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Johnny Mercer (Plymouth, Moor View) (Con)
1. What steps his Department has taken to ensure that public health grants are spent only on public health responsibilities.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
The local authority public health grant is ring-fenced and must be spent in line with published grant conditions set by the Government. Local authority chief executives and directors of public health are required to certify that grant spend is in line with these conditions. In addition, Public Health England further reviews spending information and local authority spend against the grant is subject to external audit.
Johnny Mercer
In 2014-15, my city of Plymouth received £47 per head. Portsmouth, which is statistically healthier, received £77 and Kensington and Chelsea got £136. I absolutely understand that this is a legacy issue with the funding formula, and the Government are committed to dealing with it, but I cannot stress enough how important it is that we speed this up. How does the Department plan to achieve this? The current situation is grossly unfair to my constituents.
Jane Ellison
I applaud my hon. Friend for being a champion of public health in his community. We have had several conversations on this issue. As he says, there are historical differences, of which I am conscious, in the levels of local public health spending. They mostly arise from historical primary care trust spending priorities. We have made some progress in addressing the matter, but, as regards future allocations, we are considering a full range of factors, including the impact on inequalities and existing services. Those will be announced shortly. As I have told him before, the chief executive of Public Health England is happy to talk to him about the specific challenges facing his community, and that offer remains open.
Emma Reynolds (Wolverhampton North East) (Lab)
The NHS “Five Year Forward View” states that
“the future health of millions of children, the sustainability of the NHS, and the economic prosperity of Britain all now depend on a radical upgrade in prevention and public health.”
How will the in-year cuts this year and the future 4% real cuts in public health help to achieve that objective?
Jane Ellison
The challenge of being serious about prevention is one for the entire health and social care system. We acknowledge that, like many parts of government, public health grants have had to absorb some of the fiscal challenge. We are dealing with the problems we inherited at the beginning of the coalition Government. Despite that, local authorities will receive £16 billion in public health grants alone over the spending review period, but that is not the only way we invest in prevention. On my many visits, I have seen some of the great work being done to work with local authorities, and I am confident of the great things they can do with that money.
Ms Margaret Ritchie (South Down) (SDLP)
19. Given the report by the Crisp commission, released in the last few days, on mental health provision and treatments, can the Minister provide any assurance about the equitable treatment of physical and mental health to ensure an equal allocation of funds?
Jane Ellison
There is rightly a great deal of attention on this area—more tier 4 beds have been commissioned, for example—but I want to stress what is being done in my area of public health. Right at the heart of our new tobacco strategy, which we are beginning to work on, is a concern for the inequity facing people suffering from mental ill health in terms of smoking levels. I can reassure the hon. Lady that across the piece we are considering how we can do more for those who suffer with mental health problems.
Andrew Gwynne (Denton and Reddish) (Lab)
Access to contraception is not only a fundamental right but a cost-effective public health intervention—every £1 spent on contraception saves the NHS £11—yet the Government are presiding over savage cuts to public health services. It is predicted that £40 million will be cut from sexual health services this financial year alone. Is that what the Minister means when she says the Government are serious about prevention? Why does she not finally admit that these cuts not only make no financial sense but could put the nation’s health at risk?
Jane Ellison
I reject that analysis. It is for local authorities to take decisions on local public health spending, but they are mandated by legislation to commission open-access sexual health services that meet the needs of their local population, and in fact there is a great deal of innovation around the country in how people are doing that. For example, in Leeds, they are redesigning services to enable people to access sexual health. [Interruption.] The shadow Minister laughs, but the question of how much they would have invested in the NHS goes unanswered by the Opposition—a question that was never answered at the general election. On prevention, as I have said, the public health grant is not everything. In the next financial year alone, for example, the Department will spend £320 million on vaccines. We have introduced two world firsts: the child flu programme and the meningitis B immunisation programme. Right across the piece, this Government are investing in prevention and in our NHS.
Rehman Chishti (Gillingham and Rainham) (Con)
2. What progress his Department has made on improving the performance of hospital trusts in special measures.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
9. What progress his Department has made on improving the performance of hospital trusts in special measures.
Nigel Huddleston (Mid Worcestershire) (Con)
12. What progress his Department has made on improving the performance of hospital trusts in special measures.
The Secretary of State for Health (Mr Jeremy Hunt)
Eleven out of 27 hospitals have now exited special measures, having demonstrated sustainable improvements in the quality of care. Overall, trusts put into special measures have recruited 1,389 more doctors and 4,402 more nurses, with one estimate saying this has reduced mortality rates by 450 lives a year.
Rehman Chishti
Following the recent Care Quality Commission report on the Medway hospital, the staff and new chief executive are working hard to turn around long, historic and deep problems. What further support can the Secretary of State and the Government offer the hospital to help turn it around and get it out of special measures? I thank the Secretary of State and his Department for the support they have given to the hospital so far.
Mr Hunt
I thank my hon. Friend for his enormous support for that hospital, which has been through a very difficult patch. I had a long meeting with the chief inspector of hospitals about the Medway yesterday. My hon. Friend will be pleased to know that, over the past five years, we got 106 more doctors and 26 more nurses into the trust. We now have a link with Guy’s and St Thomas’s that is beginning to bear fruit. There is a lot more to do, but we are determined to ensure that we do not sweep these problems under the carpet and that we deal with them quickly and deliver safer care for my hon. Friend’s constituents.
Daniel Kawczynski
My right hon. Friend will know of some of the terrible problems experienced in Shropshire with respect to clinical commissioning groups and the trust, particularly over the future fit programme and A&E services in the county. The Royal Shrewsbury hospital covers a huge area—not just Shropshire, but the whole of mid-Wales. Will my right hon. Friend give me an assurance that he will do everything possible to support me and the residents of Shrewsbury to guarantee that A&E services remain at the Royal Shrewsbury hospital?
Mr Hunt
First, I thank my hon. Friend for his campaigning on behalf of the Royal Shrewsbury; no one could do more than he has over many years. I encourage him to engage carefully with the future fit programme. In the end, it is incredibly important to get the right answer for patients. My hon. Friend has been supportive of the process, but like him, I would like to see it concluded sooner rather than later.
Nigel Huddleston
Will the Secretary of State set out for my Worcestershire constituents what impact the putting of trusts into special measures is likely to have this year and what improvements can be expected when the trust exits special measures?
Mr Hunt
The advantage of the special measures programme is that we tend to make much faster progress in turning round hospitals in difficulty than used to happen in previous years. My hon. Friend will know that, in the past five years, his local trust gained nearly 50 more doctors and more than 100 more nurses. We are making progress, but we need to do it much faster. The hospital will have my full support in getting these problems dealt with quickly.
Valerie Vaz (Walsall South) (Lab)
Walsall NHS trust has been placed into special measures, so what immediate action can the Secretary of State take to ensure that the Manor hospital can recruit the vital staff in paediatrics and A&E that it now needs—not agency staff, but long-term fully employed staff?
Mr Hunt
The hon. Lady is absolutely right that one thing that can tip hospitals into special measures is having too high a proportion of staff from agencies so that a trust cannot offer the continuity of care that other trusts can. There have been an extra 83 full-time doctors at Walsall Healthcare NHS Trust over the past five years, along with 422 full-time nurses. An improvement director started this week and we are looking to find a buddy hospital, which is what I think will help most. When it comes to turning hospitals round the fastest, we have found that having a partner hospital can have the biggest effect, as with Guy’s and St Thomas’s for the Medway.
Keith Vaz (Leicester East) (Lab)
Despite having a football team at the top of the premier league, the hospitals of Leicester are in need of urgent assistance. The worry for Leicester is that they will slip into special measures, particularly regarding A&E. What steps can the right hon. Gentleman take to ensure that our hospitals perform as well as Leicester City football club?
Mr Hunt
We want to them to be as outstanding as Leicester City football club, but we recognise that there is some way to go. There is pressure on A&E departments, as the Under-Secretary of State for Health, my hon. Friend the Member for Ipswich (Ben Gummer), has acknowledged in the House, and we are giving careful thought to what we can do to support them. Leicester will be one of the first trusts in the country to offer full seven-day services from March or April 2017 onwards, so important improvements are being made, but we will do all that we can to ensure that they happen quickly.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Calderdale and Huddersfield trust is not in special measures, but it is in trouble, and we are likely to lose our A&E service—in one of the biggest towns in Britain—if we follow the recommendations of the CCG. Does the Secretary of State agree that when hospitals and trusts get into trouble, it is usually because of poor management? What can we do to improve the management of hospitals, and, in particular, what can we do about people who, because they are GPs, think that they are managers?
Mr Hunt
The hon. Gentleman has made an important point. I think that there are some things that we just need to do differently. For instance, we should allow managers to remain in their posts for longer. If the average tenure of NHS chief executives is only about two years, their horizons will inevitably be very short-term, so we need to give them enough time to turn their organisations around. The chief executive of the latest trust to be given an “outstanding” measure, Frimley Park Hospital NHS Foundation Trust, has been there for 26 years, and I think there is a connection. We can ensure that managers have the necessary resources. I think we can also make sure that we identify their problems quickly, and give them support before those problems turn into a crisis.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
Barking, Havering and Redbridge University Hospitals NHS Trust is working extremely hard to improve its services and has already achieved considerable success, but although there are 250 spare home beds in the London borough of Havering, there are still a great many frail elderly patients in hospital who are no longer clinically ill. Has any research been done on the reasons for delayed discharge, and to what extent does patient choice play a part in it?
Mr Hunt
Unfortunately, it sometimes plays a part, but the main way to tackle the problem is to establish better co-ordination between what local authorities do, what the CCGs do and what the trusts do. That applies not just to my hon. Friend’s local trust, but to trusts throughout the NHS. I do, however, commend her local trust. At its last inspection, the CQC found that it had made significant progress. It has more doctors, more nurses and, in my view, an excellent chief executive, and I am very confident about its future.
Heidi Alexander (Lewisham East) (Lab)
Sixteen trusts across the country are currently in special measures, nine out of 10 hospitals are failing to fulfil their own safe staffing plans and waiting time targets are being missed so often that failure is becoming the norm. Does the Secretary of State think that that might explain why, as we learned yesterday, a King’s Fund survey has found that dissatisfaction with the NHS increased by eight percentage points in 2015? That is the largest single-year increase since the surveys began in 1983.
Mr Hunt
The hon. Lady might want to look more closely at that King’s Fund report before turning it into a political football. According to page 6, satisfaction rates in Wales—run by her party—are six percentage points lower than those in England.
Let me tell the hon. Lady exactly what is happening with the special measures regime. We are being honest about the problems and sorting them out, rather than sweeping them under the carpet, which is what caused the problems that we experienced with Mid Staffs, Morecambe Bay and a range of other hospitals. At the same time, we are putting more money into the NHS and helping it to deal with its deficits, we are treating more people, and public confidence in the safety and dignity of the care that people are given is at record levels.
Heidi Alexander
It is clear that the Secretary of State does not want to talk about his record in England. His own Back Benchers are queueing up to tell him about the problems in their NHS areas of Medway, Shropshire and Worcestershire, but he seems not to understand the extent of those problems.
Let us return to what the public think. Satisfaction with the NHS has fallen by five percentage points; dissatisfaction has risen by eight percentage points; satisfaction with GP services is at the lowest rate ever recorded; and satisfaction with A&E stands at just 53%. We know that the Secretary of State has lost the confidence of doctors, but is that not the clearest sign yet that he has lost the confidence of patients, too?
Mr Hunt
What my Back Benches are queueing up to say is, “Thank you for sorting out the problems that Labour swept under the carpet for years and years.” What did Professor Brian Jarman of Imperial College say about the Department of Health under the last Labour Government? He said that it was a “denial machine”, with all the problems in hospitals being swept under the carpet and not dealt with. What is happening under this Government? Every day, 100 more people are being treated for cancer, 2,000 more people are being seen within four hours at A&E departments and 4,400 more operations are being carried out. There are record numbers of doctors and nurses, and the NHS is safer than ever in its history. We are proud to be the party of the NHS.
Ian Lavery (Wansbeck) (Lab)
3. What estimate he has made of the number of patients who went to A&E after having been unable to make an appointment with their GP in the most recent period for which figures are available.
The Minister for Community and Social Care (Alistair Burt)
The results of the last GP patient survey show that 91.9% of all patients get convenient appointments. Of the 8% who are unable to get an appointment or a convenient appointment, 4.2% indicated that they went to A&E.
Ian Lavery
The same survey indicates that one in four people are now waiting more than a week to see their GP, and a staggering 1 million people are heading off to A&E because they cannot get an appointment with their GP. It is a total meltdown. What is the Minister doing about it?
Alistair Burt
There are 40 million more appointments available for GPs than in the past. The Government have made a commitment to transform GP access, and £175 million has been invested to test improved and innovative access to GP services. There are 57 schemes involving 2,500 practices, and by March next year more than 18 million patients—a third of the population—will have benefited from improved access and transformed service at local level. That is what we are doing about it.[Official Report, 22 February 2016, Vol. 606, c. 2MC.]
Mr John Baron (Basildon and Billericay) (Con)
The Minister will be aware that, despite great improvements in cancer care under this Government and the previous Government, one in five cancer patients—more than 20%—are first diagnosed as late as when they go to A&E. The Government rightly focus on one-year survival rates as a means of driving forward earlier diagnosis. Can he give me an assurance that that will remain a key focus?
Alistair Burt
My hon. Friend raises a serious issue. Pursuing the earliest diagnosis of cancer is very important to the Government; it is obviously also important to all patients. We are going to publish the statistics on early detection through the clinical commissioning groups to improve transparency still further, because as this Government have shown, transparency often drives improvement in performance.
Kate Osamor (Edmonton) (Lab/Co-op)
24. Can the Minister tell me how the Government are urgently going to tackle safety of care at the North Middlesex hospital A&E department, following revelations last week that a patient died at the hospital in December 2015 after being forced to wait an unacceptable time in A&E? The department has also received a notification of risk.
Alistair Burt
The hon. Lady gives an example of why it is so important to continue to seek to improve the quality of care in A&E and why it is so important to keep transparency going. This is one of the reasons that we have a new inspection regime, which has been designed to highlight these things, but the introduction of 1,250 new doctors in accident and emergency departments over the past five years will also make a difference to the improvement in quality of care. However, she is right to highlight this matter. The NHS does not do everything right, but what is important is that we value what is done with the vast majority of stuff and that, when things do go wrong, we say so, we examine them and we learn lessons.
David Tredinnick (Bosworth) (Con)
According to information that I have received, 16 of the 25 ambulances on duty in Leicestershire one evening before Christmas were queueing outside Leicester royal infirmary to discharge patients. I have written to my right hon. Friend the Secretary of State about this issue. Please will the Minister update me and the House on the steps he thinks we should be taking?
Alistair Burt
The issue with ambulances and with quality of care elsewhere is the variation in quality. It is so important to ensure that local leadership addresses those local problems, because they are handled very differently in different places. It is right for my hon. Friend to raise this matter, and I am sure he has raised it with his local ambulance trust, as well as the hospital, to see how there can be better facilitation of patients going in and being discharged so that ambulances need not queue.
Dr Philippa Whitford (Central Ayrshire) (SNP)
The Health and Social Care Information Centre has shown that last year 124,000 patients waited more than 12 hours after arrival at accident and emergency, which compares with a figure of 1,700 in Scotland, and the number has doubled since 2013. The Royal College of Emergency Medicine has explained that these tend to be the sickest patients and that this delay is associated with increased mortality, so how do the Minister and the Secretary of State plan to improve that performance?
Alistair Burt
I have to tell the hon. Lady that patient satisfaction with A&E was rather lower in Scotland than it is in England, which indicates that we all have problems to deal with in this area. It is correct that we continue our progress both to increase resources throughout the health service and to A&E, and to improve transparency and people’s ability to see what is going on. Unacceptable waits are not part of what we all want to see from the NHS, which is why we are determined to drive them down. Patients in England will have the best information anywhere in the world about what is happening in their NHS, as we continue to drive efficiency and improvement.
Dr Whitford
Patients will not have the information about the four-hour waits, as that has not been published since November. The doctors required to look after these people are A&E specialists. There is already a major problem in retaining A&E trainees because they work a higher proportion of unsocial hours. These are exactly the hours that will be less rewarded in the new contract, so how does the Secretary of State plan to recruit and retain doctors in emergency medicine in the future?
Alistair Burt
There have been 500 more consultants in A&E medicine since 2010. The new contract is under negotiation at the moment and the majority of it has been agreed with junior doctors. It is designed to replace the failures in the old contract, which everyone knew needed to be corrected, and it provides the basis for the profession for the future to deal with some of the issues the hon. Lady mentions. All of us are concerned to ensure that the negotiations continue and that there should be no strike tomorrow, so that this pattern for the future, which is wanted by doctors and patients alike, as well as by the Government, gets a chance to work.
Andy Slaughter (Hammersmith) (Lab)
4. What assessment he has made of the implications for his policies of the findings of the Independent Healthcare Commission on the NHS in north-west London.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
It might assist the House if I were just to mention that this commission was commissioned by five Labour councils and was chaired by Michael Mansfield, QC. On the assessment of the commission’s findings, I can put it no better than the lead medical director for the “Shaping a Healthier Future” project, who said:
“The unanimous conclusion of the board’s clinicians was that the report offered no substantive evidence or credible alternative to consider that would lead to better outcomes for patients…above the existing plans in place”.
I concur with that judgment.
Andy Slaughter
Last July, the Minister held a constructive meeting with west London MPs and agreed that information on the review of our hospital services would be shared. We understand that a plan B is being considered that will still move hospital services from Charing Cross and Ealing but, because of rising costs, will retain and mothball existing buildings rather than redeveloping the sites. Can we see the current plans?
Jane Ellison
The hon. Gentleman rightly says that we had a constructive meeting but, as with everything in this area, it is time to move on. There is a grave danger of him appearing to be like one of those soldiers discovered on a Pacific island after the second world war still fighting the old war. Part of the reason for cost escalation in NHS projects is the constant challenge and delay, and “Shaping a Healthier Future” has complete clinical consensus across north-west London. The clinicians say that this
“will save many lives each year”.
It is time to get on with this project.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
The report heavily features Ealing hospital, where the radiographer Sharmila Chowdhury blew the whistle on consultants taking bungs—extra payments. She is now jobless and, as a widow with a mortgage, soon to be homeless. Will the Minister urgently look into her case, because despite a plethora of reports—this one and the Francis review—this Government do not seem to be doing anything for her?
Jane Ellison
I do not think that is fair. In fact, my right hon. Friend the Secretary of State of State has met the clinician in question, and the Francis review recommendations, as we have adopted them, make it quite clear that staff have a right to speak out. Of course we want everyone to speak out on behalf of patient safety.
Derek Twigg (Halton) (Lab)
5. What proportion of hospital trusts are in deficit?
The Secretary of State for Health (Mr Jeremy Hunt)
Trusts reported a net deficit of £1.6 billion for the first half of this financial year, with 75% of trusts reporting a deficit, which is why, last week, we launched the Carter efficiency programme in which Lord Carter confirmed that hospitals can save £5 billion annually by making sensible improvements to procurement and staff rostering.
Derek Twigg
Almost every acute trust will be in deficit in the coming year, including Warrington and Halton Hospitals NHS Foundation Trust and Whiston and St Helens hospitals, which cover my constituency. The fact is that the Government have been slow in dealing with one of the causes of the deficit, which is the employment of great numbers of agency staff. They also want to cut the tariff, which is based on efficiency savings, leaving hospitals such as Whiston and St Helens, which are among the most efficient in the country, struggling to make greater efficiencies. Will the Secretary of State look at that matter again?
Mr Hunt
The hon. Gentleman should give a slightly more complete picture of what is happening in his hospitals. There are nearly 2,000 more operations every year, 7,000 more MRI scans, and 7,000 more CT scans than there were five years ago. When it comes to the issue of deficits, we are tackling the agency staff issue. That happened because trusts were responding to the Francis report into what happened in Mid Staffs. Rightly, they wanted to staff up quickly, but it needs to be done on a sustainable basis. I simply say to him that if we were putting £5.5 billion less into the NHS every year, as he stood for at the previous election, the problems would be a whole lot worse.
Dr Andrew Murrison (South West Wiltshire) (Con)
Does my right hon. Friend not agree that running costs in the NHS, which vary from £105 to £970 per square metre per year as highlighted by Lord Carter, are wholly unacceptable, and that the concept of a model hospital to bring the worst up to the standard of the best, which was also highlighted by Lord Carter, has great merit?
Mr Hunt
My hon. Friend knows about these things from his own clinical background, and he is absolutely right. We are now doing something—it is probably the most ambitious programme anywhere in the world—to identify the costs that hospitals are paying. From April, we will be collecting the costs for the 100 most used products in the NHS for every hospital. That information will be shared. We are the biggest purchaser of healthcare equipment in the world, so we should be paying the lowest prices.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
Barts Health NHS Trust, the UK’s largest hospital trust, is set to run up a £135 million deficit this year. That would be by far the greatest ever overspend in the history of the NHS. When will the Minister accept the sheer scale of the austerity-driven crisis facing the NHS?
Mr Hunt
It is stretching things a bit to call that an austerity-driven problem when, next year, we are putting in the sixth biggest increase in funding for the NHS in its entire 70-year history. There are some severe problems at Barts, but we will tackle the deficit. We also need to ensure that we improve patient safety and patient care.
Jeremy Lefroy (Stafford) (Con)
The staff of the University Hospitals of North Midlands to whom my right hon. Friend entrusted the care of County Hospital in Stafford and the Royal Stoke University Hospital have done a great job both in improving the quality of care and in bringing down the deficit. Will he ensure that a long-term approach is taken to the finances of that trust so that we do not make rapid decisions that could result in difficult situations in the future?
Mr Hunt
As ever, my hon. Friend speaks very wisely. When we are reducing these deficits and costs, the trick is to take a strategic approach and not to make short-term sacrifices that harm patients. That is why, at the weekend, we announced a £4.2 billion IT investment programme, which will mean that doctors and nurses spend less time filling out forms and more time with their patients.
Mims Davies (Eastleigh) (Con)
6. What further steps he plans to take to improve access to GPs.
The Secretary of State for Health (Mr Jeremy Hunt)
By 2020, everyone will be able to get GP appointments at evenings and weekends. By March this year, a third of the country—18 million people—will have benefited from improved access to GP services.
Mims Davies
There is a concerning recruitment issue for GPs in my constituency, Eastleigh, which has led to patients experiencing significant delays in getting non-urgent appointments. Will my right hon. Friend look into promoting more agile working structures for GPs, especially women? This was highlighted by my CCG on Friday as vital for recruiting and retaining the extra GPs we need.
Mr Hunt
I know that West Hampshire CCG is providing extra space and capacity to take on more trainees, and across the country we plan to have 5,000 more doctors working in general practice by the end of this Parliament. This will be the biggest increase in GPs in the history of the NHS. It builds on the extra 1,700 GPs we have working in the NHS since 2010. It does take too long to get to see a GP. We are committed to sorting that out, and the record investment in the NHS five year forward view will make that possible.
Colleen Fletcher (Coventry North East) (Lab)
Wyken medical centre in my constituency is due to close in March. This will leave more than 2,000 of my constituents needing to find a new GP, at a time when it is practically impossible to get a prompt GP appointment, never mind register at a new GP surgery. Can the Secretary of State therefore assure me that he will co-ordinate with NHS England to ensure that it manages the situation appropriately and does all it can to assist each of my constituents affected, particularly the vulnerable and elderly, to get access to a new GP as soon as possible?
Mr Hunt
I am happy to do that. The hon. Lady is right to make those points. It is to care for the vulnerable people with long-term conditions that we need to see the biggest support given to GPs, because strengthening their ability to look after people proactively will mean that those people are kept out of hospital and kept healthier, and costs are kept down for the NHS.
Kelly Tolhurst (Rochester and Strood) (Con)
In Rochester, we are facing the closure of two single-handed GP practices owing to a retirement and a suspension, with no long-term replacements, making it more difficult for our growing population to access these vital services. Will my right hon. Friend outline the steps he is taking to maintain appropriate access to local GPs?
Mr Hunt
I am absolutely prepared to do that and I have met a number of GPs in my hon. Friend’s area. We are reversing the historic underfunding for general practice, with an increase of more than 4% a year in funding for primary care and general practice for the rest of this Parliament. That will give hope to the profession, whose members are vital to the NHS.
Jim Shannon (Strangford) (DUP)
Northern Ireland has the lowest number of GPs per capita across the United Kingdom. In order to access GPs, we need to have GPs. In the whole of the United Kingdom of Great Britain and Northern Ireland 25% of GPs are aged over 55, and that is going to get worse. What steps have been taken to train more GPs and to ensure that they stay in the NHS and do not go overseas, where there are better wages and conditions?
Mr Hunt
We have plans, as I mentioned, to have 5,000 more doctors working in general practice, and there is a big interviewing process. We need to increase the number of GPs going into general practice by 3,250 every year and I am happy to liaise with the Province to see how we can work together on these plans.
Mr Speaker
I call next the medal-wearing member of the team which won the parliamentary pancake race this morning, against the peers and against the press.
Victoria Atkins (Louth and Horncastle) (Con)
7. What progress the Government has made on integrating and improving care provided outside of hospitals.
Amanda Solloway (Derby North) (Con)
16. What progress the Government has made on integrating and improving care provided outside of hospitals.
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
I join you, Mr Speaker, in offering the Government’s congratulations to my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on her extraordinary success.
Tackling the long neglected integration of health and social care is a major priority for this Government. It is crucial to avoiding unnecessary hospital admissions, providing better care outcomes for the elderly and easing the pressure on our health economy from an ageing population. That is why we have set up the better care fund, providing funding of £3.9 billion—£5.3 billion if we include local funding; why my right hon. Friend the Chancellor has announced the social care precept, which will raise £2 billion; and why we have fully funded the NHS five year forward view integrated care pioneers and new models of care in 95 sites. That is more than Labour promised or ever did in its term of office.
Victoria Atkins
Thank you for calling me, Mr. Speaker. I must mention the team ably led by the hon. Member for Ealing North (Stephen Pound) and of course the hon. Member for Heywood and Middleton (Liz McInnes).
In areas with a high proportion of older residents, home aids and adaptations can help people live longer in their homes, which benefits them and can also help to ease pressure on the NHS and social care services. What steps are the Government taking to boost such support?
George Freeman
My hon. Friend makes an excellent point. The disabled facilities grant is our primary mechanism for supporting the most vulnerable patients. It is currently £222 million, and I am delighted my right hon. Friend the Chancellor has announced it will increase to £500 million by 2019-20. That will fund 85,000 adaptations and help to prevent 8,500 unnecessary hospital admissions.
Amanda Solloway
A recent study carried out by the Care Quality Commission found that there had been no notable improvement in mental health services outside hospitals. What steps are being taken to rectify that?
George Freeman
My hon. Friend makes an important point. It is right that the crisis resolution and home treatment teams were criticised in the recent CQC report for not providing adequate home treatment. That is why the Prime Minister announced in January that we are providing an extra £400 million in funding for those teams. It is also why, in the mandate, we recently required that NHS England not only agree but implement a plan to improve crisis treatment in all areas.
Helen Jones (Warrington North) (Lab)
Does the Minister now accept that the Government’s decision to slash funding to local authorities was disastrous for adult social care, as the Government were warned at the time it would be? Does he also accept that the social care precept, which the Government are allowing councils to levy, will raise the most money in those councils with the highest council tax base, not necessarily in those with the greatest need?
George Freeman
I would be concerned if that were true. The point is that we are facing extraordinary, exploding demand in our system. At the risk of sounding like a Monty Python sketch, what have the Government done, apart from launching the £3.9 billion better care fund and a £2 billion social care precept; fully funding the NHS five year forward view, with a front load of £3.5 billion; driving health devolution; and providing £4 billion for health technology? We are funding the integration of health and care in a way the last Labour Government never did.
Barbara Keeley (Worsley and Eccles South) (Lab)
That is really not true. Ministers are presiding over the hollowing out of social care, because their funding falls far short of what is needed. Some £4.6 billion has already been cut from adult social care, and the funding gap is growing at £700 million a year. The social care precept the Minister has just been talking about will raise £400 million a year, and the better care fund does not start until next year, when it starts at £105 million. Simon Stevens has called this “unresolved business”. When will Ministers face up to the fact that the Government’s figures just do not add up?
George Freeman
I think that that question could be taken more seriously, first, if the Labour party had tackled this issue in office and, secondly, if it had any suggestions. Let me summarise the pressure the system is under. Over the next 10 years, there will be a 22% increase in over-65s, and the number of people aged over 75 will rise by 90% in the next 20 years. We face extraordinary challenges. That is why we have announced the better care fund increases, why we have launched the social care precept and why we are driving devolution powers for local areas, which allow local health and care leaders to integrate. If this was as easy as Labour Members say, perhaps they would have done these things during their term in office.
Mr Ben Bradshaw (Exeter) (Lab)
8. What proportion of patients exercised their right to choose where to receive hospital treatment in each of the last three years.
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
The NHS choice survey, which has been carried out in its current form for the past two years, shows that the proportion of patients who said that they recalled being offered a choice of hospital or clinic for their first appointment was at 40% in 2015, up from 38% in 2014.
Mr Bradshaw
What the Minister just left out from his answer is that the figure was 50% when Labour left power in 2010. How does he explain this worrying fall in the proportion of patients being given a choice on the Conservatives’ watch? Will he reaffirm that choice is a legal right under the NHS constitution? Will he acknowledge that the introduction of choice by the Labour Government has been a major driver in improving NHS performance across the piece?
Ben Gummer
The fact the right hon. Gentleman missed out was that that was a different survey, so the figures are not comparable. However, I agree that choice is important. We are still not doing enough, and we should do more. I would like to take this opportunity to congratulate the team at his local hospital, which has just been rated good by the CQC—the first hospital in the south-west to receive that rating.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Patients needing mental health services do not get to choose where they receive their care, as highlighted in the Commission on Acute Adult Psychiatric Care report, which was published today. The report says
“the whole system has suffered from a steady attrition in funding…in recent years.”
It highlights
“poor quality of care, inadequate staffing and low morale.”
It describes the situation as “potentially dangerous”. Does the Minister now accept that the Government have let vulnerable people down? Will he implement the commission’s recommendations in full to put this serious situation right?
Ben Gummer
We have just received the report. It is a good report; we have taken note of it; and NHS England is already working on its recommendations. I remind the hon. Lady that this Government have put mental health on equal parity of esteem within the NHS constitution for the first time. [Interruption.] Opposition Front Benchers say that is meaningless, but why did they not do it when they were in office? We have done it for the first time and we are acting on it, not just in the constitution but in funding for the NHS, which is going up in real terms in the course of this spending review.
Daniel Zeichner (Cambridge) (Lab)
10. What progress his Department has made on reviews investigating the end of the contract between Cambridgeshire and Peterborough clinical commissioning group and UnitingCare Partnership.
The Minister for Community and Social Care (Alistair Burt)
The CCG expects to publish its internal review by the end of February, and NHS England’s independent review is expected to be completed by the middle of the month. Monitor is assessing the project from the providers’ perspective and will share its findings with NHS England in due course.
Daniel Zeichner
The UnitingCare contract in Cambridgeshire was an attempt to join up unintegrated services. We now appear to be having a series of unintegrated reviews. What is actually needed is a single overarching review that looks at the roles of NHS England, Monitor, the strategic projects team, and, of course, Ministers. When are we going to get that review?
Alistair Burt
As I said, there are ongoing reviews concerning the precise responsibilities of each individual part. There is no doubt that this is a very serious matter—a serious failure—that raises series concerns. We want to know what went on as much as the hon. Gentleman does, so once the reviews have been completed and we have been briefed, I will be very happy to talk to him about their consequences.
Stephen Pound (Ealing North) (Lab)
11. What assessment he has made of the potential effects on public health of his Department’s proposals on the future of community pharmacies.
The Minister for Community and Social Care (Alistair Burt)
It is my considerable honour, Mr Speaker, to respond to the hon. Gentleman in his victorious mode.
Community pharmacy is a vital part of the NHS and it plays a pivotal role in improving the public’s health in the community. We want a high-quality community pharmacy service that is properly integrated into primary care and public health. The proposed changes will help us, in conjunction with the pharmacy profession, to do just that.
Stephen Pound
I am very grateful to the Minister for that answer. There is always a place for him in our team next year, although we are running trials in the next few weeks.
Despite the generosity of the Minister’s response, does he not accept that community pharmacies are of great and growing importance to our constituents and provide an ever-increasing range of healthcare and advice in accessible high street locations? What message does he have for these dedicated professionals, who, frankly, now fear for the future due to the uncertainty arising from the announcement of a 6% cut in funding for the NHS pharmacy service?
Alistair Burt
I am grateful to the hon. Gentleman not only for his question but for the way he put it. The message is that community pharmacy does, and is doing, an extraordinary and important job, but it will change. In 2013, the Royal Pharmaceutical Society said in its publication, “Now or Never: Shaping pharmacy for the future”:
“The traditional model of community pharmacy will be challenged”
due to
“economic austerity in the NHS , a crowded market of local pharmacies, increasing use of technicians and automated technology to undertake dispensing, and the use of online and e-prescribing”.
It pointed to the massive potential of community pharmacists to do more and sees pharmacy as ideally placed
“to play a crucial role in new models of…care.”
All that is to come. We are negotiating with the pharmaceutical profession. A consultation is going on. There is a great future for pharmacy, but, like so much else, it will be different.
Kevin Hollinrake (Thirsk and Malton) (Con)
13. What progress his Department has made on making the UK a world leader in tackling antimicrobial resistance.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
The UK continues to play a global leadership role on antimicrobial resistance. We co-sponsored the World Health Organisation’s 2015 global action plan on AMR, created the Fleming fund to help poorer countries tackle drug resistance, and are promoting action through the G7. The O’Neill AMR review is galvanising global awareness.
Kevin Hollinrake
Antibiotic resistance is one of the biggest global challenges for public health, making routine operations impossible within 10 or 15 years unless action is taken. I welcome the Government’s action on this. Antibiotic Research UK is the world’s first charitable organisation, set up in my constituency, to tackle this issue. Will the Minister look at how we might fund such organisations in the charitable sector?
Jane Ellison
I very much welcome the fact that my hon. Friend is becoming a real champion of this important international and national agenda. I am aware of the important work of the charity he mentions, and I believe it has already had some contact with the Department. I do not make the decisions on these sorts of funding issues, but I am happy to look at the issue he mentions and to meet him to discuss it.
Margaret Greenwood (Wirral West) (Lab)
UK health and medical research projects benefit hugely from European Union funding, with the UK at the top of the table for approved grants. That funding is vital if we are to tackle global health challenges such as resistance to antibiotics. Does the Minister accept that pulling Britain out of the EU may have a detrimental impact on the UK’s role as a world leader in health research and development?
Jane Ellison
I reassure the House that the vital funds mentioned by the hon. Lady are protected in the spending review.
Sir Simon Burns (Chelmsford) (Con)
14. What assessment he has made of the adequacy of provision of GP practices in Chelmsford constituency.
The Minister for Community and Social Care (Alistair Burt)
NHS England advises that in Chelmsford there is a GP to patient ratio of 1,927 patients per whole-time equivalent GP, which is slightly lower than that for the Mid Essex clinical commissioning group area. The Care Quality Commission has inspected eight of the 13 Chelmsford GP practices—seven were rated “good” overall and one, Sutherland Lodge, was rated “outstanding”.
Sir Simon Burns
Does the Minister think it would be possible for the NHS review of the personal medical services scheme to ensure that the good and innovative work promoted by PMS, as exemplified by Sutherland Lodge surgery, can be sustained?
Alistair Burt
I hope so. I appreciate my right hon. Friend’s visit to my office yesterday with members of that surgery and NHS representatives. The £1.4 million released from PMS in Essex will be reinvested in the CCG area, but it is important that there is an opportunity for all practices to bid for that money so that some of the work already done under PMS gets the chance, if it is vital and still needed, to continue, which certainly includes services that are rated “outstanding”.
Rosie Cooper (West Lancashire) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Health (Mr Jeremy Hunt)
Significant progress has been made in our negotiations with the British Medical Association on a new contract for junior doctors, but agreement has not been reached on the issue of Saturday pay, despite previous assurances from the BMA that it would negotiate on that point. So, regrettably, 2,884 operations have been cancelled ahead of tomorrow’s industrial action, which will affect all non-emergency services. I urge the BMA to put the interests of patients first and to reconsider its refusal to negotiate.
Rosie Cooper
At Prime Minister’s questions in February 2014, I raised with the Prime Minister my very serious concerns about the dangerous bullying culture at Liverpool Community Health NHS Trust. I understand that the Capsticks inquiry into parts of that is now complete, so will the Secretary of State, in the spirit of honouring his stated commitment to openness and transparency, ensure that that report is made available, perhaps via the NHS Trust Development Authority, if necessary, to the public trust board on 23 February?
Mr Hunt
I will happily look into that matter. The Under-Secretary of State for Health, my hon. Friend the Member for Ipswich (Ben Gummer), has held a round table on bullying and harassment. I thank the hon. Lady for raising the issue, because over the past decade—none of us should be proud of this—the number of NHS staff who say they are suffering from bullying and harassment has gone up from 14% to 22%. If we are going to deliver safer care, we have to make it easier for doctors and nurses on the frontline to speak out without worrying about being bullied or harassed.
Several hon. Members rose—
Mr Speaker
Order. As in the health service, so at Health questions: demand always exceeds supply, so we need short questions and short answers.
Ben Howlett (Bath) (Con)
T4. I am sure Ministers will join me in congratulating Number 18 surgery in Bath on being ranked in the top 10 GP practices in the country. Do they agree that patients having a choice of where they are treated will increase patient satisfaction in the NHS?
The Minister for Community and Social Care (Alistair Burt)
Yes, it certainly will. That is another reason why we hope to have 5,000 more doctors and 5,000 more allied health professionals working in general practice, to expand the primary care service by 2020.
Justin Madders (Ellesmere Port and Neston) (Lab)
Today’s The Independent reports that a potential deal on the junior doctor contract was put to the Government that would have resolved junior doctors’ concerns without costing any more money and potentially avoided tomorrow’s industrial action. A source close to the negotiations told the newspaper:
“The one person who would not agree was Jeremy Hunt. Even though the NHS Employers and DH teams thought this was a solution he said no”.
So let me ask the Health Secretary a very direct question: have the Government at any point rejected a cost-neutral proposal from the BMA on the junior doctor contract—yes or no?
Mr Jeremy Hunt
The only reason we do not have a solution on the junior doctors is the BMA saying in December that it would negotiate on the one outstanding issue—pay on Saturdays—but last month refusing to negotiate. If the BMA is prepared to negotiate and be flexible on that, so are we. It is noticeable that despite 3,000 cancelled operations, no one in the Labour party is condemning the strikes.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
T6. Will my right hon. Friend update us on the progress in decriminalising dispensing errors for pharmacists?
Alistair Burt
I am aware of my hon. Friend’s keen interest in the rebalancing programme of work, and particularly the work on dispensing errors. We are fully committed to making that change. There are a number of stages to amending primary legislation through a section 60 order. Given the timetable, it is likely that the order will be laid before the Westminster and Scottish Parliaments in the autumn.
Tommy Sheppard (Edinburgh East) (SNP)
T2. The Secretary of State will be aware that Maximus is recruiting junior doctors to perform work capability assessments in the Department for Work and Pensions. The company is offering £72,000 a year, which is up to twice the salary that junior doctors would get in the health service. Is he concerned that that will result in inexperienced medical staff making judgments that relate to people’s livelihoods? Is he not also concerned that it will result in a drain of staff resources out of the NHS and out of providing general healthcare for the public?
Mr Jeremy Hunt
As a result of the changes the Government have made on welfare reform, we have 2 million more people in work and nearly 500,000 fewer children growing up in households where nobody works. Part of that is making important reforms, including having independent medical assessments of people who are in the benefit system. I think everyone should welcome that.
David Tredinnick (Bosworth) (Con)
T8. Comparative research has shown that proton therapy is as effective as radiotherapy for certain cancers, but has fewer side effects. Do Her Majesty’s Government accept the use of comparative evidence in deciding the availability on the NHS of emerging treatments such as proton therapy?
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
I will reflect on the wider point my hon. Friend makes, but the House will be keen to know that we are investing in building two proton beam therapy facilities at the Christie in Manchester and University College London hospitals. Work has already started on that £250 million project, and the first facility is due to become operational in 2018.
Steven Paterson (Stirling) (SNP)
T3. Will the Secretary of State provide an update on efforts and contingencies to combat the Zika virus, and on how that is being co-ordinated with the devolved Administrations, including Scotland?
Jane Ellison
The Government are taking the matter extremely seriously, and they have it under active review. Up-to-date medical guidance has been cascaded to the NHS in England. As the hon. Gentleman will know, the UK is at the forefront of some of the world’s response. We are a major funder of the World Health Organisation. We have got people on the ground helping in Brazil, in particular. I assure him that we are maintaining close links with the devolved Administrations at official level, and I am always happy to speak to colleagues. We take very seriously keeping those links live.
David T. C. Davies (Monmouth) (Con)
T9. Has the Secretary of State seen the comments of Professor Angus Dalgleish, who is widely reported in the papers today as suggesting that EU rules are forcing us to spend billions of pounds treating health tourists and preventing us from undertaking important clinical trials? Has the Secretary of State made any assessment of Professor Dalgleish’s comments?
Mr Jeremy Hunt
The Government have made a huge and significant assessment of the cost of overseas people using the NHS, and we think that there are £500 million of recoverable costs that we do not currently recover. When it comes to the EU, the biggest problem that we have is that we are able to reclaim the costs of people temporarily visiting the UK, but we do not do so as much as we should because the systems in hospitals are not as efficient as they need to be. We are sorting that out.
Liz McInnes (Heywood and Middleton) (Lab)
T5. Despite the prevalence of pancakes in Parliament today, I am pleased to be asking a food-related question. A recent opinion poll performed by Diabetes UK showed that three quarters of British adults think food and drink manufacturers should reduce the amount of saturated fat, salt and sugar in their products. Does the Minister support introducing mandatory targets for industry to reformulate food and drink products to help people to eat more healthily, and will that form part of the Government’s childhood obesity strategy?
Jane Ellison
We made considerable progress in this area in the last Parliament, under the responsibility deal, but we have always said that there is more to do and the challenge to industry remains. We will say more about that when we publish the childhood obesity strategy in due course.
