. I ask the Minister whether there could be any greater priority than getting this right. I urge Parliament from today to take the debate forward. I want all those who have participated in today’s debate to make sure that we prioritise social care so that it is seen as an urgent need to be addressed by the Government in this term, so that we do not have to face challenges and struggles we face at the moment of questioning the finances and the value we put on social care. The question is whether the Government are willing.

15:21

[Anna Turley (Redcar) (Lab/Co-op)]

It is a pleasure to serve again under your chairmanship, Mrs Main. I thank my hon. Friend the Member for Hove (Peter Kyle) for obtaining this important debate with his customary determination to tackle the big challenges of the day and his concern for the most vulnerable in society. As everyone on both sides of the House has agreed during the debate, older people deserve the right to live with dignity and decency; but, as has also been discussed, too often that is not the case, and I am afraid the situation seems set only to get worse.

Eighty-six per cent. of care home places are run by the private sector for profit. Local authorities are the largest single purchasers of those places across the country. Because of intense budgetary pressures, which my right hon. Friend the Member for Enfield North (Joan Ryan) and my hon. Friend the Member for York Central (Rachael Maskell) clearly explained, local authorities reduced their fees by an average of 5% between 2010-11 and 2015-16. According to the sector analysts LaingBuisson, the care home sector is closing more beds than it is opening for the first time since 2005, with a net loss of 3,000 across the UK last year. In the north-east we expect to have a substantial crisis in social care as a result of the Government’s failure to grip the issue.

As my hon. Friend the Member for Hove said, the homes most at risk are those dependent on residents paid for by local councils at rates far below those paid by self-funding residents: proprietors say rates are actually below break-even point. In the north-east, only 18% of people requiring care are self-paying, compared with 54% in the south-east. In Surrey, by contrast, only 1% of people in residential homes are paid for by the state.

The Financial Times has noticed that the care home market is highly polarised between lucrative self-pay homes, mostly in south-east England, and those with local authority residents, such as Redcar and Cleveland, which are struggling. Given that disparity between areas such as Surrey and areas such as mine, and since there is a crisis in the funding not of residential care but of state residential care, it is probable that the market will not collapse nationally, but will fall over in areas such as mine where the state is the main payer. If a major provider struggles it is likely to mean that it will close its homes in the north but not the south.

There is no capacity in local government to take over those homes. Any private sector supplier that did so would be taking an unsustainable risk, because they are currently loss-making businesses. At the moment there appears to be no plan B for the Government. I want to ask the Minister whether he accepts the scale of the impending crisis. Crisis point will be reached shortly in our region as demand continues to increase while spending is drastically cut back. The Government’s care legislation will further increase the burdens on councils in England. The only way in which providers can make any money is by cutting services and by squeezing workers’ pay and conditions.

The comprehensive spending review in December 2015 gave councils the option of adding a social care precept of up to 2% to annual council tax bills to raise extra money to pay for adult social care. However, as well as being regressive, as we have already discussed, the precept will at best raise £2 billion by 2020, against a predicted funding gap of closer to £8 billion. Indeed, the King’s Fund estimates that at best the precept will raise £800 million.

I want to use this opportunity to raise some contributory factors to the crisis, which the Government need to address, and I will begin by talking about the care workforce and national minimum wage compliance. The Resolution Foundation has estimated that care workers—both those in care homes and those providing home care—are already collectively cheated of £130 million a year because of sub national minimum wage pay. That is driven by chronic underfunding of the care sector, poor employment practices, poor commissioning practices and the ineffective enforcement of the national minimum wage by Her Majesty’s Revenue and Customs.

One employer, which will remain nameless at this stage, has put to its workforce a set of proposed changes to terms and conditions, to prepare for the introduction of the national living wage. Those include withdrawing all bank holiday and overtime enhancements, removing contractual sick pay, scrapping the meal allowance for workers when they are eating with clients, asking workers to pay for their own registration with the Disclosure and Barring Service, enforcing eight hours per annum of unpaid training time, introducing new duties and making changes to existing duties. In care homes non-payment of the national minimum wage is driven by a failure to pay for actual hours worked, such as when staff are not properly recompensed for overnight sleep-ins or time spent training; failure to pay for uniforms; and deduction of money for accommodation that does not form part of an employment contract.

The Financial Times has said that,

“businesses that run care homes for the elderly are at risk of going bankrupt, especially those reliant on revenues from local authority funded places, from a double blow of the imminent increases in the minimum wage and tighter immigration rules, making it harder to recruit from overseas”.

That is the issue I want to discuss next. The care sector is particularly dependent on migrant labour. The latest estimates suggest that nearly a fifth of the workforce are non-British. Unison has highlighted a particular problem in the care home sector with regard to the treatment of migrant workers. In a recent round-table event, a group of Filipino workers reported that they were paying £300 a month each to share a flat with only one toilet and no lounge at the residential care home where they worked. The rate paid for the work they did was £7.02 per hour, but there were then monthly deductions. The deductions were for their uniform—they got one per year but had to pay every month—and for training; that is a breach of national minimum wage law. The cost would normally be more than £200 a month, and it transpired that the workers were not necessarily getting the uplifts in the minimum wage that they were entitled to.

The round table also heard that a working week for the staff could sometimes be as long as 60 hours, depending on staffing levels, despite the fact that they were contracted for 36 hours. They could also find themselves working a 10-hour night shift for a paltry £35, way below the national minimum wage, and with no sleeping permitted. The employer extorted £500 each from that group of workers as their initial five-year period in the job came to an end, on the basis that payments were needed to retain a licence to hire foreign workers and to protect their immigration papers. The staff were also subject to body searches before meeting the employers. To compound matters, they were then obliged to pay fees of £2,000 each for a solicitor to renew their work permits—in cash. The work permits are for work with that one employer, so if the workers lost them they would lose their visa and have to leave the country. Not only is the exploitation of immigrant workers immoral, but it drives down terms and conditions across the sector for all workers and reduces the number of job opportunities for local people.

I want to discuss some wider problems in the care home sector. The social care workforce are predominantly female, with the latest estimates suggesting that 82% of care workers are women and that the percentage is broadly similar across all types of care. Social care is a highly gender-segregated sector, with low pay and poor conditions reflecting, as my hon. Friend the Member for York Central has mentioned, the historic undervaluing of what is deemed to be women’s work. Compared with other sectors, the workforce are also particularly concentrated in the 45 to 60 age bracket. Government-backed attempts to move away from that disproportionately middle-aged demographic have foundered, largely on the basis that the quality of work, pay and conditions is simply not attractive enough to bring in younger staff.

Residential care tends to be based on shift work and there are often problems with short-staffing, with care workers being called on at short notice to cover shifts. That can be particularly problematic for night shifts, where the compensation is often insufficient. There may also be pressure from care providers to work beyond a 48-hour working week. Vacancy rates and staff turnover are high across the sector. Councils are struggling to retain social workers in the face of high caseloads, a blame culture and competition over pay. High turnover has damaging implications for the continuity and quality of care.

There is no English language requirement for care workers whose first language is not English. The overall level of training and qualifications across the care sector is low. There are expectations of induction training for staff but the nature and quality varies considerably. There is less training available in outsourced services, and there are particular concerns about agency staff not receiving training. There are increasing expectations for care workers to carry out medical treatments that have previously been the preserve of nurses or other NHS professionals, but there is no concomitant expansion in training. There are no longer any universal standards for providers to meet benchmarks for percentages of trained staff in their workforces. Without obligations it makes no business sense for providers to do that training voluntarily, because of the high turnover of staff. There is also no central quality assurance mechanism for training, which leads to a lack of faith in qualifications, and no incentive—

[Mrs Anne Main (in the Chair)]

Order. I ask the hon. Lady to bring her remarks to a close in the next few seconds.

[Anna Turley]

I will. In summary, the Government’s crisis in funding for care homes has pushed the sector to the brink. Terms and conditions for the workforce are being squeezed, and the current funding structure for local authorities is simply unsustainable. The Government must get a grip.

15:30

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I thank the hon. Member for Hove (Peter Kyle) for securing this important debate. As Members might imagine, I have listened with great interest to the debate, albeit from a Scottish perspective. However, it is in all our interests and, indeed, in the interests of a decent society that those who require care can access the care they need, and are treated with dignity and respect wherever they live in the United Kingdom. There are challenges, many of which have been debated this afternoon, as our ageing population grows in number and as needs become more complex, requiring additionally trained and supported staff, and bringing all the pressures outlined by the hon. Member for Hove.

I declare an interest in the issue as my mother-in-law, Iris Gibson, is fortunate to receive wonderful care at the marvellous Haylie House, which is located in the lovely Ayrshire coastal town of Largs in my constituency of North Ayrshire and Arran. Hon. Members might be interested in the approach taken in Scotland under the Scottish National party Government, who have been working hard to ensure that as many people as possible who need care in Scotland receive care in their own homes. Indeed, the number of older people receiving personal care services in their own homes in Scotland has increased from 36,000 in 2004-05 to 47,810 in 2013-14.

Since July 2002, local authorities in Scotland can no longer charge for those personal care services. In addition, payments for free personal and nursing care have been increased in line with inflation annually by the SNP Government since April 2008, improving the lives of about 7,000 to 8,000 vulnerable older people in Scotland, but, of course, funding continues to be a challenge in Scotland and across the UK.

As for carers, Scotland’s First Minister, Nicola Sturgeon, has pledged to increase carer’s allowance to the same rate as jobseeker’s allowance, which is a clear recognition of the very important job that carers do. I want to pick up on something that has been highlighted by several Members, which is what I would call the so-called national living wage because it is, in fact, nothing of the sort. It is a minimum wage, unlike the Scottish living wage that actually relates to the cost of living. The Scottish Government are a living wage employer and continue to encourage Scots-based businesses to become living wage accredited employers.

The hon. Member for Hove is correct that the caring sector has become associated with low pay. That is a scourge on that important sector, and must be acknowledged and tackled in any discussion about the future of the whole care sector. I agree very much with the hon. Member for Rochdale (Simon Danczuk) that the provisions of the social care precept are not enough. What is needed is more investment in the care of older people from central Government. Many private care homes argue that they will struggle to pay the national living wage, as outlined by the Chancellor, of £7.20 an hour from April—never mind the living wage that the Scottish Government are encouraging employers to pay, which currently stands at £8.25 an hour.

We have heard from the hon. Member for Redcar (Anna Turley) about some shocking employment practices. The SNP is committed to improving the quality of care in Scotland and will consider carefully the impact of the living wage on the care sector. Make no mistake: any discussion about how to improve the quality of care must include a discussion about the scourge of low pay. Indeed, the Scottish Government are taking forward the recommendation of the residential care taskforce to undertake financial modelling of the costs of paying the living wage.

[Mrs Anne Main (in the Chair)]

Order. I ask that the hon. Lady sticks as closely as possible to the subject of the debate, which is care homes in England. I have given her some latitude but she is somewhat straying off the point.

[Patricia Gibson]

I was simply going to ask the Minister to ensure that the scourge of low pay is tackled as far as possible under the Chancellor’s arrangements to ensure that the wage levels are at least enforced. As we have heard from the hon. Member for Redcar, that is not even currently the case.

It is clear that there are urgent concerns about care homes, which must be addressed. I look forward to the Minister’s taking the opportunity to do so. The urgency of the concerns are apparent as care home margins are squeezed by a lack of investment and a failure to deal with the funding of long-term care to an acceptable and sustainable level with local authorities facing even tighter budgets. We should recognise that care services are a vital component of the fabric of the NHS.

What happens in the care sector in England has a direct consequence for the care sector across the UK. Caring for our older population and caring for our carers is an issue of social justice. Of course there is a price tag and a cost for supporting older people, but politics is about choices and the challenges of our ageing population will only increase. We must make the choice to treat them with dignity, and to support carers and our older population as much as we can. We cannot afford not to.

15:35

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

It is a pleasure to speak in a debate with you as the Chair, Mrs Main. I think it is the first time for me, although others have a different experience. I congratulate my hon. Friend the Member for Hove (Peter Kyle) on securing this important debate. As well as his speech, there have been speeches and interventions from my right hon. Friend the Member for Enfield North (Joan Ryan), my hon. Friends the Members for Dewsbury (Paula Sherriff), for Rochdale (Simon Danczuk), for York Central (Rachael Maskell) and for Redcar (Anna Turley), the hon. Members for Newton Abbot (Anne Marie Morris) and for Bexhill and Battle (Huw Merriman), and the SNP spokesman, the hon. Member for North Ayrshire and Arran (Patricia Gibson).

The care home sector in England is in crisis. A toxic combination of a chronic lack of funding plus rising demand and increased costs means that care providers are facing an extremely difficult time. I will go on to say more but we heard a great deal about that during the debate. The social care settlement announced in the autumn statement does little to provide the additional resources that the care home sector needs. As I said in Health questions last week, the Government’s funding proposals for social care are risky, uncertain and late. They are risky because the better care funding is back-loaded. It does not reach £1.5 billion until 2019. Indeed, it offers nothing this year and only £100 million next year.

Funding from the social care precept is uncertain. It can only raise £1.6 billion if every single council decides to raise council tax by the maximum amount and that is by no means certain. Only about half of councils chose to increase council tax this year. Despite social care pressures, it is unlikely that all councils will want to implement an unpopular tax increase at this time. Both sources combined are late, because they do not help this year and they only reach £3.5 billion in 2019-20. Council leaders—including, I think, a council leader in Essex—wrote to the Prime Minister asking him to move some of the funding forward.

In a joint review of the spending review undertaken by the King’s Fund, the Health Foundation and the Nuffield Trust, the total funding gap for social care is found to be between £2.8 billion and £3.5 billion by the end of this Parliament. We need to make it a goal to close that gap. The three organisations conclude:

“Public spending on social care as a proportion of GDP will fall back to around 0.9 per cent by 2019/20, despite the ageing population and rising demand for services. This will leave thousands more older and disabled people without access to services.”

I suspect that it is probably hundreds of thousands, not just thousands.

The plans for the social care precept are seen as unfair due to the wide variations in the revenue that local councils can raise from their council tax base. Deprived areas can have the highest need for publicly-funded social care, yet councils in those areas are less able to raise significant additional revenue from council tax.

Let me give the example of my local authority in Salford. The adult social care budget is now £61 million. It has had to be cut by £15 million since 2010 due to cuts in the central Government grant, and 2% of our council tax—the maximum we could raise if everyone paid and, of course, they do not—is £1.6 million a year so that does not close the gap. Ministers have failed to explain how the social care precept can be implemented in a fair way that addresses the differences in need across the country. That is important.

The care sector responded to the spending review by saying:

“We believe the package put forward for social care will not enable us to fill the current gap in funding, cover additional costs associated with the introduction of the National Living Wage, nor fully meet…growth in demand due to our ageing population… the settlement is not sufficient, not targeted at the right geographies and will not come soon enough to resolve the care funding crisis.”

That is absolutely clear, and it is the sector itself saying that.

The social care funding crisis is most apparent in the care homes sector. In his opening speech, my hon. Friend the Member for Hove gave a useful analysis of the differences between large and small providers, but I will focus on what could happen with the biggest care home operator. Four Seasons owns some 470 homes and cares for 20,000 residents, mainly older people. It has been reported that, in the third quarter of 2015, Four Seasons lost more than £25 million before tax, and the rating agency Standard & Poor’s has warned that Four Seasons could run out of money in as little as six months. Squeezed local authority fees and the cost of temporary nursing staff are cited by the company as the reason for its financial difficulty, and we know from this debate that those pressures are only going to rise.

The so-called national living wage will be introduced in April 2016, and we have just heard the views of the hon. Member for North Ayrshire and Arran, the Scottish National party spokesperson, on that. Perhaps the key thing, whatever we think of the level of the national living wage, and it probably is not enough, is that the Government have so far provided no assistance to help care home providers or local authorities to address the increasing costs caused by their own policy, welcome though it is, because increasing the pay of staff working in the care sector is vital—I think we all agree on that.

Before the spending review, a sector-wide group of charities, organisations and providers wrote to the Chancellor expressing concerns about the funding gap in social care. They said that a £2.9 billion social care funding gap would have these results:

“Up to 50% of the care home market will become financially unviable and care homes will start to close their doors. 74% of homecare providers who work with local councils, have said that they will have to reduce the amount of publicly-funded care they provide.”

Care homes are already finding it difficult to provide quality care, as we have heard. The CQC’s 2015 report recognised that, of course, adult social care providers face challenging times, but it raised concerns, as my hon. Friend the Member for Hove did, that nursing homes provide a poorer quality of care than other adult social care services. Indeed, just under half of nursing homes rated up to 31 May 2015 were rated good or outstanding, and one in 10 were rated inadequate. That trend is likely to continue unless the funding gap is addressed.

We have heard about the ResPublica report released in November, which projected a funding gap of more than £1 billion for older people’s residential care alone by 2020-21. My hon. Friend referred to that, and it could result in a loss of some 37,000 beds, which would be greater in scale than the collapse of Southern Cross. A loss of beds on that scale would have significant costs for individuals, families and the NHS. If all the residents of lost beds in care homes included in the report were to flow through to hospitals, the annual cost to the NHS is put by the report at £3 billion.

There has been excellent coverage in this debate of the postcode lottery that exists in certain regions of the UK. Of course, care homes in certain regions are much more likely to be subject to significant financial pressures. A market insight report by LaingBuisson found that the proportion of self-funders varies dramatically between regions, and we have already heard some examples. In 2014, in the north-west, only 18% of residents were self-funders, compared with 54% of residents in the south-east. That contrast has already been drawn out by my hon. Friends. Those differences have significant implications for the financial viability of care homes in regions with higher levels of local authority-funded residents.

It is no surprise that the Government’s policies have failed to attract investment in state-funded social care, and it has not happened on its own; but many providers have been forced to attract private funders to maintain their profitability, and LaingBuisson concluded:

“Prospective new care home developments for state-funded clientele…struggle to meet investment criteria because of inadequate fee levels on offer from local authorities in most areas of the country”.

That is a serious point.

The hon. Member for Bexhill and Battle raised the issue of migrants working in nursing in the care sector, but there is a further issue with recruitment to which my hon. Friend the Member for York Central referred. Independent Age and the International Longevity Centre produced a report called “Moved to Care,” which raised that issue:

“Migrants and particularly non-EU migrants play a big role in the care workforce. Nearly 1 in…5 care workers was born outside of the UK”.

The report states that one in seven care workers—more than 191,000 people—is a non-EU migrant. The care sector has a vacancy rate of nearly 5%. That is the recruitment problem that my hon. Friend the Member for Hove talked about. Given those statistics, the serious thing is that care workers do not appear on the shortage occupation list, so a fall in net migration could have a serious impact on the care sector. As the hon. Member for Bexhill and Battle asked—this is in addition to what I was going to ask today—would it be viable for skilled care workers, including senior care workers, to be included on the tier 2 shortage occupation list, as are nurses?

Good quality, affordable care in old age is a basic right, but the current pressures that care providers and local authorities face mean that there is a risk that good care will become the preserve of the wealthy. Julia Unwin, the chief executive of the Joseph Rowntree Foundation, has said that the effects of reduced home care capacity would be “devastating.” She said that,

“care homes are already under financial pressure.”

We have heard ample examples of that. She continued,

“if proper funding is not provided…with these additional costs, the Government risks creating a two-tier care home system where good care is only available to those who can pay for it.”

Ministers must do more to ensure that the most vulnerable people in our society start to receive the good-quality care that they need.

A sustainable financial settlement is needed, but the Government’s policies are ineffective and are failing to take account of differing needs across the country. We had an opportunity for a settlement with the Dilnot reforms, but chronic underfunding has led to long delays in implementation. Will the Minister reiterate his support for the implementation of the Dilnot reforms? After all, page 65 of the Conservative manifesto—that was not very long ago—stated that that is what the party would do.

Whatever we do about the cap on care costs, we must first address the deepening funding crisis. A first step would be for the Government to admit that the plans announced in the spending review do not address the funding crisis that has been so amply referred to in this debate. What steps will be taken to protect services from collapse? That is the priority. Without a radical change in policy, care homes will be unable to offer the services needed to ensure what almost everybody in this room would want—that every older person has the care they need and the dignity and respect that they deserve.

15:47

[The Minister for Community and Social Care (Alistair Burt)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Hove (Peter Kyle) on securing the debate and thank him for introducing it courteously and knowledgeably. He is a valuable addition to the House, as indeed are a number of the new Members who have spoken. This is another example of a debate where the House’s knowledge and passion is conveyed in an entirely reasonable but challenging manner. I do not think this is the only debate we will have on this subject, so we will return to a number of issues.

I thank colleagues for their contributions. My hon. Friend the Member for Bexhill and Battle (Huw Merriman) spoke about the quality care provided in our care homes, and it is important not to lose sight of that. The right hon. Member for Enfield North (Joan Ryan) spoke about costs—we will come back to that—and workforce issues. The hon. Member for Rochdale (Simon Danczuk) spoke about the need to ensure that local authorities in poorer areas are covered, and I will speak about that. The hon. Member for York Central (Rachael Maskell) spoke about choices, and I will come back to her on that in a moment.

The hon. Member for Redcar (Anna Turley) spoke knowledgeably about workforce issues. The hon. Member for North Ayrshire and Arran (Patricia Gibson)—we wish her mother-in-law well in the home where she is situated—gave more examples of what is happening in Scotland. I am always keen to see whether we can find anything that can be extrapolated from what is done up there. The hon. Member for Worsley and Eccles South (Barbara Keeley) spoke with her usual eloquence and from her strong background in the subject. Again, we will be covering a number of these issues over quite some time, and it cannot be completed today. I thank colleagues from all parties who made interventions.

I will not be able to respond to every point in 10 minutes. I will talk about quality and care issues, the spending issue and contingency—what to do if there is a problem. I think those are the three biggest things. That does not mean that I am uninterested in integration and winter pressures, which we believe we are working through and tackling. I will not talk much about the workforce, but I entirely agree that we should value the workforce at all levels and provide a decent career path. I agree entirely with the view that everyone has to be valued in a way that has not really been the case in social care up to now.

There are a number of other issues that I will just not be able to touch on. If there were specific questions directed at me and I do not cover them, I will go through them and write to the appropriate Member.

In general, we all start from a common position on the importance of this issue and the context in which it is set: an ageing population; people living longer with multiple long-term conditions; and many of our care workers working with dedication, both in homes small and large and in domiciliary care. I praise Chris Ryan of Bedford, who does much the same job as the gentleman the hon. Member for Hove mentioned in looking after a smaller home. It is a family business with a great sense of care and compassion, and I see those things in many homes.

May I start with a few words about quality? I am conscious of time, and I will try to keep my remarks on the three main issues that I want to cover quite short. In a way, we cannot win with the inspection regime. If inspection is done thoroughly and reveals things that need to be changed and improved, I can be lambasted for things that are inadequate. On the other hand, if we do not have a regime that turns up the things that need to be changed, then we are missing things.

The tougher inspection regime and the work that the Care Quality Commission is doing are good for us all. The bulk of homes—60% of the homes inspected, and a third of all homes have been inspected—have been rated “good” or “outstanding”. The CQC started with some local knowledge and wanted to go to the most difficult homes first. When it goes back to them it sees improvement, because the job of inspecting is not just about closing people down; it is also about seeing what improvement needs to be made.

In many cases, care is not about resource per se. I will never stand here as Minister and say that money and resource do not matter, but I will always say that making sure there is good-quality care is about many other things as well. There is tremendous variability of provision. There are people who handle the same resource in very different ways, and some are poorer at it than others. Quality of management, quality of leadership and in particular the use of registered managers in homes are all important issues, and there is much that can be learned through the inspection regime.

It is important for us to set out the five key questions, so that we remember what the regime is intended do. These questions are asked of each service that is inspected: is it safe, is it caring, is it effective, is it responsive, and is it well led? All inspections deliver a rating for the answers to each of those five key questions, on a scale that ranges from “inadequate” to “requires improvement” to “good” and “outstanding”. It is right that we do that, and I am not afraid of the answers that have been produced.

However, I want to go slightly beyond that process. I am never content to rest on what the inspection regime is bringing forward; I listen to other voices as well. Although I do not respond to all the tweets I receive, I read them all, and I am in contact with some of those who represent families and with those who have uncovered things and who do not feel that the inspection regime is doing its job. I say to them that we can do more, and I am listening carefully. I want to use the experiences of those who have been through poor circumstances to see whether we can make any changes that will make such circumstances less likely. There will never be nil bad circumstances, although there should be, but we must do all we can, and I am listening carefully to some less heard voices to try to ensure that that is the case.

I will speak about spending, which I know is at the heart of this debate, before I cover contingency. The hon. Member for York Central spoke about choices. I will not labour this point, but it needs to be said, because it is at the heart of all we do—yes, there are choices to be made. In a different context, I hear much talk about “mandate” from Opposition Members. The Government also have a mandate, and it is a difficult one. It is to try to ensure that our spending on public services matches the needs of the population and also looks after the future, ensuring that we are not running a continuous debt and running into more debt. It is a difficult choice, and we put it to the people and they gave their answer. We are working with that mandate.

The hon. Lady also said that how a society treats its old people is a measure of the quality of that society. That is quite true, as it is of our treatment of our children, those with mental health issues and our prisoners. It is also true of how we treat the future and what we leave for the future. That is why this Government, like every previous Government who have had to make difficult choices, including Labour Governments, have never been able to spend as much money as some would have wished. That is at the heart of this debate as well. We will do what we can with what we have got, and I will explain how we will do it, but that is the difficult choice that we have to make, and the hon. Lady does not have to do so yet. All I will say is that I will explain what we are trying to do in making that choice.

[Peter Kyle]

I am grateful to the Minister for giving way, and for letting us know that he reads all the tweets he receives, because that has opened up another avenue for communicating with him; he may well regret that, even by the end of today.

Part of the Minister’s mandate is to reduce spending—we understand that—and part of his mandate is to spend money better, which is an issue that has come up time and time again in this debate. There was cross-party support for an independent evaluation of the better care fund and how it applies to the care home industry. May I specifically ask him whether he will support the call for that evaluation, which came from Government Members as well as from Labour Members?

[Alistair Burt]

We are constantly evaluating the better care fund. We work on it with local authorities on a regular basis, and with the Association of Directors of Adult Social Services, so it is constantly being evaluated. I do not know whether something else would add to that process.

[Barbara Keeley]

I have made the point about choices to the Chancellor in the past. Perhaps the Minister has not got the Chancellor on side yet; I hope that he will do so. However, the inheritance tax giveaway that this Government have enacted will cost £1 billion by 2020. How far would that £1 billion go in social care? A long way.

[Alistair Burt]

We could all pick items of Government spending that we do not particularly fancy and say, “Oh, if only it was applied to this, it would be great.” Every single Government and every single Chancellor have faced the same argument. We are where we are. We have made choices about a whole variety of things, and we have a range of obligations to deliver to the public. In this particular instance, however, I want to talk about what we are spending and what is new. I will do so briefly, but I must cover that.

The Government are giving local authorities access to up to £3.5 billion of new support for social care in 2019-20. We believe that the precept could raise up to £2 billion a year, and with that money and the £1.5 billion that was included in the spending review, we believe that by 2019-20 there will be the opportunity for a real-terms increase in spending on social care.

[Barbara Keeley]

Will the Minister give way?

[Alistair Burt]

No. I have only three minutes. If I give way, I will not be able to cover everything now.

[Barbara Keeley]

I just want the Minister to say how councils such as the Essex council that wrote to the Prime Minister will manage until 2019.

[Alistair Burt]

I will give two responses to that and talk about the equalisation of funding. First, we are working closely with local authorities and with ADASS. I do not pretend in any way that the situation will not be tough for the next couple of years; it will be. However, we believe the resource is there. Secondly, the social care precept will come in this year, and that money will be made available more quickly. It will be difficult and it will be tight, but a lot of changes are being made and a lot of work is being done to ensure that services are more efficient. Those things are going on all the time.

I want to address the problem that was raised about the precept and explain how it will be used to ensure that local authorities do not miss out. The Department for Communities and Local Government published for consultation a provisional local government finance settlement in December. Recognising that local authorities have varying capacity to raise council tax, it is proposed that the additional funding for the better care fund that will be available from 2017 should be allocated using a methodology that provides greater funding to authorities that benefit less than others from additional council tax flexibility for social care. That will include consideration of the main resources available to local authorities, including council tax and business rates.

[Peter Kyle]

Will the Minister give way?

[Alistair Burt]

No, if the hon. Gentleman will forgive me; I have 90 seconds left.

That is how there will be some degree of equalisation, to respond to the point made by the hon. Member for Rochdale. More money is being spent, and there is an equalisation process.

I will speak about contingency plans briefly. Local authorities now have a responsibility, through the Care Act 2014, to monitor the care providers in their area for any early warning of difficulties. In total, 44 care providers are included. Local councils are also under a duty to provide contingency plans for what would happen if there was a failure of provision, and 95% of local authority areas are currently covered by such contingency plans. Of course, I am looking for answers from the other 5% to ensure that coverage is there. If there is a failure of provision, local authorities have a responsibility to step in, and we are addressing the situation to ensure that contingency provision is in place.

We believe that we have put in money that will assist the system and provide the care that is needed. With local authorities, we are constantly looking at what can be done to make things more efficient. We want to ensure that money is spent properly. That is why the social care precept is there; it can only be spent on social care. I have mentioned the position of councils that might be in particular difficulties over that issue, and over time, we will see whether that provision is sufficient. The Government and I will keep this issue under constant review, and we will talk about it again—

Motion lapsed (Standing Order No. 10(6)).

Dartford Crossing: Congestion

Wednesday 13th January 2016 Westminster Hall

[Sir Alan Meale in the Chair]

16:00

[Gareth Johnson (Dartford) (Con)]

I beg to move,

That this House has considered congestion at the Dartford Crossing.

It is, as always, a pleasure to serve under your chairmanship, Sir Alan. I am pleased to secure this debate on an issue that has dominated road transport in the south-east and beyond: the congestion so often found at the Dartford crossing. Local people have in their thousands signed a petition relating to the issue, and that has prompted a response from the Government. I do not believe, however, that it is right to wait for the number of signatories to reach the 100,000 trigger point for a debate in the House, so I am pleased to have secured a debate today.

The tunnels have caused problems in the area for pretty much all my life. It is fair to say that there was a period of respite when the bridge was built, but that was back in 1991, and the problems have grown ever since. In Dartford, we believed that there would be further respite when the tollbooths were finally removed but, alas, that has not been the case. Today we have congestion like I have never known before.

Quite simply, the approach to the Dartford crossing is Britain’s worst stretch of road. I challenge the Roads Minister to name one stretch of road in the UK that is worse than the Dartford crossing approach. It will be interesting to see whether he can come up with a single road in the whole United Kingdom that can compare. The congestion has a huge impact on local residents. Children cannot be picked up from school and people cannot get to work or home from work. People say to me that often it is like being a prisoner in their own home. Businesses are also affected, particularly those on Crossways Boulevard. If the congestion continues, it will ultimately cost Dartford hundreds of jobs.

We have a growing economy. London and the south-east are envied around the world for their wealth creation. The south-east provides not just thousands but millions of new jobs. It is very much the financial engine of the country, but the whole area is held back by Britain’s worst stretch of road. It is pointless to have a financial engine if the tyres are punctured. As the Prime Minister said in response to my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson), we cannot secure inward investment for Kent unless we have a modern road system. That applies as much to the A249, which my hon. Friend asked about in Prime Minister’s questions, as it does to the Dartford crossing.

The congestion is not only a transport issue; it also leads to pollution. The pollution created at the Dartford crossing is nothing short of a national disgrace. It is both noise pollution and air pollution. According to Public Health England, a staggering 6.7% of the deaths in Dartford are at least partly attributable to long-term exposure to human-caused particle air pollution. In other words, more people die from air pollution in Dartford than anywhere else in Kent or Essex. The figure is the second highest in the whole south-east, behind only Slough, which is of course home to Heathrow airport. The worst area in the east of the country is Thurrock, and we know where the Dartford crossing links up to. Why should the people of Dartford be subjected to such high levels of pollution? Why should the health of people in Dartford be put at risk by the road scheme?

The congestion at the Dartford crossing will be properly dealt with only when we have another crossing in the lower Thames area. In my opinion, that crossing should be located away from Dartford and east of Gravesend if it is to provide a proper alternative for the motorist. I shudder to think of the problems that will be caused if another crossing was to be built at Dartford.

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

I congratulate my hon. Friend on securing this important debate and echo some of his comments, particularly on air pollution in Thurrock. I am privileged to represent parts of that area. He talks about an additional crossing east of the existing crossing. Does he agree that both options A and C answer a question that was posed 10 years ago? We should broaden the debate and potentially look further east, and west into London, to resolve the issues.

[Gareth Johnson]

My hon. Friend makes an important point, and I pay tribute to his campaigning on behalf of his constituents on transport links in Basildon and Thurrock. As I understand it, the Mayor of London continues to assess the alternatives to the Blackwall tunnel, and that work is ongoing.

With the Dartford crossing, I argue that options D, E and F have been assessed previously and have been properly looked at. We are left with options A and C. My hon. Friend the Member for Gravesham (Mr Holloway) is a vociferous opponent of any crossing east of Gravesend. I disagree with that stance; I believe that there needs to be that alternative for the motorist, but we need a decision. We need something to be built as soon as possible, because the current situation is completely untenable.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

Would my hon. Friend accept that any crossing east of the Dartford crossing would have to take account of the existing problems on the M2 and the A2?

[Gareth Johnson]

My hon. Friend makes an important point, and I would add the M20. It has been years—I cannot remember it happening in my lifetime—since we have seen any major improvements on the M20, A20, M2 or A2. It is high time that we had some road improvements in the county of Kent. We have increasing levels of traffic coming from the port at Dover through to the east of England and round to ports such as Harwich. Kent is being used as a thoroughfare. There are too many pinch points and too many roads that simply cannot cope with the amount of traffic that we have. A garden city is being built in my constituency. We have population growth throughout the county, which in many ways is welcome, but we must have the infrastructure to match that, and a crucial part of that infrastructure is investment in our road network, because the local roads simply cannot cope with the demands of the levels of traffic.

On whether there should be a crossing at Gravesham or Dartford, my argument is that another crossing at Dartford would give us years of roadworks. As a consequence, we would have more traffic squeezed into what is already a pinch point. It would be nothing short of a disaster for the town.

[Mr Adam Holloway (Gravesham) (Con)]

I thank my hon. Friend for securing the debate. It strikes me that we need to fix the appalling problem at Dartford—I was not aware of the awful statistics he mentioned on respiratory illnesses—but is not the answer, therefore, to fix the problem at Dartford, rather than unnecessarily create a whole range of problems for 20,000 people to the east of Gravesend?

[Gareth Johnson]

My hon. Friend the Member for Gravesham and I disagree on this. Understandably, he wants a crossing, but not in his constituency, and I fully understand the reasons why. My argument is that if we had another crossing east of Gravesend, we would see far less of the stationary traffic that creates the most pollution. It is estimated that 30% of the traffic currently using the Dartford crossing would move east of Gravesham, where there would be another crossing, giving not only relief to Dartford but an alternative for the motorist. If we insist on having just one crossing point at Dartford, no matter how wide we make it, it puts so much pressure on the roads in the area that they will not be able to cope. One single problem on the M25 at Dartford can cause mayhem in the area. We need an alternative. Unless we have that alternative, there will always be problems at Dartford.

[Mr Holloway]

Does my hon. Friend not agree that the reason for the northbound back-up is that we have a tunnel bore? According to Highways Agency staff, the problem is caused by dangerous goods vehicles backing up. It takes seven minutes to reverse one. Should he not concentrate on fixing the problems at Dartford, rather than creating problems for people living elsewhere?

[Gareth Johnson]

HGVs that are too high and need to turn round do cause problems with delays in that area—

[Mr Holloway]

It is the problem.

[Gareth Johnson]

It is not the only problem.

[Mr Holloway]

It is the main one.

[Gareth Johnson]

The existing tunnels were designed for roughly 140,000 vehicles a day, and anything up to 170,000 vehicles currently use them. Inevitably, according to the laws of physics, there will be congestion at certain times going through the existing Dartford tunnel. So we have two options. We either build a crossing further away from Dartford to give motorists an alternative, or we put another crossing next to the existing one, putting an increasing amount of pressure on local roads that cannot cope at the moment. If we put more traffic there, even after the roadworks are finished we will have even more problems.

[Mr Holloway]

That is the point. If my hon. Friend wants to protect his constituents from respiratory problems, he has to have a way of stopping those great build-ups at Dartford. Of course the multi-billion-pound answer is to build another crossing, but another bridge at Dartford going northbound will help his constituents much more quickly.

[Gareth Johnson]

Even if we had 100 crossings at Dartford, we would still rely on a small geographical area that would inevitably be a pinch point. The only solution is to have another crossing east of Gravesham. I struggle to think of organisations outside of Gravesham that believe Dartford is the best location for another crossing. The organisations I have spoken to—outside of Gravesham—agree that there should be a crossing elsewhere and an alternative for the motorist. That is the way forward and it is the only way in which we will see real relief from the problems we have today.

[Stephen Metcalfe]

I am grateful to my hon. Friend for giving way and being so generous with his time. Does he accept that the danger with his approach of championing a crossing east of the current crossing is that we will still experience air pollution at the existing crossing and create a new area of air pollution to the east potentially coming into my constituency? Because both options A and C land in Thurrock, we will end up with pollution both in the west and the east of the borough. Would it not be better to move some of this to a wider extent and not concentrate it in south Essex?

[Gareth Johnson]

My argument is that if all the traffic uses one area, it inevitably leads to traffic hold-ups and increased pollution. The best way of dealing with pollution in an area is to relieve the congestion. The only way to properly relieve congestion in north Kent is to have another crossing away from Dartford—east of Gravesend —that gives motorists an alternative and ensures there is less chance than we have now of the horrific jams that we so regularly see in that area.

[Kelly Tolhurst (Rochester and Strood) (Con)]

I thank my hon. Friend for securing the debate today. My constituents complain continuously about the tunnel and congestion. They also think the charges are a tax on local businesses in the south-east. Does my hon. Friend agree that, whatever option is put forward, we need a real strategic view and a project that suits north Kent’s development over the next 20 years and meets our needs? We are an important part of the UK and any project must be suitable for the future—not just for now—and not simply solve a problem in the short term.

[Gareth Johnson]

The hon. Lady is absolutely right. That is why option C ensures that the vehicles using the M20 are able to access the Thames. We must take into account the growth in population in the area. I pay tribute to the work that the hon. Lady has put in for her constituency. I know that the problems with the Dartford crossing affect her constituents, a number of whom have contacted me. I pay tribute to the work that she has put in on their behalf to help alleviate some of the problems that they have had, particularly using the Dart Charge system.

I need to make progress; I am aware that the Minister will have limited time to respond. I will focus on the small part of Dartford where a lot of the problems are caused—the roundabouts at junction 1A and the Bluestar roundabout at junction 1B. These need a major overhaul and greater enforcement of the vehicles that block traffic on the roundabouts. Highways England correctly points out that that is an issue for Kent County Council. We therefore look to those organisations together to tackle the issues.

I recently held a round-table summit for all authorities with responsibility for the crossing. Both Kent County Council and Highways England know that the current situation is untenable, and that they need to find a solution. Congestion is also caused at the slip road from Bob Dunn Way, which causes huge problems for the people who live on an estate called The Bridge, which is adjacent to that road. If Kent County Council is unresponsive to requests made by Highways England, it should make that publicly known. Kent County Council must work with Highways England to find a solution to the problems that we currently face.

The new road layout was put in place to facilitate the free-flow system that saw the back of the tollbooths. I still maintain that it was right to remove the tollbooths, but the road layout simply has not worked. The Dart Charge system is riddled with administrative errors and incompetency. Hardly a day goes by—I am sure this is the case for my colleagues in Kent and in Essex—when I am not approached by a motorist who has been wrongly or unfairly given a penalty notice. I do not want any tolls on the crossings in the area, but where they exist motorists have a right to have confidence in the tolling system. The London congestion charge rarely makes a mistake, but the same cannot be said about Sanef, the company that runs the Dart Charge system. Will the Minister look again at withholding payments to Sanef until it can rectify the mistakes it frequently makes?

I anticipate that the Minister will claim, on behalf of Highways England, that journey times have improved since the new road system was put in place. I do not dispute that traffic flow has improved from Essex into Kent. However, it is hard to find anyone in Kent who thinks that journey times the other way round have improved. Highways England claims that journey times northbound have improved by five minutes. However, that calculation is obtained purely by measuring traffic flows for just 1.5 miles before the tunnel entrance, compared with 6.5 miles approaching Kent from Essex. Why the difference between the two? It seems that the figures have been taken to obtain the most favourable outcomes. I hope that this is not simply a case of cherry-picking. Why not measure from the same distance northbound and southbound? Parliamentary answers today show that such figures are not available.

In conclusion, Highways England has accepted that it needs to do more, and I agree. The approach to the Dartford crossing is a hellish, unpredictable nightmare for motorists. The crossing strangles the town of Dartford and causes misery and anger. It damages both the economy and the health of the local area and must be improved as a priority. The road layout needs a major overhaul. Britain’s worst stretch of road needs to be given priority by both Highways England and the Department for Transport. It is essential that everybody who has been stuck in jams at the crossing hears that action will be taken to improve the situation in advance of a new crossing being built.

[Sir Alan Meale (in the Chair)]

Before you start, Minister, I apologise for the short time you have to respond. I thought it was important that the local Members had a chance to participate in the debate and get their message across.

16:20

[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

Thank you very much, Sir Alan. We need to ensure that local Members’ voices are heard—I have absolutely no problem with that and will rattle through what I have to say. The need to champion the constituencies in the area, recognise the problems and seek answers has come across very strongly.

I congratulate my hon. Friend the Member for Dartford (Gareth Johnson) on securing this debate on an issue that is incredibly important to him. We have discussed it on previous occasions, and he is a vigorous local champion and continues to highlight the issue. It will be no surprise for him to hear that we agree on many of the issues he has raised. He has played an important role in bringing people together locally, and I hope that, as that work continues, I will be able to offer support, and that we will be able to work together and count on each other’s mutual support as we make progress and develop solutions.

The crossing consists of two bored tunnels for northbound traffic and a bridge for southbound traffic. It was initially built as a tunnel 50 years ago to provide a link between Kent and Essex, and provides the only road-based river crossing east of London. It is a link in the M25, which is used by many to orbit or bypass the capital, as well as a connection to several strategic radial routes. As my hon. Friend said, since it was originally built, the area has seen enormous growth. The M25 has been constructed, as have the Lakeside and Bluewater shopping centres. Traffic levels have increased, including freight, and the crossing provides connections to a host of international gateways in the south-east, including the port of London, the Medway ports, the port of Dover and the channel tunnel.

The incremental upgrades that have been made as growth has occurred have led to a layout ill-suited to the needs of today’s traffic. The crossing is now one of the busiest stretches of road in the country. I cannot say that it is the worst road in the country, because I am afraid to say I have heard that accusation from many colleagues in this place, but I can certainly agree that it is a real problem, so we have to work together to find a solution. The Dartford crossing is hugely busy, with more than 50 million vehicle crossings each year, and it has been operating well above its design capacity for years.

When incidents occur, the consequences for the road network are severe. Delays can take a long time to clear, meaning that road users have to endure unreliable journeys. There are typically more than 300 unplanned lane closures every year. When the crossing closes, users have no choice but to wait it out, use the Blackwall tunnel, or take the long way around the M25, all of which are unacceptable options. Such resilience issues will worsen until we build on the actions we have taken recently and get the planning right for future capacity.

The free-flow system has been mentioned a number of times in the debate. Until recently, the road layout on the south shore of the crossing broadened out to multiple lanes to accommodate toll booths and then merged back into four lanes in each direction. The new arrangements, known as free-flow charging, require remote payment of the Dart Charge. Drivers no longer need to stop to pay at a barrier, and there is no need for multiple lanes to merge back in. The new arrangements have reduced journey times, although I recognise the concerns that my hon. Friend has about the accuracy of the data. I will pass them on to Highways England and ask it to write back. I will then forward the reply to him. The latest data from Highways England show that journeys are now on average a third faster than before the new system was introduced. Those traveling from the north to the south are saving almost 7 minutes, which is a reduction in journey times of around 36%. Less positively, for those traveling from south of the river the journey time saving is around 3 minutes per trip, which is much smaller.

[Mr Holloway]

Does my hon. Friend agree that we need to be a lot more creative if we are to rescue the people of Dartford and prevent the blight on 15,000 homes? We have to think about things such as using the tunnel for local traffic and anticipating the huge future effects of driverless cars. We also need to do pretty straightforward things such as running freight trains—rather than unloading them all at Dover, we should let them run north.

[Andrew Jones]

I entirely agree that creative approaches are required. We will need to take a number of approaches, because there is no single, silver-bullet answer to this question. If I have time, I will discuss some of these issues shortly.

After several months of close working, in December, Highways England made proposals to both Kent County Council and Dartford Borough Council to make better use of technology, such as signalling and signs. The proposals have been with Kent County Council for a short period, and a response is due in the next few days. In addition to that partnership, I hope data sharing will help both authorities to agree strategies to help traffic moving between the local network, which is controlled by Kent County Council, and the strategic network, which is run by Highways England. I expect decisions to be made and improvements in place by February. My hon. Friend the Member for Dartford has supported the initiative through his work to bring all parties to the table, and I hope he will be pleased with the results as it develops.