Nusrat Ghani (Wealden) (Con)
Midwife-led units, such as the brilliant Crowborough birthing centre in my constituency of Wealden, are key to the provision of high-quality, safe and compassionate maternity care. Last year, it scored 100% satisfaction on a friends and family survey. Will my hon. Friend outline the Government’s plans for midwife-led care, particularly given this weekend’s launch by The Sunday Times of the safer births campaign?
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
Midwife-led units have increased in number in the past few years, to the great advantage of women wanting a full range of choice when they give birth. That is why we are all looking forward to the publication of the Cumberlege review, which I hope will map out the future of maternity services and show what midwife-led units will do within maternity services in the NHS. I am very excited about that, and I know that my hon. Friend will be, too.
Alison Thewliss (Glasgow Central) (SNP)
T7. Ministers will be aware of The Lancet series on breastfeeding and the open letter signed today by a range of organisations in the field calling for concerted action to promote, protect and support breastfeeding. Will the Minister meet me and these organisations to discuss the proposals further?
Ben Gummer
I am aware of The Lancet review, which makes some important points. We are not doing well enough yet in England, and it is of note that progress has been made in Scotland, Wales and Northern Ireland that we should be able to copy in England. I know that the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), who has responsibility for public health, will want to hold such a meeting to discuss that. We have made considerable progress, but there is still a differential between rich and poor that we need to fix.
Henry Smith (Crawley) (Con)
I am pleased to support the National Society for the Prevention of Cruelty to Children’s “It’s Time” campaign, which is an initiative to ensure that children who have been the victims of abuse receive ongoing support. May I seek assurances from the Government that they will actively help with this initiative?
Alistair Burt
Yes, indeed. We strongly support the initiative. Our work to look after children who need extra care, particularly in relation to their health and emotional needs, has been helped by the transforming care package, which is going through local authorities at the moment. Their vulnerabilities are certainly a matter of great concern, and that will be followed up by the Government.
Mrs Emma Lewell-Buck (South Shields) (Lab)
Over 1 million elderly people are able to maintain independence and remain in their own homes due to the attendance allowance. What discussions has the Minister had with his colleagues about ensuring, when the fund is transferred from the Department for Work and Pensions to the Department for Communities and Local Government, that the allowance will remain at the same level?
Alistair Burt
The consultation is ongoing between Departments. A unit has been set up by the Department of Health and the DWP to look at a range of issues that concern us both. The actual detail of the future attendance allowance has not been finalised yet, but it is a matter of concern and discussion between Departments.
Dr Sarah Wollaston (Totnes) (Con)
In asking a question about mental health, may I remind the House that I am married to an NHS forensic psychiatrist, who is also registrar of the Royal College of Psychiatrists? Have the Government looked carefully at today’s report from the independent commission on improving mental health services, particularly its finding that provision nationally for the most severely ill acute patients is inadequate? Will the Government set out what measures they will take to make sure we really see progress on parity of esteem and on improving access to such severely ill patients?
Alistair Burt
I thank my hon. Friend for her question, and the Royal College of Psychiatrists for its work on Lord Nigel Crisp’s commission, which we have supported. The report and recommendations have only just come to us, but they certainly travel in the direction in which the Government are already going. We want to reduce out-of-area placements. The NHS is already committed to that, and is working on moving to a definitive target to reduce the number of them and, I hope, eventually to scrap them. I was up in Hull last week to look at problems in that particular area. The recommendations on waiting times are very important. As we all know, this area has been undervalued in the past. It is under greater scrutiny, and more investment and support are going in through the Government. Today’s report will help us in relation to that.
Mr Speaker
I will call the hon. Gentleman if his question consists of one sentence.
Greg Mulholland
Leeds has a shortage of integrated care beds and pressure on acute services. Will the Secretary of State—[Interruption.] That was a comma, Mr Speaker. Will the Secretary of State please intervene, so that Leeds Teaching Hospitals NHS Trust can open wards at Wharfedale hospital, which it wants to do, while the clinical commissioning group provides the money?
Andrea Jenkyns (Morley and Outwood) (Con)
By refusing to condemn the junior doctors strike, the hon. Member for Lewisham East (Heidi Alexander) has shown that she has little regard for patient safety. [Interruption.] Will my right hon. Friend repeat his condemnation of this strike, which will seriously endanger patient safety, and assure me that he will continue to press for the new contracts, which will guarantee safer patient care and a better contract for doctors?
Mr Hunt
I think my hon. Friend got a bit of a reaction with those comments. The Labour party is saying that if a negotiated settlement cannot be reached, we should not impose a new contract—in other words, we should give up on seven-day care for the most vulnerable patients. There was a time when the Labour party spoke up for vulnerable patients. Now it is clear that unions matter more than patients.
Several hon. Members rose—
Mr Speaker
I am sorry, but demand is so high. Last but not least, I call Kevin Barron.
Kevin Barron (Rother Valley) (Lab)
The 6% cut in the pharmacy budget will come in in October—halfway through the next financial year. Will the Minister tell us what the percentage cut will be in a full financial year?
Alistair Burt
Negotiations are ongoing with the Pharmaceutical Services Negotiating Committee. The amounts that have been set out cover this financial year and the settlements are moved on from year to year, so the discussion is ongoing. The future for pharmacy is very good, although it will be different, as the profession has wanted for some time. Not only is there a great future for high-street shops in areas where we need them, but there will be an improvement in and enlargement of pharmacy services in healthcare settings, primary care settings and care homes around the country.
Several hon. Members rose—
Mr Speaker
Apologies to colleagues. I did stretch the envelope as far as I could, but we must move on.
Points of Order
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
On a point of order, Mr Speaker. It has been brought to my attention that the use of vellum—the calfskin material on which Acts of Parliament are printed—is to be discontinued, with Parliament giving 30 days’ notice to cease to the printers. However, in response to a point of order made by the hon. Member for North Wiltshire (Mr Gray) on 26 October last year, you made it clear that a decision on this matter would have to be taken on the Floor of the House.
May I therefore seek your guidance on what should be done now in order that Members from across the House can register their opposition to the decision and make the case for the continued use of vellum, especially in the light of significant disputes over the so-called savings that have been cited by the Administration Committee and influenced its recommendation to end the centuries-old practice of using vellum to print this country’s legislation? Surely we think that the legislation that we make in this place—the mother of all Parliaments—is worthy of nothing less.
Mr Speaker
I am very grateful to the hon. Lady for her point of order and for her courtesy in giving me notice of it. She is, indeed, correct that when the matter was raised in October last year by the hon. Member for North Wiltshire (Mr Gray), I indicated that, as had been the case in 1999, the House would be asked to decide whether to agree to the recommendation of the Administration Committee that it should agree to the proposal of the House of Lords—indeed, the decision of the House of Lords—to replace vellum with archival paper. That was my understanding at that time, not least for the historical reason that I have just given. No such opportunity has, however, been offered to the House. That is why she is complaining. The provision of such an opportunity is not in my gift.
I should also say that the arrangements for printing Acts of Parliament and the associated expenditure are matters for the House of Lords, and not for this House, so its arrangements with the printers of Acts are not matters for the Chair.
As for seeking an opportunity to demonstrate the depth and breadth of support for the continued use of vellum, I am sure that the hon. Lady will have thought of tabling an early-day motion. I shall leave the matter there for now.
Chris Stephens (Glasgow South West) (SNP)
On a point of order, Mr Speaker. As you may recall, last week I asked the Minister of State for the Department for Business, Innovation and Skills a topical question. It was about facility time and check-off provisions contained in the Trade Union Bill, and whether they would be removed as they apply to Scotland and Wales. The Socialist Worker newspaper—you may have a subscription, Mr Speaker—and other media outlets have published a letter from the Minister of State to other Ministers, including the Prime Minister, which indicates that concessions will be made to devolved Administrations, effectively removing the Bill’s check-off and facility time arrangements. That letter was dated 26 January.
The information that I was given on 2 February and the letter of 26 January are contradictory to say the least. Can you indicate, Mr Speaker, whether the Minister of State has made a request to clarify those contradictory statements, and can you say what options are available to hon. Members who wish to seek clarity on that matter?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order, but I have received no indication from any Minister from that Department about an intention to make a statement on the matter. I hope he will forgive me, but I do not recall off the top of my head which Minister responded to the question last week.
Mr Speaker
Yes, but there is usually more than one Minister of State. Name recognition is helpful, but in the absence of a declared name, I cannot recall which Minister answered. I hope I followed the drift of the hon. Gentleman’s attempted point of order, but I was not conscious that Ministers had a hotline to the Socialist Worker newspaper.
Mr Speaker
Not yet, says the leader of the Liberal Democrats from a sedentary position. I read the journal myself occasionally when I was a school student, but I readily concede that it has not passed my desk since. If there is confusion about the matter, it is best that that is dispelled. My advice to the hon. Member for Glasgow South West (Chris Stephens) in all seriousness is that he should wend his way to the Table Office and table a written question on the matter. If, when he receives a response, the fog has not lifted, I have a feeling that he will turn up at business questions on a Thursday to press for an early statement or debate on that matter. He is nothing if not dogged, and I feel sure that he will pursue his objective with the fixity of purpose that is required.
Mr David Winnick (Walsall North) (Lab)
Further to that point of order, Mr Speaker. If I remember correctly, you said that in your youth you read the Socialist Worker. Would it be right to come to the conclusion that having read that revolutionary journal, you decided to become a Tory?
Mr Speaker
The hon. Gentleman may be correct in that surmise. A young lad at my secondary school was a devoted seller of that paper, and another young lad was also a devoted seller of the paper and has since become a distinguished academic, but as far as I know, he no longer adheres to the precepts of the Socialist Workers party. Did reading that paper make me a Tory? Probably. I am grateful to the hon. Gentleman, both for his point of order and for his sense of humour.
bill presented
Blood Donor (Equality) Bill
Presentation and First Reading (Standing Order No. 57)
Tim Farron, supported by Michael Fabricant, presented a Bill to make provision about the conditions to be met by male blood donors, including removing the restrictions relating to blood donation from men who have sexual intercourse with men; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 11 March, and to be printed (Bill 130).
Ofsted Inspections (Schools’ Rights of Challenge)
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
John Pugh (Southport) (LD)
I beg to move,
That leave be given to bring in a Bill to establish the right of schools and academies to challenge the timing and format of school inspections; to appeal against the outcomes of such inspections; to make provision about increasing accountability and quality assurance within the school inspection system; and for connected purposes.
I apologise in advance, Mr Speaker, for my lacklustre demeanour. I recently had a bout of winter vomiting, and I am concerned that I have more to worry about than projecting my voice.
Her Majesty’s inspectorate of schools, as Ofsted used to be called, has a long and distinguished history stretching back to the days of Queen Victoria, when inspectors such as the great poet Matthew Arnold fought against the scourge of philistinism in British society—a term, incidentally, he invented. Historically, it has always been torn between its twin and not always compatible roles of supporting school improvement and ensuring that state-funded schools abide by whatever standards and rules are currently laid down by the Government of the day.
We are now witnessing an interesting period of Ofsted’s development. It is a huge multimillion pound organisation, with 1,000-plus permanent employees and a remit stretching not just over the entire school system but over nursery, pre-school, out-of-school provision and sundry aspects of childcare. The varying and occasional pronouncements and opinions of the head of Ofsted, whether delivered with the self-effacing modesty of Sir David Bell or the misguided arrogance of Chris Woodhead, are treated as though they are the ex cathedra announcements of a pope. Unlike other HMIs toiling away for the public good, the head of Ofsted is guaranteed celebrity status. For schools and providers, Ofsted is critical. Preparing for Ofsted—pleasing or pacifying Ofsted—is hugely important. It casts a long shadow over the entire school year. Its verdict can determine a school’s reputation, future funding, governance, the professional careers of its staff, ownership and very survival.
I do not, at this stage, want to minimise the very real role that HMIs have, and have had, in school improvement. However, we need to flag up that as a country we are almost unique in currently having such a heavy duty, high-stakes, expensive and unaccountable public body policing our schools. It is also worth pointing out that many of the countries we seek to emulate—in terms of pupil progress, whether in science, technology, engineering and maths, PISA ranking or whatever—lack such a cumbersome and encumbering apparatus.
The considerable amount spent by the Government on Ofsted is a mere fraction of the amount that schools spend in trying to ensure and protect themselves from a perverse or unfair judgment from Ofsted. Again, as a nation we are an outlier here. Unsurprisingly, good teachers and heads who fear an errant verdict are diverted or stressed. They leave the profession early, or, in the worst cases, pass up opportunities for promotion. We do not have a collegial, peer-reviewed model of school improvement. Instead, we have what can become, at worst, the teaching equivalent of the Spanish inquisition, where careers go up in flames at the mere whiff of educational heresy.
I recognise that inspection has a valuable role in education, but the way we currently do it in England, via the bloated bureaucratic beast that Ofsted has become, is clumsy, poor value for money and unaccountable. Critically, there is no independent appeal on matters of substance. The Bill seeks to give schools powers to contest an unfair judgment by appeal to independent regional panels. Where disagreements remain, it would give a school the right to table its response for inclusion in the final Ofsted report. Currently, even lodging a legitimate complaint is seen as futile and positively risky. Very few schools actually do it—it is about as good as arguing with traffic wardens or traffic cops. We need to change this top-down culture and address the imbalance of power. We need a cultural change.
It is not as though Ofsted has never been without flaws. In 2015, Ofsted dismissed 40% of its inspectors for reasons undisclosed. It is not as though it has never been arbitrary. The current head of Ofsted summarily announced recently that schools would be graded inadequate for allowing full veils—that was just his decision—and a nursery was downgraded from outstanding to inadequate simply for emailing a picture of a happy child to its parents.
Worse still, it is not as if judgments are wholly impartial or immune from political pressure—or the suspicion of that. I do not suggest that that is systematic, but it can happen. It is a known fact that the Government want all schools to become academies, and that the head of Ofsted worked for an academy chain. He sought to inspect academy chains but, to be fair, he has been blocked from doing so by the Government. The only antidote to the suspicion that free schools and academies get an easy ride is more transparency and the possibility of challenge, as there is not a straightforward read-across from the data collected to the verdict reached.
I have with me two Ofsted reports on two schools in Liverpool, both in tough, challenging areas, and both with similar scorecards—virtually identical in every respect. Notre Dame Catholic College is rated good by Ofsted. The Savio Salesian College in Bootle is said to require improvement. Oddly, the apparently inferior school has appreciably better results in English than the so-called good school, and its maths results, too, are better in places. Ironically, the head of Notre Dame has been invited to take over Salesian school based on the Ofsted judgment. To add to the irony, I taught in Savio Salesian High in the early ’70s under a saintly headmaster called Father Maurice Gordon, an Oxbridge graduate who, on stepping down as a successful head did not become a consultant—not even an Ofsted inspector—but timetabled himself to teach remedial maths to hard-to-reach pupils. He fostered a glorious sporting tradition, and numbered among his alumni Jamie Carragher and the deputy leader of the UK Independence party.
I know absolutely nothing of the college in its current incarnation, but my suspicion, based on the evidence provided on Ofsted’s website, is that Ofsted has little reason to be confident in its verdict, hence the need for the right to challenge. Ofsted verdicts shape the destiny of schools, and determine their structure, ownership and very survival. Not to have the right to challenge such a fallible system—it clearly is such a system—is not only demoralising but fundamentally unjust.
Mr Speaker
The Question is that the hon. Gentleman have leave to bring in the Bill. As many of that opinion say “Aye”. It would be helpful if the promoter of the Bill declaimed with enthusiasm.
John Pugh
My enthusiasm is undiminished, Mr Speaker.
Question put and agreed to.
Ordered,
That John Pugh, Mr Clive Betts, Norman Lamb, Tom Brake, Kelvin Hopkins, Greg Mulholland, Mr Mark Williams, Steve McCabe and Fiona Bruce present the Bill.
John Pugh accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 11 March 2016, and to be printed (Bill 131).
Opposition Day
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
EU Referendum: Timing
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
15:53 - The House divided: - Ayes: 70 / Noes: 286 - Question accordingly negatived.
Mr Nigel Dodds (Belfast North) (DUP)
I beg to move,
That this House notes and regrets that the Government appears set to rush to a referendum on the UK’s membership of the European Union in June 2016; believes that no case has been made for holding a referendum at such an early stage, and that further, any such needlessly premature date risks contaminating the result; believes that a subject as fundamental as EU membership should be decisively settled after a full and comprehensive debate; notes the recommendations of the Electoral Commission on best practice for referendums; further notes that there are elections happening in Northern Ireland, Scotland, Wales, London and some local authorities in May 2016 and that the First Ministers of each of the devolved administrations have all expressed opposition to a June referendum date; and urges the Government to set the date for the referendum having respect for the May elections as distinct electoral choices.
The referendum on EU membership is one of the biggest decisions that the people of this country will be asked to make in our lifetime. I, for one, am glad that we have been afforded the opportunity to have our say. The Democratic Unionist party campaigned long and hard, when the two major parties were against a referendum, for the people of the United Kingdom to have their say. I commend the Government very much for introducing legislation to allow the referendum to take place during this Parliament.
Today’s debate is about the timing of the referendum and the date on which the vote is held. Some Members who support our motion hold different views on EU membership and, indeed, on whether we should have a referendum at all. However, whatever side of the argument we are ultimately on, we agree that, when the referendum is finally held, there must be the fullest, most comprehensive debate possible, which does not overlap with, or otherwise become enmeshed in, the election campaigns in May for the Scottish Parliament, the Northern Ireland and Welsh Assemblies, and indeed for that matter, for the London Mayor, and other local elections.
Mr Mark Williams (Ceredigion) (LD)
I am grateful to the right hon. Gentleman for taking an early intervention. Does he take comfort from the fact that the view that he has just expressed has been endorsed by all the party leaders in the National Assembly for Wales—not just the First Minister but the Liberal Democrat leader, the Plaid Cymru leader, the Labour leader and, critically, the Conservative leader?
Mr Dodds
The hon. Gentleman makes an extremely important point, which I shall come to, about the cross-party nature of the sentiments behind the motion. It is not motivated by one side or the other on the EU referendum debate, or by a party political consideration, and it has the support of a diverse range of parties on both sides of the argument. The issue needs to be taken very seriously by the Government, and cannot be dismissed lightly or set aside easily, given the breadth of support that it attracts from all parties, including the major parties mentioned by the hon. Gentleman: the Conservative and Labour parties in Wales, and the Labour First Minister in Wales. It would be interesting to know the position of the main parties in Scotland.
Ms Margaret Ritchie (South Down) (SDLP)
Does the right hon. Gentleman agree that having elections to the devolved Administrations and the campaign for the European referendum running in parallel could obfuscate the issues and confuse them? Politicians in the devolved Administrations should concentrate on the principal issues of health and education, and working towards an evolving programme for government.
Mr Dodds
Again, that illustrates the point. The hon. Lady and I may have different views on EU membership and so on, but we agree on the need for a full and comprehensive debate that is not caught up in the election campaigns for the devolved Administrations. I will discuss that in more detail shortly. .
Philip Davies (Shipley) (Con)
I commend the right hon. Gentleman and his party for the work that they have done to campaign for an EU referendum for many years, long before it was fashionable. Has he also taken into consideration the fact that there is a European Council meeting scheduled for 23 June—apparently, the Government’s favoured date for the EU referendum? Does he think it appropriate for a European Council meeting—and who knows what reports might come out from that meeting on the day—to be held on the same day as the EU referendum?
Mark Spencer (Sherwood) (Con)
I wonder whether the right hon. Gentleman’s constituents will pay more attention to the European Council meeting on 23 June than the Northern Ireland fixture against Ukraine on 16 June. Perhaps his constituents have other things in their life, and Europe is not a constant feature in their psyche.
Mr Dodds
As my hon. Friend says, it is not an either/or. People are capable of watching the football, listening to the political debate and doing other things. If this is to be an issue, it will be because the Government have chosen to foist the EU referendum on us at the time of the Euro championships, which people will want to concentrate on. That is another good argument for having the debate later. Another good reason is that many fans from England, Wales and Northern Ireland—sadly not Scotland—will be travelling to France. We could avoid the extra cost of postal votes, proxy votes and the rest of it, if we had the vote on a different date.
Mark Spencer
Given that the right hon. Gentleman accepts that the good people of Northern Ireland can focus on more than one thing at once—football and politics—surely they can focus on local elections and the EU referendum at the same time.
Alex Salmond (Gordon) (SNP)
Does the right hon. Gentleman agree that this is not about the voters in Northern Ireland, who are quite capable of concentrating on the European championships—we envy them for being in it—and politics but about the devolved Administrations, who, unlike the one closer to here, respect purdah? If the referendum is on 23 June, the three Administrations will be in purdah for 10 out of 13 weeks. I do not know whether Conservative Members have considered that.
Mr Dodds
The right hon. Gentleman, from his considerable experience, makes a very salient point.
This debate is not about the substance of the EU referendum argument or the deal that the Prime Minister has negotiated, so I will pass over the details of that deal—it is surprisingly easy to do so. Instead, I want both sides of the House to consider whether the result of the referendum will be morally binding or politically conclusive and whether we will settle the debate for a generation. We can do that, of course, but, on the Government’s current timetable, I fear we will not. This is needless folly, not least for the Conservative party, but there is time, even now, for it to reconsider—that would be in its long-term interests—and I believe it should.
To be clear, there is no suggestion that the public cannot choose or that a compressed electoral cycle would, as some have suggested, be too complex for the voters. Of course the people can choose and understand the issues. This is not about their choice, and still less is it about their ability to choose; it is about the Prime Minister’s desire that they choose in a particular way at a particular time in the rushed referendum that I fear he is set upon.
Why hold the referendum on 23 June? No Minister has made the case for an early referendum—quite the reverse; they have extolled and observed the virtues of Electoral Commission guidance and past polls at all levels, be they general elections, local elections, devolved elections and, yes, both the national referendum in the last Parliament on the alternative vote and the recent Scottish referendum. The House and public are entitled to ask, therefore, why they are seemingly intent on kicking over their own precedents. Why is this poll to be so very different from all that have gone before? What explains the rush and the panic?
Hywel Williams (Arfon) (PC)
Given the congestion of events in May and June, what does the right hon. Gentleman make of the comparative coverage already in the media of the referendum and the elections in our own backyards?
Mr Dodds
The hon. Gentleman makes a good point. Despite the public’s ability to discern the different issues at stake in the different election questions, the media often fixate on one issue. They will undoubtedly concentrate heavily on the national question of the EU referendum while giving little coverage to the elections in the devolved regions. That is another good argument for why the two should not become enmeshed.
Lucy Frazer (South East Cambridgeshire) (Con)
Is the right hon. Gentleman aware that in Sweden in 1994 two months elapsed between a general election and a referendum on membership of the EU; in Denmark, two months elapsed between the general election and the referendum on the treaty of Amsterdam; in Malta, one month elapsed between two such elections; and in Switzerland, 15 referendums were held in 1992 alone? Is he suggesting that these countries have abdicated their responsibility to the general public?
Mr Dodds
No, not at all. That is a rather strange argument to make. In Northern Ireland and elsewhere, European elections have been held on the same day as local and Assembly elections. So that is neither here nor there. We have already made the point that people are quite capable of separating out the issues. We are talking about the impact on the functioning of the devolved Administrations and the ability of political parties to campaign and work with others, if necessary, on those issues; about the purdah issue the right hon. Member for Gordon (Alex Salmond) rightly raised; and about the media’s concentration on EU issues to the exclusion of devolved issues. This debate is about those important issues, not the question the hon. and learned Lady raised.
On 3 February, the First Ministers of Northern Ireland, Scotland and Wales, along with the Deputy First Minister of Northern Ireland, wrote jointly to the Prime Minister to set out the case against a June referendum and to argue for the debate to be free from other campaigning distractions. That needs to be taken seriously and treated with the respect it deserves. We hear a lot about the respect agenda and taking on board the views of the devolved Administrations, and that now needs to be put into practice. This is an important moment in this Parliament. Will the Government respect the devolved Administrations?
Kevin Foster (Torbay) (Con)
I was interested to hear the right hon. Gentleman talk about listening to the views of the Electoral Commission. Last Thursday, in questions to the hon. Member for South West Devon (Mr Streeter), who was representing the commission, I asked if it had given a view yet on dates in June. It had—it had only ruled out the 2nd and the 9th. Does the right hon. Gentleman think that says something?
Mr Dodds
I will come to the Electoral Commission shortly.
The leaders of the Administrations in Scotland, Wales and Northern Ireland have very different views and come from very diverse backgrounds. We have the leader of the Scottish National party, the leader of the Labour party in Wales, the Democratic Unionist party leader and the Sinn Féin leader in Northern Ireland. That is a diverse group of politicians with very different backgrounds—to say the least—but they have come together not out of party political interest but in the interests of the peoples they represent in their respective countries. Whether on the “remain” or the “leave” side, they have set aside party political considerations in the common interest that the referendum should not happen in June. My colleague, Arlene Foster, Northern Ireland’s First Minister, has rightly observed that any premature European referendum campaign would inevitably become intertwined with the Stormont elections. How could it not?
Sir Edward Leigh (Gainsborough) (Con)
I suspect that the right hon. Gentleman and I will both vote to leave. From a Eurosceptic English point of view—we are self-confident and we know our arguments—we say to the Prime Minister, “Bring it on—no delay, don’t look worried, bring it on!”. We can have a proper debate, and we can win this.
Mr Dodds
I respect the hon. Gentleman’s point of view. I understand where he, as an English Eurosceptic, is coming from. I hope he respects where we in Northern Ireland, Scotland and Wales on both sides of the argument are coming from. We will weigh the arguments and consider whether his view should be tempered by the contributions of colleagues from other parts of the UK, some of whom might share his views.
Simon Hoare (North Dorset) (Con)
A phrase in the motion stands out as pretty strong stuff, and I would welcome the right hon. Gentleman’s explanation of it. It claims that the
“needlessly premature date risks contaminating the result”.
I thought we had already established across the House that the electorate can both walk and chew gum. I am not entirely sure how the result could be “contaminated”.
Mr Dodds
It is pretty obvious on an issue that the Conservative party has debated for many decades and the country raised many concerns about, that when the deal is finalised—the “t”s are crossed, the “i”s dotted and all the rest of it—we surely deserve more than a short 18, 17 or 16-week campaign for detailed consideration. If the Conservative party and others are really interested in putting the issue to bed once and for all, I think they will want the fullest and most comprehensive debate possible.
Mr Gregory Campbell
Does my right hon. Friend agree that a consensus seems to be emerging that this serious issue needs to be examined, debated, made subject to dialogue and voted on? We need to have this discussion and debate unencumbered by regional influences, London Mayoral elections and other issues that will undoubtedly feature in the media, sidelining the issues relating to a European referendum, which should take place at a time later than June this year.
Mr Dodds
I quite agree with my hon. Friend, who sets out the position very clearly.
Only last month, the Prime Minister himself was pretty unambiguous about this matter. He said:
“I’m not in a hurry. I can hold my referendum any time up until the end of 2017”,
and that
“it is more important to get this right than to rush it.”
My fear is that he is rushing it and not getting it right.
Mr David Hanson (Delyn) (Lab)
As a Welsh Member of Parliament, I have some sympathy with the right hon. Gentleman’s argument on grounds of purdah and for other reasons, but will he help to clarify it by telling us on what date he thinks the referendum should be held? I am also concerned that the longer this is left, the more damaging it will be to the long-term economy of the United Kingdom.
Mr Dodds
The Government have set in legislation the end of 2017 as the backstop. I generally think that the longer the debate, the better, because it will give people the fullest and most comprehensive debate possible. Personally, I would be content to have the referendum in the autumn. We do not have to go to the end of 2017, but we should certainly go beyond June and not have it enmeshed with the other elections we have mentioned.
Many people are asking the question—it needs to be asked—of what the Prime Minister is afraid of in relation to the summer. What is it that he does not want to risk voters see happening over the course of the summer when they consider the issue of British membership of the EU? What mistakes does he anticipate our EU partners will make? What is he really worried about?
That brings me on to some of scare stories that are going around at the minute and, sadly, getting a lot of currency. Some are silly; some are implausible; some, of course, are simply knockabout stuff, without which politics would be infinitely duller and the papers would have less to write about. However, some are pernicious and should not be casually repeated.
In anticipation of our referendum deciding our membership of the EU on the grounds of what is or is not in our national interest, I entirely acknowledge the right of friendly foreign Governments to say how that might affect them. What I do not accept, and what I can hardly believe has happened from the mouths of serious figures who really should know better, is the sort of absurd nonsense that British exit from the EU could somehow in itself precipitate the rise of Irish republican terrorism again. It is hard to know what is worse about claims such as these—that they are criminally irresponsible, or logically fatuous. Brexit will neither cause republican terrorism, nor make any difference to it. Its cause, wrong and bad as it is, is Northern Ireland’s membership of the United Kingdom, democratically decided and settled—not the UK’s membership of the EU. Those who have claimed in recent weeks that terrorism would be encouraged or facilitated by a leave vote in the EU referendum are peddling scare stories of the very worst nature. I can only hope they are already ashamed of them, and will not repeat them again.
Ian Paisley (North Antrim) (DUP)
It is worth outlining that every single witness to the Northern Ireland Affairs Committee, which is looking into this issue, has underscored and reiterated what my right hon. Friend has just said—that there is no chance of terrorism being affected one way or the other by this debate.
Mr Dodds
My hon. Friend reinforces the point strongly. I look forward to reading the Select Committee’s report when it comes out. It will provide a very useful contribution to the debate in Northern Ireland and indeed more widely.
We have provided for a body to administer these things. The Electoral Commission is not wholly without fault or flaw, but it has been consistently clear on how this referendum should best be conducted. It has said that administrative necessity, the needs of the other elections in the first half of this year and fairness all combine to suggest that the referendum should not, in my view, be on 23 June. Of course, the Electoral Commission is not in charge of the process—the Government are. Indeed, they took to themselves additional powers to determine how this very referendum should be run.
It is interesting that the designation process for lead campaigners is still murky and uncertain, and I wonder who benefits from that. By way of contrast, long before the regulated campaign began in Scotland, both Yes Scotland and Better Together had been designated lead campaigners for their respective sides on the ballot paper. What is the point and what is the reason for the Government to flout for the very first time their own guidelines, as issued by the Electoral Commission? To do so is very telling—and not in a good way.
The Electoral Commission has said:
“We currently do not know when we will be able to run the process to appoint lead campaigners.”
It is now February, and the Government are planning to hold this referendum in June. Frankly, this is not fair play, but foolish game playing. Having taken to themselves the power to set both the date of the referendum and the date of designation for lead campaigners, this puts in front of the Government the temptation, in some people’s eyes, to rig the process. They would be very foolish to succumb to that temptation. Let me say to the Government that the Prime Minister and his successors will sorely regret any perceived fixing of this referendum. We have already debated some of the issues surrounding purdah and so forth, and I think the Government should learn from that debate, as well as from the 40 years of debate within the Conservative party on this issue.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
On the advice of the Electoral Commission and the timing of designation, there is a growing concern that the designation process will finish up overlapping the referendum period. In a letter to me, the chair of the Electoral Commission, Jenny Watson noted that the commission had
“recommended that the statutory six week process for the designation of lead campaigners should take place shortly before, rather than during the first weeks of the referendum period. This ‘early’ designation would provide clarity earlier for voters and campaigners about the status of campaigners.”
Does the right hon. Gentleman agree that it would be unforgivable if the Government were to allow, by sleight of hand, what amounts, frankly, to corruption of the designation process?
Mr Dodds
I agree with the hon. Gentleman. The Government really need to get on with this and get the matter resolved. Frankly, it would be scandalous if matters were allowed to drift and to drag. Again, that would call into question the Government’s handling of the referendum and its fairness. It would give cause for people to question whether they have made the final decision on this matter. If the Government were wise, they would want to ensure that once the people had spoken on this matter in a referendum, everyone would accept—from whatever side and whatever the outcome—that the decision had been properly taken by this country under the proper rules and that everybody will respect it for the foreseeable future. To do otherwise is short-term opportunism.
In conclusion, we need to face up to this crucial issue of the timing of the referendum. We need to ensure that the Government respect the Electoral Commission and that they respect the devolved Administrations in Northern Ireland, Scotland and Wales. On an issue of such import, we must put the national interest above every other consideration. We must respect the rights of the people who go to the polls in May. We must allow for the fullest possible debate on the biggest decision to be made by this country for generations. For those reasons, I commend the motion to the House.
The Parliamentary Secretary, Cabinet Office (John Penrose)
I am delighted to respond to this important debate, and I commend the long-standing support of the Democratic Unionist party for the principle of holding a referendum on the European Union. As was pointed out by the right hon. Member for Belfast North (Mr Dodds), its members were there earlier than many, and I think that their consistency and constancy in respect of that principle can serve as a model for others.
Before we get too far into the debate, let me say that I think it is important for us all to remember that any debate about the referendum date needs to be undertaken in the conditional mood. In other words—if I may make a statement of the blindingly obvious—the date has not yet been set. As the Prime Minister has consistently said, it is renegotiation and then referendum. As the renegotiation is not yet complete, there is, as yet, no referendum date.
Alex Salmond
Given the breadth of the range of interests among the parties in the devolved nations that are asking for the referendum not to be held in June, and given that no date has been set, why are the Government so reluctant to accede to the views of the right hon. Member for Belfast North (Mr Dodds)?
John Penrose
I am coming to that, but I think it would be, at the very least, disrespectful to the principle behind the European Union Referendum Act 2015, which requires the date of the referendum to be set through a debate in the House on a statutory instrument, under the affirmative resolution procedure, in due course. When that point comes, there will be plenty of opportunities to debate the issue. I think that it would be premature to start ruling too many dates in or out, although I will be specifying the dates that we have already ruled out.
Philip Davies
I am grateful to my hon. Friend for giving way so early in his speech. I realise that we are not talking about a specific date proposed by the Government, but about the principle of opting for certain dates. Will my hon. Friend comment on the appropriateness of holding the referendum on the same date as a European Council meeting?
John Penrose
I know that my hon. Friend is an assiduous follower of matters European, but I suspect that he may be one of the very few people in the entire country who pay quite so much attention to the musings of the European Council. I think that the Council would be honoured to feel that its conclusions carried as much weight with anyone else as they clearly do with him. I shall address some of the broader issues underlying his question in a moment.
I said that the renegotiation was not yet complete and that, therefore, a date for the referendum had not yet been set because I suspected that certain Members might try—gently and kindly, I am sure—to tempt me to commit some hideous indiscretion by revealing a planned referendum date, whether in June or in any other month between now and the end of 2017. For the sake of our collective mental and emotional health, and to save us all an awful lot of time, I thought that I should take this opportunity to advise any amateur Kremlinologists who might be hoping to glean clues about the date of the referendum from close textual analysis of my remarks not to bother, because there are no clues.
Stephen Gethins (North East Fife) (SNP)
Notwithstanding what the Minister has said, will he answer a very simple question? Does he agree with the points that were raised in the letter from the three First Ministers?
John Penrose
I shall address those points in a moment. I am sure that the hon. Gentleman will pick me up if he feels that I have glossed over any of them inappropriately.
Let me repeat that there are no clues. Alan Greenspan, the famously gnomic and opaque former chairman of the United States Federal Reserve, once said:
“I guess I should warn you: if I turn out to be particularly clear, you’ve probably misunderstood what I've said.”
He went on to say:
“I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant.”
In other words, clues are to be avoided.
However, even if we do not know the precise date on which the referendum will be held, we know several dates on which it will definitely not be held. It will not be held on 5 May this year or on 4 May 2017, because both those dates are expressly excluded in the primary legislation that we passed last year, and—as was recently promised by my right hon. Friend the Prime Minister—it will not be held within six weeks of 5 May this year. Although we do not yet know the exact date, those exclusions are important, because they create and guarantee enough time between the referendum and any other upcoming elections to ensure that the important issues that arise in each set of polls are debated fully and separately in each case.
Peter Grant (Glenrothes) (SNP)
The Referendum Act specifies a 10-week period between the Government’s publication of their response to the negotiations and the referendum date, presumably because both this House and the other place thought that people needed that period to digest the information. Would it not be wrong for three of those 10 weeks to fall right in the middle of an election campaign affecting over 20 million citizens who will be voting in the referendum a few weeks later?
John Penrose
I am coming to that point. I hope that I shall be able to respond to it adequately, but I am sure that the hon. Gentleman will come back to me if I do not.
It is important for those issues to be debated fully and separately, because, as we have just heard, 5 May this year will be a very busy time at the ballot boxes. I need mention only a few of the votes that will be held then: votes for the Mayor of London, for police and crime commissioners, and for devolved legislatures in Stormont, Cardiff and Edinburgh.
I am not arguing, as some do, that it is impossible to hold more than one election in the same place and on the same day. The fact that local council elections took place at the same time as the general election in many parts of the country last May without democracy collapsing in a heap shows that voters, and election administrators, are perfectly capable of handling such a situation comfortably. As we heard from my hon. Friend the Member for North Dorset (Simon Hoare), everyone is capable of walking and chewing gum at the same time, and I think that the right hon. Member for Belfast North made it clear that that was not the main source of his concern.
Mr Gregory Campbell
I accept what the Minister has said, but does he agree that this particular referendum will absorb the minds and hearts of people throughout the United Kingdom as no referendum has for 40 years, and must therefore be unencumbered by any other electoral considerations?
John Penrose
I agree with part of that. The important point is that the overlap needs to be dealt with extremely carefully. We must not attempt to run two polls at the same time, but an overlap is perfectly feasible provided that we accept a gap of a minimum of six weeks between them. I remind the House that six weeks is the full length of a general election campaign during which we decide who is to govern the country.
Mark Spencer
I am sorry to tell the Minister that after a six-week general election campaign my constituents are pretty cheesed off with politics. I think we need to understand that not everyone in the country is as excited about politics as we are in this place. A short campaign enables people to focus on the issues, and then to make a decision at the end of that short campaign.
John Penrose
Absolutely. Europe is one of those issues that may be extremely exciting for a small number of people—extremely exciting, perhaps, to a small number of people in this place and in the half-mile that surrounds us—but if we “bang on about Europe” for far too long, we shall run the countervailing risk of starting to turn people off the whole issue, important though it is. A decent period which, after all, we use to decide general elections is what the country and the electorate are used to. It allows plenty of time for a full and in-depth discussion of the issues that need to be covered, without necessarily boring everyone to tears and turning everyone off before they go to the ballot boxes. Of course I entirely accept that a gap will be necessary.
Lady Hermon (North Down) (Ind)
Given that Northern Ireland remains part of the United Kingdom and will continue to do so for a long time, I expect the Prime Minister of the United Kingdom to come to Northern Ireland and campaign for it to remain part of the European Union. It would be helpful if the Minister confirmed that the Prime Minister will indeed campaign in Northern Ireland, but will do so after the Northern Ireland Assembly elections and not before.
John Penrose
I thank the hon. Lady for giving me this opportunity to commit the Prime Minister’s forward diary in such a specific way, although I think it would be a career-limiting move were I to do so. I suspect that she will nevertheless make her point strongly, and my right hon. Friend will have an opportunity to respond to it specifically.
Patrick Grady (Glasgow North) (SNP)
I am sure the Minister would agree that the decision on whether to remain in the European Union is at least as important as the decision that Scotland had to take on remaining in or leaving the United Kingdom. There were 540 days between the announcement of the Scottish referendum and the date of the poll. We are not necessarily suggesting that there should be that length of time before this referendum, but if the Minister is saying that there should be a free and open discussion, the period should surely be longer than six weeks.
John Penrose
This is where I would respectfully part company with the hon. Gentleman. While it would be stretching a point to argue that holding two polls in the same place a minimum of six weeks apart would be somehow disrespectful or that it would prejudice the result of either poll—
John Penrose
May I just finish this point, then I will give way?
While that would be stretching a point, I believe that it is important to provide enough time for the issues and arguments to be debated fully. A six-week minimum—which is, after all, the length of an entire general election campaign—would provide plenty of time for an extremely full and detailed democratic debate to take place.
Mr Speaker
Order. I think the Chairman of the European Scrutiny Committee, the hon. Member for Stone (Sir William Cash), is seeking to fox the Chamber. I will not say that he has perambulated around the Chamber, but he has entered, most uncharacteristically, from a different door and he is seated in a different place. There is nothing disorderly about this, but it is mildly confusing and I hope that he might perambulate towards his normal position in due course, because that would make us all feel so much more comfortable.
Sir William Cash
Thank you very much indeed, Mr Speaker. I love that! The final possible date for the referendum is 31 December 2017. Would the Minister be kind enough to confirm that it is a slam dunk that we would not hold the referendum during the French presidential elections in April and May 2017 or during the German federal elections on 22 September of that year?
John Penrose
May I first congratulate my hon. Friend on sitting in a different place in order to demonstrate flexibility of mind and his ability to take a different approach once in a while, just to keep us all on our toes? On the specifics of his question, I have to confess that those elements have not been factored into any of my discussions on potential dates so far. Perhaps they should be, however, and I will take that information away if I possibly can.
The motion also notes the recommendations of the Electoral Commission on best practice for referendums. The commission has produced reports on previous referendums and we have taken on board many, if not all, of its recommendations in the European Union Referendum Act, including those on pre-poll reporting of donations and loans. We have also taken on board its views in other areas. For example, we followed its recommendation to change the wording of the referendum question. We also consulted it on the draft conduct regulations, which set out the detailed framework for the administration of the referendum poll. Those are just a few examples of how we have listened to the commission’s thoughts.
Alex Salmond
I am slightly puzzled as to why the Minister is praying in aid the fact that the Government have ruled out 5 May—the date of the elections in Scotland, Wales, Northern Ireland and London. My certain memory of the process last year during the passage of the Bill is that the Government did that only unwillingly when they were facing certain defeat on the legislation, so why is he now presenting this as a great Government concession?
John Penrose
I am just referring back to my notes, because I do not think I said that we did anything in that regard. I said that “both those dates are expressly excluded in the primary legislation that we passed last year”—that is, the legislation that this Parliament passed last year. I will leave it to Kremlinologists and others to decide whether that was done under pressure, with grace or in any other way. None the less, I hope the right hon. Gentleman will agree that the will of Parliament was expressed and that it was listened to extremely carefully.