Highways England is working hard to improve the traffic safety system, which meters traffic if congestion is backed up on the other side of the tunnel to prevent the dangerous build-up of traffic inside the tunnel. Nevertheless, I agree with my hon. Friend that there are still unacceptable levels of congestion at the crossing, caused by the limits to its capacity and driven by the extreme growth in traffic. More needs to be done. That “more” is the development of a lower Thames crossing. From the debate today and the conversations I have had with colleagues, I recognise that a new crossing is not going to be an easy option. There will perhaps be some difficulty in getting everyone aligned behind it, but I have no doubt that we need to get it in place.

The Dartford crossing’s capacity has been exceeded. In July and August 2015, the bridges and tunnels carried 20,000 more crossings a day than they were designed for. Dart Charge is at best a medium-term solution to the capacity challenges. The 2011 national infrastructure plan named a new lower Thames crossing as a top-40 project. Successive Governments have investigated the need for additional crossing capacity in the lower Thames area and where to locate it. The Government are committed to delivering the investment required for a new lower Thames crossing in the next road investment period. Highways England is currently concluding its examination of routes at the two remaining location options: a further crossing near the existing Dartford-Thurrock crossing, or a new link further east to connect the A2/M2 with the A13. There would be many benefits to a new lower Thames crossing, some of which have already been articulated during the course of the debate, but the decision is very important and will affect thousands of people, so it is vital that we get it right.

On the administration of the Dart Charge scheme, Sanef’s performance is of concern to colleagues. I have called Sanef in to meet me at the Department to highlight our concerns. Complaint levels are at their lowest to date, but I will continue to monitor the situation and ensure that the feedback from colleagues present is delivered back to Highways England, Sanef and Kent County Council. Local service providers are working together, and I guarantee my support for finding solutions to make the situation better. I will do all I can to support them and local Members. The situation is very challenging. It is driven by growth and capacity constraints. We can take some short and medium-term measures to improve the situation, but a long-term measure in the form of increased capacity via a new crossing is the only answer that will make a significant difference.

Question put and agreed to.

Hand Hygiene: NHS

Wednesday 13th January 2016 Westminster Hall

16:30

[Nigel Mills (Amber Valley) (Con)]

I beg to move,

That this House has considered hand hygiene in the NHS.

I am grateful for the chance to raise these concerns. It is a pleasure to serve under your chairmanship, Sir Alan. I secured this debate to highlight some important issues. The germs that cause infections are spread to patients primarily on the hands of healthcare workers, so cleaning hands is the No. 1 way of reducing the spread of infection. Guidelines and rules are already in place, but they are not followed closely enough and the inspection regimes do not do their job and do not produce meaningful data about hand hygiene compliance levels. This serious issue has a dramatic effect on the health of many thousands of patients a year. For many of them, it could be avoided. There is a way of dramatically improving this issue for patients.

The data on this issue are scary. The 2011 prevalence survey showed that 6.4% of hospital patients—one in every 16—contracted an infection while in hospital. Imagine going to a restaurant where one in 16 customers was made ill by the food. No one would go back again; we would not allow it to stay open. But that is what the data showed for our hospitals five years ago. We should not be willing to accept that.

Infections contracted in hospitals affect 300,000 patients every year and cause 5,000 deaths. They have a dramatic impact on those individuals and a significant impact on the NHS, because patients who contract such infections remain in hospital on average two and a half times longer than patients who do not. They spend an average of 11, and a maximum of 25, extra days in hospital at an estimated cost of about £1 billion a year. It is estimated that 30% of such infections can be avoided simply by better applying the existing rules and practices.

The NHS must improve its performance on this fundamental issue. We should not be willing to accept that level of unnecessary infection. I am not saying that such infections are caused by people deliberately not washing their hands enough. They probably do not realise what they are doing, and their behaviour is not corrected. I suspect that most people in the NHS do not realise how many times they should wash their hands when they see a patient and do not know that they are not doing all they can. I am sure most people are extremely keen to do everything they can to fix this problem and prevent such infections. We must look at what more we can do to put systems in place and enforce them. We should give people support, training, peer pressure and peer reviews to ensure it is happening, rather than blame individuals. This issue will become increasingly important as the problem of antimicrobial resistance grows. We cannot rely on antibiotics to fix such infections and tackle the problem, so it is important that we stop the infections in the first place and prevent the situation from getting worse.

I want to talk about the existing hand-washing rules, the systems for monitoring them and why they do not work. I will look at some things that can be done to improve the situation. I hope the Minister will accept that I do not intend these ideas to be controversial or costly; they are ways of enforcing the rules that are already in place and of using the existing systems.

There is a generally accepted international standard for the number of hand-washing moments when nurses and doctors treat patients. It is not controversial; all nurses and doctors are taught it as part of their training. It is an accepted standard in the NHS and most hospitals around the world. I am not asking for a super gold standard for the UK. I do not want to create anything new, different or complicated. That set of moments when hand-washing is needed is accepted by everybody; it is just a question of how many of them are acted upon.

The National Institute for Health and Care Excellence put in place rules for hospitals to assess compliance with that number of hand-washing moments, so we do not need a new framework or a new duty on hospitals. Hospitals already have a duty to assess how well their staff comply with the rules for the five hand-washing moments when they deal with patients. When the Care Quality Commission audits hospitals, it checks how well those rules are enforced, so the systems are there but they are not working and we are not getting the outcomes we ought to have.

One of the problems is that hospitals check the compliance of their staff mainly through observations carried out by a member of staff on the ward or a member of the team. Normally, a nurse who happens to have half an hour spare one day is asked to review how well her colleagues are performing the five hand-washing moments. If I am doing a job and someone tells me, “Right, today you’re being observed on these criteria,” my performance goes up a bit because I know I am being observed and I do everything I can to comply—far in excess of my normal behaviour.

Another issue is that the staff members conducting the review are not trained in how to do it. They may not be entirely familiar with how many hand-washing moments there are or how many arise in the care of patients, so there is a combination of effects. If the people reviewing their colleagues, perhaps their friends, have not been trained to do so—they are not specialists—and are not fully familiar with the rules, it is not surprising that we do not end up with the most reliable data.

The vast majority of the observations show that the nurses and doctors observed are somewhere in the high 90s for compliance, which means they clean their hands more than 96% of the time, as they are meant to. The problem is that independent assessments carried out by people in a more reliable way suggest that compliance is significantly lower. Those data suggest that the actual compliance levels are somewhere between 18% and 40%. There is a set of rules and a system for checking compliance, but it is producing a dramatic false positive. It suggests that we are in the very high 90s for compliance, when we are nearer 20% compliant. It overstates the results by a factor of nearly five, with the terrible effect that there are more infections than there need to be and patients are suffering.

The NHS and other international health bodies accept that the levels of compliance with the hand-washing rules in the high 90s cannot possibly be right. Everybody knows they are false positives, but they give excessive reassurance to the boards of trusts that their staff are compliant, so further action is not taken. Everybody accepts that there has been progress in recent years in tackling infections, which have been reduced from even higher levels. The measures that were adopted to tackle infections had an effect on clostridium difficile and MRSA, but the problem is that we do not track instances of other infections, so it is hard to get data on how many are being tackled.

There have been various studies to try to assess levels of hand hygiene compliance to see what can be done to improve it. I am grateful to the Deb Group, one of the large employers in my constituency, which has an interest in this issue because it makes hand hygiene gel. It has some innovative ideas about how we can monitor hand hygiene compliance. I am grateful for the information it gave me for this debate. I should be clear that I am not advocating any one solution or product; we need a greater recognition in the NHS that this is an issue, and that there are better ways of assessing compliance. We need to encourage greater compliance.

As for recognition of the issue, Sir Mike Richards, the chief inspector of hospitals at the CQC, has highlighted the inaccuracy of local hand hygiene audits, so one would think that action is required. If we recognise that hand hygiene is important and if we recognise that we are nowhere near as compliant as we ought to be, one would think that many hospital trusts would be taking action to try to improve the situation. Sadly, that is not the case. Trusts have a lot on their plates and there are many issues, financial and others, to deal with, so they may decide that an area with compliance levels in the high 90s is not a stone that they want to turn over. They may fear that some proper audits might lead to the discovery that they are only 25% compliant and thus incur some unnecessary wrath.

However, the experience is that hospitals that take the matter seriously do get positive feedback. The CQC report on Burton Hospitals NHS Foundation Trust, which was in special measures until last year and is not too far from my constituency, highlights its use of a method to count the number of hand hygiene moments and the number of times ward staff were complying with the rules. It received some positive feedback in the letter from the chief inspector of hospitals in the report, which states that the hospital was using

“innovative practice to increase hand hygiene, using the latest technology monitoring the use of alcohol in sanitising gel.”

They were not marked down for having discovered an issue; they were complimented. The report states:

“We saw innovation in practice on ward 11 (male surgical ward) where the infection control nurses had worked with staff to reduce infection control risks and increase hand hygiene. The team implemented technology which counted the use of alcohol sanitising gel and compared it against the target of how often it should be used. This was in response to hand hygiene audits which needed improvement.”

On action that the trust must take to improve, the report states:

“The trust must ensure that ward assurance targets, such as hand hygiene practice and recording of patient observations, is achieved at a consistent level in the emergency department.”

We can see from that that if hospitals take the matter seriously, recognise that they are not as compliant as they ought to be and take action, that helps them in these audits.

The big ask here is what more we can do to ensure that CQC reviews identify that hospitals are perhaps fooling themselves into thinking that they are compliant when they are not. Perhaps asking, “Are you really doing accurate and competent monitoring of whether your staff are complying with the hand hygiene rules? Do you have any independent assurance that that data is accurate or are you just relying on surveys done in an idle half an hour by a member of staff who is not really trained, which can produce false positives?” should be a regular feature of all inspections. Work done over a long period to improve levels of hand hygiene compliance in hospitals has produced data showing that when hospitals improve performance and increase the number of hand hygiene moments, infections decrease at a pretty similar rate to the increase in hand hygiene moments. Data exists in the public domain that shows that that is not just a coincidence. If a hospital can increase compliance, infection rates can come down, improving outcomes for patients and reducing costs to the NHS.

My suggestion is not particularly complicated or expensive. It would not lead to the creation of new rules or new burdens that people have not been trained for. I am simply asking that hospital trusts around the country comply with the rules that are already there and monitor whether their staff are complying with the standards that they have been trained in. The NICE guidelines could be tightened up so that hospitals must not only monitor whether staff are compliant, but do so in a competent, independent and impartial manner and not rely on the occasional untrained observation by members of the same team.

When the CQC goes around hospitals assessing cleanliness and patient safety, we should expect it to check whether competent work has been done. If it has not, it should encourage and instruct hospitals to take the matter seriously. When hospitals show higher than average instances of infections, it should check that they took this issue seriously and that the relatively simple and low-cost measures that can be taken to reduce infection were applied. When hospitals are not doing that, it should be regarded as a serious issue.

There are many things in health that we cannot control or fix or that are incredibly expensive, but what we have here is a set of rules that already exist. It is a simple thing that most people are trained in. By doing everything that we can to comply with it, we could save a lot of money and a lot of patient suffering. There is the potential for real improvement. I hope the Minister will accept that this is a serious situation, and that there is more that NICE and the CQC can do and more that hospital trusts can be expected to do, so that the prevalence of infections in the next report is at the lowest possible level.

[Sir Alan Meale (in the Chair)]

As the debate is only an hour long and we have three quarters of an hour remaining, I want to inform Members that I intend to call Back Benchers first, then the Front-Bench Spokespeople and then the Minister. I will call the Back Benchers who stand.

16:45

[Mrs Madeleine Moon (Bridgend) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Alan. I commend the hon. Member for Amber Valley (Nigel Mills) for calling the debate. It is such a simple issue. We are taught from early childhood to wash our hands, and yet somehow it seems to get lost. It seems to have disappeared out of our daily practices. We are failing on one of the easiest ways of addressing so many conditions that are costing this country a huge amount and causing the NHS a terrible problem.

We are told every day whether we should take vitamins or whether we should drink red wine, which is either good for us or destroying our lives, and we are told what superfoods to eat, but a simple, life-changing thing that can be added to the daily routine is washing one’s hands on a regular basis. It is one of those bizarre things that came up during a quiz. The question was, “What is the fastest thing that a human being can do?” and the answer was sneezing. Apparently, a sneeze comes out at 100 mph and can spread across a huge area. Most people catch it in their hands and do not then think to wash them. We all know about washing our hands after going to the bathroom, but we somehow cough and sneeze into our hands and pass diseases on, particularly to those who are vulnerable, in the most frightening of ways.

Globally, poor hand-washing leads to 600,000 deaths a year. Another horrible statistic is that 28% of commuters across the UK have faecal bacteria on their hands. I dread to think who found that out and how they did it, but there we are. It takes just 30 seconds of washing to stop an infection being passed on to someone else and it can make huge difference. In Europe alone, 25,000 people a year die from infections resistant to antibiotics. Resistance to antibiotics is on the global agenda and hand hygiene is a way that we can actually reduce our dependence on antibiotics and prevent common illnesses such as food poisoning.

I want to bring to the Minister’s attention today a deeply concerning condition that sadly not many people seem to know about, but hand-washing really can make a difference to it. CMV, or cytomegalovirus, is a common virus that can infect anyone. Most people will not know they carry it, but if a pregnant woman contracts the virus, she can pass it on to her unborn child with catastrophic results. Almost 1,000 children are affected by the condition every year. CMV can cause miscarriage or stillbirth. Five out of 1,000 babies will die in their first year of life, and two to three babies a day are damaged by CMV, which was identified in 1956 by the same research team that discovered polio, mumps and rubella. There is no vaccine to deal with it, but we can prevent passing it on simply by washing our hands.

CMV is responsible for 25% of childhood hearing loss, as well as for vision loss, physical impairment, ADHD—attention deficit hyperactivity disorder—behavioural and learning difficulties, and cerebral palsy. It is passed on by bodily fluids, mainly saliva and urine, often from small children. It is battled simply by washing hands in soap and water and by getting parents to understand that they must not share food, cutlery or drinks with their children. No parents, I hope, would think of changing a child’s nappy without washing their hands, but how many parents wipe a child’s nose without thinking to use a handwashing sanitiser or washing their hands? Parents should ensure that they wash their hands both before and after feeding a child. Those are simple ways to prevent dramatic changes.

Hand-washing can prevent diarrhoea, vomiting, food poisoning, the norovirus and MRSA. It is a simple way to change infection rates. We could save the NHS huge amounts of money. I am pleased that nurses are very conscious of it, but we almost need to have every patient watching for other people’s visitors and ensuring that they use the antibacterial washers as they enter the ward. The statistic mentioned by the hon. Member for Amber Valley—one in 16 patients acquires an infection—is horrific. That is not something that on the whole doctors have to combat; it is something that every one of us as patients, visitors and fellow citizens should take responsibility for tackling. I am delighted that we have had the opportunity to raise the profile of the issue today.

16:51

[Andrea Jenkyns (Morley and Outwood) (Con)]

It is a pleasure to serve under your chairmanship, Sir Alan.

I thank my hon. Friend the Member for Amber Valley (Nigel Mills) for securing the debate and for his support of my campaign on hand hygiene. I also thank the hon. Member for Central Ayrshire (Dr Whitford) who, with the hon. Member for Wolverhampton North East (Emma Reynolds), worked with me on a cross-party campaign on hand hygiene. Recently, we got more than 50 MPs to sign up to it. I ask anyone present who has not signed up to join us, please. Hand hygiene is a bit of a personal crusade of mine. We simply cannot ignore the importance of hand hygiene in hospitals and the community. It is the single most effective, yet simple, way to prevent avoidable infections and so reduce the burden on the NHS.

I will talk a bit about my background and why I am such a fierce advocate of hand hygiene. My father, Clifford, was diagnosed with lung cancer in 2011; the prognosis was good, but he got fluid on his lungs and he went into hospital for a routine operation. The simple procedure should have taken about 20 minutes, but a junior doctor practised reinserting the lung drain with medical students for two hours. My father subsequently became infected with MRSA. What we saw in the hospital was shocking. One nurse walked in, put antibacterial cream on her hands, put something up my father’s nose and did not wash her hands. Basic things were not happening. I constantly observed a failure to follow basic hygiene procedures, which I mentioned to nurses at the time, but I was ignored and even rebuked. A few months later, in November 2011, he died from MRSA.

Afterwards I got in touch with MRSA Action UK, the charity, and became its regional representative. In Parliament, I set up an all-party group for patient safety for the Patients Association—I commend the Minister, the Secretary of State and the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), for supporting it. From my conversations with the Secretary of State and other Ministers, I know they are taking hand hygiene seriously and have plans to deal with it.

On areas for improvement, the World Health Organisation has taken a lead in establishing good practice in hand hygiene around the world, although through Dame Sally Davies, our chief medical officer, and the Prime Minister we have put the issue of antimicrobial resistance on to the global agenda. The WHO talks about the five moments for hand hygiene and identifies when medical workers should wash their hands, providing clear guidance that could make a real difference to hand hygiene routines. I commend the work done by everyone at the WHO.

In England, hand hygiene is most frequently monitored through direct observation—a member of the ward staff will take time to observe colleagues and their adherence to the five moments of hand hygiene. Such studies often produce incredibly high rates of compliance, nudging around 80% or 90%. That is because direct observation is ineffective. Only a minimum of 10 moments have to be observed, which on a busy ward is negligible. Furthermore, staff are aware that they are being monitored and will often change their behaviour—I know that from personal experience.

The APPG had an evidence session at which a lady from the Royal College of Nursing was present. I asked her a simple question—whether she had ever disciplined anyone or taken any of her nursing staff to one side to discipline them on lack of hand hygiene. The answer was no. That was in a 20-year career. We need to ensure a place of consequence if hand-washing is not adhered to.

The hon. Member for Amber Valley and I were presented with some startling statistics at a recent meeting with the Deb Group, which kindly sponsored our cross-party Handz campaign. They included registered rates of hand hygiene compliance as low as 20% to 40% in hospitals in which Deb systems were installed. Such figures are common to other companies offering a similar service in the healthcare sector. We cannot ignore the fact that, although the hospital statistics show a high rate of compliance with the five moments, in reality it is not always the case.

We need to implement a new system for proper observation and monitoring, hand in hand—excuse the pun—with proper awareness of the risks of poor hand hygiene. The hon. Member for Central Ayrshire has told me a lot about the fantastic work being done in NHS Scotland, educating the public with a proactive campaign of posters and information.

[Douglas Chapman (Dunfermline and West Fife) (SNP)]

As the hon. Member for Bridgend (Mrs Moon) has suggested, there are simple ways in which to improve hand hygiene. Recently, when visiting a school, I noticed that children were washing their hands to the two verses of “Happy Birthday to You”, which seemed to be going down well and was doing the trick. Does the hon. Lady accept that that is a good way of introducing children to hand hygiene at an early age? It is cost-effective, simple, memorable and starts the hand hygiene routine at a very early age.

[Andrea Jenkyns]

I thank the hon. Gentleman for making that point. With MRSA Action, the charity that I am involved with, I have been going into schools and we use that technique of singing “Happy Birthday” twice. The Handz campaign with the hon. Members for Central Ayrshire and for Wolverhampton North East is about education in schools and promoting hand hygiene from a young age. It is a year-long campaign running through to October and we are also going to go into care homes—there was a recent Westminster Hall debate on care homes—to emphasise the importance of good hand hygiene with the vulnerable in care homes.

Going back to what I was saying, hospitals in Scotland are covered in reminders for people to wash their hands and about the risks brought on to the ward if they do not. I am sure that the hon. Member for Central Ayrshire will mention this herself, but, in Scottish hospitals, people observe staff members when the staff members do not know they are being observed, which is a much better system than the one we use.

To sum up, we need to do a number of different things to improve hand hygiene compliance. First, we need to improve observation and reporting of hand-hygiene breaches so that we can get real and effective reports on compliance. As I said earlier, we need a place of consequence when that does not happen.

Secondly, we need to make it clearer to patients and staff when a ward is not hitting its compliance targets. NHS staff strive for brilliance and we thank them for their hard work, but we need to ensure that they are aware of areas in which they need to improve.

Thirdly, we need to ensure that people are properly aware of the risks of poor hand hygiene compliance in hospitals and elsewhere. Those achievable aims would make a real difference. The hon. Members for Wolverhampton North East, for Central Ayrshire and I are working hard to increase awareness through the Handz campaign and are planning further events.

Hand hygiene goes beyond people catching infections in hospital. More infections means that more antibiotics are needed for treatment, which leads to antimicrobial resistance, which is a huge global threat. Dame Sally Davies, our chief medical officer, has been an advocate on that issue and supported our campaign.

Hand hygiene is incredibly important. I reiterate my thanks to my hon. Friend the Member for Amber Valley for securing the debate, which will make a valuable contribution to discussions on the subject. The UK already leads the fight and it is great to see so many colleagues from the Government and other parties with such great enthusiasm for the subject.

17:00

[Jim Shannon (Strangford) (DUP)]

It is always a pleasure to serve under your chairmanship, Sir Alan. It was especially nice to hear the hon. Member for Amber Valley (Nigel Mills) introduce the debate, and it is good to participate in it. I would like to give some personal knowledge and put forward some viewpoints.

I congratulate the hon. Gentleman on so succinctly setting the scene for the rest of us to follow. To add a bit of background to the debate, patients in the NHS today have a 6.4% chance of catching an infection in UK hospitals. There are 300,000 healthcare-acquired infections annually, of which 5,000 result in mortality. We cannot ignore the mortality rate—5,000 people dying in our hospitals is 5,000 too many. If the figure was one, that would be one too many. If we can take steps to prevent those deaths, we should do so.

Although our figures are below the European average, many other developed countries perform better, including the United States at 4.5%, Italy at 4.6%, Slovenia at 4.6% and Norway at 5.1%. I know that the Minister will address that in his response, but if the States, Italy, Norway and Slovenia can do it better, I am sure that we can achieve their levels, which would be a two percentage point drop or thereabouts from our current figure.

Not all healthcare-acquired infections are preventable, but it is believed that approximately 30% of them could be avoided by better application of existing knowledge and realistic infection control practices. Hand hygiene is an essential component of that.

I remember when my brother was in an accident. He liked racing motorbikes, but unfortunately 11 years ago he had a very serious accident that resulted in him being in a coma and in intensive care for some 19 weeks, followed by 2 years of rehabilitation. Whenever we visited him in the Royal Victoria hospital in Belfast, we all had to wash our hands. He was not able to respond to us at that stage, but his family and other people who knew him wanted to go and see him because of the severity of his injury. The nurse was clear: she said, “You have to wash your hands every time you go to that bed, because the risk of infection for someone in that extreme circumstance is very real.” Every time we left the bed and went outside the ward, we had to wash our hands before we went back to the bed—that was clearly outlined.

To me it was clear: we do that because we want to visit the person in the bed, but we may unwittingly have infections on our hands. The hon. Member for Bridgend (Mrs Moon) spoke earlier about sneezing. Unwittingly, we cover our mouth with our hand and then rub our hands. Then we might stick our hands in our pockets and rub them on the pockets. Even when using a hanky, there will still be infection on the hands. That is the point I am trying to make. It is clear that we have to do something.

The infection prevention and control sector claims that basic hand hygiene standards are not being met on many NHS wards. If that is the case, a clear guide needs to be given to those on wards to ensure compliance. The Deb Group claims that although 90% to 100% compliance with hand hygiene standards was reported by UK hospitals—it is easy to say that—the true figures are between 18% and 40%.

As health is a devolved matter, I have asked the Minister responsible for health back home questions on MRSA infections in hospitals, because even though we have few infections, it is clear that something needs to be done. Back home—it is probably the same elsewhere—many would say, “If you’re ill, be careful in hospital, because you have people with open wounds and people whose immune systems are down. If you bring in your colds, flus and coughs, or whatever it may be, that can have an impact.”

Deb also argues that the data collection method is flawed and that direct observation artificially inflates compliance, as nurses observe colleagues meeting the requirements and undertake a tick-box exercise. There needs to be more than that. NICE issues guidance on hand-washing in hospitals and encourages strict hand-washing practices, but it does not include a demand that accurate data be recorded. We want to ensure that that happens. If we record the data, we are making an effort and, if we are doing that, we are washing our hands. There may be some weight to Deb’s concerns, and that should be extremely worrying for all of us.

Good hand hygiene practice in hospitals is the single most effective way to prevent the spread of infection, and we should take action to ensure that more effective records of hand-washing on NHS wards are made in future. That is a simple yet effective way of making our hospitals safer, and with the recent growth in antimicrobial resistance we need to act sooner rather than later to ensure that poor hand hygiene does not further increase the severity of HAIs.

We have had an extensive hand hygiene strategy in Northern Ireland since 2008, and although some problems persist—in all honesty, we cannot stop all infections—we have seen results from simply adopting a thorough hand hygiene regime in our hospitals, with education on the importance and effectiveness of hand hygiene being an essential part of the Department of Health, Social Services and Public Safety’s regional infection control strategy. Like in Scotland and in some individual trusts, we are taking action to address the issue.

Accurate records are the starting point for addressing the problem. There are many examples across the world, but a recent three-year pilot in a hospital in South Carolina in the United States of America found that once staff were trained in how to use electronic hand monitoring systems, compliance with best practice increased and MRSA rates dropped. That saved the hospital $433,644 from April 2014 to March 2015. There was therefore also a financial advantage, and although that is not the reason to do it, it is an example of what can be done to stop infections and address costs.

As we seek to have a more streamlined and cost-effective NHS, those are the sorts of approaches we need to look into. Indeed, the introduction of such a system at Burton Hospitals NHS Foundation Trust drove up hand hygiene compliance by up to 50% in just three months. That is an example from this country, which shows what we can do if we put in the effort.

With 5,000 people dying each year as a result of HAIs, it is clear that action must be taken. With resistance to antimicrobial treatment increasing, we need to get on top of the issue before it is too late. Hand hygiene is the simplest and most effective way to do that, so let us make sure hospitals are doing that right and doing it well.

[Sir Alan Meale (in the Chair)]

We now move to the Front-Bench Members, and we have only until 5.30 pm. I therefore ask Members to be succinct. Minister, if it is possible, could you give a minute or so at the end to the Member who moved the motion to allow him to wind up the debate?

17:08

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

Thank you for calling me, Sir Alan, in a debate that sounds simple but is important. The education centre in my hospital in Ayrshire is named after Sir Alexander Fleming, because the man who discovered penicillin was an Ayrshire lad. It may be that people have got complacent and think that the age of infections is done with. In earlier generations, children did wash their hands, but then people got too casual.

In Scotland, we began to be much more fixated on hand-washing in 2001, after some of the evidence about the impact of hospital-associated infections came out. In the early 2000s, our uniforms changed: white coats were banned, tops needed short sleeves and eventually we moved to no ties or jackets. We also began to have more audit in the system. We went through a painful experience between 2006 and 2007: a massive clostridium difficile outbreak in the Vale of Leven hospital in which 163 patients were affected and 34 died. Nicola Sturgeon, our First Minister, was the Cabinet Secretary for Health at the time, and she instantly set up a hospital-acquired infection taskforce when the problem became obvious. The whole approach accelerated.

We have several different organisations that are part of driving hand-washing, but it is about the culture. It is not a question of someone facing the threat of losing their job or being sanctioned; it is about getting people to see hand-washing as part of the rhythm of every contact. There is observation, as has been mentioned, and there are also ward champions. The observation is hidden, so no one knows it is happening. I must say, to my chagrin, that in every single audit of staff, doctors were the worst. That fact was published, to shame doctors by showing that we were the slowest to adopt the right practice. We also observe visitors, and there is alcohol gel as people come into wards. My office was on the ward, and it was easy to see physios, nurses, doctors and visitors interacting with the alcohol gel.

I pay tribute to the hon. Member for Morley and Outwood (Andrea Jenkyns) for setting up the APPG for patient safety, which I am part of, and the Handz campaign. In Scotland, we have the “Happy Birthday” hand-washing campaign, which has been running for some time. We already have that campaign in schools, but it is important to raise the issue.

To verify hand-washing, we have the Healthcare Environment Inspectorate, which turns up without anyone knowing it is coming. Its inspectors are down under the beds and poking around in the mattresses on the trolleys. They are observing staff and, believe me, if there is a dusty corner, they will find it. They also look at surfaces—is there a cracked surface or a rough bit of floor that could be difficult to clean? It is about not only hands but the cleanliness of the entire ward.

My hospital was lucky in that it never outsourced cleaning. We never had companies coming and going. We kept our ward maids. It was their patch, in which they took pride. The supervisor comes along, like your mother-in-law, wearing a white glove, to check exactly what everything looks like. They can be seen under the bed, in among the frame, cleaning every pick of it while chatting to the patient. Those are simple things, but we need to do them, because we are moving into what could be a post-antibiotic era. To think that we could lose something that we started using in 1942 after 80 years is absolutely terrifying, so we need to bring that culture back.

In the NHS, every single trust publishes its infection figures every quarter. The hon. Member for Amber Valley (Nigel Mills) mentioned all infections, and as a surgeon I have to admit that infections happen for all sorts of reasons. The reason why C. diff and MRSA are so important is that their root cause is the poor use—prolonged use—of antibiotics, which causes C. diff, and poor hospital hand hygiene, which causes MRSA.

Trusts’ infection rates are published every month and pinned up on the wards, so that visitors can see them. We also put out the reports of the Healthcare Environment Inspectorate. I have shown a critical report on one of our hospitals to the hon. Member for Morley and Outwood, to show how thorough and challenging the inspection is; there are no holds barred. That is what has to be done. There are also infections out in the community. The hon. Member for Bridgend (Mrs Moon) mentioned cytomegalovirus, which, again, can simply be reduced by hand-washing.

We in this place have to realise our part in all of this. We shake hands with hundreds of people. We go and eat our lunch, and I do not see people forming a queue at the ladies or gents to wash their hands. We should all have a bottle of alcohol gel in our bags. I am on the House’s medical panel, and I have put on the agenda that we should have exactly the same dispensers of alcohol gel used in hospitals outside our canteens. We need to set examples, whether that is by visiting local schools or simply by showing all the people we interact with.

The NHS has a responsibility for hand hygiene. We need to change the culture in the NHS, so that if a member of staff is near a patient and touching not only them but their environment, the member of staff washes their hands or uses alcohol gel before their next contact. We in this place also have a role in getting the message out into society.

17:14

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Alan. I congratulate the hon. Member for Amber Valley (Nigel Mills) on securing this important debate. I also pay tribute to the hon. Member for Morley and Outwood (Andrea Jenkyns), who chairs the all-party parliamentary group on patient safety and has been a passionate advocate on the issue. Indeed, infection prevention was the first subject that the APPG decided to focus on. She referred to the startling answer given by an RCN representative at our first meeting that no nurse, in her experience of some 20 years, had been disciplined for failing to wash their hands. I do not know whether that is because this system is, by its nature, self-policing, but it raises questions about whether the issue is treated with the appropriate importance that we would all agree it should be.

There have been excellent contributions today. My hon. Friend the Member for Bridgend (Mrs Moon) and the hon. Member for Strangford (Jim Shannon) rightly said that washing hands after coughing and sneezing is such a simple thing to do, yet so many of us fail to do it. My hon. Friend the Member for Bridgend mentioned the devastating effects that CMV can have, and how easily it can be prevented. There were also excellent comments from the hon. Member for Central Ayrshire (Dr Whitford), who spoke from her personal experience with remarkable candour about which health professionals have the most to do to catch up in this area. She is right: this is all about the culture in which our health professionals work.

During my Christmas break, I spent a Saturday night shadowing an emergency medicine consultant at the Countess of Chester hospital. It was an incredibly busy environment, and the pace was relentless. Despite the extremely challenging circumstances faced by staff, there was a continual focus on hygiene at every stage. Hands, as well as equipment, were constantly cleaned and sanitised before and after every contact with patients. Indeed, I am now something of an expert at cleaning trolleys.

My experience, however, was not an isolated one. The importance of compliance with hand hygiene is something that NHS staff treat with a high level of importance, and it is worth recognising that, despite the difficulties highlighted today, most staff in the NHS do the right thing and do a fantastic job.

Despite the improvements in recent years, the rates of healthcare-acquired infections in England remain stubbornly high, with what can only be described as inadequate checks on compliance with hand hygiene best practice. As the hon. Member for Amber Valley said in his opening remarks, around 300,000 people per year—or, to put it another way, one in 16 people—get an infection while being cared for in the NHS in England. As he rightly pointed out, if that was our experience at a restaurant, we would not consider it acceptable.

As well as the devastating impact on the patients who are immediately affected, those infections have a significant financial impact on the NHS—the most recent reliable estimate derived from the Plowman report puts the figure at £1 billion per year—and lengthen hospital stays.

The growing threat of antimicrobial resistance adds to the seriousness of the matter and the urgent need for the Government to act. Antimicrobial resistance-associated deaths are projected to increase 2,000-fold by 2050. A report by the World Health Organisation states that resistance is very frequent in bacteria isolated in healthcare facilities and that, at present, antibiotic-resistant bacteria are the cause of over half of all surgical site infections.

Given the clear scientific evidence that good hand hygiene by health workers reduces infections, and in particular MRSA, it is clear that hospital workers are on the frontline against this threat. We therefore need more action to bring about improved hand hygiene to avoid problems in future.

Of course, not all hospital-acquired infections are preventable, but it is believed that around 30% could be avoided by better application of existing knowledge and good practice. It is also widely accepted that good hygiene practice in hospitals is the single most effective method of preventing the spread of infections. That was recognised by NICE in early 2014 when it issued a new quality standard, which included six statements designed to reduce infection rates, with the central aim being that all patients should be looked after by healthcare workers who always clean their hands thoroughly, both before and immediately after contact or care.

While those aspirations are laudable, since the publication of NICE’s guidance, the positive progress made in recent years appears to have stalled, and in some cases possibly reversed. The most recent figures I have seen make worrying reading, with C. diff showing no reduction in the past year, the rate of MSSA increasing and the rate of MRSA increasing by a worrying 14%. For all its aspiration, the NICE guidance is seriously flawed, not least because it relies upon monitoring by direct observation by nurses, which not only takes up valuable nursing time but has been found to overstate compliance rates.

The chief inspector of hospitals for the Care Quality Commission, Mike Richards, has drawn attention to the inaccuracy of local hand hygiene audits. The high compliance rates reported by hospitals simply are not supported when we look at the levels of hospital-acquired infections. We have heard that the compliance rate is more likely to be 18% to 40%, rather than the 90% to 100% reported by hospitals. As the hon. Member for Amber Valley set out with great clarity, there are possibly a great number of reasons for such a discrepancy, and there seems to be an element of self-fulfilment about how assessments are carried out. The trials that have been undertaken to ensure that there are more accurate data have also been shown to improve compliance with best practice.

The introduction of electronic monitoring equipment at Burton hospitals NHS foundation trust was found to improve hand hygiene compliance by 50% within three months. I would therefore welcome an expansion in the use of data and electronic monitoring, and I would be grateful if the Minister could set out in his response how he intends to address that. There is clearly a role for the Care Quality Commission. A key element of every inspection needs to be an assurance that proper checks on hand-washing are carried out. The greater use of data would also enable a new era of transparency to be ushered in. Patients should have the right to meaningful information about hand infection control and hygiene.

Another cause of the recent increase in infection rates is the chronic shortage of nurses on many hospital wards and the increased use of agency staff, caused in part by the Government’s decision to slash the number of nurse training places after taking office in 2010, as well as the worrying retention trends. Significantly, when there is a high turnover of staff, it is much more difficult for best practice to be instilled, monitored and ingrained into the culture of a hospital. I hope that when the Minister responds, he will say a little more than he was able to last week at the Dispatch Box about improving the retention rates for nursing staff.

Finally, as well as improving practices within the NHS, we need to improve hand hygiene among the public at large. Studies have shown that, despite awareness about good hand-washing practices being widespread, one in five people do not wash their hands after using the toilet. According to the Royal Society for Public Health, one of the major barriers has been an assumption by people that they do not carry any diseases. However, on average, studies have shown that hands can carry about 3,000 different bacteria, so we also need to explore what more we can do to improve good hand-washing practices among the public. The cross-party Handz campaign, which was launched by the hon. Member for Morley and Outwood, has already done very good work to raise awareness of these issues, and I hope it will provide a catalyst to drive forward improvements both inside and outside the NHS.

17:22

[The Parliamentary Under-Secretary of State for Health (Ben Gummer)]

I thank my hon. Friend the Member for Amber Valley (Nigel Mills) for bringing this important matter to the notice of the House, and I thank hon. Members on both sides of the Chamber for their speeches and contributions.

Hand-washing is an interesting thing, is it not? For the majority of human history, from Pontius Pilate to Lady Macbeth, it was associated with a bad act. Hand-washing was what someone did after they had done something wrong. It was only through the transformation in clinical knowledge in the 19th century that the understanding of hand-washing and its criticality in reducing infection rates became commonplace, but it was a long fight. It is worth remembering that Ignaz Semmelweis, the man who made people understand that washing their hands in obstetric and maternity settings reduced the risk of infection, was so criticised by his colleagues that it drove him to insanity, and eventually to death in an asylum. This was a hard-won victory, and I utterly endorse the wise comments made by the hon. Member for Central Ayrshire (Dr Whitford): perhaps it is because it has become such a commonplace part of our modern understanding of hygiene that we have forgotten its central importance in reducing infection.

My hon. Friend the Member for Morley and Outwood (Andrea Jenkyns) came to the Department of Health a few months ago and sat in on one of the Secretary of State’s Monday morning care meetings to discuss her Handz campaign and the fact that she wanted to set up an all-party parliamentary group on hand hygiene. I know that her personal testimony brought acuity to our understanding of why this is important. It is all too easy to see MRSA, E. coli and C. diff rates plotted on a chart and to forget that, actually, the result of those infections can lead to the tragic and completely unnecessary loss of life. However, even if it does not lead to that, it can often mean a very extended stay in hospital, with serious injury sometimes incurred as a result of infection.

The overall story of infection caused by poor hand-washing has been good over the last decade. Rates of MRSA, MSSA, C. diff and E. coli have all come down— very considerably in some circumstances—but, as the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), rightly noted, we have plateaued in almost all of those, and worryingly so. In fact, in the case of MRSA, there has been a worrying, albeit slight, increase in rates in hospitals. That has now been consistent enough to constitute a trend.

We have to be clear that, from the Government’s perspective, we are still not entirely sure in each case why the reductions have not continued. To some extent, it is clear that an increasing role is played by community infection and community onset, or expression, of infection. We do not yet have a full understanding of the relationship between community settings and hospitals, and the chief medical officer is working very hard to try and understand it. Therefore, this is a pressing moment, not least because of the problems of antimicrobial resistance, which the hon. Member for Central Ayrshire mentioned, and which is why we have to be particularly vigilant.

Overall, the one thing that will guarantee that we do not make more progress is if I make a central directive from Richmond House and then ensure compliance through a massive, bureaucratic reporting mechanism. The only point on which I differed from anyone in their observations was when the shadow Minister, in his generally very wise comments, talked about the relationship to staff retention. That was because, although general infection control should be part of how teams work, it should be part of the personal, professional responsibility of a clinician, no matter where they work—whether in the community or between hospitals as a bank nurse or clinician—to take infection control very seriously.

How do we improve matters? How do we make sure that, as in so much of the NHS—to copy Bevan’s words, which I do not tire of using—we are “universalising the best” and lifting poor performers, of which there are several, up to the best standards in the country, some of which can be found with our neighbours in Scotland?

[Dr Philippa Whitford]

I have not worked in a hospital in England, but the poster campaign that the hon. Member for Morley and Outwood (Andrea Jenkyns) referred to involved massive posters that were in the lifts and targeted at visitors, porters, nurses and doctors. The five points of contact were above every sink and in every room. If we are trying to change a culture, I wonder whether the first thing is actually just to try to get the campaign out there among staff and visitors.

[Ben Gummer]

I take the hon. Lady’s point, and I agree that we have to re-educate the public that we have not won the battle and that we have to re-engage. I will take her comments to the chief medical officer and talk to her about what more we can do to re-engage the public in the debate on hospital-acquired infections.

[Douglas Chapman]

My hon. Friend the Member for Central Ayrshire (Dr Whitford) has outlined some of the initiatives taken by the Scottish Government and the NHS in Scotland. Despite those measures, hospital-acquired infections in Scotland still cost the NHS £183 million a year. If we managed to reduce those infections by 20%, that would give us a saving of £36 million. A 40% reduction would give us £73 million. Does the Minister agree that there is a huge financial incentive to reducing the infection figures as much as we can, especially in these times of public spending restraint?

[Ben Gummer]

The finances follow the far bigger win, which is the benefit to patients and the saving of lives.

One further thing that I will attack quickly is compliance monitoring. It is a very interesting area, and I would encourage local trusts to look at it in detail. The CQC has it as one of its main targets and, in the new inspection round, which will come very soon, it will want to look at the area as a central part of its monitoring.

17:29

[Nigel Mills]

I thank everyone who joined in the debate. We have raised an important issue, and I thank the Minister for his recognition of its seriousness. We were never asking him to issue a direction from Richmond House. However, we have a set of rules and instructions to trusts that they should be checking this, and I think we want to see those rules enforced—

17:30

Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).

Written Statements

Wednesday 13th January 2016 Written Statements

Wednesday 13 January 2016

Defence Science and Technology Laboratory Trading Fund Review

Wednesday 13th January 2016 Written Statements

[The Minister for Defence Procurement (Mr Philip Dunne)]

I am announcing today that following a review of its status, the Defence Science and Technology Laboratory (DSTL) will continue to remain an Executive agency of the Ministry of Defence (MOD), but its trading fund status will be revoked from April 2017.

Since its creation in 2001, DSTL has been at the forefront of national security, working with international partners and industry to deliver a range of high-impact science and technology solutions, such as developing life-saving armour and deploying scientists to contain the Ebola outbreak. I am pleased to report that the review has strongly reaffirmed the ongoing need for DSTL’s services for both defence and wider national security.

In order for DSTL to continue to fulfil this role, the review has recommended that DSTL continues as an Executive agency of the MOD. This will be the most effective and efficient option for the future of DSTL because it preserves the flexibility and agility DSTL has to work across the MOD, wider Government and internationally, but will also promote greater efficiency in the delivery of science and technology, and bring about a renewed focus on strategic partnerships with our allies, other laboratories, academia and industry. However, because DSTL’s income comes largely from customers within Government, it has been agreed that DSTL can no longer remain a trading fund and will come within the ambit of the defence vote from 1 April 2017.

DSTL has a bright future within MOD, and will continue to play a key part in delivering the MOD’s science and technology strategy as well as supporting the rest of Government on vital national security tasks and our international partners. The strategic defence and security review has reiterated the importance of science, technology and innovation in meeting our national security needs into the future and the retention of DSTL as an MOD agency fully supports the delivery of that strategy.

There is now more work to do in order to transition DSTL’s organisational status and I look forward to seeing the changes recommended by the review becoming operational by April 2017.

[HCWS465]

North Korean Nuclear Test

Wednesday 13th January 2016 Written Statements

[The Secretary of State for Foreign and Commonwealth Affairs (Mr Philip Hammond)]

At 0400 GMT on 6 January North Korean state media claimed that it had successfully conducted its first hydrogen bomb test at 0130 GMT. The Comprehensive Test-Ban Treaty Organisation reported seismic signatures with a magnitude of 4.85, consistent with previous North Korean nuclear tests. We assess that the size of the seismic event caused by the nuclear test, while indicative of a nuclear explosion, is not indicative of the successful test of a thermonuclear weapon (also known as a hydrogen bomb); however this nuclear test is a serious violation of UN Security Council resolutions 1718, 1874, 2087 and 2094. North Korea’s nuclear and ballistic missile programme poses a significant threat to international security and regional stability. North Korea’s repeated provocations hinder the prospects for lasting peace on the Korean peninsula.

On 6 January I issued a statement strongly condemning the nuclear test as a grave breach of UN Security Council resolutions. While travelling in the region last week I spoke to my South Korean, Japanese and Chinese counterparts about the international response. I have also spoken to the US Secretary of State. The Minister of State for Foreign and Commonwealth Affairs, my right hon. Friend the Member for East Devon (Mr Swire), summoned the North Korean Ambassador to the Foreign and Commonwealth Office on 7 January in order to underline, in the strongest terms, the UK’s firm condemnation of this nuclear test and to make clear to North Korea that it can either engage constructively with the international community, or face increasing isolation and further action by the international community.

We worked to secure, and strongly support, the UN Security Council’s swift condemnation of this nuclear test in its statement following its emergency meeting on 6 January. The Security Council agreed that this North Korean nuclear test was a clear violation of existing Security Council resolutions; and that there should be a robust response including immediate work on further significant measures in a new Security Council resolution.

The UK remains deeply concerned by North Korea’s continued development of its nuclear and ballistic missile programmes. We continue to urge North Korea to return to credible and authentic multilateral talks on its nuclear programme, to abide by its obligations under the Nuclear Non-Proliferation Treaty, and to permit full access by the International Atomic Energy Agency.

[HCWS464]

UK Delegation to the Parliamentary Assembly of the Council of Europe

Wednesday 13th January 2016 Written Statements

[The Prime Minister (Mr David Cameron)]

This written ministerial statement confirms that Lord Wright of Richmond has been appointed as a substitute member of the United Kingdom delegation to the Parliamentary Assembly of the Council of Europe in place of Baroness O’Loan.

[HCWS466]

House of Lords

Wednesday 13th January 2016 Lords Chamber

Wednesday, 13 January 2016.

15:00

Prayers—read by the Lord Bishop of Rochester.

Bus Services: Local Government Funding

Wednesday 13th January 2016 Lords Chamber

Question

15:06

Asked by

[Lord Greaves]

To ask Her Majesty’s Government what assessment they have made of the effect of reductions in local government spending on local bus services in 2016–17.