Mr Jenkin
I am sure the Minister will know that the Public Administration and Constitutional Affairs Committee, of which I am Chairman, is taking an interest in the matter of the date. I also declare my interest as a director of Vote Leave, one of the potentially designated campaigns. May I press him on an assurance that he gave the House in September last year? He said that
“it is important that the designation process means that the decision on who are the lead campaign groups for the in and the out campaigns is properly arrived at that and those groups are clearly designated before the start of the 10-week campaign”.—[Official Report, 7 September 2015; Vol. 599, c. 157.]
Does the Minister stand by that assurance, or is this going to be fudged?
John Penrose
I remember that moment clearly. In fact, I think I was responding to a question from my hon. Friend the Member for Stone (Sir William Cash) in making that point. What I was trying to put across was that I had what I thought was a brilliant solution to the potential problem of any compressed timetable, should there be one, in order to find enough time for both the designation and the full referendum timescale. The original point I was making at that point in our discussions—I think it was during the Bill’s Committee stage, but I could be wrong—was that we could have dealt with the designation process through a negative statutory instrument, which could be made when it was laid, thus allowing the designation process to start early and finish before the beginning of the referendum period. I think that that is what everyone was driving at, at that time.
However, the equivalent of the Joint Committee on Statutory Instruments in the Lords felt that a negative statutory instrument was inappropriate and said that a positive statutory instrument should be used. That has made it rather more difficult, as my hon. Friend will appreciate, for me to achieve the aims that we were discussing at that point. If I may, I will take his earnest and strongly made point, and the point that he made earlier to the right hon. Member for Belfast North, to indicate a strong preference for starting the designation process as early as possible, should there be a compressed timetable. I am sure that the various campaigns are already working on their designation submissions and that, were it to be necessary, my hon. Friend would be able to aim for a shorter and very efficient designation process in order to avoid an overlap between the end of the designation and the start of the referendum process.
John Penrose
Does my hon. Friend want to come back to me, perhaps to assure me that I have understood him correctly?
Mr Jenkin
I am most grateful to the Minister for that explanation. However, I believe that he will be bound by his commitment unless the Government put on record before the House agrees to that affirmative resolution procedure that the consequence of agreeing to that procedure might be that the campaigns may not be designated until the referendum campaigns had already started. If there is going to be a referendum on 23 June, which seems to be a possibility, either the regulations will have to be expedited in order to foreshorten the period and allow us to start the designation process earlier or the Minister must put back the date. I am as keen as anybody to get on with this referendum, but not on the basis of undesignated campaigns going into the referendum process without the necessary resources and authority and without being able to plan what they are going to do.
John Penrose
It is helpful for my hon. Friend to remind me of the point that I made last year. We are all subject to the will of Parliament, and because the Lords—in this case—decided in their wisdom to change the process that I was laying out at that point, it is now difficult for me to be bound by anything other than the later expressed will of Parliament. However, I appreciate his point that it would be a superior outcome if we could possibly avoid any overlap between the two processes. I think he is saying that he would prefer to see a rapid process for designation, and to start it as promptly and efficiently as possible, should that be necessary. I will take his strongly expressed point back and ensure that we strain every sinew to accommodate him if we can.
I am conscious that other Members want to speak in the debate, so I shall omit my further comments about the other aspects of the Electoral Commission’s advice that we have either been following or not. I want to make it clear that the process from here on is clearly laid out by Parliament in the European Union Referendum Act. The Act requires the Government to bring forward a number of statutory instruments that are subject to the affirmative process—as we have just been hearing—before a poll can be held. They will cover the conduct rules—the detailed plumbing of how the poll will be held—which are already laid before the House and which I hope are uncontroversial, plus regulations setting the date of the referendum period and the start date of the designation period. Those regulations have not yet been laid, but when they are, this debate will be able to move, at last, out of the conditional tense and into action.
Carol Monaghan (Glasgow North West) (SNP)
I want to make a point about the compressed time period and the possible date of 23 June. Scottish schools will be about to go on holiday at that point and many of the electorate will be either planning or starting to take their holidays. In some local authorities, 22 June will be the date in question. It would be unthinkable to have a vote of such importance during the English school holidays, yet this vote could actually take place during the Scottish school holidays.
John Penrose
I have to go back to my starting point about being tempted into giving guidance on when the referendum vote might be; that is not a matter about which we are able to tell anybody yet, because we do not have a completion of the negotiations and without that there can be no referendum. The Prime Minister has been very clear on that point, but I am sure he will note the hon. Lady’s point when he considers the matter.
The Government are going to be doing something that has not been achieved for more than a generation. We will be giving people something that I, along with many others in Parliament and across the entire country, have long been denied: a vote, a say, a voice on our relationship with the European Union. Whichever side of that argument we are on, whether we vote to leave or to remain, I hope that as democrats we will all welcome the dawning of that referendum day.
Several hon. Members rose—
Mr Speaker
Order. Just before I call Pat Glass to speak on behalf of the Labour Opposition, I should point out to the House that 18 Back Benchers wish to contribute and some sort of time limit will be inevitable. I know Members will want to get in, and I want to help them, so they will recognise the need for the time limit.
Pat Glass (North West Durham) (Lab)
With that in mind, Mr Speaker, I will endeavour to be brief.
Interestingly, we are having this debate when no referendum date has been set, the starting gun has not yet gone off and the deal the Prime Minister is negotiating with our partners in the EU is not yet agreed—if it ever will be. I therefore agree with the Minister—I do not think I am going to say that often—that in many respects this debate is somewhat premature.
Patrick Grady
The Leader of the Opposition called last Wednesday for the referendum to happen on 23 June. Does the hon. Lady disagree with him?
Pat Glass
Now the hon. Gentleman is just trying to get me into trouble. I would never disagree with my leader.
Let me deal with the motion by discussing each of its parts, and I start with the premise that no case has been made for holding an early referendum. May I remind this House that we have been debating the UK’s place in Europe on and off for more than 40 years? I voted in the last referendum. It was 43 years ago, so we are hardly rushing at this.
Pat Glass
He has given his opinion, and of course we will listen respectfully to those arguments, as I am sure the Government will. We know that while all this goes on, uncertainty and instability is created in our businesses and in our economy. We are already seeing the damage done to business confidence in the UK, inward investment and the economy by the uncertainty and the potential risks that lie with an EU referendum and exit. Those uncertainties and risks increase the longer they go on. That is not good for our country, for our economy and for regions such as mine, where hundreds of thousands of jobs depend directly and indirectly on our membership of the EU.
Stephen Gethins
I appeal to the hon. Lady, because she and I are going to be on the same side in this referendum, that we have a positive case and that we should put forward the positive case. The words about “uncertainty” have no place in this referendum, and I hope she will put forward some positive arguments, too.
Pat Glass
I, too, hope that we will be able to make a positive case for remaining, but there are clearly risks to business of delay, and they get greater the longer the delay goes on. There are very good arguments to support the view that, as soon as the Government’s European renegotiations are complete, they should get on with having the referendum and ending the uncertainty, which is bad for the whole UK—for jobs, growth, investment and working people.
The motion says that a
“needlessly premature date risks contaminating the result”.
In what way would a referendum five months from now contaminate the result? If there is evidence that holding the referendum on a specific date, whether in June 2016, September 2016 or April 2017, would in any way contaminate the result or lead to greater or lesser risk of electoral fraud, let us see it. I have not seen any such evidence, so I can only assume that what is meant by that statement is that a shorter campaign is more likely to lead to a remain vote. Given that we have had more than 40 years of hearing one side of the argument, are we really being told that the leave campaign arguments are so lacking in substance that four months of campaigning from the other side will devastate its arguments and campaign?
The motion goes on to say that
“a subject as fundamental as EU membership should be decisively settled after a full and comprehensive debate”.
I absolutely agree, but I say again that we have already had 40 years of debating the UK’s place in Europe, so this is not a surprise and it is not happening quickly. It has been 40 years in the making.
Mr Jenkin
The hon. Lady’s party set up the Electoral Commission when it introduced the Political Parties, Elections and Referendums Act 2000, presumably, so that the commission would give advice that the Government would generally accept. The Electoral Commission argues that there should be a six-month period between the regulations and the referendum date, but the Government are set to ignore that. Like her, I am enthusiastic to get on with this, but what consideration has she and her party given to the designation being compressed with the referendum period? Has her party expressed a view on that matter, or does she believe that she and I should discuss it, with a view to when this referendum should be?
Alex Cunningham (Stockton North) (Lab)
My hon. Friend is a colleague from the north-east, so she knows as well as I do how important the EU is to jobs in our region. Another important European date is almost upon us; the Government have to make an application within the next three or four weeks for EU solidarity funds to help flood victims across our country. Does she agree that the Government should perhaps concentrate on that date first?
Lady Hermon
The hon. Lady will of course be aware that the Northern Ireland Labour party intends to run candidates in the Assembly election, whether or not her party leader agrees. Is she aware of any objections from her colleagues in the Northern Ireland Labour party to the possibility of an early EU referendum in June? Has she heard of any complaints from them?
Pat Glass
I thank the hon. Lady for the intervention, but those are internal matters and do not really relate to today’s motion.
I believe that the people of the UK are easily capable of absorbing the issues and making a decision after five months of a comprehensive campaign. As has been said, we have six weeks of the campaign in general elections, with three weeks of the short campaign, yet we are still able to come to a decision. If the referendum is held in late June, we will have had at least 16 weeks of the campaign, in which people can listen to both sides of the case, weigh the arguments and the risks, and make a decision.
The motion talks about
“the recommendations of the Electoral Commission on best practice for referendums”.
The Electoral Commission has said that the referendum date should be separate from a day on which other polls are taking place. Labour agreed with that and succeeded in pressuring the Government to amend the European Union Referendum Bill to stop the holding of the referendum on 5 May 2016. However, the Electoral Commission also said that the final Act, following the amendments made,
“provides a good basis for the delivery of a well-run referendum and the effective regulation of referendum campaigners.”
The bottom line is that if the referendum is held on 23 June or 30 June, that would be more than a month and a half after the 5 May elections. I, for one, believe that the people of the UK are perfectly capable of making an important decision in late June, a month and a half after local elections. To suggest otherwise is patronising and disrespectful.
Alex Salmond
The legislation also specifies a 10-week campaign period. Therefore, if the referendum was held on 23 June, the campaign period, with all the attendant regulations, would take place in the middle of the Scottish, Welsh, Northern Irish and London elections. How can that possibly be a good thing?
Pat Glass
That argument has been well rehearsed in the House and it has been very clearly agreed on all sides that people can do two things at the same time.
I want an early referendum, so that this country’s businesses, workers and people can get on with their lives in a safer, stronger and more prosperous union with our partners in the EU. Labour believes that the UK is better off in Europe and it is campaigning to stay in. The European Union brings us jobs, growth and investment. It protects UK workers, the UK environment and consumers and helps to keep us safe in an increasingly unsafe world; leaving would put all that at risk.
I want to finish by reminding the House why the EU was established in the first place. Up until 1945, we in western Europe committed genocide on one another every 30 years. Families such as mine and those of other Members fought and died in those wars. Although I appreciate that the EU is not the only reason why we settle our differences around a negotiating table rather than on a battlefield, it does remain one of the main reasons. In a world in which we are facing Russian expansionism, global terrorism and global criminality, we in the UK are safer as well as stronger and more prosperous as part of the EU, which is why Labour is campaigning to remain.
Mrs Anne Main (St Albans) (Con)
I am pleased to be called so early in this debate in which there have been many interventions.
May I say to the right hon. Member for Belfast North (Mr Dodds), who proposed the motion, that I welcome this debate, because there are issues around the proposed date of 23 June? As someone who professes to want to leave the Union, I am happy that the date has been set sooner rather than later, but I can understand his concerns, and it is good that we explore them.
On the designation of the Leave groups, the Go groups, or whatever group there is for those who think that we will be better and stronger outside the European Union rather than in it and controlled by it, there is a real concern that the date will mean that they are less able to get their act together. In the end, though, I encourage the right hon. Gentleman to believe that whoever knocks on people’s doors—whether it is a Go campaigner or a Leave campaigner—they will all be asking the same question. There are only two questions on the ballot paper. It is not as though people will be asked which political party they support at a general election. The argument will be made by all groups, whether or not they receive designation, so I am not discouraged about the process, but I can see the point that he is making.
Mrs Main
The hon. Gentleman has made a lot of interventions, and some of us have waited to make our remarks within our own speeches, so I will make some progress before taking interventions from those who have already intervened.
As I have said, I am not too discouraged by the designation process, but I can understand the right hon. Gentleman’s point. If several people knock on someone’s door and say why they wish to make the case for leaving the EU, it will only reinforce the views of that person and help them with their decision-making process when they cast their vote. None the less, I do understand that there is a concern for those of us who are waiting eagerly to see what date has been chosen.
I note that the word “contaminating” has been used in the motion. Although I would not use that word in relation to the date, I understand that it does give those who wish to remain in the EU a bit of an advantage. A lot of information will come out later in the year. I am not talking so much about the European Council meeting to which my hon. Friend the Member for Shipley (Philip Davies) referred. In a letter on subsidiarity, Mr Tusk said:
“The Commission will propose a programme of work”—
by which I believe he means the competences—
“by the end of 2016 and subsequently report on an annual basis to the European Parliament and the Council.”
Therefore, if we do have a vote in June, we will not know what the Commission is proposing on subsidiarity and on the competences that are being brought back. We will only know what our Parliament has control over after that vote. However, some of us in the Leave and Go campaigns believe that we can make the case already, but there will be very thin gruel, as my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) has said, for us to consider.
Another matter that we need to know, but that we will not know by June—we will probably not know it by the end of the year or at any other date—is to do with the proposal that the Prime Minister is currently exploring with other EU countries on limiting benefits across the 28 countries. After looking into the matter, I have found that some countries have very different rules on child benefit. Some have no child benefit; some have benefits for one child; and some have benefits for multiple children. That will be a minefield to explore. We have no details on it at the moment. More to the point, the deal will be struck behind closed doors, so before the date in June we will not know whether any of the deals that may have been agreed will hold up. That is a concern, but I am not sure that we will be any the wiser the longer we leave it. Whichever treaty we have in place either guarantees EU nationals the rights to claim welfare in each other’s countries or it does not. If those treaties do guarantee those rights, I am not sure how legally binding they will be in the future; they could all fall apart two days after the referendum. However, pushing the date further down the road to later in the year will not make us any the wiser.
The motion talks about a rush to the referendum, but I think that there is a compression. For those on the Front Bench with Eurosceptic leanings who currently feel constrained to speak, the compression gives them less opportunity to cite their views in favour of removing this country from the European Union. On that basis, I can see why having a date early might constrain some of our colleagues on the Conservative Benches who are waiting to hear what the Prime Minister delivers on 18 February. That is probably the only conspiracy theory that I can see going around. I personally think that the public would rather get on with this matter. Our Conservative manifesto promise is delivering this referendum. I pay tribute to the Ulster Unionists for their long-standing campaign.
Mrs Main
I mean the DUP. I am so sorry. I pay tribute to its long-standing campaign. If we push this matter even further into the long grass, none of the questions that I have about treaty change or about what Mr Tusk and his colleagues will allow us to bring back in terms of subsidiarity will be answered until 2017. One of my biggest concerns as a Eurosceptic is that we constantly have to ask 28 countries what they think. Trying to get three or four countries to agree to anything is pretty difficult, but getting 28 countries to agree is almost impossible, which is why I want to leave. We will not have the clarity that the Democratic Unionist party seeks today.
Although I have a slight concern about the designation process, I do think that the groups will sort themselves out. On the May elections, let me offer a scrap of comfort to those who say that the Remain campaign would benefit from an early referendum. I suggest that that campaign may be experiencing voter fatigue. Those of us who feel passionately and strongly about this matter—I add that many of our Conservative Associations feel the same way, even if some of the Members do not—have been out talking to our constituents. I did so on a market stall over the weekend and at various meetings, including one with my Conservative ladies yesterday. I will be out there to vote—it will not matter that we have had a vote six weeks before—because I feel very strongly that, for the first time, I will be able to ask myself, “Do I wish to be in this European Union as it is with all its failings and all its flaws?” My answer will be, “No, I want to leave.”
Those campaigning to go or to leave, however that is framed, will be more agitated and more wishing to get out the front door on whatever date is chosen than those who may feel voter fatigue as a result of being involved in all those other elections. In short, I am reasonably encouraged that people may feel that they have had enough of voting in local elections, mayoral elections and all the other elections and will just sit at home and watch the Romanian rugby match or whatever is on the television on the day. I do not think that we will ever get the clarity that we want. I will be sticking with whatever date is picked, because I would like to get on and resolve this matter. It is a shame—I mean not that it is shameful but that it is an issue for me—that colleagues on the Front Bench who see the matter our way will have such a short amount of air time and a short amount of time to campaign and put their case.
Mr Stewart Jackson (Peterborough) (Con)
As usual, my hon. Friend is making a tremendously eloquent case. Does she remember that just a few years ago—in the blink of an eye—we were told that merely having an EU referendum would lead to economic instability, threats to our prosperity and threats to jobs and growth in this country? Of course, it was all unadulterated nonsense propagated by Labour and, sadly, to some extent by some people in our party.
Mrs Main
Well, we have heard a lot of unadulterated nonsense already. I am amazed that we are invoking the dead. Lady Thatcher, apparently, is speaking from the grave. In her speech in Bruges in 1988, she said:
“We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.”
I say hear, hear to that. I am sure we will hear a lot of ridiculous comments. A lot of nonsense will be proposed—that we cannot possibly exist outside—
John Redwood (Wokingham) (Con)
Is it not the case that if the best that the “stay in” side can do is scares, trying to tilt the playing field and invoking the dead when they believe the opposite, we have nothing to fear and we will be leaving?
Mrs Main
My right hon. Friend is right. We need to make sure that we have an informed debate. The European Communities Act 1972 gives EU law precedence over British law. Let us not fudge the matter. If the public wish to stay in on that basis, fine. If they do not, they vote to leave. If they want to bring back those competences and the authority that Lady Thatcher was talking about, the date cannot come soon enough.
I make a plea, however: may we please have the argument, not the scaremongering, not the fear factor, not the suggestion that we would be moving the borders to Kent and we would have camps that we cannot control of migrants pushing their way across Europe to come and knock on a British door? That is nonsense. It is fear; it is phobic, and I am disappointed that those arguments are coming out now. Let us talk about what the argument means. To me, it is all about control by this Parliament, rather than being controlled by 28 other Parliaments via an unelected bureaucrat in Brussels.
Several hon. Members rose—
Mr Speaker
Order. I point out to the House that 14 Back Benchers are seeking to catch my eye and the debate has to conclude, with Front-Bench winding-up speeches, by 3.54 pm. So if we can get on to Back-Bench speeches by 2.15 pm, that would be immensely helpful, but I am in the hands of the right hon. Member for Gordon (Alex Salmond).
Alex Salmond (Gordon) (SNP)
You could not be in safer hands, Mr Speaker.
May I say to the hon. Member for St Albans (Mrs Main) that there was a time when the Conservative party would have been more sure-footed on the designations in Northern Ireland politics? I am not making a particular point about her not knowing the difference between the Ulster Unionists and the Democratic Unionists, but that gets to the heart of the debate and to the heart of why I will support the motion in the name of the right hon. Member for Belfast North (Mr Dodds) and his Democratic Unionist colleagues.
We are told, and we were told in particular during the Scottish referendum campaign, that there were four equal parts of this United Kingdom. Now, the democratically elected leaders of three of those four parts, backed up by a range of agreement in the political parties in their Parliaments, have written to the Prime Minister saying that they do not think it is a good idea to hold the referendum in late June because it would conflict with the electoral process taking place in Scotland, Wales and Northern Ireland. Members on the Government Benches do not seem to think that that is a clinching argument. Of course it is a clinching argument if we have a respect agenda encompassing the four component parts of the United Kingdom.
The Minister said that we were trying to tempt him into naming the day, which he would not do because of career-limiting implications. We are not trying to get him to name the day; we are trying to get him to name the day when the referendum is not going to be held. It is a question of “calculatus eliminatus”. I commend the poem to him:
“When you’ve mislaid a certain something, keep your cool and don’t get hot…
Calculatus eliminatus always helps an awful lot.
The way to find a missing something is to find out where it’s not.”
We are merely trying to get the Government to exclude 23 June because it conflicts with the important elections taking place in three out of the four nations of this United Kingdom.
When I heard the speech of the hon. Member for North West Durham (Pat Glass) from the Labour Front Bench, I was encouraged because I thought an element of flexibility was moving in, as opposed to last week’s rather foolish declaration of 23 June from the Leader of the Opposition. If it was a good idea for the Opposition parties, supported by many on the Conservative Benches, to combine last year to make sure that the Government did not hold the poll on the same day as the Scottish, Welsh, Northern Irish and London elections, why is it not a good idea similarly to combine now to make sure that the 10-week campaign period, as defined in the legislation, does not overlap with those elections? If there was logic in not having the referendum on the same day as the elections, why is there not logic in making sure that the two campaign periods are different as well?
Mr Jackson
Is the right hon. Gentleman really saying that the people of Scotland—that wonderful country that has played such an enormously positive role in the history of the United Kingdom and produced statesmen, engineers, educators and pioneers across the world—are unable to distinguish between an election for a devolved and unique Parliament and a once-in-a-generation EU referendum? Is he saying that the people of Scotland are too stupid to understand the difference?
Alex Salmond
The right hon. Member for Belfast North dealt with that point well in his opening speech, to which I am sure the hon. Gentleman was paying the closest attention. We are saying that it is better to have the two campaigns distinct for all sorts of reasons, including broadcasting and the publicity that goes through people’s doors.
My hon. Friend the Member for Glasgow North (Patrick Grady) pointed out that there were 540 days between designating the date of the Scottish referendum and the poll. Whichever side of that campaign they were part of, people cannot argue with a 98% registration to vote and an 85% turnout in the referendum. In this European referendum, if the date is as specified in a dash to the poll, we suspect, by the Prime Minister, public engagement is unlikely to come anywhere near such a desirable figure.
There is a shabby and sleight aspect to the Government’s argument. I wrote to the Prime Minister at this time last week. I referred to his “junior” Minister, for which I apologise. I said:
“Your junior Minister David Lidington quoted me several times today in the emergency statement as pointing to the necessary 6 week period between the devolved elections and the referendum.
However, while six weeks clearance is a necessary condition it is not a sufficient one.”
I went on to point to the 10-week campaign period, which would start in the middle of the devolved elections. I pointed out the position that the Scottish National party holds on the matter. Despite that, the next day the Prime Minister quoted me and suggested that I had had thumbscrews applied to me by the First Minister of Scotland in order to change my position. The Prime Minister reveals how little he knows that lady. Thumbscrews are not necessary; one glance from the formidable Ms Sturgeon would be more than enough to persuade any politician to see the wisdom of her ways. I have never made the case for a six-week period and I am concerned about the 10-week campaign period.
Peter Grant
I am sorry to interrupt my right hon. Friend when he is in full flow. Does he recall that shortly after he stood down as First Minister, the media and the Tory press were full of stories that the new First Minister of Scotland would not be her own woman because she would be bullied by the former First Minister of Scotland? Does he agree that there has been a remarkable switch in roles in that short time?
Alex Salmond
Another scare story set to rest, as my hon. Friend points out.
Mr Jenkin
The right hon. Gentleman talks about how outrageous it would be to have just a six-week referendum period, but if the designation of the two campaigns is delayed some weeks into the 10-week referendum period, that is what we will finish up with. Does he agree that it would be outrageous for the Government to corrupt the process of this referendum by delaying the designation of the in and out campaigns in the way the Minister suggested might be the case?
Alex Salmond
I agree with the hon. Gentleman. We also agree on another aspect: purdah in referendum periods has not previously been properly observed in this place and by this Government, although it has been observed by the Scottish, Welsh and Northern Irish Administrations. Having a long purdah period, with a purdah period for the Scottish, Welsh and Northern Irish elections, and then a further purdah period for a referendum on European issues, would mean that those Administrations had a double purdah period, which cannot be a good thing for governance. I know that that point will not be lost on the hon. Gentleman.
Let me get to the nub of my concern, apart from the patent lack of respect. We have already seen the start of the European referendum campaign, and a thoroughly depressing start it has undoubtedly been. Yesterday’s ludicrous exchange about on which side of the channel there will be a giant refugee camp just about sums up this miserable, irrelevant debate. The truth, of course, is that it does not matter; it will take at least five years to withdraw from the European treaties, and by then we could have 10 times the number of refugees or indeed none at all. No one knows how the bilateral arrangements between Britain and France will be affected. This is a pointless, pathetic, puerile debate, typical of what looks like it will be a depressing campaign—the political equivalent of a no-score draw.
As we anticipated, the lead responsibility for this state of affairs lies with the Prime Minister—this whole mess is of his creation. The time to propose a referendum is when we want to achieve something important, such as Scottish independence, not when we want to achieve nothing at all, as is the case with his sham Euro-negotiations on points of little substance. He has set out the terms for this depressing campaign, which is, to quote the Scottish play,
“full of sound and fury,
Signifying nothing.”
The chance of those who are anti-European Union of winning has always been greatest if the campaign is reduced to a competition of scare stories—a war of attrition—to find out who can tell the biggest porkies. That is exactly what is unfolding before our eyes. It is almost as if the Better Together campaign from the Scottish referendum had split in two. We now have two versions of “Project Fear” from opposing sides in the Europe poll. At this rate, the only thing these two campaigns will scare is the voters—away from the polling stations.
The Prime Minister is gambling this country’s entire European future on his sham negotiation and this shame of a campaign—even Jim Hacker would have fought on a more visionary platform on Europe. We need to fight an entirely different campaign in Scotland. People want to hear how we can build a Europe that acts on the environment; faces down multinational power; shows solidarity when faced with a refugee crisis; acts together when faced with austerity; respects the component nations of Europe; co-operates on great projects such as a supergrid across the North sea; and revitalises the concept of a social Europe for all our citizens. That will be a Europe worth voting for, not the Prime Minister’s teeny-weeny vision of nothing much at all.
Several hon. Members rose—
Mr Speaker
Order. I am afraid that, with immediate effect, there will have to be five-minute limit on Back-Bench speeches. I call Mr Paul Maynard.
Paul Maynard (Blackpool North and Cleveleys) (Con)
Thank you, Mr Speaker. It is a pleasure to speak in the debate, and particularly so early. I was not expecting to be raised so far up the list of speakers, but let us take our chances while we can.
I have been struck by the fact that there seems to be a degree of consensus on this issue in the Chamber, on what should be an issue that greatly divides us. We agree on a number of things. We do not know what the date is, and we can all agree on that—even I do not have telepathic powers at Prime Minister’s Question Time quite yet. Beyond that, we have also managed to agree that all our electors—be they young or old, or male or female, and whatever party they vote for—can perform the amazing feat of considering two important issues at roughly the same time. It is a great step forward that we can broadly agree on all that.
Looking at the DUP motion, however, I do not agree that we are somehow in an unseemly rush. I would dispute the use of the word “rush” in the motion. Before Christmas, I had the misfortune to turn 40. It was a chance to look back at my life. Have I gone down a cul-de-sac or down the wrong path? Am I stuck in a rut? Is now the time to throw it all in, go away and run an artisan cheese factory somewhere? Should I get out of politics now? The Whips will be pleased to know that I might just stick with what I am doing at the moment.
None the less, it was a chance to reflect on the fact that I am 40, so I was not born the last time we had a referendum on this issue. It is not that I did not have a chance to vote—I was not even alive when we had the previous referendum. To say that we are somehow in a rush, therefore, misunderstands the long campaign the DUP itself has run to get us where it wants to go. If it had had its way, this would all have been over and done with many years ago—certainly before I was elected to this House. I do not, therefore, accept that we are in a rush.
I do accept, though, that our electors can cope with these things. That goes back to the real reason why we are having a referendum: we want to trust the people. Certain issues are greater than the party divide in this place. Trusting the people is at the heart of what the referendum will be about.
Electors across the board are capable of making important decisions during campaigns that are, by their very nature, compressed. One need only think of the French electoral system, which has a two-week gap between rounds. What happens in the first round dictates the campaign in the following fortnight, and the truth will then be available at the end of that fortnight. For example, a far-right candidate might have got through to the final two in the contest, and a fundamentally different campaign would then have to ensue in metropolitan France. However, the voters manage to cope with that.
Voters are also quite discerning. We need only remember the Darlington by-election of 1983. A chap called Ossie O’Brien won it for the Labour party shortly before the House dissolved for the 1983 election. But a few weeks later, the good voters of Darlington repented of their decision and elected someone else entirely—the current Defence Secretary. I think we all agree that voters are very sophisticated, and they can cope with compression, as well as with doing two things at once. I would therefore urge people to have confidence in their voters.
There was some discussion of the role the media might play. Once again, however, voters in Blackpool North and Cleveleys are more than capable of seeing through what the media are up to.
Patrick Grady
How does the hon. Gentleman respond to the point made by my right hon. Friend the Member for Gordon (Alex Salmond) about the impact on the purdah period, given that the devolved Governments might theoretically be in purdah for 10 out of 13 weeks?
Paul Maynard
I thank the hon. Gentleman for that point. It is no different, in a way, from what central Government will have to go through. Every Department will have to work out how it engages on European issues during a long campaign and a short campaign.
I am left in no doubt that this is one of those important issues in the lives of my constituents that passes the “stop me in the street” test. If I am out shopping in my local Sainsbury’s, I am already being asked what I think about this issue. The notion that we can somehow say that the campaign does not start until we the politicians say it does, is rather naive. The campaign has started; the number of emails in my inbox is increasing, and people want to know where I stand. I am trying to deal with those queries, as I am sure every other Member of the House is trying. Setting an arbitrary starting point, when we will allow people to think about this issue, will not be possible. The reality is that we have already begun thinking about it, and the media will keep reporting on it. However, my constituents are perfectly capable of thinking about it for themselves. They are desperate to have this vote. Many of them have waited 40 years for it, and they do not want to wait a single moment longer than is absolutely necessary. Many of them have made their minds up already. They want the vote now, without even knowing what the final decision is or what deal might be reached in Brussels.
In conclusion, I recall the words of my former hon. Friend the Member for Hertsmere during consideration of a private Member’s Bill a few years ago. Surely, the question now is not what to do, but, “If not now, when?” Now is the time, and we need to move as fast as we can.
David Simpson (Upper Bann) (DUP)
The Common Market, as it was known way back then, was founded on 25 March 1957. It did not come into operation until 1958, long before I was born—I know that is hard to believe. [Interruption.] I wish my own colleagues were supportive of that. The aims and objectives of the Common Market were to emulate what the United States had—open markets and no borders. People were jealous of that. The United Kingdom joined the European Union in 1973, just over 40 years ago. Within this timescale of almost 60 years, the United Kingdom has been part of the European Union for just over 40 years.
So why the rush now? Suspicious minds would think that perhaps the deal that the Government, or the Prime Minister and his officials, have almost negotiated is so thin that it hangs by a thread and would unravel. Or is it the case that we are going to see a large influx of people from other countries over the summer? I ask what is the reason because I have not yet heard a convincing argument from the Government as to why this referendum should be held in June.
Alex Salmond
I would not in any way dispute the hon. Gentleman’s chronology regarding age or anything like that. Could this not also be about the internal cohesion of the Conservative party? Could it be that the Prime Minister is so fearful of the lack of unity in his own party that he wants as short a period as possible for that to be understood?
David Simpson
Far be it from me to go into the internal frictions, if that is the right word, within the Tory party. All parties have their issues to resolve, so I leave the Tory party to deal with that one.
One area that has not been much mentioned over the past weeks and months is the agri-food sector. Our farming community has gone through very difficult times over the past number of years. I do not speak on behalf of the Ulster Farmers Union—I do not have the authority to do so—the National Farmers Union of Scotland, the Farmers Union of Wales, or indeed the National Farmers Union. Whenever they make their decisions, they will advise their members on which way to go. However, when I speak to farmers in my constituency, they are concerned about how things are going to pan out for them in future. Will there be an agri-food industry at all? Do the Government have enough interest in the sector to help and defend it in the years to come, and encourage young farmers into it? A lot of issues across the board need to be addressed.
The European Union Referendum Act 2015 provides for a referendum to be held on the UK’s membership of the EU before the end of 2017. This adds up to approximately 15 months following the Assembly elections, yet some within the Government find it appropriate to send the electorate back to the polls within seven weeks. As we have heard, the European championship will be taking place and some 200,000 people might be out of the country. Of course, people from my constituency will be across the water supporting Northern Ireland. I want to ensure that they are at home when the biggest political decision of their day will be taken. That is vital.
During this debate there will no doubt be accusations that we are undermining the voters, as we have already heard, and that we do not trust the British people to make two different decisions within a seven-week period. Those accusations are untrue. Nevertheless, for the good of our nation, let us allow each voter the time and space to study the arguments and the effects that this will have on them and on their families to come. The EU referendum provides one of the biggest political decisions in a generation. Let us ensure that the right final decision is made and that, whatever it is, we embrace the new era and ensure that the livelihoods of our elderly, our young and our employed are changed for the better.
Iain Stewart (Milton Keynes South) (Con)
I am grateful for the opportunity to contribute to this debate. I congratulate the right hon. Member for Belfast North (Mr Dodds) and his colleagues on introducing this important topic and exploring some of the genuine issues of concern in a very moderate and civilised way.
Whatever date is eventually chosen for the referendum and the campaign period, there will always be perfectly good arguments that can be made against it. In this country, by democratic tradition, we narrow down a lot of the time for holding elections to when it is sensible to do so. Traditionally, unless there is a period of emergency, we have them in the spring, early summer or autumn. There are perfectly good reasons for that. It is not pleasant to be out knocking on doors and delivering leaflets in the wilds of winter. It is important to respect the times when different parts of the United Kingdom have their summer holidays. For example, I would not suggest that we hold a referendum in July because that would clash with the Scottish holiday period, or August in the case of England.
Patrick Grady
The Scottish referendum was held very successfully in September when we had longer evenings, warmer days, and the full summer period in which to campaign. That would give us more of the time and opportunity that the hon. Gentleman is talking about than a June date.
Iain Stewart
If the hon. Gentleman is suggesting that he would like a roadshow visit from my hon. Friend the Member for Stone (Sir William Cash) or my right hon. Friend the Member for Wokingham (John Redwood) to entertain his electors over the summer, he is very welcome to it.
The point I am making is that there are a relatively small number of periods when we can sensibly have an election.
Alex Salmond
I understand the hon. Gentleman’s point perfectly, but, as a matter of interest, what are the arguments against an autumn date, as specified by the right hon. Member for Belfast North (Mr Dodds) in opening the debate and as mentioned by my hon. Friend the Member for Glasgow North (Patrick Grady)?
Iain Stewart
I will happily answer that. First, I am not in charge of selecting the date, and I have no objections to June or September. I am merely saying that there are a number of considerations that we have to bear in mind.
Another consideration, more generally, is that there is a delicate balance to be struck between allowing a sufficient period of time for all the arguments made by both sides of the campaign to be properly explored and challenged, and not having so elongated a campaign that we bore the electorate to death or create such a long period of uncertainty that it is unhelpful to our economy. I am not arguing that it should be 23 June, or 18 September or whatever it would be at that time of year, because that is not my job; I am saying that it is about a balance of different considerations.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
Where do the views of the First Ministers of all the devolved Governments fit into the balance of considerations that the hon. Gentleman mentions?
Iain Stewart
That neatly leads me on to the point I was about to make.
In relation to purdah, we have heard about the potential overlap between the Scottish Parliament campaign and the referendum campaign, if the date were to be 23 June; that is hypothetical. I will make two observations on that. First, whenever purdah is, it will be disruptive to the usual governance of the UK Government, the Scottish Government, and the Governments of Wales and Northern Ireland. If it were to be in September, it would cause disruption to the legislative programme of whoever forms the Scottish Government after May. There is a case to be made that it would be less disruptive for one period to immediately follow the other. The Scottish and other Governments could then get on with their full programmes without interruption, rather than being blocked in the autumn. I would also point out that, to avoid future election clashes, the length of the next Scottish Parliament has been extended by a year, so the Scottish Government have more time than was originally envisaged.
Iain Stewart
If the right hon. Gentleman will forgive me, I have taken a few interventions and have a limited amount of time left.
I am not an expert on what Governments can and cannot do during purdah, but I hope we can have a sensible debate so that if a purely domestic Scottish matter that would have no impact on the EU referendum needs to be introduced during purdah, a way could be found for that administrative work to continue.
There is a precedent on this matter, namely the alternative vote referendum, which was held on the same day as the Scottish, Welsh and Northern Ireland elections in 2011.
Iain Stewart
I am not arguing that the elections should be held on the same day—we have accepted that they should be held on a separate day and that there should be a minimum of six weeks between them and the referendum—but there are lessons that we can extrapolate from that campaign. The Electoral Commission report on the 2011 AV referendum specifically addresses the issue of media coverage, which a number of Members have raised, and it concludes that it was not an issue. Paragraph 3.60 states that there was
“no inherent disinclination on the part of the media from Scotland, Wales and Northern Ireland…to cover the referendum; rather, the elections were considered to be a greater priority than the referendum.”
The right hon. Gentleman and his colleagues should not be worried about the capacity of the Scottish media to cover both the Holyrood elections and the referendum over the same period.
Iain Stewart
Forgive me, but I am down to my last minute and I want to conclude.
As my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) said, this debate is not starting from a zero base. The arguments about Europe are not new. People are already exploring them and have been doing so over many years and many election campaigns. They are perfectly capable of computing the arguments for the devolved elections and for the referendum at the same time. To be fair to the right hon. Member for Belfast North, he is not saying that they are incapable of doing that.
Ultimately, this comes down to a judgment of whether we as a country have the bandwidth in Government, the media and among our voters to make up our minds on the referendum and the devolved elections at the same time. My judgment is that we can perfectly well do that. America combines many elections—presidential, Congress, state and referendums—at the same time. If it can do it, so can we.
Ian Paisley (North Antrim) (DUP)
As many Members have said, this is one of the most important constitutional questions that perplexes our nation, and the referendum provides probably a once-in-a-lifetime opportunity—it is certainly a once-in-a-generation opportunity—to shape where the nation goes. That is why it is essential that we have a full, frank, proper and considered debate about all the issues that affect our membership of the European Union.
A rushed referendum will only threaten to present to the public a debate that is shaped according to the most baseless of arguments, namely that of “Johnny Foreigner” versus “What will we get out of the European Union?” That is not the way to have this debate, but unfortunately it appears that it is in the Government’s interests to have a debate shaped according to that base argument. If only a limited amount of time is made available for the debate, we will not be able to deal with the issues that affect all our constituents, including issues to do with trade, the rural economy and the social agenda, and, indeed, the very important issue of immigration.
John Redwood
Does the hon. Gentleman agree that the “stay in” side is worried that it does not have enough disinformation and nasty scares to last until September?
Ian Paisley
I have no fear that it will promote all those nasty issues, but we should be proud of the fact that we can present a cohesive argument that will convince many people who are at present wavering on the vital questions. That is why we should take time to have a proper debate.
I, like most Members in this House, but probably more than some, am familiar with “Never, never, never” speeches. We witnessed one such speech in this House on 3 February, when the Prime Minister made self-fulfilling “never” prophecies, none of which is even on the agenda. For example, there is not going to be a European army and the United Kingdom is not going to adopt the single currency. That has been ruled out by the people, but none the less the Prime Minister has nailed the arguments of this debate to solid winds that were never up for grabs in the first instance.
Over the next few weeks, we are going to be fed a diet based on soundbites, not on substance. My right hon. Friend the Member for Belfast North (Mr Dodds), supported by the right hon. Member for Gordon (Alex Salmond) and others, has stated very clearly that we want the debate to be based on sound, substantive arguments, because the public—our public, our electorate—expect much more. Although I accept the universally expressed view that the public can deal with multiple choice questions, that is not what is at stake. What is at stake is that we have a cogent, clear and sophisticated debate that deals with all the issues.
Some Members have argued that the reason we can rush into this is that the issue of security has already been dealt with and we need to get on with it, but the European Community, which is now known as the European Union, has singularly failed on the issue of security decade in, decade out. It failed to give this kingdom a clear position on the Falklands. It failed to give the UK support whenever we tried to purchase weapons for the Royal Ulster Constabulary in the 1980s. It failed Europe in its lacklustre response to Kosovo. It failed the middle east when we were dealing with Kuwait 1, and it has clearly been an abject failure in recent weeks and months when we as nations have been trying to deal with the important issue of immigration. We should have a proper debate so that the public can be reminded of the catastrophic failures brought about by the EU week in, week out.
Domestically, it is important that we talk about the potential opportunities if Britain exits the Union. At present, my constituents are not allowed even to consider the prospect of what farming would be like post-common agricultural policy. The fact of the matter is that it is our money that is being spent on our farmers by European bureaucrats. I want to have a debate that allows us to focus on where the money comes from—it comes from here—and how we could better spend it if we were not tied to European policy, but we will not have the opportunity to get into the nitty-gritty of that debate and my farmers will go to the polls on the basis of the fear that they could lose their subsidy when that is not right at all. We should have the opportunity to deal with that.
The Northern Ireland Affairs Committee is currently trying to address some of the issues. Every single witness—there have been six or seven to date—has indicated, as my right hon. Friend the Member for Belfast North said, that this is going to be decided not by whether it will affect terrorism, but by trade and other issues. We have only brushed the surface of border security in that inquiry so far, yet it is a key issue, given that we are the only part of the United Kingdom that, if we leave Europe, would have a land border with a nation that is in Europe. We need a proper debate about that, but we are not being given the time. I implore the Government to listen and, in the same way as they have ruled out other dates, to rule out June and suggest a more acceptable date, probably in the autumn.
Stuart Andrew (Pudsey) (Con)
I congratulate the Democratic Unionist party on this debate, which is obviously of interest to many of us, but clearly not to the Labour party, given that its Benches are all empty.
Stuart Andrew
I am sorry—there are two of them, including the right hon. Member for Gordon (Alex Salmond), who has defected by the looks of it.
Simon Hoare
I have heard a rumour that the Labour Members are all in a Trident submarine somewhere, sailing around and looking for things.
Stuart Andrew
That was a wise intervention.