[The Parliamentary Under-Secretary of State, Department for Transport and Home Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, decisions about the provision of bus services requiring local government subsidy are a matter for individual English local authorities in the light of their other spending priorities. The majority of public funding for local bus services is via the block grant provided to local authorities in England from DCLG. The Department for Transport also provides £40 million in bus service operators grant funding directly to English local authorities to help deliver local bus services.

[Lord Greaves (LD)]

My Lords, that is a factually correct account. However, all over the country there are horrific stories about local bus services being cut as a result of cuts in council subsidies which are as a result of cuts in the funding of local authorities. In my own county of Lancashire, the proposal that will go before the county council is to abolish bus subsidies for services to villages, services in rural areas, and the little buses that go around the towns, which are so important. Is this really the legacy that this Government want to leave?

[Lord Ahmad of Wimbledon]

It is not. I mentioned the bus service operators grant. In Lancashire, last year, we provided £1.86 million directly for the purposes of retaining services. The Government are looking at the overall offering of bus services, particularly in rural areas, to ensure both connectivity and the sustainability of essential transport links.

[Lord Snape (Lab)]

My Lords, did the Minister happen to see the BBC “Countryfile” programme last Sunday, which set out starkly the decline in bus services throughout this country, particularly in rural areas? Does he agree with the conclusions of that programme that this decline is largely due to the reduction in government payments to local authorities and direct grants for bus services? Can he assure the House that the much-vaunted devolution of these services will be accompanied by proper finance? Otherwise, some of us might suspect, that decline will continue, with the blame moving from Whitehall to the town hall.

[Lord Ahmad of Wimbledon]

I did not see the programme. Part of my Sundays are taken up with my own “countryfile” responsibilities of helping my children build their country projects—in this case, however, it was a chocolate cake.

To get back to the question, the noble Lord is quite right to point out that there are challenges in funding. However, this is not about apportioning blame to one over the other; it is about ensuring that essential services are sustained, and the Government are moving forward on this. Indeed, yesterday, during the debate on the devolution Bill, I talked about the creation of STBs, which I intend will ensure that local decisions on transport are made by the people who know best.

[Lord Rosser (Lab)]

My Lords, given the drop in fuel prices, what action have the Government taken to ensure that there is now a reduction in bus fares to reflect the reduced cost arising from that?

[Lord Ahmad of Wimbledon]

As the noble Lord will be aware, one of the legislative proposals coming forward is the buses Bill, which will ensure again that local authorities are empowered—through the purposes of franchising, for example—to ensure better, sustainable fares and the sustaining of essential bus services. That will form part and parcel of the Bill.

[Baroness Randerson (LD)]

My Lords, Conservative councillors in Wiltshire, Dorset and Somerset are all among those proposing swingeing cuts to bus services across the country. Indeed, Somerset plans to cut community transport schemes which are usually the last refuge for rural services. The Government proposed after the election the reform of the bus service operators grant. That is clearly now delayed. Can the Minister tell the House when announcements will be made on this? Can he assure us that any reform of this grant will include an element for mileage which would protect rural bus services?

[Lord Ahmad of Wimbledon]

I am sure the noble Baroness is aware that the grant she talks about is being protected. Indeed, in the last spending round that is exactly the commitment given by my right honourable friend. The announcements are imminent and will be made quite shortly. I also draw the noble Baroness’s attention to the total transport pilot fund we are currently allocating to 37 local authorities which are looking at an integrated form and retention of transport funding, which includes the bus services operators grant, local bus services support through DCLG, home-to-school transport provided through DfE and DCLG, and non-emergency patient transport. We need an integrated approach to long-term solutions and sustainability at a local level.

[Baroness Perry of Southwark (Con)]

My Lords, does my noble friend agree that it is unfortunate that some local authorities are making cuts in services when they are sitting on substantial reserves?

[Lord Ahmad of Wimbledon]

I agree with my noble friend but, as I have said already, it is very much a decision-making matter for local authorities. We are, through various legislative measures that we have taken in the previous Government and in this Government—only yesterday through the devolution Bill—underlining the importance this Government attaches to local decision-making, including on transport.

[Baroness Royall of Blaisdon (Lab)]

My Lords, local decision-making is extremely important but it requires funds to underpin it. However, much has been made about the need for good rural bus services. At the moment the cuts in rural bus services are hitting students particularly harshly. Will the Minister have a discussion with his colleagues in the Department for Education so that we can ensure that students choose their post-education studies on the basis of what is best for their future and not on the availability of buses to get them to and from their courses?

[Lord Ahmad of Wimbledon]

I assure the noble Baroness that I have regular discussions and conversations with colleagues across a vast range of areas and across different ministries. The total transport pilot fund I have highlighted again underlines the Government’s commitment to look at how funding works and how government funding is sourced and provided at a local level across a range of different departments. We are half-way through the pilot and I shall report back once we have completed it.

[Lord Lea of Crondall (Lab)]

My Lords, do the Government agree that public services are part of our living standards and that when measuring the cost of living it is not only the retail prices index that is not moved by these affairs? People have to go to a supermarket a long way away and pay for a taxi or make some other arrangement. Is there not a case for an inquiry into how we measure the cost of living when it does not include these major elements?

[Lord Ahmad of Wimbledon]

As a public servant I agree with the opening statement of the noble Lord: the public sector is an important part of this. I do not agree with the premise that an inquiry is required. When it comes to transport, we need to ensure that we have schemes in place that work for ensuring sustainable transport at a local level. That is the Government’s priority.

Gross Value Added

Wednesday 13th January 2016 Lords Chamber

Question

15:14

Asked by

[Lord Wigley]

To ask Her Majesty’s Government what are the latest figures for the gross value added per head in England, Wales, Scotland and Northern Ireland respectively.

[Lord Ashton of Hyde (Con)]

My Lords, the latest figures published by the Office for National Statistics show that in 2014 gross value added per head was £25,367 in England, £17,573 in Wales, £23,102 in Scotland and £18,682 in Northern Ireland.

[Lord Wigley (PC)]

My Lords, last week the Chancellor of the Exchequer boasted in Cardiff about the UK Government’s role in securing a small improvement in the Welsh economy. That being so, do they also take their share of the responsibility, at least, for the fact that the average Welsh income per head is still more than 25% below the average for England? That has stubbornly been the fact for the past three decades. Are the Government totally complacent about that?

[Lord Ashton of Hyde]

My Lords, as the House knows, my right honourable friend the Chancellor is a modest man and will take credit only where it is due. The fact is that since he became Chancellor, some 70,000 jobs have been created in Wales, unemployment has fallen by 30% and we have invested £69 million in rolling out superfast broadband to 500,000 homes and businesses. But as the noble Lord has said, it is also true that since GVA statistics started in their current form in 1997, under all Governments GVA in Wales has been around 70% of that in England every year. Certainly, the Chancellor is not going to take responsibility for all those years, but the good news is that since 2010, Wales’s GVA has grown at a faster rate than England’s.

[Lord Forsyth of Drumlean (Con)]

My Lords, can my noble friend confirm that the figures for Scotland would be disastrously lower had Scotland voted for independence in the referendum, given that the oil price has fallen from what the SNP said it would be, which was $110 a barrel, to $31 today?

[Lord Ashton of Hyde]

Obviously, the premise of the independence party was based to a large extent on the oil price, but as my noble friend has said, it has fallen, from $120 per barrel in 2012, and is predicted to fall as low as perhaps $25. That is a very important factor to take into account.

[Lord Anderson of Swansea (Lab)]

Does the Minister agree that a similar picture of comparative poverty emerges from tax receipts in Wales? The last figures I saw suggested that only 4,000 Welsh taxpayers are in the top tax band. The question is surely this: what are we going to do about it? Does that not have implications for the Barnett formula, and will the Minister confirm that the comparative position in Wales is deteriorating?

[Lord Ashton of Hyde]

The trouble with comparing England and Wales is that England has a population of about 53 million, while the population of Wales is some 3 million, so it is a difficult comparison to make. A better comparator would be the regional differences in England. But obviously, what we want is for more people to go into higher tax bands in Wales because the economy is booming and we are doing our bit to help that through investment. We hope that, when the devolution settlement is reached under the new Wales Bill, the Welsh Assembly will be able to play their part in growing the Welsh economy.

[Lord Thomas of Gresford (LD)]

My Lords, in 1999 the GVA index for Wales was 79.2 as against a UK average of 100. The Labour Government of the day promised to increase it to 90 by 2010, but in fact it has dropped to 71. Perhaps I may employ my family motto, ar bwy mae’r bai—who can we blame?

[Lord Ashton of Hyde]

My Lords, I think we should take a more positive view and work out what we are going to do about it. Certainly in Wales, there is plenty that the Government are doing. For example, capital spend is increasing by £900 million over this Parliament. Infrastructure investment through the block grant in this Parliament will rise by just under 17%, and among other things we would like Cardiff to agree to a city deal which will help its economic growth.

[Lord Geddes (Con)]

Does my noble friend agree that the economy of Wales would be greatly improved if the Severn barrage project went ahead? What progress has been made on that?

[Lord Ashton of Hyde]

I believe that my noble friend has raised this point before. I am not sure that I can make much more progress, except to say that the Government have started a due diligence process on this project. But it is very important to work out the cost-benefit analysis of tidal lagoon energy. This is an ongoing process. It is important that we understand the costs of this project and the technology in detail, particularly in the broader context of energy needs and prices, and availability.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister said that the Chancellor was a modest man. Well, he certainly used to boast about the fact that he was going to achieve a balanced economy in terms of manufacture and finance, as well as regional balance. Since 2009, London’s economy has grown by 20.9% but in one region—Yorkshire and Humberside—the figure is 12.8%. What on earth have the Government got to boast about in achievements in that area, particularly when, for the first time in a decade, wealth inequality in this country has increased? Is it not clear, in this the seventh year of the long-term economic plan, that this Government are utterly incapable of creating fairer growth across the economy and ensuring that all citizens participate to some extent in improving conditions?

[Lord Ashton of Hyde]

The noble Lord should not decry the fact that gross value added wealth creation takes place in the south-east and London: that is obviously a good thing for the country. However, we do want to make sure that that same growth applies to the regions. He is right that it is less in the regions of England and the devolved Administrations than in London, which is bigger by far than the rest of the regions. Of course, we do have a comprehensive plan to rebalance the economy and strengthen every part of the UK. It involves major investment in transport infrastructure, science and skills, and support for local businesses. We have set up the National Infrastructure Commission, for example, which will spend £100 million in this Parliament, of which £61 million will be on transport.

Saudi Arabia: Executions

Wednesday 13th January 2016 Lords Chamber

Question

15:22

Asked by

[Lord Hoyle]

To ask Her Majesty’s Government what representations they have made to the Government of Saudi Arabia about their reported plans to execute 50 people.

[The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)]

My Lords, the British Government are firmly opposed to the death penalty in all circumstances and in every country. We are deeply concerned about the execution of 47 people on 2 January. We have expressed these concerns to the Saudi authorities. The British Government do not shy away from raising legitimate human rights concerns and we believe that we would be more successful discussing cases privately with Saudi Arabia than criticising it publicly.

[Lord Hoyle (Lab)]

I thank the Minister for that reply and I am pleased that she has taken a stronger attitude in relation to the plans, because there appeared to be a craven silence in relation to them, particularly as this is the largest number since 1980. What view does she take of the opinions that have been expressed that these are intended to derail the Syrian peace process talks taking place in Vienna?

[Baroness Anelay of St Johns]

My Lords, throughout my time at the Foreign Office, I have made it clear on every possible occasion the strength of feeling that the Government have about the death penalty. It is wrong in principle and wrong in practice. Clearly, the noble Lord and I agree on that. There is a concern that any changes in behaviour by any country in the region may have a destabilising effect on the important discussions to which the noble Lord rightly alluded. We understand from both Iran and Saudi Arabia that they expect to continue to support the negotiations on Syria.

[Baroness Falkner of Margravine (LD)]

My Lords, the noble Baroness accepts that Saudi Arabia not only uses the death penalty but uses it against political prisoners, which is a significant point. It also wages illegal wars, as with its neighbour Yemen, and supports jihadi groups in Syria. Will she tell the House how she thinks that the UK Government supporting and collaborating with it to get it elected to the Human Rights Council of the United Nations advances international peace and security or the UK’s interests? Does it advance human rights?

[Baroness Anelay of St Johns]

My Lords, there are at least five questions there. Of course, I am supposed to try to address just two. I will choose perhaps the two most contentious. First, with regard to Yemen, it is not an illegal activity. I remind the noble Baroness that the request for support was made by the legitimate President, President Hadi, to the United Nations Security Council.

Regarding the Human Rights Council, I say now, as I have said throughout, that the matter to which the noble Baroness referred was an uncontested election—I know that that has not got into the media, so many people are not aware of it—and therefore the Saudi Arabian place, by the interesting way in which the Human Rights Council works, was taken because it is a member of the Asian group.

[Lord Singh of Wimbledon (CB)]

My Lords, by any sort of measure the regime in Saudi Arabia, with its beheadings, amputations and public floggings, is one of the most barbaric in the whole of the Middle East, yet our Government continue to look more benignly at that regime than at others in the area. There is a Christian hymn that states:

“They enslave their children’s children who make compromise with sin”.

Does the Minister agree with this sentiment and agree that the overriding strategic interest for the 21st century is even-handed respect for the human rights of all people?

[Baroness Anelay of St Johns]

My Lords, we do indeed subscribe to that very value: there should be even-handed respect for the human rights of all people. But we have to recognise, whether we like it or not, that Saudi Arabia follows sharia law, as other states do, and that the death penalty is part of that. Clearly, we do not support that and we work towards its eradication around the world. Saudi Arabia is a country with which we continue to work strongly. It is an important partner for security purposes. Indeed, it has provided information that has enabled us to avoid serious security incidents in this country.

[Lord Tugendhat (Con)]

My Lords—

[Baroness Corston (Lab)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

I am sorry to interrupt. We have not heard from the Conservative Benches, but it would then be right to come back to the Labour Benches.

[Lord Tugendhat]

My Lords, I congratulate the Minister on her reply. Would she not agree that, while megaphone diplomacy is never very helpful, it is important that the Government should make clear privately to the Saudi Government that the indignation and concern felt about their policy crosses all political boundaries in this country and that therefore, if they persist in their present line of policy, it will make it very difficult indeed for the British people, let alone the British Government, to support the continued close relationship that we have enjoyed with Saudi Arabia in the past?

[Baroness Anelay of St Johns]

My Lords, my noble friend makes the excellent point that all states around the world need to balance very carefully their actions against how they will be seen by the international community.

[Baroness Corston]

My Lords, given what the Minister said in reply to other noble Lords, and in view of the fact that she and I were on a Speaker’s delegation to Saudi Arabia in December 1997—probably the only time in our lives when our ankles had to be covered because they were considered provocative—and remembering the experience of that visit, would she agree that it would have been much better if the Prime Minister had said something a little more emphatic than that it was “disappointing” that 47 people had been executed?

[Baroness Anelay of St Johns]

My Lords, we do not talk about disappointment with regard to individuals—we say that it is wrong for the death penalty to be used and we are deeply concerned when it is—because it is wrong to pick out one individual as against another. Every death is to be mourned and grieved. It is wrong and we need to work together to change the future. Saudi Arabia may be changing slowly, but it is. The noble Baroness reminds me of that visit. However, we may have been the first ladies to visit Riyadh—indeed, even into the mosque in Riyadh, where we were not asked to cover our heads.

Sugar Tax

Wednesday 13th January 2016 Lords Chamber

Question

15:29

Asked by

[Lord Clinton-Davis]

To ask Her Majesty’s Government what plans they have to impose a sugar tax on fizzy drinks.

[The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con)]

My Lords, we will be launching our childhood obesity strategy soon. It will look at everything, including sugar, that contributes to a child becoming overweight and obese. It will also set out what more can be done by all sides.

[Lord Clinton-Davis (Lab)]

If we had a league of government U-turns, this one would surely head the list. Not so long ago, the Prime Minister said that a sugar tax was not worth while. Now, urged on by experts and MPs of all parties, he says that it is not a bad idea. What should we now do? My view is that we should follow the example of Mexico. Why wait for many months when the evidence is very clear? Why do the Government not act immediately?

[Lord Prior of Brampton]

My Lords, I think the Prime Minister’s position is that he will want to think long and hard before imposing a tax that would fall by and large on those least able to afford it. On the other hand, the Prime Minister and the Secretary of State for Health recognise that obesity is a scourge in this country, affecting young people in particular, and will want to implement a comprehensive range of measures to tackle it.

[Baroness Hollins (CB)]

My Lords—

[Lord Ribeiro (Con)]

My Lords—

[Noble Lords]

Cross Benches!

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, I was just going to say that perhaps the House itself would like to indicate who it would like to ask a question because we are at that point in the cycle when it is not anybody’s turn next. However, I think the House has indicated that it would like to hear from the noble Baroness, Lady Hollins.

[Baroness Hollins]

My Lords, what assessment have Her Majesty’s Government made of evidence provided by the BMA—I should declare an interest here as chair of the BMA’s Board of Science—Public Health England and others on the anticipated positive impact of implementing a sugar tax? Does the Minister agree that we need a range of regulatory and educational measures to reduce the intake of added sugars, particularly among children and young people, but also adults with learning disabilities who are vulnerable to some of the same market pressures?

[Lord Prior of Brampton]

My Lords, the Government have taken into account a range of evidence from Public Health England, the McKinsey institute, the SACN and others in coming to their strategy. The noble Baroness is absolutely right that the response will need to take into account issues such as reformulation, portion size, availability and a whole range of other issues that affect sugar intake.

[Lord Ribeiro]

My Lords, while the sugar tax for fizzy drinks is a regressive tax, the very people it would target stand to benefit from such a tax because, leaving aside obesity, which is a long-term problem, dental caries are a short-term problem. There is no doubt that sugary drinks are causing a massive amount of dental caries, the cost of which falls on the NHS, as these unfortunate children have to have dental extractions which will affect their well-being and quality of life for years to come.

[Lord Prior of Brampton]

My Lords, reduction of sugar is a critical part of the Government’s obesity strategy. It has been made clear by the reports of Public Health England, the McKinsey institute and others that there is no silver bullet. It is not just a question of passing a tax and getting the results that you wish to have. If a tax were to come in, it would be part of a whole range of other measures.

[Lord Rennard (LD)]

My Lords, does the Minister accept that the introduction of a modest sugary drinks tax should be a win-win policy in that, if it works, people would be deterred from consuming those drinks, switch to alternatives and lead healthier lifestyles, and, if it does not work, it would raise money much needed by the NHS to deal with the problems of the obesity and diabetes epidemics?

[Lord Prior of Brampton]

My Lords, as I said earlier, the Prime Minister and the Secretary of State for Health are thinking long and hard about what should be part of the obesity strategy. I am not sure that the noble Lord is right when he says that a modest tax would have much of an impact; it would have to be a significant tax to have a major impact on the consumption of sugary drinks.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, does the Minister agree that the campaign against tobacco and cigarettes has been particularly effective? It has been applied across all sectors of the economy with no differentiation between any particular sectors. He mentions that, this time round, we have to be concerned about how sugar might impact on particular parts of the community but, surely, we should make our approach similar to what we did with cigarettes and tobacco and we should apply it right across the board so that we all gain from the change.

[Lord Prior of Brampton]

My Lords, I think that the noble Lord is right; indeed, the Prime Minister has called this the new smoking. Obesity is as important to public health as smoking has been in the past. We have to build a much stronger case among the public at large before we can start to introduce the full range of tax and other measures that we have had for cigarettes and alcohol.

[Baroness Walmsley (LD)]

My Lords, has the Minister tried the Sugar Smart app on his mobile phone, which can be found on the Change4Life website? I tried the app this morning—it is very clever; it reads a barcode and tells you how much sugar is in a product. Unfortunately, however, I tried it on five sugary products and it did not have any of them in its database. Has this very good idea been under resourced?

[Lord Prior of Brampton]

My Lords, fortunately I, too, tried the Sugar Smart app this morning. Interestingly, 600,000 people have downloaded that app and the PHE Change4Life programme has had considerable success in raising awareness of the amount of sugar that you consume when you buy a product in the supermarket.

Housing and Planning Bill

Wednesday 13th January 2016 Lords Chamber

First Reading

15:36

The Bill was brought from the Commons, read a first time and ordered to be printed.

Strathclyde Review

Wednesday 13th January 2016 Lords Chamber

Motion to Take Note

15:36

Moved by

[Lord Strathclyde]

That this House takes note of Command Paper Cm 9177, Secondary legislation and the primacy of the House of Commons.

[Lord Strathclyde (Con)]

My Lords, I am flabbergasted by the number of Peers who have put their names down to speak this afternoon. For a moment I wondered whether they realised that we are discussing statutory instruments, then I thought that perhaps I had been more controversial in my review than I had originally intended. I think, however, that it is a sign of the importance that we attach as a House to the way that we pass legislation and to the powers that we have. All are, therefore, extremely welcome, perhaps none more so than the two maiden speeches that we will hear this afternoon, from the noble Baroness, Lady Bowles of Berkhamsted, and the noble Lord, Lord Darling of Roulanish. The noble Lord, Lord Darling, brings recent and genuine breadth of experience and knowledge from the House of Commons, which I know will be extremely valuable to this House. Another reason I welcome his words is that I think he was probably the Minister responsible for the introduction of tax credits in the first place. So long as he can keep his words uncontroversial, it will be interesting to hear what he has to say.

This debate goes to the heart of what we believe we are here to do—what we are for. It goes to the heart of the relationship between this House and the House of Commons and how we conduct our affairs, particularly given that the Government are, and always are, a minority in this House. There has been nothing new in that since 1945. I have heard some people say that the Government have overreacted in all this because it is the first time that a Conservative Government find themselves not in control of the House of Lords. I have some sympathy with why people say that. I do not think that it was always quite as easy as some people imagine when we had about 400 Peers in the House of Lords, mainly because they did not always turn up, but I understand the point that is being made. The answer to that, of course, is that the Government need to learn lessons about how to handle the House of Lords. However, it is also the first time that the Labour Party finds itself in a position of power and authority as the Opposition in this House and, therefore, a great responsibility falls upon its shoulders.

I also presume no greater qualification than anybody else to be leading this debate, but between 1994 and 2013 I was either the Chief Whip or Leader in opposition and in government. Therefore, I had a rare view and a period of study of the theory and practice of how we deal with secondary legislation in this House, particularly how statutory instruments are dealt with, and of the various conventions that guided us during that period. I am sorry that the noble Lord, Lord Hennessy, is not here, because it is what he might have said was a study in the emotional geography of the House, and in how it has changed over the last 20 years.

We need at least to understand and agree on the nature of this House. Without a government majority, it is a very strange beast. I was in opposition for 13 years, and there is always an obligation in opposition to know that there is often an opportunity—a requirement, in fact—to pull your punches: a self-denying ordinance. If not, the House can virtually always defeat the Government, and that way chaos lies and the patience of the House of Commons will be tried. You have only to look at the history of the 20th century. The House of Lords behaved foolishly in the run-up to the 1911 Parliament Act, and of course the 1949 second Parliament Act is a reminder of what happens when the Commons loses trust in the ability of the House of Lords to complement its work.

To avoid these problems, in the latter part of the 20th century we developed a whole series of practices that developed into conventions of the House, such as the one I contend existed on statutory instruments. There are others on reasonable time and, of course, the far better-known Salisbury/Addison convention on Second Reading amendments. I am delighted that one of the speakers this afternoon is none other than the noble Lord, Lord Cunningham of Felling. When he was in the House of Commons, he chaired a Joint Committee that did a comprehensive study about the conventions that govern the relationships between the two Houses.

[Noble Lords]

He was in the Lords.

[Lord Strathclyde]

Well, he had been in the House of Commons, my Lords, and therefore it would be fair to say that he had a pretty good view of the relationship from both sides of the argument. He was then a supporter of the Government; I am sure that he is still a supporter of the Labour Party. These things are important, because when you reread his work from 2006 you find that it is still fresh and interesting, and I urge noble Lords who are so interested to go back and have a look at it. Perhaps the Library could be persuaded to give a small extract from it on the conventions of the House of Lords to remind us.

Why conventions? Conventions require us to behave in ways that we would rather not. They require us to sign up to a series of obligations that constrain the way the powers of the House of Lords are used. To work, they need to be binding on those who agree them; and they are of course based on trust, because there is no legal basis for them.

My view is that the convention on statutory instruments has been fraying for some time, for a number of reasons. First, the House of Lords has changed substantially over the last 17 years. There is undoubtedly a new confidence in the House of Lords; I applaud that. There has been an influx of new Peers over many years. There has been a fundamental change from a more hereditary House to one that has been appointed, with people here on merit. On the other side of the equation, however, there has been a loss of collective memory and less understanding of the implications of what happens when we use our powers too aggressively. I tried to avoid that after 1999, when it should be remembered that nearly half the Conservative Party in the House of Lords was expelled by the Government. I do not want to give this Government any ideas, but it was quite effective at the time.

In 2000, I declared in a speech that the convention was now dead. I did so quite deliberately and pointedly, and we then went on to defeat the Government on some order to do with the London mayoral elections. Two things happened immediately afterwards. First, we agreed a process by which the offending order was put into legislation and, secondly, Lord Williams of Mostyn and I agreed that of course the convention should stay on and that it was not true that there was no need to continue the conventions from the old hereditary House into the new House that had been created after the 1999 Act. He understood, as a Leader of the House and leader of the Labour Party in this House, that it would help the House of Lords to work better to maintain this convention.

There is a similarity between that and what happened in 1968. Incidentally, one of the remarkable things about this House is that my noble friend Lord Trefgarne, who is going to speak in a few moments, was around in 1968 and voted on the Rhodesia orders, on which the House foolishly voted to vote down the orders to impose sanctions on Rhodesia. My noble friend Lord Carrington and Lord Shackleton, who were then the Leader of the Opposition and the Leader of the House, agreed that there should be a convention that this should never happen again—and nor did it, until 2000. In the 1970s came the start of the Motions to Regret, which were a sensible way forward. However, that agreement of my noble friend Lord Carrington and Lord Shackleton was a sensible and pragmatic understanding between two parties. They accepted that the Lords may have the power to reject but that they should not use it, because they did not have the authority to do so.

In 2007, the super-casino orders were also lost in the House of Lords. There was no Conservative Whip but it was interesting that 15 Labour Peers voted against the Government and there was a dramatic last-minute intervention by the then most reverend Primate the Archbishop of Canterbury. No more was heard of the super-casinos after that.

That brings us to tax credits, because what was so interesting about the votes that took place on them is that the House divided along entirely political lines. In fact, what was so unusual is that several senior Labour Peers voted to support the Government—not, I hasten to add, because they had any affection for what the Government were doing on tax credits but because they understood the constitutional implications of what was to take place and that a practice was going to change. In the Chamber itself, there was some confusion as to whether the delay Motions of the noble Baronesses, Lady Hollis and Lady Meacher, were in tune with the convention or broke it. At a stroke, there was then more than one interpretation of what the convention was; hence there has been a need for clarity and the Prime Minister, in his wisdom, invited me to conduct my review.

I should say at this point that I absolve completely, if any absolution is required, the two noble Baronesses in their Motions. I do not think for one moment that they were seeking to undermine the conventions that existed. In fact, they had rather cleverly and innovatively found a frame of words that technically did not break the convention. These were words that were neither fatal nor non-fatal; this is the cleverness that succeeded.

My view is that, in practice, whatever the technicalities, they proved fatal because they took the order hostage and would not pass it unless certain conditions were met. The noise from the opposition Benches exemplifies what has gone wrong, because if we cannot now agree what the convention is, we have to either re-establish it or find another way to try to get it right.

My review was greatly helped by an excellent team of officials from the Cabinet Office and a group of parliamentary advisers whose combined knowledge of Parliament and the passing of legislation is, I think, unparalleled. However, it was my review and my report, and I am entirely responsible for all the views held in it.

One issue that exercised us perhaps more than anything else was that of financial privilege. In my report, I discuss the old conventions between the two Houses on tax and supply, which go back to the 17th century—some argue to the 15th or the 14th century. Sometimes these things are not well understood these days. What is true is that financial privilege is very much a matter for another place, which, rightly, jealously guards its financial privilege. I have made recommendations that government and parliamentary authorities ought to discuss more, perhaps with the House of Commons Procedure Committee, exactly how to deal with financial privilege in future.

Of the three options that I have put forward, the first two are pretty self-explanatory. The first is to remove the House of Lords from debating and discussing statutory instruments, which I think would be a loss of scrutiny and an encouragement for the Government to use statutory instruments and secondary legislation even more. The second is somehow to rebuild the convention, but the convention can be rebuilt only if it comes from the House. Governments cannot impose conventions on the House. That is why I came to my third option, which is a genuine attempt to find a new procedure and give the House of Lords a new power, a very practical power that we have never had before. I also have to admit that there was nothing original in it. As part of my studies, I looked at previous debates and discussions. As early as 2001, in the great Royal Commission on Reform of the House of Lords chaired by my noble friend Lord Wakeham, he and his team of commissioners came up with a plan that looks remarkably similar to my option 3, and it has been echoed in other studies as well.

By having the ability to do what the House of Lords traditionally does so well, which is to ask the House of Commons to think again, we are doing what we have always done. To limit it to—if I may call it this—a ping without a pong, we are giving the House of Lords certain rights that it does not have at the moment. In other words, we have a conversation between the two Houses but the other House has the final say.

I should also like briefly to mention the scrutiny committees. One thing that became apparent very quickly was in what high regard the scrutiny committees of the House of Lords, chaired by my noble friends Lady Fookes and Lord Trefgarne, are held by government departments, Commons committees and outside commentators. There is no question in my mind that secondary legislation—statutory instruments—are an absolute requirement in the modern era, but it is very important that we have the right tools for scrutiny. We should question very strongly when framework Bills are put before us whether the requirements for ministerial powers are necessary.

Since the Statutory Instruments Act was passed in 1946, we have enjoyed unfettered powers to vote on secondary legislation. In this context, I asked myself these questions. First, is there a problem that now needs to be solved? I concluded that there was. Secondly, should the Lords retain this veto power? I concluded that the answer was no. Thirdly, is this the right time for a new power and a new procedure for the House of Lords to do what it does best? That is, to ask the House of Commons to think again, and the answer to that was yes. It is now up to your Lordships and the Government to decide not only whether these are the right questions but whether they are also the right answers to find a sustainable process that will serve the interest of Lords and Parliament alike over the next few years. I beg to move.

15:56

[Baroness Smith of Basildon (Lab)]

My Lords, I have greatly enjoyed listening to the noble Lord, Lord Strathclyde. At the outset, I thank him for his service to your Lordships House’ through this report. For years your Lordships have, without any recognition, fanfare or glare of publicity, dutifully and with great expertise considered and advised Governments on statutory instruments—or SIs as we affectionately call them. Rarely if ever has there been any interest outside Parliament. Now, with the Government having been asked to reconsider just one such SI, their massive over-reaction means that suddenly SIs are the hot and exciting political issue. In the language of social media, SIs are trending in UK politics. Part baffling and technical, part exotic with lots of promise, they have, some may say, even added a frisson of excitement to parliamentary proceedings. For that I thank the noble Lord.

More seriously, I also thank him for his report, and for the extraordinary speed with which it has been produced and the vigour with which he has sought to defend the Government’s exceptionally weak rationale for undertaking it. Like him, I look forward to this debate and welcome that there is such interest across the House from those speaking today. I am also pleased that we have two maiden speeches, from the noble Baroness, Lady Bowles and my noble friend Lord Darling, whom it is a great pleasure to welcome.

The noble Lord, Lord Strathclyde, is a jovial man of great integrity. He was a popular and effective fellow leader during the last Labour Government. Before he spoke today, I must admit that I was starting to worry that his memory was failing him. When I read his report, I thought that he had forgotten his speech, the date of which our memories may differ over—I think it was in 1999 but he says it was in 2000—in which he declared that the convention was dead. He disabused me of this when he spoke. So what has changed, now that he now sits on the government side of the Chamber? As I have said before, I think that there are two versions of the noble Lord, Lord Strathclyde: one for opposition, and now we have a shiny new one in government.

Across this House we are proud of our well-earned reputation for effective legislative scrutiny. It is what we do, and we do it well. As part of that, SIs are normally examined in Committee by Peers who have knowledge of or expertise in the issues. Any member of your Lordships’ House is entitled to ask questions or express an opinion in an SI committee. Very occasionally, there is a vote. Exceptionally this House may reject an SI. It last did so in 2012, on legal aid, and prior to that in 2007, under the noble Lord’s leadership. In his report the noble Lord recommended that the Lords’ power be limited to asking the other place to think again only. But SIs are sent to your Lordships’ House from the Government, not from the Commons, and it is perfectly proper for us to consider an SI first. Perhaps more importantly—and it is probably easier for me to admit this as a former Member of the other place—your Lordships’ House’s processes are more robust.

In the other place the Government ensure they have a majority on any SI committee and MPs are chosen by Whips. Other former MPs may recognise that the two most common questions asked by MPs selected to serve on an SI committee are, first, “Why me?” and secondly, “How long will it last?”. It is a rare Minister who welcomes Back-Bench interventions.

Of course, we should examine our procedures to see whether they remain effective, appropriate and relevant, but that should be in the interests of good governance and with respect to the role of your Lordships’ House, not for the advantage of any Government. If we are seeking to change how we scrutinise legislation, even in the narrow way outlined in the report by the noble Lord, Lord Strathclyde, we surely have to consider not just our own procedures but whether any change here should be undertaken alongside the creation of a more effective process in the other place.

We know that this report has been produced only because of our decisions to support two Motions on tax credits, one from the noble Baroness, Lady Meacher, and the other from my noble friend Lady Hollis. The result was that the Chancellor took that opportunity substantially to change his position. Indeed, perhaps Mr Osborne learnt a valuable lesson—that this House can be a Minister’s friend. As the noble Lord, Lord Forsyth, who will forgive me for quoting him, so perceptively pointed out recently in a Question to the Leader of the House,

“had this House passed the secondary legislation on tax credits, it would have had the immediate force of law and prevented the Chancellor of the Exchequer abandoning his proposals in his Autumn Statement”.—[Official Report, 3/12/15; col. 1199.]

He is quite right. We provided a breathing space for the Government to reconsider.

There was also the fatal Motion in the name of the noble Baroness, Lady Manzoor, which was rejected. The noble Baroness and I sought the same end, but we on these Benches chose to use the procedures of this House in a way that was both principled and sustainable. Even that was too much for this Government. Before any Motion had even been tabled, we had threats that the Government would pack the Lords with 150 new Conservative Peers or, more bizarrely, that this House would be suspended.

Challenge and scrutiny are not new. They were not invented by this Opposition. Indeed, unless the noble Lord’s is memory is failing, he will recall his time on this side of the House. He alluded to it in his comments today. As Opposition leader and Chief Whip, he could boast well over 500 government defeats, including 145 during the 2005-10 Labour Government and 245 during the 2001-05 Labour Government, which had an elected majority of 167. Those many defeats included a government Bill at Second Reading, two fatal SIs and a number of key national security measures that involved ping-pong late into the night. Those were hugely significant defeats for the Labour Government, so we understand that challenge and scrutiny are never easy for any Government or any Minister; but any changes must be in the public interest, provide for better legislation and be agreed by this House. They cannot be forced on Parliament by an Executive who fail to understand the role of and reason for effective challenge. As the Hansard Society points out in its excellent report, this is no way to undertake reform. An independent inquiry into the legislative process is required.

Every year around 1,000 SIs are debated here following consideration by our highly regarded Secondary Legislation Scrutiny Committee. The committee flags up the issues it knows we will take an interest in or where the Government have fallen short, and we welcome those reports as essential to proper scrutiny. So, given that hundreds of SIs have already gone through your Lordships’ House, is it really the case that the Government are failing to get their business through? Of course not. The reality is that we seldom use our powers to their limits, but that does not mean they should not exist. It means that this House is respectful of when it is appropriate to use them. That was recognised in the Cunningham report of 2006, and I look forward to the contribution from my noble friend Lord Cunningham later today.

The Government’s case for weakening Lords’ scrutiny of secondary legislation is feeble. It is an unnecessary solution to a fictitious problem. We have to ask: is the overreaction to the tax credits vote symptomatic of the Government’s attitude to scrutiny and challenge? We should not see this as a stand-alone report; rather, it should be seen alongside other legislation and proposals—for example, the lobbying Bill in the previous Parliament that restricted the ability of charities and other groups to campaign for their causes; new limits on freedom of information; and the Trade Union Bill, debated this week, which will strip the Labour Party of its funding, quite contrary to the balanced proposals from the Committee on Standards in Public Life. We have seen reports of Ministers being told to make increased use of statutory instruments to drive through legislation without proper scrutiny; and now we have the proposal to remove this House’s power to veto the same secondary legislation that the Government favour. It is hard not to see this as an authoritarian Executive waging war on the institutions that hold them to account. The Government are seeking to stifle debate, shut down opposition and block proper scrutiny. They are a Government who fear opposition and loathe challenge.

The noble Lord’s report is entitled Secondary Legislation and the Primacy of the House of Commons. This is not about the primacy of the House of Commons over your Lordships’ House; it is about the Executive seeking to brush this House aside. The noble Lord asks for responsible opposition. We provide that. What we seek is responsible government.

16:06

[Lord Wallace of Tankerness (LD)]

My Lords, I join the noble Baroness, Lady Smith of Basildon, in thanking the noble Lord, Lord Strathclyde, for setting out so clearly and comprehensively the preferred recommendation in his report, and indeed, during the preparation of his report, for meeting my party leader, Tim Farron, and myself to discuss his review. I also thank the noble Baroness the Leader of the House for giving the House an opportunity so swiftly to consider the important matter of the noble Lord’s report. Like previous speakers, I look forward to the maiden speeches during this debate from my noble friend Lady Bowles of Berkhamsted, whom I welcome to these Benches, and our long-standing and very much respected political colleague the noble Lord, Lord Darling of Roulanish.

It is fair to say that, with some noble and honourable exceptions, not many pulses start racing when you mention the subject of statutory instruments. As your Lordships’ House knows only too well, though, the reality is that SIs often contain very important and far-reaching policy detail. I am not going to rehearse all the events surrounding the tax credit regulations; suffice to say that it was a statutory instrument that brought forward policy changes that would have had a significant effect on millions of working people on low incomes. One might be forgiven for having thought that a policy proposal with such far-reaching consequences would have been brought before both Houses of Parliament as a Bill, as primary legislation, giving both Houses the opportunity to discuss the policy in detail at Second Reading, in Committee and on Report, and to propose amendments to it. Indeed, it was possible and conceivable that it could have been put in a Finance Bill, in which case this House would have had no locus at all.

However, that is not what the Government did. They proposed the change in a statutory instrument, for which the scrutiny process is considerably weaker. It is a matter of regret to me, as I am sure it is to other Members of your Lordships’ House, that because of how the Government approached this matter there was no opportunity for Members of this House, nor indeed for those in the House of Commons, to propose amendments to the policy, or for the two Houses to have a conversation and potentially reach an accommodation. As a consequence of the Government’s decision, this House took the only action that I believe it could take to make its voice heard: we voted to delay the implementation of the changes to tax credits until transition measures could be put in place.

On reflection, as the noble Baroness, Lady Smith, has indicated, the Government did of course change their mind, and that also led to the review that has been carried out by the noble Lord, Lord Strathclyde. His report has recommended that the House lose its important power to ultimately reject statutory instruments. This House has long recognised that, although some statutory instruments can be minor, others, such as the one on tax credits, contain significant policy issues, the consequences of which may have a deep and lasting effect on the people of this country.

As a consequence of the Jellicoe report in 1992, this House radically reformed the way it looks at statutory instruments by setting up the Delegated Powers and Regulatory Reform Committee, and the excellent work that that committee carries out has been complemented by the Secondary Legislation Scrutiny Committee. It is disappointing that the House of Commons does not seem to have availed itself of the opportunity to update its procedures in a similar way and to enhance its scrutiny of secondary legislation. As Mr Matthew Parris said in the Times on 19 December:

“MPs need procedures for early whistleblowing when dodgy secondary powers are sneaked into draft legislation”.

The consequence is that, in the vast majority of cases, meaningful scrutiny of statutory instruments is carried out by your Lordships’ House. That is why we on these Benches support and fully endorse the Motion that was proposed by Lord Simon of Glaisdale and carried by this House in 1994, and which is now enshrined in the Companion to the Standing Orders:

“That this House affirms its unfettered freedom to vote on any subordinate legislation submitted for its consideration”.

This long-cherished freedom means that, if a parent Act agrees that a delegation is appropriate, this House is entitled to discuss, scrutinise and, yes—in exceptional circumstances—reject statutory instruments. It is an incontrovertible truth that this House rarely rejects statutory instruments. This has only happened now in six instances since the 1946 legislation. We can safely say that six occasions in 70 years means it is a rare event.

My party believes that both Houses of Parliament should be examining better ways to work together to achieve more comprehensive, more informed and more effective scrutiny of the Government’s legislation and their actions. We continue to reject the notion that any Government who achieve a majority in the Commons should have the absolute power to prosecute their business without the burden of proper checks and balances, particularly as voter turnout declines and Governments are elected by a smaller and smaller share of the vote. We believe that a second Chamber, however it is constituted, should not be a mere echo of the House of Commons, and we are interested in ways to strengthen the role of Parliament as a whole, not to convert the House of Lords from an effective revising Chamber into something more akin to an impotent debating society.

I firmly believe that there is a strong case for enhanced parliamentary scrutiny of secondary legislation. This is particularly important when the primary legislation introduced by the Government is a so-called skeleton Bill, with statutory instruments flowing from it which contain provisions that are more suitable for primary legislation. If Governments make increasing use of skeleton Bills, it stands to reason that the statutory instruments stemming from them should be afforded much closer scrutiny.

To that end, my party submitted formal written evidence to the noble Lord, Lord Strathclyde, proposing two different mechanisms by which this House—and the House of Commons—could propose amendments to statutory instruments. We suggested that a controversial SI could be “parked” while a Motion is moved with the wording of the SI embedded in it. Amendments could then be moved and voted upon, at the end of which there may be an amended Motion for the Government to reflect upon. An alternative would be to amend the Government’s Motion to approve statutory instruments to suggest that specific provisions of the SI are removed or replaced with alternative wording. We believe that either mechanism would allow the House of Commons to think again and would in fact reduce the number of incidents where this House withholds its approval of a statutory instrument.

This is in contrast to the recommendations from the noble Lord, Lord Strathclyde, which I fear could diminish the ability of Parliament to hold the Government to account, and, as the noble Lord admits in his report, might lead to an increase in the instances where the House withholds its approval of a statutory instrument. Will the noble Baroness the Leader of the House give some assurance that the Government will not only consider the report of the noble Lord, Lord Strathclyde, but also examine the option of bringing forward procedures which would allow statutory instruments to be amended—or at least proposals to be made as to how they might better be amended—as part of their consideration of the review, and that they will do so within the appropriate committees of this House?

We maintain that it is an important right of both Houses of Parliament to vote on, and occasionally reject, statutory instruments. We do not believe that this House should be required to give up its power of veto when this is such a rare occurrence. To do so would change the arrangements agreed by both Houses following the report of the Joint Committee on Conventions in 2006, to which the noble Lord, Lord Strathclyde, referred. I am somewhat disappointed that the report proposes such a drastic step without suggesting any innovative way to ensure that the effective scrutiny of statutory instruments continues.

On some specifics, I am further concerned by the suggestion that there should be no fixed period for the Government to reflect on concerns raised by this House before pushing a statutory instrument through the Commons for a second time. The noble Lord’s reasoning is that,

“it might in a particular case overrun the time specified in the draft or instrument for its commencement … The Commons needs the ability to override the Lords rapidly in cases of urgency and the extent to which decisions of the House of Lords should be fatal to a particular instrument should not depend on arbitrary factors, such as the commencement arrangements for the instrument”.

Does not the same logic apply to primary legislation, where ultimately this House has the ability to delay a Bill for a year? This particular contention undermines further the ability of the two Houses of Parliament to have a conversation about the policy proposals put forward by the Government. We frequently see in primary legislation that, through a dialogue between both Houses, good sense allows Parliament to reach an accommodation. Instead, what is proposed here could potentially allow a Government to ignore concerns raised by your Lordships’ House. I do not believe that is in the best interests of scrutiny.

Furthermore, I draw attention to page 20 of the noble Lord’s report, where he suggests that removing the ability of your Lordships’ House to ultimately reject a statutory instrument could actually lead to an increase in the number of occasions where your Lordships’ House would approve such a Motion. The report says:

“If that were to happen, there are a number of ways in which it might be dealt with. The House of Commons might need to find ways to expedite its override procedures, which would have the effect of reducing the consideration given to the Lords rejections or it might lead to demands to proceed with option 1”.

That is, the House of Lords might lose its ability to scrutinise secondary legislation entirely. I am deeply concerned that this paragraph contradicts the intention on a previous page of the report that a Government should give “serious reconsideration” to the instrument in question and that they should do this both “seriously and well”.

In fairness to the noble Lord, Lord Strathclyde, he did mention this again today, if only in passing, but I am also disappointed about the problem I have already raised about skeleton Bills. One might say that his report is rather skeletal as to how the matter might be addressed. The noble Lord does not address the issue of a Government using statutory instruments as a means of implementing new policy, rather than putting that new policy before Parliament as primary legislation.

This is not a matter simply a matter for the Prime Minister and the Government: it is, as I think has been recognised by us having this debate today, a matter for Parliament. It is about the relationship between the two Houses, the role of Parliament as a whole in providing effective scrutiny, and the burden of proper checks and balances on the Executive. We on these Benches believe that it would be appropriate for Parliament to deliberate on any further discussion, and it may well be that the Joint Committee could be reconstituted. Whether the noble Lord, Lord Cunningham, wishes to chair it again is another matter, but he proved to be a very capable chair the last time that he did so.

As less and less detail appears on the face of Bills and statutory instruments become more complex and more important, they should be accorded more scrutiny, not less. I regret to say that, alongside the points made by the noble Baroness, Lady Smith, I can do no better than quote from Monday evening’s contribution by the noble Lord, Lord Kerslake, on the Trade Union Bill. Referring to the provisions of the Bill, he said:

“When this is taken with the other measures being put forward by the Government—the curtailing of the powers of this House, the moves to water down the Freedom of Information Act and the reduction in so-called Short money to support opposition parties—there appears to me to be a worryingly authoritarian streak emerging from this Government, who are uncomfortable with scrutiny and challenge”.—[Official Report, 11/1/16; col.79.]

Finally, the noble Lord, Lord Strathclyde, has admitted, as echoed by the noble Baroness, Lady Smith, that he did once pronounce the convention dead. I think he did it in a lecture in 1999, and surely the noble Lord does not want to give it the Lazarus effect. We await with interest to see how the Government will respond.

16:18

[Lord Wakeham (Con)]

My Lords, we have had three powerful speeches so far. A great deal of what the leaders of the two opposition parties said was about criticising what went on in the House of Commons. I have some considerable sympathy with that but want to restrict my remarks to what I consider to be the role of the House of Lords.

The issue of this debate has not arisen particularly because of recent events, but has been a long time coming. As the noble and learned Lord, Lord Wallace, mentioned, there was a very interesting debate in 1994, when the wonderful former law officer Lord Simon of Glaisdale set out with clarity that the House of Lords had absolute, unfettered power to reject secondary legislation. He was followed by my successor as Leader of the House, my noble friend Lord Salisbury, who accepted Lord Simon’s proposition but then set out clearly the way that conventions had influenced how the House operated. It is a debate well worth rereading, but in the end it demonstrated to me that the conventions were not powerful or clear enough to be an acceptable way to run matters in the House as it is now constituted. It may well have been when the House was mainly hereditary but not now in a House with so much greater political wisdom and experience.

That was one reason why, in my royal commission report some 15 years ago—when I was an opposition Member but was supported by all parties at the time—I recommended that we changed the way that secondary legislation was dealt with in this House and made a proposal not very dissimilar from option 3 proposed by my noble friend Lord Strathclyde.

Secondary legislation is here to stay. It is important to remember the advantages which government, Parliament and society derive from the existence of delegated powers. Ministers and other statutory authorities are able to legislate by secondary legislation on detailed points within the limits of the delegated power in the original Act. In consequence, Bills can be restricted to their essentials, Parliament can concentrate on the key principles and Acts will be better drafted and understood. There is less need for subsequent corrective amendments to primary legislation. Secondary legislation can be amended or replaced much more easily than primary legislation.

In my royal commission report, we said that the number of statutory instruments had increased substantially over the last 100 years, but my noble friend Lord Strathclyde reports that the number has stabilised since then. Nevertheless, it is important that they are dealt with effectively. The proposal before us is to give the House of Lords not less but more influence over secondary legislation. In my view, it is ironical that the present powers of the House of Lords are more absolute over secondary legislation than they are over primary legislation, but we have got by because of the conventions, which, as I indicated, some of us felt were at breaking point even 15 years ago.

Over the years, all Governments have got secondary legislation passed in the House of Lords, even when the House of Lords would have preferred to ask the House of Commons to think again. My noble friend’s proposal would change all that and allow the House to ask the Commons and the Government to think again, and thus give the House a revising function over secondary legislation that it at present lacks by contrast with its role in relation to primary legislation. The proposal before us is to give the House of Lords more power and influence over secondary legislation, which in the right circumstances they should use.

These proposals are entirely consistent with our constitutional practice. The Lords’ role is to review and, if not satisfied, to ask the House of Commons to think again. The Commons’ role is to think again but in the end to decide. Recent events indicate that it is a course that can be effective. However, our democratic system requires the House of Commons to prevail.

16:23

[Baroness Hollis of Heigham (Lab)]

My Lords, I very much welcome this debate and look forward to the maiden speeches that we will enjoy later, particularly that of my noble friend Lord Darling, my former boss at the time when legislation on tax credits was introduced in this House.

Why have this review? Is it because of tax credits? As I think has been conceded, that was a delay Motion and, happily, the Commons did indeed reconsider, as this House wished. But even if it had been fatal, which it was not, it would not have been a constitutional threat, as is acknowledged, because between 2000 and 2010 the Conservative Opposition, under the noble Lord, Lord Strathclyde, ran 11 fatal Motions against the Government. Five of them were led by former Ministers, including a former Leader of the House, and two of them were successful. No one had a tantrum; no one called for a review; no one proposed to legislate on the subject; no one threatened to create 100 Peers. The only difference now, as my noble friend Lady Smith said, is that the then Opposition are now in government.

Was the tax credits issue, none the less, a constitutional outrage because it dealt with financial matters? No, that will not run either. Most of what our work involves concerns finance, whether it is defence, transport, childcare or social security. The Government know perfectly well that SIs are not financially privileged and do not need to be if they are used, as they should be, for fairly minor matters according to our conventions. So in my view, it was not the tax credits vote that strained our conventions but the Government in the first place using a statutory instrument for a highly controversial measure that would take millions of pounds away from millions of families, despite the Prime Minister’s election promises to the contrary.

With tax credits, an SI was used not to apply the original policy intent of the Bill, which is what SIs are for, but to subvert it. As has already been said, that task should have been done by primary legislation, if that was the Government’s intent. Having chosen an SI route, which cannot carry financial privilege and to do what SIs were never intended to do, the Government then claimed retrospectively that financial matters come under some sort of informal financial privilege, which, even though it had not been sought, they wanted us to respect as though it had been—when it had not. That is indeed a straining of conventions.

Why then do we have a review? Is it petulance from the noble Lord, Lord Strathclyde? Surely not. But the Government do seem to feel hard done by, victimised, with their 30.5% of the vote. As Ministers, we had 31% of the vote. We did not whinge, despite huge majorities down the other end; we worked for our votes the hard way. No, the issue that really matters is not the tax credit vote, as the noble Lords, Lord Strathclyde and Lord Wakeham, have acknowledged. The issue is the expanding role of SIs and their lack of scrutiny. Thanks to the noble Lord, Lord Strathclyde, this debate allows us to discuss this more fully, to which I now wish to return.

More and more, we have framework legislation—for social security, childcare, the Cities and Devolution Bill—where key decisions are to be carried by SIs beyond reach of amendment, sometimes drawn down months, even years, later. That role was never intended: nor, I believe, is it appropriate. Bills are now being future-proofed for future Secretaries of State with open-ended SIs that place future policy development beyond effective scrutiny.

The noble Lord, Lord Strathclyde, calls for greater clarity and certainty surrounding SIs. That is nice—for the Government. But what is really needed is effective scrutiny. I doubt that the Commons can do it, and I think that we can and that we should. Only we have the admirable delegated powers and scrutiny committees, and your Lordships have relevant expertise. We spend twice as much time as the Commons on debating SIs, even though we all know that we are wasting our time. As the Hansard Society says, we have the interest, appetite and time to do effective scrutiny.

So why do we not? We know why. The noble Lord, Lord Strathclyde, is right: we should, but do not usually, get draft SIs during the process of the Bill so that we can consider them. We cannot, as a result, amend SIs that are passed and brought to us subsequently. Motions to Regret deplore and are ignored; fatal debates debate and destroy. However, in certain circumstances, either may be appropriate.

However, in 65 years, the Lords has rejected only five of the 169,000 statutory instruments before it. In 35 years, the Commons has not rejected one. As the noble Lord, Lord Goodlad, said in his report on page 147, why bring SIs to Parliament at all if parliamentary scrutiny makes no difference? The noble Lord, Lord Wakeham, called for a suspensory veto to “force”—which he italicises—the Government and the House of Commons to take our concerns seriously. They were strong words from the noble Lord and he was absolutely right. Every review of Lords practices has called for a power of delay requiring the Government to think again while ensuring that the final say rests with the Commons.

Would option 3 in the report of the noble Lord, Lord Strathclyde, do that? It could, but only if it specified, as the noble and learned Lord, Lord Wallace, said, the period of delay—say 30 sitting days—before the SI returns to the Commons. Otherwise we could pass a delay Motion and the Government could take it back to the Commons, without reflection, with irritation and within 48 hours. The noble Lord, Lord Strathclyde, assures us that a Government would never behave like that. You think? He writes that the Commons may need to override the Lords rapidly in cases of urgency. If something is indeed urgent—such as national security —would we really delay? It seems deeply implausible and, in any case, the usual channels would sort it.

He then fears that the specified delay might run past the proposed implementation date. That is pretty feeble, too. With the Library’s help, I checked the 60 or so statutory instruments we have had so far in this Session. As we know, they have three stages: they are laid, debated and implemented. I agree that with perhaps four of those 61 there was less than six weeks between laying the SI and its implementation date—for example, the Northern Irish election order last July and the Asian banks immunity order last October—but most of the rest were laid three to six months before their implementation date. There is adequate time for a delay Motion if those SIs are debated in good time. What struck me was the length of time, often three months or more, between laying and debating them. However, that can be sorted by effective departmental and business management; it is not a pretext for denying us and the public effective scrutiny.

The only real argument against a specified delay period is the one the review will not admit to: that it would be highly inconvenient for the Government. Yes, it is meant to be. I would not expect a delay Motion to happen very often—perhaps half a dozen times a year—but the fact that it might—

[Viscount Younger of Leckie (Con)]

My Lords, I am sorry to interrupt but the noble Baroness might be aware that the guide time for speeches is six minutes.

[Baroness Hollis of Heigham]

It is an advisory time and I am coming to the end.

I would not expect a delay Motion to happen very often—perhaps six times a year—but the fact that it might would transform the value of our scrutiny; it would transform the care with which departments bring SIs to this House. The Lords would be doing exactly what it should by asking the Government and the other place to think again and then respecting their decision, as we should, when they have done so. So I hope that we can move down that path but with appropriate specified delay periods.

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, perhaps I may interrupt before the next noble Lord rises to speak and add to the comment of my noble friend. We put in the guidance time because we know that the House will wish to rise at around 10 pm. We can do that only if everybody respects the speaking time. So I urge noble Lords to co-operate. When I get to my bit at the end I shall try to be brief but I know that the House will also want me to be fulsome in my reply.

16:34

[Lord McNally (LD)]

My Lords, I was intrigued by the very first sentence of the executive summary in the paper of the noble Lord, Lord Strathclyde, which states:

“Since 1968, a convention has existed that the House of Lords should not reject statutory instruments (or should do so only rarely)”.

To my mind, that is exactly what has happened over the past 50 years. The Motions that caused the establishment of the Strathclyde report, and even the noble Lord, Lord Strathclyde, himself has accepted this, were not in any way breaches of the convention in terms of rejection.

I am taking part today because it is 20 years since I first took my seat in the House, and therefore I thought it would be useful to contribute to what the noble Lord, Lord Strathclyde, referred to as the collective memory. During that time, I have spent nine years as Leader of the Liberal Democrats, three very pleasant years as the Deputy Leader of the House under the noble Lord, Lord Strathclyde, and three and a half years as a Minister. I have never made any secret of my view that although this House has many admirable qualities and does some extremely useful work, in its present form it is an affront to democracy. I regret the opportunities missed more fully to reform the House in 1999 and, as the noble Lord, Lord Wakeham, knows, I regret the missed opportunity of the Wakeham commission in 2000. However, we must not be seduced today by the argument that because the recommendation of the noble Lord, Lord Strathclyde, is close to one of the proposals made by the noble Lord, Lord Wakeham, it has greater weight and authority. The Wakeham proposals were, as I am sure the noble Lord would agree, a carefully balanced package of powers and responsibilities, not a single measure designed to weaken and undermine the authority of this House. I may want to see this House reformed, but I have no wish to see it become Mr Cameron’s poodle, and a neutered poodle at that.

One of the most useful experiences I have had in the past 20 years was to serve on the Cunningham committee, and I am delighted to see that the noble Lord, Lord Cunningham, is here today. It is worth remembering that the impetus for the setting-up of the Cunningham committee was that the then Labour Government thought that the House of Lords was getting too big for its boots. This is not a new phenomenon. Every former Leader of the House will be able to show you the scars of being hauled over to No. 10 to explain some defeat or other in the Lords. I well remember having to prepare, as Leader of the Liberal Democrats, a tribute to the late Lord Belstead, who had been a Leader of the House under Mrs Thatcher. I thought I would find something nice to say about him by looking at the Thatcher memoirs. The only reference I could find was to a handbagging he had received from Mrs T following a defeat in the House of Lords. That is the nature of the relationship. I freely confess to my own impatience as a Minister when the House shredded some carefully constructed inter- departmental compromise or spotted a piece of legislative corner-cutting which had escaped the scrutiny, or lack of it, of the other place.

I do not believe that the Lords over-reached themselves in the matter before us, but the whole furore has exposed the need to look at the increasing use by the Government of skeleton Bills backed by secondary legislation, as well as the increasing tendency of the clerks in the other place to affix financial privilege to an amendment. I remember the surprise and relief in the Ministry of Justice when some mainly legal amendments to one of our Bills suddenly had financial privilege attached to them in the other place. We all breathed a sigh of relief that they did not come back to the Lords.

It is 40 years since the late Lord Hailsham warned against a Parliament without checks and balances becoming an elective dictatorship. That warning is even more pertinent today, when the flaws in the first past the post system provide us with a Government with 100% of the power and only 36% of the vote. We are now living with our past failures to reform both the House and the voting system. In those circumstances, it is essential that this House should retain the right to say no. It is the paragraph of the Cunningham committee report that I fought hardest to have included, and that report was endorsed by both Houses. Let us be clear: that Cunningham report is the baseline; it is not Salisbury/ Addison, which was never endorsed by other than the two political parties, and never by these Benches. I urge this House not to abandon its right to say no: use it prudently, yes; use it sparingly, yes; but retain it we must.

I can only say to the Conservative Benches, on which there are some very wise heads, that the best service they can provide is gently to tell the Chancellor and the Prime Minister that the best way to avoid the hubris which overtakes all long-serving Ministers is to retain the safety catch which accident rather than design has left here in the House of Lords to protect us from that elective dictatorship which Lord Hailsham so wisely warned us against.

16:40

[Baroness Hayman (CB)]

My Lords, the noble Lord, Lord Strathclyde, was asked to review in haste. He did so and he produced a review that is an enormously valuable starting point for a more comprehensive approach to how we improve the scrutiny of secondary legislation not only by this House but by the other place as well. When he introduced this debate, the noble Lord said that it took us to the heart of what we are here for as parliamentarians. I agree with that. We have a responsibility to look very carefully at the proposals before us and to approach them, I hope, in a way that looks forward rather than backwards. But it is impossible completely to disregard the circumstances that gave rise to the review and to allow a mythology to grow up that this House had overstretched itself and had broken with convention.

I find it extraordinary that when everyone agrees that the convention is that only in the most exceptional circumstances should the House vote down an SI, the Government bring into the argument the fact that this was an exceptional SI. It was to do with a major plank of government policy. It had huge financial implications. They defeat their own argument by arguing its exceptionality. What I think was exceptional was that the House found a constructive way forward on this occasion, which was not to kill stone dead.

When there was a murmur of disagreement as the noble Lord, Lord Strathclyde, said that we had killed off the tax credits legislation, he said that it illustrated that there was not clarity about the convention. It did not illustrate that at all. People were arguing with whether the vote in this House killed off the tax credits legislation. It did not. The SI had still been through the House of Commons. It could have been brought back to this House in exactly the same form. It could have been incorporated in a short, sharp Bill that was a finance Bill that never came to this House. None of those things happened. What happened was that the Government thought again. They thought that there was some sense in what was being said here and changed their policies. That was a good example of what this House is for.

We have to look at the proposals in the report of the noble Lord, Lord Strathclyde, and, building on the work that has been done by the noble Lord, Lord Wakeham, and others, we have to ask ourselves whether there is a way of effectively asking the House of Commons to think again. Effectively asking it to think again is not as easy as simply having a delay Motion. It will not think again at all on a large proportion of statutory instruments that have not been thought about at all in the House of Commons—those that come here first. It will not think again effectively if that means that the Government can bring forward a vote on a deferred Division within 48 hours of it coming back from this House with no debate.

If the House is to be asked to give up a very precious, very rarely used freedom to kill off an SI, it should not sell that freedom for a mess of pottage. It should do so only when it is absolutely convinced that the scrutiny that Parliament as a whole would thereafter be able to give to statutory instruments would be improved dramatically. That is the test to which I would put these proposals.

I worry about legislation. It will not do what the Government want it to do unless it is retrospective, and I do not like retrospective legislation. It will not do what the Government want it to do if we do not recognise that the reason, in the words of the noble Lord, Lord Strathclyde, that the convention had become “frayed” was because, over the years, use of statutory instruments, culminating with the tax credits regulations, has gone way beyond their original purpose.

16:46

[The Lord Bishop of Rochester]

My Lords, I, like other Members of your Lordships’ House, am grateful to the noble Lord, Lord Strathclyde, for the work that he has undertaken and for giving rise to what is clearly an important debate about the role of this House, which probably goes much wider than some of the specifics in front of us today. By way of introduction, I will add a little correction to the text of the noble Lord’s report. He ascribes to my right reverend friend the Bishop of Southwark the tabling of an amendment that was not, in fact, put to a vote. Although they would not argue over it, it was actually my right reverend friend the Bishop of Portsmouth who tabled that unvoted on amendment, which was, as it happened, an amendment that asked the Government to consider again—precisely the kind of amendment under consideration here.

I am conscious that in speaking in this debate there are many in this Chamber who have many years more experience than I do in these matters of constitution and convention, as has already been amply illustrated. However, there are one or two things I would like to offer the debate.

If we are to change the present convention, perhaps we need some criteria against which we assess any changes that we might make. Three might be: would any change enhance or diminish the ability of your Lordships’ House to scrutinise legislation and thereby hold the Government to account; would it improve or worsen relationships between this House and the other place; and what might the impact be on the reputation and status of your Lordships’ House? As a relatively new Member of this House I understand its primary function to be that of a revising Chamber, thereby holding the Executive to account and occasionally, it has to be said, saving the Government from themselves. If we can achieve that, it will be a hugely valuable contribution.

One of the difficulties with SIs, as has already been indicated, is that our capacity to revise them is severely restricted. Indeed, we cannot revise them; there is no power to amend. Therefore, the increased use of SIs presents this House with a problem in fulfilling its function as a revising Chamber because we are left with a blunt instrument of yes or no. That seems to be part of the problem we face. I am encouraged that there are some helpful suggestions in the noble Lord’s report and elsewhere in the conversation. Establishing some clarity over the respective roles of the Houses on finance Bills and other financial matters will clearly be helpful. Indeed, it will be very helpful if the proposed review by the Procedure Committee established some guidance on that. A strong encouragement to government to rein in the excessive use of secondary legislation and put more detail in Bills, as stated in the noble Lord’s report, is clearly important too. If we are to establish or re-establish relationships of trust, we need to be confident that that will take place as it is a necessary ingredient in balancing the roles of the two respective Houses.

It seems to me that beneath the detail and the circumstances of this debate there is an assumption that trust between this place and the other place has been lost to some degree, and that we are being asked to consider surrendering part of our self-regulation relating to our role within that relationship of trust. The suggestion, or implication, of the proposals in the noble Lord’s report is that we have gone beyond the point where the present self-regulatory framework can be allowed to continue, and that something formally laid down in statute may be required in place of the current convention. If that is the case, there is a sadness to it. Even if we do find ourselves going down the line of changing the arrangements, I encourage noble Lords to consider also the underlying question of the level of trust that exists between the two Chambers and between government and Parliament.

My most reverend friend the Archbishop of Canterbury is currently in another other place, where he is trying to deal with the re-establishment of relationships of trust within the worldwide Anglian communion. Therefore, there is experience of these kinds of processes. If we are to pursue changes, I encourage noble Lords, through whatever channels are available to them, to look also at the wider culture of the relationship between this House and the other place to see whether we can find ways of improving that and building on the existing depth of trust because whatever we put in place will work only if that environment of trust is in place.

For my own part, I would regret your Lordships’ House no longer having the power to veto SIs but accept that the introduction of another way of tackling them may prove necessary. I hope that might be combined with a consideration of the possibility of amending them. That could enhance the whole process, enabling SIs to be improved and their purpose to be more fully achieved. I encourage us to have that conversation so that, whatever our powers may be, we can fulfil them responsibly within a rebuilt and re-established spirit of trust.

16:53

[Lord Trefgarne (Con)]

My Lords, in rising to intervene briefly in this debate, I start by explaining that I am chairman of your Lordships’ Secondary Legislation Scrutiny Committee, which has the task of looking at virtually all the secondary legislation coming before Parliament and reporting, as necessary, to your Lordships. We see about 1,200 or so such items each year, but, happily, only need to trouble your Lordships with a very much smaller number. Your Lordships’ Select Committee intends to study my noble friend’s review, taking into account your Lordships’ views expressed today, and will no doubt submit a report in due course. I must therefore emphasise that everything I say today reflects my personal view only.

I turn now to the events of 26 October and subsequently. While I accept that in theory—and in theory only—your Lordships’ decision on that day was not formally fatal, fatality was, indeed, the practical effect and Ministers and the other place were entitled to take that view. Furthermore, there was never any doubt that that would be their reaction.

There are two reasons why I think that your Lordships were mistaken on that day. First, there is a long-standing convention that secondary legislation is rejected only in the most exceptional circumstances—a mere political disagreement is not sufficient. When your Lordships came to express your opinion in the Division Lobby, not a single Conservative supported the amendments. The matter was pure politics and nothing else. The second argument in relation to the tax credits order was the plain and simple fact that it dealt with essentially financial matters, for which your Lordships have long accepted House of Commons primacy. For these reasons, I consider that your Lordships took a mistaken decision on 26 October and I am, therefore, not surprised that my right honourable friend the Prime Minister asked my noble friend Lord Strathclyde to conduct his review, for which we are grateful to him.

I turn now to my noble friend’s conclusions set out in Cm 9177, in which he offers three alternatives. I deal first with his first possible change, namely primary legislation to remove your Lordships from all future consideration of secondary legislation, leaving it to be entirely a matter for the other place. While I can see that that would be a possible reaction, it would be, I believe, a mistake. The fact is that your Lordships have always, through relevant Select Committees, offered much more detailed and constructive consideration of secondary legislation than has ever been possible in the other place. It would be a great pity if all that was brought to an end. It is, I suggest, highly unlikely that the other place would find it possible to create a mechanism for such detailed scrutiny.

My noble friend’s second alternative is for your Lordships simply to rewrite the existing Standing Orders relating to secondary legislation and hope that they would stand the test of time. The snag with that arrangement, as my noble friend points out, is that Standing Orders can of course be changed by a simple resolution, and I can well see that the other place would regard this as an inadequate response.

We are, therefore, left with my noble friend’s third alternative, namely setting out a new procedure in statute providing for your Lordships to invite those in the other place to think again when a disagreement arises and allowing them to insist, if they so decide, on primacy. As my noble friend suggests, this would be a not dissimilar process to the one set out in the Parliament Acts relating to primary legislation. It is the way forward that I personally support.

I end by saying that I recognise that there is room for more than one respectable point of view on this matter. My view is the one that I have described, which I hope will in due course find favour. I look forward to the two maiden speeches that we shall hear in a little while.

16:57

[Lord Grocott (Lab)]

My Lords, the noble Lord, Lord Strathclyde, presented his report in his characteristically emollient way. I do not think we should be too taken in by the gentle way in which he presented it, because what he is suggesting is a substantial constitutional change that will transfer power to the Executive from Parliament and will alter the relationship between the two Houses. I do not object to constitutional change but the responsibility for arguing for it must come clearly from those proposing it and we should review it with all the skills of forensic examination that are at our disposal.

I want to look at the two key arguments that the Government and their supporters—or, I should say, the noble Lord, Lord Strathclyde, and his supporters—have advanced on the need for this constitutional change. The first is that, somehow, the decision on 26 October had considerable impact on our primary concern, the primacy of the House of Commons, and threatened that primacy. The title of the noble Lord’s review even refers to the primacy of the House of Commons. But it did not. If the Commons or the Government had decided that they did not like the decision that we made on 26 October, they had several simple options open to them. One would have been, as the noble Baroness, Lady Hayman, said, to resubmit a statutory instrument in a slightly modified form, which this House would have then had to consider. It would probably have been like ping-pong but it would, sooner or later, have been sorted out. Alternatively, the Government could have brought in a simple Bill and timetabled it strictly, and no doubt it would have been designated a Bill over which this House should have no control. They easily had the capacity to remedy and to enshrine the principle of primacy.

The other argument advanced, including by the Leader of the House in her presentation on the report, is that the decision on 26 October somehow threatened the constitutional convention about the Lords not throwing out statutory instruments; she went so far as to say that it was “broken”. I took the precaution of asking one or two Questions of her. First, I asked her how often since the Second World War the convention had been broken. The reply came back that it was on five occasions, in 1968, 2000, 2007, 2012 and 2015; I remark in passing that three of those were when Labour Governments were in office. So we find that in 71 years since the Second World War, on the Leader of the House’s own acknowledgement, the convention has been challenged on five occasions.

I asked the Leader of the House how often the convention had been broken on those five occasions when the Lords threw out a statutory instrument that had come from the Commons, and the answer is once—the last time. I am conceding the Government’s whole case now and saying that the amendment passed here could have been interpreted as a fatal amendment, but even on those grounds—the Government’s own terms—only once in 71 years has the convention been threatened, and now they propose to change the constitution to deal with it. By the way, during the whole of that time there were 41 years of Tory Government, and they suffered two defeats on statutory instruments. If that is the rate of defeat, I do not think it is enough to get in a lather about. So why are the Government determined to go ahead when, quite plainly, on their two principal arguments, the primacy of the Commons is intact and the convention is intact?

I cannot resist doing this; I apologise in advance to the noble Lord, Lord Strathclyde, but he had this to say about secondary legislation and statutory instruments in a debate on the Cunningham committee:

“although many have argued … that a power to reject might be replaced by a power to delay, or even a power to amend, the practical difficulties are great … I think that we need … more legislative restraint by government with fewer skeleton Bills backed by reams of regulation … Sometimes, as the committee acknowledged, rejection may be needed—very rarely—but the circumstances must be exceptional and extremely rare”.—[Official Report, 16/1/07; col. 632.]

They are exceptional and extremely rare, on any reading of what has happened.

So why is this change proposed? It is part of a wider concern of the Government: they do not like it when they are defeated. No Governments like it when they are defeated but all I can say is, “Join the club”. I know what it is like to be defeated. In the five and three-quarter years of this Government, they have suffered 123 defeats. In the five and three-quarter years with which I am particularly familiar, between 2002 and 2008, the Government suffered 325 defeats. I know the response but, even allowing for the undoubted ineptness of the Government Chief Whip at the time, 325 defeats against 123 hardly gives this Government grounds for their persecution complex. They have a very easy time in relation to the House of Lords most of the time. In the 115 years of my dear old party’s being around, only for eight of them has it even been the biggest party in the House of Lords, despite years of Labour Governments. If you do the maths, in 107 of the last 115 years the House of Lords has had the Conservative Party as its biggest party.

The ball is really in the Prime Minister’s court. He has the power and can do what he likes. He can cut our powers, if he brings in legislation and is able to get it through. He can create large numbers of Conservative Peers, as he has already been doing, but if he wants to carry on then no one can stop him. He can even abolish us if that is his wont, since he has a Conservative majority—although he might find it tricky. But I very much hope that he will go away, calm down and decide that, “This isn’t broke, so don’t fix it”. Governments do not like being defeated and I believe that there are enough people in the House of Commons who do not like this unnecessary encroachment of executive power. I certainly hope that should any firm proposal come to cut our powers in this House, enough people here will be certain enough about our responsibilities to ensure that it is rejected.

17:05

[Baroness Bowles of Berkhamsted (LD) (Maiden Speech)]

My Lords, I rise for the first time, deeply conscious of the honour that it is to serve in your Lordships’ House. I am grateful for the kind way in which noble Lords have received me, for the friendliness of all staff and for the elegant and discreet way in which the attendants and doorkeepers have steered me from uncertain manoeuvres. I thank the noble Lords who introduced me, my noble friends Lord McNally and Lady Falkner of Margravine, and all those who have enriched my life and learning, without whom I would not be here.

I hope to contribute to various deliberations drawing upon my experience from both strands of my career. The first strand was that of scientist, engineer and patent attorney for over 25 years, running a professional business and immersed in leading-edge technology. The second strand was nine years in the European Parliament, culminating in five years as chair of the Economic and Monetary Affairs Committee, facing a vast and profound agenda due to the financial and eurozone crisis.

Many noble Lords have long-standing experience of the conventions of your Lordships’ House, so I speak now with great respect. None the less, secondary or delegated legislation exists in other legislatures and I have been deeply involved in the establishment and scrutiny of European secondary legislation, while keeping a watchful eye on that of the United States. My somewhat unoriginal observation is that secondary legislation works well until you hit a problem: then it works rather badly and does not fail-safe.

Financial services legislation is highly delegated in most countries and Europe now has delegated Acts and regulatory technical standards, the latter also involving the European supervisory authorities. Scrutiny is by the European Parliament and the Council of member states; each can veto independently, but not amend. From that well-populated setting, and with your Lordships’ indulgence, I will elaborate three experiences that resonate with the wider debate around delegated legislation.

The first is that of overarching constraint. Europe has the ECJ’s Meroni constraint, which limits delegation of discretionary power. Despite debate, constraint has had useful benefits. It reduces the likelihood of secondary legislation doing extraordinarily large or unexpected things. But perhaps even more importantly, it fosters vigilance on how to frame the delegated power with objective, legislation-specific guidance: an important aid for transparency, benefiting individuals and businesses as well. In the context of the review of the noble Lord, Lord Strathclyde, I venture that greater vigilance over the framing of delegated power is a natural response to other curtailments, even if the drafting of that guidance will rarely seem as exciting as other amendments or may even upset the odd Sir Humphrey.

The second experience is the inability to amend. On the technical standards for the European Markets Infrastructure Regulation, EMIR, a committee stage motion to reject was carried. Only a couple of parts in a complex, interconnected proposal were wrong, but they were important parts affecting small and medium-sized business, and it also went against the grain of prior understandings. A subsequent plenary rejection would have meant deadlines missed and various embarrassments to be felt all round, so a clarifying interpretation was obtained from the European Commission and, although it was not as good as proper correction, the fact is that without corrective opportunity, secondary legislation risks being, if not second-rate, at least second-best legislation. I also extracted a commitment to consultation for future proceedings—effectively, a correction in advance opportunity—but it is still thought that limited corrective amendment has a place.

The third experience is of a scrutinising Chamber feeling conflicted, which also came to light in our EMIR adventure. The Council privately agreed about the identified problems, but it emerged that various member states were embarrassed to vote against technical standards that had been signed off by their national regulatory authorities—which is a story in itself. However, they were glad that the European Parliament could take responsibility for the remedy. Of course, the constructs are different, but this shows the usefulness of independent veto powers for separate Chambers.

Europe has travelled in the direction of fuller framing of delegated power and, in contrast, I cannot disguise consternation about the extent and scope of some of our delegated legislation. What I have read and heard in your Lordships’ House on this subject, as in all things, is thoughtful and has raised similar remedies to those that I favour. I do not see a single silver bullet, but constraint, guidance and corrective amendments are tools for avoiding secondary legislation becoming second-best.

17:12

[Lord Hannay of Chiswick (CB)]

My Lords, it is a very great pleasure to have been placed on the list after the noble Baroness, Lady Bowles of Berkhamsted. As a member of your Lordships’ EU Select Committee for a number of years, I watched with fascination and admiration the work that she did in the European Parliament. The work that she did then was inestimable. The Ancient Mariner was always said to have stopped only one in three, but the noble Baroness quite often stopped two or even three in three of the dafter ideas that came out of the Commission or the other members of her own Assembly. We all hold her a debt of gratitude for the way in which, as chair of that committee, she handled the large amount of legislation that came forward after the crisis of 2008.

In my view, she has in her maiden speech this afternoon demonstrated very clearly the sort of skills that she will bring to this House and her knowledge of financial regulation, which is remarkable—and that subject occasionally comes before us. I am sure that her plea to consider enhancing this House’s power to send an amendment back to the other place—which we do not have at the moment—is very wise. So I look forward very much to her future work in this House.

Turning to the matter we are debating, I suggest that we should not focus too much in today’s debate on the events which triggered the Strathclyde review last October. Panicky and opportunistic its origins may have been, but, in truth, a review of the way we handle secondary legislation was long overdue. The present arrangements are hard to sustain and hard to defend. Of course, one might have hoped for some recognition by the Government that this House, by the action it took last October, enabled the Government to avoid falling into a trap similar to the one which their predecessors fell into over the poll tax in the 1980s—but I am not holding my breath for that recognition.

The noble Lord’s review is admirable: short, crisp and persuasive. Of the three options for reform that he considers, I am sure that he is right to have excluded the idea of simply cutting this House out of any role in secondary legislation. That would have been to make a mockery of the very existence of this House as a scrutinising and revising Chamber. To place the House, as the other two options do, in a position that is analogous to that which we have on primary legislation—being able to propose amendments and ask the other place to think again—must be the right way to move.

The loss of the so-called “nuclear option”, which we hardly ever dared to use, is no particularly serious cause for regret. Incidentally, I have doubts about the noble Lord’s speculation that we would not often make use of the new powers—the “non-nuclear options”—which he suggests that we should have: I suspect that he may find that that will not be borne out by events, but time alone will tell. As for the choice between a new system based on primary legislation or one based on convention, I share the noble Lord’s view that the former is clearly preferable. Surely we do not want to risk falling back again into muddle and dispute.

Putting the preferred option into primary legislation will not be without its complexities. There is the issue of time factors that has been referred to. I agree that the Government will need to be able to return a measure again, overriding this House’s view, within the same Session of Parliament—which is a difference from the Parliament Acts of 1911 and 1949. It is important to note that the noble Lord’s review was silent on whether the measure to be returned by the House of Commons could be an amended version of the original statutory instrument, perhaps taking account of the views expressed by this House when it sent the matter back. Such a possibility is sensible and desirable, but it is not what is envisaged in the Parliament Act, which requires that the overriding measure be identical to the one that was first rejected. I look forward to hearing the Government’s response on that point.

There is also the tricky issue of financial privilege, which the noble Lord managed to duck. That, too, has given rise to plenty of controversy, most recently when it was invoked, unnecessarily in fact, in the case of the EU Referendum Act last month. The least that needs to be done is to introduce a bit more proportionality and transparency into the system’s operation. Invoking financial privilege over a sum that represents expenditure of a vanishingly small percentage of overall government expenditure, as happened in December, risks bringing every single piece of legislation and amendment that this House proposes within the ambit of financial privilege. That would not be a defensible or proper use of the power and I hope that the Government will now consider how in future to bring about a more proportionate and transparent approach to those determinations.

In conclusion, I congratulate the noble Lord on his review and hope that the Government will move ahead and introduce primary legislation on the basis of his preferred option. That could well result in a more effective House, but one operating clearly within the spirit and parameters of the 1911 Act.

17:19

[Lord Jopling (Con)]

My Lords, I have put my name down to speak this afternoon with a background as a former business manager and a former instigator of procedural changes in another place. Quite frankly, it is time that we faced up to the problem of statutory instruments. We have argued about it for years. It is not a new issue. We have had references this afternoon to Lord Simon of Glaisdale and to the reports by my noble friends Lord Wakeham and Lord Goodlad. We need to get on with it. The noble Lord, Lord Hannay, who has just spoken, made exactly the same point.

I shall begin by making one or two general points. In my experience, some Ministers are sometimes tempted to cut corners in getting their policies agreed by Parliament. It has nothing to do with the matter before us, but I remember cases where Ministers produced huge draft Bills to the Cabinet committee on legislation and the Cabinet committee said, “Oh no you don’t. You cut that down”, and made them take a third of it out, and that seemed all right. Then, to the fury of the business managers, one found that they put all the things they had taken out back as Schedules to the Bill at Committee stage. One has to put up with the enormous appetite of some Ministers to legislate. That was an abuse.

It is also an abuse to cut corners and try to enact policies through statutory instruments rather than through primary legislation. I deplore that trend. I have never been able to convince myself that the tax credit issue should not have been done through primary legislation. I commend the last few words of my noble friend Lord Strathclyde’s executive summary, where he says that,

“it would be appropriate for the Government to take steps to ensure that Bills contain an appropriate level of detail and that too much is not left for implementation by statutory instrument”.

I believe very strongly in that. I also cannot get my mind around why the tax credit issue came here at all, because it seemed to me that it was a financial issue that we should never have been asked to discuss.

In his report, my noble friend gives us three options. I am very strongly opposed to the first option of taking the consideration of statutory instruments away from this House. That would be a travesty of the bicameral basis of our parliamentary procedures. For the first three or four years, I was a member of the Select Committee on the Merits of Statutory Instruments where, as my noble friend Lord Trefgarne pointed out, we looked at more than 1,000 statutory instruments a year. That consideration of legislation in the form of statutory instruments is hugely important and thorough and is far better than what is carried out down the corridor in another place. Indeed, I was one of the instigators in that committee of the recommendation to reject the draft Gambling (Geographical Distribution of Casino Premises Licences) Order 2007, which this House, quite rightly, kicked out.

I also do not like option 2 because it does not take us much further than the current contentious situation. It seems to be a recipe for continued argument.

I see much more merit in option 3. It preserves the right of the Commons to ride over us. I cannot see the logic of this House being able to delay primary legislation whereas on the other hand it can veto statutory instruments; that seems to me to be the wrong way round, and the two ought to be comparable together. My old friend, the noble Lord, Lord McNally, who I think is no longer here, said that we must preserve the right to say no. Option 3 maintains that right. It is an extension of the Wakeham all-party proposals as well as the similar Goodlad all-party ideas. I suggest that the Government should listen to our views, have this report debated in another place and bring legislation that develops the option 3 proposal. The Leader of the Opposition said in her opening speech that the tax credit event gave the Government the opportunity to think again. So does option 3, and I believe that that is the way we should go.

17:26

[Baroness Andrews (Lab)]

My Lords, I sought to speak in this debate for one specific reason. It has been my privilege in recent years to be a member of the Delegated Powers and Regulatory Reform Committee and the Secondary Legislation Scrutiny Committee, as well as of the Goodlad committee. Noble Lords may wonder what I have done to deserve such cruel and unusual punishment, but it has been a genuine privilege to see the way that the House does scrutiny.

I am speaking personally now. I am concerned about anything that might reduce the legitimate use of our powers of scrutiny in this House and diminish the power of Parliament. I believe that the weight of opportunistic changes to our political system, some of which has been rehearsed in the House, has reached a tipping point in terms of executive power and away from Parliament and, with respect, the noble Lord’s review sits at the heart of that. Far from having a quarrel with the other place, we are here today making a defence of Parliament as a whole and its ability to hold the Government to account—a Government who, as many noble Lords have already said, find it difficult to face losing votes. Sometimes they seem to behave as if it were 1796, not 2016. I advise the party opposite to remember that there is an ineluctable law in politics that no Government have an endless shelf life.

Talking of hubris, despite the elegant way in which the noble Lord, Lord Strathclyde, delivered his speech, in 1999 he declared that the convention that this House did not vote against statutory instruments was dead. In 2005, he conceded that it had had a lively revival and was rather robust, but now, awkwardly, the Government have required him to declare it conveniently dead after all, and have charged him with finding a way of resuscitating the patient. The problem is of course that the patient is not actually dead; as we have heard today, it is sitting up and having a hearty breakfast. Unfortunately, that means that the noble Lord’s review started on a false note with a false premise. Since there is no evidence of the excessive use of statutory instruments being rejected in this House, no case can be made for the abolition of our power to veto.

Having been invited to address the wrong question, the noble Lord, not surprisingly, came up with the wrong answer. It appears that we are the problem, with our apparent “failure” to understand the conventions. We are also told that the convention has been fraying for many years; indeed, to quote from the report, it,

“has been stretched to breaking point”.

I know that the noble Lord has a fine sense of irony—we saw it in operation many times when he was Leader of this House—but to say that it is stretching the convention to breaking point for the House of Lords to reject five statutory instruments in 65 years, and four in the past 16 years, itself stretches credibility to breaking point. What is frayed and stretched is the other important and very long-standing convention, the distinction between primary and secondary legislation, which has already been alluded to. As Erskine May itself puts it, the purpose of secondary legislation is to deal with the application of detail. The fact that secondary legislation is increasingly not about detail at all but about the scope, the impact and the implementation of primary legislation and making substantial variations to it is the source of the crisis that this Government have manufactured, and is exemplified by the tax credits regulations.

This is evident in the raft of Bills, some already cited by noble Lords, which have been described by the DPRRC in one instance as simple mission statements. Most notoriously, perhaps, there is the Childcare Bill, which led that committee to say that the delegated powers,

“go to the very heart”,

of the Bill. My experience on both the scrutiny committees of this House leaves me in no doubt that the Government find us a thorough nuisance. Time and again in the past two Sessions the Government have been reprimanded by both committees for excessive and inappropriate use of delegation. We have had to refer back to this House secondary legislation which contains substantial policy changes with substantial impacts—for example, the draft hunting regulations, immigration changes, and universal credit. In this Session alone, 32 SIs have had to be corrected by government after serious flaws were identified and 16 have had to be withdrawn completely.

If we add to that ministerial failure to provide impact statements, or Explanatory Memoranda which do what they are supposed to do, a picture emerges of a Government who not only deliberately exploit secondary legislation and reduce parliamentary scrutiny in the process but are resentful of proper scrutiny. If we were to lose our exceptional power to reject SIs, Parliament would lose a legitimate brake on government excess. However, it would also reduce the credibility of the scrutiny process as a whole and open the gate to greater abuse. What is needed, which the noble Baroness, Lady Hayman, anticipated, is a wholesale review of secondary legislation to remind Ministers of their public duty to be open and transparent about policy and legislation, to be accountable, and to respect—in fact, invite—the role of scrutiny.

Instead, we have the three options before us. We are invited to focus on option 3, which involves a new procedure to be set out in statute which would allow the Lords to invite the Commons to think again when a disagreement exists and to assert its primacy. Sadly, this option raises more questions than it resolves. Where is the timetable which will allow the House of Commons to think again? Where are the provisions for legitimate delay? Where is the guarantee that the House of Commons—either as a whole, or in Committee —would be able to show that it had indeed thought again, by debate, or by vote? Where, in short, is this additional provision for scrutiny which would compensate the House for the loss of our veto?

Many commentators are already alarmed by what this implies. We have heard the Hansard Society quoted. Meg Russell of the Constitution Unit says:

“If a Lords defeat did not trigger a debate, and a full-blown vote, peers could find themselves overridden by MPs who had no clue what they were voting on”.

The reality is that we could end up with the worst of all worlds: having lost important competence in this House but with no extra scrutiny in place.

Finally, when the noble Baroness winds up I hope that she will give some indication of the issues raised by the proposal to legislate for these changes. The legislation, we are cheerfully told by the noble Lord, is likely to be short. That will not stop it being problematic. It will be extremely difficult. Nothing like this will have been done before. I know that the noble Baroness is aware of the pitfalls. I detect a certain wistfulness in the noble Lord’s tone when he says that when the conventions go, Parliament and the people it serves will miss their value. Indeed they will, and they will miss nothing more than the power of this House to have a veto over a Government who sometimes act far too hastily, which is when we save them from themselves.

17:33

[Lord Empey (UUP)]

My Lords, following the general election and the opening of the new Parliament, it is fair to say that a number of us looked forward to a period in which reform of this House was not on everybody’s lips but instead we had an opportunity to get on with business, scrutinise legislation and do the job which we are sent here to do.

Sadly, as the summer progressed, the Sewel scandal had a huge impact on the standing of this House, and of course another major controversy erupted in the autumn over the tax credits issue. A number of noble Lords have already questioned whether that piece of secondary legislation should have been brought to your Lordships’ House in the first place. Maybe, on reflection, there could have been another way, but the temptation in this case to stop such a controversial measure was irresistible.

My main concern about option 3 is, in part, shared by the noble Lord, Lord Strathclyde, himself. In the final paragraph on page 6 of his review, the noble Lord expresses the concern that I share, when he uses the words,

“Finally, in order to mitigate against excessive use of the new process which I have proposed under option 3”,

et cetera. My anxiety is that the temptation will be to ping-pong piece after piece of secondary legislation down the corridor and say, as the scorpion did to the frog, “It’s what we do”. It could lead to further confrontations rather than fewer.

Perhaps we need to look at other measures. These could include, as mentioned by many Members this afternoon, those around the question of secondary legislation. Anybody who has ever had any role in a formal legislative process, either nationally or regionally, will know that Ministers all like statutory instruments. They are easy and quick, and difficult to amend. You can achieve quite a lot with them. Of course there is now future-proofing of legislation—I have no doubt that the draftspeople will deny it, but I do not accept that—where provision is made so that Bills can be subsequently amended by statutory instrument. The temptation is undoubtedly there.