I come at the issue having always supported a referendum. Dare I say it with the Government Whip on the Front Bench, but I was one of the rebels who voted for a referendum back in the day. I was four when the people of this country last had an opportunity to have a say on our relationship with Europe. That relationship has clearly changed over the past 40-odd years, and many of my constituents want the opportunity to discuss the matter and have their say again. That is backed up by evidence; in 2008, an organisation called Open Europe organised an all-postal ballot in my constituency, asking people whether they wanted a referendum and whether they supported the Lisbon treaty. Even though it was a voluntary postal ballot, more than 13,000 people took part in it, and more than 11,400—some 88% of those who took part—voted to say that they wanted to have the opportunity for a referendum on Europe. There is a clear appetite for such a referendum.
Many people have expressed to me their frustration about the fact that the referendum could be as late as 2017. They want to get on with it, regardless of which side of the argument they are on. I suspect that if there was a further delay because of the issues that have been raised in the motion, many of my constituents would view that with some scepticism.
When the European Union Referendum Bill was going through the House, I had sympathy with the views about the referendum being held on the same day as the 6 May elections. I am glad that the Government responded to the pressure that was applied, because those two things needed to be very separate, but to suggest that a longer period of separation is needed is, frankly, patronising. As others have said, it is not as though the Europe debate has not been going on for years and years. All who are for or against our partnership in Europe have made their points eloquently over the past four decades. In addition, the Government have also committed to allowing at least a six-week period between the elections and the referendum. I believe that that is more than adequate. Frankly, if those campaigns cannot get their message across in six weeks, perhaps they, and not my constituents, need to ask themselves some serious questions. My constituents are more than able to understand the issues that are being debated.
The truth is that there is history here. The previous European referendum was held only one month after the completion of the legislation. With the alternative vote referendum, there was plenty of time to discuss the issues. I know from being on the doorstep that many people understood what was being asked of them. When it comes to separating the issues, I refer back to my point about being patronising. Yes, the elections in May are incredibly important. In Wales, people will be elected to the Assembly, and in Scotland to the Parliament. There will be mayoral elections and the Northern Ireland elections. In my constituency, people will have to vote for their local councillors and for their police and crime commissioners.
Stuart Andrew
I do not have enough time; I am sorry.
I know my constituents, and I know that they are more than capable of separating those issues and campaigns, particularly because they will be at least six weeks apart. Last May, they were able to distinguish between electing a Member of Parliament, their local councillor and their parish councillor, all on the same day. My constituents knew that each candidate would hold a different office, and they fully understood that difference.
In addition, those who call for a delay because people will be confused assume that they are thinking only about the next election and the next referendum. I envy such people; my constituents have got lives to get on with and other things to think about. They are not obsessed with the referendum, as we may be. Six weeks-plus is plenty of time. Our constituents will be able to make a decision on what they want their future relationship with Europe to be. If the period was to be prolonged, I fear that that would switch many people off.
I come here as someone who was born in Wales, whose father is a Scotsman and whose mother is English. I respect every part of this nation, and I know that every part of this nation, just like my constituents, understands the difference. The 88% of people in my constituency who voted in favour of a referendum should be given the opportunity to have one. Who am I—who is anybody in this Chamber—to deny them that opportunity? I credit them with the ability to separate two very different voting responsibilities.
Stephen Gethins (North East Fife) (SNP)
I thank the right hon. Member for Belfast North (Mr Dodds) and his colleagues in the Democratic Unionist party for giving us the opportunity to debate the subject. This is our opportunity and the Government’s opportunity, as the right hon. Gentleman said, to put the respect agenda into practice. My right hon. Friend the Member for Gordon (Alex Salmond) and colleagues in the DUP have mentioned the letter of 3 February from the First Minister of Scotland, the First Minister and Deputy First Minister of Northern Ireland and the Labour First Minister of Wales, all of whom hold very different views about the European Union referendum, just as they hold many different views on a whole range of issues. I also tabled an early-day motion on the referendum, which received backing from Members from every party in this House.
Democratic representation does not begin and end in this place. Decisions that affect the day-to-day lives of our citizens are not purely taken here. At the beginning of May, issues such as health, education and transport will be debated and decided on by something north of 20 million voters across the United Kingdom. This has nothing to do with minor sporting events such as the European football championship, or major sporting events such as Andy Murray defending his title at the Queen’s Club. More than anything else—even the respect agenda, important though that is—this is about the Government and those of us who want to remain in the European Union having the courage of our convictions and putting the matter to a thorough democratic test.
A thorough democratic test does not mean simply rushing the referendum in six weeks; it means having a balanced and fair opportunity to debate this important issue. That is why throughout proceedings on the European Union Referendum Bill, we said that we wanted to see a fair playing field. That is why we worked with colleagues across the House to ensure that that happened, and we will be more than happy to work with colleagues across the House on the date of the referendum.
My hon. Friend the Member for Glasgow North (Patrick Grady) pointed out, as I did during the debate last week, that the campaign on the independence referendum called by my right hon. Friend the Member for Gordon ran for 545 days.
Patrick Grady
I congratulate my hon. Friend on achieving cross-party support for early-day motion 1042 on the date of the referendum. Does he agree with the point I made earlier about the impact of the autumn date of the Scottish referendum, which allowed an invigorating campaign to take place during the long summer days with good weather and lots of daylight? There is a lot to be said for an autumn date.
Stephen Gethins
My hon. Friend makes a valid point, which I hope that the Government will take into account. In Scotland, both those who campaigned for yes and those who campaigned for no should be credited for having one of the greatest democratic debates that any part of the United Kingdom has ever seen. A great deal of that was owing to the fact that we had a long run-in, and we had the summer to debate it.
We in the Scottish National party have some experience of the matter, and I hope that other hon. Members will listen to us. I hope that they will listen to my right hon. Friend the Member for Gordon, who led much of the debate over that long period. He rightly gave credit to those on both sides of the debate for the way in which they conducted themselves. He also spoke about the 10-week period, which my hon. Friend the Member for Glenrothes (Peter Grant) raised. The Government have not dealt with that adequately, and I hope that the Minister will tackle it when he sums up.
I want to see a positive campaign, and I am disappointed by what we have heard from Government Members who want to stay in. I am disappointed by some of the words that we have heard from Labour Members, and we will be debating the matter with them. We want to put forward the positive impact that Europe can have. Think about charges for roaming, workers’ rights and the security challenges that we face together as a European Union.
We must always be mindful of where the role of member states begins and that of the European Union ends, because we have not always been honest about that. It was not the European Union that described Scotland’s fishermen as “expendable”. It was not the European Union that introduced policies that were damaging to Scotland’s renewables industry. It was not the European Union that gave Scotland’s farmers the lowest single farm payment in the whole European Union. These were faults of the member state and the way in which it chose to exercise its membership of the European Union. We will bring all those issues to the fore during this debate.
Let us think about the areas on which we have had European co-operation that is much closer to Scotland’s opinion than this Government’s ever could be. Let us look at the refugee crisis—the worst since the second world war—on which the UK Government are not stepping up to the mark, as the Irish Government, who have disregarded their opt-out, have. Let us look at climate change policy, where Scotland led the world and on which the European Union is now leading the charge. Let us look at renewables, which I have already mentioned. Let us look at security issues and tackling, as a European Union bloc, the issues of Ukraine, Syria and all the other huge challenges we face; no member state can face such challenges alone.
My appeal to the House is that we do not want any scaremongering or a re-run of “Project Fear”, because that is the way in which the yes side will lose this referendum. We want a positive debate, but we also want a debate that runs beyond the summer and possibly into September. That is why I will back the DUP motion.
David Rutley (Macclesfield) (Con)
I am grateful to you, Madam Deputy Speaker, for the opportunity to speak in this debate, and to the right hon. Member for Belfast North (Mr Dodds) for securing it and bringing forward this subject. It is a very important subject—hon. Members from all parts of the House are passionate in their views on Europe—and the timing issue is clearly of concern to him and his colleagues.
I tend to find that my views agree with those of DUP Members most of the time. We clearly agree on one very important thing, which is that this is the time—this is a once-in-a-generation opportunity—to give the public a referendum so that they can have their say. However, I disagree with them today and I will not support them on the timing issue. I think that there will be enough time. The Prime Minister has clearly set out in legislation that there will be time for people to think and there will be enough information for them to make up their minds.
Let me explain why I will not support the motion. As colleagues have already mentioned, the aim of the Conservative party to hold a referendum on this subject has not exactly been the best-kept secret on the planet. Indeed, during the last election, many Conservative Members, and probably many Members on the Opposition Benches, talked about the referendum in their election literature. It was in our manifesto, and it was certainly in my election materials. I was very proud to talk about it, because I think it is time for this subject to be put to the British public so that they can express their views.
In fact, I distinctly remember that we were able to debate the issue extensively during the last Parliament, even though we were part of a coalition Government at the time. Government Members, particularly me and my Conservative party colleagues, found a mechanism to have such a debate on private Members’ Bills, particularly those introduced by our hon. Friends the Members for Stockton South (James Wharton) and for Bromley and Chislehurst (Robert Neill). They put forward those Bills continually to seek a debate on this subject, even though we were constrained within the coalition. As parliamentary private secretary to the Minister for Europe during 2014 and 2015, I know that the issue was much debated as a matter of clear concern that agitated many of our colleagues. They wanted to talk about Europe, and they did, and they wanted the referendum. During all the parliamentary discussions, it was also clear that a wider debate was taking place. News reports and TV programmes went on about it, and I did detect one or two tweets on the subject as well. This was not a surprise—it has been well trailed—and it is therefore important to address head-on the concerns expressed in the motion, because we need such a debate more quickly than not.
I listened carefully to the right hon. Member for Belfast North. I believe that his concerns, and indeed those of other Members on the Opposition Benches, are sincere, but that they are overstated. That brings me back to an experience I had in a Leeds shopping centre, not far from Pudsey, several years ago. I was in a rush—I needed to get to a meeting, and I had to move very quickly—and I had to make a quick decision about which escalator to go up to get to the meeting. I ran up it as fast as I could, and it became pretty obvious that I had chosen the wrong escalator: I was running up the down escalator. An older lady, who was mesmerised by the spectacle, looked me in the eye and said, “That’s what comes from rushing.” I have never forgotten that. Rushing is having to deal with decisions within split seconds. I can assure the House that this is not about rushing, but about having a conversation and a debate over weeks and, indeed, months.
Alex Salmond
I am still grappling with which side of the argument the escalator analogy supports, but if six weeks were enough, why does the legislation specify a 10-week period for the European referendum campaign? Does that not conflict with the argument the hon. Gentleman is making?
David Rutley
No. We know that if the Prime Minister is successful in securing the negotiation and is minded to put it forward in the referendum, there will be challenges in terms of the multiple debates that will be going on. Like the hon. Member for North Antrim (Ian Paisley), who talked about there being multiple choice questions, I do not think that is a problem. This is about putting two separate questions: who will the electorate vote for in local elections, or indeed the Assembly elections or the parliamentary elections in Scotland; and how will they vote in the referendum. Those two things are separate and clearly set out, and I do not think there will be a conflict. In the minute I have left, I will explain why.
If the Prime Minister chooses the timescales I have set out, there will be seven weeks between the May elections and the referendum. Indeed, there will be more than 17 weeks between the decision being made to progress with the referendum and the referendum being held, so there will be 17 weeks in which to have such a discussion. If we compare that with what happened in previous referendums, we can see that in 1975 there was just one month between the completion of the legislation and the referendum, and that in the alternative vote referendum, which some hon. Members have talked about, there were three months—it felt like an eternity—but the Prime Minister has promised more time. There is therefore enough time and I believe that the electorate will be able to separate their thoughts about whatever the issues are in Northern Ireland or Scotland from their thoughts about the referendum. For those reasons, I support those on both sides of the debate—whether they are ins or outs on this subject—who say we need to take the earliest opportunity to have the referendum.
Danny Kinahan (South Antrim) (UUP)
I, too, congratulate my DUP colleagues and the right hon. Member for Belfast North (Mr Dodds) on raising this matter. I agree with their premise about not having the referendum too soon, although not necessarily for the same reasons. June seems far too early and the autumn, or later, seems more sensible because we must give the public time to understand all the pros and cons.
The Ulster Unionists—for those who do not know, I make it clear that we are very different from the Democratic Unionists—have consistently said that we want Britain and Northern Ireland’s membership of the EU reformed and renegotiated before we make a decision. We therefore need the facts and the details to be able to decide. It is good that the referendum will happen, but we need it to be held later.
What I ask is that when you all make your decisions—not that many Government and Opposition Members are in the Chamber—you think of the whole Union, not just your small part of the United Kingdom. This has to be something that works for all of us. If I can leave you with a clear message, it is: can you think about how it benefits—
Madam Deputy Speaker (Natascha Engel)
Order. May I just remind the hon. Gentleman that he is speaking through the Chair?
Danny Kinahan
I apologise, Madam Deputy Speaker.
It is very important that we keep the Union in mind when we take our decisions in the future. In a poll last week, 42% said they are for leaving and 38% said they are for staying. It saddens me that they have already made up their minds, but we have not even got the facts. I want to use an analogy that is slightly different from the escalator one. I am a sci-fi fan: I am a “Doctor Who” fan and perhaps even a Trekkie. In wanting to make a decision, it is rather as though all those who want to leave are charging into the Tardis—hon. Members will remember that it did not know whether it was going backwards or forwards, where it would land or anything else—so we are going into the unknown. I want the electorate to understand what they are voting for. That is why I am asking for a delay. I hope that Members will keep the Tardis in mind. If I may mix my metaphors or even sci-fi series, this is about boldly going where no man has gone before.
Danny Kinahan
Or not.
As the House has heard, the Northern Ireland Affairs Committee heard evidence from three economists last week. It basically came down to certainty against uncertainty. We need to know more. We need to be more certain. We must know where we are going. For those of us who have elections in May, this matter will be part of the debate. That is how the whole thing is being pitched. Already, I am being asked more questions about the European Union than about how good the Assembly will be in the future.
I want us to have the facts in front of us. I do not necessarily think that we should stay in, although that is where I am leaning at the moment. I want to know the risk factors. I want to know how good things could be for us if we leave. I look at the many other things going on in the world, such as how the Chinese economy has changed. I look back at Lehman Brothers and Enron, and at the great USA hope. Look what that did to our economies. I want to know where we will tie ourselves to in the future if we leave. We must have the facts. Do the leadership debates in the United States give us confidence about where we will go with our trade in the future? We need to know.
As others have said, agriculture is phenomenally important in Northern Ireland. It means £250 million to us. If we are to make this decision, we need to know what the guarantees are for the future, how we will work in the future and how we can keep Northern Ireland’s agricultural economy as one of the best in Europe.
That is why I agree with the motion. Let us make sure that we have the facts. Let us make sure that the electorate have the facts. That will take time and time is what we are asking for. Let us not have the referendum at the end of June. That will help those of us who want to go and watch Northern Ireland play. I have tickets if they get into the last 16. So come on Northern Ireland, and come on everybody else—let’s get the facts out.
Mark Spencer (Sherwood) (Con)
It is a pleasure to follow the hon. Member for South Antrim (Danny Kinahan), with his extreme optimism that Northern Ireland will reach the final 16. I, too, shall be cheering on Northern Ireland. I wish them all the best.
It is always a pleasure to participate in a DUP debate, because I know that the wording of the motion will challenge me quite a lot. I am often minded to support DUP motions because they are often very sensible, and this one is no exception. This is a very important debate. At the same time, we must recognise that this is a debate about a date that has not been set. No one has announced this date. Those of us in the Chamber are engaging in pure speculation about possible dates and possible outcomes, and about the implications of any of those dates.
I welcome the optimism among colleagues on the Opposition Benches that the Prime Minister will secure what he wants from the European Council in February, that that will be enough for him to fire the starting gun and that we will all be able to crack on with the referendum.
The motion says that Government are “set to rush” the referendum. My constituents would disagree with that. It has been 40 years in the making. I was three when the decision was made to join the Common Market. To suggest that we are rushing towards a referendum would frankly be viewed as laughable in Sherwood. My constituents are bouncing off the walls with delight that the referendum will finally be put in front of them, whichever way they are minded to vote, so that we can once again put to bed our relationship with the European Union for a generation.
Alex Salmond
The fundamental point that is being made by Members from Northern Ireland, Wales and Scotland is that of the four parts of the United Kingdom, three are clearly asking for it not to be a June date. What is the hon. Gentleman’s response to that?
Mark Spencer
I think we should consider the views of colleagues, but it is worth recognising that there are elections in England in May as well, including in London. It is not just colleagues from the devolved Administrations who need to be given that consideration. I have confidence in the ability of my constituents and the right hon. Gentleman’s constituents to separate the issues and decide whether they are voting in a Scottish election or an EU referendum. That is a bit of a red herring.
Stephen Gethins
If the hon. Gentleman will not accept the points that are being raised by Members from Scotland, Northern Ireland and Wales, will he accept the opinions of the Members from England who have signed my early-day motion to call for the referendum not to be in June because of the English local authority elections?
Mark Spencer
To be absolutely clear, I give no more weight to an English opinion than to a Scottish opinion. They are both completely valid. I recognise the point that the hon. Gentleman is making. What I am saying to SNP colleagues is that our constituents have the ability to separate the issues and to understand the enormity of the decisions they are making—who will govern Scotland, who will govern Wales, who will be the next Mayor of London and whether our relationship with the European Union should change or remain the same, or whether we should come out completely.
Mr Jim Cunningham (Coventry South) (Lab)
The hon. Gentleman knows that many people in his constituency, as in mine, would rather the referendum was separate from the local elections. He knows that as well as I do.
Mark Spencer
I have good news for the hon. Gentleman: the referendum will be separate from the local elections. They will be at least six weeks apart. At the risk of bursting his bubble, I say to him that while many people in this place are very focused on political issues, many of my constituents are busy going about their normal business. They are thinking about paying their mortgage, where to go on holiday and whether their kids will get into the school of their choice. Europe is not as high on their political agenda as it is for some in this place.
At some point, we will be told the date of the referendum. We can then have six weeks of campaigning to establish which way we want to vote. By the end of those six weeks, I guarantee that our constituents will be fed up to the back teeth with the debate.
Peter Grant
We keep hearing that people get fed up after a three or four month campaign, and some people are clearly fed up after a three hour debate. Why do Conservative MPs never refer to the last referendum we had, which was in 2014? After a campaign of over 500 days, people were so fed up that almost every polling station in the country reported queues at the door before 7 o’clock, the biggest number of people registered to vote and the biggest number of people voted in Scotland’s history. That is how fed up people were.
Mark Spencer
That is a really important point and there is an important distinction here. Clearly, the starting gun has already been fired. The Prime Minister had committed himself to a referendum on our relationship with Europe so the second there was a Conservative majority in May 2015, we knew that there was going to be a referendum. So the starting gun has been fired.
However, there is a difference between the long campaign, when we all know that the debate will happen and we start to engage in it, and the short, intensive campaign, when the leaflets come through the door and people knock on the door, asking, “Which way are you going?”. I absolutely adore knocking on doors. It is great fun and I hope that my constituents like me appearing on their doorstep. However, there does come a point when it becomes a bit tiresome—when the fourth person knocks on their door to ask the same question, just as they are sitting down to watch “Coronation Street” or to eat their tea. I start to get a bit of negative feedback from my constituents at that point.
I think we have got the balance about right. The starting gun has been fired. We are aware that the referendum is coming at some point in the future. As soon as the Prime Minister has secured the deal he wants to secure, we can make up our minds and our constituents can make up their minds which way to go. We can have an intense debate and campaign at that point. It is right not to rule out any more dates. Let us see what the Prime Minister comes forward with.
Hywel Williams (Arfon) (PC)
I congratulate the right hon. Member for Belfast North (Mr Dodds) on securing this debate. The Minister referred to Alan Greenspan, and said that he was not going to give any clues, and that certainly was the case with his remarks. I quote back to him Henry Kissinger who, when facing a very excited press conference, scanned the excited news hounds and said, “Do any of you boys have questions for the answers I’ve already prepared for you?” That is rather how it felt this afternoon.
Plaid Cymru is in favour of staying in the Union—we believe there is a strong positive case to be made for that, and that another EU is possible. Among other things, developing the Union has strengthened protection measures for the environment, farming and rural life, increased social protection for the workforce, improved the protection, wellbeing and prosperity of minorities—including linguistic minorities—and strengthened progressive cohesion and regional policies. We will campaign on those issues. I certainly regret the rather tetchy tone of the campaign so far, but that is quite separate from our concern about the date of the referendum—a concern that is shared by people on both sides of the argument.
The First Ministers of the three devolved Governments have written a joint letter to the Prime Minister to insist on a later date for the referendum, and, as others have said, that is important for the respect agenda. There is a risk that the May elections could become proxy votes for the referendum, and I agree with the Electoral Commission’s concern about the proximity of the proposed referendum date to the elections, which could lead not to confusion but to voter fatigue.
The DUP will campaign for a power-sharing set up in Northern Ireland, and—from my reading at least—it is unlikely that an early EU referendum could influence the consequence of the Northern Ireland Assembly elections in the same way and to the same degree as might be the case in Wales, Scotland or London. The result in Northern Ireland will be a power-sharing Executive, but the result in Wales, I am glad to say, is much more open—indeed, it is possibly wide open. That is why I was particularly disappointed with the response of the hon. Member for North West Durham (Pat Glass), because there is a question for us in Wales about the position of the Labour party—I note the vast green acres of empty Labour Benches.
Hywel Williams
And on the Conservative Benches.
Carwyn Jones, our First Minister, has written to the Prime Minister and made his views abundantly clear. However, the Labour party at Westminster does not oppose a June referendum—in fact, it seems very much in favour of that as it wants a quick referendum. Either the Labour party headquarters does not listen to Carwyn Jones, or possibly it is part of a less laudable plan to frame the National Assembly election as a fight between Labour and UKIP. There is no doubt that there will be a strong UKIP campaign in Wales, and it might even achieve some membership of the National Assembly. It is in the Labour party’s interest to frame the debate in that way, thus avoiding scrutiny of its dismal record in government for the past 17 years.
Alex Salmond
It is difficult to see how the Government or the Labour party can pursue a respect agenda to the devolved nations if none of their Members is in the Chamber to hear the arguments being articulated from those countries.
Hywel Williams
The right hon. Gentleman makes a good point. Some Welsh Members were here earlier in the debate, but it is regrettable in the extreme that they are not here now to contribute. I assume, however, that they will be trooping through the Lobby if the Labour party decides to take part in a vote.
The media campaign has already started, and it feels almost as if every news broadcast and every newspaper is running stories on the latest developments in the referendum campaign. The hon. Member for Milton Keynes South (Iain Stewart), who is no longer in his place, said that it was quite easy for people to make up their minds, and mentioned the press in their respective countries. However, 85% of people in Wales get their newspapers not from Cardiff or Llandudno Junction, but from London, and the so-called national debates in England and Wales, or the UK, often influence their voting behaviour. Few media outlets will pay proper attention to the Welsh general election, and anything that detracts from that is to be regretted.
Few media outlets will cover crucial issues such as the state of the Welsh NHS, the proposed 32% cuts to Welsh universities by the Welsh Labour Government, or election pledges from other parties. The Welsh NHS is no less important to the people of Wales than the English NHS is to the people of England. Given the constitutional significance of the result of the referendum, particularly if people in Wales and Scotland vote in contrast to the people of England, the Government would be well advised to pause before setting an early referendum date.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
I rise to speak in favour of the motion: the Prime Minister should reconsider his rather obvious plan for an early referendum. That is not just because it undermines his self-set “respect, one-nation, agenda”; this is about Parliaments and National Assemblies in the UK whose views on this issue must be taken into account.
We have heard today about boring campaigns and bored people—it seems as if the people of this country do not have an awful lot to look forward to with whatever will make up the positive campaign to stay in the European Union, and it will clearly fall to the SNP to be the leading light in that campaign. It raises the question why we are having a referendum in the first place, if it will be so boring for the people of this country.
The First Ministers of Wales and Scotland, and the First Minister and her Deputy in Northern Ireland, represent what could euphemistically be described as a diverse range of political views, but they all wholeheartedly agree that to hold the Prime Minister’s referendum in June would be wrong. This is not simply a political issue, because those whom we trust to ensure our elections are run fairly and honestly also have concerns about a June referendum.
At the end of last year, the chair of the Electoral Commission stated in evidence to a Committee of this House that a referendum date close to the May elections would reduce the window of opportunity for registering new voters, and for raising awareness of the impending referendum—that issue is so important for this vital decision. There are also concerns about how broadcasters will interpret their rules on impartiality when reporting on political issues, during a period when both campaigns are under way in earnest. Those key issues must be resolved to ensure a fair referendum campaign, and the simplest way to deal with that is to move the date.
When the Prime Minister made his first visit to Scotland in May 2010, he stated clearly and simply:
“I want a real agenda of respect between our parliaments…This agenda is about parliaments working together, of governing with respect, both because I believe Scotland deserves that respect and because I want to try and win Scotland’s respect as the Prime Minister of the United Kingdom.”
Well, cometh the hour, cometh the man—I shan’t be holding my breath.
The date is also wrong because those of us in favour of remaining in the EU want to take every opportunity to make a positive case for it. The UK Government cannot make a unified case for membership, given how deeply divided the Conservative party and Cabinet are on this crucial issue, so we must have an informed debate and time to hold it. It would be wrong for the Prime Minister to spare no effort or time in speaking individually to the Heads of State of each EU nation, without giving due cognisance to the views of the respective Governments across these islands.
The Prime Minister’s negotiations appear to be serving no purpose other than to appease his own Eurosceptic Back Benchers, most of whom have removed themselves from the Chamber today. Instead of carping around the fringes of Europe, we should be seeking to maximise the benefits that our partnership with other European countries offers. For example, let us see action to ensure transparency in our negotiations with the USA on the Transatlantic Trade and Investment Partnership, so we can have an agreement that is seen to deliver the reassurances promised by Ministers. Let us have concrete action now to reform the common agricultural policy and the common fisheries policy, so that our agriculture and food industries can benefit directly from strong leadership in this area—leadership which, sadly, and for long periods of time, has been lacking from this Government. Business need to see measures on how to remove the barriers to trade in all member states, in particular on the freedom to provide services, which would be a huge boost to several of Scotland’s key economic sectors at this time. Taking time to deliver tangible progress on those vital areas would show how the EU can work for Scotland and the UK.
Let us change the narrative. When people from this country go and spend their retirement in Spain they are “expats” and when people come here they are “economic migrants”. That needs to change. This is a 21st century of equal nations, as opposed to the UK’s own 18th-century constitutional arrangements. The European Union has been central in protecting peace in Europe since 1945, and has enshrined our citizens’ rights in international law to protect workers, consumers and trade unionists from reactionary right-wing Governments.
Patrick Grady
Does my hon. Friend agree that those protections extend to the 30,000 UK citizens claiming benefits overseas in the European Union? We have yet to hear how the negotiations will affect them.
Ms Ahmed-Sheikh
Absolutely. I raised the point about the importance of trade union representation and dealing with reactionary right-wing Governments, because time after time since our election in May, we have seen legislation pushed through this Parliament. We now need to rely on the EU to protect the rights of workers in this country.
Built on this firm foundation, social, economic and political union is to the benefit of all across Europe. We must work with our EU partners to achieve that. As my hon. Friend the Member for North East Fife (Stephen Gethins) said, from dealing with the refugee crisis on our doorstep to protecting our economies in the face of international challenges, we cannot address these serious issues by pulling up the drawbridge and turning our backs on the international community. If we are threatened by the changing world in which we live, we must face it head on and not retreat into a backward era of international isolationism, which is where this Government will take us.
In conclusion, given the significant and serious prospect of a vote to leave, we must take the necessary time to take the population with us and not force voters to the polls without the opportunity to come to an informed and considered view. A headlong rush would be contrary to our country’s interests on every level. If we act in haste, I fear we will repent at leisure.
Ms Margaret Ritchie (South Down) (SDLP)
I am pleased to follow the hon. Member for Ochil and South Perthshire (Ms Ahmed-Sheikh). I rise to speak in support of the motion and I would like to take the opportunity to commend the right hon. and hon. Members responsible for it. We may not agree at all times, and perhaps not even on the very issue on which the referendum will be held, but I none the less hope that the debate so far has motivated a desire for a fair and open debate on the EU referendum.
As other hon. Members have said, we should be worried about electoral fatigue setting in among the voting public this year. I know, however, that people will still want to register their votes. What I am more concerned about is the issue of purdah, which was raised by the right hon. Member for Gordon (Alex Salmond). We will have two periods of purdah running from the end of March to 23 June—if that is the date. Many of us have been led to believe that that is the date in the Prime Minister’s head, subject, of course, to his getting agreement in Brussels on 18 February. Notwithstanding that, to me and to my party colleagues it is undemocratic to have such a period of purdah, because it prevents Ministers, MPs and members of devolved Administrations from properly representing their constituents.
Alex Salmond
The hon. Lady will have heard earlier one of the “speeches for England,” to quote the Daily Mail, in which it was suggested that an Administration being elected and then going into an immediate period of purdah was somehow a good thing. Can the hon. Lady explain that extraordinary argument any better than the hon. Member who made it?
Ms Ritchie
The right hon. Gentleman makes a very helpful intervention. I did not think that that comment, made from the Government Benches, was all that helpful. I believe that such periods of purdah will simply stultify a democratic institution in undertaking its new work in preparing a programme for government, detailed work for ministries, and a strategy and plan—whether in finances, resources or in any other discipline—for the next four to five years of that Administration. It would minimise the amount of time available to an Administration for preparation.
It is not hard to imagine, if I may be parochial and talk about Northern Ireland, that we will have two campaigns running at the same time. Important issues such as health and education, policy making and setting a programme for government could be erased from the front pages of our local newspapers and from hustings as the press devotes time—perhaps quite rightly—to the big issue of the EU referendum and all the political drama that that will entail. The two elections should be separate. They should be conducted separately to allow a full and active campaign and debate to take place. There are major issues in the EU referendum. I come to this as somebody who wants to remain within the EU, because I have seen clear benefits of Northern Ireland being a member. I believe my colleagues in the Democratic Unionist party take a different view. Notwithstanding that, there needs to be time for a measured and considered debate on this issue, irrespective of which side people are on.
Many issues have been raised today, but we do not want to get into the whole area of partisanship. As one who represents a constituency in Northern Ireland, I believe that our membership of the EU should not be moulded by identity issues. That is the nature, I suppose, of Northern Ireland, but the debate about membership of the EU is very serious, complex and deserves to be given adequate space and time. Between now and 23 June does not provide that adequate time and it is vital that the Government appreciate the danger of that. No matter what anyone claims, Northern Ireland’s place in the EU is not an identity issue. It is not a nationalist or a Unionist issue and it should never be treated as such. The funding that came, and continues to come, from the EU, whether for agriculture or through the fisheries fund announced yesterday in Poole in Dorset for the next five years, is for all communities. All communities can derive benefit from that. The cross-border trade enabled by the EU is worth billions each year. It does not just bring jobs and growth to one community, but to all of Northern Ireland.
We need to address another particular issue as part of that: the south of Ireland remaining in the EU. The issue that needs to be considered is the one I put to the Prime Minister last week. How is the free movement of people within the island of Ireland going to be facilitated if the UK chooses Brexit? That issues needs to be discussed, so the referendum should not be held on 23 June.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in the debate. It is good for the Democratic Unionist party to propose a debate on an issue that concerns our constituents, whether in the Northern Ireland Assembly, where we are the party of leadership, or in the House, where we are the party of leadership when it comes to these issues.
It is concerning and, indeed, saddening, that the Prime Minister is happy for people in the devolved regions of the greater United Kingdom of Great Britain and Northern Ireland to be second-class citizens in this once-in-a-lifetime decision on the future of our country. Welsh, Scottish and Northern Irish citizens of this great unitary state are set to be punished for having devolved Assemblies and making local decisions at a local level. That is how we feel, and that is how many of my constituents feel as well.
We will have just over half the time to campaign, consider and make this huge decision in the devolved regions. The proposed referendum date is a huge insult to voters in Scotland, Northern Ireland and Wales, and if we cannot secure a reasonable accommodation—nothing stands in the way of doing so—that will rub salt into the wounds. My colleagues in the House and our Scottish countrymen will have just over half the time to campaign and make that major decision on the future of the United Kingdom than they had when they voted to maintain the Union. In the Scottish referendum they were given some 540 days. I am not saying that we should have 540 days for this referendum, but hon. Members can see the difference between those two referendums.
With the general election last year, local government elections the year before last, and now an Assembly election and the biggest referendum in a generation, the proposed referendum date risks not only a democratic deficit in campaigning but voter fatigue. Many Members have mentioned that, and we cannot ignore it. We are constantly pressing for better voter engagement and participation, and we are constantly working to improve voter turnout and engagement in the Province. If the Government continue to take the same approach to the EU referendum date, that will only hinder the positive work that has been done.
I think that we have had 14 elections in 14 years in Northern Ireland, so we are electioneered almost to the max. The British people, including the Scots, the Welsh and the Northern Irish, gave the Prime Minister time to renegotiate, and now he will give millions of British citizens just six weeks to consider something he took months to obtain and which, in reality, amounts to nothing at all. One of his MPs, who is not in the Chamber—the hon. Member for North East Somerset (Mr Rees-Mogg)—described it as “thin gruel”. It certainly is: there is nothing that has been negotiated so far that gives us any hope, but it stops us having the referendum at a time when all the citizens of Great Britain and Northern Ireland have democratic equality.
I have been contacted by many of my constituents, who are in a state of dismay, and I want to speak in the remaining couple of minutes about the fishermen and farmers across my constituency and Northern Ireland who will be disadvantaged. Fishermen and fisherwomen in Northern Ireland, Scotland, Wales and parts of England, to a man and woman, will vote to leave the Union, because they are burdened with red tape, bureaucracy and restrictions on fishing. The hon. Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) referred to the common fisheries policy, which should change, as we need regionalisation. We need responsibility back in our own hands. That is a huge issue for fishermen and fisherwomen, and it requires consideration, as it directly affects their livelihood. Normal, hard-working, everyday folk are the backbone of our nation, and they should be given the same democratic rights as farmers and fishermen in England. With Assembly elections around the corner, my hard-working constituents in that sector have enough on their plate.
Farmers are up to their eyes in paperwork, regulation, rules and laws. Quite simply, the fishermen and farmers want to know what is going on. We put £19 billion into the European Union, and I understand that the common agricultural policy costs £15 billion. That is the debate that we need to take to the farmers, so we can let them know what we are going to do for them and make sure that they understand.
The Prime Minister has signalled that he intends to visit Northern Ireland as part of his attempt to convince Eurosceptics that his “thin gruel” is palatable. It will never be palatable as it does not suit the energy or taste of anyone in Northern Ireland. The proposal completely disregards the democratic rights of citizens in our corner of the United Kingdom. There is no good reason or excuse for not having a referendum on a different date—even four weeks later, or whenever. We have not heard anything to convince us as citizens in Wales, Scotland and Northern Ireland that we will not be at a disadvantage in the referendum.
In conclusion, the Prime Minister and the Minister need to take these comments on board and listen to their fellow countrymen and women in Scotland, Wales and Northern Ireland, give them the respect that they deserve, and make sure that the people there have the same ability to participate in the referendum as their counterparts in England.
Sammy Wilson (East Antrim) (DUP)
I thank my right hon. Friend the Member for Belfast North (Mr Dodds) for the way he started the debate. He set out the DUP’s case while also speaking for other parties across the devolved Administrations.
As many have said, we all come to this debate with different views. I welcome the fact that the Government have afforded the UK people a referendum, although I differ from some in my reasons for wanting it. Some want to cement even more firmly the relationship between the UK and the EU, while others, such as myself, want to break down the walls of the prison in which we have been held for the last 40-odd years. In that time, we have been robbed of our money, our fishing grounds have been violated, our farmers have been destroyed and the EU Court of Justice has run over the rights of victims while upholding those of terrorists. We want a referendum for many reasons. At least we now have one.
The Minister said that the referendum would be an exercise in democracy. If so, as many have said, its terms must reflect the views of all those taking part. Despite coming from different angles, parties across the three devolved Administrations have united in saying that 23 June is not the appropriate date, for all the reasons given. The word “respect” has been used time and again. We need respect not just for the Administrations but for the millions of UK citizens they represent, who will want to engage in this exercise in democracy on a fair basis.
There is already a view that the debate has been contaminated and that this exercise is not being conducted in the most democratic way. The Prime Minister and other Ministers who support our membership are free to wander the country, go on the airwaves and express their views, while Cabinet Ministers who hold a contrary view are bound and gagged. That does not indicate a level playing field. Hardly have the scare stories passed the Prime Minister’s lips before they are dismissed by the very people he claims will do terrible things to the UK. We were told yesterday that we would have immigrant camps on our own shores. No sooner had he said that than the French Government dismissed it.
Gavin Robinson
My hon. Friend is making a great contribution. Does he agree that the Government’s chief fear is that, were we to have another summer of the migrant crisis before the referendum, they could lose the vote?
Sammy Wilson
Several Members have said that already. The Government have tried to perpetuate these scare stories, but they do not have enough to last them until September. The danger is that there are not scare stories, but scary facts and events in the pipeline that could influence the referendum. Again that might be one reason for the decision to have an earlier referendum. The Minister rightly said that no date had been set and that he was not in the job of giving clues. It was the first time I had heard anybody in the House admit to making a clueless speech. Those were his own words. He said he would not be giving any clues about when the referendum would be held.
John Penrose
In my defence, I think the word has a double meaning, and I meant the other one.
Sammy Wilson
It does. I accept that. I was simply stating that the Minister had indicated he was going to make a clueless speech. The one thing I would say to him is that he has already ruled out certain dates, so ruling out one more day in the 670 days that remain before the last date on which the referendum could be held is not an unreasonable request, especially when there has been such unanimity among the devolved Administrations to do so. I hope that the Minister carries back the message that has come from the Chamber today.
Let me go through some of the arguments used by those who oppose the motion. The first is that using the term “rushed” is a bit over the top. I noted that the hon. Members for Pudsey (Stuart Andrew), for Macclesfield (David Rutley), for Blackpool North and Cleveleys (Paul Maynard) and for Milton Keynes South (Iain Stewart) all queried the point about the referendum being rushed. Of course the debate about our membership of the EU has been going on for some time now, but the referendum is going to be on the Prime Minister’s promised reform, and we do not yet know the terms of what he has got. Those issues will have to be addressed along with all the wider issues affecting our membership of the EU.
It is not a question of our simply having talked about the issue for a long time. The same thing could be said about what happens between one election and another. All the issues pertaining to an election are discussed over a five-year period, but the election campaign is the time when people focus most on those issues. When we talk about the referendum being rushed, we are simply asking why we should compress the debate into a short period, especially when it has implications for the devolved Administrations.
I have not heard any Member answer the point put time and again by the right hon. Member for Gordon (Alex Salmond): how this will affect Administrations that are having elections. Governments will need to be formed after the elections, but instead of getting into the full role of forming a new Government, a new Administration and a new programme for government, we will be into another period of purdah for at least six weeks—after having one of at least four weeks beforehand. That is disruptive of government, and this important point has not been addressed by any Members participating in the debate.
Ms Ritchie
Does the hon. Gentleman agree that there is a need, an urgency and an obligation on the Government to provide a Minister to answer that particular issue about the disruption to democracy resulting from two periods of purdah?
Sammy Wilson
Yes, and we have heard allegations that straw men are being put up to indicate, for example, that the electorate would be confused. However, my right hon. Friend the Member for Belfast North never claimed that. He simply made the point that conflating the election campaign with the referendum campaign was inappropriate where different nations and different issues apply. Indeed, parties will be competing with each other in the Assembly or devolved Parliament elections, but they might want to co-operate during the referendum campaign, so further confusion is introduced there, too.
Peter Grant
Does the hon. Gentleman appreciate that a further aspect not touched on is the fact that there will be different electorates? Thousands of people entitled to vote in the Scottish Parliament elections will be barred from voting in the EU referendum. Does he agree that, in those circumstances, having both campaigns running in parallel would be completely unacceptable?
Sammy Wilson
That is another important point that has not been raised before. It is one of a number of essential points that need to be considered.
Another argument I have heard is that people will get bored. When people are thinking about their long-term future and they vote, should their vote actually mean something or should they vote for people who come to this institution but then find that their views are overridden by bureaucrats in Brussels or by judges in the European Court? That, to me, is a fundamental issue. Given the impact that the European Union has had on the lives of so many people throughout the United Kingdom, I cannot imagine that they will be bored by the debate. I have addressed a few campaign meetings. I spoke at a Grassroots Out meeting not long ago, and the one thing I noticed about that audience was that they were not bored by politics in general, or by the politics of discussing the European Union. They were raring to go: they wanted to get into the campaign. I believe that this “boredom factor” is another straw man.
Mr Jim Cunningham
Anyone who took part in the Scottish referendum knows that this referendum will not be boring. I was involved in the 1975 referendum, and that was not boring. In fact, this referendum will generate a great deal of heat. I think that the real reason the Government are rushing it is the problem that they have with their right wing, which will try to sabotage it.
Sammy Wilson
I think the hon. Gentleman is right. The campaign will not be boring, and nor will the issues, because they are so fundamental to people’s lives.
Another argument that has been advanced, notably by the hon. Member for North West Durham (Pat Glass), is that the longer the campaign goes on, the more destabilising it will be for the United Kingdom and its economy. That was the Labour party’s argument for not having a referendum in the first place. It did not apply then, and it does not apply now. It was significant that the hon. Lady could not even give any examples of investors fleeing the United Kingdom or withholding investment from the United Kingdom, or of jobs moving out of the United Kingdom, simply because of the prospect of a referendum on our membership of Europe.
This is an important issue, and one that should be given full consideration. It should not be squeezed as it has been. I have not even touched on the issue of designation, but the Minister indicated that even that might be squeezed, which would cause further suspicion in people’s minds. We need to have a positive debate. The right hon. Member for Gordon spoke of the benefits of membership, and of his wish to extol them to the people. I want an opportunity to extol to the people of Northern Ireland and the rest of the United Kingdom the great life that we can have outside the EU: the great life that we can have when the chains are off our arms and off our economy, when we can decide how we can spend our own money, decide who we let into our country and who we keep out, decide what laws we want and how they are applied, and decide how we trade with other parts of the world.
That is the positive debate that I want to have, and I want it to continue throughout June, July, August and September. It will not be boring, and it will give the people of the United Kingdom, including the people of Northern Ireland, an opportunity to make their decision on the basis of the facts, not on the basis of the scare stories, and not on the basis of a compressed campaign that the Government hope can take place quickly so that only their side of the argument is heard.
The Parliamentary Under-Secretary of State for Northern Ireland (Mr Ben Wallace)
Let me begin by saying that following the frequent speeches and wise words of the hon. Member for East Antrim (Sammy Wilson) is never boring.
We should not forget that we are having this debate partly because the Government have delivered a referendum on our membership of Europe. While for many of us that may be cause for celebration, whatever our views on Europe, we should perhaps reflect on the fact that one or two people may have helped to cause our victory at the last election, which enabled us to deliver the referendum, and which may have resulted not just from our great manifesto, but from the wise words of the Scottish National party, which, at the time, said “Vote SNP to keep the Tories out of Downing Street.”
Much of the debate has been interesting, and I congratulate the Democratic Unionist party and the right hon. Member for Belfast North (Mr Dodds) on initiating it. It is important for us to hear people’s views on whether there should be a long or a short campaign, and whether it should be close to or far away from other elections in the United Kingdom. It is absolutely true that there is no date for the referendum, although some Members spoke as if they knew the date on which the Prime Minister had decided, and the basis on which we would consequently proceed.
Mr Wallace
I must get on, because I have only a few minutes in which to speak. I shall be dealing with what the right hon. Gentleman said earlier in any event.
It is important that we remember what this is really about. It is about trusting the people; it is about trusting the voters. No one in the Chamber has challenged the fact that members of the public will be able to distinguish between two elections. There is also the central allegation, coming predominantly from the Scottish National party, that we are not listening to the devolved institutions and that we do not trust or respect them. Let us remember that we have ruled out the dates of the Scottish Parliament and Northern Ireland and Welsh Assembly elections this year and in 2017. Not only that, we have respected the right hon. Member for Gordon (Alex Salmond)—
Mr Wallace
I am not going to give way to the right hon. Gentleman. He said on 12 January 2016 that it would not be right to hold the referendum unless it was at least six weeks after the date of the Scottish elections. He said that in Foreign Office questions, and we have absolutely listened to that point about the six-week period—[Interruption.] Of course it is not a big issue. Speaking from the Labour Front-Bench, the hon. Member for North West Durham (Pat Glass) said that it was correct—
Madam Deputy Speaker (Natascha Engel)
Order. The Minister has said that he will not give way.
Mr Wallace
It is absolutely right, as the hon. Member for North West Durham said—
Alex Salmond
On a point of order, Madam Deputy Speaker. The Minister is summing up from the Front Bench and he has made a direct reference to another Member. Is it not a matter of courtesy and respect in those circumstances to give way to that Member? Is not this typical of the lack of respect, not just to Members—
Madam Deputy Speaker
Order. That is not a point of order. It is a point of debate.
Mr Wallace
I could say that if the right hon. Member for Gordon had not made such a long speech, we might all have had more time to contribute to the debate and I might have had time to give way.
My hon. Friend the Member for St Albans (Mrs Main) made some true points about the views of the public—
Alex Salmond
It is. It is a matter of record that I conformed exactly to the Speaker’s advice during my speech. Would the Minister like to withdraw his no doubt inadvertent misleading of the House?
Madam Deputy Speaker
That is also not a point of order. This has been a good debate and people have had plenty of time to make their speeches, but the Minister has only one minute left. He has said that he will sit down at that point in order not to talk out the debate.
Mr Wallace
I think the right hon. Gentleman’s not wanting to listen demonstrates why he lost the referendum in Scotland.
The debate will now have to be curtailed, but the reality is that Members on both sides of the House want to trust the people. This Government have heard what has been said. No date has been picked, and no doubt all the contributions will weigh on the mind of the Prime Minister when he makes the decision on the date of the referendum. It is important that everyone engages in the debate on Europe in a positive way, whatever their view on it. I agree with some of the Members who spoke. It is important that people understand that the electorate are perfectly capable of distinguishing between elections for the Scottish Parliament and the Northern Ireland Assembly and the EU referendum.
Finally, on the point about purdah, the law states clearly that the devolved institutions may continue to discuss their domestic agenda without purdah. They can launch their manifestos and make announcements about hospitals and schools, and that will not be affected. Only on the issue of European membership will purdah come into effect, so they can carry on and have the debate. They can implement their legislative programmes and at the same time have a healthy debate about Britain’s future in Europe.
Question put.
Ian Paisley (North Antrim) (DUP)
On a point of order, Madam Deputy Speaker. Can you confirm for the House whether the Secretaries of State for Northern Ireland, for Scotland and for Wales voted in the Division and, if so, in which Lobby?
Madam Deputy Speaker (Natascha Engel)
I am afraid I cannot do so at this short notice but, as the hon. Gentleman knows, it will be a matter of public record shortly when Hansard publishes the results of the Division.
Housing: Long-term Plan
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
18:49 - The House divided: - Ayes: 15 / Noes: 274 - Question accordingly negatived.
Tim Farron (Westmorland and Lonsdale) (LD)
I beg to move,
That this House believes everyone deserves a decent, affordable home to live in; regrets that many people are priced out of the communities in which they grew up due to rising house prices and rents; acknowledges the achievements of the Coalition Government in implementing Help to Buy, bringing empty homes back into use and increasing support for self-build; condemns the present Government’s housing reforms which will lead to fewer new affordable homes for rent and breakdown in communities by selling off affordable homes with no guarantee of replacement; further notes their devastating impact on supported housing of the most vulnerable including those with learning disabilities; recognises the need for a huge increase in the supply of homes due to decades of under-delivery by successive governments; notes that an increase in apprenticeships and other skills training within the construction industry is required to meet that need; further notes the particular challenges of affordable housing in rural areas; regrets that the average cost of a home in London is now over £500,000; endorses the proposal of London Mayoral candidate, Caroline Pidgeon, to convert the Olympic precept into a funding stream that would enable 200,000 new homes to be built in London; acknowledges the benefits of building sustainable homes; and calls on the Government to set out a long-term housing plan to meet the housing needs of future generations which includes lifting the borrowing cap for councils and at least ten new garden cities.
Nothing robs people of their freedom more than poor housing, unaffordable housing or insecure housing. Housing is fundamental to our liberty and it is the entry point to a civilised society, yet despite being one of the world’s richest countries, we have a housing crisis in Britain that stunts freedom and crushes aspiration for many millions of people who want nothing more than to have a decent, secure and affordable place to live.
House prices are now almost seven times average incomes. In my constituency in Cumbria, house prices are 10 times average local incomes. Home ownership is falling, especially among those below the age of 40, and a majority of those who manage to get on the housing ladder have had to rely on the bank of mum and dad. Britain needs an approach to housing that provides people with a genuine opportunity to access the housing they need at an affordable cost, but this is not happening for too many people. That is why I have made housing a key priority for the Liberal Democrats and why we have chosen to talk about housing in our first Opposition day debate of this Parliament.
For decades successive Governments have not built enough homes, leaving the UK with a crippling undersupply and an industry producing only around half the houses that we need. This desperate lack of supply has fuelled rising house prices, with millions now priced out of the communities in which they grew up or the places in which they work. At the same time the lack of affordable housing to rent is at crisis point, with 1.6 million households on the social housing waiting lists and 100,000 homeless children, the most vulnerable people in our society, being let down. I wonder whether it is a coincidence that those sections of society most in housing need are those sections of society least likely to cast a vote.
None of this will be fixed by accident or by blinkered ideology. Put simply, we need house building on a scale not seen since the post-war housing crisis was alleviated by Harold Macmillan, whose wise, effective and dogma-free pragmatism saw the building of 300,000 homes a year—the same number, incidentally, as Liberal Democrats have been calling for and continue to call for to tackle our present housing crisis. However, the Government have not yet demonstrated a Macmillan-style commitment to solving this crisis. They have introduced a short-term target of building 1 million homes by 2020, but even that falls well short of need. Of course, setting even an inadequate target is no guarantee that that target will be met.
As a matter of urgency, the Government must give us a long-term plan for fixing the problem of housing supply. We need to know how many homes their current strategy is set to deliver in 20 or 30 years’ time and how those homes will be delivered. Unless we build enough homes to meet demand year after year, housing costs will spiral further out of reach. For those with aspirations of getting on to the housing ladder, their dream will become less and less likely to become a reality.
The coalition Government made a good start on tackling the housing crisis. They inherited a situation in which house building across the UK had dropped to its lowest level since the 1920s, and a waiting list that had increased to 1.7 million in England alone—even higher than it is today. We brought 70,000 empty homes back into use, released enough public sector land for more than 100,000 homes and oversaw the building of 700,000 more homes. We made a start on Ebbsfleet garden city and got rid of 1,000 pages of planning guidance. There was a sincere commitment on the part of the coalition to bring housing back from the brink and to provide homes to buy and to rent. Before anyone jumps in, let me add that that record was far from perfect, but it stands out as a rare example of where a Government took real action to tackle housing need.
Since May 2015, however, without the influence of the Liberal Democrats, the Government have moved in the wrong direction. They have brought forward a Housing and Planning Bill that will all but destroy social housing, that will prevent the building of affordable homes for rent and that merely tinkers around the edges in an attempt to increase supply, rather than pushing forward the ambitious, radical plan for housing that Britain desperately needs.
Andy Slaughter (Hammersmith) (Lab)
Before the hon. Gentleman gets carried away with this Manichean view of how wonderful things were then and how terrible they are now, let me point out that he is right in the sense that the income needed to buy shared ownership housing in London in April this year will be £90,000. However, under the coalition Government, it was £85,000 for three bedrooms or more, which is not really affordable either, is it?
Tim Farron
The hon. Gentleman makes the point that I made a moment or two ago, which is that the coalition’s record was far from perfect. What I would say, however, is that those years were the only time since the 1970s that a Government saw a net increase in the social housing available. It was a matter of a few thousand houses, which is small beer, but that is significantly better than the record of the previous Administration. Perhaps one of the greatest shames that hangs over the 13 years of the Labour Government is that Labour somehow managed to build fewer council houses than Margaret Thatcher, which is quite an achievement.
The reality is that the Housing and Planning Bill will tinker around the edges. It will not bring forward the ambitious, radical plan that Britain desperately needs. Indeed, it has redefined what an affordable home happens to be—apparently, it would include houses of £450,000 in London under its starter homes initiative. There is nothing wrong, by the way, with the idea, at least, of starter homes, but they are for better-off renters. Shelter has calculated that someone would need a £40,000 deposit and a £50,000 salary, and much more in London, to afford one.
There is a place in the market for starter homes, but the way they are being introduced has three fundamental flaws. First, they will not be kept affordable in perpetuity so that future generations can benefit, and the lucky few who get one will make a huge profit. Secondly, they will be instead of, not as well as, other forms of affordable homes. Thirdly, they will be exempt from the community infrastructure levy and section 106 requirements.
James Cartlidge (South Suffolk) (Con)
Is the hon. Gentleman aware that although a discount in perpetuity is very attractive in theory, the problem has been that mortgage lenders have not been so keen and have, historically, insisted on quite large deposits for those rare schemes where such a discount applies? That would be a barrier.
Tim Farron
The hon. Gentleman makes a fair point. In my part of the world, many of our homes are local-occupancy and have covenants that affect their long-term value.
If this is the Government’s only way of trying to tackle this problem, they will not succeed. Their flagship policy on providing affordable homes is narrowly based on a group of homes that are really affordable only for people at the higher end of the private rented sector. That would be fine if it were part of a panoply of offers, but it is not. Those houses are provided at the expense of more affordable homes that would have been provided through section 106 instead. That is why my criticism is fair, and it stands. The houses that are built under this scheme will be exempt from the community infrastructure levy and from section 106 requirements. That means that the families who live in them will, quite rightly, make use of the schools, the roads and the infrastructure in those communities, yet the developers will not have paid a penny to contribute to the upkeep of any of those parts of the vital local infrastructure.
The Bill fails to guarantee that homes sold off under the right-to-buy extension to housing associations will be replaced, and we know from experience that that is unlikely to happen. The hon. Member for Hammersmith (Andy Slaughter), who is now leaving the Chamber, criticised the coalition. He could have criticised the fact that so far only one in nine of the homes sold off since 2012 have managed to be replaced. Even a Government who were keen to replace homes that are sold off find it hard to do so.
Mr Nick Clegg (Sheffield, Hallam) (LD)
My hon. Friend is making a compelling argument. Does he agree that there is an ideological irony in the right-to-buy scheme in that what are, in effect, charitable organisations are being, in some sense of the word, renationalised by this Government?
Tim Farron
That is a very interesting observation. Given that this will be counterproductive in trying to tackle the housing crisis, it can only be ideological. It is massively ironic, as well as totally and utterly counterproductive, that outfits such as Lakeland Housing Trust, which looks after 100 or so affordable homes, many of which are gathered through bequests from very well-meaning, decent people who want affordable homes in their communities, will be put under Government diktat that means that, in future, we will be unable to recruit the benefactors who will enable us to provide affordable homes in places such as the Lake District.
The right-to-buy extension is being funded through the sale of high-value council houses. That is an outrage. It will again reduce the homes available for social need without a guarantee of replacement. If this is to happen, councils should be allowed to retain 100% of the sales of those homes to reinvest in housing in their communities —but they will not be permitted to do so.
The Government have stopped councils and housing associations from building thousands of homes that they were planning to build. A 1% cut in social rents is a good thing if it is done fairly, but the Government did not do it fairly; they chose instead to be generous with other people’s money. A rent cut is right, but to make housing associations and the often vulnerable users of their services pay for it is pretty mean and massively counterproductive. In Hampshire, for example, 400 fewer new homes will be built than planned, as a direct result of this policy. At a time when councils should be expanding their building projects, they are being forced to cut back. Consequently, the housing crisis is set to get even worse. At a time when new homes should be encouraged from every direction, the Government are relying on a broken market to deliver, skewing the building of new homes away from being affordable. While we should make home ownership an option for as many as possible, we also need to ensure that there are homes available for those for whom that is not within reach.
Rural areas such as mine in Cumbria face particular challenges in housing. Land for building is hard to find.
Julian Knight (Solihull) (Con)
The hon. Gentleman has been talking about fewer homes being built as a result of the change to the relationship with the housing associations. When four leaders of housing associations were before us in the Communities and Local Government Committee, I asked them whether more or fewer homes would be built as a result of these changes. Three out of four said that more would be built. Would the hon. Gentleman like to comment on that?
Tim Farron
The idea that the income and borrowing of a housing association is reduced and it can then therefore build more utterly beggars belief. That is not the experience of housing associations in Cumbria or those anywhere else that I have spoken to. I would be very keen to look at the Select Committee report and see the angle that those folks come from.
Simon Hoare (North Dorset) (Con)
I have had conversations with housing associations in my constituency, two of which are merging. Housing associations now face a challenge and an opportunity to scale up, make back room efficiencies and continue to drive delivery. That is what is going to happen. We are not going to see the terrible scenes that the hon. Gentleman seems to be suggesting. The housing associations are going to rise to the challenge, as evidenced by my hon. Friend the Member for Solihull (Julian Knight).
Tim Farron
The hon. Gentleman is basically saying, eloquently, that, despite the Government’s attack on housing associations, they will somehow muddle through. Many of them will, indeed, have to increase their efficiency; otherwise, people will be hit, including those in supported accommodation, young people who are attempting to get back on the straight and narrow after a difficult start in life, and people living in sheltered accommodation. Others will also be affected by the lack of investment resulting from the reduced income. Good, decent, responsible housing associations will not just sit and grump and sulk; they will make the best of things, but they will do that despite the Government, not because of them.
Tom Brake (Carshalton and Wallington) (LD)
May I update my hon. Friend on the conversation I had with a local housing association? It had put in place investment plans to build new homes, but all of a sudden those plans have been blown apart because their income is going to fall as a result of the rent cut. It therefore has to readjust its investment plans downwards.
Tim Farron
My right hon. Friend makes a perfect point that is relevant to my experience in Cumbria. None of this is to say that a reduction in social rents is a bad thing—it is a good thing—but, as I have said, there is something utterly mean-spirited and counterproductive about being very generous with other people’s money.
Rural areas such as mine in Cumbria face particular challenges in tackling the issue of affordable housing. If we consider the fact that some 8% of homes in rural areas are affordable, compared with 20% across the country, we will realise how difficult it is for children who grow up in rural communities to cling on, make a living there and raise their own families when they get older, and, indeed, for key workers to live in the areas in which they work.
On the positive side, when councils have been empowered and supported to deliver homes, they have proven that they can do so. South Lakeland District Council has delivered hundreds of new affordable homes, bringing the waiting list down by 18% in a single year. It is a fantastic example of a council with the right priorities delivering to meet the needs of its community. So many communities are under threat. The growth in second home ownership means that communities can be hollowed out as the result of a diminished resident population and the subsequent loss of schools, post offices, shops and public transport links.
The increase in stamp duty on the purchase of second homes is good news, but mostly for the Treasury. When communities such as Hawkshead have roughly 50% second home ownership, why cannot those funds be redirected to those communities, to support local services and to help provide new affordable homes? Why will the Government not support Liberal Democrat plans to allow second homes to be charged double council tax, to tackle the immense damage that excessive second home ownership does to towns and villages in places such as the west country, Northumberland and Cumbria?
Councils have a valuable part to play in providing the homes we need to tackle the crisis of supply. They could play an even greater role in providing homes of all tenures, by which I mean not just social homes, but homes for sale and private rent, improving the quality of homes in that sector. Yet councils are being hit with cuts and extra taxes from every side by this Government in what appears to be a war of attrition aimed at putting councils out of the business of providing homes.
Councils are not the whole answer to the housing crisis, but they are part of the solution, as are starter homes. We must trust our democratically elected councils, which know and understand local needs, to deliver for their communities. That is why we are calling on the Government to lift the borrowing cap to enable councils to borrow to build. That could lead to an extra 80,000 homes over four years, each providing a secure home for a family to bring up their children. That has been called for by the London Chamber of Commerce and Industry, the Local Government Association and others. Most solutions to the housing crisis are long term, but where immediate action can be taken, the Government surely must take it. Ideology must not be allowed to get in the way of supplying the homes that are needed. It is time to trust councils again.
Mr Jim Cunningham (Coventry South) (Lab)
I am sure the hon. Gentleman remembers as well as I do the days when parties stood for election with housing targets for the number of council houses that they would build each year in government. More importantly, I agree that allowing councils to borrow to build council houses would take the pressure off prices for young people who want to buy homes and get a start in life. There is an imbalance in relation to housing.
Tim Farron
The hon. Gentleman makes a great point. Demand and supply are at the heart of our housing crisis. All the evidence suggests that it just makes sense to provide more social housing—people who believe in the free market should understand this—because it will take the heat out of the bottom end of the bought market and make houses more affordable.
Mr Clegg
On my hon. Friend’s point about giving councils greater borrowing powers—this also relates to his earlier point about borrowing powers for housing associations—does he agree that any entity, whether it is a housing association or a council, can be given the right to borrow money only if it has a reliable income stream? That is why when the previous coalition Government cut social rents, they gave a guarantee to housing associations that their revenues would remain stable for a decade and a half. That reliable revenue stream has been torn apart by the new Government.
Tim Farron
It rather plays into the pattern over the last nine months—since the coalition Government ended and the Conservatives came into power alone—of short-termism and a lack of a long-term thinking. The long-term plan appeared to leave office with my right hon. Friend. Instead, we see short-termism over green energy cuts, for example, and over providing the certainty that businesses of any kind need to plan. That includes housing associations, which are charities but which have, in many ways, the acumen and the outlook of the private sector. If we reduce their income, their certainty and their confidence in their balance sheets, they will build less and provide fewer services. Society as a whole will end up picking up the cost for vulnerable people whom we cannot support, who become more costly to society in later life.
Other reforms are needed to boost supply on the scale that is required. That cannot be left to the social housing market or to the starter homes initiative. That is why we are calling for at least 10 new garden cities in areas where there is local support to create thousands of new homes in thriving and sustainable communities with effective transport links and schools, providing hundreds of jobs in the process. In addition, we are calling for many more garden villages—not building in people’s backyards, but building beyond people’s horizons, with consent, and giving a sense that there is a long-term answer to the crisis. The Government must create the conditions for those garden cities to work, by empowering councils to buy land more cheaply and providing incentives to make the plan a success.
Marcus Fysh (Yeovil) (Con)
Given that in my area of south Somerset the council’s local plan has failed to deliver a five-year housing land supply, would the hon. Gentleman ally with me in searching out a site for a suitable garden town in south Somerset to provide the infrastructure and homes that he is talking about?
Tim Farron
The hon. Gentleman is talking about creating more garden towns, and it is important that we take a cross-party approach to creating more garden villages, garden towns and garden cities. The danger is that if somebody comes up with bold ideas, others will knock them down. I will not play party politics, but towers and towers of Conservative leaflets have been delivered across south Cumbria over the past 10 years, all aimed at stopping the building of affordable homes. It took bravery from my Liberal Democrat colleagues on the council to stand up against that and build affordable homes. As a result, hundreds and hundreds of families have a place to call their home. Sometimes it is right for local and national Governments to do the right thing, even when it is difficult.
Julian Knight
The hon. Gentleman is being most generous in giving way. He mentions how parties are opposing the local council in his own constituency. As soon as we try to build anything in my constituency of Solihull, we have the same from the Liberal Democrats, who always try to oppose on almost every issue. Will he communicate with his grassroots—what remains of them—and let them know that they should in future get on board to produce more homes?
Tim Farron
I would be very interested to look at the detail of that. I am also keen to recognise that we have to take the community with us, which takes bravery at every level. It sometimes seems that we have to tackle this issue, as Harold Macmillan bravely did in the 1950s, by not looking at it from an ideological point of view and by not scoring points. I would be pretty surprised if anybody on the Labour or Liberal Benches did that back in the 1950s. There are more people on the Liberal Democrat Benches today than there were on the Liberal Benches in the 1950s, which is progress. [Interruption.] There may have been three Members, depending on whether or not Megan Lloyd George had left by then.
The point is simply that if we are brave and do not look at this issue through an ideological prism—such as by saying that we can move forward only by having all social rented housing or by flogging off social rented housing—we can take people with us and minimise the number who will oppose us in the planning process. However, if we have a Government, as sadly we do, who look at this issue purely through an ideological prism, rather than by asking how we can solve the crisis, we will always land ourselves with opponents.
Mims Davies (Eastleigh) (Con)
I note the hon. Gentleman’s point about the long term. The lack of a local plan is a long-term issue in Eastleigh. The council, which is led by the Liberal Democrats, has not taken people with them and we have been without a plan for five, or nearly six, years. Lots of people are unhappy. On a party political point, for the council to allow the first options paper to come out on 23 December, when people were doing their Christmas shopping—he says that councils must take people with them on this important issue—was disingenuous at a local level.
Tim Farron
That is a staggering intervention from an hon. Lady who represents a constituency with one of the best housing records in the country. I remember taking part in the by-election in 2013—talk about bravery. It was brave of the council, led by a party that was defending a seat, to pass, weeks before polling day, exactly the sort of long-term local plan that she mentions because that was the right thing to do. For the next few days, Tory leaflets were full of criticisms of the Liberal Democrat administration for having the decency to build homes. She needs to look at her party’s previous election literature in the constituency that she temporarily represents.
It is time for the Government to take action. We cannot simply rely on the dysfunctional market to deliver the homes we need. Even in the boom years of 1997 to 2007, the market delivered at best only 148,000 new homes each year, which is far lower than the Macmillan—or the Liberal Democrat—standard. The problem we face is not a result of the recession; it is a structural problem that will be solved only by intervention. The current system works for those who have, but not for those who have not. Britain should be a place where affordable housing is available for all, to rent or to buy, no matter the circumstances of their birth, but Britain is not such a place. It is time to put ideology and party politics aside and to build the homes that Britain needs.
The Minister for Housing and Planning (Brandon Lewis)
Once again, I thank an Opposition party—a different one this time—for choosing housing as the subject of its debate. We are a one nation Government, and our goal is to have a Britain where everyone who works hard can have a home of their own. That ambition is possible only because of our tough action to drive down the deficit, and it is conceivable only because of the progress we made during the last Parliament. I therefore want to start with a word of thanks not for the hon. Member for Westmorland and Lonsdale (Tim Farron), who refused to serve in the coalition Government, but for his party, which did, and for his colleagues who played their role in helping to turn around the broken housing market we all inherited in 2010.
I just hope that this is a debate that the hon. Gentleman will remember. I say that because at his party conference in September, he declared:
“Housing is the biggest single issue that politicians don’t talk about.”
That is news to me and, no doubt, to many Members across the House, because this is the eighth debate about housing in recent months, and that is not including the debates on the Housing and Planning Bill. On none of those occasions did we hear a contribution from a Liberal Democrat. On 10 June 2015, we had a debate on housing; on 24 June, we had a debate about leaseholders and housing association ballots; on 14 July, we had a debate about shared ownership housing; on 15 July, we had a debate on housing supply in London; on 9 September, we had a debate about affordable housing in London; on 4 November, we debated prefabricated housing; on 15 December, we debated housing again; and on 27 January 2016, we debated housing benefit and supported housing. Not a single Liberal Democrat took part in any of those debates. Even during the passage of the Housing and Planning Bill, the hon. Gentleman was the only Liberal Democrat who bothered to speak on Second Reading and on Report, and they did not take a seat on the Committee—not once. If the hon. Gentleman believes that politicians should start talking about housing, I suggest gently that he should give his lectures closer to home.
Brandon Lewis
The right hon. Gentleman will appreciate that, as the hon. Member for Westmorland and Lonsdale said, we have built more social housing in the past few years than was built in the entire 13 years of the last Labour Government. In fact, we built more social housing in 2014-15 than was built in those 13 years.
Members may recall that during the last Opposition day debate on this matter I said that there was an appropriate film for the return to his old brief of the shadow Housing Minister, who I notice is missing yet another housing debate. I said that it was rather like the Soviet version of “Back to the Future”. It would be unfair to deprive the hon. Member for Westmorland and Lonsdale of a cultural reference of his own. Hon. Members will, by now, have realised that I like to use the odd film analogy. On account of his completely forgetting that politicians do occasionally talk about housing, I suggest a film from 2007 called “Goldfish”. It may be a little-known film—I admit that it is hardly a box office smash—but it is highly rated by the few people who have bothered to watch it. I admit that the plot bears little relevance to today’s debate, but if you will bear with me, Madam Deputy Speaker, I can explain its relevance. Crucially, there were just eight people in the official cast.
Most hon. Members will know that housing issues are given great prominence in this House, and that is entirely welcome.
Julian Knight
The Minister just mentioned 2007. Is he aware that in 2007, under a Labour Government, housing associations and local authorities built 12% of the new housing stock? Last year, the proportion was 22.6%.
Brandon Lewis
My hon. Friend makes a good point. To be fair to him, the hon. Member for Westmorland and Lonsdale referred to that fact. We should be proud that the coalition Government were the first Government in a generation to see an increase in affordable housing by the end of a Parliament, unlike the previous Government. My hon. Friend highlights the work we are doing and the changes we are making that are seeing housing supply go up. I will come to that in a few moments.
The Government are determined that everyone who works hard will be able to have a home of their own. After all, 86% of the population want to own their own home. Whoever you are and wherever you live, we want to support your ambition and aspiration to own your own home. That is not just a manifesto commitment of the Conservative party; it is an aspiration that is shared by the vast majority of the British public. That is why we are embarking on the largest Government house building programme for some 40 years. We aim to build a million homes by 2020 and to help hundreds of thousands of people to take their first steps on to the housing ladder. We will consolidate and expand on the progress that we have made since 2010, when we inherited a housing market on its knees.
Let me remind the House what our inheritance was—our shared inheritance: a burst housing bubble, an industry in debt, sites mothballed, workers laid off, skills lost, a net loss of some 420,000 affordable homes, rocketing social housing waiting lists and a collapse in right-to-buy sales, with just one home being built for every 170 sold.
Those failures were accompanied by a post-war low in house building by councils, a sustained fall in home ownership—the shadow Housing Minister was quite “pleased” about that, if I remember his quote correctly—and chaos in the regulation of lending. Underpinning that gigantic sorry mess was a planning system in disarray, presiding over the lowest level of house building since the 1920s with just 88,000 starts. The hon. Member for Westmorland and Lonsdale may struggle to remember that, but I know that the right hon.—and absent—Member for Wentworth and Dearne (John Healey) will have no such problem, because he was the Minister in charge at the time.
It is terrifying to think of where we would be today if we had not gripped those problems and applied the right solutions. In the previous Parliament, the number of first-time buyers doubled, as did the number of new homes built and public support for new house building. We helped more than 270,000 households buy a home with Government schemes, provided more than 270,000 affordable homes for rent—with nearly one third of those in London—and we were the first Government since the 1980s to finish their term with a higher stock of affordable homes.
We spent £20 billion on our affordable housing programmes, achieving the same rate of delivery with half the grant required by Labour policies. We built more, it cost less, and we did it faster. As the hon. Member for Westmorland and Lonsdale said, twice as many council homes were built in the five years of the coalition Government than during 13 years of Labour, and I reiterate that his party should be rightly proud of its role in achieving that progress.
Mr Clegg
We are indeed proud of that record, and I thank the Minister for extolling it so beautifully. Does he agree that it is a radical departure from that record to move from Help to Buy, which the coalition Government used to spread the opportunity to buy a home to many people across the county, to right to buy, which will help only a tiny fraction of people and do nothing for those facing very high rents, or build more homes in this country? Is that not a radical departure from the preceding excellent record that the Minister has been extolling so well?
Brandon Lewis
On this occasion I am afraid I have to “disagree with Nick”. We are expanding Help to Buy, as I will say in a moment, and I do not think that giving 1.3 million more people the chance to own their own home is a small percentage. A lot of people have the right to aspire to that, and we will support them in their aspiration.
Our plans for housing are delivering, but I agree that we must do more. We are still dealing with Labour’s deficit in public finances, and we must now tackle the housing deficit with that same determination. Both are required to ensure that this is the turnaround decade. We must build more, but this is not only about the number of new homes; we are also determined not just to halt, but to reverse the slide in home ownership that began in 2003, which the shadow Housing Minister said was not such a bad thing. With so many people kept off the housing ladder for so long, we are determined to deliver our promises quickly. That is why in the spending review the Chancellor announced the biggest investment in housing for 40 years. We are investing in what matters most to young people and British families, with £20 billion set aside for housing.
Our work includes major investments in large-scale projects, including garden towns in places such as Ebbsfleet, Bicester, Barking Riverside and Northstowe, and £7.5 billion to extend Help to Buy. The equity loan scheme through to 2021 will support the purchase of 145,000 new-build homes. I notice that the new adviser on housing to the Labour party wants to end that, so perhaps the shadow Minister will say whether Labour is supporting the end of Help to Buy, as its adviser has suggested.
Last week we doubled the value of equity loans in London to 40%, and 50,000 people have already registered their interest. We will ensure that the scheme continues, and we will deliver on our promise. A quarter of a million people are already investing in our Help to Buy ISAs so that they can save for a deposit. The brand new Help to Buy shared ownership scheme will deliver a further 135,000 homes, by removing many of the restrictions that have held back shared ownership. For example, an aspiring homeowner in Yorkshire could get on the housing ladder with a deposit of just £1,400. In the south-east, it will cost under £2,500, and in London, £3,400. Those possibilities will be open to anyone of any occupation who earns under £80,000, or £90,000 in London. Our plans will improve the housing market across all tenures: a £1 billion housing delivery fund to support small and custom builders; £8 billion to help build 450,000 affordable homes; and 200,000 starter homes available to young first-time buyers with a 20% discount at least. We make no apology for this innovation in the delivery of affordable homes—it is what people want, with 86% of our population wanting to buy their own home—and for making sure that they can reach that aspiration. The reality of home ownership can be within their grasp. It is right that we help to make their aspiration more affordable.
Mr Richard Bacon (South Norfolk) (Con)
The Minister talks about the many excellent things the Government are doing. The right hon. Member for Sheffield, Hallam (Mr Clegg) did not know it, but he is right that the Government have made a radical departure. Does the Minister agree that the Government are providing legislative support to self-build and custom housebuilders, building on the, if I may say so, excellent Self-build and Custom Housebuilding Act 2015 with further measures that will require local authorities to provide service plots for people who want to build their own dwelling for social rent and for ownership?
Brandon Lewis
My hon. Friend makes a very good point, particularly on the excellent Self-build and Custom Housebuilding Act 2015. He put a great deal of passion and determination into that. He is delivering something that the Housing and Planning Bill builds on and underpins to ensure a real step-change. It will help not just by providing people with more opportunities to own their own home, but by providing an opportunity for the reinvigoration of small and medium-size local builders that we all want to see. A few weeks’ ago, we announced an expansion of direct commissioning, which will go even further to deliver that.
It would be simply old-fashioned political dogma to insist that Governments should intervene in the market only to support renters, when most people want to buy. To persist with an outdated mind-set risks creating a generation of young people exiled from home ownership; young people worse off than their parents, compelled to leave communities they love and grew up in, and forced to decline good job opportunities all because local housing is too expensive. That is bad for our economy and bad for society. Starter homes have the potential to transform the lives of young people. Just think about it: a first–time buyer able to get at least a 20% discount from a new home with just a 5% deposit. That really does change the accessibility to affordable housing for thousands more people. Starter homes will help young people and ensure that more homes are built.
We must not fall for the lazy assumption that there is a contradiction between supporting the dreams of homebuyers and ensuring that more affordable homes are built. Nowhere is this lazy thinking clearer than in the opposition to our extension of right to buy for housing association tenants. In the previous Parliament, we improved dramatically the right to buy for council tenants. Some 47,000 tenants seized the opportunity, with more than 80% of those sales under the reinvigorated scheme, and yet 1.3 million social tenants in housing association properties continued to receive little or no assistance and continued to be trapped out of ownership. That cannot be right. We promised the electorate that we would end this unfairness and we have. Housing associations have also recognised this inequity. They have signed an historic agreement to end it, and I congratulate them on coming forward with that offer. They are giving tenants what they want: an option to buy their home and a ladder to real opportunity. I am delighted that we have five pilots already under way across the country. Every property sold will lead to at least one extra property being built.
Tim Farron
The Minister refers to housing associations and the National Housing Federation’s involvement in discussions in putting together the Housing and Planning Bill. Will he confirm that this agreement with housing associations is voluntary? Will he confirm that housing associations that look at the needs of their community and decide, on balance, that the right to buy would be a negative for that community, will be allowed to maintain that position?
Brandon Lewis
It is a voluntary agreement. The Housing and Planning Bill does not legislate for that. It underpins the agreement by providing the legal ability to pay the housing associations for discounts. Exemptions are outlined in the voluntary agreement, so I suggest the hon. Gentleman reads it. In rural areas, for example, housing associations will be able to use the exemptions. After we reinvigorated the scheme in 2012 for council tenants in London, 536 additional homes were sold in the first year, and 1,139 were built. For clarity, that is two-for-one replacement. That success has the potential to be repeated on a much grander scale. Where buyers can buy, builders will build, and we can support the aspiration of hard-working people. That will be true for right to buy, starter homes and Help to Buy. Those plans are at the heart of our ambition to build 1 million more new homes, but we have made it clear that we must do more in all areas of housing supply.
Tim Farron
After this, I promise to leave the Minister alone for a while. Is he aware that one in three homes that have been bought under right to buy are now privately rented, so they do not help people to get on the housing ladder? They help other people to make a living from renting out property. What will he do to ensure that any homes that are sold under right to buy belong to people who need an affordable home, and do not end up slipping into the private sector, becoming less affordable and more insecure?
Brandon Lewis
With those kind words, I am happy for the hon. Gentleman to intervene, as it gives me an opportunity to highlight another good scheme that the Government have introduced. With the voluntary right to buy, and with right to buy more generally, I defend the homeowner’s right to do with their home what any other homeowner can do. I do not know why he thinks that a particular part of society that owns their own home should have fewer rights than he or any other hon. Member has in a house that they own. After that short period of five years, when that home is protected and has to be that person’s home, it is absolutely right that they should have the same rights as any other homeowner. It is disgraceful that he wants to stop that.
James Cartlidge
The former Deputy Prime Minister has extolled the virtues of Help to Buy, which is fine, but there is absolutely nothing to stop someone, after purchasing a Help to Buy home, renting it out should their circumstances change, which would be the same for anyone buying on the open market.
Brandon Lewis
My hon. Friend highlights an important point. What the hon. Member for Westmorland and Lonsdale seems to be asking for with the right to buy and, to an extent, in the arguments that he made about starter homes, is second-class ownership, and I do not support that. If someone owns their home they should have the same rights as anyone else. It is sometimes tiresome to hear people who own their home explain why we should not let someone else have the chance to do so. The Housing and Planning Bill is part of our work to drive up the housing supply and home ownership, and it will give house builders and local decision makers the tools and confidence to deliver more homes.
Mr Bacon
Before the Minister moves on, this issue riles a lot of us, as it riles him. The hon. Member for Westmorland and Lonsdale (Tim Farron) made the point that buying a house and renting it out at some point in the future was bad per se. At the same time, we are supposed to take measures to encourage the private rented sector. Is it not a good thing if more houses are made available for rent? Particularly in the light of what has happened with City of London pensions for 50 years, it is hardly surprising that people are looking for good investment alternatives to safeguard their future and provide more housing for rent.
Brandon Lewis
It is always good to see the institutional money to which my hon. Friend refers investing in the British property market and playing its part in driving up housing supply. I am keen to see, as I have said before in the House, an increase in supply across all tenures. We have to make sure that we build the right homes in the right places, with the right tenures for the people who need and want those homes.
Mr Clegg
The Minister is generous in giving way. On the point about extra supply, he said—I do not quite know which schemes he was referring to—that in some London schemes there is evidence of a 2:1 replacement, rather than the wider picture of a 1:10 under-replacement. Will he tell me a little more about that scheme, and does he believe that when the right to buy is extended from the five pilot areas, once a property is sold it will be replaced twice over in all the areas where the right to buy applies?
Brandon Lewis
The point I was making was that in the first year’s sales of right to buy homes in the reinvigorated scheme in London, properties have been replaced in the timeframe at a ratio of 2:1. That is a fact. The one for nine to which the right hon. Gentleman refers does not compare like-for-like figures—it is a totally false representation. On the wider scale, there is 1:1 as well. I would go further, as this is not about replacement. Once a home has been bought by someone who lives in it for five years, it does not disappear from the housing stock. The homes that are built are extra homes that increase the housing supply. Under the voluntary agreement, housing associations will deliver one extra home at least for every home that is sold. The Housing and Planning Bill, which the hon. Member for Westmorland and Lonsdale has consistently opposed, would ensure that the planning system plays a part in helping to drive up an increase in supply.
In the last Parliament, we reformed and streamlined the failing top-down planning system we inherited. Today, local people are in control and developing their own plans for house building, while the planning system is faster and more efficient.
Brandon Lewis
I am sorry the hon. Lady thinks giving that power to local people is rubbish. I think that local people are the right people to make these decisions.
Since 2010, the number of planning permissions for new homes has risen by 50% and the number of local plans has more than doubled. I gently say to the hon. Member for Westmorland and Lonsdale that my hon. Friend the Member for Eastleigh (Mims Davies) was absolutely right and he was wrong: the local authority in Eastleigh does not have a local plan. It should do the right thing and get one in place. That is what she is fighting for on behalf of her residents.
I know that Members want building on brownfield land to be the first choice. Under this Government, brownfield land will be prioritised and new homes will be built near existing residences so that the green belt and local countryside is protected. A new statutory register of brownfield land will provide up-to-date and publicly available information about land suitable for housing. Planning permission in principle will drive that further. Our estate regeneration programme will transform rundown bad estates across the country, and 40 brownfield housing zones, including 20 in London, are also being created.
We want planning permissions in place for 90% of these sites by 2020 so that we can regenerate eyesores and derelict land to create modern homes for the next generation. We will change the parliamentary process to allow for urban development corporations, and smaller firms in particular will benefit from quicker and simpler ways to establish where and what they can build. We are supporting smaller house builders by directly commissioning the construction of new homes on publicly owned land. Our pilot schemes will see work start on up to 13,000 homes on four sites this year, with 40% of them being starter homes. Nothing on that scale has been done for 30 years. Our new approach will support smaller house builders and new entrants that are ready to build but lack the resources and access to land. We will help them. Currently, the top eight house builders provide 50% of all new homes, and we are determined to change this ratio, as we build more homes this Parliament.
Great progress has been made since the great housing crash under Labour. We took the tough decisions, in coalition and then in a Conservative Government, to tackle the deficit, help homebuyers and get Britain building again. We reformed the planning system and ensured that local people were in control of building the homes they needed, and we ensured that new homes were built across all tenures. In 2010, the housing market was in danger of collapsing altogether, and house building had almost stopped. At the same time, public opposition to new housing was enormous, because people were sick and tired of being bossed from Whitehall. Dramatic improvements have been made in all these areas.
Problems that fester for years, however, take a long time and great effort and commitment to solve. There is still a profound need to build more homes in our country across all tenures to support the aspirations of people who want to buy their own home. Everyone in the Chamber and in public life has a role to play in making the case to local communities for seeing these homes built. This will be a defining challenge of our generation. That is why the Government will be unwavering in their commitment to deliver a better housing market—one that secures our economic recovery, boosts productivity and rebalances our economy. That is a prize worth fighting for. Its economic and social legacy could last far beyond any of our political lives.
These plans are about working people—the people we all serve. It is about their hopes, their dreams, their plans for their and their families’ futures, and their confidence that their hard work will be rewarded. That must be our motivation. We are one nation—north and south, renters and buyers, young and old. Whoever and wherever they are, anyone can walk through the door of opportunity and into a home of their own.
Teresa Pearce (Erith and Thamesmead) (Lab)
I am pleased that the issue of housing has once more been brought to the Chamber. It seems to be virtually a weekly occurrence now, and I am glad about that, because the housing crisis is one of the greatest challenges that has faced our country in recent times.
Members across the Chamber will know the impact housing has on our constituents’ lives. My advice surgeries, my inbox and my office phone are always busy with the problems of people suffering from the housing crisis: rising rent costs; poor standards in the private rented sector; ever-increasing homelessness—statutory homelessness and rough sleeping—across the country; a Government committed to seeing an end to the social housing sector as we know it; fewer homes built than at any time since the 1920s; and a generation of young people priced out of the property market.