I sincerely hope that we can look at some kind of change. However, although it may certainly be required, I am anxious that we will escalate the number of confrontations rather than reduce them. The temptation will be to send any statutory instrument back to the other place to amend it. It would open up a huge degree of additional traffic between the two Houses, which would not necessarily be helpful.

I am of course a very strong believer in the primacy of the other place, but I also believe that, to do our job properly, this House needs to be able to express a view in order to improve legislation and cause the Government to rethink their position from time to time. However, where we may be starting to go wrong is that this House should not allow itself to become the national Opposition to Her Majesty’s Government, which I fear is the temptation to which a number of Members of your Lordships’ House have yielded in recent months. That is not helpful to the balance in this Parliament.

There is growing hostility towards us among some Members in the other place, which is concerning. This is in part as a result of confrontation coming so soon after the Government secured a mandate. I fear that there might be far less support expressed for this House in the Commons today than there was when the Clegg proposals were being pushed through a few years ago. It would be churlish not to acknowledge the work done by the noble Lords, Lord Cormack and Lord Norton of Louth, and their very effective group in trying to get a proper balance in the relationship. Knee-jerk reactions and changes always carry risks.

The fundamental weakness in all this is the unco-ordinated nature of the changes occurring to our unwritten constitution at so many different levels. Devolution to the home nations is evolving rapidly, with no thought given to accountability to Parliament; major changes are taking place at local level, with the new council and mayoral arrangements being introduced; and, finally, we saw last night another attempt to resolve the West Lothian question, with EVEL being used for the first time in the other place. Only a coherent and comprehensive examination of all our constitutional arrangements taken together will provide the platform for a fully thought-through constitution for the 21st century. That must involve consideration of what role this House plays.

What we are discussing today is an understandable attempt to resolve what is seen as a challenge to the primacy of the other place, and I do not believe there is real support in this House for any challenge. That is the weakness that is so apparent in the way successive Governments have chosen to handle the constitution. I sincerely hope that we can promote a more joined-up approach and that the noble Baroness the Leader of the House will address this matter during her contribution later in the debate. I thank the noble Lord, Lord Strathclyde, for the work he has done, but I believe we need further refinement, perhaps around option 3 or variations thereof. Otherwise, I fear we will increase, at a dramatic rate, the number of issues which we will be sending back to the other place.

17:39

[Lord Naseby (Con)]

My Lords, it may help if I explain my background as Chairman of Ways and Means in the other place. First, it was a post that I held when the Government of the day had a small majority rather similar to that of the present Government. Secondly, we took through the Maastricht treaty, which has probably been the most controversial piece of legislation since the war, with four clauses, 500 amendments and four all-night sittings. Our guidance then was not convention; it was that wonderful bible Erskine May, and, when quoted from the chair, every Member accepted the ruling.

Furthermore, there was a secondary role for the position of Chairman of Ways and Means and it related to SIs. They were handled primarily by Speaker’s Counsel and the clerks, but when an SI was controversial I was shown it and, if I thought it really was controversial, I shared that with the Leader of the House. If we both thought it was controversial, the Secretary of State was called in and the matter was discussed in some depth. I suspect that that procedure has gone by the board. I cannot believe that it happens today, otherwise the SI that arrived here would never have been in the state in which it was, and it most definitely should not have ever got to this House. I say in parenthesis that I suggested to my party that the whole thing should be pulled.

Of course, there is the other side of the coin. We all knew that there was a convention in this House. We all knew that this was a major issue with £4 billion at stake. A number of my former colleagues from the other place sitting on the opposition Benches did not vote for the Motion before the House that night—they saw how important it was that that particular convention was not abused. However, we are perhaps all politicians and the temptation was for the Opposition to give the Government a bloody nose, which they certainly did. We have to recognise that that is what happened.

My noble friend Lord Strathclyde was asked to look at this issue. He has produced a report with three recommendations. I reject the first but think that both the second and third are possible. If option 3 has more certainty, I should like to know what safeguards there are to ensure that the other place does think again and does not just nod through a measure, producing exactly the same result. There needs to be some clarity there. I also commend my noble friend on the last paragraph on page 6 of his report. It says in patent terms, “You must look again at what used to happen to SIs and clearly is not happening today”.

However, I am sorry to say that I question Appendix C to the report. I have worked with the Library and have carried out research using legislation.gov.uk. That shows that in recent years, on a calendar basis, the volume of SIs has increased—from around 2,000 in 2009 up to nearly 3,500 in 2014, and, looking at the graph in the appendix, it seems that in 2015 the record will go even higher. It is not just a matter of the numbers. When I used to look at SIs, they consisted of just two pages; now, on average they consist of four pages and some are considerably longer. Added to that is the size of an average Bill today, which I would guess is at least double what it used to be in the early 1990s.

From that research I am now much clearer about the issues. I think the word “convention” has to go. Of course, we have our Companion. I have it here, and it is a wonderful document, but the other place has Erskine May. Erskine May has 1,097 pages and our Companion has just 296, including the contents and index. But the really interesting point is that there are 432 pages in Erskine May of direct relevance to and with mention of your Lordships’ House. I suggest to my noble colleagues that the time has come for a complete review of the Companion, including the parts that are in Erskine May, and for putting the whole lot together. Colleagues may ask what that would really achieve. It would give this House, in our bicameral Parliament, a framework similar to the Commons but geared to our needs and to the needs highlighted by Erskine May on the law, privileges, proceedings and usage of Parliament as relevant to your Lordships’ House.

In conclusion, unless we take such action ourselves along these principles, I foresee ever-increasing arguments and diktats from Governments of the day. Surely it is wiser to pre-empt such action and produce our own comprehensive equivalent of Erskine May.

17:46

[Baroness Williams of Crosby (LD)]

My Lords, I ask the indulgence of the House for a moment to say just a word about my friend and colleague who gave her maiden speech a few moments ago. There is no doubt that my noble friend Lady Bowles of Berkhamsted is one of the most remarkable economists, with incredible knowledge of very complex financial matters. She has already been a great asset to the European Parliament, and anybody who follows its work will know that, time and again, she has intervened in order to establish a more sensible, more rational, more thoughtful and less bureaucratic approach by the Commission to many of the things that it does within Europe. I believe that she will make a major contribution to our discussions over the next few weeks and months with regard to the referendum and its outcome, one for which the House will be extremely grateful. She made in her maiden speech a compact, short but extremely wise contribution to what will be a future discussion perhaps even more than to the present discussion today.

One of the subtle things about the noble Lord, Lord Strathclyde, is that he is very good at hinting at what he wants to say without shouting about it; he just leaves it to sink in so that people understand the complexities of what he is trying to get across. What I am saying in another kind of language is that if one reads his review carefully, one will see that it points to the weaknesses in the whole structure that we have for how we deal with statutory instruments.

Let me take two examples from his compact, well-worded and thoughtful review. In it he points out, as the noble Lord, Lord Jopling, pointed out, that there is a real problem with the sheer scale of statutory instruments. He does not say that in so many words, but he makes it quite clear that in making his own proposals work, he hopes that there would be a much greater recognition by government of the limitations of and obvious flaws in relying on statutory instruments as a way to get across complex legislation. In that context, I have to say that, frankly, I do not think that the tax credit system was one that lent itself to having a statutory instrument explain it rather than the proper procedure of primary legislation. The House has already indicated the ways in which that could have been done.

I believe that the House sometimes sells itself short. It is more than just a revising Chamber. It is a Chamber that, on many occasions, has reiterated the fundamental foundations of what it is to live in a constitutional democracy. In that context, to deal with legislation on issues as sensitive as the level of income of people already hard-pressed as a result of the economic crisis is not appropriate for a statutory instrument. It is much more appropriate for what the Lords does well: to bear in mind the balances and challenges that make it possible for a democracy to survive. Although it is not itself democratic, as my noble friend Lord McNally pointed out, the Lords is often very conscious and sensitive about the constitutional issues that have to be taken into account.

Among those constitutional issues, the noble Lord, Lord Strathclyde, pointed to what he calls the conventions. Therefore, I think that the acceptability of his third option, which has certain attractions, would be much enhanced if he was able to show that there is a balance, in constitutional terms, for it. That balance needs to be of two things, as he himself has hinted. The first one I have mentioned already: a real study of whether statutory instruments are becoming out of control in terms of the sheer weight and volume of them—over 3,000 a year in years that do not have an election within them.

The second one, as he also made clear in his review, is the deep and profound undesirability of statutory instruments replacing primary legislation. That is why he also very sensibly said that primary legislation must be enriched by being clearer and by spelling out in more detail what the implications of it are; and that the steady retreat of Governments of all kinds from primary legislation which is detailed, sensibly set out and clear into statutory instruments is a substantial threat to the best workings of parliamentary democracy.

I am inclined to agree with my noble friend Lord McNally that we would be unwise to give up at this stage the concept of losing a veto over a statutory instrument, rare though its operation is, because we do not yet have the reassurance that we would need that the Government on their own side would be responsible for changing the ways in which legislation is drawn up in order to enable this House to continue to do its valuable and essential work, not only of scrutiny but, as I have tried to say more widely, a genuine commitment to the principles on which democracies depend.

I wish to say two other things before I conclude. A more appropriate approach would have been for the two Chambers’ Leaders to meet and discuss whether this matter could not have been handled much more responsibly and consensually. That would have been good not only for the House of Lords but immensely good for the House of Commons. It would have enabled us to say what the House of Commons’ responsibilities were in relation to any change in the current actions and powers of this House. To have the reassurance that we need, that means that they would properly respond to the new responsibilities vested upon them. However, some of recent history does not suggest that one can be sure of that.

I have great sympathy with what the noble Lord, Lord Jopling, and the noble Baroness, Lady Hayman, had to say about the way that this issue should have been handled more properly—not by the Government, despite the brave attempts of the noble Lord, Lord Strathclyde, to find a sensible and thoughtful response, but rather through the parliamentary system and our constitutional structures. I would advocate strongly that we do not in future allow any Government of any colour to determine what should be the powers of this House.

17:52

[Lord Cormack (Con)]

My Lords, it is always a privilege to follow the noble Baroness, Lady Williams. She brings great experience and wisdom to all the debates in which she takes part. I echo what she said about her noble friend Lady Bowles, who made a notable maiden speech. I also echo her perceptive and truly appreciative remarks about my noble friend Lord Strathclyde and the work he has put into what is certainly a thoughtful and constructive report. However, it is not the last word. I am grateful to the Leader of the House for ensuring that this is a “take note” debate and that we can all reflect on what is said in it.

We have to begin by recognising that this debate has come about because of a paradox. Rarely has there been a more popular vote in the country, as far as the House of Lords is concerned, than the one that took place on 26 October; and rarely has there been a greater change of policy on the part of a Government as a result of the vote. I recognise that, even though I voted enthusiastically in the other Lobby. The Labour constitutionalists, as I call them, and noble Lords in other parts of the House thought that this was a step too far. However, because of the enormous financial cost involved, it was understandable that the Government reacted—but I believe that they overreacted.

It is very interesting that wherever you sit in this House you are conditioned by the position of your party. Position lends difference to the view. I well remember that in another place I fulminated—sometimes from the Front Bench as well as from the Back—against some of the changes of procedure to the House of Commons introduced by the Labour Government. I deplored Programme Motions; I deplored the proliferation of what we called Henry VIII clauses on skeleton Bills; I deplored deferred Divisions; and I very much hoped that when my party came into government those things would go. I even said from the Front Bench that they would go—but of course I was not then in a position to do anything about it. But some of those who had made promises became members of, first, the coalition Government and then the Conservative Government and felt it inconvenient to carry them out because all of those changes were helpful to the Executive. This is really what it is all about.

The noble Lord, Lord Grocott, referred to this in a whimsical way. I almost thought that he was going to quote Corporal Jones from “Dad’s Army”—“They don’t like it up ‘em”. The fact is that Governments do not “like it up ‘em”—which is why we are in this position today.

Having said all that, we do have a real problem: what should this House do about, and what should its powers be over, important legislation with financial implications—secondary legislation particularly in this case? My noble friend Lord Strathclyde has pointed the way. It is important that we follow some of his suggestions but address them in a manner in which the House of Commons, the other place, has to learn to behave: with more robust independence when it comes to secondary legislation.

I hope that as a result of my noble friend’s report there will be a realisation on the part of government that skeleton Bills should become a thing of the past. Governments are not there to create Christmas trees on which Ministers then hang balls. I hope, therefore, that following today’s “take note” debate there will be a discussion in government. I also hope that a Joint Committee of both Houses will be established to look at the whole issue of secondary legislation and that it will take on board the wise advice given a few moments ago by my noble friend Lord Naseby. We cannot stay where we are—we have to have clarification—but we have to preserve the position of this House, to which I am passionately devoted, to have a real role in legislation while never subverting the superiority, in legislative terms, of the other place, the elected House.

So let us go forward from here having taken note of this sagacious and helpful report. Let us have a Joint Committee of both Houses; let the Government realise that they were largely responsible for the debacle on 26 October. My position then was very like that of my noble friend Lord Lawson, who said that he was determined to vote as he did—as we both did—but that he had considerable sympathy with the points being made by those who were going to vote in another direction. We have had our lesson, I hope. Let us now move forward constructively so that this House’s position in our country’s legislature is properly recognised and confirmed, so that the supremacy of the Commons is not challenged but legislation, both primary and secondary, is thoroughly scrutinised.

17:59

[Lord Kakkar (CB)]

My Lords, I join in thanking the noble Lord, Lord Strathclyde, for the thoughtful way in which he introduced his review, and indeed for the very thoughtful approach he has taken to it. I believe that a review was necessary because there is a difference of opinion both within your Lordships’ House and between this House and another place over the role that this Chamber should play in the scrutiny and disposition of secondary legislation. A convention can exist only if there is consensus. On this occasion, it is clear that the consensus has started to break down and, therefore, the matter must be addressed. The noble Lord’s review is a starting point, as indeed is this important debate to take note.

We need to recognise that the debate on 26 October raised an interesting and important issue. My understanding previously had been that with regard to statutory instruments, the role of your Lordships’ House was to scrutinise them, but that our response was binary; that is, either to accept them or to reject them. A new, potentially helpful concept was introduced that the House should be able to consider a statutory instrument and provide an opportunity for the Government to think again in a meaningful and real way, and indeed that is what happened on that occasion. The third proposal in the report of the noble Lord, Lord Strathclyde, seems to provide that option in a more definite way, and if one reviews the debate of 26 October, many arguments were made. I was particularly taken by that of the noble Lord, Lord Rooker, when he said at col. 1015 that the powers of your Lordships’ House with regard to secondary legislation were “too drastic”. There must be a possibility for your Lordships, in looking at the development and evolution of conventions, to consider seriously the proposal made by the noble Lord, Lord Strathclyde.

In his review, the noble Lord also makes an important point about the need to look in addition at the way that primary legislation is drafted and, in particular, at the use of delegated powers if this new convention is established for your Lordships’ House. This is important, particularly in terms of the use of delegated powers that may have constitutional ramifications. We have only to look to the previous Session of Parliament and the passage of the Fixed-term Parliaments Act 2011 to note that there are delegated powers in that Act which provide for the extension of the life of this or any Parliament by two months on the basis of a statutory instrument. Two months is a short period, but there is an important principle here with regard to the constitutional implications of that statutory instrument. Therefore, any criteria that are developed with regard to the drafting of primary legislation and the appropriate use of delegated powers must make special reference to those with a constitutional implication.

There is then the question of the many Acts of Parliament currently on the statute book that have delegated powers, some of which may also be used for constitutional purposes. I should like to ask the Leader of the House how the Government would go about providing an opportunity for an understanding of the implications, with regard to existing legislation and delegated powers, in this specific area of constitutional importance so that we can be certain that our important role as guardians, to some extent, of our constitution can be maintained. The Parliament Act 1911 made specific reference to an ongoing and important role of your Lordships’ House at that time to ensure that the life of a Parliament could not be extended beyond five years. That provides the context of our constitutional responsibilities and therefore the need, in taking forward these proposals, to ensure that there are no unintended consequences that serve badly our country, our fellow citizens and this Parliament in the future.

18:04

[Baroness Fookes (Con)]

My Lords, I rise to take part in this debate from the perspective of the chairman of the Delegated Powers and Regulatory Reform Committee. I am speaking for myself because I have an extremely active and assiduous committee and I would not dream of speaking on its behalf, so anything I say is my own view alone.

I have come to value very much the work that we do in a quiet way, which is certainly of no interest whatever to the media. But we perform a valuable role and therefore option 1 in my noble friend’s report fills me with horror. That is because there is nothing in the House of Commons as it is currently constituted which would replicate the work we do.

For those who may not be so familiar with the committee’s work, perhaps I may be allowed to explain that we look at each Bill as it comes through, usually between Second Reading and Committee. We have the help of an assiduous team of very experienced lawyers and we look, first, to see whether the delegated power is appropriate—in other words, is it delegated legislation that ought to be on the face of the Bill?—and, secondly, whether the degree of parliamentary scrutiny is appropriate for that particular work.

We are guided, hopefully, by a departmental memorandum which is supposed to explain why the powers have been taken and the justification for them. I have to say that the quality of these memoranda is extremely variable, and indeed we produced a report on this subject before I became the chairman. If the Government want to make a modest start, they should take a look at how seriously the various departments, and the Bill committees in particular, take those duties. I think that the Cabinet Office, which actually tells the departments what they are supposed to be doing, should take a good, hard look and make sure that they do so. This might deal right at the outset with some of the problems that subsequently come forward.

Much greater attention should be given to allowing draft regulations to be brought forward while we in the House of Lords are looking at the main Bill, because often they are not available. They do not become available for ages, and again a lot of difficulties could be overcome if the regulations were with us so that we could discuss them without coming to the final point where we have to accept or reject or, as I rather vulgarly call it, swallow it whole or spit it out.

Furthermore, the Government should be looking seriously at the way in which they think about the development of legislation. I can remember a time when, before important Bills ever appeared, they would have a Green Paper making suggestions, then a White Paper giving the Government’s views and finally the Bill. Where has that system gone? I am absolutely certain that, if we had more of that, we would have far fewer problems that then arise subsequently.

[Noble Lords]

Hear, hear!

[Baroness Fookes]

Alternatively, we have the draft Bill approach, which again can be valuable, but how often is that used? In my view, not often enough. If the Government are really keen on improving the quality of legislation and not having the various difficulties that have been so eloquently expressed, they ought to take a hard look at how they approach the whole possibility of legislation.

Let me turn to the options. As far as I am concerned, I have already ruled out firmly option 1. Other people have already explained that option 2 has its shortcomings. I tend to favour option 3, but with considerable caveats. Unfortunately, in his excellent report my noble friend failed to give any detail as to how the option might be implemented, and that is absolutely key to whether it will work well or not. I think he suggested that it might be considered by the Procedure Committees of both Houses, if I remember correctly, but I think we need considerably more than that.

Perhaps I may put forward a few suggestions, which no doubt will be fired upon and lost. If the House of Lords decides that it does not want or disapproves of a statutory instrument, a committee should be set up to set out the reasons—this is used in other matters—which would then be sent to the House of Commons and the relevant Minister. The Minister would be required to formulate a Written Statement setting out his views on whether he agreed or whether there should be a modified statutory instrument. Built into it, there should also be some time delay to make sure that the House of Commons had the opportunity to consider it and have a full debate.

Those would be my suggestions. No doubt fault will be found with them, but I am not going to go for option 3 unless I am pretty sure that it will be a useful and practical solution.

18:10

[Lord Darling of Roulanish (Lab) (Maiden Speech)]

It is a pleasure to follow the noble Baroness, who makes some very trenchant criticisms of the way in which statutory instruments and legislation are dealt with. It is a pleasure, too, for me to have this opportunity to deliver this my first speech in your Lordships’ House. I had not expected to end up here, but it was a great pleasure to meet so many people whom I have not seen for, in some cases, many years. I particularly thank my noble friends Lord Bradley and Lady Armstrong who introduced me to the House just before Christmas. The three of us were elected on the same day in 1987 and we have known each other for a long time.

I am grateful to the officers and staff of this House for all their help in what turned out to be a long and arduous process of getting from nomination to arriving here a few weeks ago. I am also grateful for the warm remarks made by the noble Lord, Lord Strathclyde, and my noble friends Lady Smith and Lady Hollis, who indeed toiled with me in the vineyard of tax credits some years ago.

I know that, rather like in the other House, the first speech should be uncontroversial and should not be phrased in such a way that it would provoke someone to stand up in outrage at anything I may say. Despite the subject, I shall try not to be controversial. I start off in that vein by saying that I come at this from the experience of having spent nearly 28 years in the other House, 13 of which were in government. I understand fully the frustrations of being a government Minister in a Government who get turned over in this place rather more often than one would wish. As a member of the Opposition for almost 15 years, I understand, too, the concern when opportunities to hold the Government to account are being taken away.

Obviously, the merits of tax credits were discussed last October when I was not a Member of this House. Suffice it to say that there has been some debate today about exceptional matters. That depends on where one stands in all this. The nature of tax credits is that they are designed to support the income of people who would otherwise be on a very low wage. It is not dissimilar, philosophically, from universal credit, which the Government are somewhat struggling to implement. From the point of view of the people who stood to lose very substantial sums of money, this was an exceptional measure. As I understand it, exceptional measures do not happen that often in relation to tax credits. Therefore, to react without giving the whole matter proper consideration might simply store up other problems for the future. So I hope that the House will reflect on that.

Speaking as someone who served in government for 13 years, the substantial point is that it is no bad thing that the House of Lords has the opportunity to revise legislation and to say that, no matter how inconvenient or uncomfortable it may be to the Government of the day, they should go back and think about the matter again. This is particularly apposite in relation to tax credits. I sometimes reflect that Members of the government party in the other House might be profoundly grateful for being spared several months of being, quite rightly, harangued by their constituents who would have lost substantial sums of money.

I am sure that my successor as Chancellor, perhaps in his private moments, is also very grateful. I am almost certain that he would have been bound to have had to reverse the measure at some point. I have been there before. I had to deal with the consequences of our decision to abolish the 10p rate of tax and, a decade and a half ago, when we raised pensions by rather a small amount. Without wishing to remind my colleagues of that pain, I know what it is like to make a decision and then look at it and think, “Well, perhaps I should have done something different”. The present Chancellor was given the opportunity to change his policy. In the Autumn Statement, he said that, having looked at it—remember that at that time the sun was shining on our economy, although I understand that clouds have subsequently arrived to make the outlook less rosy than it was last December—he did not need to do it. It is a classic case of where the House of Lords said, “Think again”, and a lot of people, perhaps silently, have said, “Yes, I am glad that we did”. But it turned out that the Government said that they did not actually need to introduce the measure.

I make the point that if you take away or restrict the opportunity to revise, the obvious problem will arise that Parliament—I use that term advisedly—will pass, on occasions, legislation which has unintended consequences, or sometimes consequences that are very adverse on the population which looks to Parliament to protect its interests. I understand that when I was in the Government what we proposed was defeated in the House of Lords on nearly 500 occasions. That may have been on a temporary basis but on a number of occasions we had to think again. When you are making policy, you just have to take it on the chin. You have to ask yourself, “Can I get this through the House of Commons? Can I get it past a Select Committee? Can I justify what I am doing in front of a Select Committee for a couple of hours without stumbling? Can I get it through the House of Lords?”. It is important to do that.

I fully accept some of the criticisms made of statutory instruments. There are far too many of them. They are an easy way out for Ministers. In relation to tax credits, I have every sympathy with what the noble Baroness, Lady Williams, and the noble Lord, Lord Jopling, said as to why on earth was this not introduced by primary legislation. That is where it should have been introduced because it was an issue of some principle.

My conclusion is twofold. The need for revision and for questioning of the Executive is essential. I live in Edinburgh, where the Scottish Parliament is getting more and more powers. It is unicameral. It was never designed to be run by one party. As that Parliament gets more and more powers, the lack of questioning and scrutiny will become an increasing problem. We should bear that in mind.

Finally, as the noble Lord, Lord Empey, said, I am increasingly concerned at the amount of constitutional change that is taking place in this country on a piecemeal basis. The Scottish Parliament is getting more and more powers, including complete power over income tax very shortly. The imbalance of devolution in the United Kingdom is becoming a real problem. The whole concept of English votes for English laws is fraught with difficulties, particularly if you get into something that undermines the fiscal union that underpins the political union in this country. Other Members have referred to other measures. I know that reform of the House of Lords is difficult. I can understand why the Prime Minister and all his predecessors said, “Look, forget this. Let’s leave it for another day”. Yet, every year we do a little bit more. If it is not looked at as a whole, one day the whole thing will topple over. Outside, people may say, “Hurrah to that”, but it would be far better for us to look at this and come up with a sensible way to scrutinise and revise legislation, and to make sure that we have a Parliament which reflects what people want, especially at a time of growing dissatisfaction and alienation from our current political structures. It cannot be put off for much longer.

I hope that the House will think further about this, so that it does not look like a political fix and perhaps resembles a more considered view as to what we need as a second Chamber in the 21st century.

18:18

[Lord Hope of Craighead (CB)]

My Lords, it is a very real pleasure for me to congratulate the noble Lord, Lord Darling, on his fascinating—indeed, outstanding—maiden speech. It is, of course, a much easier task for me than it would be for a shadow Chancellor to try to reply at short notice to one of his speeches from the Front Bench in the other place. At least I have that advantage. I can look back over the noble Lord’s career for over 40 years, ever since he joined the Faculty of Advocates, of which I was already a member, in 1984. For a time he was a member of a remarkable group of members of that body, which included the late John Smith, the noble and learned Lord, Lord Wallace of Tankerness, and the noble Lords, Lord Campbell of Pittenweem and Lord Selkirk of Douglas, who sought to combine practice at the Scottish Bar with politics. He was already a member of Lothian Regional Council, if I recall correctly, when he joined the faculty. Not long after that—I think within three years—he became a Member of the other place for an Edinburgh constituency. That led to a decision, for very good reasons as we now all know, to give up a future career in the law and instead move into politics. It is as a result of that that he comes to this House with a remarkable fund of knowledge and experience. We also owe him an immense debt of gratitude for the work he did as leader of the no campaign in Scotland last year. It was an outstanding service to the country, appreciated very much in this House. It is against that background, too, that we all welcome him to our number. I am sure that we all look forward very much to many contributions from him on that subject and others.

I shall say a few things about the review by the noble Lord, Lord Strathclyde, not in my capacity as Convenor, but in my personal capacity. I begin by drawing attention to points made by the noble Lord, Lord Butler of Brockwell, who unfortunately cannot be here to speak himself, on 17 December last year in reply to the Leader’s Statement on the publication of the review. He pointed out that for many years now there has been dissatisfaction in all parts of the House with the binary choice available to us for either accepting or rejecting statutory instruments. He was speaking, after all, with some knowledge, because he was a member of the commission under the noble Lord, Lord Wakeham, which reported on that issue as long ago as 15 years, and of the Leader’s Group under the noble Lord, Lord Goodlad, which reported a year later. For that reason, he encouraged us to look positively at the proposals as pointing the way forward to resolve a problem that has been with us for far too long. He urged us not to be diverted by the circumstances that gave rise to the review, but rather to concentrate on the way forward. He emphasised, as other Members of the House have today, that the problem is one of long standing that needs to be resolved, and the sooner that happens the better.

Of course, a balance has to be struck. I welcome the careful attention that the noble Lord, Lord Strathclyde, gave to the work of the scrutiny committees—both the Joint Committee and the committee of this House—and that work’s importance. It is vital that it should continue. Of course, for that reason, option 1 is not one that anybody in this House can take seriously at all. To add to the point that others have made, I draw attention to a memorandum that the noble and learned Lord, Lord Walker of Gestingthorpe, sent to the noble Lord’s review, in which he drew attention to some important examples of the use of statutory instruments that now have statutory authority. We have moved far away from the primary purpose of delegated legislation, as set out on page 667 of Erskine May, which is to deal with,

“details of an essentially subsidiary or procedural character”.

The noble and learned Lord gave two examples of that, one from the European Communities Act 1972, where, in Section 2 and Schedule 2, provision is made for remedial legislation to cure incompatibility with convention law; and the other from Section 10 of and Schedule 2 to the Human Rights Act 1998, to deal with incompatibility with convention rights. A mechanism is a statutory instrument. It really would be absurd if this House, in dealing with issues of considerable difficulty and, indeed, possibly constitutional importance, could not comment on and examine them.

I shall say nothing about option 2, except to endorse the point that the noble Lord, Lord Jopling, made, that it really would be a recipe for continued argument. We really do not want that any more.

So we are left with option 3, which certainly has its attractions and which I, for my part, would endorse, but certainly there is more work to be done. I shall mention just one or two points. First, I welcome the point that the noble Lord, Lord Strathclyde, made about the need for clarity over what amounts to a denial of approval. We simply do not want to go through the kind of arguments that we had last term on that point. Although there may be difficulties about a fixed period, it is crucial that we have clarity as to what happens next if the thing goes to the other House. We really need to be sure that something proper will be done, that proper scrutiny will be given and, furthermore, that good reasons are given by the Executive if the decision is to reverse the decision of this House.

I endorse the point that others have made, in particular the noble Baroness, Lady Bowles, about amendment. Amendment has a great value. If you make an amendment it focuses the point of dispute. It requires an answer designed to deal with the particular point raised by the amendment. I hope that that point can be taken very seriously.

Lastly, I go back to the point that the noble Lord, Lord Empey, raised. He drew attention to what would happen if the reform takes the form that option 3 suggests. I think that the noble Lord, Lord Strathclyde, has played down the extent to which use would be made of that option. If given legitimacy, I am sure people would begin to use that route. I am not as pessimistic as the noble Lord, Lord Empey. I do not think that it would be overused, but it would be unwise to assume that it would not be used. I suspect that it would be used quite frequently in circumstances where, in the past, quite rightly, we have shrunk back from something that would, in effect, run the risk of contravening a convention of which we were rather uncertain.

18:25

[Lord Norton of Louth (Con)]

My Lords, the review undertaken by my noble friend Lord Strathclyde may be pointing us in a direction that is worth pursuing, but for very different reasons from those advanced by my noble friend and not in the way recommended in his report. Our debate, following my noble friend’s report, has tended to focus on whether the House, by its vote on 26 October, broke a convention of the constitution. We are in danger of getting into a muddle. There has been no attempt to define what we mean by “convention”. The Joint Committee on Conventions did not offer a definition. My noble friend in his report offers a definition that is not incorrect, but it is incomplete.

There is much misunderstanding of what we mean by constitutional convention. Conventions are non-legal rules that determine a consistent, indeed invariable, pattern of behaviour. Those who comply with them do so because they accept that they are, as David Feldman has cogently expressed it, “right behaviour”. Conventions do not become such by the words of a particular person, be it Viscount Cranborne in 1945 or Lord Sewel in 1998. They are not created, but develop. A convention exists once there is an invariable practice. Kenneth Wheare distinguished between conventions and usage—in effect, a distinction between invariable and usual practice. The Cranborne doctrine of 1945 developed into the Salisbury convention. The statement of Lord Sewel developed into a convention named after him, even though the convention is such only by departing from the words that he used. It is a convention because seeking a legislative consent Motion is an invariable practice.

It is our usual practice not to withhold agreement to statutory instruments, but it is not our invariable practice. As we have heard, the House has asserted its right to reject statutory instruments and has on occasion exercised it. This House therefore does not regard itself as bound, and has not been bound, by a moral imperative that we should not reject statutory instruments. So long as that is the case, there is no convention. The Joint Committee got itself into something of a confusion on this issue, partly because of a failure to define conventions, but it recognised that no convention was breached if the House defeated a statutory instrument. As it reported at paragraph 228:

“The Government appear to consider that any defeat of an SI by the Lords is a breach of convention. We disagree”.

The fact that there is no convention is borne out by the words of my noble friend in the course of asserting that there is. My noble friend’s report states on page 15:

“The convention that the House of Lords should not, or should not regularly, reject SIs is longstanding but has been interpreted in different ways, has not been understood by all, and has never been accepted by some members of the House”.

The very wording draws attention to the absence of any agreement on what this supposed convention constitutes. Some Members, like my noble friend, may believe that there is a convention but, for it to be one, Members generally have to consider themselves bound not to vote down SIs. There is no such acceptance by the House. There was thus no breach of convention in respect of how this House deals with statutory instruments. That was not the problem. The problem derives from the fact that we exercised our power in respect of a statutory instrument that engaged the financial privilege of the Commons. The key section of my noble friend’s report is to be found on pages 21 and 22. That should have been the focus of his report. As my noble friend recognises, there is nothing to stop us developing procedures particular to delegated legislation that cover financial privilege.

I am not against reviewing our powers in respect of statutory instruments, but I take the view that if our powers in respect of delegated legislation are to be restricted, the powers should at least be analogous to those provided in the Parliament Acts in respect of primary legislation. My noble friend’s recommendation in favour of option 3 claims on page 18 that it is, but then admits, on page 20, that it is not, since there would be no suspensory veto. If we are to go down the route recommended by my noble friend, there needs to be something else built into the procedure to ensure that the reasons for objecting to an SI are taken seriously. I therefore endorse what several others noble Lords have argued—in other words, what may be termed option 3 plus.

In short, while I think that my noble friend’s report has come up with some stimulating proposals, it derives from a false premise and comes up with recommendations not geared to the mischief that prompted my noble friend’s inquiry. In the short term, there is a case for acting in respect of SIs that engage the Commons supremacy in respect of tax and spending. In the longer term, as several noble Lords have said today, there is a case for a substantial review of how we deal with statutory instruments. We have had recommendations from the Wakeham commission and the Goodlad committee. There is also a report on the subject produced by the Hansard Society, which has made the case for revisiting how Parliament as a whole deals with secondary legislation, recognising the limitations of the other place. Rather than a rushed quick fix, a more holistic approach is the way forward.

18:32

[Lord Cunningham of Felling (Lab)]

My Lords, first, I apologise for the state of my voice. Secondly, as the first speaker from this side of the House to follow the incisive and commanding maiden speech of my noble friend Lord Darling, I think I speak for the whole House when I say that we look forward to hearing him on many more occasions.

I begin by quoting from the preface of the report of the noble Lord, Lord Strathclyde, in which he states:

“Conventions exist because they provide a basis for orderly government. They will survive only so long as there is a continued understanding of why they were originally brought into being. But when they go, Parliament and the people we serve will, I believe, come to miss their value”.

Yet he goes on to recommend just that—the abolition of the convention—in his report. I make it clear to your Lordships’ House that statutory obligations are not the same as conventions; they are entirely different. Therefore, the convention would go if the only one of the recommendations of the noble Lord, Lord Strathclyde, worth considering—that is the third one: I do not think the other two are worth considering at all—were enacted just as it stands, and we would be left in almost as big a morass of uncertainty as, apparently, some people claim we are now. I am sure that none of us wants that.

The noble Lord, Lord Strathclyde, has adopted many different positions on the convention. In 1999, he declared that it was deceased. He said that the convention on statutory instruments was dead. By 2005, he had given it the kiss of life, and said that it had been,

“surprisingly robust over the decades”.—[Official Report, 26/01/2005; col. 1375.]

Those two statements cannot be reconciled. However, the reality is that, whatever his personal views, between the votes on the Greater London Authority orders in 2000 and the end of the 2004-05 Session, this House divided nine times on Motions potentially fatal to a statutory instrument. On three of those nine occasions, the Motion to annul was moved from the opposition Dispatch Box, so there is no doubt at all—as the record shows—that whatever any individual thought about the convention, there was an attempt to use it on those occasions. There were no cries of a constitutional crisis then. There were five rejections in all under this convention in about five decades; three of them, incidentally, were defeats for Labour Governments. One was a defeat for the coalition Government and one—the most recent one—was a defeat for the current Administration.

This is not to say that we do not face serious problems with statutory instruments in this House; of course, it would be foolish to deny that. However, let us be clear: if the number of statutory instruments coming to this House was cut by 50%, there would still be occasions on which strong opposition to some or other of those instruments would arise. Therefore, cutting the number of statutory instruments—I would be in favour of that and I certainly share the view of the noble Lord, Lord Strathclyde, on that, as, I am sure, do most Members of your Lordships’ House—would not obviate the problem of this House wanting to disagree with however many statutory instruments remained.

In 2006, foreseeing some of these problems, or perhaps just recognising them rather late in the day, the then Labour Government set up the Joint Committee on Conventions, which I had the honour and privilege to chair. The remarkable thing about the committee—which was made up of Members on all sides of the House, here and in the Commons—was that all its decisions and recommendations were approved unanimously. There was not a single vote in the whole of the committee’s deliberations. Therefore, the report was unanimous, which, in turn, was unanimously approved by this House and the other place. However, here we are, 10 years later, asking ourselves more questions about how we operate. The report, which we deliberately entitled Conventions of the UK Parliament, has stood the test of time. If we want to re-examine these matters—I am certainly not against that—it is surely not sensible to do it in a piecemeal way on the back of an angry, intemperate reaction to one defeat of the Government in this House. That is not the way we should deal with this problem. Frankly, it is simply not credible to suggest that this House has abused the use of the convention on statutory instruments in any way at all. It has not exceeded its powers and I do not believe that statutory codification of these issues will improve the working of the House or improve our relations with the other place.

In reality, the Government have decided to strip this House of its ability to reject any statutory instrument because of the one defeat sustained in October last year. That strengthens the Government and the Executive against Parliament because, if it happens, it will weaken not just this House but the position of the other place as well. That is not what we should be seeking to agree to, in my opinion. The reality is—I am overrunning my time, I apologise—that this House has a far better record of scrutiny of statutory instruments than the other place. I believe that it is time we looked at this, as previous speakers have indicated, in a far more comprehensive, effective and collective way than simply to accept the diktats of the Government because of their annoyance at their defeat.

18:40

[Lord Higgins (Con)]

My Lords, I join those who congratulate my noble friend Lord Strathclyde and his team of experts on a really excellent report; it is extremely useful in setting out the position with regard to statutory instruments and, to some extent, financial privilege. I have only one technical quibble: it would have been helpful, particularly in relation to this debate, if the paragraphs had been numbered.

It is a great pleasure to follow the noble Lord, Lord Cunningham of Felling, because I had the pleasure of serving under his chairmanship on the Joint Committee on Conventions, which was a remarkable committee. As he has just said, it was unanimous, and its reports were approved by both Houses as an appropriate way forward. It is worth referring to a passage in the report of the committee concerning statutory instruments, which was quoted in my noble friend Lord Strathclyde’s report. It states:

“The Committee concluded that ‘the House of Lords should not regularly reject Statutory Instruments, but that in exceptional circumstances it might be appropriate for it to do so’. A number of specific circumstances were identified, for example, when the provisions of an SI were of the sort more normally found in primary legislation or in the case of certain specific orders”.

It went on to say that under particular circumstances, opposition parties should not simply vote against something because they had disagreed with it.

The crucial point is that one needs to put that in the context of the catalyst that gave rise to my noble friend’s report, namely the debate that we had on the tax credit order. It is absolutely clear from the passage I quoted that the convention was not breached. Quite clearly, that statutory instrument involved something that ought to have been in primary legislation. That being so, it was quite appropriate for the Opposition to take the view that it was legitimate to vote against it. The reason that I did not vote with them was because it involved financial privilege and it seemed to me that that overrode the issue as far as the convention and the ability to vote against it were concerned.

The whole issue arises from the extraordinary fact that this statutory instrument involved financial privilege to such a massive extent. I find it totally puzzling that the Treasury ever allowed this to happen. It looked as though it was trying to pull a fast one, which I do not believe was so. I can understand that the primary legislation enabled it to do that but, in political terms, not to foresee the problems that it would create in this House is, I think, quite extraordinary. We must, therefore, look at this whole issue and the report of my noble friend as a reaction to what was an extraordinary, and not a normal, situation. In that context, we need to consider our position. I had great trouble, as I said, in knowing which way to vote. There is no great problem in dealing with the financial privilege point; the simplest solution would be for the Treasury never to do the same thing again. Or it could be dealt with by the unusual procedure of being debated only by the Commons.

I come to the broader question of how to deal with the situation. I believe that the report 10 years ago had, basically, the right approach. It is not right to cite the tax credits fiasco, if I may put it that way, as a reason for saying we cannot maintain the convention. There is a lot to be said for it. My noble friend Lord Strathclyde and I share the view that conventions are better than legislation, if that can be done, although, strangely, he comes down in favour of option 3; I would prefer option 2.

We need to give this very careful consideration. Perhaps we should reconvene the committee on conventions —I am not volunteering, necessarily—to look at this issue again. There was no breach of the convention. My noble friend’s report is wrong, I think, in suggesting in a later passage that, somehow, the fact that this event took place shows how difficult it is to agree on what the conventions really are. We are fairly clear and we could in fact enumerate the various exceptions that might be appropriate. It is at least worth an attempt to do so, because it avoids legislation. I view the idea of more legislation on matters involving the House of Lords with considerable alarm. The issue of composition was cleverly avoided by my noble friend in his report by stating that it was outside his terms of reference, but that will not necessarily apply in the case of legislation. That is a dangerous and rather heavy road to go down. The report says that a Bill may not need to be very long. It is not a question of whether it is long but of whether it is dangerous. That is an important point that we need to bear in mind.

There have been various comments by people outside who take a profound interest in the operation of your Lordships’ House. I noticed that Meg Russell, who comments frequently on our affairs, suggested, perhaps optimistically, that this was a marvellous opportunity to have a negotiation on whether we should reduce the size of the House by capping our numbers in exchange for more restriction on the operation of this House. That is rather optimistic—it would certainly confuse the negotiations.

Overall, we should have a shot at option 2. I rule option 1 absolutely out of court, not least because, as my noble friend Lady Fookes said, it would affect our two extremely valuable committees that do this work that the House of Commons does not. But I think that that is a better option than suddenly rushing in on the back of an event that was controversial to legislate on this matter and to limit and control the powers of your Lordships’ House.

18:48

[Baroness Thomas of Winchester (LD)]

My Lords, ever since I joined my party’s Whips’ Office in 1977, the threat by all Governments of curbing the Lords’ power if the Opposition tried to vote down statutory instruments has been part of folklore. The threat was enough because all Governments eventually turn into the Opposition and then take a different view. It is ironic, as other people have said, that it should be a Conservative Government who are now proposing to take action, given that Conservative Oppositions have used the power far more than Labour have. As my old friend, the noble Lord, Lord Strathclyde, said in his Politeia lecture in 1999:

“Governments—all governments—are increasingly, and dangerously, insouciant about powers taken under secondary legislation … those powers are often so far-reaching that they must … undergo improved Parliamentary scrutiny. Parliament must, in turn, be ready to reject bad regulations. The new House of Lords will certainly assert that right”.

So is this Government in danger, perhaps, of becoming “insouciant” about powers taken under secondary legislation? If so, parliamentary scrutiny should be improved—as the noble Lord, Lord Strathclyde, promised —not curtailed.

I am in favour of improved scrutiny and have put forward my own proposal, also mentioned by my noble and learned friend Lord Wallace of Tankerness; briefly, it is that the substance of controversial SIs might be debated on a Motion which was amendable and on which Peers would be able to vote, while the instrument itself was parked and unaffected at that stage by votes. That two-stage procedure might enable the Government to give certain assurances, or even to withdraw and re-lay the instrument with some amendments of their own. In putting forward such a proposal, I am keen to show that I am not against a change in procedure for controversial SIs, but I am totally against legislating in this area for any diminution of this House’s power over secondary legislation. Without the ultimate threat of a veto, why would Governments with a majority in the House of Commons bother to be careful how they used their increased power? What nobody has referred to so far are the times when Governments have withdrawn an SI when the hostile Motion has been tabled. I know that from personal experience, but it will not show up in any records.

Option 3 of the review says that the Commons should have the last word. That is fine in theory but, as others have said, will that last word be a proper debate? I am full of admiration for Commons debates, but often one searches in vain for a Commons debate on an SI, only to find that there has not been one and that the SI was nodded through.

To take this whole matter forward, could we not ask our Procedure Committee to work up some of the various proposals, particularly those put in this debate, and even to conduct pilot schemes?

I end with a rhetorical question asked by the late great Lord Simon of Glaisdale, who was an expert in this field: “Do we want executive Government or parliamentary Government?”. That is still a question that we need to pose today.

18:52

[Lord Judge (CB)]

My Lords, I had a very bad night’s sleep last night. I had a nightmare in which King Henry VIII came to visit me. The monstrous tyrant had been allowed out of hell—I assure you, that is where he is—for a few weeks to read all those wonderful books by Philippa Gregory, Alison Weir and Suzannah Dunn, all of whom give his long-suffering wives rather a good press and a very bad press to him. He was so offended by it that he started looking into what we were talking about. He said, “There’s a piece of history none of you knows. You have all these wonderful books about why I cut off Thomas Cromwell’s head, but I’ll tell you the truth about it. I said to him, ‘I want the Reformation Parliament to give me an Act of proclamations’, and he said he’d get it for me. I said, ‘I want the widest powers to regulate Tudor life. A good regulatory system would really organise Tudor life better’. ‘Yes, Your Majesty.’ Unfortunately, he couldn’t get Parliament to give me control over—let me just think—inheritance, goods, chattels, liberty and all the things I really did want to control. So I had his head cut off”.

The nightmare was this: we have too many Henry VIII clauses, and we call them Henry VIII clauses because they are draconian and potentially tyrannical. Many of them come to us by way of subordinate or secondary legislation and, although we have to consider many different aspects of this debate, I want to focus on this: this debate could actually be about secondary legislation and the primacy of Parliament, because our processes—in both the House of Commons and this House—have led to a situation in which legislation is enacted which creates the most awesome powers.