Julian Knight
The hon. Lady mentions the social housing market, so would she like to explain why, in 2001-02, the number of homes completed by local authorities was only 0.1% of the total? Moreover, that record continued from 2001 right the way through to 2007, so will she explain why?
Teresa Pearce
When figures are quoted on social housing, it is often council housing that is being talked about rather than the full social housing register, which includes housing association properties. When we have these debates, we trade statistics back and forth every time, but the problem is that trading statistics does not build homes and it does not take people off the housing waiting lists. Simply saying “You did this, but we did that” will not help anybody.
Mr Bacon
I completely agree with the hon. Lady that trading statistics does not help. I have listened to a lot of housing debates over the last three or four years, so I know that most of the debate has been of that ilk—and it is very unhelpful. Will she therefore elevate the debate by explaining why she thinks the supply of housing does not rise to meet demand?
Teresa Pearce
I could say a lot about that, but I would rather get on with the points I intended to raise, which are about the private rented sector—a subject that has hardly been mentioned and one that did not appear in the Conservative manifesto. It is an issue that affects my constituency and London constituencies in particular. Supply has not risen—you are right—and I believe it is because parties of all colours have not done as much they could have done. I hope that this debate will be elevated above the “You’re bad, they’re worse” level, which gets us nowhere. It is very macho, but it really does not help and it does not play well outside this Chamber.
Mr Bacon
I do not think that you, Madam Deputy Speaker, have an opinion on this matter at all, but I share the hon. Lady’s view that supply does not rise to meet demand, which she has just repeated. I am asking her why she thinks that is the case. I have a view; I wonder whether she has.
Teresa Pearce
I imagine that the hon. Gentleman’s view is that not enough people self-build. What has happened with supply reflects problems with the availability of land, although some land has now been released. I believe that the hon. Gentleman still sits on the Public Accounts Committee, as did I when we looked at the parcels of public land that were disposed of, supposedly to build 100,000 homes—yet it appears that hardly any have been built. There is not just one problem. I should like to continue with my speech, if the hon. Gentleman would not mind, and talk about the fact that more needs to be done than providing a supposedly simple fix of helping people on to the housing ladder. More definitely needs to be done than that.
My hon. Friend the Member for City of Durham (Dr Blackman-Woods) and I led the scrutiny of the Conservative Housing and Planning Bill—for 55 hours, I am told, and at times it felt like 55 hours. There was much to scrutinise and much that we were concerned about, although we welcomed some parts of the Bill.
The Government’s answer to the shortage of housing seems to be starter homes. To be fair, these homes are a solution for some young people, but only for young people who could have got on to the housing ladder anyway—people who have an income of £70,000 and a deposit of £98,000 in London or an income of £50,000 and a deposit of £40,000 outside London. This helps the few and not the many.
Brandon Lewis
The hon. Lady might want to refresh her memory by looking at the Hansard for the Housing and Planning Bill Committee, particularly at the evidence sessions, where it was very clear that the average price paid by first-time buyers was considerably lower than the figures she has just outlined. I can tell her from looking at the issue that a starter home was available last week that required a deposit of £11,800—nothing like the sort of figures the hon. Lady mentions.
Teresa Pearce
I thank the Minister for his intervention, but with Help to Buy and starter homes, many developers are seeing people queuing round the block for the opportunity to buy the few houses and flats that are available. That shows that people want to buy, but it also shows that more people want to buy than developers have properties to sell. In my experience, such a position simply inflates prices. What is more worrying, however, is the fact that developers can deliver starter homes to help the few, rather than affordable homes that would help the many. I do not think that Labour Front Benchers would have such a problem with starter homes if they were in addition to, but they are not in addition to; they are instead of.
Where are people supposed to live if they cannot afford a starter home? They will find themselves in the private rented sector, with insecure, short-term tenancies, unable to save for deposits on homes of their own because their rents are so high. In 2010, the average deposit was £43,000; it is now close to £60,000. If that trend continues, by 2020 the average deposit will be about £76,000.
At the core of the housing crisis is a fact that has already been touched on. Not enough homes are being built, but although in a year’s time we may be judged by the number of homes that we have built, in 10 years’ time we will be judged on the basis of the quality of what we have built. Although we need to build more homes, it is a question of not just number but quality, and the growing skills shortage in the construction industry seriously threatens our ability to deliver the types of home that we need.
The Construction Industry Training Board recently revealed that in 2013-14 just over 8,000 apprentices had completed their training, 10,000 fewer than in 2008-09. Many construction apprentices are working towards an NVQ level 2 qualification, which means that they will not have the complete skills set that would enable them to become fully trained construction workers. The Government need to tackle that growing skills shortage, because it is a key issue, and I look forward to hearing what the Minister has to say about it. We need the land, the developers and the people who want to buy, but we also need the people who can build.
In 2010, one of the first decisions made by the Chancellor in the coalition Government was to cut investment in affordable homes. Partly as a result of that short-term cut, the housing benefit bill has risen in the last five years as families have been forced into the expensive private rented sector. The provision of affordable homes would save money for the taxpayer by lowering expenditure on housing benefit.
The housing benefit cuts will have a devastating impact on supported housing, which we debated in the House two weeks ago. The Secretary of State is pressing ahead with the cuts although the evidence review on supported housing that he commissioned, which was supposed to be completed in November last year, has still not been completed. The National Housing Federation predicts that 156,000 supported homes could be forced to close. Moreover, the building of a further 2,400 homes has been stopped because of the proposals. The cuts in housing benefit, which supports thousands of elderly, disabled and homeless people, will have a catastrophic impact on those who can least afford it. Homelessness is becoming a national scandal. According to Shelter, rough sleeping has increased by 55% since 2010. In fact, those statistics understate the true picture, because many thousands of people are hidden from view because they are sofa-surfing or staying temporarily with friends or family, with nowhere to call home. In London, that must be a priority for the next Mayor.
Tom Brake
I wonder whether the hon. Lady, like me, is surprised that on Monday the Prime Minister—rightly, in my view—spoke of the need to address reoffending, given that many organisations that provide supported housing for ex-offenders are telling us that they will have to close hostels, bedsits and one-bedroom flats because they will not be able to go on providing them from April 2018 onwards. That will clearly boost the level of reoffending.
Teresa Pearce
There are three prisons in my constituency, and that issue worries me greatly.
Private rents have soared well beyond inflation, which places more strain on tenants’ finances. Although most landlords do provide good-quality accommodation, the English housing survey estimates that almost one in three privately rented homes are non-decent. A quarter of a million properties in the sector are estimated to have a category hazard. According to a major report by Shelter which followed a YouGov survey, 61% of tenants had experienced mould, damp, leaking roofs or windows, electrical hazards, animal infestations or gas leaks in the last 12 months.
Andrew Bridgen (North West Leicestershire) (Con)
The shadow Minister should be aware that when the Conservatives took over North West Leicestershire District Council after 33 years of Labour local government, we inherited the worst standard of council housing in the country, with 75% of the homes non-compliant with the decent homes standard. I am pleased to tell her, however, that under the Conservatives—and a Conservative Government—all the council housing in North West Leicestershire was up to the decent homes standard by 2015 and we are now the best in the country.
Teresa Pearce
I can see that the hon. Gentleman is very proud of his constituency, and I am glad that the people there have decent homes to live in.
We tabled an amendment to the Housing and Planning Bill proposing that all private rented property should be of a decent standard and fit for human habitation, but the Conservatives voted it down, which quite surprised me. I am pleased to say that the Lib Dems voted in favour of our amendment. In the past five years, we have seen a rapid growth in the private rented sector. The number of people and families living in the sector has increased, and more than 9 million people now rent privately. Many of them are under 35.
Brandon Lewis
In the light of the hon. Lady’s comments, does she not realise that powers already exist to cover those issues in local government housing? I also assume that she will want to welcome the biggest crackdown on rogue landlords ever made by a Government, which the Housing and Planning Bill is taking through.
Teresa Pearce
The Bill contains clauses on banning orders and rogue landlords, but they relate to taking action after the fact. I would prefer to see people entering into tenancies for private rented properties that are already fit to live in, rather than having to wait until they become unfit before the landlord can be put on a register, banned or fined.
In the motion, the hon. Member for Westmorland and Lonsdale (Tim Farron) refers to the Lib Dems’ candidate for London Mayor. Indeed, it is rare to have a debate on housing in the Chamber without the mayoral candidates from both sides—all sides—being mentioned. I should therefore like to point out that my right hon. Friend the Member for Tooting (Sadiq Khan) has described this election in London as a referendum on housing. I agree with him. The housing sector in London is in crisis and all the mayoral candidates need to pay great attention to that fact and to make this a top priority. My right hon. Friend has outlined a wide range of policies that will put Londoners first, secure more investment in house building across the capital and deliver more affordable housing for Londoners. He will do this by setting up a new team at City Hall dedicated to fast-tracking the building of genuinely affordable homes to rent and buy, and by establishing a London-wide not-for-profit lettings agency to promote longer-term stable tenancies for responsible tenants and good landlords across London.
Tim Farron
It is very decent of the hon. Lady to give way. I do not want to disappoint her and, in this debate on housing, we must of course talk about the London mayoral election, given that housing is comfortably the biggest issue on Londoners’ agenda. Does she agree with Caroline Pidgeon’s idea that we should maintain the Olympic precept beyond its expiry date this year in order to create a fund to build affordable housing across London? Does the hon. Lady agree that this would be an innovative way of tackling the housing crisis across the city?
Teresa Pearce
I am always in favour of innovation and new ways of looking at things, but I looked at that proposal only yesterday and I do not think it will raise enough money to do what the hon. Gentleman intends. However, innovation is always a good idea and I am glad that housing has now gone to the top of the agenda, particularly in London.
A lot has been written about the housing crisis, and we often trade statistics on the subject, but this is a crisis not only for the homeless or for those living in overcrowded slums; it is a crisis for all of us and for all our constituents. Decent homes make a decent society, and without a stable home people’s education and health are affected and family cohesion is shattered. The housing crisis is not just about numbers or about bricks and mortar; it is about people and their life chances. It is about the children who have been in three primary schools before they are even 10 years old, and about the teachers who are struggling to deal with the effects of classroom churn every month. It is about the children who grow up unable to put down roots and build the childhood friendships that are so vital to their self-esteem. It is about the local GPs who cannot build patient relationships because, in their thousands, patients move on and off the register each year, as they get shifted from one private rented flat to another. It is about the isolation of elderly couples who bought a house when they first got married and have lived there all their lives, but now no longer know any of their neighbours because 25% of the properties in that street are houses in multiple occupation, where there is a churn of tenants every six months. It is also about the millions of adults under 34 who are still living with their parents and about the parents of those adults, who worry that their children will never have a home of their own.
The life of the private renter is typically unstable, insecure and blighted by anxiety. The rogue landlords register has been mentioned and although it is welcome, it is action after the fact. Given that the private rented sector is likely to keep expanding, we need to create a reputable industry that protects the vulnerable and ensures that renters are not at the mercy of unscrupulous landlords. For too long, some private landlords have been able to take the money without the responsibility, while the rest of us pick up the costs of unstable communities, marriage breakdowns and children with no secure home life.
I opened by saying that the housing crisis is one of the greatest challenges to face our country, but we have seen house prices and rents far out of sync with earnings; a failure to tackle poor standards in the private rental sector; ever-increasing homelessness across the country. a Government who appear committed to seeing the end of the social housing sector as we know it; fewer homes built than at any time since the 1920s; and a generation of young people priced out of the property market. That is this Government’s record and they will be judged on it.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. It will be obvious to the House that this is a short debate—we have less than two hours left—and a great many people wish to catch my eye. I hope we can manage without a formal time limit. Everyone will get a chance to speak if each hon. Member, out of courtesy for other hon. Members, keeps to somewhere between eight and nine minutes. You can work it out by adding eight minutes on to the time on the clock up there. I look on this as a test of very simple year 3 arithmetic. People who can add on eight will get it right and people who cannot will get it wrong, and we will see who is who.
Stuart Andrew (Pudsey) (Con)
I think I am going to fail at the first hurdle, Madam Deputy Speaker.
It is a pleasure to speak in this debate on a subject I have had an interest in for a long time, not least since I became a councillor back in 2003. Although I agree with the beginning of the motion, as I do believe that everyone has the right to a decent and affordable home, other parts of the motion are slightly disingenuous in respect of what this Government are achieving. My right hon. Friend the Prime Minister has acknowledged that this country has a housing crisis, but that crisis is down to successive Governments’ chronic lack of investment in the housing that we need.
It is right that we do everything possible to help people fulfil their ambition to become homeowners. I grew up on a council estate in the 1970s and 1980s, and it is fair to say that the early part of that period was an era that silently expected families such as mine just to accept their lot. Chances to improve our lives and move to a different area were extremely limited, but something that changed that and tore up that ethos was Margaret Thatcher’s right to buy policy. That was the first time people on my estate, and the first time in generations that families, were given the opportunity to own their home and enjoy the benefits that many other people had enjoyed in this country. This was not just about the opportunity and dream of owning one’s own home; it also helped significantly with those families’ social mobility. Some may say—I have heard it said today—that this policy is ideologically driven. If that ideology gives families such as mine the opportunity to become homeowners and improve their lives, it is an ideology I fully support. I am glad that this Government have kick-started that policy of right to buy again, so that families on those estates today are given the opportunities I was given. Furthermore, I am delighted that the Government have committed to a like-for-like rebuild for those houses. It is great that the replacement policy is already running at 2:1 in London.
I am proud that more council houses have been built under this Government since 2010 than the Labour party managed to achieve in a full 13 years. Other initiatives such as Help to Buy have also helped. Many of my constituents are now proud to have the family home and security that they want. I am proud, too, that our Help to Buy individual savings account is encouraging people such as my own parliamentary researcher to save up to become homeowners.
The right to buy scheme has now been extended to housing associations, which means that people such as my brothers and their families also have the opportunity to own their home. These schemes provide a real opportunity for young people to enjoy the social mobility from which I was fortunate enough to benefit.
It is important that we strike the right balance with the type of house that we build and where we build it. My hon. Friend the Minister will be fully aware of my concerns about the planning issues in Pudsey. My constituency has contributed greatly to the housing needs of Leeds. Many of the old mills have been rebuilt and used for housing. We have built many thousands of new homes to help supply housing for the Leeds area, but I have significant concerns about Leeds City Council’s local plan. The council has set itself an over-ambitious housing target of 70,000 houses over 14 years, which poses a threat to the green-belt land that makes our city and my constituency great. The land serves as natural boundaries between historic towns and villages and helps to stop urban sprawl. It is important that we do not lose our identity of which so many people are proud. Areas are at risk from the council’s target, and Leeds City Council is currently consulting on the site allocation plan. The response has been huge.
Julian Sturdy (York Outer) (Con)
My hon. Friend is absolutely right to talk about green-belt land. Does he agree that green-belt land also plays a key role in driving urban regeneration and in delivering a lot of our brownfield sites not only in Leeds, but in my city of York as well?
Stuart Andrew
I completely agree with my hon. Friend, and I will come on to that point in a minute.
As I was saying, the response to the consultation has been significant. I pay tribute to the neighbourhood development group, Rawdon and Horsforth councils and other community groups that have been helping local people understand these complex matters. What frustrates local people is that these valuable green sites are up for grabs while the brownfield sites in other parts of the city are just left abandoned.
Greg Mulholland (Leeds North West) (LD)
I thank the hon. Gentleman who is my neighbour for giving way. He and I agree on the Leeds City Council targets, but does he not accept that there is a real disconnect between what he would like and what Ministers say, and the reality of the Conservative Government’s planning system and what it delivers? Does he not agree that our constituents are frustrated about that? Does he not acknowledge that, and is he raising it with Ministers?
Stuart Andrew
The hon. Gentleman knows that I have raised those issues on a number of occasions. Of course the plan must go before the inspector, and we will be making it very clear that much of what Leeds City Council is advocating goes against Government advice. We will make that point very strongly again during the inspection period.
While I am talking about the brownfield sites, let me say that the Leeds City Council plan goes against the advice from Ministers on brownfield development first. Releasing green-belt land should happen only in exceptional circumstances, and those circumstances have not been proved by Leeds City Council.
What also frustrates people is that there are already 17,000 planning permissions in existence in the Leeds area, and not one single brick of those schemes has been built. We need to get the developers building. They cannot be allowed simply to say that they cannot afford to do so. We need far more help in this regard. Building on those sites with the 17,000 permissions would go a long way towards helping to deal with our housing crisis.
We have suffered significant floods in the Leeds area recently. It is easy to attack the Government on the flood defences project, but Leeds City Council must look at the plans that it is putting in place. Building on those important green-belt sites in my constituency will add to the amount of water coming off those new estates and into the rivers that serve the city further downstream.
We need to get some of those 17,000 houses rebuilt and implement the powers that already exist to bring empty houses back into use. We must regenerate the brownfield sites to create the housing that people need so that the residents who live there now can enjoy a much smarter area to live in. I welcome the fact that the planning process now involves more neighbourhood planning, and I hope Ministers will look carefully at the plan to see whether Leeds City Council has properly engaged with groups such as the Aireborough neighbourhood development forum, which has some strong concerns.
I am proud of our Government’s achievements. Yes, 260,000 affordable houses have been built. The right to buy offers opportunities to families like mine and allows more young people to become homeowners. Some of us never had the bank of mum and dad, so I thank the Government for the initiatives that will help those 86% of people who aspire to own their own home, because my experience shows that the best social mobility can start when we give people the reality, not just the dream, of owning their own home.
Alison Thewliss (Glasgow Central) (SNP)
I am glad to be able to contribute to this debate on housing, because it is a clear example of a tale of two Governments and of the positive effect that the different approach taken by the SNP Scottish Government is having on housing provision in Scotland.
I read with interest the Liberal Democrat motion before us today, for the Liberal Democrats’ record on housing under the coalition Government was not great. They continually voted with the Tories in favour of the bedroom tax, and even voted against exempting social tenants who were carers or had disabilities. The SNP in Scotland has been working to mitigate this catastrophic policy and its effects on vulnerable people. The Scottish Government have committed £90 million since 2013 to mitigate the impact of the tax on 72,000 households in Scotland.
In Glasgow alone, £18.8 million has been spent providing community care grants and crisis grants from the Scottish welfare fund to mitigate the welfare reforms brought in under the coalition, with £8.3 million in discretionary housing payments to combat the bedroom tax specifically. The SNP has helped the most vulnerable, and I feel deeply for every household in England that struggles on unaided. The recent court cases demonstrate the deep injustice of this policy— many of those who had had their homes specially adapted for their needs have now lost their
“decent, affordable home to live in”.
In Scotland, too, the Lib Dems’ legacy on housing is very poor. Their motion talks of under-delivery by successive Governments, and how right they are. In coalition with Labour, the Lib Dems in government in Scotland built all of six council houses in a full four-year term in Parliament. Those were all in Orkney and Shetland. I see that the right hon. Member for Orkney and Shetland (Mr Carmichael) is not in his place. Since the Scottish Government took office in 2007, 162 council homes have been provided in that constituency—a 2,600% increase. That is a good record for us in Orkney and Shetland at least.
In Scotland we are doing all we can to increase housing stock, having already exceeded our five-year target for building 30,000 affordable homes. Figures released on 1 December last year show that 30,133 affordable homes have been built since 2011, which is 133 more than our target. Since 2007, the Scottish Government have seen the completion of 54,186 affordable homes. Social rented completions have also exceeded our target of 20,000. At the end of October last year those stood at 400 more than our target. The target of 5,000 council homes has been exceeded by 292. The Scottish Government have already invested over £1.7 billion in affordable housing to achieve this target, despite a 26% real-terms cut to Scotland’s budget since 2010. The Scottish Government are not stopping at that, however, and if re-elected in May, an SNP Government will press on with an even more ambitious target of 50,000 new affordable homes, a £3 billion investment that will help to create 20,000 jobs per year.
The Liberal Democrat motion notes the increase in training and apprenticeships that home building can bring, and, in that, it is absolutely correct. We have invested in apprenticeships in Scotland, and many of the developments I saw in my eight years as a councillor had significant apprenticeship programmes. Community benefit clauses have also been brought in as part of housing projects, which is really important for the local communities involved.
Investing in housing is particularly important in areas of deprivation, creating a virtuous circle that gets people out of poverty. The investment in affordable housing in Scotland over the current parliamentary term is creating an estimated 8,000 jobs per year.
In contrast to England, where the right to buy has been extended, the Scottish Government have increasingly restricted the scheme. In 2013, they confirmed that they will abolish it, and that will take effect soon. In July 2013, Nicola Sturgeon announced that they intended to do that to prevent the removal of properties from the social rented sector. She said:
“we can no longer afford to see badly needed homes lost to the social sector…That is why I am today announcing the final stage of the abolition of the Right to Buy—a decision that will safeguard Scotland’s social housing stock for the benefit of citizens today and for our future generations.”
In 35 years, the right to buy has resulted in the selling of about 2 million council properties in England and just shy of 500,000 in Scotland. In Scotland, more than 160,000 replacement homes were built—leaving a huge deficit in social rented housing. By scrapping the right to buy, the Scottish Government are keeping up to 15,500 homes in the social sector for the next decade.
The UK Government’s proposals involve selling off at least another 113,000 council properties to fund the selling-off of housing association properties, while so many people still languish on waiting lists. Conservative Members talk about people’s right to own their own home, but they forget completely about the rights of the people on these waiting lists, who sit in accommodation for the homeless and do not have the right even to rent, never mind to buy.
The maddening thing is that this obsession with the right to buy does not even save money for the public purse. Often, these homes do not end up being lived in by the purchaser. Figures presented by the Scottish Federation of Housing Associations in evidence to the Communities and Local Government Committee inquiry into the right to buy show that 40% of the properties purchased under the right to buy end up in the private rented sector, incurring higher rental costs for tenants and higher rates of housing benefit than if they had remained in the social rented sector. SFHA estimates that that equates to £324 million per year in Scotland alone.
The Government’s obsession with homeownership is resulting in the continuing depletion of social housing stock in a way that is unsustainable given the continued high levels of need. The proposals in the Housing and Planning Bill, which talks of pay to stay, ending secure tenancies, extending right to buy to the hard-pressed social rented sector and enforcing rent reductions on housing associations, all speak of a Government who do not recognise the significance and importance of being able to rent a decent home. Some people cannot afford to buy; some do not want to buy and are happy to be in social rented housing.
I hope the Liberal Democrats are moving towards improving their previous position on social rented housing. If they are, I welcome that. I also hope that they will look to Scotland and follow the SNP Government’s lead.
Mr Richard Bacon (South Norfolk) (Con)
It is a pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss), because her leader at Westminster, the right hon. Member for Moray (Angus Robertson), was one of the sponsors of my Self-build and Custom Housebuilding Bill, which became law on 26 March 2015.
If the hon. Member for Erith and Thamesmead (Teresa Pearce) thinks I am going to talk about self-build and custom house building, I would not want to disappoint her. There are many good reasons for engaging in self-build and custom house building, and I will come to them shortly.
First, however, we have to analyse why so many Opposition Members—I have listened to them drone on for a long time—appear to think that the current housing system is, give or take, more or less, in reasonably good shape and that it just needs a few tweaks, give or take, more or less, to sort it out. The truth is that our housing system—the one we have endured for 50 years— is intellectually, socially and morally bankrupt. It is intellectually bankrupt because the supply of housing does not rise to meet demand—the hon. Member for Erith and Thamesmead could not give me a reason why, but she accepted that that was the case. It is socially bankrupt because not having enough housing is so extraordinarily divisive and limits opportunities. Finally, it is morally bankrupt because it is a disgrace that a rich country such as ours cannot supply enough decent housing for everyone to have somewhere to live, and that, in a country where the vast majority of people want to own their own house, homeownership is going down rather than up. This Government are starting to address these problems with the radical solutions that will make the difference.
The hon. Member for Westmorland and Lonsdale (Tim Farron), did not talk about self-build at all, although his motion refers to it. Yet that is by far the most radical suggestion in the Housing and Planning Bill, which amends the Self-build and Custom Housebuilding Act to take it further. Under the Act, local authorities will have an obligation that cuts in on 1 April this year to maintain a register of people who want to develop their own self-build project—individuals or groups of individuals. The Bill, which is currently in the other place, will place an obligation on local authorities—I do not think most of them have realised this yet, to be honest—to provide serviced plots commensurate with the demand as evidenced on their registers.
James Cartlidge
My hon. Friend speaks with great passion on this issue, and that is wonderful. If councils take these lists seriously, will not that offer the opportunity that, when significant development sites come up, whole areas can be set aside for self-build?
Mr Bacon
My hon. Friend is absolutely right. The only thing I would question is his use of the word “if”. Councils have a legal obligation to take the lists seriously. A planning inspector would be quite right to find a local plan unsound if it failed to contain provision for serviced plots commensurate with demand as evidenced on the register.
When Councillor Barry Wood, the leader of Cherwell District Council came to our self-build summit in Downing Street last month, he talked about one of the sites in the National Audit Office report that the hon. Member for Erith and Thamesmead mentioned, which has 109,500 potential houses. I spent some time explaining to the permanent secretary of the Department that our constituents liked living in real houses rather than potential houses. The list is a bit distorted, because on some of that land nothing has happened at all, and on some of it a great deal has happened. There are 1,900 serviced plots in Bicester, at Graven Hill. Anybody can look at that scheme by going to gravenhill.co.uk. Once it gets off the ground, as Councillor Wood explained in his presentation, it will make a significant difference to the marketplace because people will start looking at it and saying, “They have that in their area—why can’t we have it in ours?”
Kevin Foster (Torbay) (Con)
As always, my hon. Friend is speaking as a passionate advocate of self-build. He talks about local authorities taking this seriously. He will pleased to hear that my authority, Torbay Council, is already looking to identify sites for self-build projects.
Mr Bacon
I am very pleased to hear that. There is quite a lot going on in the south-west, and I hope it will spread right across the country to all corners of our great kingdom.
According to a YouGov survey, 75% of people do not particularly want to buy the product of the volume house builders. That probably has something to do with the quality of the offer and the fact that there is not enough choice. However, they sometimes have to do so even though they would prefer to do something else. An Ipsos MORI survey discovered that 53% of people would like to build their own house at some point in their lives, that 7 million people would like to do it in the next five years, and that 1 million would like to start in the next 12 months.
There are a whole range of benefits in this approach. We get much better quality building standards—I am sure the hon. Member for Erith and Thamesmead would approve of this—because people who are investing in their own homes are not doing it to get a margin that they can sell on in the way that, perfectly understandably, a volume house builder tries to do. Rather, they will try to get the highest quality fabric, and the highest thermal performance standards, that they can possibly afford. It also helps the skills agenda. Some people are doing it themselves, while some are commissioning others to do it but often still get involved at some level or other. There is a tremendous opportunity for the apprenticeships programme. Locally built housing causes money to stay in the local economy.
Self-builders are often much more community-spirited. They are much more likely to stay and to become pillars of their local communities; they are the ones who get on to the parish council. It is great for helping the vulnerable. What I find so depressing about the droning I have heard from the Opposition Benches for some years now is that there is no sign of radicalism. Somebody who goes on to the Community Self-Build Agency’s website—I encourage anyone to do this—will read the following on the front page:
“I was encouraged by the local council to apply for the CSBA Scheme, I rang them and said; ‘I am disabled, unemployed, on benefits and I know nothing of building.’ They said; ‘You fit all the criteria!’ I have never looked back.”
Rod Hackney said:
“It is a dangerous thing to underestimate human potential and the energy which can be generated when people are given the opportunity to help themselves.”
That is what this is really about.
I recently spoke to the headteacher of a small, rural high school in my constituency. It is always going to be a small school, because of the demographics, and it finds it difficult to recruit teachers. I told him, “You and the governors could tell a potential recruit in a difficult-to-fill subject, ‘If you come to our school, we’ll help you create your own house, which you could either rent or perhaps buy from us in the future.’ A history teacher could have a library for a couple of thousand books, and an arts and crafts teacher could have a workshop. Do you think that would help you recruit teachers?” He said, “God, yes, it would.”
The head of children’s services at Norfolk County Council recently told me that it is very difficult to recruit senior social workers with lots of experience of leading teams. Under the Self-build and Custom Housebuilding Act, a county council could register as an association of individuals; a planning authority would then be required to provide them with serviced plots. The potential of the Act is extraordinary. It gives us a chance to change the equation and how things are done.
The hon. Member for Westmorland and Lonsdale said in his opening remarks that we cannot rely on the dysfunctional market. Of course we cannot. It is touching that there are people who think we have a functioning housing market, and the fact that he refers to the market in that way suggests that he is one of them. What we have to do is fix it. In markets, people have real choice. My hon. Friend the Member for Pudsey (Stuart Andrew) said earlier that there have been decades of under-investment. I was going to intervene on him, but I did not, to ask him why he thinks we have managed to have enough shoes for everyone without decades of Government investment in the shoe industry. No one says that we need a national shoe service in order to solve the problem of not having enough shoes. What we need is a market that actually works.
Alison Thewliss
Perhaps that is because shoes are not particularly expensive, whereas a flat in London can cost £500,000.
Mr Bacon
The word “expensive” is a function of supply and demand, and the word “affordable” is itself deeply laden. If there were enough supply, the price would not be as high relative to income. At present, the average cost of an average dwelling in South Norfolk and in Harlow is about 8.2 times the average income, while in Hertfordshire the average cost is 13.6 times the average income. If we had a market in which supply rose to meet demand, those statistics would not be so out of kilter. That is what we need to fix.
The hon. Member for Westmorland and Lonsdale said that it takes bravery to take the community with you. No, it doesn’t! It does not take bravery to stand up for one’s constituents and say, “I want you, your family and your children and grandchildren to have somewhere to live, and if we make it beautiful and somewhere that people would welcome, the people in your community would welcome it, too.” We have a revolution on its way, and people should get with the programme or get out of the way.
Mr Mark Williams (Ceredigion) (LD)
As a former teacher of year 3 children, I will be particularly mindful of your stipulation on time, Madam Deputy Speaker.
It is a privilege to speak in this debate. My only tiny regret with the motion tabled by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) is that it makes no reference to Wales. It does, however, make a specific reference to rural communities. I will restrict my comments to the situation on the ground in rural communities, not least in my own Ceredigion constituency.
It is a pleasure to follow the hon. Member for South Norfolk (Mr Bacon). Many of my constituents will appreciate some of his comments about self-build. My only regret is that his Act does not apply to Wales, but there is certainly an appetite for the initiative in parts of my constituency.
Housing responsibility for Wales rests, quite rightly, with the Cynulliad—our Assembly and Government in Cardiff—but I think that many of the concerns I will briefly outline in the time available will resonate across other peripheral and rural areas. I represent a constituency that covers a vast geographical area. It includes 147 small communities and 600 family farms in a sparsely populated part of west Wales. We have talked for many years, emotively perhaps, about a housing crisis, but now is the right time to do so, because that housing crisis exists.
My surgeries, like those of the hon. Member for Erith and Thamesmead (Teresa Pearce), are packed every week with people with housing concerns. More than 2,000 people in Wales have been on the waiting list for more than 10 years, and 90,000 households throughout Wales have been on social housing waiting lists for some time. The homelessness charity Crisis notes that overcrowding in houses in Ceredigion is above average compared with the rest of Wales. There is particular concern about those seeking social housing, of which there is a lack. Young people and young families face very real pressures. Many face the decision over whether they can stay in the community—the broader community, not just the county—and whether there is any accommodation available for them. The response from the Assembly Government has been inadequate. I regret that there are not more Labour Members of Parliament present, particularly those from Wales, although I pay tribute to the hon. Lady and one of her colleagues for being here. There are issues that the Welsh Assembly Government must address in the coming weeks and months.
The housing crisis has had an effect on rural services more generally, as my hon. Friend the Member for Westmorland and Lonsdale mentioned. When we see the reality of communities that depend on seasonal residents and seasonal tourism, not families who live there week in, week out, we begin to understand the logic behind—and flawed concerns about—the closure of post offices, village shops and long-established banks, and the reduction in viable public transport. There is a vicious circle in the housing crisis. Young families’ inability to stay in a community because of housing shortages directly affects its social and economic fabric. We do not want the vibrancy of our communities to be restricted to the summer holidays or new year’s eve festivities, but that is the reality.
Our county has seen a programme of village school closures, much of it driven by the Labour Assembly Government’s policies, but some of it dictated by declining numbers of schoolchildren in our villages. That is, in part, dictated by the number of young families who are able to stay in our communities without being priced out. That is a direct result of the sale of social housing and the inability to invest adequately, which mean that many people cannot stay in the locality. A few years ago, I remember arguing with the county council about keeping open a school in my constituency: the St John Rhys school in Ponterwyd, in the north of Ceredigion. An integral part of our case that persuaded the local authority to keep the school open was the fact that we could point to new housing development from Mid-Wales Housing Association, one of our social housing providers. We succeeded in keeping that school open, although the numbers are small. The development of that housing association project allowed the school to stay open.
The effect of not getting this right has a much deeper significance and impact on communities. When we read statistics such as those recently provided for my constituency by Savills, which showed that only 22% of my constituents can afford a medium-priced house of £166,000 and that only 52% of two-wage families can afford a property of that price, we begin to understand the enormity of the challenge. We have the widest disparity between wages and property prices anywhere in Wales. That has had a significant effect on the demographic of the community, as the National Housing Federation pointed out in some work last year. The demographic is changing, and the idea of a living, working countryside is at risk.
Last year, the NHF pointed out in an English context that we are seeing the emergence of “pensioner pockets”, as communities shift from being a balance of young families and older people to being made up largely of the elderly. That puts added pressure on social and health services, and Ceredigion County Council and Hywel Dda health board have been grappling with that. The NHF has stated:
“All it would take to deal with the acute housing crisis in rural areas is a handful of high quality, affordable new homes in our villages or market towns.”
My only hesitation in supporting what the NHF has said is that we will need rather more than a handful.
In my county, the local development plan has identified a need for 6,000 new homes, but there are challenges involved in achieving that. The building of affordable homes is governed by section 106 agreements, but the developer on a modest development must either build the affordable properties first—therefore, by implication, the project will not be as financially lucrative in the short term—or face a 10% levy. Of course, many of our small builders operate their businesses on the margins. There is an automatic disincentive or cost to the builder. Many I have met—I met one a short time ago in the town of Lampeter—have remarked that that levy, plus some perhaps well-intentioned Welsh Assembly Government legislation on compulsory sprinkler systems in houses, has had the effect of ratcheting up prices by in the region of 30%. That has an impact on affordability, and it also explains why much dormant land has, in effect, been banked and has not so far been developed.
There are some new developments. I am thinking of the 27 units in the village of Bow Street, financed by the housing finance grant initiative, and the 23 units in the village of Felinfach, made possible by the council making land available at less than the market value. It is no exaggeration to say that these projects were snapped up at the earliest opportunity, which is in itself an indication of the challenge that many of my constituents face, as well as the opportunities for them and the realities on the ground.
Andrew Bridgen (North West Leicestershire) (Con)
The long-term strength and vitality of the housing market is of great importance to North West Leicestershire. It is the base of three of the UK’s leading house builders—Barratt, Bloor and Davidsons—and it is also the home to aggregate industries such as Midland Quarry Products, Breedon Aggregates and Lafarge, which produce a considerable amount of the UK’s aggregates requirements. In addition, we have two of the largest and most efficient brick factories in Red Bank and Ibstock Brick. Indeed, it could be argued that no constituency has a greater vested interest in the health of the UK housing market.
With that in mind, I am proud of this Government’s housing record, compared with the lamentable one of the Labour party. I can ably demonstrate that with figures from my own constituency. Only 186 new homes were built there in 2010-11, but that figure had more than tripled to 678 new homes completed in 2014-15. I and my council fully expect the figure to be even higher next year—well in excess of 700 new homes a year.
The previous Labour Government’s lamentable record extends to social housing. The last social housing built in my district council area was back in 1991. None was built when the Labour party was in power, either nationally or at district level. Indeed, the former Labour-controlled North West Leicestershire District Council wanted to dispose of the council’s property portfolio in a stock transfer. Had the newly elected Conservative district council not cancelled the previous Labour administration’s planned stock transfer on taking office, we would not have been able to get Government funding to upgrade the 75% of the council housing stock that was left below the decent homes standard after 33 years of Labour neglect, as I mentioned in an intervention. That has been corrected under the Conservatives, and all our houses have been brought up to the decent homes standard and are now equal to the best in the country. I am pleased to tell the House that, instead of disposing of our homes, my council will, under this Conservative Government, build new council-owned homes during its present term. They will be the first council houses to be built in my constituency for 25 years.
One factor we must consider is that this is not just about the quantity of houses built—many hon. Members have spoken about that—but about the quality of homes we are building. We have all seen the social problems that have in some ways been compounded by poor housing design from the 1950s onwards. We still have at least 140,000 households with children in this country who live on the second floor or above, despite lots of evidence that multi-storey flats attract higher crime rates and social breakdown, potentially offering our children a poor start in life. This Government have wisely scrapped the previous Labour Government’s Whitehall targets, which forced local authorities to build high-density flats, rather than family homes and attractive terraces.
In addition, the Government have embraced Building for Life, a hallmark of quality design pioneered in my very own constituency of North West Leicestershire. Building for Life now offers a planning process based on what people care about.
Andrew Bridgen
Indeed. My hon. Friend will know that a couple of years ago I hosted the Building for Life function in the House of Commons, which was attended by the Housing Minister of the time. This is something that I very much believe in. One of my sayings is that Building for Life is not just about building houses, but about building communities. That is what we are doing in North West Leicestershire.
People care about privacy, private space, amenities and safety. Building for Life focuses on such fundamentals. It offers community-focused design tools that aim to ensure that existing and new residents are happy with the development and, therefore, raise minimal concerns about the impact of the new development. Importantly, it also offers home builders the opportunity to work with the planning authority ahead of an application to make sure that those shared objectives will be met, which makes for a more streamlined planning process. It is clear that good design is vital to avoid the mistakes of the last century, which have led to ugly and crime-ridden tower blocks and sink estates.
With that in mind, I encourage the Government to do all they can to help local authorities lodge their local plans and to offer clear guidance on what is required of them. My authority is having problems ascertaining what house building levels are expected of it and in calculating the five-year land supply. I urge the Minister to consider whether the Planning Inspectorate should look at the number of permissions that are granted by a council, rather than simply at the build rate, which is not necessarily within the council’s control. I would appreciate a meeting with the Minister at his earliest convenience to discuss these matters.
Turning to the Liberal Democrats’ housing plans, their manifesto claimed that they had a target to build 300,000 homes a year and 10 new garden cities, but there was no credible detail on how that would be delivered in reality. They say that this Government have chosen to keep the broken market broken, without acknowledging that since 2010, partly with their help, more than 700,000 additional homes have been provided, the number of empty homes is at its lowest level since records began, the number of affordable homes is growing at the fastest rate since 1993 and council house starts are at a 23-year high.
Brandon Lewis
My hon. Friend outlined clearly what a good Conservative authority can do to deliver housing. I would be very happy to meet him at an early opportunity to discuss the situation that his council is in, as it tries to do the right thing by its community.
Andrew Bridgen
I thank the Minister for agreeing to a meeting. I hope that he and our Liberal Democrat colleagues will bear it in mind that if every constituency in the country was completing homes at the same rate as North West Leicestershire, there would be more than 450,000 new homes this year, which is one and a half times the Liberal Democrat target.
Bob Stewart (Beckenham) (Con)
With his great expertise and knowledge of house building, would my hon. Friend ever contemplate building on the green belt?
Andrew Bridgen
There is no green belt in my constituency, but there is a green wedge, which is a valued area of separation between Coalville and the villages of Swannington, Whitwick and Thringstone. In a recent survey, it was claimed to be the most valued green space in the whole of Leicestershire. It is under threat from developers at the moment and we wish to defend it from that.
Andrew Bridgen
Indeed.
The Government have announced that there will be 400,000 new affordable homes and they aim, as the Minister mentioned, to have planning permission in place on 90% of suitable brownfield sites by 2020.
In summary, it can be seen from my constituency that the Government are delivering not just houses, but good-quality, well-designed homes that will provide much more social benefit and a better quality of life than many of the estates that were constructed in the past. Thanks to our long-term economic plan, house builders and home seekers have greater confidence to build and to purchase than at any time in the last decade.
The shadow Minister said in response to an intervention that I was obviously proud of my constituency. Indeed I am. Whether it is in housing, the fact that my constituency is delivering the highest economic growth outside London and the south-east, or the fact that unemployment is at an historic low of below 1%, I assure her that where North West Leicestershire leads, everyone else would be very wise to follow.
Greg Mulholland (Leeds North West) (LD)
It is a pleasure to take part in this debate and to follow the hon. Member for North West Leicestershire (Andrew Bridgen), and it is good to hear that positive things are happening. During debates on important subjects—albeit on an Opposition day—it is important to acknowledge the gravity of the challenge that we face as a nation in addressing the housing crisis. We must consider that in a serious way, rather than just score party political points.
The housing crisis has not been properly dealt with by Governments in the past, and the lack of contributions to this important debate from Back-Bench Members from all parties is disappointing. Whatever positive things may be going on in certain parts of the country with certain sectors of the population, more people in my surgeries mention housing than any other issue, and every week families come to me who are living in unacceptably overcrowded social housing.
We are desperate for more social housing in Leeds, and to pin all our hopes on this extraordinary—and in my opinion disgraceful—extension of the right to buy, not to the state but to housing associations, will make that worse not better. At the same time, what is happening in Leeds shows not only a lack of balance but real confusion from this Government. Although he is no longer in his place, my neighbour, the hon. Member for Pudsey (Stuart Andrew), knows full well the frustrations of the national planning system. In his constituency and mine, the current planning system sometimes gives carte blanche to developers to develop greenfield sites, because we do not have the brownfield sites and the kind of houses that we need.
Although a number of houses are being built, if we build expensive housing in already popular areas—that is what developers want to do and it will not be solved by the market—we will end up with more expensive housing, which those who do not have access to housing, be they in private rented housing or social housing, or trying to get on the housing ladder, could never have considered buying in the first place. That does nothing for the housing crisis even though it leads to more housing, and the Government must be more honest about that.