Let me give you an example. I thank the noble Lord, Lord Darling, for his speech, and remind him that there was a time in 2008 when life was rather tough, so we had the Banking (Special Provisions) Act 2008. I take this example not to embarrass him—his maiden speech was absolutely delightful and wonderful—but to make the point that we are talking about all Governments. The focus is on what happened in October, when we had a Conservative Government, but it is true of all Governments and always will be unless we do something about it. The Act gave all sorts of powers to the Minister and the Treasury, including to,

“disapply … any … statutory provision or rule of law”.

Any statutory provision or rule of law? What on earth was going on there?

Let us not get too carried away with the rather important disaster that was going on. The Childcare Bill was debated here in October 2015. Who could argue with free childcare? Who could argue with regulations made for “extended entitlement”? Then you see that extended entitlement regulations may cover no fewer than 11 different subjects, including the power to “impose obligations”—notice—

“or confer powers on the Commissioners for Her Majesty’s Revenue and Customs”.

Another power that Henry VIII would not have got is to,

“create criminal offences in connection with”,

so-and-so, for which another part of the statute said that you might go to prison for two years. Another is to make reviews of a First-tier Tribunal decision—that is interfering with a court’s decision—and another is to make provision in regulation for people to be fined. Not content with no less than 11 areas where secondary legislation could be enacted, we end up with Section 4 on “Supplementary provision”, on which I will now focus. It states:

“Regulations may—

(a) confer a discretion on any person”—

any person—

“(b) make different provision for different purposes”—

well, I cannot argue about that—

“(c) make consequential, incidental, supplemental, transitional or saving provision”—

who could argue with that? Until you come to—

“(d) amend, repeal or revoke any provision made by or under an Act (whenever passed or made)”.

You know, there was a revolution here in 1688. We ended up with a Bill of Rights that made it clear that there was no dispensing or suspending power. And here we have statutory instruments capable of destroying an enactment by both Houses. So we have an interest in anything which interferes with what we have agreed to in the legislative process, do we not?

I am nearly done. I could go on. Let us take another one. We looked the other day on the education Bill at what failing schools might be. What do we provide? “Failing school”, two perfectly ordinary English words—we all understand what they mean. But there will be regulations, not for the Secretary of State to say, “You are a failing school, and for these reasons”—somebody has to decide that; I have no objection to somebody deciding it—but saying, “You, the Secretary of State, will define what a failing school is”. That is very different. That is saying, “I am the Secretary of State. I say that you are failing because I do not like this, that or the other about what is going on”.

I have done. We have to examine this problem, which has arisen from a parliamentary dispute in this House, in the context of the primacy of Parliament, so that we take a proper overall look at what we are being asked to do when we legislate.

18:59

[Lord Lexden (Con)]

My Lords, I shall hope to avoid having a disturbing and dramatic dream of the kind that the noble and learned Lord, Lord Judge, has experienced but it helped to inspire a truly excellent speech. I follow in more mundane fashion.

Whatever the background circumstances, a defeat in this House on secondary legislation relating to a major political issue is bound to incur the wrath of a Government, regardless of their party complexion.

“Practically every newspaper confidently anticipated that the Prime Minister would announce in the House this afternoon a Bill to limit the Lords’ powers”.

That, in the words of Richard Crossman’s diary entry for 20 June 1968, is what followed the narrow defeat of the order on sanctions against Rhodesia, nearly 50 years ago. The fury died away, of course, and no legislation was brought forward. Calm was restored and sustained by conventions agreed between the parties.

The Strathclyde review is designed to provide the basis for the start of a new era. I am with those attracted by the third option for change that my noble friend Lord Strathclyde commended to us with his customary vigour. Indeed, I would always hesitate to challenge him in any way, having entered this House five years ago now with his kindly tutelage. But I am also with those who believe that any changes here need to be accompanied by changes in the other place. They need to proceed hand in hand; one should be conditional on the other.

The entire system by which secondary legislation is dealt with is the subject of an authoritative report, The Devil is in the Detail, to which my noble friend Lord Norton of Louth referred, from the Hansard Society, of which I am proud to be a trustee. It enjoyed until recently the wonderfully benign and gentle chairmanship of my personal friend the noble Lord, Lord Grocott. This detailed Hansard Society study confirms what many have readily acknowledged for years. It states:

“The scrutiny process for delegated legislation has become unnecessarily complex … most MPs simply don’t understand it … Many of the MPs we interviewed simply weren’t aware of the practicalities relating to the scrutiny of statutory instruments”.

It is that state of affairs which has made the existence of our power of veto extremely important.

The Hansard Society’s report also stated:

“The existence of a veto power gives purpose and leverage to the Lords’ scrutiny committees … Remove it, and the influence of the House of Lords will be neutered to the government’s advantage unless steps are also taken to improve scrutiny … by the House of Commons”.

That is surely the nub of the matter. Without improved scrutiny arrangements in the Commons, it is very hard to see how the third, preferred option in the Strathclyde review will really advance the interests of Parliament. If the procedures of the other place do not provide adequately for substantive consideration of the Lords view on a rejected statutory instrument then, instead of underpinning the primacy of the elected Chamber, the process will serve the interests of the Executive by granting an override power for MPs without requiring anything of them as regards actively engaging with or making an informed decision about the concerns raised by this House—a danger underlined by my noble friend Lady Thomas of Winchester.

I now serve on the Joint Committee on Statutory Instruments. We meet week by week in the presence of an array of legal luminaries. The work is extremely important but the contribution that members of the committee can usefully make is severely circumscribed. Our terms of reference limit us to checking whether a statutory instrument is technically sound and properly drafted. We are explicitly precluded from considering its merits or the policy behind it. It is not difficult to see how better arrangements could be made.

Do we not need to see the Strathclyde review, so judiciously conducted by my noble friend, in a wider context? Do we not need a reform process within which it would take a most useful place? For without such a process, the loss of our veto is likely to strengthen the Executive at Parliament’s expense.

19:05

[Baroness Taylor of Bolton (Lab)]

My Lords, the noble Lord, Lord Strathclyde, opened this debate by posing three questions. First, he asked: is there a problem? I think that there is a problem, but not the one that he defined. Secondly, he asked: should we retain our veto? I am inclined to say that we should. Thirdly, he asked: was there scope for change? There is general agreement that there is scope for change, but his report is not a definitive answer.

I go back to the noble Lord’s first question on whether there is a problem. He quoted the events of 26 October in justification for the fact that there is a problem, yet he said today—I wrote down his words carefully—that the two noble Baronesses, my noble friend Lady Hollis and the noble Baroness, Lady Meacher, cleverly found a form of words that did not break the convention. If they did not break the convention, why is the noble Lord quoting that as the case for the changes that he is suggesting? It makes it very puzzling—

[Lord Strathclyde]

I wonder if it would be worth clarifying that point. I completely stand by the words that the noble Baroness cited but they were in the context of saying that there was now more than one interpretation of what the convention actually was. There was the one propagated by the noble Baronesses while others, including me, regarded those Motions as being in practice fatal. Once you can no longer agree what the convention is then you have to have the kind of debate that we are now having.

[Baroness Taylor of Bolton]

It was not the words of the Motions that were fatal but the political consequences that the Government were fearing, not least because their Members in another place then woke up to what these regulations were all about. The hype that we saw, which my noble friend Lady Smith mentioned, about the threats of extra Peers and the suspension of this House was more to do with the political consequences than the actual point about a convention being broken.

For several years, I was part of the business management team in the House of Commons. I was leader of the Commons and its Chief Whip; before that, I was the shadow leader of the House when Tony Newton was the leader of that House. One of the main problems that government business managers had—looking at what the noble Lord, Lord Jopling, said earlier, I think that it is the case on all sides—was in trying to keep Ministers realistic about what they could achieve in their legislation. They always wanted to do more and to have wide framework legislation. They always wanted to load the legislation so that a lot could be done by statutory instruments. There were mechanisms for dealing with that, but it was very difficult to contain Ministers at times.

We have to acknowledge that the whole process of using statutory instruments, while absolutely vital to the machinery of government, is or can be open to abuse. The noble and learned Lord, Lord Judge, said that that is possibly the case with all Governments. I accept that there have been occasions when all Governments have pushed the limits further and further, but we are now in a new ball-game with the framework legislation that we get and in terms of the SIs. The example that the noble and learned Lord gave about the provisions in the Childcare Bill during the previous Session prove the point. The idea that you can make a criminal conviction through an SI is just outrageous and we should not even be contemplating it.

I think that we have a great deal of agreement this afternoon that we need change, but it is not a question of what changes need to affect this House. It is a question of what changes need to be implemented in Parliament as a whole to deal with the whole question of secondary legislation and how we scrutinise and hold the Government to account.

My noble friend Lady Smith reminded us of the difficulty in the House of Commons of getting Back-Benchers to serve on SI committees. It was and is a real problem, because people saw little mileage in it for themselves and very little point, because it is a very limited debate. Often, the problem was getting a quorum rather than being challenged on the issues thrown up. At the moment, we see minimal scrutiny in the House of Commons by government Back-Benchers who are told to keep quiet and opposition Back-Benchers who do not think that they will make any difference.

We have three problems here: framework Bills, the number of SIs—and, probably more importantly, their scope, which is much greater than it used to be—and the problem of lack of scrutiny in the House of Commons. When we are considering what the next stage should be, it should not be a simplistic Bill, as the noble Lord, Lord Strathclyde, has suggested; it should be a comprehensive look at this problem. We have had some interesting suggestions during this debate of a Joint Committee, with the noble Baroness, Lady Fookes, making some very pertinent points and the noble Lord, Lord Higgins, talking about implications of financial privilege for SIs. I would say that most SIs have a financial implication. Are we to have a threshold or to say that we can never look at any of them?

There is general agreement on all sides of this House that this is a bigger problem than one of a convention that may or may not have been broken. Therefore, I urge the Government and the Leader of the House to think about not only what is convenient for this Government in the short-term but—I know that it is unlikely in the near future—what they may have to and want to do in opposition. Do not think about the short term, because that will not be good for Parliament as a whole. We have a big responsibility in this House to Parliament as a whole. That is the way that we should go forward in considering this issue.

19:12

[Lord Maclennan of Rogart (LD)]

My Lords, following the thoughts of the noble Baroness, Lady Taylor, I would say that the House of Commons is not undertaking sufficient scrutiny of the Government. That is a change. I spent 35 years in another place. Subsequently, committees were set up to scrutinise the work of different departments, but the legislative scrutiny is defective. It seems to me that this House has a duty to fill that gap, but not without discussing it with the other place.

Professor Meg Russell, in her book on this House published a few years ago, pointed out that 40% of the amendments carried against the Government in this place were ultimately accepted by them. That is indicative of the role of this House. The convention that we rarely look at subordinate legislation or statutory instruments needs to be examined. It ought to be examined with another place. We should be coming together on how to change these matters.

The imbroglio about the tax credits was very well handled at the time by the leaders of that debate. It was a ghastly proposition, with hardship being suffered by the least well-off members of society. It was certainly necessary to ask the Government to consider again what they were proposing. Indeed, that could be said to have been successful, because the Government largely withdrew their proposals.

I would prefer option 3 of the suggestions of the noble Lord, Lord Strathclyde, but it should not be implemented without dialogue with another place. There is one lacuna in the proposal, which is that there is no indication of the time that it might take to allow the Government to reconsider their proposal. I hope that, when winding up the debate, the noble Lord will give us some thoughts about that. If it was fed back immediately after this House had exercised its exceptional right, it would not be as effective as the report of the Joint Committee on Conventions in 2006 wanted. In the report, which was cited earlier, the Joint Committee took the view that,

“the House of Lords should not regularly reject Statutory Instruments, but … in exceptional circumstances it may be appropriate for it to do so ... The Government appear to consider that any defeat of an SI by the Lords is a breach of convention. We disagree”.

That disagreement was very helpful. We have seen five or six statutory instruments thrown out in the past 65 years. I hope that that will be taken into account in considering whether it is necessary to have regulation, a parliamentary Act. It seems to me worthy of consideration whether the convention should be prolonged. I do not necessarily advocate the third proposal without modification.

This debate is very worth while and needs to be taken outside this Chamber, because we all accept the primacy of the other place, yet we all accept that the function of the two Chambers is to oversee and scrutinise with great care what is being done or proposed by the Government.

19:20

[The Earl of Kinnoull (CB)]

My Lords, I begin by joining in congratulating the noble Baroness, Lady Bowles, and the noble Lord, Lord Darling, on their engaging maiden speeches. As a Perthshire resident I also echo the thanks of the noble and learned Lord, Lord Hope, to the noble Lord, Lord Darling. I do not thank that he has ever really been thanked enough for his efforts. In very trying circumstances he was immensely dignified and effective. We should also thank the noble Lord, Lord Strathclyde, for his review. It is much more difficult to write a short letter than a long one. The review is short, well written and readable. Really, it contains everything that one might want to have on the topic.

I will confine myself to three areas or themes that came out of the review. The first is that of clarity. I notice that the word appears on the first page and the last, and it appeared in the speech of noble Lord, Lord Strathclyde, earlier on. As a relatively new Member of the House, I found it interesting to be asking on 26 October quite a lot of more experienced Members of the House about the conventional position. There was a total lack of clarity among the membership of the House, particularly among the more junior Members, as to what the position was. So I thought that I would do a bit of research on this, because, as a newish Member, I had recently been handed all the relevant bits and pieces of paper—and that was difficult.

My first suggestion, on which it will be very interesting to hear a comment, is that there could be in some place some recording of what the conventions might be. I say very carefully here that I have read the relevant parts of the Joint Committee on Conventions report of 2006 and I agree that it is fresh—a word used by the noble Lord, Lord Strathclyde. I agree with it all. I am not suggesting that anything should be codified in any way. I am merely suggesting recording it, so that there is at least somewhere to which people like me can go in order to form a view on what the conventions are.

My second point is about skeleton Bills. In my mind these have been rebranded by the noble Lord, Lord Cormack, as Christmas tree Bills. That is a better way of thinking about them. I will read out again the relevant bit that appears twice in the review, about the Government taking,

“steps to ensure that Bills contain an appropriate level of detail and that too much is not left for implementation by statutory instrument”.

As a quid pro quo that is good news if the third option is taken. However, it deals with future Bills and not with the problem of Christmas tree Bills already on the statute book. In six minutes it is not possible to develop that, but it occurs to me, considering this point further, that one has to deal with old Christmas tree Bills and old provisions for statutory instruments as well.

I will make some more general points, and my next comment is on timing. As has often been observed today, there was another choice for those tabling legislation for the Government as to the route that they took. There was a certain route and even if that was a bit clunky, the Government have the ability to conduct their business. As we grapple with the issues that have been raised in this debate, I do not therefore feel that this House or the other place should be in any rush; it is important to get it right.

Building on that, of course the functions, powers and composition of this House are interrelated. If you are going to tinker with those functions and powers, then, as the noble Lord, Lord Norton, said, there are quite a few difficulties that, as you scratch the surface, you come across. A number of people have suggested that a Joint Committee of the two Houses would be appropriate, and I would support that. But anyway, the document is pithy and would be very valuable were such a Joint Committee to be formed in the future. However, I do not feel that the document is a good basis today for piecemeal constitutional meddling.

19:25

[Lord Skelmersdale (Con)]

My Lords, at this point in the debate I wish to put a rather different slant on it, even though I know that what I am about to say will not endear me to many of my noble friends. I believe that there is a four-letter word that best describes the debate’s background. That word is “myth”. In fact, it is worse than that. It is myth based on myth.

Why do I say that? On his own admission, the Prime Minister asked my noble friend Lord Strathclyde to look at the relationship between the two Houses in relation to statutory instruments, having been frightened that there were two Motions on successive days to defeat SIs on tax credits and electoral registration. The indisputable fact is that these Motions were indeed laid. Both were defeated by reasonable majorities, in accordance with the conventions—pace my noble friend beside me. The noble Baroness, Lady Smith of Basildon, was spot on when she said on 17 December:

“Let us be clear that in this Parliament three attempts at a so-called fatal Motion to reject an SI have failed”.—[Official Report, 17/12/2015; col. 2191.]

I take it from that statement that the Opposition, while complaining loudly, did the decent thing in not supporting such Motions, according to the convention—which unfortunately only some of us understand. How can you have a convention when Members of the House either do not agree with it or do not understand it? The net result of the Motions was that, as we all know, the Government’s policy, announced in the Autumn Statement, came to a grinding, if temporary, halt.

This brings me to another myth. In the debate on the Motion, several noble Lords expected the order to be covered, as we have heard today, by financial privilege. The trouble is that this option is never available for statutory instruments. They further thought that the affirmative Motion should have been included in a finance Bill, or a Bill specifically for the purpose, which would have been certified as coming under yet another convention: financial privilege—again, not regularly understood by all Members of the House, and sometimes by the Front Benches when they want to confuse the issue.

Both would have taken several weeks to get on to the statute book, which would have taken too long for the Chancellor’s plans. In fact, as I understand it, tax credits can be amended only through the Tax Credit Act 2004, which stipulates the use of affirmative statutory instruments to change them. I do not know whether the Government of the day knew that they were creating an elephant trap by so stipulating, but, as events transpired, they most certainly did. After all, several SIs under that Act were agreed by both Houses during the coalition Government, so this Government very naturally thought: why not this one? It was laid and, importantly, accepted by another place—but not, obviously, here. It is worth repeating that your Lordships did not throw it out—to which, of course, there is no recourse.

I hope that I have not taken too long to explain why I think that my noble friend Lord Strathclyde was asked to solve a problem that did not exist. None the less, being him, he stuck to his brief that the existing conventions might soon break down. He has come up with a positively brilliant solution that can reasonably be worked upon. I would look at it perhaps as the basement of a future building. There is much to be thought about, as evidenced by the Hansard Society’s brief and Professor Russell’s comments from the Constitution Unit—not least, how do we cope when your Lordships consider a statutory instrument before another place? Will another place—this has already been mentioned in this debate—be able to use a deferred Division? Both these things need a lot of thought. Another vote in another place will settle the matter once and for all, without a further vote in this House.

The real damage on 26 October was that although everyone agreed that tax credits are a financial matter, the relevant SI cannot be given a Speaker’s certificate of financial privilege. I therefore ask my noble friends whether the Speaker should have this power and whether it should now be added to my noble friend’s preferred solution number 3.

19:30

[Lord Foulkes of Cumnock (Lab)]

My Lords, like the noble Lord, Lord Skelmersdale, I shall take a slightly different tack, but first I say that I have great respect— indeed, affection—for the noble Lord, Lord Strathclyde, although he organised the Conservative campaign against me in election after election in Carrick, Cumnock and Doon Valley. Mind you, my majority went up each time, so maybe I should thank him.

We have to remember that this report was not requested by this House or Parliament, but was instructed, as it were, by the Government in a fit of pique, and we have to take account of that. The heading of this debate is “Secondary Legislation and the Primacy of the House of Commons”, but, as others have said, it is not really about that at all. This is really about Parliament’s scrutiny of the Executive. That is coming up again and again in this debate.

We could ask why we need a second Chamber. After all, not all countries’ parliaments have a second Chamber. Mind you, as my noble friend Lord Darling said in his excellent maiden speech, in Scotland, we are seeing the effect of having a one-Chamber Parliament with one party in control, and that raises some concerns.

There are other arguments. For more than 50 years, I have supported first past the post for the House of Commons. It was right and defensible, not just because of the link with Members, as I found in my constituency, but because when nearly 80% of the electorate voted—as happened in my constituency, certainly in 1979—about 80% of the people who voted did so for one or other of the two main parties. Now we have a multiparty system, and a lot of people—even me—are beginning to question whether a party with less than one-quarter of the electorate supporting it really has a mandate and can say that this House must accept what the other place is doing because of that mandate. We must remember that the legislation is put forward by the Government in that place.

Meanwhile, we particularly need an effective revising Chamber. I am in favour of major reform, of a senate of the nations and regions replacing this unelected Chamber with a more responsible and accountable Chamber. Meanwhile, we need to look at how we can improve the existing system. The current proposals are entirely the wrong way of doing it, as a number of people have said. Look at yesterday’s House of Commons Hansard and see whether anyone here can understand what was happening. There was absolute chaos in the House of Commons. The noble Lord, Lord Lisvane, predicted exactly what would happen. It was total chaos as the Speaker ruled that the Bill could be voted on only by English Members. The Deputy Speaker took a vote by acclamation. I think she had to work out whether only English accents were saying “Aye” or “No” to decide whether the legislation passed. What happened was absolutely ridiculous.

We have had too many of these quick political fixes, as my noble friend Lord Darling said. We need a comprehensive review. The Labour group in this Chamber produced an excellent report. My noble friend Lady Taylor was one of the joint chairs. It did not just deal with how SIs are dealt with in this House but looked at the whole question of the structure, composition and role of the House. With respect to the current Leader of the House, she has paid scant attention to that report. A lot of work was put into it by a lot of people over a long period, looking at all aspects of the House. Frankly, unless we look at the House in that comprehensive way rather than go on with this piecemeal reform, we will get into more difficulties.

This has been an excellent debate. I have sat through most of it and found it really fantastic. I enjoyed Monday’s debate on the Trade Union Bill, but this debate has been even better. A tremendous range of suggestions has been put forward by noble Lords including the noble Lord, Lord Norton, and my noble friend Lady Hollis. The Leader of the House needs to treat this debate really seriously. I do not think anyone here would expect her to deal with the individual suggestions and proposals—there have been so many really good proposals—immediately in her reply, but we need to get from her an assurance that the Government will look at each and every one of the proposals, alternatives, additions and suggestions that have been put forward. With no disrespect to my noble friend Lord Strathclyde—he is my personal friend—I do not think his is the only way forward. There are many other ways forward. I hope the Leader of the House will look at this in a comprehensive, coherent and holistic—I think it was the noble Lord, Lord Norton, who used that term—way. I hope that will be the guiding principle as we look forward so that we do not continue with piecemeal reform, which is causing so much disrespect and so many problems within not just this Chamber but in the other Chamber, and does not enhance the reputation of this Parliament.

19:37

[Lord Bowness (Con)]

My Lords, I have not generally participated in debates of this kind, leaving them to noble Lords with greater constitutional and parliamentary expertise. However, this month it will be 20 years since I was introduced. As a member of the Secondary Legislation Scrutiny Committee chaired by my noble friend Lord Trefgarne—of course, I speak personally— I feel able, on this occasion, to offer an opinion.

I start from the position, as I think most of us do, of believing in the primacy of the House of Commons and that your Lordships’ House is complementary to the House of Commons. Over many decades, an ethos was established in this House, largely by the hereditary Peers, which was followed by the life Peers and ensured that the Government should ultimately get their business through and that the conventions should be observed, but that, for good or ill, under the present system this House had certain rights, which were rights of Parliament as a whole, not just of this House. That way of working encourages compromise, courtesy and a less partisan approach than exists elsewhere in Parliament.

That spirit survived the exclusion of the majority of hereditary Peers, but I perceive a change which began under the coalition and continues in this Parliament. It is on the part of the Government. I do not know whether the change was brought about by the dynamics of coalition or the political arithmetic that now exists. The change on the part of the Government that I perceive, rightly or wrongly, may be subtle, but it involves not just the acceptance of the traditional role of the Government getting their business, subject to the proper exercise of our rights, but a change which is turning towards seeing this House as an instrument of securing government policy, rather than as an instrument of the rights of Parliament. The rejection of the tax credit instrument, which was seen by the Government as a breach of convention—my noble friend has confused me: was it or was it not?—has led to my noble friend Lord Strathclyde’s report. To rush into legislation to change the current position would be a mistake. Hard cases make bad law.

I respectfully suggest that this measure was badly handled at both ends of the Palace. Whatever the original legislation said about changes to be made by statutory instrument, it could have been foreseen that, given the numbers on the Floor of this House and the concern both inside and outside Parliament, trouble was likely. Despite what has been said by my noble friend Lord Skelmersdale, the Government could have found a different way of dealing with it. Equally, this House—and we could have endless discussions about whether or not the amendment was fatal or in breach of convention—was not well advised to take its powers to the limit, and perhaps to breaking point.

Although we are grateful to my noble friend Lord Strathclyde for his report, I wish that this had been dealt with through parliamentary channels, not by a hasty decision of the Executive to seek a solution. We are where we are, however, and my noble friend’s report recommends option 3, a power to delay, which, if introduced properly, could improve the scrutiny of statutory instruments by Parliament as a whole. My membership of the Merits of Statutory Instruments Committee has opened my eyes to the scale, complexity and range of secondary legislation. That scrutiny is certainly needed, and I support the suggestion made in option 3.

I have not been a Member of the other place, but the scrutiny there of statutory instruments appears not to be intense. In the case of tax credits, without the benefit of the impact assessment requested by my noble friend Lord Trefgarne on behalf of the committee, it was voted on. The article referred to by the noble and learned Lord, Lord Wallace of Tankerness, by Mr Matthew Parris, a former Conservative Member of Parliament, described statutory instruments as,

“the fat, hidden underbelly of our lawmaking. Peers are good at small print, but the Commons should worry about the mountains of SIs it waves through”.

If the power to delay were to be the abandonment of our veto, then before that is agreed some conditions should be applied and some questions answered. Is the veto removal limited merely to financial statutory instruments? If so, how will financial instruments be defined? Is the right of veto to be retained over non-financial instruments? How many of them are without financial impact? I believe that a power of delay has to be for a set period to ensure that the House of Commons has and allots time to debate and consider our reasons for rejection, and to return the instrument with amendments or with reasons for maintaining its position. This is power for Parliament, not for your Lordships’ House. My noble friend Lord Strathclyde argues against a set period for delay on the grounds that there may be urgency, but that should be an exception, not the rule.

I am not a noble and learned Lord. Reference has already been made to the Fixed-term Parliaments Act by the noble Lord, Lord Kakkar, which repealed a provision in the Parliament Act and replaced it with a power for a statutory instrument put forward by the Prime Minister to extend Parliament for a maximum of two months. As he said, that is a principle that needs looking at. Our House is also bound into the process. The Statutory Instruments Act itself, as amended, deals with what must occur if an instrument is to come into force before being printed and laid before Parliament, and involves notification being sent not just to Mr Speaker but to the Lord Speaker together with an explanation. These are all matters that need consideration and discussion.

I am glad that my noble friend chose not to respond to representations about composition, nor to comment on ideas to reduce the overall numbers to reflect the votes cast in a general election, which is a recipe for a change that would lead to a further weakening of the independence of this House and its Members and create a Chamber much more in tune with whatever party formed the Government and, hence, a stronger Executive. The present situation regarding numbers in this House is not the fault of the House or any of our colleagues in any part of the House, and needs not legislation but the spirit on the part of all the parties here that led to the Salisbury, Addison, Carrington, Shackleton and, indeed, the then Viscount Cranborne and the noble and learned Lord, Lord Irvine, agreements at various times in this House.

Lastly, if there is to be legislation, I ask my noble friend the Leader of the House to confirm that it would be a House of Lords Bill, not one subject to the Parliament Act.

19:44

[Lord Desai (Lab)]

My Lords, we know that the noble Lord, Lord Strathclyde, is a very nice man. I have known him for all the 25 years that I have been here, and he has shown great courtesy, charm and ability. So the question before us is: why does the Prime Minister not like him? Why has he given him what in rugby terms is called a hospital pass? He has been given the thankless task of trying to make a major tactical mistake by the Government, which was shown by your Lordships’ House to be worth definite rejection, seem respectable, retrieving the disaster that was visited upon the Government by pretending that the fault was somehow that of your Lordships’ House.

We have had an interesting and wide-ranging discussion today. We have had a kind of admission by the noble Lord that, strictly speaking, conventions were not broken on 26 October by the two Motions that were put to the vote. In the debate on the day, the noble Baroness, Lady Meacher, said she was introducing her Motion because she knew that within three days the House of Commons would be holding a discussion on precisely the tax credit issue, so she was genuinely asking the House of Commons to think again. We all thought what would happen, after we had debated and passed the Motion, was that the House of Commons would think again. Indeed it did, and the Chancellor thought again too. As the noble Lord, Lord Cormack, said, it is the most popular thing that the House of Lords has done as far as the British public were concerned, and the most effective thing, in that the Chancellor dropped the policy. He had to revise his policy, come the Autumn Statement.

Given that all these things have happened, why do we have to consider all sorts of questions about the position of this House vis-à-vis the House of Commons, matters of power and privilege and all that? Why can we not just admit that, strictly speaking, had the Government wanted drastically to cut tax credits—they have the privilege to do so if they want to—they should have done it via primary legislation? That would have been the end of the matter and we would not have been able to do anything about it. So why did the Government do it by statutory instrument? It is precisely because there are 1,000 of them every year. I was privileged to be on the first committee of your Lordships’ House on the scrutiny of secondary legislation and, let me tell you, they are mind-numbingly boring. However, you have to go through the details because those details matter; they have to be examined. I think someone in the other place thought, “Statutory instruments are so boring that no one’s going to take this one seriously and it will pass”. It is precisely because secondary legislation is overused that a trick was tried on us that failed.

I remember Lord Simon of Glaisdale, whose name was mentioned earlier, who used to warn us about Henry VIII legislation and so on. There is indeed a problem; if we are going to have 1,000 or 1,200 pieces of secondary legislation, someone has to scrutinise them. I also agree with the many noble Lords who have said that your Lordships’ House would scrutinise them with much greater care and attention than would the other place. However, given that, we also ought to ask whether a lot of those sorts of decisions should not be much more open and transparent and be part of primary legislation, and not in skeleton Bills? Therefore, those are the issues.

I want to make one slightly radical suggestion about financial privileges. I accept that since the 17th century or before that it has been the House of Commons’ privilege to have powers with regard to financial matters. In 1911 the House of Lords blotted its copybook and got smashed for that reason—quite rightly so—and in 1949 our powers were again curtailed. Coming to today, the relationship between our two Chambers is quite different, because your Lordships’ House is no longer a seat of privilege or a place of feudal Lords. It is a place as representative of the great British public as is the House of Commons. Yes, we are unelected, but we are not unrepresentative. Also, as was proved on 26 October, we sometimes have better judgment on financial matters than another place.

Therefore, when we examine all the big questions of our constitution, we ought to ask ourselves: is it not time that we used the expertise of this House and its representativeness to have a greater input into financial matters than it is allowed today? It will not happen any time soon—if we ever have this great constitutional convention we may be able to consider that—but we should certainly not leave that question undiscussed in our future deliberations.

19:51

[Lord Greaves (LD)]

My Lords, at this stage of the debate I do not want to do what so many noble Lords so far have done. I have listened with great admiration and have been bowled over by so many cameo presentations from noble Lords that summed up the position from their point of view based on so much distinction, experience and wisdom. I was particularly fascinated by the speech by the noble Lord, Lord Norton of Louth, and his explanation of the difference between conventions and usages. I shall dine out on that for quite a long time.

The noble Lord, Lord Empey, asked, “Is there a crisis?” and said that there was not. I agree with him. The noble Lord, Lord Foulkes of Cumnock, pointed out that a fit of pique by the Prime Minister and an outbreak of anger at the top of the Government does not amount to a constitutional crisis. However, this whole process, if it is handled well, could lead to better procedures in Parliament as a whole. I will therefore just chuck one or two little pebbles into the pond.

First, in the foreword of the report—that shows that at least I read the first page, if nothing else—the noble Lord, Lord Strathclyde, calls for “more certainty and clarity” to be brought to the process of bringing statutory instruments and their passage through Parliament. I thought about this. Yes, we want clarity of process and procedures and quality of scrutiny, which is very important. On certainty, clearly we do not want chaos, where everything is being thrown to the winds all the time, but absolute certainty makes a mockery of proper scrutiny. The Government ought not to be in a position where they are 100% certain to get their statutory instrument through every time, otherwise the ability to make changes when things go wrong is taken away.

My second point leads on from that. This House has very good procedures for dealing with statutory instruments, particularly the Secondary Legislation Scrutiny Committee and others, which, as many noble Lords have pointed out, do better than the House of Commons. However, that all depends on the willingness of the Government to take seriously the concerns and representations that are made. A veto used five times in 60 years is hardly a threat to any Government or to the constitution, but it is important as a backstop. There is a lot of anecdotal evidence one can cite of civil servants writing statutory instruments and Ministers putting them forward, having to think hard and to rewrite drafts and so on because they know that that power is ultimately there and that scrutiny will take place to find out if the legislation is necessary. If that veto goes, there could be far more objections by noble Lords, as has been suggested by various Members in the debate. It will be easier to reject because it will not be fatal, and that could diminish the process; the process that we have could have less effect than it does at the moment. The noble Baroness, Lady Andrews, said that it could lead to greater abuse, and I agree with her. That is one of the unintended consequences.

My third pebble is that we must be very careful to ensure that this process does not lead to unintended consequences. One could be that when we are discussing primary legislation, there is greater pressure to refuse to accept a ministerial power to make orders and regulations in the Bill because the process of scrutinising those when they are made may be less useful, which could cause more unnecessary and irrelevant debate at the Bill-making stage. The Government ought to be careful about what they wish for.

The noble Lord, Lord Strathclyde, also said that his third proposal gives us what we do not have now—an ability for a conversation between the two Houses. It does not; all it provides is the ability for this House to reject and for the House of Commons perhaps to reject the rejection within days—certainly it would not come back and there would not be ping-pong. However, if we look at ping-pong on Bills, very little conversation takes place between the Houses. Conversation takes place informally, outside the formal structures, among politicians within the Government and between the parties, but there is very little conversation between the Houses. I suggest that the exchange of brief, inadequate messages is not a conversation. If we need conversation between the Houses, let us think hard about that issue and think of ways to set up some kind of mediation committee or negotiating system between the Houses to do a much better job than coming here occasionally in our pyjamas at 4 o’clock in the morning and traipsing through the Division Lobbies on the fifth ping-pong on some Bill.

The noble Baroness, Lady Smith of Basildon, in a superb introductory speech from her side, pointed out that at the moment statutory instruments are in a direct relationship between the Government—in the form of their Ministers—and each House of Parliament. That is the formal system; I accept that political discussions also take place informally. However, if we want to introduce a new formal system in which there is a relationship between the two Houses on statutory instruments as there is on Bills, we need to think of better ways of doing it than ping-pong, as I have just said. That at least is a constitutional issue that needs thinking about carefully and not just rushing through because the Prime Minister was piqued.

My final pebble is this: everybody thinks that House of Lords procedures have been here for 700 or 300 years, or whatever it is, and that they are historic and traditional, but of course it is completely untrue. They evolve all the time in a sensible, pragmatic way so that this self-regulating House can do what it wants to do. Therefore, let us not do anything which stops us doing what we might want to do on some occasion in the future. Let us do it in a careful, evolutionary way, and when we do that, three weeks later everybody will think that it has been here since 1215, probably.

19:59

[Lord Cromwell (CB)]

I join those thanking the noble Lord, Lord Strathclyde, for his very thoughtful and thought-provoking review, not least because of the quality of the debate that it has provoked here today, which has brought forth two such excellent and educational maiden speeches. I was a little more nervous to hear about the dreams that the noble and learned Lord, Lord Judge, has of beheading Cromwells, even if they are not my kinsmen, but I hope he sleeps rather better tonight after the very powerful speech he gave us earlier on.

When I first read the review, I found a great deal to like in it. Option 1 is, I suspect, a straw man, while option 2 is almost the status quo. Option 3, to which we are therefore ineluctably led, has an appeal. All the options in the report are designed with one purpose, which is to reduce the ability of this House to thwart the will of the other place. That is, of course, as it should be. Noble Lords may cite examples of where that thwarting has saved the Commons from itself, and we may even have reflected the popular mood on an issue better than the other place on occasion, but that is not our job. The role of this revising Chamber, which it does brilliantly, is, first, to assist the other place in avoiding the unintended consequences of the Government’s legislative programme and, secondly, to provoke thought rather than confrontation. This is achieved through a combination of the wealth of experience in our House and our role in painstaking examination of proposed legislation. However, in the end, the elected Chamber must have its way. That includes the right to pursue policies and legislation that are unpopular, including with some Members of this House, and taking the electoral consequences.

The second thing that appealed to me about option 3 was that it stresses the need for clarity and simplicity. We have talked very inwardly tonight, but out there beyond the Westminster village there is a great need for that clarity of understanding. Many citizens—lamentably few of whom know what this House does or contributes—need a clear understanding of the valuable role of this House, the areas where it excels and where its authority starts and finishes. Option 3 goes a long way to making clear and giving practical effect to the primacy of the House of Commons in interaction between the two Houses. I believe that is what the people of this country would expect.

However, there are difficulties, as ever, in the details of the report, particularly with option 3. First, as a number of noble Lords have said—notably the noble Lord, Lord Empey, and the noble and learned Lord, Lord Hope of Craighead—what is to prevent the House of Lords overusing the ability conveyed in option 3? There is a real risk of option 3 enabling political skirmishing between the Houses. That would be regrettable and I hope that the closing speeches we will hear tonight will tell us how that will be avoided. Conversely, on the other side of that coin, what is to prevent the Commons—a number of speakers have touched on this—simply adding a tick-box process to dismiss the communications from this House and paying little heed to their content? This is a real concern, widely mentioned this evening. A number of commentators have raised worries about the quality of scrutiny in the Commons anyway: both before statutory instruments even come to us and how they would be scrutinised and debated in the Commons if this House sent them back. The review suggests that a requirement for a Written Ministerial Statement might be used, but is that really going to be enough? Again, I hope that we shall get more clarity on this in the closing part of the debate.

The review ends with two further recommendations. The first is a review of when Commons-only procedures should apply. That makes sense if it avoids the abuse of the system to smuggle through aspects of policy and legislation that deserve proper debate and scrutiny. It would be helpful to know if or when this review has actually been scheduled. Secondly, there is not so much a recommendation as an appeal to the Commons to provide Bills and instruments that are more fully written—or, to use the language of tonight, less skeletal. This is something which has often been expressed in this House and is devoutly to be wished for. However, we may wonder whether it is more of a hope than an expectation. Were any signs of progress in this area detected during the course of the review?

Finally, I see the merits of option 3 as a one-off updating of the conventions of this House. But—and again it is a substantial but—it is of course risky to adjust, as this review does, one part of the machine in isolation from other, wider changes in this House and, crucially, in the other place. But that is probably a debate for another day, or perhaps even a Joint Committee.

20:05

[Lord Elton (Con)]

My Lords, a few moments ago, the noble Lord, Lord Greaves, suggested that anything we did now would be thought by everybody outside this Chamber to have been going since 1215. One of the things I find quite incredible about this country, and particularly the political class in it, is the ignorance about what did happen in 1215, which was the creation of a desperately needed organisation to control the Executive—not one to facilitate them. The Executive were not permitted to enter it until the reign of George I, who did not speak enough English to deliver the King’s Speech and had to have a Prime Minister in here to do it for him. Now we have more than 100 of his kin, as it were, in the two Houses.

That makes it increasingly important that we guard the power not just of this House but of Parliament to control the Executive. On occasion, the Government—the Executive—get control of the other place to the extent that it loses its ability to control the Government. I refer to the occasion when the Labour Party wanted to introduce 90-day detention without habeas corpus or any access to lawyers. That was only stopped because this House sat from 2.30 pm on a Thursday until 7.31 pm on a Friday evening. Your Lordships may think this is a long session, but it is nothing to what we did then. That actually stopped it. That was such a close demonstration of how difficult it is when we are really needed to restrain the excesses of an Executive that I, for one, am certainly not tempted by options 1 or 2. Option 3 is defective in two respects, to which I will return.

The other thing that amazes me about people in Parliament since 1973, when I joined it, is that I see endless processions of Oppositions clamouring for more restraint of government and coming on to the Front Bench, both here and in the other House, promising to do something about it. Within months—my noble friend Lord Higgins made this point rather well—they are saying it is not convenient or timely and actually find they like things as they are and that it makes business easier. The departments tell them that they should not build obstructions to the policies the department wants to put in, and the result is that nothing much happens in the right direction after the first six months or so in power. Incidentally, it was in her first six months that Lord St John of Fawsley got Margaret Thatcher to accept departmental Select Committees in the House of Commons, which has been tremendously important but is something she would never have done in the following years.

I come from the wrong camp: I am a Conservative, but a parliamentarian, and my view is that we should hang on to all the powers we have. The fat underbelly of legislation, as it was described a moment ago, exists in the huge amounts of legislation that go through in statutory instruments. How do we ever stop the excessive powers put into statutory instruments? If the Henry VIII clause has gone through, if the Minister has the power and if the department wants the legislation, how do we stop excessive powers and excessive expenditure—things that should not happen without proper and full parliamentary scrutiny—if we cannot say no? We can send them back for the House of Commons to think again, but if the Commons just nods them through, the same faults will be repeated.

There is much in option 3 that is desirable. I think it is necessary to have a specific time limit within which the House of Commons should make up its mind. There should be machinery to see that legislation is actually debated. My noble friend said that you could not do that because debate might go on—or there might be no debate—before the statutory instrument fell due to be implemented. The answer to that is to have a timetable for the tabling of statutory instruments by departments such that there is time for them to be scrutinised and discussed by both Houses in an interchange before the implementation date. Departments are sometimes pretty slack in getting these things out. What is now needed is a review of the whole SI process from drafting through to the instrument’s scope and the powers it confers, followed by the tabling and the procedures in Parliament. If those matters can be matched into a discussion of the wider question of the arrangements between the two Houses, all well and good. However, we need to get on with something.

If the commissioning of this report was a reaction to what was thought to be an unpopular exhibition, with the House of Lords being out of date and unpopular with the country, my response is that I think that in the country as a whole it was thought that we did rather a good job. If we want to do something to show that we, the House of Lords, wish to make ourselves more effective, easier to run and less expensive, we should address the question of the numbers in this House. I have a Private Member’s Bill on the stocks and am working on a Standing Order which, between them, would achieve that reduction without changing the balance between the parties.

I hope that your Lordships hang on to your powers for as long as you can.

20:12

[Lord Haughey (Lab)]

My Lords, I begin by congratulating my noble friend Lord Darling on a first-class maiden speech. I am sure he will be a fine addition to this noble House. I also congratulate the noble Baroness, Lady Bowles, on a wonderful maiden speech.

Much has been said today about the rights and wrongs of the vote taken in this House on 26 October last year and I have no intention of repeating what your Lordships have already heard. I would like to dwell on what happened because of that vote and may take a different slant, as my noble friend Lord Foulkes did in his speech. My speech will, I hope, be short and to the point. I should have mentioned earlier that I was giving the noble Baroness, Lady Hollis, three minutes of my allotted time.

At the end of October last year, this House was asked to scrutinise the tax credit regulations. After much debate it became apparent that there were various degrees of opposition from all sides of the House. The subsequent vote demonstrated that the majority of this House felt that the regulations should not be passed.

The uproar from the Government that followed that decision was absolutely astonishing. The knee-jerk reaction created headlines once again calling into question the legitimacy of this House. This led to the Prime Minister instructing the noble Lord, Lord Strathclyde, to carry out a review of the House of Lords. There followed media reports outlining how the decision was unprecedented and broke with convention. Some even suggested that this House had overstepped the mark. None of that is true. What we did in the tax credit regulations vote was exactly what this House was set up to do. The combined wisdom of this House prevented truly unjust financial misery being heaped upon nearly 2 million people. The banner headlines were all about opposition victory and government defeat. There was no victory and no defeat. After serious debate, common sense prevailed. We were asking the Government to think again.

Over the next few weeks, as the dust settled, the Government began to realise the ramifications of the regulations—that they were maybe a step too far. The Chancellor had the opportunity to lighten their burden. Even some Tory MPs on the Back Benches welcomed the opportunity to revisit them. The Chancellor, to most people’s delightful surprise, took the decision to do a major U-turn. This was met with great cheers from most Members of all parties in the other place, and the Chancellor actually made it look like a victory speech. Some commentators believed that it had greatly enhanced his chances of promotion.

In recent times, never has a decision been made in your Lordships’ House that has so overwhelmingly been proven to be the correct one. Over the past five years, this House has attracted numerous unsavoury and unwanted headlines—unfortunately, most of them warranted. Our legitimacy and very existence has been called into question. We could not have afforded to pay the PR bill for the positive response that this House got after that vote. There is no greater example of the worth of this Chamber and of the reason that it should exist than the outcome of the tax credit regulations vote. Suddenly millions of people throughout the UK realised that we had a major role to play.

The noble Lord, Lord Strathclyde, has now concluded his review and I imagine that most noble Lords will have read it. The noble Lord’s favoured option is option 3. Like most Members of this House, I absolutely welcome a review of the structure of this great institution. However, it is a sad day when a decision made in this Chamber, which is now accepted by all parties to be the correct one, creates a situation where we are now discussing constitutional change. This is absolutely absurd and wrong.

Looking at the structure is one thing; changing the parameters or the remit of this House because of one vote is highly dangerous. If this is allowed to happen, where will it end? I personally believe that if option 3 were adopted it would be a sad day for this House. If this option had been in place when we had the vote in October, 1.8 million people would be suffering horrendous financial hardship, because a measure that is now widely accepted as being wrong could be in place.

I thank the noble Lord, Lord Strathclyde, for all his efforts in the review, but I honestly believe that adopting option 3 would diminish the worth of this House. The review smacks of an instrument that would deliver the Government’s desired outcome, no matter what. This “scope creep” by the other place is not healthy and should be resisted vigorously. As has already been stated by the noble Lord, Lord Cormack, in relation to public response the outcome of the vote on 26 October last year was certainly the most popular that this House has delivered in many decades. People on the outside looking in must be bemused by the fact that this has resulted in a debate around constitutional change. We must always remember whom we are here to serve.

20:18

[Lord Craig of Radley (CB)]

My Lords, I venture to speak in this debate because, when it comes to tabling and then moving an annulment Motion to an affirmative instrument, I have form. I tabled an annulment Motion to the Transfer of Tribunal Functions Order 2008, an affirmative instrument. One long-standing tribunal, the Armed Forces Pensions Appeal Tribunal (England and Wales), dating back to 1919, was to be scrapped. Its work was to be taken on by a widely drawn social entitlement chamber. The Royal British Legion, COBSEO and senior members of the existing tribunal all told the Government that this did not make sense, well before the order reached your Lordships House.

It was clear that the order had had little consideration in the other place, and it was being taken for granted by the Government that your Lordships would also nod it through. So I tabled my annulment Motion just before the 2008 Summer Recess. I was of course made aware of the convention about such an amendment, but I felt that the issue was of such importance to Armed Forces veterans that I should proceed in the hope that the Government might think again. Indeed, during the Recess, the Government took greater heed of the expert advice that they had received. They decided to set up a separate Armed Forces chamber. The Lord Chancellor, then Jack Straw, and the Senior President of Tribunals signed a joint undertaking that no later attempt would be made to unpick this arrangement unless first approved by Parliament. This was subsequently incorporated into a Written Ministerial Statement on 16 October by the Lord Chancellor, and repeated by the noble Lord, Lord Bach, for this House. When the House came to debate the order on 23 October, I moved my annulment Motion but had already agreed with the Government that, in the light of the changes they had made and the Written Ministerial Statement, a key undertaking, I would not divide the House on my amendment.

In keeping with his terms of reference, the review by the noble Lord, Lord Strathclyde, offers three options for consideration to replace the present arrangements on the debatable ground that the Government have an explicit, invariable right to carry all their proposed legislation—a position where, to quote from the review,

“the veto is left unused”.

None of these three options seems to be a widely favoured runner, being either too extreme or having to rely on achieving a legally binding or codified consensus across both Houses.

My proposal, for what it is worth, based on my experience in 2008, is not to seek to change the current “convention”—it should by now be in quotation marks. The House should not readily surrender its very long-standing power to move a veto in exceptional cases. The historical record of the rarity of annulment defeats, going back to the 1950s, is well known. Since my Motion in 2008, there have been only nine attempts in over seven years to reject, as opposed to regret, an affirmative SI. In only one were the Government actually defeated before the recent case and the heavyweight, OTT reaction to it. In the same period, more than 1,500 affirmative SIs were passed by this House; a success rate for the Government verging on 99.5% of their business—surely close enough to the “certainty” that the Strathclyde review envisages.

Given such figures, it seems statistically most premature to be doing more than considering a possible way forward—contingency planning, as it were—in the event that the examples relating to tax credits and electoral issues prove to be the harbinger of frequent and successful attempts in this Parliament to thwart government SI business. Although the recent experience was a greater setback for the Government than my case in 2008, the principle of expecting the Government to think again, ahead of a debate, a vote or on an annulment Motion, is sound. It is a fine example of holding the Government to account and gives them the opportunity to reconsider, modify their original intention and seek a better consensus and more widely acceptable outcome. It would be wrong to give the Government a freedom from expert scrutiny, which this House demonstrates, time after time, in the course of its work. Government should welcome that scrutiny and not seek in narrow party interest to weaken, let alone bypass, that input to legislation.

With the benefit of hindsight, I see that it was a mistake for the Government to have relied so much on the supply argument in the tax credit SI. In casting my vote, I supported this, but I did so with a heavy heart because I felt that the arguments so forcefully put for the other side during the debate needed far greater consideration. Indeed, the outcome indicates that the Government have, in part, acknowledged the strength of the counterarguments.

To conclude, I do not favour any of the three options. I would prefer to remain, for the moment, with the current “convention”. It is the least objectionable of the possibilities before us. Indeed, I shall not hold my breath in expectation that any of the options put forward by the noble Lord, Lord Strathclyde, will be adopted. Perhaps if a wider look were to be taken at the complex constitutional issues involved, a better solution than the present one might evolve. Again, however, I do not propose to hold my breath.

20:25

[Lord Crickhowell (Con)]

My Lords, in the course of my remarks I will say something about what was said in this House on 17 December about the proposals made by my noble friend Lord Strathclyde—and, just as important, what was said in the Commons on the same day. My noble friend recommended his third option, but it is clear from what was said in the other place that the first option,

“to remove the House of Lords from statutory instrument procedure altogether”,

remains a powerful runner, despite the fact that, to quote the Hansard Society, it would risk,

“turning a deeply flawed process into a farce”.

The noble Baroness, Lady Smith of Basildon, and indeed my former pair, the noble Lord, Lord Cunningham of Felling, appear to believe that they are engaged entirely in a battle with the Executive so that Parliament can hold the Executive to account. The reality, as I will show, is that if we are engaged in a battle, it may be as much with Members of the House of Commons as it is with government Ministers.

Several noble Lords have said that this is not the way to effect constitutional change and that there would be no proper scrutiny of what is proposed. The noble Lord, Lord McNally, and the Liberal Democrats have argued that the House of Lords must have the right to say no and that without retaining that right, used sparingly, carefully and rarely, we become a mere debating society. The noble and learned Lord, Lord Wallace, supplemented his hostility to what is proposed with a procedure to allow SIs to be amended.

In the face of such strongly expressed objections to the conclusions of my noble friend Lord Strathclyde, a very powerful contrary view was expressed by the noble Lord, Lord Butler of Brockwell, as was referred to today by the noble and learned Lord, Lord Hope of Craighead. The noble Lord, Lord Butler, spoke in December of the dissatisfaction in all parts of the House with the binary choice that is open to us to either accept or reject statutory instruments. He pointed out that my noble friend Lord Strathclyde’s recommendations were very similar to those recommended by the royal commission chaired by my noble friend Lord Wakeham, who then intervened to confirm that the royal commission had made its recommendations because it wanted a better way for the House to discuss statutory legislation, and to suggest that there was a great deal of support in this House for the proposal.

He reinforced that judgment today, and I share that view. It was significant that, later, the noble Lord, Lord Richard, said:

“There is a good case for this House giving up its veto”.—[Official Report, 17/12/15; col. 2200.]

It is also significant that the noble Baroness, Lady Meacher, said that my noble friend Lord Strathclyde’s third proposal could be a useful way forward.

In arriving at a conclusion, we need to take account of what was said in the other place. I fear that it may not be as helpful a coming together as that advocated by the noble Lord, Lord Maclennan. Those who argued here that this was being pushed through without the opportunity for proper debate, and those who pointed to the shortcomings in Commons procedures for handling statutory instruments, appear to overlook the fact that it is to be dealt with by primary legislation. Mr Bernard Jenkin, who chairs the Public Administration and Constitutional Affairs Committee, said that his committee will wish to look at this, just as the Procedure Committee will. He posed a number of key questions and finished by saying:

“I assure my right honourable Friend that we will be looking at these matters in great detail”.—[Official Report, Commons, 17/12/15; col. 1743.]

I am sure that both Houses will do the same. It may be that that is one of the opportunities that will arise for dealing with the important constitutional point raised by the noble Lord, Lord Kakkar.

We would be incredibly foolish if, in reaching our own conclusion, we ignored the opinions expressed in the other place about this House and its role. Even if we unwisely discount the unanimous opinion of the four Scottish nationalist Members who spoke on 17 December, who believe that the second Chamber should be abolished as quickly as possible, it would be folly to ignore the strongly expressed views of the seven Conservative Members who also spoke, who I am sure reflect opinions very widely held in the other place. Two of them favoured the first option; only one welcomed option 3. He urged action to deal with some of the things that make this House, as he believes, almost a laughing stock. One referred to the archaic features of our constitutional arrangements; two pressed for an elected House; and one, the new Member for Yeovil, thought we were a completely ridiculous anachronism.

With views of that kind being expressed so forcefully in the Commons and with a great many in this House wanting the sensible compromise suggested by my noble friend Lord Strathclyde, to delay everything for a Joint Committee would be a mistake. There is a need for a Joint Committee for the powerful reasons that have been put to us today. As a former member of the Constitution Committee, which has frequently criticised the manner in which SIs are used and the far too frequent use of Henry VIII clauses—I enjoyed the contribution of the noble and learned Lord, Lord Judge, on that subject—I would also like to see a major independent review of the whole legislative process, as advocated by the Hansard Society. But that would take years, and its implementation even longer.

If I am even half-right about the strength of feeling in the other place, there has to be a compromise now, even if it is only an interim step. We need to get on with things, just as we need urgently to get on with our own reform of the membership and conduct of the House of Lords.

20:31

[Lord Williams of Elvel (Lab)]

My Lords, I follow the noble Lord, Lord Crickhowell, in two senses: first, we must listen to what happens in another place; and, secondly, we must not resile from our duty to be a revising Chamber.

In passing, I endorse the view of the noble and learned Lord, Lord Hope of Craighead, that option 1 will not fly. I also endorse the view of the noble Lord, Lord Norton of Louth, that conventions are not really substantial. I remember sitting on the Opposition Front Bench, as the noble Lord, Lord Strathclyde, will remember, for 10 years in opposition. Every time an SI came up, we consulted: “Shall we try to jump them on this or not?”. The argument generally was no, we should not, because they will do it to us if we come into government. So it is realpolitik; there was no convention in it.

I was most impressed by the noble Lord, Lord Kakkar, and the noble and learned Lord, Lord Judge, because I think that there is a distinction in statutory instruments between those which are the normal run of business and those which seek to amend primary legislation. I shall follow up that argument. Since 2010, 34 Acts have been passed by Parliament with Henry VIII powers. Before us at present there are five Bills with Henry VIII powers. In case your Lordships are not familiar with Henry VIII powers, I should like to read from Clause 68 of the Scotland Bill, which states:

“The Secretary of State may by regulations make … such consequential provision in connection with any provision of Part 1, 3, 4, 5 or 6, or … such transitional or saving provision in connection with the coming into force of any provision of Part 1, 3, 4, 5 or 6 … Regulations under this section may amend, repeal, revoke or otherwise modify any of the following (whenever passed or made)”—

and so it goes on. In other words, if your Lordships think that you have passed a Bill, you have not—because the Secretary of State can amend it by statutory instrument.

If we are considering the passage of SIs in this House, we ought to distinguish between those SIs, as the noble Lord, Lord Kakkar, pointed out, which try to amend primary legislation and those which do not. If they try to amend primary legislation, I would argue that we in this House should adopt procedures, such as Third Reading procedures, where we could discuss the primary legislation which is to be amended—and, indeed, amend it and send it back to the Commons for consideration. If we resile from that possibility, I am afraid that we are giving up our primary function, which is to revise primary legislation when it comes before us and send it back to the Commons if we do not agree. I would like the Government to consider that when they follow up the report of the noble Lord, Lord Strathclyde.

My second point is whether option 3—which is the only one seriously on the table—should be introduced through primary legislation or Standing Orders. The noble Baroness, Lady Fookes, made a very powerful case when she said that we have got to sort out what would be the result of option 3. I would support primary legislation for option 3 if there is a general agreement between us and the House of Commons about what should be the general thesis of how both Houses approach statutory instruments. I cannot understand any idea that this House’s approach to statutory instruments should be decided unilaterally by the House of Commons. In other words, if there is to be a unilateral decision I would prefer it to be by Standing Orders.

The noble Lord, Lord Strathclyde, quite rightly points out that Standing Orders can be suspended. That is true, but the Companion states quite clearly that for Standing Orders to be suspended, there has to be agreement within the House; in other words, between the usual channels. So any idea that Standing Orders can be suspended in order to try to pass a contentious statutory instrument does not really fly.

With those two caveats, I basically welcome what the noble Lord, Lord Strathclyde, is putting forward in option 3. It is about time we had an idea of how both Houses should deal with statutory instruments generally. We lack a definition of how the House of Commons can establish its financial privilege and how we should obey it in this House, with the primacy of the House of Commons. So I give the proposal half a fair wind—but I hope that the noble Lord, with all his experience, will recognise that half a fair wind coming from me is not bad.

20:37

[Lord Clement-Jones (LD)]

My Lords, we have had some hugely interesting and expert contributions to today’s debate. I am not a constitutional or procedural expert, and no doubt the noble Lord, Lord Crickhowell, will find me boringly predictable in agreeing with my colleagues that we should retain the veto, but essentially I want to draw some conclusions from my experience in March 2007 in persuading the House to reject by three votes an order which proposed the location of the first super-casino in east Manchester. I am glad to say that the angels, in the form of the then most reverend Primate the Archbishop of Canterbury, were on our side for a change, and of course the noble Lord, Lord Strathclyde, referred to that occasion earlier.

I take very little credit for the outcome of that debate because the arguments had been made in advance. Of huge importance was the fact that the Merits of Statutory Instruments Committee, now known as the Secondary Legislation Scrutiny Committee, had in no uncertain terms drawn special attention, first, to the change in the remit of the Casino Advisory Panel from the one originally announced by Ministers, and secondly, to the problems in the way that the panel interpreted and carried out that remit in producing its recommendation to site the super-casino in east Manchester; and that therefore, in the time-honoured phrase, the SI might “imperfectly achieve its objective”. I probably do not need to remind many noble Lords that the committee was chaired by the noble Lord, Lord Filkin, who at the time sat on the same Benches as the then Government.

During that debate, we had some procedural discussion as to whether it was proper to vote down a statutory instrument of that nature. I pointed out Lord Simon of Glaisdale’s 1994 Motion, which many noble Lords have cited today, about our unfettered freedom to vote on subordinate legislation, which of course is contained in the Companion. It was also referred to particularly by my noble and learned friend Lord Wallace of Tankerness.

But as it happened, a few months before that debate, the Joint Committee on Conventions chaired by the noble Lord, Lord Cunningham of Felling—who I was very glad to hear speak today—had published its report. I also quoted paragraph 216 of that report in the chapter relating to secondary legislation, which again referred back to the merits committee:

“The Lords SI Merits Committee considers that powers and conventions in this area are adequately codified in each SI’s parent Act and in the Companion, and that nothing further is called for. Parliamentary scrutiny of SIs is a growth area; the power to reject SIs gives Parliament ‘leverage’, and should if anything be exercised more, not less”.

The report went on to broadly agree, apart from that final sentiment, that the power should not be exercised frequently but that there was no constitutional convention against doing so, and that indeed it was legitimate to threaten defeat in a number of specific circumstances, one of which relates to special attention being drawn by the Secondary Legislation Scrutiny Committee. That particular occasion fell foursquare within the terms set out by the Cunningham committee. At the time the House, as it does, listened carefully and accepted that the Cunningham report was essentially correct, and I believe that the vote reflected that, by a narrow margin.

I believe that the report still makes good sense, and that is why I was delighted to hear from the noble Lord, Lord Cunningham, today. It is given weight by the fact that the committee chaired by the noble Lord, Lord Goodlad, with a Government and a chair of a different party stripe, subsequently took a not dissimilar view and made sensible suggestions about returning SIs which had been rejected and were coming back to this House.

A number of noble Lords, including the noble Lord, Lord Strathclyde, himself have mentioned the fact that back in 1999 or 2000, the noble Lord seemed to agree with those on this side of the argument. He referred to his statement about declaring the convention dead, and all credit to the noble Lord, Lord Grocott, for digging out further compromising statements by the noble Lord, Lord Strathclyde. After that, however, the noble Lord seems to have done a complete about-face both in his evidence to the Goodlad committee and now in this report. His views seem to have changed, and the shadow Leader of the House referred elegantly to the fact that when Ministers are in government they take a somewhat different view. The noble Lord, Lord Cormack, took a rather more crude approach, if I may say, but used a none the less vigorous expression in terms of the “Corporal Jones rule” that we must now refer to, and I entirely agree. But to be quite fair, the noble Lord, Lord Davies of Oldham, made exactly the same points when the casino order was up for debate, and I believe that life was ever thus.

By contrast, we in this House should remain consistent in the absence of wider reform of the Lords. We should stand on the very firm ground established by the reports of the noble Lord, Lord Cunningham, and of the noble Lord, Lord Goodlad, and not on the shaky arguments set forth by the report of the noble Lord, Lord Strathclyde. Governments often huff and puff, but they benefit from reconsidering a measure when it is defeated in this House. In the case of the casinos order, the Government of the time, under Gordon Brown, could have brought back a new order or rerun the process of selection. But they did not. That speaks volumes, as does this Government’s acceptance of the vote on tax credits.

To give credit where it is due, the report of the noble Lord, Lord Strathclyde, has stimulated debate. But I urge all sides to consider some of the ideas suggested to do far more effective scrutiny of legislation and to have far more effective primary legislation in terms of the way in which powers are delegated, perhaps through another Joint Committee such as that established previously. However, I urge this House to take the Strathclyde report no further.

20:45

[Lord Balfe (Con)]

My Lords, I begin by welcoming the maiden speeches of our two new Members. I have not been privileged to know the noble Lord, Lord Darling, who was in a different establishment from me. But I served in the same Parliament as the noble Baroness, Lady Bowles, who was a very widely respected United Kingdom chair of one of its committees. In the European Parliament, many people look and say, “What country are you from?” and not “What party are you from?”. She represented our country admirably during her period as chair. I am afraid that that is about the only thing I am going to say that is not controversial.

First, it is no use having a House of Lords if it cannot defeat the Government. Secondly, I did not contribute to the debate on 26 October but I sat through it. I have to say to noble Lords on this side that not only did we lose the vote, we also lost the argument. The noble Baroness, Lady Hollis, deployed her arguments extremely effectively and legitimately. Paragraph 2.4 of the report of the noble Lord, Lord Strathclyde, states that the 2006 committee,

“concluded that ‘the House of Lords should not regularly reject Statutory Instruments, but that in exceptional circumstances it might be appropriate for it to do so’ … A number of specific circumstances were identified, for example, when the provisions of an SI were of the sort more normally found in primary legislation or in the case of certain specific orders”.

There are three areas in that where this vote was justified. First, the House does not regularly reject; it does that very seldom. Secondly, there were exceptional circumstances and the fact that the whole issue was withdrawn by the Chancellor is a pretty clear indication of that. Finally, surely expenditure of this level should be in primary legislation.

There has been a mission creep in SIs over the years. They are seen as a very convenient way for the Minister to get something put through the Commons where, as someone has said, the first reaction of any MP to being put on the SI committee is, “Why me?” and the second is, “How long do I have to stay here?”. The SI procedure needs looking at. It is not the reference as to how we deal with it in this House; it is the whole procedure and the way in which this mission creep has allowed SIs to get a place in the British constitution and law making that they were never intended to have.

I am reluctantly in favour of option 3 as a starting point. Above all, if we are to change the regulations, we have to have consensus. Having been in both major parties, I am always conscious that one day the positions will be reversed. We have to make the democracy of this House work. In other words, we cannot say, “We have a majority today and we are going to run away with it”. Whatever way option 3 is developed, we have to have a consensus broadly across the House.

Going back to what I said as regards the Lords having to be able to defeat the Commons, for 10 years in the European Parliament I was fortunate to have a job which took me around the Community on behalf of the Parliament. I can claim to have been in every Chamber of every Parliament in the original 15 member states, before the big enlargement of 2004. Whatever our defects may be, there is great admiration for the fact that the House of Lords is seen as an independent and an intellectually credible Chamber. I do not want to get into trouble with too many embassies, but if noble Lords look at a number of other Chambers, the Irish Chamber is completely tribal, to the point where, if the elections for the second Chamber produce the wrong result, the Prime Minister can top up the second Chamber to give the Government a majority.

[Noble Lords]

Oh!

[Lord Balfe]

That would be a nice thing, would it not? The German upper House has very circumscribed powers. It basically looks after the Länder. It divides its powers with the lower House. It has very little say in the way the federal republic is run, other than within its circumscribed limits. The French upper House is a body of people who are largely delegates from their regional authorities. We all know how that happens: “Pierre is the leader and Françoise, she’s the number two, and we must give the committee on education to so-and-so”. Then they get to the end of the list and say, “Christ, we’ve got to send someone to Paris. Oh, I know: Jean-Marie has been a really good servant of this House and he does like travel, you know”.

There is no perfect way to construct a second Chamber, but we have one. It is a valuable second Chamber. We have to safeguard our rights, one of which is to say to the people down the corridor, “You’ve got it wrong”. If we ever said it at the right time, it was on 26 October, when we said to them, “You’ve got it wrong”, and what did they do? They agreed with us and actually withdrew it. Let us not lose sight of the fact that the vote was followed by decisive government action that basically accepted that this Chamber was right, even though I was, as ever, in the wrong Lobby.

20:51

[Lord Gordon of Strathblane (Lab)]

My Lords, the fact that the report by the noble Lord, Lord Strathclyde, was commissioned as part of a somewhat hysterical overreaction to the defeat that the noble Lord, Lord Balfe, just referred to should not blind us to the fact that it is none the less a very good report. I congratulate him on the speed with which it was produced, its brevity and the contribution of his expert advisers.

The report is a very good start to a debate that needs to commence very quickly because of abuse of SIs not by this Chamber, but by successive Governments dating back over a number of years. The quotation that we heard from the forthcoming Scotland Bill is simply one indication of what the noble Lord, Lord Cormack, earlier referred to as a Christmas tree on which to hang baubles all over the place. The way legislation moves through is a joke. When I came here there was a statutory instrument in a field to which I was vaguely related that required a small amendment. The Chief Whip told me, “Sorry, we don’t do that. We can either vote to veto it or not at all”. That is ludicrous. If statutory instruments are part of the legislative process, they should be subject to the same rules. We must move in that direction. I am quite happy to lose vetoes. Vetoes do not matter. They are, in fact, equivalent to a nuclear option: they are an inhibiting factor rather than an encouragement to proper dissent.

On page 6 of the report, the noble Lord, Lord Strathclyde, states that,

“I believe it would be appropriate for the Government to take steps to ensure that Bills contain an appropriate level of detail and that too much is not left for implementation by statutory instrument”.

That is a very polite way of agreeing with what the Hansard Society says today: that the distinction between the two has long since been abused by successive Governments and we need to start doing something about it.

Option 1 cannot really be a serious option; it is a bit of a joke. Meg Russell very kindly said that it is probably there to make the other two options look attractive. That is perhaps a legitimate objective. Option 2 is essentially staying the way we are, which I do not think works. I would go for option 3, with some amendments, which would be as follows. First, we should be capable of amending secondary legislation, because in many cases it simply needs a tweak, not a rejection. Secondly, we should have a specific time limit for the Government to respond. Thirdly, this should be decided not by statute but by a further Joint Committee on Conventions.

The statutory option worries me more than somewhat. If Option 3 is delivered by statute, what a temptation there is for a future Government to say, “Look, this worked for this statutory instrument stuff, why don’t we stop them doing that with primary legislation as well?”, and we will end up with legislation preventing us offering more than token opposition to anything the House of Commons puts through. I disagree with the noble Lord, Lord Crickhowell: the enemy here is not the House of Commons but the Government—the Executive. The Hansard Society pointed that out in its document published this morning. The noble Lord quoted the reference in that document to a “flawed process” becoming a total farce. The next sentence in that document stated that such a process would neuter the House of Lords. The enemy is not the House of Commons but the Government. They are the only people who would benefit from our being neutered in this manner.

I come to my final point. I am trying to save time to allow those noble Lords who are still trying to get something to eat to do so. It was not our vote that changed the stance on the tax credits issue; it was the fact that it struck a chord within the Conservative Party, some of whose members realised that this was a ghastly mistake and they had better get out of it very quickly. They at least had the sense to change their minds. As has already been pointed out, had the Government wanted to introduce such a measure, there are thousands of ways in which they could have done it. In fact, they dropped the whole idea altogether despite all their claims that it was an election pledge and we could not possibly vote against it because they believed in it so firmly. Nevertheless, they ditched it very quickly in the Budget.

The important thing that we do is focus attention on something and MPs then ask themselves, “My God, I didn’t vote for that, did I?”. Then they realise the mistake they have made and they change their minds. It is the fact that they change their minds that matters and it is that power that we need to retain. Vetoes are unnecessary. I am quite happy to have time limits reduced from a year to six months; it does not worry me at all provided that you give MPs enough pause to have a chance to think again.

20:56

[Lord Wigley (PC)]

My Lords, I enter this debate from a somewhat different angle in that I am only here—that is, here in this Chamber—because of statutory instruments. The reason Plaid Cymru changed its policy in 2007 and decided to accept an invitation to put forward three names for this House was specifically related to the provisions of the Government of Wales Act 2006, which were then coming into force. That Act allowed the National Assembly for Wales to legislate on devolved matters, but only if orders were passed by both Houses of Parliament in each specific instance in which the Welsh Government wished to legislate. In practice, that meant that the unelected House of Lords could block the wishes of the elected Government of Wales. If the wishes of Wales could be frustrated in such a manner, we felt that we should avail ourselves of the three places on offer and make the case for Wales in this Chamber. We were warned, incidentally, by our friends in the SNP not to believe promises made to us, and I am afraid that events rather proved the SNP right.

It was not until January 2011 that I took my place in this Chamber. Within two months, there was a referendum in Wales through which primary legislative powers were accorded to our National Assembly, and the need to get orders for that purpose through this Chamber ended. Sadly, the use of such orders to constrain the powers of the Assembly will arise again in the context of the forthcoming Government of Wales Bill—a proposal that is currently highly controversial in Wales.

In my five years here I have had opportunities to debate numerous orders. One thinks of the pneumoconiosis orders, for example, so relevant to industrial dust sufferers in Wales and elsewhere. Statutory instruments are an essential part of the legislative process. To the extent that this Chamber has a legitimate role in the process of formulating and amending legislation, that process must include secondary legislation as much as primary legislation.

In the context of the Strathclyde review—I congratulate the noble Lord, Lord Strathclyde, on his brevity and focus—a number of detailed issues need clarification, and previous speakers have alluded to some of them. The noble and learned Lord, Lord Judge, in his excellent speech highlighted Henry VIII powers. Incidentally, as the noble Lord, Lord Williams of Elvel, mentioned a moment ago, those powers are today being used in a draconian manner. Clause 42 of the Immigration Bill gives Westminster Ministers powers by regulation to amend, repeal or revoke any enactment of the National Assembly for Wales or the Scottish Parliament in the context of the children’s measure in which that provision is located.

There is one detailed implication that I should like to highlight tonight, which is the acceptability of legislation that has been passed over the years on the basis of details being fleshed out by statutory instruments or updated by such a process, with the underlying assumption that those instruments will be adequately scrutinised. If there had been any question at the time of the passing of the original Acts that the orders would not be scrutinised, or might be subject to a much weaker form of scrutiny, those primary Acts might not have been passed, or at least not in their eventual form. MPs and Peers might have insisted on greater detail in the Bills. That begs a far-reaching question: does changing the way we deal with orders trigger a question as to whether the original Acts, under which those orders are made, lose some of their legitimacy?

I first entered the House of Commons in 1974, when there were some 2,000 statutory instruments each year. Since that time there has been an ever-increasing dependence on statutory instruments to fill in the detail that has been omitted from primary legislation, so that, in 2001, when I left the Commons, there were more than 4,000 statutory instruments. This is unsatisfactory for two reasons. First, orders cannot be amended and so the two Chambers are left with draconian choices of voting them down or approving what they know to be deficient. Secondly, the House of Commons just does not seem to have the time, capacity, or interest in giving secondary legislation the scrutiny it needs.

If ever there is a justification for having a second, revising Chamber—and I believe that in the UK context there is such a need—then it is to do the detailed revising work that the first Chamber has been unable to undertake adequately. If that role is taken away from this Chamber, or our powers are eroded to the extent now being considered, this begs the question of the very purpose of this Chamber. Let us remember that, once the principle of restricting the powers of this Chamber to intervene in secondary legislation has been accepted, it is only a short step thereafter to curtail its powers to amend primary legislation—arguments about which will no doubt be made by Governments who want their programmes bulldozed on to the statute book.

That brings me to the nub of the argument as I see things. It is perfectly reasonable for people outside this Chamber to argue that an unelected House should have no right to amend primary legislation or to block secondary legislation. After all, in any democracy, it is the elected representatives of the people who should legislate on their behalf. It is my view that, until we have an elected second Chamber at Westminster, the role of this Chamber will always be limited and, to a large extent, unclear. We can argue the details of any electoral process necessary to give this Chamber legitimacy but, eventually, we will have to face that reality.

The noble Lord, Lord Foulkes of Cumnock, was absolutely right in saying that these matters, therefore, must be viewed in the overall context of the future of Parliament itself. It is my view that the Strathclyde proposals bring that day of a democratically elected second Chamber very much nearer. I believe that they will have two direct consequences, if they are implemented. First, far more legislative detail, currently consigned to statutory instruments, will have to appear in primary legislation with all that that means in terms of ensuring adequate scrutiny, as indeed the noble Lord, Lord Strathclyde, has himself recognised. Secondly, to legitimise that necessary scrutiny, the second Chamber—to give it an undisputed role in formulating legislation—will have to become a directly elected Chamber. The Strathclyde review has far-reaching consequences and, in going down that path, we should do so with our eyes open and a willingness to embrace those consequences.

21:03

[Lord Cope of Berkeley (Con)]

My Lords, those of your Lordships who have been Members of this House for a few years may remember that I was the Opposition Chief Whip for some years during Mr Blair’s Government. That Labour Government did not have a majority in this House and nor did we. Sometimes, when we had support from other parts of the House, we could and did use the Lords’ full powers, as has already been referred to on various occasions, but we did so sparingly. I am grateful for that word, which was suggested by the noble Lord, Lord McNally, as the correct way to refer to our use of those powers—and, for that matter, other parties’ use of them. That was of course because we respected the role of the elected House and recognised our unelected status here, but also because we did not wish to build up the case for the abolition of the House; in passing, I do not agree with the noble Lord, Lord Wigley, in what he just said, but he will not be surprised by that at all. Both those considerations are still entirely valid.

Rightly or wrongly, the whole issue of statutory instruments and their use—it goes far wider than my noble friend Lord Strathclyde’s report—has now been put on the table. That is as a result of the ingenuity of the noble Baronesses, Lady Hollis and Lady Meacher. My noble friend’s report is the best course immediately in dealing with the situation that has arisen. I am in favour of option 3, but it needs a little further thought before we implement it. Of course it is right that this House should not be in a position to entirely overrule the elected Chamber. At the same time, we should place secondary legislation on a basis more nearly the same as that of primary legislation. If my noble friend’s proposal has logic, it implies—it does not actually say it—that affirmative instruments should always be debated first by the House of Commons and secondarily by this House. That is usually but not always the case, and it would need to be.

Another aspect has drawn a lot of attention in this debate: when there is to be a second Commons consideration, it should always include an opportunity for debate. That is easy to say, but we should recognise that it involves alterations to the Standing Orders of the House of Commons and is not within our gift. However, it should be part of what you might call the deal. The opportunity for debate is more important, and actually a better approach, than the idea of a particular time lapsing after a defeat in this Chamber.

As I said, this debate has gone a lot wider than just the immediate considerations that my noble friend dealt with. The table in appendix C of his report suggests that the number of statutory instruments has remained broadly static since 1997, but a longer view shows that they have considerably increased in both number and importance over the years—certainly in the time that I have been in one or other House. Particularly after the speeches of the noble and learned Lord, Lord Judge, and the noble Lord, Lord Williams of Elvel, I subscribe to the view that the number of statutory instruments has increased, is increasing and ought to be diminished. I am also a supporter of the Hansard Society’s call in its note on the Strathclyde proposals that there should be a new and wider review on the preparation of legislation, on the lines of the excellent 1975 report by my late friend Lord Renton. It is regrettable that David Renton’s report was only partially implemented at that time, and of course it went a lot wider than this issue. It called for an overall look at the process of drafting legislation in the first place, and therefore what goes into a statutory instrument, for example, and the way in which legislation is debated once it gets into the two Houses of Parliament.

I also support the suggestion in my noble friend Lord Strathclyde’s report that further thought needs to be given to the precise definition and effect of Commons financial privilege. We are all aware of the general idea, and of some of the ways in which it impinges on primary legislation, but it needs further thought as to how it should work in respect of secondary legislation.

21:10

[Lord Morris of Aberavon (Lab)]

My Lords, I, too, express my thanks to the noble Lord, Lord Strathclyde, and to his advisers for the speed with which he has produced his report. My contribution today will draw on my written submission to the noble Lord and is much wider than his terms of reference. My noble friend Lord Darling, whose most excellent speech I welcome, said that he was concerned about piecemeal changes. It is my long-standing belief that piecemeal reform will not do.

I played a small part in encouraging my friends to set up the Kilbrandon commission on the constitution. It was effective as a catalyst for devolution and major legislation. I believe that there should be another constitutional convention to consider, deliberate on and opine on a wide range of options and, having done so, with a hope for a more permanent and comprehensive settlement for Parliament as a whole.

In my time, I have seen many attempts at House of Lords reform. Drawing a veil over the Clegg-inspired reforms, my mind goes back to the joint attack of Michael Foot and Enoch Powell on the reform attempt in the 1960s. When the plug was pulled on that Bill, Michael Foot uttered memorable words regarding the efforts of the two junior Ministers who were left in charge of it. They were the future Lord Merlyn-Rees and the noble Lord, Lord Elystan-Morgan, whose speedy return to this House we wish for. Mr Foot said that never had so much bravery been shown,

“since the boy stood on the burning deck”.—[Official Report, Commons, 14/4/69; col. 885.]

And that was the night the plug was pulled on the Bill.

I confess that I did not vote in the tax credit Divisions last October. As many noble Lords have said, the Government should not have used the statutory instrument procedure, with its inadequate discussion in the Commons, to deprive a large number of the poorest people like those whom I had the privilege of representing in the Commons for more than 41 years. But I do not buy the argument that a convention was broken. In the words of my noble friend Lord Richard, primary legislation should have been used. Nevertheless, it was not right to deny the Commons its right to change taxation, despite the machinery adopted.

I believe in the paramountcy of the elected House and that there is a way to put that beyond peradventure for almost all occasions and, at the same time, to spell out a role for our own non-elected House for the future. I surmise that my radical solution—the one that I would propose—will not appeal to most of your Lordships. I believe that the way forward is to revisit the Parliament Acts of 1911 and 1949 together, to learn from the simple mechanism that they adopted. Incidentally, we forget the rather plaintive words of the 1911 Act’s preamble as to the substitution of a hereditary House with a popularly based House. It said that,

“such substitution cannot be immediately brought into operation”.

Rather than pursuing that aim more than 100 years later, my suggestion is that we should copy and adopt that machinery for this House’s power to delay legislation which shortened the period in the 1911 Act to the 1949 Act by what amounts to one year. I propose removing this House’s powers to delay legislation altogether—hence, I am sure, it is too radical for most of your Lordships. The shearing away of this House’s power to delay would result in this House having power only to consider Commons legislation—in short, to review it and scrutinise it. This would apply to both primary and secondary legislation, with which the noble Lord, Lord Strathclyde, has been wrestling.

This House could of course then debate amendments, and any amendments made would be returned to the Commons. They would have the benefit of our discussions. If, then, the Commons disapproved of our amendments, that would be the end of the matter. The Commons, unless directed to the contrary, would present the Bill for Her Majesty’s approval and it would become an Act of Parliament on Royal Assent being signified thereto, notwithstanding that the Lords had not consented.

It would be essential to include a maximum period for your Lordships to consider any particular Commons Bill, so that consideration did not become delay by another name. When I said earlier that I was dealing with almost all occasions, of course the present exclusion as amended of the Parliament Acts as regards extending the maximum period of the length of the Parliament would remain. That would be fundamental.

My simple amendment would end the argument about the overuse of statutory instruments and reaffirm the primacy of the Commons in all respects. There would then be no danger of gridlock between Commons and Lords. I was a witness to gridlock between the Senate and Congress in Washington on that fateful weekend in July 2011. It is my belief that the result would be a substantial weakening of any case for an elected House, and it would be a matter for another time to consider the fettering of the Prime Minister’s power to top up, in the words of the noble Lord, Lord Balfe, the membership of this House. The noble Lord’s words regarding the Irish Senate were perhaps too close for comfort.

21:17

[Lord Beith (LD)]

My Lords, if I were to explain why I profoundly disagree with the noble and learned Lord, Lord Morris, I would lose the time I need to say what a wealth of experience came from the two maiden speeches that we heard today—experience of both the Treasury and the European Parliament. My noble friend Lady Bowles’s speech would repay careful reading in Hansard by anybody who wants to take these issues any further.

I am a new boy in this House; my experience is of the ineffectiveness of the House of Commons in dealing with delegated legislation. In her Statement, the Leader of the House said that,

“as a revising Chamber … we complement the work of the other place”.—[Official Report, 17/12/15; col. 2189.]

I have to say that there is an awful lot of complementing to be done. There is complete reliance on the extensive work carried out in this House on statutory instruments. That should remind us of the danger of weakening the ability of this House to question and challenge the Executive and require them to think again. The very rare instance of an order being defeated by your Lordships underpins the ability of this House to question and challenge ill-thought-out delegated legislation, particularly when it deals with matters of principle or policy, which should be dealt with by primary, amendable legislation.

I should add that my experience in the Commons includes the one occasion when a statutory instrument was overturned by the House of Commons. It related to paraffin oil price control, and it was a mistake. We shouted “Aye” in support of the annulment Motion, the Prayer, and the Government Whip forgot to shout “No”, as a result of which one of his colleagues had to go along to the Palace and come back in his tailcoat with his white wand of office and bring back a Message that the Queen was happy to comply with our Prayer. As I said, that was not intended to happen.

Indeed, in the previous Parliament, the average amount of time spent in the House of Commons Chamber debating delegated legislation was just over five minutes per day. You might say that it is all done in committees. One of the means by which late-night sittings were largely abandoned in the Commons in pursuit of family-friendly hours was by consigning almost all statutory instruments, which we used to have to debate between 10 pm and 1 am, to committees, but the situation in the committees is not much better than in the Chamber. The noble Baroness, Lady Smith, has referred to the press-ganged MPs who want to know whether it will be over in 10 minutes or whether they have to be there for 20. If there is a negative-procedure instrument, no meaningful vote can take place. Even if the committee votes that it has not considered the instrument, that vote is not reported to the House and no other procedure ensues or follows from it.

This is much more than a minor procedural issue. Governments of all kinds use delegated legislation to enact new policies and principles to change the impact of the criminal law, and amend the very legislation on which the instrument is based, as a number of noble Lords have mentioned. Committees of your Lordships’ House have produced egregious examples of this, such as the Childcare Bill 2015-16, which was described by the delegated legislation committee as little more than a mission statement. Yet even the mildest of the alternative proposals in the report of the noble Lord, Lord Strathclyde, rests on the utterly implausible hope that Governments will,

“take steps to ensure that Bills contain an appropriate level of detail and that too much is not left for implementation by statutory instrument”.

That will never happen. It would be like relying on an alcoholic promising to drink only moderately in future. It is just not realistic.

Why is that? There are several reasons. Often a Bill is introduced before enough work has been done on it. Departments like the freedom to rewrite and extend the legislation as they go along. Frequently the reason is that entirely new provisions are introduced into a Bill at a late stage without time to include key aspects in it. Opposition parties and campaign groups often feel obliged to accept this defective way of legislating, because it is a means of implementing a concession that they have sought and won from Ministers. How often have I heard it said from the Dispatch Box that the amendments are defective, but the Government will accept the principle and implement it by regulations? The phraseology gives it away. It is a matter of principle and importance, but it will be done by regulations and everyone says that that is fine. It is a victory, but one that undermines the effective scrutiny of legislation.

My conclusion is that we have to plan for the real world as we know it to be. The integrity of the legislative process and its ability to protect the rights of the citizen will always be threatened not just by the Executive’s fondness for power but also by the short cuts taken very often to promote quite good intentions. It will always be like that. We should therefore continue to develop the scrutiny role to which many of your Lordships devote a great deal of time and effort, and do nothing that could weaken the underlying authority for that role. There is lot wrong with House of Commons scrutiny of delegated legislation, and I believe that improvements could be secured and discussion between the Houses could well be profitable. However, the basis on which the House of Lords gives or very rarely withholds its consent for statutory instruments is basically sound. It is not broken and we should not risk weakening the work of this House by trying hastily to fix it.

21:23

[Lord Forsyth of Drumlean (Con)]

My Lords, at this hour even I can think of very few original things to say, but I congratulate my noble friend Lord Strathclyde on an excellent report, which provides a basis for going forward. I suggest to the Prime Minister that he invites him to take over from Sir John Chilcot, in order to finish Sir John’s report. I apologise that I had to leave the Chamber for a meeting and missed the maiden speech by the noble Lord, Lord Darling. I look forward to reading it. We all owe him a great debt, especially now that oil prices are down to $32 a barrel in Scotland, and I look forward to seeing his contributions.

Let us be frank about this: it is unfortunate that we are having to discuss this in the context of the tax credits regulations of 26 October. That was not the Government’s finest hour—let us be fair about that. I tried on several occasions through Ministers to get information on the impact of the regulations on families, who would lose and how much would they lose, and in the end I had to rely on the Institute for Fiscal Studies. The consequences, had those regulations been implemented, would have been disastrous for many vulnerable families up and down the country, and I certainly did not come into politics to do that, and nor, I believe, did the Chancellor or many of the MPs who voted for them. The facts of the matter were that the stushie in this place drew people’s attention to how savage and immediate the impact would be and to the consequences for the poorest families and for the Conservative Party and the Government because the political consequences would have been very severe. I therefore say to the noble Baronesses, Lady Manzoor, Lady Meacher and Lady Hollis, thank you so much for what you have done to help the Conservative Party in the country.

I would have supported the Motion moved by the right reverend Prelate the Bishop of Southwark. Indeed, my noble friend the Leader of the House almost invited us to do so, if you look at column 979 of Hansard for 26 October. That would not have been a fatal Motion, but nor were other Motions, other than that moved by the Liberal party, fatal Motions.

My noble friend the Leader advised us that if we voted for those Motions,

“It would have the practical effect of preventing the implementation of a policy that will deliver £4.4 billion of savings to the Exchequer next year—a central plank of the Government’s fiscal policy as well as its welfare policy. It is a step that would challenge the primacy of the other place on financial matters”.—[Official Report, 26/10/15; col. 979.]

Actually, the impact was to make the Government think again. No one in this House suggested that the policy should not be implemented. The argument was that it should be phased in over a period of time, but the Chancellor chose to abandon it altogether.

I am not sure whether I am grateful to the noble Baroness, Lady Smith, for starting to quote things that I have said in her speeches, but I did indeed say that if the Motion moved by the noble Baroness, Lady Hollis, had not been passed by the House, the tax credit changes would immediately have become law and the Government would not have had an opportunity to think again and make the necessary changes. Indeed, the key point is that if the Chancellor really felt that the primacy of the House of Commons had been challenged, it was up to him to table exactly the same Motion again the following day. He could have done that. He chose not to do so because, as my noble friend pointed out, she had been to see him and had told him of the feelings in the party and in the House and he had undertaken to think about it again. That is what I thought we all came here to do. I thought that is why we are all here at this hour of the night—to try to encourage the Government to think again if they have got it wrong.

The response from those around the Prime Minister and from the Prime Minister himself was a tad ungrateful. It was as if the captain of a ship which had been driven on to the rocks by the first mate after being safely rescued responded by inviting his crew to begin scuttling the lifeboat. That was the effect. It may have been unwise to vote for the Motion moved by the noble Baroness, Lady Hollis, which was not fatal, but it was certainly not out of order. As has been pointed out by a number of people in the course of this debate, the report of the Joint Committee on Conventions, which was approved by both Houses of Parliament, makes the position crystal clear.

The effect of our intervention was to give the Commons time to see the impact of their proposals, and I do not believe—perhaps the noble Baroness, Lady Hollis, can help me—that had the Chancellor of the Exchequer brought the proposal back a second time this House would have rejected it for a second time.

So what is the problem that we are trying to solve here? In his report, my noble friend Lord Strathclyde points out that there were two Motions on SIs on consecutive days. Just because two buses come along at once does not mean to say that you have to change the entire bus route. The second Motion was defeated; it failed because your Lordships chose to vote accordingly. It is true that on very rare occasions the House has voted against SI Motions but, according to my noble friend’s own report, there have been 55 occasions when the House has refused to vote through Motions of that kind, so those five have to be seen in that context.

I accept of course, that something has to be done about the use of statutory instruments and secondary legislation, and option 3 probably has within it the means of a way forward. What I do not accept is that this should be done by primary legislation. The conduct of Parliament is a matter for Parliament, not the Executive. The Executive is accountable to Parliament, not the other way round. I believe that we need to have a Joint Committee to review those procedures and agree them. The joy of my noble friend’s report is that it illustrates how wide the context is in which this needs to be looked at in terms of the Standing Orders of both Houses.

I say to my noble friend the Leader of the House that despite Mr Corbyn’s best efforts, we will be in opposition one day. My noble friend Lord Strathclyde says in his foreword that the Lords must,

“complement the work of the Commons and not … block its will—too often”.

We have never blocked the will of the House of Commons. He says:

“It would be regrettable if the Lords simply became a highly politicised ‘House of Opposition’”.

Quite so, but it would be equally regrettable if the Executive were to drift towards treating Parliament as an irritating inconvenience and limited its ability to ask the Government to think again.

21:31

[Lord Howarth of Newport (Lab)]

My Lords, we do not have a constitutional crisis on our hands. We are dealing with two problems, both of which are much more mundane: the problem of Ministers feeling frustrated and sore, and the problem of a system of scrutiny of statutory instruments that we all agree does not work well.