The target of 300,000 new homes a year is perfectly achievable, but it is just as important to ensure that we focus that on the right kind of housing and in the right places. At the moment that is not happening sufficiently, and I look forward to hearing more about how Ministers will achieve that. We hear consistently from the Minister and his colleagues that brownfield development is being prioritised and incentivised, but that is not happening in Leeds, and I look forward to hearing how it will happen over the next few years. We need bold thinking on garden cities and not to have that shot down, and there is support for some of the areas suggested by the Liberal Democrats in their manifesto, including between Oxford and Cambridge—a great part of the country and an area of particular demand—and for a garden cities railway.
On the right to buy, why is there a blind spot for those people and families—including, in some cases, single parents—who work incredibly hard bringing up children on very low incomes and who are stuck in the private rented sector? Where is the hope for them? In many cases, their only hope is to get into a more affordable social home—a council house, as people in the north of England call houses that are owned by the local authority. Frankly, I have heard nothing from the Minister today that will give that huge section of the population any hope. Until they can get a council house—and that means building more of them—those people simply will not have that possibility. The idea of them getting enough money for a deposit is cloud cuckoo land.
James Cartlidge
The hon. Gentleman makes a very important point, with which I strongly agree, about institutional investment. Does he not accept that one of the big factors that will eventually lead to greater choice and supply in the private rental market is institutional money coming in and building large-scale development for rent, which is happening now across the country?
Greg Mulholland
That is an intelligent intervention and a sensible point. Of course I agree, but that does not build council houses and it does not give people hope. It creates more private rented accommodation, but it does not deal with the problem these people face.
We talk about wanting local authorities to build more council houses. That is not some crazy left-wing idea; it is investment. It is the state building and investing in property. As everyone knows and would agree, it is a very good investment not only for housing associations but for councils and for innovative schemes. We need to see an increase in the ability of local authorities to invest in that way. I have been very critical of the Labour-run council in Leeds. Councils—certainly Leeds City Council—are not using the powers they have to borrow. That is very disappointing, particularly as we need to get away from the idea of social housing being on council estates. Social housing should be integrated. We need to integrate our towns, cities and villages. I have pressed Leeds City Council to purchase properties, using the money it has and the powers given to it by the coalition Government, in and around the place and to get away from having all our social and council houses together. That approach should be consigned to the past. I again call on Leeds City Council to use the powers it has to buy up properties, particularly in LS6.
Kelly Tolhurst (Rochester and Strood) (Con)
Would you agree with me that your council could take guidance from Medway Council, a Conservative-run council that has been building council houses for the first time in a long time? It has smashed its own targets on affordable housing, delivering far more than our percentage target over a number years. Do you think that your council could take advantage of Medway Council’s experience in delivering in this area?
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I do not want to interrupt the hon. Lady, but this happened yesterday five times and it has happened today three times. When you use the word “you” you are referring to the Chair. The hon. Gentleman is the hon. Gentleman and his council is his council. It is like the eight minutes—you just use the third person. We are back to year 3 again.
Greg Mulholland
Thank you, Madam Deputy Speaker. I welcome the intervention from the hon. Lady, and indeed anything that will get Leeds City Council building more and using its powers. We need to learn from best practice everywhere and from councils of any colour.
My final point is that the planning system is not set up to deliver the solution to the housing crisis. Deregulating and making it easier for developers to build on green belt and greenfield sites will not help. I share the criticism of the housing targets and the fact that Leeds City Council will not revise its target. I have campaigned with my neighbouring MPs and with Wharfedale and Airedale Review Development, which highlighted the flaws in the council’s case. At the same time, WARD is very clear that there need to be changes in the planning system. It feels that, because of the planning system and the way that developers are able to exploit it, Leeds City Council will not stand in the way of developers. I again ask the Minister to look at my National Planning Policy Framework (Community Involvement) Bill, which came up with a number of solutions last year on how we can give more specific powers to communities and councils; look at housing targets not on a council but on a regional level; allow co-operation; and do more to put into practice the words from the Minister about ensuring that we incentivise development on brownfield sites.
The balance is not right on either the planning system or housing. Until the Government accept that and stop hiding behind the dangerous gimmick of the right to buy, it will leave many sections of our society with no way out of this housing crisis.
Julian Knight (Solihull) (Con)
The crux of the problem that we face, and which we have faced for many years, is the fact that we do not build enough homes. I can count on the fingers of one hand the number of times we have built enough homes to meet the formation of new households, whether that is the result of divorce or the fact that we lead more solitary lives with more solitary households. Perhaps migration features around the edges, but those are two quite major issues. That means that we have not built anywhere near enough houses. This is not a new phenomenon, as it is a generational issue.
Many social aspects have been touched on by other hon. Members, so I shall discuss the considerable economic damage caused by building too few homes. It exacerbates the north-south divide, and means that demand for land and housing is concentrated in the south-east and they become more expensive, which damages the mobility of labour. It also leads to boom and bust. The recession of the late 1980s and early 1990s was domestically driven, and was caused by the shock of interest rate rises to combat inflation caused by an asset bubble.
An asset bubble in housing skews the way in which people invest in other assets. We have a low propensity to save partly because of the housing asset bubble and the fact that it predominates in our personal finances. It drains money away from other assets, and interest rates are kept artificially low, because of the debt that comes with housing. That is why we have so few savings, and so little confidence in our pension system. The housing asset bubble also divides the generations, and we can see that acutely today—many of us will have seen it in our surgeries.
Owning a home is a great thing, and is a moral good that has raised the wealth and life chances of millions. Like many Conservative Members I am from a council house background. Without the property-owing democracy of the 1980s, I would not be standing in the Chamber today, such are the opportunities that have arisen in my lifetime for my family.
Mr Bacon
Does my hon. Friend—by the way, I was born in his constituency, in Browns Coppice Avenue—think that it is instructive that we have heard a number of contributions from Conservative Members who were brought up in council houses? Those who strongly oppose the right to buy, although some of them are no longer in the Chamber, come from a wealthy background, and have been to top public schools. Whether or not they might one day have the chance to own their own home has never been an issue.
Julian Knight
I completely agree. It is ridiculous politics for people on the housing ladder to seek to pull it up and not allow others on. That is terribly two-faced, and entirely wrong.
Help to Buy is a fantastic innovation and is a good measure for an emergency. Our housing industry was dying, which is why we introduced it. The Government should be commended for continuing with that policy. Social mobility is aided by the measure, but this is not a demand issue. It is a problem of supply.
James Cartlidge
My hon. Friend is making an excellent speech. He is the first person to make the wider point that I think we should focus on, which relates to issues such as the pensions system and the price of money. We often talk about supply, but the price of money is an issue too. After the crunch there was a complete collapse in economic activity, and Help to Buy was given a huge boost, with maximum prices of £600,000 and so on, which was necessary to rescue the economy from what would have become a depression.
Julian Knight
My hon. Friend is absolutely correct. Help to Buy is very similar to the car scrappage scheme, which helped to rescue a major industry in 2008-09. The measure was introduced to allow house builders to get rid of dormant stock. As an economy, we are held captive by the lack of supply. Responsible Governments look at the supply side—that is what we did in the 1980s—for solutions, and that is what we are trying to do. We are trying to get more homes built: the Government aspire to 200,000 a year, or 1 million in total. It is good to have stretching goals, but if we could just produce enough for the new families being formed, that would be satisfactory. In my constituency, we are stepping up to the plate. We have a local plan in place, unlike many areas represented by Opposition parties. We have met the challenge and are looking to build more homes, be it through direct build, right to buy or getting housing associations to build more homes—they have not been building enough. I believe that devolution, through the combined authorities, can also help.
Finally, I turn to our opponents. The hon. Member for Erith and Thamesmead (Teresa Pearce) said she did not want to trade statistics, so I will not delve into them, but I will say one thing: the real shame of the 1997-2010 Labour Government was that their flagship policy was home information packs. That was basically it on housing. All those people waiting on the housing list, looking for a home to follow their dreams, had to wait, because the homes were not being built for the households being formed.
Labour has commissioned a report into housing, as it did in 2004, and I presume that this time the findings will again be ignored. I will be interested to read the report—I do welcome it—but instead of commissioning a report, the Government are getting on with building houses. They can truly say, “We are the builders”.
Rachael Maskell (York Central) (Lab/Co-op)
I want to bring this debate back to the reality I see in my surgeries week after week, as families come to me pleading for help.
Last Friday, a family with two children came to see me. The father had become ill and had lost the ability to pay his rent in the private sector. He is now living with his family of four in a hostel for the homeless. His children are stigmatised by that experience. That is no way for children to grow up in our country. It is a family full of aspiration who just want a home of their own—somewhere safely to bring up their children. Following that, an intelligent gentleman came in. He was homeless. He was desperate to get a job, but he needed a home. He was desperate to get a home, but he needed a job. He was in a vicious circle. Homelessness, as we have heard, is on the increase, and that is unacceptable.
Those are not unique stories. I am confronted by similar ones every week. In York, 1,624 people are desperate for a home, so I want to reflect on the housing crisis there, some of the challenges and some of the fortunes we could turn around. Over the past 10 years, York has built only half the number of homes it needs. We need to be more ambitious. The housing market in York is collapsing, and people are being forced into the private rented sector because there is not enough social housing available. Some 26% of housing in my constituency is now private rented. The average price of a private rented house in York is £988 per calendar month—we are moving up rapidly to London-style prices—but the average wage is just £473, which is way below the national average. People aspire to a home of their own, but social housing is not available and they cannot engage in the private rented sector.
Julian Knight
Is the hon. Lady aware that in some parts of the country, such as Hull, the private rented sector is actually cheaper than the social rented sector? In some parts of the country, the private rented sector is sometimes a better option.
Rachael Maskell
That is not the experience in my constituency, where people are being priced out of the city, which is having an impact on the local economy. Businesses are saying that it is really difficult to recruit and retain the vital staff they need because people cannot afford to live in our city. The NHS requires improvement, not on account of the excellent care provided by NHS staff, but because it is unable to recruit the staff it needs—doctors, nurses and physiotherapists.
Our care sector, too, is in crisis at the moment because careworkers cannot afford to live in our city. It is impacting on discharges from hospital. I know of someone who was in hospital for seven months, trying all the time to get out. We have seen care homes shut down, and we know that it costs more to keep people in the NHS than to care for them in the community, but if we do not have the care staff in the community, people are going to be left in hospital, which is totally unacceptable. What is happening to our public services and to businesses in our city is impacted on by our housing crisis.
We know how much demand there is for homes. We have two universities in the city, which means 22,000 students all looking for homes, on top of the 1,624 people who simply do not have a home in our city at the moment. Under the Government’s right to buy scheme, the situation is going to get worse. The City of York Council will be asked to sell just short of 1,500 homes. It will stretch opportunity further and further away from people because of the price of housing in our city.
We have heard a lot about the opportunity to buy homes, but again this is largely inaccessible for many people in York. Starter homes can cost £209,000 and we know that people cannot afford the deposits. An average income of nearly £59,000 is required, but the average wage in York falls less than half of that. Buying does not provide the solution that people in my city are looking for.
It is not all bad news in York. We have a great opportunity because of the “York Central”—not to be confused with my York Central constituency—which is a 72-acre brownfield site looking to develop alongside the expansion of the National Railway Museum and the enterprise zone, which is coming in to build the opportunities for business in the city. The problem with the “York Central— Site, which is public land partly owned by the City of York Council, Network Rail and the museum, is that the council is looking at developing somewhere between 1,000 units and 2,500 units, depending on the size of the business area, but for high-value apartments. That will not at all address the social needs of my city. We are told that building on the site will be expensive because it is a brownfield site and that social housing cannot be considered. Expensive infrastructure in the form of access roads is necessary. The local housing associations have said that they simply cannot afford to build there. The situation is challenging, which is why I ask the Minister to look again at the principles of how to develop housing on brownfield sites as we move forward.
The reality in York is that recent housing developments are being sold off so that people can come and have somewhere to stay on race days. People have bought homes to use at the weekends or for holidays, or for commuters to use so that they can reduce the time of the journey down to this city to less than two hours, but none of that helps the 1,624 people who are on my city’s housing waiting list. The opportunity to build houses will be lost if we do not change planning priorities.
I would like to see put behind all planning an analysis of the housing need in the city, and, secondly, an analysis of the impact on the local economy of what is happening in the housing market. Then we should use those priorities to apportion the way in which housing is developed. I am calling on York First to make sure that the priorities of the people who live in my city are taken into account, so that housing on public land can address their needs. We first need to ensure, then, that the priority is building homes for the most vulnerable in our community—the elderly and the homeless, for example—and making sure that supported housing is affordable. We also need homes for social rent, which is the aspiration of so many. We cannot ignore the real needs of people who simply want a roof over the heads, and are being denied that at the moment. And, yes, we can then build starter homes and other homes. We know that that is possible. The Joseph Rowntree Housing Trust, for instance, has a fantastic development in our city, Derwenthorpe, to house a mixed community.
I ask the Minister to ensure that the Government think about the priorities of the city, rather than the priorities of those who want to make an asset out of land.
Mims Davies (Eastleigh) (Con)
I think that everyone has been delighted to contribute to the debate, and I am pleased to see that a quarter of the parliamentary Liberal Democrat party is present to appreciate it. [Hon. Members: “One less now!”] I spoke too soon.
Like those of others who have spoken today, my inbox is full of e-mails from people who are worried about housing issues, including the need for housing to be built. Such issues unite Members across the Chamber. It is true that families need homes, but it is also true that development must be balanced with the way in which our communities exist. Reconciling those two great and important demands is a challenge to which the Conservatives are rising. I must add that I was disappointed by the release of the draft options plan for Eastleigh on 23 December, just before Christmas. That was both disingenuous and against the spirit of the Localism Act 2011.
Home ownership is fundamental to our society, and it is very important to our party. I am proud to be a member of a party that gave 5 million council tenants the right to buy their homes. At the time of the election, and afterwards, I heard from many housing association tenants who were delighted to have the opportunity to make their space into a home of their own. Of course, our party’s policies will require the necessary amount of housing stock to be maintained. The number of new affordable and social rented homes has increased by more than two thirds in the last 12 months, but the picture has become slightly distorted in some parts of the country. Some residents feel locked out when it comes to housing in their communities.
Steve Brine (Winchester) (Con)
I thank my long-term neighbour for giving way. I am glad that the leader of the Liberal Democrats has arrived to return his party’s representation in the Chamber to a quarter. He said earlier that he needed to take people with him. Does my hon. Friend agree that it is not “taking people with you” to have a local plan and a borough consultation in my constituency that excludes Chandler’s Ford? The people who live there have been locked out of the consultation.
Mims Davies
I think my hon. Friend must have read my speech. I was about to say that people in Eastleigh felt locked out of the local planning process by a complacent council that is not listening to residents and taking them on the planning journey. No neighbourhood plans are being subjected to a referendum. Residents have not been encouraged to take part in the process; indeed, I would say that Eastleigh Borough Council has barred them from it. My inbox is full of correspondence from frustrated constituents who want to play their part in the provision of homes, but do not feel part of the process. The council is riding roughshod over where the homes should be built.
The other day I went for a ramble through the most beautiful countryside, with a view of Winchester. I walked along highways and byways, past horses and cows, and reflected that this was the area where 3,500 homes are due to be built following the publication of the “Issues & Options” paper to which I referred earlier. I think it is entirely wrong that residents learned about that proposal just before Christmas, when present-buying, rather than house-buying, was their priority.
We need a strategic oversight for the housing of people throughout Eastleigh, and the lack of a local plan is very disappointing. However, I welcome the neighbourhood plans from Botley, which I have encouraged, and from Bishopstoke, where it has been recognised that most of the parish could be concreted over. When I spoke to the Minister yesterday, he agreed with me that the best way of providing housing locally was a locally adopted plan, and I am pleased that Eastleigh Borough Council has provided one for my constituents. They have waited for it for some time, and I want to ensure that it is not simply a rehash of the last one.
We must accept that housing is important and put it in the right context. When the Conservative coalition came into office in 2010, we inherited a housing crisis, and let us not forget that it continues today in Eastleigh because of the Liberal Democrats. So what is the future for the borough? We want homes that our children can afford, we need the right starter homes and we need to prepare the right brownfield sites. One such site in Eastleigh is about to become available, after some delay, for a new McDonald’s and new offices, but it should be used for starter homes in our community, and an Eastleigh residents group is fighting to achieve that aim. Housing is the No. 1 issue in my inbox. People are concerned about where the homes should be and how they should be built, and I believe that this Government are tackling the issue in the right way.
James Cartlidge (South Suffolk) (Con)
I declare my interest as a director of a shared ownership property portal and a mortgage broker. I want to make a couple of points about second-hand supply, which is often overlooked, and about estate regeneration, for which the Prime Minister has set out a very bold agenda. All the statistics show that there is a record low in the number of instructions to estate agents in the second-hand market. That is actually one of the main crises that we are facing, because the second-hand market forms such a large part of the market.
However, there is evidence that hope might be around the corner. We have recently heard a prediction from the National Landlords Association that 500,000 extra properties will come on to the market this year because of the buy-to-let tax changes and other changes that we are bringing in. I will put my neck on the line here and say that those measures represent the single most radical change that this Government have introduced so far, in the light of the wider impact that they will have. It is extraordinary to note, however, that just as it appears that those changes could have an impact, someone out there is going to go to court to try to stop them. I am of course talking about Cherie Blair. Looking at Blair Inc., we see that when Tony Blair finished as Prime Minister, he went round the world advising dodgy dictatorships, and that Cherie Blair is now going to lead a court action on behalf of, and defending, the rentiers. That is an interesting legacy indeed. It proves that champagne socialism is not yet dead.
On the regeneration agenda, I am proud that the Prime Minister has seized this important opportunity. He has set out plans to provide £140 million to transform 100 of our very worst estates. The theory behind estate regeneration is clear: it is that we can rebuild the very worst estates in the country and yet deliver a higher density of homes, thereby providing more housing for those who need it. That is an incredibly powerful agenda. Some will say, “Well, that all sounds very good in theory, but in practice those are people’s homes.” Developing those estates is not easy.
As the chairman of the all-party parliamentary group on housing, I have had the privilege of visiting two major estate regeneration schemes in recent weeks: Woodberry Down in Hackney, and Elephant Road at the Elephant and Castle. In both cases, I saw the practical reality on the ground: we have rebuilt terrible sink estates with higher density housing of better quality and with a better eco-rating. We should be seizing this agenda. There is a link between the changes that we are bringing in on buy to let and the estate regeneration agenda.
Bob Stewart
Given my hon. Friend’s great expertise on this matter and my lack of knowledge, could he enlighten me as to what happens to the people who live on a sink estate when it is brought down and rebuilt? What happens to those people while they are having their homes rebuilt?
James Cartlidge
This is very simple. My hon. Friend is an expert on decanting, I think, and the answer to his question is that we decant them. That is the technical term. I am sure that this will be interesting to him, and I am sure that I know what he keeps in his decanter. It is probably the same nationality as his wife. The process is difficult, however, because we do have to decant those people. One solution, which we saw at Woodberry Down, is to build the new housing and decant the people in stages. We saw another solution at the Elephant and Castle, which was difficult but there was no alternative. It was to allow the estate to run down and become empty over time. That is the toughest part of the process.
The details of regeneration are incredibly difficult, as my hon. Friend the Housing Minister will know. However, the aim—which is the same as that of our policy on buy to let—is a one-nation Conservative housing policy that is about revitalising our worst estates and extending opportunities to first-time buyers, and if that hits some of those buy-to-let landlords, all I can say is that I wish them good luck in court but I believe we need a housing policy that is on the side of those who aspire to own their own home.
Tom Brake (Carshalton and Wallington) (LD)
First, I thank everyone who has contributed to this good-natured debate, leaving aside the unfortunate references to the size of the Liberal Democrat party. We can live with that for the next four and a half years, and we look forward to 2020 and seeing the Conservative Benches severely depleted.
We have heard contributions from a number of Members, and I hope to make a brief reference to each. My hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) set out why lives are blighted, insecure and unfulfilled without housing. He rightly dwelt on the coalition Government’s record, which was in some aspects very positive, particularly on empty homes—all Members have campaigned on that, because it is such a waste of resource—and on scrapping the planning guidance. In a meeting with planning officers a few days ago, they described how the guidance had shrunk, and that is clearly welcome. My hon. Friend also focused on the negative impact a lack of housing has on rural communities.
I thank the Minister for his thanks for what the Liberal Democrats contributed in the coalition Government. I intervened on him to ask whether he would confirm how many social homes had been built during the time the debates he mentioned had taken place, but he did not give me that answer—I suspect it was probably not many more than the number of those debates. He focused on Eastleigh and it is worth pointing out, just in case any Members were of the opinion that nothing was happening on the local plan in Eastleigh, that it is being consulted on it at this very moment.
The hon. Member for Erith and Thamesmead (Teresa Pearce) spoke for the official Opposition and referred to the fact that starter homes should be additional, and I agree with her. There is nothing wrong with a starter homes initiative if it is part of a package and provides additionality. She referred to the skills shortages and helpfully referred to what the Liberal Democrat London mayoral candidate, Caroline Pidgeon, is planning.
The hon. Member for Pudsey (Stuart Andrew) is no longer in his place, but he said that everyone has the right to a decent home, and I completely concur with him on that. That of course applies whether they can afford to buy their own home or whether they cannot and need to rent an affordable home. He touched on the issue of the sustainability of housing, and I am sure that is key in his area. There is no point in building housing that is not sustainable, particularly in areas where flooding is prevalent.
The hon. Member for Glasgow Central (Alison Thewliss) is no longer in her place, but she presented a glowing picture of the housing situation in Scotland under the Scottish National party. She did not, however, refer to figures from June 2015—it may be that things have moved on since then—when there were 150,000 families on the waiting list for a decent place to live in Scotland, and there were 1 million people suffering fuel poverty and 60,000 overcrowded homes. The picture is not quite as glowing as the one presented earlier.
The hon. Member for South Norfolk (Mr Bacon) complained that, although our motion contained a reference to self-build, my hon. Friend the Member for Westmorland and Lonsdale did not refer to the issue. Of course, the hon. Gentleman will know that that was because my hon. Friend knew that the hon. Gentleman was going to concentrate exclusively on the subject of self-build in his speech and in a series of interventions, so he should be grateful to my hon. Friend for allowing him to focus on that in the way he did.
My hon. Friend the Member for Ceredigion (Mr Williams) focused on rural communities and rural services, and the impact that seasonal tourism can have on a range of services and the social fabric in areas where it means many homes are unoccupied at other times of the year.
The hon. Member for North West Leicestershire (Andrew Bridgen) rightly focused initially on Labour’s poor track record over a 13-year period in its level of contribution to housing stock. He also focused on the importance of good design. That is particularly true, as I suspect that many of the developments we are going to see in future years will be at a higher density and therefore the design will need to be of even better quality.
My hon. Friend the Member for Leeds North West (Greg Mulholland) talked about prioritising brownfield sites. Well, I have been a Member of Parliament for 18 years, and for each of those 18 years there has been a call for brownfield sites to be prioritised. It seems as though we have never quite got to the point where it has happened. He also pointed out that councils can take advantage of their borrowing powers—certainly my local council has done this—to invest in council housing. Like him, I regret the fact that his local authority has not done so. He also referred to his excellent National Planning Policy Framework (Community Involvement) Bill, which he would like all Members to support for the good ideas that are contained therein.
The hon. Member for Solihull (Julian Knight), who is in his place, praised Help to Buy, which was an excellent coalition policy that continued into this Government. The scheme clearly has made a contribution at a difficult economic time, where the market was dead, the skills associated with house building were being lost and something needed to be done, and the Government acted on that.
The hon. Member for York Central (Rachael Maskell) mentioned the impact on businesses when employees cannot afford to live in the city in which they work. That is not just an issue for York. At the first meeting organised around the mayoral hustings for London, we heard about a large firm of accountants—a household name—that was having to find accommodation for their young employees, as those employees could not find anywhere in which they could afford to live, so affordable housing is a big issue for employers in London. As she pointed out, it is regrettable that, when there are sites that could provide a substantial level of affordable housing, very little, if any of it, ends up being used for social housing. In London, for example, New Scotland Yard has been bought up by a developer from Abu Dhabi for £370 million. The starting price for a flat is just below £1 million. I do not know whether there will be any affordable homes in that development. Clearly, that is a huge missed opportunity.
The hon. Member for Eastleigh (Mims Davies) had a number of pops at her Liberal Democrat councillors. I simply point out to her that the local plan in Eastleigh is under consultation, and I hope that she is encouraging her constituents to take part, either by email or in writing.
The hon. Member for South Suffolk (James Cartlidge) talked about the importance of regenerating estates, which is essential, and can work effectively. In the London borough of Sutton, we have a good example in the Roundshaw estate, which was completely regenerated under Labour’s single regeneration budget, and it works very well. The residents of the old estate—it is the concrete monstrosity with 1960s tower blocks and aerial walkways that features in “The Bill”—wanted to stay on the estate, and were able to do so. The scheme was a total success. We need to regenerate, but, at the same time, maintain our communities.
In my last couple of minutes, I should like to comment on a couple of things that have not been mentioned in as much detail as I would like. The first is supported housing, to which I and the hon. Member for Erith and Thamesmead referred. I hope that the Minister will listen carefully to this, because it is an issue to which the Government need to respond. In my constituency, I had a meeting with Transform Housing and Support and Langley House Trust that provide supported housing. They are very concerned about what will happen from April 2018 onwards when they will receive the housing revenue account figure only for that particular area. They say that they will not be able to provide supported housing. One housing association predicts that it will lose 300 units. I hope Ministers will listen to that concern and look carefully at the position. We do not want to see ex-offenders turfed out on to the streets because their housing providers cannot continue to meet their housing needs. That will not help the Prime Minister’s drive to cut reoffending rates.
On environmental standards, to which we heard reference, the Liberal Democrats pushed hard on that in coalition and made it a priority. It did not last very long once the Tories came to power. It is clear that the Prime Minister’s beloved huskies have been taken out and quietly shot. As the Wildfowl and Westland Trust requests, we should not neglect the quality of new housing from the perspective of resilience and environmental sustainability. When building new homes, we should have regard to natural resilience, such as sustainable drainage, which is vital for flood mitigation. We also need to have regard to carbon emissions and energy costs. What is the point of cutting the cost of new build by a fraction, thereby guaranteeing extra energy costs associated with heating that home for the next 50 or 60 years? That is what the Government have done by scrapping the zero carbon homes initiative.
I do not want to say that everything is bleak and there are no good opportunities out there. There are, and my local authority has taken advantage of them. It took up the ability to borrow and is building an extra 140 council homes as a result. It has set up a company, Sutton Living Ltd, which will build homes across all tenures—homes for sale, which will subsidise homes for affordable rent. That will provide hundreds of new homes.
In conclusion, I do not always agree with the Institute of Economic Affairs, but I share its view that unless we address the supply problem, we will not bring down prices or ensure wider home ownership. The Government’s plans do nothing to address the scale of the supply problem for would-be homeowners on lower or middle incomes, and their ideological opposition to social housing will ensure that the supply of affordable homes is cut. We often hear from the Government Benches the refrain “the long-term economic plan”. What families in overcrowded homes and young people still living at the hotel of mum and dad want to hear echoing round this Chamber is a long-term plan for housing. That is what we offer in our motion and what the Government have failed to provide. I commend the motion to the House.
The Parliamentary Under-Secretary of State for Communities and Local Government (James Wharton)
What a fascinating debate this has been. It was opened by the hon. Member for Westmorland and Lonsdale (Tim Farron) with a detailed speech containing the concerns that he wanted to raise.
I welcome the contribution from the shadow Front Bench—not for its content, but for its tone. At least it was positive in its approach to a very serious issue. Of course, I welcome the excellent comments from my hon. Friend the Minister for Housing and Planning, who covered nearly every topic that was then discussed by hon. Members.
When my hon. Friend the Member for Eastleigh (Mims Davies) rose to speak, half of those on the Liberal Democrat Benches exited in fear of her incredible reputation for bringing down those of that party political colour.
My hon. Friend the Member for Pudsey (Stuart Andrew) spoke passionately about right to buy, what it meant to him and why it matters. How any hon. Member, almost all of whom will own at least one property of their own, can oppose assisting others to do the same is anathema to me, and I am sure it comes as a shock to my hon. Friend.
Having listened to the comments of my hon. Friend the Housing Minister, I do not think there is much that needs to be added to a comprehensive tour de force that explained why this is a one-nation Government who will build more homes, meet more aspiration, fight to deliver on our objectives and deliver our long-term economic plan. This is a Government who know what they are doing on housing, know where we are going on housing, and will make a real difference to all our constituents when they deliver on that plan.
Question put.
Business without Debate
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
European Union Documents
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Deputy Speaker (Mr Lindsay Hoyle)
With the leave of the House, we shall take motions 4 to 6 together.
Motion made, and Question put forthwith (Standing Order No. 119(11)),
Better Regulation
That this House takes note of European Union Documents No. 9079/15 and Addenda 1 and 2, a Commission Communication: Better regulation for better results - An EU agenda, No. 9121/15 and Addendum, a Commission Communication: Proposal for an Interinstitutional Agreement on Better Regulation, and unnumbered European Union Document, an Interinstitutional Agreement on Better Law-Making; welcomes the Commission’s intention to use these documents to refresh and take forward its work on better regulation; and supports the negotiations on the Interinstitutional Agreement that started in June last year, aimed at setting out the commitments of the European Parliament, the Council and Commission concerning better regulation, interinstitutional relations and the legislative process.
Financial Management: Countering Fraud
That this House takes note of European Union Document No. 11470/15 and Addenda 1 to 6, a Commission Report: Protection of the European Union’s financial interests—Fight against fraud 2014 Annual Report, and unnumbered European Union Documents, the European Court of Auditors’ 2014 Annual Reports on the implementation of the budget and on the activities funded by the 8th, 9th, 10th and 11th European Development Funds; agrees that budgetary discipline and robust financial management at all levels remains crucial, and that EU taxpayers must have confidence that their funds are being effectively managed and implemented at an EU level; expresses disappointment that the error rate for EU budget payments shows only a slight improvement on last year; supports the Government’s efforts to continue to engage with the Commission and Member States to drive improvements to reduce the error rate, in particular, advancing the simplification agenda; stresses the importance of the EU budget achieving results as well as being compliant; and presses the Commission for a clear action plan to address the European Court of Auditors’ recommendations relating to the European Development Fund in order to improve its error rate.
Assessment of Exhaust Emissions From Passenger Cars and Light Vans
That this House takes note of European Union Document No. 14506/15 and Addendum, a Commission Regulation (EU) …of…amending Regulation (EC) No 692/2008 as regards emissions from light passenger and commercial vehicles (Euro 6); and urges the Government to continue to press for action so that EU emissions testing accurately reflects real-world performance of vehicles on the road.—(Stephen Barclay.)
Question agreed to.
Humber Energy Estuary
(8 years, 9 months ago)
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Martin Vickers (Cleethorpes) (Con)
This is a timely debate on jobs and growth in the Humber energy estuary, as the estuary has been christened by many people, including many Ministers. The Minister herself has said that it is a key part of the northern powerhouse or, to be more precise, the northern energy powerhouse.
If I may, I will spend a minute or two on the background of the Humber and its importance to the offshore renewables sector. The Humber is ideally positioned geographically to serve the wind turbines that are located in the North sea. In recent years, the port of Grimsby has benefited from multimillion-pound investment connected with the renewables sector. That has included resources from the regional growth fund and has created hundreds of jobs.
Since the late 1990s, Able UK has acquired around 2,000 acres of land on and around the south bank of the Humber. The process was complex and involved multiple landowners. In 2008, the site was identified as a potential location for the emerging offshore wind sector. There followed a protracted and, it has to be said, frustrating process to achieve the required planning consents. North Lincolnshire Council, under the leadership of Baroness Redfern, whom it is good to see in the Public Gallery, has been fully supportive at every stage.
The protracted and exhaustive planning process culminated in the Transport Secretary giving consent in October 2014. Associated British Ports appealed, and there followed a hearing before a Joint Lords and Commons parliamentary Committee—chaired by you, Mr Deputy Speaker, among others—which wisely threw out the appeal.
This Government and the previous coalition Government have done a great deal to attract the renewables sector to the Humber and to establish the Humber as the energy estuary. They have created the largest enterprise zone in the country, supported to the tune of £11 million the establishment of the university technical college in Scunthorpe, and established the Humber local enterprise partnership with the specific remit of developing skills for the renewables sector.
Melanie Onn (Great Grimsby) (Lab)
I congratulate the hon. Gentleman on securing the debate. It is wonderful to see so much investment in our area. DONG Energy alone is spending some £1 billion a year on offshore wind in the Humber region. Does he agree that we have to ensure that young people in the local area have the opportunity to learn the skills of the trade and get the jobs that the renewables industry has to offer, and does he support the renewable energy skills fair that I am hosting in Grimsby on 25 February to help local young people get into the industry?
Martin Vickers
I congratulate the hon. Lady on organising her skills fair. Her intervention was timely, because I was just about to say that only last week, in a letter following my question to him on 27 January, the Prime Minister reminded me that
“another welcome development is the 19+ skills strategy that North East Lincolnshire Council is developing with support from the Humber LEP…through the Humber LEP Growth Deal we are investing nearly £4 million in a skills capital project”.
That will be based at the CATCH training facility at Stallingborough in my constituency. The Government have contributed £15 million towards infrastructure work at the Able UK site. Most notably, DONG Energy has benefited to the tune of billions of pounds from the contracts for difference that were agreed before the recent changes.
It is fair to say that many people have been sceptical about the benefits of wind power—that comes, in part, from opponents of onshore wind turbines—and my constituents are no different: the majority of them oppose onshore wind turbines. They have a positive view of the offshore sector, however, partly because of the positive media coverage in the area. The local media have repeatedly published very positive reports about the industry and the anticipated benefits. The Grimsby Telegraph produced an energy estuary supplement, in which you are pictured, Mr Deputy Speaker. It described the term “energy estuary” as a “worthy title”. It rightly pointed out that the Humber has, in reality, been the energy estuary for a century or more, with Immingham, by tonnage the largest port in the country, having a massive throughput of traffic connected with the energy industries. One reason for the port’s construction was to enable coal exports. More recently, coal imports have been vital to the economic success of the port, but for a host of reasons coal traffic has fallen dramatically in recent months, leading to recently announced redundancies. It is to be hoped that Associated British Ports can find replacement contracts in the near future. Its recent investment in facilities to handle biomass pellets is an indication of its continued investment in the port.
Another article in the estuary energy supplement was penned by Marcus Walker, the senior officer at North Lincolnshire Council who is responsible for handling the Able project. He said:
“The Humber Estuary is fast becoming the energy capital of Europe. The Government’s £100 billion offshore wind programme is the largest engineering project in the history of the UK and plans for Able Marine Energy Park…play a key part in helping create the energy clusters that we need to be able to compete with major manufacturers in mainland Europe.”
Melanie Onn
On that point about the energy capital, Grimsby has recently been named the renewable energy capital of England. Does the hon. Gentleman agree that the Humber is the obvious location for a national college for wind energy, and will he join me in calling on the Government to grant the Humber local enterprise partnership’s bid for the college?
Martin Vickers
It is perfectly true that, unfortunately, there was a misunderstanding and the LEP submission was too late. I certainly urge the Minister, if it is within her power, to grant an extension to the Humber LEP so that the college can be established in the obvious place for it.
Martin Vickers
I cannot think why my hon. Friend is shouting “Goole”, but to give him his due he has played a supportive role in all that we have done. Certainly, the MPs from the south bank—
Martin Vickers
Hang on a moment. Those MPs have always been united to establish the Able site, to complement the Siemens investment in Hull.
Stephen Savage, a leading local solicitor who serves on the Humber LEP board, states in the estuary energy supplement:
“The £450-million Energy Estuary scheme will create around 4,000 jobs and provide a new deep water port on the Humber”.
Were these people, all of whom were and are very close to events and are closely watching developments, all deceived or misled, because as yet the Able site remains fallow? They have all reached the conclusion that the wider Humber, and the Able site in particular, was going to be not just a secondary centre, but a real hub of activity, construction, assembly and all the support activities that would generate a growing and extensive supply chain.
Nic Dakin (Scunthorpe) (Lab)
I congratulate the hon. Gentleman, who is my constituency neighbour, on securing this very timely and important Adjournment debate. He has come to the nub of the issue. There is a great deal of expectation that the Government investment in the project will deliver manufacturing jobs on the Humber estuary. That is a matter of concern and we need it to be delivered.
Martin Vickers
The hon. Gentleman is absolutely right.
When the memorandum of understanding between Able and DONG was signed last summer, there was an indication that final agreements would follow, with last October as the target date. My understanding is that this memorandum was for DONG to establish an operational hub or installation port at the Able marine energy park. North Lincolnshire Council was under the impression that DONG had suggested that the Government should be involved in this exercise, and that an immediate priority was to secure a UK tower manufacturing facility. I hope that the Minister will be able to clarify that.
DONG had indicated that it requires the new quays, which are being constructed as part of the marine energy park, to be available by the first quarter of 2018. To meet that timescale, all the preparation, design and development work must begin almost immediately if the conditions of the planning consent are to be met, including restrictions and conditions linked to ecological compensation and mitigation.
Many of the negotiations were conducted by Peter Stephenson, the executive chairman of Able, and Joachim Steenstrup, the head of strategic supply chain at DONG. I understand that Able learned on 31 October that Mr Steenstrup had been dismissed.
In November and December, Ministers were good enough to meet me and other Members to discuss the situation. This all happened at a time when Tata Steel in Scunthorpe was reviewing its activities and announcing redundancies. The location of the steelworks just a few miles from the Able site had been an important part of the attraction of the south bank as a centre for turbine manufacturing.
It is worth putting it on the record at this point that the Government handled the situation at Scunthorpe extremely well and, along with North Lincolnshire Council, are putting together an excellent package of support, as well as plans for a sustainable steel industry in the town. The early statement from the Prime Minister, in which he made it clear that steel manufacturing at Scunthorpe would continue, was welcome, timely and crucial in giving confidence to the many people affected by the anticipated change of ownership.
The clear understanding of North Lincolnshire Council, the local enterprise partnership and just about everyone else is that the Able development will proceed. On 9 July last year, talking about the project and the £15 million from the regional growth fund, the northern powerhouse Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Stockton South (James Wharton), said:
“As part of our long-term economic plan we’re determined to back business in the Humber and the Government’s £15 million infrastructure funding is helping kick-start development at the site that will help create 4,000 new jobs for local people.”
He continued by restating that:
“The Government is committed to backing offshore wind…This agreement will help the UK supply chain develop in key areas like towers manufacturing and ensure the UK remain market leaders in this sector.”
The leader of North Lincolnshire Council, Baroness Redfern, last week attended DONG Energy’s inauguration of Westermost Rough, which brought the Race Bank announcement. She said:
“This is fantastic news for North Lincolnshire and the Humber.”
She said that the Able marine energy park
“will deliver a state of the art purpose built facility—the largest in Europe. It is the UK’s best opportunity to attract a brand new offshore wind sector in the country and I am delighted that such a world leader like DONG have made this commitment.”
I hope that the Minister will confirm that DONG has made a long-term commitment to the south bank of the Humber. Baroness Redfern stated that the new university technical college in Scunthorpe
“will provide the right skills for the offshore sector and our major infrastructure improvements to support this development are almost complete. AMEP has the real potential to transform the economy across…North Lincolnshire”.
The chairman of the local enterprise partnership, Lord Haskins, added:
“The signing of the Memorandum of Understanding which holds out the prospect of Dong Energy becoming the first user at AMEP is a significant step forward… Attracting the interest of companies such as Dong endorses that we are the UK’s Energy Estuary with the Humber ports developing as a strong and growing national hub for the new offshore renewables industry.”
I hope that the Minister is in a position to make clear exactly where we are. Companies such as DONG have benefited greatly from the generosity of British taxpayers, particularly but not solely through the contracts for difference. DONG Energy has given the impression that it is committed to investing in the marine energy park to North Lincolnshire Council, local MPs, the local media and the Minister for Small Business, Industry and Enterprise, whom I can see nodding on the Front Bench. Such companies have benefited from the regional growth fund, the Government’s investment in the university technical college and the establishment of the enterprise zone. All that is very welcome, as is DONG Energy’s investment in northern Lincolnshire and the wider Humber region. Jobs exist that did not exist just a few years ago. However, with billions of pounds of taxpayers’ money already committed and the assurance that there is more to come, it is payback time for those companies. I hope that the Minister, who has been extremely helpful, supportive and robust in this matter, can provide some positive news in her response.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
I congratulate my hon. Friend the Member for Cleethorpes (Martin Vickers) on securing this debate, as it gives me a fantastic opportunity to set out my vision for the growth and jobs that can flow from the UK offshore industry to the northern powerhouse and across the UK. I am delighted to see the hon. Members for Kingston upon Hull North (Diana Johnson), for Great Grimsby (Melanie Onn), and for Scunthorpe (Nic Dakin) in their places, as well as my hon. Friend the Member for Brigg and Goole (Andrew Percy).
This is an important area, and the Humber estuary has a long history as a driver of jobs and growth in the region, with roots dating back to the 13th century. It has played a key role in our energy infrastructure over many decades—indeed, my right hon. Friend the Minister for Small Business, Industry and Enterprise and I like to call it the northern energy powerhouse. It has played host to vital energy activities, including coal, and more recently offshore wind, not to mention all the other commodities that pass through the numerous ports on the estuary every day. Its location has enabled it to build industries around agriculture, construction, production and energy. My hon. Friend the Member for Cleethorpes is right to point out that it has the potential to deliver much-needed jobs and investment.
There has been a £75 million investment in the Humber international terminal at the port of Immingham, which is receiving some of the world’s largest shipments of biomass destined for Drax. That has the potential to increase to some 6 million tonnes per annum of pellets imported into the UK, becoming a hub for future business, including in the heat sector.
Andrew Percy
The Minister is right to mention the huge investment at Immingham in biomass that feeds Drax, which is a massive employer. With the use of coal stopping by 2025, will she commit that biomass will remain an option for energy generation into the future, and that Drax, which has several more units yet to be converted, will be able to bid for that? I have a new role as trade envoy to Canada, so does she recognise the potential growth in jobs in the Humber as a result sustainable biomass coming in from Canada via Immingham? [Interruption.]
Andrea Leadsom
My right hon. Friend the Minister for Small Business, Industry and Enterprise is asking whether we can carry my hon. Friend’s bags—I think that is a very good idea. I congratulate him on his new role as trade envoy, and assure him that we are doing what we can to try to secure the future for sustainable biomass, which is important.