As to statutory instruments, the vote on tax credits and the complaints about that, it is clear that it was not your Lordships who breached any convention governing relations between the two Houses. As we have noted, the report of the Joint Committee on Conventions, agreed unanimously by both Houses, made it clear that the House of Lords is entitled to go so far as to vote down a statutory instrument in exceptional circumstances, and the circumstances attending the tax credits SI were exceptional. It is entirely outside the conventions of Parliament, as is made clear in Erskine May, that the Chancellor should have tried to sneak through Parliament in an SI radical and massively contentious legislation on tax credits. He was not candid about the impact of his measure, so that the House of Commons voted it through in ignorance of what it would mean for millions of people on low incomes. It was this House that ensured that the appalling damage the SI would have done to so many of our fellow citizens was correctly understood by Parliament. The Government duly thought again and withdrew the measure.

Wise Ministers recognise that effective opposition benefits the quality of government. Indeed, it has long been one of the most valuable roles of this House—performed sparingly; for sure, only on rare occasions—to rescue a Government from themselves. The pattern in these events is that a Government take it into their head to do something ill-considered and unacceptable; the House of Commons wakes up to what is amiss too slowly; the House of Lords obliges the Government to pause and think again; the public are delighted; government Back-Benchers are relieved; and Ministers go into a sulk and get all huffy about the constitution, but the misguided element of policy is dropped, tempers die down and life then returns to normal.

This Government have behaved true to the pattern so far. First, there was an absurd briefing that the House of Lords was to be suspended. Then there was the threat of the mass creation of new Tory Peers on top of what we have already had. Then the heavy artillery was rolled out: the noble Lord, Lord Strathclyde, was commissioned to carry out a review. As the noble Baroness, Lady Williams, noted, the noble Lord does not bark, but on behalf of the Prime Minister he growled in his foreword that,

“the patience of the Commons is not unlimited”.

Then, on page 18, he resorted to the assertion that this House had acted in defiance of the Government’s “electoral mandate”. But the Conservative Party never told voters that it intended to make massive cuts to in-work benefits, and it won a House of Commons majority of only 12 seats on the votes of just 24% of the total electorate, so the claim that the Lords defied an electoral mandate is tosh.

In his menu of recommendations the noble Lord set out an outrageous option 1, to remove the House of Lords altogether from consideration of SIs. Almost as threatening to the principle of bicameral government and effective accountability, he also proposed that the House of Commons should consider annexing a greater range of SIs, not just on financial matters, to Commons-only procedures. He made this proposal, notwithstanding that scrutiny by the House of Commons of SIs is perfunctory in the extreme. In committees on SIs, all too many MPs scrutinise their Christmas cards more thoroughly than the legislation before them. If the House of Commons persistently fails to scrutinise legislation adequately, of course more responsibility falls on the Lords, and we should not shirk it. Finally, the noble Lord proposed, as a so-called compromise, statutory regulation of the relationship between the two Houses.

I dread to think what the process of legislation that the noble Lord has advocated would be like. Consideration of such a Bill would be prolonged and expansive. The House of Lords would not—surely it should not—willingly give up its present power to strike down SIs. At the very least, agreement would need to be secured on three points. The first—relatively easy to deal with, but insufficiently guaranteed in the prescription of the noble Lord, Lord Strathclyde—would be that Commons reconsideration must be genuine, with adequate time given to debate and proper explanation of the Government’s position. The second agreement that would be needed is more complex still. It would have to be agreed that statutory instruments were not to substitute for primary legislation. I agree with those noble Lords who have said that we need a Joint Committee of both Houses to review and clarify the appropriate use of SIs and the appropriate means of scrutiny of them in both Houses of Parliament.

The third, and much more difficult condition, but which is essential for the health of Parliament, would be that a limit must be placed on the Prime Minister’s power to pack the government Benches in the Lords and thus disable this House by another means. Surely we will make better progress if we apply ourselves to a renewal of the conventions rather than attempt such legislation.

It is healthy if Governments are nervous of what it is in the power of Oppositions to do. That is a strong argument for our not renouncing fatal Motions. However, it is not an argument against the development, within the conventions, of an additional power that is less devastating than a fatal Motion but less futile than a regret Motion. The precedent has now indeed been set for use by this House, on an important issue, of a delaying power where an SI is concerned. A series of reports, the latest being the report of the noble Lord, Lord Strathclyde, have proposed the formalisation of a new delaying power on SIs exercisable by the Lords. I hope Ministers will now be willing to accept that. I do not see, however, that such a power would need to be created by statute, and I see good reasons why it should not.

The kind of mature relationship that the two Houses need cannot be legislated for. As Professor Dawn Oliver says in her excellent pamphlet, Constitutional Guardians: The House of Lords, what is required in dealings between the Houses is emotional intelligence. The noble Lord, Lord Strathclyde, knows this really. He opens his report by saying, rightly:

“Conventions in parliament are a cornerstone of our Constitution”.

But he then wrings his hands and despairs of conventions any longer being able to work.

My advice to the Government, if I may be so bold, is to lighten up, and certainly to stop trying to bully this House. It is time now to restore to working relations between the Houses, and within this House, an atmosphere of tact, forbearance, proportion, mutual respect, courtesy and good sense.

21:39

[Lord Goodlad (Con)]

My Lords, I join other noble Lords in congratulating my noble friend Lord Strathclyde on his report. Its recommendations on secondary legislation are in line with those of the royal commission, chaired by my noble friend Lord Wakeham, and those of the report of the Leader’s Group on Working Practices, which I chaired—option 3 in my noble friend’s report—to create a new procedure. I think that is the way forward. Although I entirely agree with the noble Lords, Lord Howarth and Lord Cunningham, that that convention must be maintained, the time has come for something more to be done.

I strongly support the report’s suggestion that future Governments should ensure that Bills contain more detail. I agree with my noble friend Lord Jopling and the noble and learned Lord, Lord Judge, that less is contained in primary legislation, with implementation by statutory instruments, and that Henry VIII clauses should be discontinued as far as possible.

In my experience, your Lordships’ House plays an extremely effective role in scrutinising secondary legislation. When I chaired the Secondary Legislation Scrutiny Committee, which is now chaired by my noble friend Lord Trefgarne, its work—not mine I hasten to say—led not only to well-informed debates in your Lordships’ House but to essential revisions to ill-prepared statutory instruments before they ever came to this House. The work of the clerks in this process was, in my observation, beyond praise. I do not see how the other place could in practice do the same job.

The primacy of the House of Commons has been accepted for well over a century. We heard from the noble Lord, Lord McNally, about an elective dictatorship, but I have to say that when I was Chief Whip in the other place for the Government about 20-odd years ago, it did not feel like an elective dictatorship. I see a number of heads nodding on the other side, including those of the noble Lords, Lord Grocott, Lord Howarth and Lord Beith. I do not think that is a danger. What is needed now is a redefinition of the roles of the two Houses.

During recent decades, the world has changed radically—technologically, socially, economically and in every other way. It will continue to do so in the future with ever-increasing velocity, which will lead to the continuation of the torrent of legislation coming before us, and the distinctive roles of the two Houses of Parliament will be ever more important. In the absence of a written constitution, we must proceed, as we usually have, by negotiation, compromise and agreement. There are many details to be addressed in option 3 of my noble friend’s report. We can make progress only by agreement, which would be best achieved by discussing his excellent report, as my noble friend has suggested, in a Joint Committee of both Houses, despite the fact that we do not know which way it will go off.

21:43

[Lord Lisvane (CB)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Goodlad, whose 2011 report—particularly at about paragraph 154 in the context of today’s debate—is a source of great wisdom. The report of the noble Lord, Lord Strathclyde, is technically an excellent piece of work. I say this not merely because he has been kind enough to refer in it to two works in which I myself had a hand. I cannot fault his description of the constitutional background and the procedural arrangements. He has been very well served by his team of expert advisers, all of whom I know well and have worked with, and for whom I have the very greatest respect.

I do not want to be unduly churlish to the Government Front Bench, because I suspect that it was not master of its fate, but what happened on 26 October was at least in part a failure of business management. If defeat was likely or possible—and that must have been apparent—then several options were of course open to the Government. They could have delayed and sought some sort of accommodation; they could have achieved what they wanted by inserting new clauses in the Welfare Reform and Work Bill, which was conveniently to hand; or they could have made the required changes in a free-standing Bill, which as the noble Lord observes—and I respectfully agree—would most probably have been certified under the Parliament Acts and would therefore not have touched the sides, so to speak, in your Lordships’ House.

Of course, in the event of defeat on an SI, the option is always there of withdrawing and re-laying. The substitute instrument has to be slightly different to avoid breaching the rule about deciding the same question twice in the same Session, but it does not have to be very different, and that simple pragmatism is always at the disposal of Governments who suffer defeats on SIs in either House.

So what about the three options that the noble Lord has put before us? They need to be seen against the asymmetry of consideration of delegated legislation in the two Houses. This is not in itself a problem, because one of the strengths of Parliament is that the two Houses are complementary and not competing. But that is also a powerful argument against diminishing the role of your Lordships’ House, as the House of Commons is not in a position to take up the slack.

In the latest edition of How Parliament Works—I am not seeking to advertise here but it was written before I left my previous post—I described Commons scrutiny of delegated legislation as a “legislative black hole”. The noble Lord, Lord Beith, has drawn attention to the average time—averaged out per day over a Session—taken in considering SIs in the Commons Chamber.

I hope that option 1, simply excluding this House from the consideration of statutory instruments, will be rejected out of hand. Indeed, I think that the noble Lord is very nearly counsel for the prosecution in terms of the significant disadvantages of this option that he identifies in his report. If it were decided to go down that extremely ill-considered route, I think that the legislation would have to be Parliament-Acted, with all the collateral damage for a considerable period to the Government’s legislative programme.

Option 3, the recommended outcome, has some attractions, although of course it does not guarantee a proper debate at the Commons second stage—a point raised by a number of noble Lords. And it is not without hazard. In the context of Article 9 of the Bill of Rights, I have an instinctive dislike of legislating for proceedings in Parliament. There is a more immediate hazard—and here I take the timely warnings of the noble Lord, Lord Crickhowell—because the scope of a Bill, and the relevance of amendments to it, is determined not by the Long Title but by what is actually in the Bill. I do not think anybody can guarantee that there could not be in the Commons more wide-ranging amendment of the noble Lord’s apparently simple proposition—and then where should we be?

Then there is option 2, a non-statutory resolution of both Houses. The noble Lord expresses scepticism about this route and whether it can be achieved because,

“a wide range of different views has been expressed about what the convention is”.

That seems to me an excellent argument for redefining the convention—or, with a nod towards the noble Lord, Lord Norton, the doctrine—probably using a Joint Committee to achieve a cross-party and inter-House agreement rather than rushing to legislation, although I accept that legislation will be there as a potential penalty, should that route fail. If there were to be such a Joint Committee, I agree with many noble Lords that it could be a forum for a much more comprehensive examination of how Parliament as a whole deals with delegated legislation.

Briefly, I have two other observations. The noble Lord suggests that the Government should review, with the help of the Commons Procedure Committee but not with the help of a committee of this House, when SIs should be subject to Commons-only procedures. However, there is a quid pro quo to this. If SIs receive less scrutiny in the Commons than in your Lordships’ House, it must be clearly understood, and delivered, that Commons-only SIs must contain only matter which engages Commons financial privilege and must not be freighted with non-financial matters simply because of the attraction of an easier ride.

My last point is also the noble Lord’s last point. In the review it is almost a throw-away line, but it is the real reason that we are in this fix. The threshold between primary and secondary legislation has been steadily rising, no doubt because SIs are more convenient for Governments, and SIs are being used for matters of policy and principle which should find their place in primary legislation. Both the Constitution Committee and the Delegated Powers Committee have consistently pointed this out, and the searing indictment of my noble and learned friend Lord Judge is still ringing in our ears.

I could wish that we were not in this fix but, now that we are, that is the real mischief that needs dealing with. I think it is reasonable to say that we should expect a striking and sustained change of culture before your Lordships give up any powers over delegated legislation.

21:50

[Lord Young of Cookham (Con)]

My Lords, as the last Back-Bench speaker in this debate—I wonder whether there is some alphabetical bias in the selection of the order of speakers—I join others in commending my noble friend Lord Strathclyde for his report and for his speech introducing the debate. His report is a “best buy” in terms of value for money. Indeed, such good value is his report that the Command Paper publishing it does not even have a price on the back.

Picking up a point made by my noble friend Lord Forsyth, I wonder whether there are some broader lessons to be learned from this type of inquiry, as the law of diminishing returns sets in quite quickly as the size and length of inquiries develop. With the Chilcots, the Levesons and the Scotts at one end, and the Strathclydes at the other, should we not have fewer of the former and more of the latter? Without being dogmatic, we need more sprints round the greyhound track with a small field, and fewer London marathons, where some entrants find it difficult to finish.

Turning to the report itself, I believe it offers the basis for a settlement. I have been encouraged by the number of noble Lords who have spoken in this debate who have been quite careful not to close the door on further discussions building on what is proposed. There are real advantages for both Houses. I am a recent refugee from the other place after 41 years there and, in my capacity as a former Leader of the Commons, I see real advantages for it, in that the will of the Commons will prevail in secondary legislation as it now does in primary. Indeed, it seems somewhat perverse—a point made by my noble friend Lord Jopling—that the will of the elected House can prevail with Bills but not with the statutory instruments that derive from them.

I would make a number of clarifications. For example, if we were to reject an SI, it must be debated in the other place and not simply approved on a deferred Division without substantive discussion; it should be treated like a Lords amendment. As far as this House is concerned, I think that we get a new weapon that is more appropriate to our role as a revising Chamber. In his report, my noble friend Lord Wakeham said:

“At the cost of weakening the formal power of the second chamber … we believe it would actually strengthen its influence and its ability to cause the Government and the House of Commons to take its concerns seriously”.

It is worth reflecting on what might have happened in October had option 3 been available. This House could, of course, have rejected the SI. I suspect that it would have done so by an even bigger majority, because many noble Peers felt inhibited against voting it down for constitutional reasons, and those would have been dealt with under option 3. It would have gone back to the House of Commons with a bigger majority and the House of Commons would have then had to consider what to do with it. We will never know the answer, but my guess is that it would have done exactly what it did in November. The key difference would have been that the House of Commons would have had the last word on the SI and not this House. That is why I think there are real merits in the proposal.

We read on page 18 of the report that the preferred option requires legislation. My noble friend must have come to that decision on the basis of the professional advice that he got from his team. There may be some in my party who will want to legislate straightaway, using the Parliament Act if necessary, but I hope we do not proceed too hastily, precipitating a wholly unnecessary constitutional crisis. There should now be discussions between the parties, and it may be that issues not addressed by the Strathclyde report—for example, the SI procedure in the other place—need to be put on the table, together with other issues such as the time lag between rejection by this House and consideration by the other.

The Government could set the tone for constructive discussions by indicating that they are sympathetic to the recommendation referred to by the noble Lord, Lord Lisvane: that about not using SIs where primary legislation is more appropriate. This is not a pain-free decision for the Government, in that it inevitably squeezes out other legislation from their programme if what would have been an SI now becomes primary legislation. However, if the Government were to indicate that they are sympathetic to that proposition, I hope that that would encourage other parties to come to the table to see whether we could then reach all-party agreement on the way forward. If it is then indeed necessary to legislate to introduce option 3, that can be done on the basis of mature consideration and not the hasty, shooting from the hip exercise that may be advocated by some.

21:55

[Lord Tyler (LD)]

My Lords, this has been a fascinating and thoughtful debate. The contributions and the expertise that have been displayed in the past few minutes have been particularly helpful to your Lordships’ House.

I will refer briefly to two remarkable maiden speeches. My noble friend Lady Bowles brings not only professional expertise and experience to this House but particularly interesting experience from the European Parliament. The direction of travel there is to have more democratic control over secondary legislation while in this House this evening it looks as though we might be going in the opposite direction. That is a useful lesson for us. I suspect that the parliamentary experience and touch in the Treasury would never have let the noble Lord, Lord Darling, ride into this House and fall into the elephant trap that the present Chancellor fell into on 26 October. His expertise and experience will be welcome in this House, too.

If there has been a theme during the debate today, it is that this is not a new problem. It is complex, it is not simple—and to that extent we are all indebted to the noble Lord, Lord Strathclyde for trying to simplify it—but it is not new. Therefore, it is up to us to realise that there is no novel, simple one act that could suddenly transform the situation.

As a non-expert, I have at least enough humility to listen carefully to previous wisdom. With the noble Lord, Lord Higgins, and my noble friend Lord McNally, I served on the Joint Committee that the noble Lord, Lord Cunningham, so brilliantly steered in 2006 which produced the report on conventions at the UK Parliament. I read again last night some of the excellent evidence that was put before us on 20 June 2006, when we heard from three distinguished witnesses. This was their first key statement:

“The only inference to be drawn from these proposals is that the Government intends further restriction of the freedoms and powers of the House of Lords. We would start from precisely the opposite premise—the freedoms of both Houses should be upheld and, where possible, extended. We further disagree with the government’s view that ‘codification’ is necessary as a prelude to the reform of the House of Lords. Even if true, which it is not, it could never justify further weakening of Parliament”.

The delegation that produced that evidence included Mrs Theresa May MP, then shadow Leader of the Commons and the noble Lord, Lord Cope, then Opposition Chief Whip here. It was led by none other than the noble Lord, Lord Strathclyde. Members of your Lordships’ House may have guessed that the evidence they gave was given on behalf of the Conservative Opposition. Colleagues may also recall that the Joint Committee was set up by the previous Labour Government because Mr Jack Straw wanted to clip the wings of your Lordships’ House—is that not, too, familiar?—as my noble friend Lord McNally reminded us today.

The evidence of the noble Lord, Lord Strathclyde, continued powerfully:

“‘Codification’ could cause more problems than it solves … We therefore agree with the Government that it would be undesirable to legislate on the conventions and other relations between the two Houses. That would lead to judicial intervention in and resolution of parliamentary and political difficulties”.

I agreed then and I agree now, because there is a real danger that we could drift into justiciable decision-making, which would put us in a very awkward position.

This has been referred to during the debate today by a number of colleagues on all sides of the House, including the noble Lords, Lord Cunningham and Lord Higgins, from the committee, my noble friend Lady Thomas, the noble Lord, Lord Forsyth, who spoke forcefully a few minutes ago, the noble Lord, Lord Howarth, and, most recently, the noble Lord, Lord Lisvane. That is a dangerous route for us to go down without thinking it through very carefully indeed—and I will come to how I think we should do that.

Those witnesses then turned to the specific subject with which we are engaged today. They said:

“The conventions on secondary legislation are equally well understood. We propose no alteration. We uphold the right of the Lords to reject secondary legislation, while considering its use should be exceptional in the extreme. However, there is an important balancing convention to this, namely that governments should not use their majority in the Commons to introduce skeleton Bills as a basis for introducing unamendable secondary legislation”.

There is nothing new under the sun. It has been said again today several times that we have skeleton Bills which have become more and more skeletal.

A reference was made earlier by, I think, the noble and learned Lord, Lord Judge, to the Childcare Bill. I draw the attention of the House to the work done on that Bill by the Delegated Powers and Regulatory Reform Committee, chaired by the noble Baroness, Lady Fookes, and on which I serve. It pointed out admirably that the Childcare Bill was not sufficiently well thought through to put before either House of Parliament. It was indeed so skeletal as not to be worth consideration by either House. Some time ago in the debate the noble Baroness, Lady Hayman, referred to this issue, as did my noble and learned friend Lord Wallace. We believe that that is a major problem so far as the House’s consideration is concerned.

Having previously argued that the convention on secondary legislation was “dead”, the noble Lord, Lord Strathclyde, came before the Joint Committee with a slightly modified view. He said:

“However, on many, many occasions the House of Lords has asserted its unfettered right to maintain its power to throw out secondary legislation; I think the custom and practice that has built up, in combination with the long-stop power in the House of Lords, works extremely well”.

He has changed his mind since then.

There was a good deal of support from other witnesses and in the Joint Committee for that approach. I shall quote from the committee’s report. The noble Lord, Lord Norton of Louth, who has also spoken today,

“likewise argues against codifying a convention that the Lords do not reject SIs. He observes that:

(a) It is not agreed that there is any such convention;

(b) SIs do not normally involve ‘great issues of principle’, and any argument in Parliament is usually only about fitness for purpose;

(c) A rejected order can be re-laid;

(d) The power to reject supports the work of the SI Merits Committee;

(e) Power to reject orders under the Legislative and Regulatory Reform Bill will be even more important than power to reject mainstream SIs”.

The work of the Delegated Powers and Regulatory Reform Committee of your Lordships’ House makes his case even more powerful; it is a critical part of our job and it is very effective in undertaking that responsibility.

As has already been quoted once or twice in the debate, the eventual recommendations of the Joint Committee are unequivocal and bear repetition. The committee states that,

“we conclude that the House of Lords should not regularly reject Statutory Instruments, but that in exceptional circumstances it may be appropriate for it to do so. This is consistent with past practice, and represents a convention recognised by the opposition parties. The Government appear to consider that any defeat of an SI by the Lords is a breach of convention. We disagree ... The Government’s argument that ‘it is for the Commons as a source of Ministers’ authority to withhold or grant their endorsement of Ministers’ actions’ is an argument against having a second chamber at all, and we reject it”.

That, like every other recommendation of the Cunningham committee, was not only debated in both Houses but unanimously and enthusiastically approved by both Houses.

It was also welcomed enthusiastically—unsurprisingly, since we had accepted so much of his evidence—by the noble Lord, Lord Strathclyde. I find it difficult, as my noble friend Lord Clement-Jones hinted earlier, to understand what precisely has happened to that noble Lord, Lord Strathclyde. The contrast between the evidence to the Joint Committee, written and oral, and what we have heard today and read in his report is so remarkable that it makes one slightly suspicious.

[Lord Strathclyde]

My Lords, perhaps I may clarify that to the noble Lord, because he has made quite a meal of it. I stand by every word I said until 25 October of last year. On 26 October, it all changed. That was when I got my review. As a result of that, I conducted my review and produced it for the debate today. The noble Lord can poke as much fun as he would like about what I said, but, as I have just said, I stand by every word of it.

[Lord Tyler]

I do not think that the House fully understands that, and I think that it has taken a more measured view of these issues. Perhaps I may say that it has been all across the House. It has been remarkable how much consensus there has been in the debate today. These issues clearly are inappropriately dealt with by an internal government review. These matters are of great importance to the whole of Parliament—both Houses.

The memorandum from the Hansard Society sent to Members today makes a very powerful case on this point. The society suggests an independent inquiry. But I have been arguing for some weeks that an evidence-taking, properly constituted and properly advised Joint Select Committee of Peers and MPs would carry even more authority. During this debate, I have lost count of how many Members, from all sides of the House, have supported the idea of a new Joint Select Committee. It would meet the requirements of so many Members who have contributed today. The noble Lords, Lord Cormack and Lord Cunningham, and a number of other Members have said that that is the appropriate way for Parliament together to think through these issues. This is not us against the House of Commons. It is both Houses of Parliament having to think together about how we best operate in undertaking our responsibilities to hold the Executive to account. That is the proper, effective constitutional role of the two Houses.

If we pursue option 3—a powerful case was made for option 2—there would be all sorts of difficulties. Every Member who said that they are in favour of option 3 also said that there were difficulties. Where are we going to elucidate how we can deal with those difficulties? The only appropriate way to do so is of course in a Joint Committee. If there is to be any revision at all of the way in which the two Houses interrelate, modifying the agreed position set out in the 2006 Joint Committee report, there must be a new Joint Committee to take evidence to make new recommendations.

I hope that the Leader of the House, in responding to this debate, will specifically answer that point. All sides of the House have said that that is the appropriate way forward and it is the one thing on which there is clearly a consensus across the House. I trust that when evidence is given to that committee by, I hope, a “Strathclyde mark 2”, he will be as forthright and as protective of the proper role of your Lordships’ House as he was when he was “Strathclyde mark 1”.

22:07

[Lord Hunt of Kings Heath (Lab)]

My Lords, this has been an excellent debate. I warmly welcome the noble Baroness, Lady Bowles, and, of course, my noble friend Lord Darling, to the House. I congratulate them both on excellent maiden speeches. Right at the start, at about 3.35 pm, the noble Lord, Lord Strathclyde, said that this debate goes to the heart of the work of the Lords as a revising Chamber. Of course, that is true.

Interestingly, as we have developed during today, what has become clear is that, whatever view one has about the conventions, financial privilege and what happened in October, this debate is really about the role of Parliament and the fears that many Lords have expressed about the encroaching approach of the Executive seeking to gain more control over the legislature. That is why we have to be wary, at the very least, of giving up our veto on the strength of what, in the noble Lord’s report, are essentially vague possibilities that the Government will reduce their use of statutory instruments or even that the other place might take statutory instruments rather more seriously in the future.

We are, of course, highly indebted to the noble Lord, Lord Strathclyde, for his report and for opening the debate. Clearly, he has a new role ahead as chairman of numerous public inquiries. But he will know that, like my noble friend Lord Grocott, we cannot accept his arguments. We did not break a convention; we did not challenge the primacy of the Commons; there is no constitutional crisis. In October we overwhelmingly declined to support a fatal Motion. Instead, we asked the Government to reconsider and bring forward changes. As the noble Lord, Lord Lisvane, pointed out, the Government had many options for doing that, either through primary or secondary legislation. They chose not to do so. The Chancellor accepted the logic of the Lords position, as the noble Lord, Lord Forsyth, pointed out. As my noble friend Lord Haughey said, there was no victory or defeat, common sense just prevailed.

My noble friend Lady Hollis remarked that it was not our vote on tax credits that strained the conventions, but the Government deploying a statutory instrument in the first place to introduce by the back door highly controversial measures affecting millions of people and, essentially, to avoid proper debate in the other place. My noble friend Lord Cunningham put it so well. The resulting fit of pique by the Government is not the basis on which to make far-reaching changes without a careful examination of the long-term consequences.

So we come to the detail of the report by the noble Lord, Lord Strathclyde. For me, the most important part of that report is the last paragraph, on page 23, concerning the appropriate use of statutory instruments as opposed to primary legislation. Many noble Lords expressed worries about the increased use of statutory instruments, in particular the growing use of what are now being called skeletal Bills, backed up by a host of statutory instruments including Henry VIII powers. The noble and learned Lord, Lord Judge, made a most telling contribution. My noble friend Lord Williams spelled this out: 34 Acts since 2010 contained such Henry VIII powers. Let us be frank: the Government of which I was a member was also guilty of that.

In that paragraph, the noble Lord, Lord Strathclyde, said that,

“in order to mitigate against excessive use of the new process”,

which he proposes under option 3, he believed that,

“it would be appropriate for the Government to take steps to ensure that Bills contain an appropriate level of detail and that too much is not left for implementation by statutory instrument”.

It is the most important point he makes in the report. The question I put to the Leader of the House is this: how is that to happen? What guarantees are there for this House were it to give up its veto on secondary legislation? I hear what the noble Lord, Lord Young, said, but in this case warm words are simply not enough.

We then come to the question of the role of the Commons in dealing with statutory instruments. It has been confirmed by many Members of your Lordships’ House who have come from the other place that the way the Commons deals with statutory instruments is frankly nothing short of disgraceful, with minimal interest, discussion and scrutiny. The Lords would be asked to take an awful lot of things on trust were it to accept the recommendations of the noble Lord, Lord Strathclyde. Will the noble Baroness tell us what guarantees we have that the House of Commons is seriously going to change its ways in dealing with statutory instruments?

I want also to ask her about the details of the noble Lord’s report, in particular his option 3. There have been a number of detailed questions and criticisms of some aspects of that recommendation. My noble friend Lady Hollis raised the importance of a set period of delay. Without such a set period, what on earth would make a Government take notice of anything the Lords said on such an instrument? There are other questions: how will the Executive engage with noble Peers on statutory instruments? How will the view of the Lords be conveyed effectively to the House of Commons? Will the resolution be preceded by debate on the Floor of the House of Commons? How much time would be allowed for it? Would it be more than the five minutes a day on average that currently occurs? Will the matter be subject to deferred Division in the Commons, as is the case with many statutory instruments now? Will statutory instruments continue to be started from both Houses, because it certainly has an impact on whether the House can ask the Commons to think again if the Commons has not thought about something in the first case? Will amendments be allowed? This is a very important question about amendments in relation to statutory instruments. The noble Baroness, Lady Fookes, made an excellent contribution and put forward many excellent ideas in relation to how we might take the scrutiny of statutory instruments forward.

In listening to the debate I sense that most noble Lords on all sides of the House are not opposed to a careful examination of how we might improve the way we scrutinise secondary legislation and of how the relationship between the two Houses might be more carefully effected in the future, alongside a review of what most appropriately constitutes primary legislation as opposed to secondary legislation. However, the House does not wish to give a blank cheque to the Executive or to proceed without fully understanding the long-term implications. It is here that we look to the Leader of the House. She is, of course, a government Minister and is Leader of the Conservative group of Peers in your Lordships’ House. However, as Leader, she has a wider responsibility to guard the House’s interest and to ensure that its role is cherished and enhanced.

Many noble Lords have quoted the Hansard Society paper that we received this morning, and a very good paper it is, too. However, it concluded:

“The complexity of the delegated legislation process, the lack of understanding amongst parliamentarians … all point to a system that is no longer fit for purpose”.

As noble Lords have said, the Hansard Society argues for an “independent expert inquiry” and certainly adds weight to the case for a constitutional convention. My noble friend Lord Darling made a persuasive case for that in describing the problems arising from a piecemeal approach to constitutional change.

We are not elected. We are the second Chamber. We accept without question the primacy of the other place. However, we are the only part of Parliament that takes secondary legislation scrutiny seriously. Therefore, in the light of our debate, I hope that the noble Baroness the Leader will tell us what she is now going to do. However rarely it is used, we currently have an unfettered right to veto secondary legislation. I believe that is a safeguard for both Parliament and the public. Does the Leader want to be the person to remove that right and hand yet more power to the Executive? I hope not. I certainly hope that she will listen very carefully to what noble Lords have said before she takes any such precipitous action.

Many noble Lords have suggested that we appoint a Joint Select Committee of both Houses to look at this issue in the round. The work of my noble friend Lord Cunningham is an excellent example of how that might be done. It would also enable us to embrace the very interesting point made by the noble Lord, Lord Crickhowell, about the need to reflect and understand the views of Members of Parliament.

I say to the noble Baroness that this has been a rather remarkable debate. Different views have been expressed, but I think that there is an urge in the House to try to find sensible consensus on the way forward. She would find huge support on all sides of the House if she said tonight that she would agree to the appointment of such a Joint Select Committee of both Houses. Having heard this debate, I am convinced that is the right way forward.

22:19

[Baroness Stowell of Beeston]

My Lords, I offer sincere thanks to all noble Lords who have taken part in this debate. It is an important part of the process of the Government considering my noble friend’s report. I scheduled this debate today because I wanted to hear from noble Lords. I know that it is a big investment of time to contribute to a debate that starts mid-afternoon and goes on until now, so I am very grateful to everybody who has contributed. I must congratulate the two maiden speakers: the noble Baroness, Lady Bowles of Berkhamsted—I welcome her to your Lordships’ House—and the noble Lord, Lord Darling. I hope he will not misunderstand if I say that I will just call him “Darling” as I do not think that I can pronounce the place in his title where he is from, but he is warmly welcomed. We are very pleased to have both the noble Baroness and the noble Lord among our number.

I am grateful for all the contributions today. They have been interesting, constructive and helpful to me in my consideration of my noble friend Lord Strathclyde’s report. I want to thank my noble friend for doing his review, outlining a clear set of options and, today, setting out very clearly, when he introduced the debate, the route to how we got to where we are and why it is that the Government asked him to carry out that review.

There have, understandably, been a range of views expressed, but one thing that I found pleasing was that we are all united in our desire to uphold this House’s very important role as a revising Chamber. What has also been acknowledged in the debate today is that our relationship with the other place is at the heart of how we fulfil that important role. Also, as has been mentioned already, we have acknowledged an understanding that we are here to complement and not compete with the elected House of Commons. The noble Lord, Lord Empey, was right to highlight the risks when we do not properly respect and understand that relationship.

For us to work together effectively with the House of Commons, it is important that there is clarity on how we work together. When it comes to primary legislation, we are clear on how that relationship works; there is a dialogue between the two Houses and a mechanism, through ping-pong, for us to ask the House of Commons to think again, but there is also a way for the will of the elected House to prevail, with the ultimate back-stop of the Parliament Acts when all else fails.

With secondary legislation, the relationship between the two Houses is not structured as clearly. We cannot enter into a dialogue; we may only give or withhold our approval to a statutory instrument. If we choose to withhold approval, there is no mechanism to allow the will of the other place to prevail. That is what gives us this absolute power of veto. Given how significant that power is, it is essential that we have a shared understanding within your Lordships’ House about how it should be used. Yet, right now, we do not. That is a very important point to stress, because several noble Lords have said today that, in October, we asked the House of Commons to think again. We did not do that, because we cannot do that. We do not have that facility. What we did was to overrule the House of Commons, because it had already decided.

[Noble Lords]

Oh!

[Baroness Stowell of Beeston]

It had already decided what its view was on the statutory instrument and we do not have that mechanism for a dialogue.

The role of this House and its powers on SIs is not a new issue; this is something that we have heard from many noble Lords speaking today. My noble friend Lord Wakeham, through his royal commission, and other noble Lords have grappled with this issue in the past. Over the past few months, and indeed through today’s debate, what has crystallised, for me, is the fact that there is no clear agreement among us about how we exercise our powers. We are still debating and still disagreeing today about whether the Motions that were tabled in October were fatal or non-fatal. I feel that, for us to be effective, we cannot sustain that lack of agreement between us about how we use our powers.

The noble Lord, Lord Grocott, was the first person that I noted down who said, “It’s not broke so let’s not fix it”, but he was not the only one who made that point; in fact, the noble Lord, Lord Hunt of Kings Heath, said the same. But, as my noble friend Lord Strathclyde and others argued, conventions work only when both sides agree on what they mean in practice. The noble Lord, Lord Grocott, looked back on the submissions made by my noble friend when we were in opposition. I also looked at the submissions made to the Joint Committee on Conventions by the noble Lord’s Government when they were in power. Back then, the then Labour Government said in their submission:

“A contested convention is not a convention at all”.

I agree. That is the problem we have at the moment—we are contesting.

For us to fulfil our role effectively, we need clarity, simplicity and certainty—what my noble friend outlined as principles in his report—and we need to ensure that the other place has the decisive say on secondary legislation, just as is the case when we consider Bills. My noble friend’s report gives us the opportunity to consider how we could do things differently and tackle the long-standing questions raised.

Before I talk about some of the options that my noble friend outlined and the responses to some of those that he put forward, I should be clear that the Government are still listening. Tonight I will not offer any government response to what he put forward in his report—the options and the recommendation. In terms of considering the way forward, the Government will take account of this debate, which is why it has been such a valuable exercise. The noble Lord, Lord Foulkes, asked earlier that we should consider, and I am considering what has been argued—I am taking it on board. I have listened carefully to the debate tonight.

[Lord Foulkes of Cumnock]

I respect what the noble Baroness says, but in her remarks so far she gives no evidence whatever of having taken account of any of the comments made right around the House. Could she make it clear how all the points made—the very good suggestions from every quarter of the House—will be brought together, considered by the Government and dealt with? Will they look at setting up a Joint Committee?

[Baroness Stowell of Beeston]

I am conscious of time; everybody is tired. I am going to come on to that; I have just said that that is what I am going to come on to, and I will.

Some noble Lords thought that it would be best to proceed without legislation and instead to codify the convention; certainly there is an argument to be made in respect of that, but that approach would require us to restore a shared understanding about the convention underpinning our power of veto. Most noble Lords focused their comments on the third option put forward by my noble friend, the one that he recommends—as he described it, the ping without a pong. He suggests that that would replace this House’s power of veto with a new power to ask the other place to think again, with the House of Commons having the final say.

What he is recommending there is what noble Lords are arguing for. However, some thought that it would be necessary to retain the veto available to us now. I stress again that all these things are under consideration, but it is important for me to point out that we do not have an absolute veto when it comes to primary legislation. The new power that my noble friend suggests would be more in keeping with the role of this House, and the desire it has to ask the other House to think again.

The noble Baronesses, Lady Taylor and Lady Smith, and the noble Lord, Lord Hunt, and others asked me from the Labour side of the House to consider what was possible that would have some longevity and was not about just advancement for any particular party in government. Again, I found it very helpful to revisit what the Labour Party said to the Joint Committee on Conventions about the veto when they were in power. Forgive me for singling out the noble Lord, Lord Grocott, again but it was he who made this point to the Joint Committee. He said that,

“the House of Lords can veto secondary legislation … the very legitimate question arises … whether it would be sensible to consider the proposition that the Lords in respect of secondary legislation should do what it does with primary legislation, and see its function as being a delaying, revising chamber but not a vetoing chamber. That is really the question that is being put”.

[Lord Grocott]

My Lords, the noble Baroness will acknowledge that a lot of evidence went to the Joint Committee, which was set up by the Labour Government precisely to look at all these issues. That all-party Joint Committee, although a committee with a Labour majority on it, looked at it and the conclusions that it reached were agreed unanimously and adopted by both Houses. That is the way the process worked and it is the way any new process should work.

[Baroness Stowell of Beeston]

I say to the noble Lord that the Joint Committee on Conventions of 2006 was clearly highly respected. It was a very significant committee, and its findings and work have really stood the test of time. The problem we have is that the convention that was set out there and reinforced by the Joint Committee—I am afraid that this is the problem, because we disagree and this is what we are having to address—is no longer operating in the way that it was agreed it should operate.

[Lord Cunningham of Felling]

I am grateful to the noble Baroness, and I apologise again for the state of my voice, but what she says is not correct. The committee was absolutely unanimous in endorsing the conventions. Both she and her noble friend Lord Strathclyde have introduced into the argument just today that somehow one of these conventions is contested. That is just not true. The conventions have been upheld and adhered to, and on 26 October no convention was broken.

[Baroness Stowell of Beeston]

I am going to move on, to make some progress. I do not disagree with what the noble Lord says about his committee of 2006. I do not want to dwell so much on October—I want us to look forward—but I am saying this about the events of October. It is all very well for the noble Baroness opposite to groan but, by agreeing to those Motions last October, this House said that it would decline to consider something until a set of demands had been met by the Government. That is what it voted for, and that had never happened before. That is why I assert that that kind of arrangement means that the convention as it exists, for this part of the agreement, is now difficult. That is the problem. Let me move on.

[Baroness Hayman]

I really do not understand the noble Baroness’s logic. Is she saying that if the House had accepted the amendment of the noble Baroness, Lady Manzoor, it would not have broken the convention but that because it found a way of doing something lesser, which did not destroy the SI, we did breach the convention? That seems to be the logic of her argument.

[Baroness Stowell of Beeston]

My precise point, which my noble friend made when he introduced today’s debate, is that, in practice, this House voted for something that had a fatal effect, and it is therefore no longer possible for us to say that our understanding of how that convention works continues. I shall give way one further time to the noble Lord and then I really would like to move on.

[Lord Cunningham of Felling]

I am grateful to the noble Baroness for giving way again, but she just again said something that is simply not correct. She said, in respect of the Division on 26 October, that something like that had not happened before. That is simply not correct. Between 1968 and 2005, there were five such Motions, three against a Labour Government, which were carried in this House, so it has happened before.

[Baroness Stowell of Beeston]

Okay, I am just going to make one simple point and then I really will move on. We are disagreeing because what happened previously were fatal Motions that we all understood to be fatal. On the Motions tabled in October, one side of this House is arguing that they were not fatal, the other side is arguing that they were. I am afraid that that disagreement is what has led us to have to ask my noble friend Lord Strathclyde to look at this issue and come forward with his report. He is trying to bring forward something which addresses the need of this House that has been outlined since 2000, when my noble friend Lord Wakeham first looked at this matter.

This House is influential when we act in a constructive and nonpartisan way. We do not need vetoes. The impact and effect that we have on legislation is very powerful, and we continue to have a very important role in our effect on the decisions that the Government make in legislation.

Many noble Lords said that this House should give up a veto only if there was some kind of trade-off for the Government to review how they use secondary legislation. This is a very important point. The speeches from the noble and learned Lord, Lord Judge, and my noble friend Lady Fookes were very powerful and they make a really important point. I said the same to the noble Lord, Lord Richard, when I delivered the Statement before Christmas. I am grateful to the noble and learned Lord and the noble Lord, Lord Hunt, for acknowledging that any criticism that Parliament may have of Governments for the use of secondary legislation is not new.

I also say to the House that I do not think that things are quite as bad as the House suggests in terms of our approach to secondary legislation—I do not just mean the Government, I mean the House as a whole. There is always room for improvement, but the number of SIs over the past 20 years has been pretty steady.

The committees of this House are very powerful and respected. The committee chaired by my noble friend Lady Fookes does a very good job of scrutinising delegated powers in primary legislation. Very often, the Government respond constructively to its recommendations. In the work that this House does on primary legislation, a lot of the changes that it makes are around the powers. My noble friend Lady Fookes has put forward some good arguments and ideas about how we can improve within government, and I will certainly take those away.

We should not forget that when SIs come into Parliament they are scrutinised by a Joint Committee of both Houses, as well as by the Secondary Legislation Scrutiny Committee chaired by my noble friend Lord Trefgarne. The tax credit SIs went through that JCSI, which is chaired by a Labour Member of the other place. In its report, the JCSI did not raise any questions or concerns about that tax credit SI.

Some have argued for a period of delay. Some have argued that it would be essential for us to ensure that we would introduce debates for the House of Commons when it considers secondary legislation. What is important, interesting and helpful to me is that, although there are different views being expressed today about how to operate without a veto, there are many noble Lords at least discussing the idea of not having a veto but having a new power instead of the veto. I am grateful to noble Lords for that response.

As I draw to a close, noble Lords have raised questions about a Joint Committee. I have already said that the work of the Joint Committee in 2006 was incredibly powerful, but I do not believe that right now we need another Joint Committee. We need to look at the options that have been put forward by my noble friend, but I know that my noble friend Lord Trefgarne and his committee have committed to looking at what has been proposed, and I am grateful to him.

As for the Commons looking at this, it is clearly for the other place to decide how it should scrutinise secondary legislation. However, as my noble friend Lord Crickhowell has identified, the Public Administration and Constitutional Affairs Select Committee in the other place has committed to look at what has been put forward by my noble friend Lord Strathclyde. It has a hearing next week at which he is giving evidence, so the Commons is also getting on with its consideration of this arrangement.

[Lord Tyler]

If the Leader of the House is dismissing out of hand the idea of a Joint Committee, how can she guarantee that the two Houses will think about this problem together? Members on all sides of the House have said how essential this is. How will she ensure that that happens?

[Baroness Stowell of Beeston]

The point is to make sure that the House of Commons has the final say on secondary legislation. It has set out how it wishes to consider what has been put forward by my noble friend. He has put forward his options after extensive consultation with Members of the other place, as well as with Members of your Lordships’ House.

There is clearly much for me to reflect on from this debate. I will do so with my colleagues in government. I am sincere when I say that the contributions have been very valuable. We have not come to any conclusions in government.

[Lord Foulkes of Cumnock]

The noble Baroness has said that she has not come to any conclusion, yet she has said that she is not going forward with a Joint Committee. How are the Government going forward? A lot of good suggestions have been made in this House. If we are not to waste the whole day that we have spent on this, she must indicate to the House how the Government will take this forward.

[Baroness Stowell of Beeston]

I have said what we are doing. We will reflect on the very important points that have been made today. My noble friend Lord Trefgarne and his committee will be looking at what has been put forward. There may be other committees of your Lordships’ House that wish to do so as well. We will be considering this in the period ahead; at an appropriate point we will consider which is the best way forward, and I will return to your Lordships’ House.

My noble friend has done a comprehensive piece of work. As my noble friend Lord Wakeham said, what is in my noble friend’s report is very similar to what was in the report of his commission 16 years ago. Many noble Lords have pointed to that as a way forward. I am not reaching any conclusion tonight on the right way forward, but my noble friend Lord Wakeham’s point is very important and it is worth us all dwelling on it.

22:45

[Lord Strathclyde]

My Lords, what is so refreshing about the debate we have had today is that we have been discussing what we are here to do, what we are for and what the House of Lords is for. What a contrast that is with the years we spent discussing how to get here. At last we are discussing what we have to do in practice.

I shall make two short points. First, for me the most significant and interesting contribution was from the noble and learned Lord, Lord Judge, which showed what a good thing it is to have properly qualified senior former members of the judiciary here—with due deference also to the noble and learned Lord, Lord Hope of Craighead—and how wrong we were to throw out the Law Lords all those years ago.

Secondly, and perhaps more substantively, there has been an enormously wide range of views expressed in the debate. I wish the Government the best of luck in trying to bring all this together and come out with a coherent response. It will be difficult.

My noble friend Lord Young of Cookham heard something that I also heard. Although there were numerous disagreements, if we are going to change the way we debate this, the key area of disagreement is whether it should be by legislation or by agreement. I urge all those who are in favour of doing it by agreement to work within the House and with the Opposition and the Government to see if that agreement would work.

The noble Lord, Lord Cunningham, misunderstood what I wrote in my report—it is my fault because it was not clear. In my foreword, I talked about conventions, but conventions cannot be imposed by me, by the Government or by the Opposition. They can be reached only by agreement, by good will, by compromise and by joint objective. If that is the result we end up with, I will be the first to cheer.

Motion agreed.

House adjourned at 10.47 pm.