We are all aware of the Siemens investment at the port of Hull. That £310 million investment will help to support the industries of the future, and is due to be completed by the end of this year. Of course, we could not talk about the Humber without mentioning Hull, which has been named as the UK City of Culture 2017. We all hope that that will leave a lasting legacy in Hull and the region, as has happened in previous cities.
All those achievements have seen the Humber become a key element of the northern powerhouse, but a key driver for growth in the region will be the offshore wind industry. There has been an incredible expansion in offshore wind which, as my hon. Friend the Member for Cleethorpes rightly pointed out, has been at the expense of bill payers in the UK. Much of that growth is off the east coast of England, generating clean power for hundreds of thousands of homes.
In November 2015, the Secretary of State for the Department of Energy and Climate Change set out our commitment to the future of the UK offshore industry, backed up by the pledge of three contract for difference auctions in this Parliament, provided that we get costs down. Those actions are part of what makes us the greenest Government ever. Alongside our support and commitment to offshore wind, this Government are determined to see higher levels of supply chain content in our energy infrastructure. Our objective is to have a strong, industrialised UK supply chain that delivers higher UK content in offshore projects, and proves its capability, increasing its capacity to win export orders.
Nic Dakin
On the supply chain and local content, this is a great opportunity for the Minister, and the Minister for Small Business, Industry and Enterprise who is sitting alongside her, to ensure that the procurement guidelines that the Government have put in place have leverage, and that the development is built with UK steel.
Andrea Leadsom
My right hon. Friend and I have spoken about that on a regular basis, and we will continue to work together to ensure that we maximise the procurement of UK content wherever we can. The Humber region has huge potential to contribute to growth in the UK supply chain. Just last week we saw DONG Energy secure financial approval to build what will be by far and away the biggest offshore wind farm in the world, with around 1.2 GW—enough to power 800,000 homes. By its own estimate that will create 2,000 jobs during construction, and 300 long-term permanent jobs in operations and maintenance.
The region has had success in realising many of these jobs already. Grimsby is fast becoming the centre of excellence for operations and maintenance activities for offshore wind farms in the North sea, with DONG, Centrica and E.ON having located their bases there. I enjoyed visiting the E.ON operations and maintenance facility with the hon. Member for Great Grimsby and my hon. Friend the Member for Cleethorpes when I was in the area to open the Humber Gateway wind farm last September. During that visit, I also went to see the site where Siemens is constructing its blade manufacturing facility and service centre at Green Port Hull, which will provide over 1,200 much-needed apprenticeships and skilled jobs in the local area when it opens later this year. I was particularly struck by the export capability of this new factory.
Melanie Onn
On that point about skills, and as I mentioned to the hon. Member for Cleethorpes (Martin Vickers) earlier, does the Minister agree there has never been a more opportune time to make sure the national college for wind energy is situated in the Humber estuary? Does she agree that we should all be working together to try to encourage the Government to support the local enterprise partnership in bringing the college to the Humber area?
Andrea Leadsom
As I think was pointed out to the hon. Lady, the application was slightly late but the Minister for Small Business, Industry and Enterprise is here. I will make sure that the hon. Lady’s lobbying is passed on to her team.
Diana Johnson
Will the Minister very kindly agree to have a meeting to discuss the national college for wind energy? The sticking point seems to be the Minister for Skills not being able to attend the meeting. As it is in the gift of the Department for Business, Innovation and Skills to agree to the name being given, even if it is privately financed, I wondered whether the Minister might have a word with her colleague to see if she can get him to the meeting too.
Andrea Leadsom
Absolutely. I am very happy to do that. As I said when we last spoke about this, I will be delighted to meet the hon. Lady.
Like my hon. Friend the Member for Cleethorpes, I want to see the Humber estuary achieve much more. I want developers to do more to share the economic benefits to be gained from building and operating offshore wind farms, and to share the gains of our new offshore wind policy. As he rightly said, it is payback time. I have instructed my officials to set up bilateral discussions with key offshore wind developers, such as DONG, SSE and Scottish Power. As I will make clear to them, the current round of projects provides a clear opportunity to stimulate further UK supply chain activities that will enable us to reap the rewards of our offshore wind leadership, both in terms of securing more jobs in the current projects and industrialising the supply chain. I want the UK to be exporting our technology and skills to projects in Europe and elsewhere. This is my ambition, and I want the Humber estuary to be at the forefront of that ambition.
Martin Vickers
What the Minister has just outlined is clearly good news. She has made rapid progress since our last discussions and I compliment her on that. Can she give a timeframe for that? It is critical that we move forward now. We have already lost quite a few months.
Andrea Leadsom
Yes, absolutely. I can tell my hon. Friend that it is a very top priority for me to have those meetings. We will be reconvening the offshore wind industry council in the near future and I want to have met each of the key developers before that meeting takes place.
On the Able marine energy park, I agree with my hon. Friend that the proposed facility is a significant opportunity to build on the successes in offshore wind and renewable energy more generally. It would be a fantastic addition to the UK offer. When it is completed, for example, it is well located to be a construction and staging facility, and could open up further port infrastructure facilities for the industry, as well as additional land for quayside supply chain investments. I encourage Able to continue to make the case for the facility, which has the potential to attract a range of developers.
As my hon. Friend pointed out, Able issued a press release on 9 July 2015 announcing the signing of a memorandum of understanding with DONG Energy, which committed to early stage talks on the project. Expectations are high that the facility would provide much-needed jobs. The recent announcement by DONG about Hornsea reaching a financial close last week is timely. I understand the importance of this project to my hon. Friend and to the UK. I therefore wrote and spoke to DONG seeking an update.
I am pleased to tell my hon. Friend the Member for Cleethorpes that DONG has replied saying that it continues to see AMEP as an as an important facility in the development of the offshore wind sector in the UK. DONG proposes to establish and lead a strategic joint industry and Government review to identify opportunities to develop the east coast as a UK construction and staging facility for the UK and European offshore wind industry. DONG would expect the AMEP facility to be a key consideration in this exercise, and I am pleased that DONG has appointed Benj Sykes, who co-chairs the Offshore Wind Industry Council with me, to lead that work. I shall shortly write to other developers regarding their participation in this review.
I am also pleased to say that DONG has told me that discussions on a UK tower manufacturer continue to progress well. To secure the first UK tower facility would be a major achievement, on which developers and the supply chain can continue to build. Let us be clear: the ability of the UK offshore industry to contribute to jobs and growth is a key part of what makes it an attractive industry. It is not the only one: climate change is one of the biggest challenges that we face, and it needs big technologies if we are to achieve our decarbonisation goals. Offshore wind offers one of those solutions.
Martin Vickers
Will the Minister confirm that she or her officials will have an input in those discussions, and not leave it entirely to the industry?
Andrea Leadsom
I can assure my hon. Friend that this interests me a great deal, and I shall certainly be involved.
When the Secretary of State set out the Government’s new direction for UK energy policy last November, she highlighted the challenge we face in making sure that energy remains the backbone of our economy while we transform to a low carbon system that is secure, affordable and clean. We want a consumer-led, competition-focused energy system that has energy security at its heart and delivers for families and businesses.
Britain is already the world leader in offshore wind, with over 5GW operational, which could double by the end of the decade, with the UK on track to reach around 10GW by 2020. That supports a growing installation, development and blade-manufacturing industry that employs about 14,000 people, but there is clearly potential for many excellent new careers. The Secretary of State has provided what the offshore wind industry has been asking for: clarity. She announced last November that the Government would hold three further contract for difference auctions in this Parliament, with the first due to take place by the end of 2016. If costs come down sufficiently, the UK could support up to another 10GW of new offshore wind in the 2020s, which is a doubling of capacity.
The offshore wind industry must do its part in return for being provided with such long-term clarity. The technology needs to move quickly to cost-competitiveness. There will be no blank cheques. A priority is the UK supply chain playing a full part in enabling the offshore wind industry to drive towards cost-competitiveness. The industry exemplifies what the Government are trying to achieve: creating jobs and apprenticeships, and working towards full employment while delivering our decarbonisation targets—but not at any price.
The Government have set their new energy policy direction. Offshore wind developers fully understand the importance of UK companies securing economic benefit from our programme of development, and they agree that it is not unreasonable to want to see UK companies competing for this work, as they can then use the home market as the perfect launch pad to export their capability and expertise.
In conclusion, the Government are fully committed to the continued growth of UK offshore wind and its supply chain, and to building on the success that the region is already seeing. I congratulate my hon. Friend the Member for Cleethorpes once again on raising this important issue.
Question put and agreed to.
Bank of England and Financial Services Bill [ Lords ] (First sitting)
(8 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we begin, I have a few preliminary points. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings. Members may, if they wish, remove their jackets during Committee meetings. Today, we will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication. In view of the time available, I hope we can take those matters formally, without debate.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 9 February) meet—
(a) at 2.00 pm on Tuesday 9 February;
(b) at 11.30 am and 2.00 pm on Thursday 11 February;
(c) at 9.25 am and 2.00 pm on Tuesday 23 February;
(2) the proceedings shall be taken in the following order: Clauses 1 to 13; Schedule 1; Clauses 14 to 16; Schedule 2; Clause 17; Schedule 3; Clauses 18 to 20; Schedule 4; Clauses 21 to 38; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 23 February.—(Harriett Baldwin.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Harriett Baldwin.)
The Chair
Copies of any written evidence that the Committee receives will be sent to Members and made available in the Committee room and online.
We will now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. A Member who has put their name to the leading amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any of the amendments within that group. A Member may speak more than once in a single debate.
Please note that decisions on amendments take place not in the order in which they are debated, but the order in which they appear on the amendment paper. In other words, debate occurs according to the selection and grouping list, and decisions are taken when we come to the clause that the amendment affects. I hope that that explanation is helpful. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debates on the relevant amendments.
Clause 1
Membership of court of directors
Richard Burgon (Leeds East) (Lab)
I beg to move amendment 9, in clause 1, page 1, line 7, at end insert—
“(2A) In section 1(2)(e), at end insert “who shall include four designated representatives including—
(i) Practitioner Representative,
(ii) Smaller Business Practitioner Representative,
(iii) Markets Practitioner Representative and
(iv) Consumer Representative.”
The Chair
With this it will be convenient to discuss the following:
New clause 2—Composition of the Court of Directors of the Bank of England—
“In making nominations to the Court of Directors of the Bank of England, the Chancellor of the Exchequer must have regard to the importance of ensuring a balanced representation from the nations and regions of the United Kingdom.””
New clause 5—Publication of transcripts of meetings of the Court—
“In paragraph 12A of Schedule 1 to the Bank of England Act 1998, replace the word “record” with the word “transcript” in each place where it occurs.””
Clause stand part.
Richard Burgon
It is a pleasure to serve under your chairmanship, Mr Wilson, and to serve opposite the Minister.
On part 1 of the Bill, which is on the Bank of England, it is our intention to make the case for increased transparency and increased accountability at the Bank. At a time when the financial services sector, as the political system does, faces a lack of public support and public trust—or rather, not as much as we would like—it is in the interests of the sector as a whole and the Bank of England itself for it to present itself and its decisions in the most open way possible.
Clause 1 relates to membership of the court of directors. Amendment 9 regards representation on that court. We accept the proposals in the clause regarding membership of the court, but I note that concern was expressed in Committee in the House of Lords about a potential reduction in the number of non-executive directors in the court. Will the Minister clarify the number of non-executive directors that the Government foresee sitting in the court? In the light of amendment 9, which is in my name, and new clause 2, tabled by Scottish National party Members, the Government should make use of the option of nine non-executive directors in the legislation to ensure the widest possible representation and fullest possible input into and scrutiny of the Bank’s work through the court.
Through amendment 9, we seek to amend the Bank of England Act 1998 to insert a requirement that, of the nine non-executive directors, four be designated as representatives of specific practitioner sectors, including a consumer representative. We recognise that the court, as it stands, includes representatives of a variety of backgrounds, including, historically, the trade union movement. We welcome that and believe that that tradition and representation should continue.
To improve that representation, we propose drawing on the practice at the Financial Conduct Authority and the categorisation of its statutory panels to ensure that a practitioner representative for larger firms, a smaller business practitioner representative for smaller firms, a markets practitioner representative and a consumer representative are included. That is all I have to say directly in relation to amendment 9.
We believe that providing transcripts of the court’s proceedings, such as Hansard provides of our own discussions in Parliament, allows for rich scrutiny of lines of argument and is a clear way to increase transparency and public awareness. In the United States of America, it is the practice to broadcast meetings of the chairs of the various Federal Reserve banks. In the new clause, Members have not asked the Bank to go that far, but we believe that that is a positive example. The aim is to enable the public to understand what is going on and to allow greater scrutiny of the Bank of England’s valuable work.
George Kerevan (East Lothian) (SNP)
I want to speak to new clause 2, which is a probing amendment. My response will be determined by the Minister’s response. We are asking that, when making nominations to the Bank’s court of directors, the Chancellor should have due regard to the importance of ensuring balanced representation from the UK’s regions.
Overall, the Bill is useful in tightening regulation and in refocusing the organisation and direction of the Bank of England. In particular, there is much merit in tidying up the operation of the Bank’s three main committees overseeing micro and macroprudential activity and the operation of the Monetary Policy Committee and, if that is accepted, in ensuring that the Bank’s court becomes essentially the organiser of the organisation, with responsibility, as the main oversight, for how the Bank’s operation works and for ensuring that there is managerial competence and value for money and that resources are well deployed between the Bank’s various functions.
It has been generally recognised over the years that the court has sometimes had an ambiguous position halfway between being a proper corporate board and a policy-making institution. The Bill, correctly, separates the policy functions that go to the committees, leaving the board with the essential corporate governance. That is a step forward. My point is that, if we do that —if we redefine and concentrate the board’s activity—we must look at the composition of the board and ensure that it is fit for purpose—a new board for a new competence.
The composition of the current board is a little too narrow. I accept that it has moved beyond the days when the court consisted simply of City grandees. In recent years, appointment to the board has widened; the international influence has widened. It includes a South African and an American. There is some industrial representation, but by and large there is still a feeling in the wider financial community outside London and in the wider industrial and commercial communities outside London that it is too City focused. For a board that is about not simply managing the City, but managing the central bank, it would be in the interests of the central bank and of commanding the respect of the central bank if there were a wider remit in relation to appointments to the board.
In the new clause, I am trying not to be too specific. A board should not be federalised; it should not consist of delegates. A board has overall responsibility. I presume that most people around this table have been on the boards of companies, large and small. I have been on at least two dozen boards in my rather geekish lifetime. When boards have discussions about who should be on them, they say, “Well, what experience do we have? Who is not represented? What area of competence do we need that will help the board to function?” That is perfectly proper.
I am just saying that, given the key role that the Bank of England plays in the UK, there should be more representation of the regions and nations of the UK. That is particularly the case because the banking community is no longer concentrated simply in the City of London. There are operations in Manchester, Bristol, Glasgow, Edinburgh, Cardiff and beyond, and the industries and sectors there want to feel some confidence that the Bank of England listens to them.
I know of course that the Bank of England has long had a system of agents. I suppose that many of us around the table will have met the agents in our region over the years. However, the agents have a different function. We are talking about a new board for a single bank.
Let me say—I hope that the Government will respect this—that the principle has already been conceded in one respect, which has been referred to. It has been traditional since the post-war period for the Bank to have a representative of the labour movement, the trade union movement, on the grounds that labour and capital were the two great elements of the economy. Given that that principle has already been conceded, all we are talking about is extending it.
My final point is that the distinguished Governor of the Bank of England, Mr Carney, of course comes from Canada, where the principle is already accepted. There is a rule that, in composing the board of the Bank of Canada, due consideration should be given to the provinces being represented. There is not a rule that every province has to be represented on the board of the Bank of Canada; it is not as specific as that and nor should it be. However, if we look at the board of the Bank of Canada, we see that, strangely enough, all the provinces are represented. Mr Carney is perfectly comfortable with that, so we are not trying to impose a burden that he has not had to face in the past.
Richard Burgon
I will comment on new clause 2, in the name of the hon. Member for East Lothian. As I said, we see merit in the proposal for wider geographical representation on the board and we believe that it complements our proposals to ensure that different stakeholders are represented. We would be interested to hear a little more detail if possible. He spoke about different centres of employment—Birmingham is one example—but I would be interested to hear specific comments on whether this proposal relates to personal residency or employment and, crucially, does the SNP believe that devolved bodies should make recommendations to the Chancellor?
To clarify, our new clause 5, on the publication of transcripts of meetings of the court, is a small tidying amendment, but we hope that it would have a significant impact by opening up the discussions of the court to wider scrutiny and that it would ensure increased transparency and accountability. That is why I will seek a Division on new clause 5 and why I invite all hon. Members to consider voting for it.
John Mann (Bassetlaw) (Lab)
It is an honour and a privilege to serve under your chairmanship, Mr Wilson. The issue of the court and its lack of transparency— the amendments attempt to bring in some transparency—is one that has bypassed the majority of commentators and the general public. Hidden in the rather grand depths of the Bank of England, the court holds significant potential power, yet it has become embodied by not a concept of nepotism within the financial sector, but something akin to that. Perhaps “revolving door” is a better term. Someone goes in one door, they fail and go out of another door, and then they turn up in the same industry and at the same heights, time and again.
The criteria for who is on the board have always been shrouded in some secrecy. The hon. Member for East Lothian raised the question of the representation of the labour movement. That is a good and interesting point to examine in this context, because it remains the case today that Mr Prentis of Unison is on the court, as was Mr Brendan Barber of the TUC before him. I believe that Mr Bill Morris was on the court before that, and Mr Gavin Laird was too, in the distant past. Indeed, I used to see the papers that Mr Laird received at the time and the contributions he made. If they had been listened to at the time it would have had a significant impact on British competitiveness. Mr Laird used to argue repeatedly, very eloquently and in beautifully scripted speeches, that we were in danger of overemphasising the importance of finance at the expense of manufacturing. That is an issue not only for the Government, but for the Bank of England itself. Industry, as opposed to finance, needs to be in at the Bank. That is a fundamental weakness, because at present it is financiers as opposed to industrialists who are evident at the Bank, not so much in the expertise but in the mindset and the thinking which lead to decision making. The Bank thinks as financiers do, and it does not think more widely.
In the same way, my hon. Friends on the Front Bench propose to broaden the court with consumer champions and others who are missing at the moment. The Chancellor is decisively, deliberately and calculatedly removing consumerism and the consumer interest from regulation. Why? Because that is seen as a barrier to the ever onward growth and recovery of the big banks, not least RBS and Lloyds. Some commentators are speculating that there might be a fuel tax increase. That is quite wrong, in my view. What the Chancellor wishes to do is maximise his returns on the sale of shares in RBS and Lloyds. In itself, that is very sensible, and it is something that the Bank of England would support, does support and will support. However, speed and timing are critical in all of this. We have the Bank of England being unduly influenced by the Chancellor and the Treasury, while at the same time it is losing external influences from the world of industry. That includes both the employer and, potentially, the trade union influence.
There is the intriguing possibility of a more regional Bank. What would the world come to if there were people in the Bank of England who did not live in London or, more likely, in the commuter belt outside London? How would the world survive? It is a shame that my hon. Friends did not go even further and suggest that the court ought to meet not in the hallowed chambers on the third or fourth floor of the Bank, but in Manchester, Birmingham, Cardiff, Edinburgh, Aberdeen or Sheffield, in order that the public can see and hear it and get a feel for it. That would be an easy, significant win, and I am sure that the Bank’s representatives listening in will take note of that. I commend the amendments to the Committee; they are excellent and should be agreed.
The Economic Secretary to the Treasury (Harriett Baldwin)
May I say what a pleasure it is to serve under your chairmanship, Mr Wilson? I will speak to clause 1 and why it should stand part of the Bill before dealing with the amendments.
The clause makes the deputy governor for markets and banking a member of the court of directors—an important position that is not currently a statutory member of court. It also provides enhanced flexibility to add or remove a deputy governor or alter the title of a deputy governor, as well as the corresponding ability to make changes to the composition of the court, the Financial Policy Committee, the Monetary Policy Committee or the new Prudential Regulation Committee where a deputy governor is added or removed. Those important provisions will simplify the governance of the Bank.
Following the expansion of the Bank’s responsibilities through the Financial Services Act 2012, a deputy governor for markets and banking was appointed with responsibility for reshaping the Bank’s balance sheet, including ensuring robust risk management practices. That important position is currently filled by Dame Minouche Shafik, who is not a statutory member of court. We have talked about regional diversity this morning, but she ticks many boxes in terms of other forms of diversity, having been born in Egypt, worked a lot in America and being a British citizen. The clause amends the Bank of England Act 1998 to make that deputy governor a member of the court, ensuring equal status for all the Bank’s deputy governors and simplifying the Bank’s governance structure.
It should be noted that the power to add or remove a deputy governor will not permit the Treasury to remove a deputy governor or change his or her title while that deputy governor is in office. The measure will ensure flexibility for future need. At present, changes such as the creation of the new position of deputy governor for markets and banking can only be affected through changes to primary legislation. Instead, as a result of the clause, the Government will in future be able, by order and after consulting with the Governor, to adjust the size and shape of the Bank’s senior management team to meet future requirements—for example, to bring in new expertise if that proved to be necessary.
The hon. Member for Bassetlaw asks why we are changing the number of non-executive directors on the court. To be clear, that change is not being made by the Bill. The Bank of England Act 1998 requires up to nine non-executive directors, and following retirements there are currently seven non-executive directors on the court. A smaller board will be better for the Bank. The strong view of the Bank’s non-executive chair, Anthony Habgood, is that a smaller board makes for more effective challenge and accountability of the executive. When there are fewer non-executive directors, each member has greater opportunity to pose questions to executive members and to debate with them. A larger court might encourage a round table of individual speeches, rather than enabling effective back-and-forth discussions with and challenge to the executive.
Harriett Baldwin
The hon. Gentleman serves as a member of the Treasury Committee, and I believe he was also a member of that Committee in the previous Parliament, so he will remember that it produced a report in 2011 called “Accountability of the Bank of England” which recommended that the court’s membership be reduced to eight—smaller than we propose. It emphasised that a smaller court would allow for
“diversity of views and expertise”
while still being
“an efficient decision-making body”.
He may want to go back and look at the evidence base that the Committee looked at. It is important to emphasise that the Bill does not make a change in terms of the membership, which remains at possibly up to nine.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Does the Minister therefore believe that the Cabinet should be reduced in size?
Harriett Baldwin
The Cabinet, as the hon. Gentleman knows, has fluctuated in size over the years. On the evidence base, we are obviously talking about the experience of the Bank of England having in the past, particularly in the run-up to the financial crash, had a significantly larger court. I think there were 19 members in the run-up to 2009, and it was thought that that was a very large and unwieldy body. I think it still falls short of the number of people who currently attend Cabinet. There is a range of different views of effectiveness, but the important point to emphasise is that the Bill does not intrinsically make any changes to what is already there, although in practice we currently have seven non-executive directors on the court.
Importantly, the Bill also provides for the continued balance of internal and external members on the MPC, the FPC and the newly formed PRC. Following the addition or removal of a deputy governor, the Government may make a corresponding change to the number of members appointed by the Chancellor in the case of the FPC or PRC or the Governor in the case of the MPC.
New clause 5 would require the court to publish transcripts of its discussions within six months. I agree completely with the hon. Member for Leeds East that transparency is critical. The Bank of England makes decisions that affect all of us and it must be accountable to the public, and enhancing transparency is central to that. That is why I am so pleased to bring this Bill to the Committee: it makes governance of the Bank much more transparent in several ways. First, it makes the entire court responsible for the oversight functions. No longer will an oversight committee oversee the work of an oversight board. Every member of the board, executive or non-executive, will be clearly responsible for oversight of the Bank.
Secondly, the Bill removes a greater barrier to transparency and unnecessary complexity. In 2013, the Parliamentary Commission on Banking Standards noted the complexity of the present regime. It said:
“The accountability arrangements of the new structures”—
that is, the structures that exist now—
“are more complex than those of the previous regulatory regime. The PRA is a subsidiary of the Bank, and the FPC is a sub-committee of the Court of the Bank.”
The Bill will change the FPC’s status from a sub-committee of the court to a committee of the Bank and will end the PRA’s subsidiary status, establishing the Bank’s three policy committees on a common statutory footing.
The final and perhaps most significant means of enhancing transparency is bringing the whole Bank into the purview of the National Audit Office for the first time in its history. Allowing the NAO to conduct value-for-money reviews across the Bank will increase its accountability to Parliament and to the public. In turn, this will build greater public trust in the Bank’s operations and governance, supporting its vital independence role in the UK economy.
I agree with the hon. Member for Leeds East that transparency is important: it improves accountability and ultimately makes the Bank’s governance better. However, I disagree with him that mandating transcripts of court sessions will make governance better. As hon. Members are aware, the court is now required to publish the minutes of every meeting within six weeks. That was not always the case, but I am glad to see that the court has published historical records of its minutes, including those during the financial crisis. Through this, Parliament and the public now have greater insight into the governance of the Bank and the key decisions made. Transcripts are a different matter entirely.
We are fortunate in this debate because the impact of transcripts on Bank discussions has already been examined by Governor Warsh in his review, “Transparency and the Bank of England’s Monetary Policy Committee”. He said:
“Creating a safe space for true deliberations is among the most critical indicia of organisations that make good decisions, according to the leading academic and empirical literature and my own observation”.
I am sure we all want a court that makes good decisions. The alternative would be extremely costly for all of us. Governor Warsh looked at the MPC’s two discussion days and found that the different nature of the day one and day two discussions required different approaches to transcript publication. It makes sense to see which of those days is most like a court session and what Governor Warsh recommended. Day one is when the MPC members deliberate, challenge the evidence before them and question one another—exactly the kind of role that the court performs very effectively. Day two is very different. In Governor Warsh’s words:
“With few exceptions, the deliberations are nearly complete, policymakers are heard, and their judgments tallied.”
I think it is clear that day one is closer to the deliberations and discussions of a board.
Roger Mullin
I thank the Minister for explaining Governor Warsh’s views, but I would like to challenge his view that the academic literature is all one way. In fact, some of the academic literature points out that in more private settomgs, people are more prone to groupthink.
Harriett Baldwin
As a distinguished academic himself, the hon. Gentleman will know that academics often differ in their points of view. It is clear that in this case the distinguished Governor Warsh has come down in one way, and here in our deliberations we have come down in favour of producing a transcript, and Hansard performs that incredibly valuable role for us. I will make some further points, which I hope will convince him of the wisdom of the position that the Government are taking on transcripts.
When Governor Warsh looked at releasing transcripts of the day one deliberations, which he described as “safe space” deliberations, he found that
“Should the transcripts of the Day 1 deliberations be made public, the quality of the deliberative process would risk being materially impaired, to the detriment of sound policymaking.”
He went on to make a clear recommendation that
“the Day 1 policy discussions should no longer be recorded nor should they be transcribed.”
Publication of transcripts of meetings of the court would have a “chilling effect” on discussion and the quality of debate and harm decision making. I therefore hope that the hon. Member for Leeds East will not press his new clause.
John Mann
Having gone through in some detail an analysis of whether transcripts of meetings of the Monetary Policy Committee should be made available, on which there has been a thorough debate, including with members of the MPC, the Minister translates that to an amendment relating to the court. In relation to the court, what is the evidence base that suggests that the hearings or decision making of the court, as opposed to the MPC, would in some way be restricted by a transcript?
Harriett Baldwin
The hon. Gentleman makes an important point. The court oversees the MPC, the FPC, and the PRC under the proposals in the Bill. We have not discussed yet—I will be happy to do so—the fact that on the prudential side of discussions, the people on that committee will looking at material that constitutes, by any judgment, non-public information on the soundness of important financial institutions in this country. I am sure that, as a member of the Treasury Committee, the hon. Gentleman will agree that such material ought to be treated as extremely market-sensitive in any circumstances.
John Mann
The Minister is now jumping to a third body. The amendment relates to the court. The court does not make decisions on interest rates. The court does not delve into the financial situation of individual banks or other financial institutions. The court oversees; the court is strategic. Will she explain the relevance of her case in relation to the court, as opposed to the committee dealing with prudential regulation or with monetary policy?
Harriett Baldwin
I would have thought that it spoke for itself. The fact that the court is overseeing all these different committees, some of which will be considering material that is non-public information—
Harriett Baldwin
If the hon. Gentleman will allow me, I will give way to him when I have replied to his previous point. We are proposing the publication of a record of the court’s meeting, and I agree with him that it is important for that record to be in the public domain. There is a clear difference between that record and a transcript.
John Mann
I thank the Minister for giving way again. I have the advantage over her of having been in the deliberations of the Treasury Committee on these matters. There is a world of difference between decision making on interest rates or the examination of whether a particular financial institution is in danger of collapse and going into that in a committee and the role of the court. The Minister seems to misunderstand the role of the court. Has she looked at and understood the transcripts the discussions of the Treasury Committee and the banking review on the question of the court? She is talking about different bodies. This amendment is about the court. The Minister said, in response to my earlier intervention, that this is self-evident. No, it is not self-evident—
Harriett Baldwin
In responding to the hon. Gentleman’s intervention I will be a little bit cheeky, if I may, and highlight the fact that even that august body, the Treasury Committee of this House, sometimes meets in private. There is a need for a safe space for discussions at certain points. We agree with the hon. Gentleman that it is important to have a degree of transparency in terms of the court. We think that the record provided is adequate. I hope that the hon. Gentleman will not press the amendment.
Harriett Baldwin
I would like to move on, but I will take another short intervention.
John Mann
I thank the Minister for giving way. Debate is important. The Minister now cites in evidence the Treasury Committee, which is a good example. The reason that minutes and transcripts of Select Committees are available is because of the strategic overview and public accountability that they provide. That is the whole point about the court. It is not making decisions on the minutiae or on the specifics. It is providing an overview and oversight, on precisely the same democratic logic as a Select Committee. That is the point of this excellent amendment. The Minister does not seem to understand the point of the court and what it is there for.
Harriett Baldwin
With great respect to the hon. Gentleman, I do understand that. Perhaps he would like some further examples. The court plays an important role in relation to emergency liquidity assistance at the time of a financial crisis. We have to agree as a Committee that there will be times when the court is discussing something that we do not want to have transcribed and put into the public domain. Personally, I thought that Governor Warsh was very convincing in comparing what happens on day one of the Monetary Policy Committee and what can happen at other times—not necessarily all the time—and how a record will be published. The hon. Gentleman will vote one way and I will vote another. I do not agree with the amendment.
Amendment 9 would require representation on the court of particular sectors, and require the Chancellor to have regard for balanced regional and national representation on the court. Obviously, the Bank of England plays a central role in the UK economy, and its policy decisions are vital to everyone in the United Kingdom. I therefore entirely agree with hon. Members about the importance of the Bank of England giving careful consideration to how its policy decisions affect people throughout the country. This is at the heart of the Bank’s mission of promoting the good of the people of the United Kingdom by maintaining monetary and financial stability—indeed, that is precisely what the Bank does.
I will give a few examples. The Bank has representatives around the country; those agents work from 12 agencies, in Scotland, Wales, Northern Ireland and the regions of England, to gather information from businesses operating across many different sectors, including financial and non-financial firms. The regional agents, often joined by the Bank’s governors and members of the policy committees, regularly meet and hold panel discussions with companies of a range of sizes across the UK to gauge economic conditions and inform the Bank’s monetary policy and financial stability work. I trust that all members of the Committee have had an opportunity to observe that activity in their constituencies. If they have not, I strongly recommend that they do so, because those Bank activities are extensive. To give hon. Members an idea of how extensive they are: in 2014-15 the agents visited some 5,200 companies drawn from firms in all sectors and in all corners of the country; also, panel discussions were held with 3,700 businesses. Undoubtedly, the Bank goes to great lengths to ensure that it develops a detailed understanding of the conditions for businesses in all sectors across the whole United Kingdom.
In addition, the Prudential Regulation Authority’s practitioner panel ensures that the interests of those who must put the PRA’s rules into practice are communicated to the regulator. The panel includes representatives of banks, insurers, building societies and credit unions. The Financial Conduct Authority’s consumer panel has a statutory right to make representations to the PRA, and the FCA chief executive sits on the Financial Policy Committee and the PRA board, and will sit on the new Prudential Regulation Committee.
Through this Bill we are going further in ensuring that the regulators take into account the diversity of business models operating in the financial sector. Specifically, we are making it clear that both the PRA and the FCA must take account of the differences between different types of firm, including mutuals, whenever they are discharging their general objectives. We argue that these amendments are unnecessary and, indeed, unhelpful. They would cloud the appointments process.
George Kerevan
Does the Minister not accept that there is a difference between being consulted and having a right to be consulted and having a right to feel that one is represented on a deliberative body?
Harriett Baldwin
There is, but the purpose of the deliberative body, as we have heard, is effectively to act as the board of the Bank of England, supervising the different committees. Prior to the financial crisis, members of the court were often selected specifically to represent a range of sectoral interests, including many of those proposed in the amendments. The first problem with the amendments is that requiring representatives of different sectors and regard to regional representation will entail a much larger and therefore oversized and dysfunctional court. Before the financial crisis, when the court had non-executives specifically to represent different interests—why stop at the four listed in the amendment?—the court had an incredible 16 non-executives, rendering it far too large to operate effectively and unable to hold the executive properly to account.
Roger Mullin
I think the Minister may have been in error when she implied that the new clauses would introduce a requirement. Our new clause 2 simply says
“the Chancellor of the Exchequer must have regard to the importance”
of balanced representation.
Harriett Baldwin
The hon. Gentleman is right to highlight that difference. Of course, what the Chancellor of the Exchequer would have regard to is the quality and ability of those individuals to perform the function they are asked to perform. The Banking Act 2009 sensibly limited the court to nine non-executives, and in practice we have now reduced the number of non-executives to seven while keeping that non-executive majority, which means that the court is now sufficiently small to form an effective body that can challenge the executive. The amendments before the Committee would inevitably mean a return to a large, inefficient and ineffective court.
A second problem with amendment 9, which would require sectoral representation on the court, is that it would give rise to conflicts of interest. The amendment calls for several practitioner representatives on the court. We have tried that in the past, too. During the crisis, the conflicts of interest meant that some of those on the court who could have been of most assistance to the Bank had to leave the room for the most important decisions, such as on liquidity provision to the markets and on individual firms. That hampered the court’s ability to respond effectively.
George Kerevan
Does the Minister agree that her statement about the ineffectiveness of the board, because of its narrow composition during the crisis, makes our point that we need wider representation across the country, across areas and across industrial sectors?
Harriett Baldwin
I do not think anyone disagrees with the idea that we would want to have a range of different abilities and skills on the court of directors. What we are fighting against in opposing the amendments is the propensity of such amendments to lead to a larger and larger group of individuals on the court. Importantly, in relation to highlighting the potential for conflicts of interest, the conflicts policy now makes it clear that, among other restrictions, members of the court should not accept or retain any interest that is in conflict with membership and should not normally be associated with a PRA or Bank-regulated firm, whether as a director, employee or adviser. That ensures that the wide-ranging expertise—we all agree that that is necessary—appointed to the court can be deployed without obstacles, and leaves the court better equipped to respond to a crisis. The amendment would unravel those arrangements, and I argue that we should oppose it; we should not allow it to take us backwards.
The third and most important concern about the amendments is that they would impose unnecessary and undesirable constraints on appointments to the court. In the past three years, the court has been transformed. The Chancellor has appointed the highest-quality team, with significant experience of running large organisations and deep expertise in matters relevant to the Bank. The Government look far and wide for the best candidates, with roles advertised in the international press. Let me be clear: obviously, there are highly competent and highly qualified individuals who work in the sectors proposed and from all the regions across the UK. The amendments would constrain the appointments process utterly unnecessarily, potentially preventing us from forming the highest-quality, most experienced board for one of the most important institutions in the country.
Harriett Baldwin
Not off the top of my head. I cannot specifically think of anything, other than to highlight the fact, in relation to the previous life of the court, when we were dealing with a much larger organisation, that all the reviews since the financial crash have highlighted the unwieldiness of that organisation and the lack of clarity in terms of conflicts of interest as being among the underlying imperfections in the financial regulation that we inherited in 2010.
John Mann
The decision in Sweden, for example, to move to negative interest rates, the collapse in oil prices, the mistake that the Chancellor made with the timing of the RBS shares sale and the successful prosecution in relation to LIBOR are all issues that have originated within the past three years. Did the court in its wisdom say anything about any of them in giving advice to the Bank?
Harriett Baldwin
As the hon. Gentleman will be aware, a number of different independent reviews have been commissioned by the oversight committee during the past few years. I completely dispute his point about the sale of RBS shares. Given how much lower they are today, I would have thought he would welcome the fact that the Government were able to sell the first £2 billion-worth in the market last August. He and I will clearly vote along different lines on this matter. The Government feel that the amendment would constrain the appointment process, to the detriment of effective decision making in the court and in effect, therefore, to the detriment of the Bank’s overall effectiveness. Undoubtedly the court should have a breadth of experience and knowledge, and we certainly want different perspectives to be brought to bear.
It is also important that the court is able, when necessary, to commission the kind of review about which the hon. Gentleman speaks. There has been the Plenderleith review to increase emergency liquidity assistance capabilities and the Stockton review, which made recommendations on how the Bank communicates its forecasts. We have even spoken this morning about the Warsh review, which has made the very recommendations that we are considering, regarding MPC procedures and the governance of the Bank of England.
The current court contains a remarkable collection of experience and talent. Among the directors are the chief executive of a major telecoms provider.
George Kerevan
The Minister is being very sporting in giving way this morning. Can I take it from the tenor of everything she has said that the place for the trade union representative on the court, which we have had since world war two, is now in jeopardy?
Harriett Baldwin
I do not know where the hon. Gentleman would get that impression from. It is important that we have a chief executive of a major telecoms provider, a chief executive of a major power utility, a private equity specialist, a leader of a global information services group and a leader of a major public sector trade union. The chair, Mr Anthony Habgood, is one of the most experienced and respected company chairmen in the country.
George Kerevan
There has always been, since world war two, a place reserved on the court for a leading trade union figure. That is not written down anywhere, but it has always been accepted. Will it continue?
Harriett Baldwin
Nothing in my remarks this morning has suggested any change whatsoever in that policy, but it is important that the best people are selected for the roles and we do not accept the Opposition amendments, which would further constrain the selection process. I hope we can all agree that every member of the court, wherever they are from, should consider in their decision making the Bank’s impact on everyone in the UK, across the UK, not just in one region or one individual sector.
The amendments call for a different kind of court, made up of representatives from UK regions and representatives of narrow interests, and that would result in a court riven by conflicts of interest. We have tried that kind of court before and we know how the story ends. I hope that members of the Committee agree that we should not allow the amendment to take us back there.
Richard Burgon
We will not seek to divide the Committee on the amendment, but we might, of course, revisit the matter on Report.
On new clause 5, we have heard powerful interventions from the hon. Member for East Lothian, and insightful ones from my hon. Friend the Member for Bassetlaw, who speaks, on this and other matters, not only with great experience because of his role on the Treasury Committee but with great common sense about transparency and representation. I am disappointed, therefore, by the Minister’s lack of support for the new clause. She says that she supports transparency but, with respect, I do not believe that she has offered greater transparency in this regard, not even with the compromise of an above-the-line and below-the-line model for transcripts, which is used by local authorities and school governor boards. On that basis. I will wish to press the new clause to a Division and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
I remind colleagues that votes on new clauses will be taken at the end of the Bill proceedings.
Clause 1 ordered to stand part of the Bill.
Clause 2
Term of office of non-executive directors
Question proposed, That the clause stand part of the Bill.
Harriett Baldwin
I am glad that you are finding it as confusing as I am, Mr Wilson, that there is a group 2 and a clause 2 and what have you. Clause 2 enables the Government to extend the appointment of a non-executive director. The standard length of appointment for a non-executive director is currently four years, and this will be maintained following the passage of the Bill. However, if necessary, the Government will have the power to extend the appointment by up to six months. If the individual is subsequently reappointed to the court, the length of their new tenure will be reduced by the length of the extension.
The ability to extend a non-executive director’s appointment provides a number of key benefits. First, the ability to extend the terms of appointments by a few months enables the end dates of non-executives to be staggered, which supports smooth transitions in membership, preventing a significant change in personnel at any one time. Secondly, should a member of the court resign or retire unexpectedly, extending the term of one or more non-executive directors can provide resilience during a potentially turbulent time. Finally, enabling this extension will bring the court in line with the FPC and the MPC, whose members can already have their term extended by up to six months.
Richard Burgon
I will be brief, because the Opposition are happy with the proposal to provide for the extension of the term of office of non-executive directors. However, we feel that this is an opportunity to highlight again the important role that non-executive directors can and should play, a point made effectively by my hon. Friend the Member for Bassetlaw in the debate on clause 1. There was a clear suggestion in the other place that the Government believe that a smaller body of non-executive directors on the court would be more efficient, and the Minister has made that clear again. I take this opportunity to reiterate the point that it is necessary to ensure broad representation and the appointment of active and dedicated members. As my hon. Friend has indicated, the world would not come to a stop if there was broader representation, both geographically and in terms of life experience.
John Mann
I warmly welcome—warmly—this clause, as I do the Minister’s confirmation to the hon. Member for East Lothian that the Government have no intention of removing the trade union representative from the court. I warmly welcome that. It is an exceedingly sensible approach that will resonate well beyond this place. This clause should be unanimously adopted.
Harriett Baldwin
Excuse me if I faint from astonishment, Mr Wilson. I do not think that that has ever happened to me before with the hon. Member for Bassetlaw.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
Abolition of Oversight Committee
Richard Burgon
I beg to move amendment 10, in clause 3, page 4, line 5, after “would” insert “materially”.
The Chair
With this it will be convenient to discuss the following:
Amendment 11, in clause 3, page 4, line 7, leave out “may” and insert “shall”.
Amendment 12, in clause 3, page 4, line 11, after “directors” insert—
“and
(c) for the review to be conducted by a person who is not an employee or director of the Bank.”
Richard Burgon
The abolition in clause 3 of the oversight committee was clearly a very controversial part of the original Bill, as evidenced at each stage of the debate in the House of Lords. My colleague in the other place, Lord Tunnicliffe, supported Lord Sharkey in seeking to challenge it. Labour Members believe that the abolition of the oversight committee is an attack on accountability within the Bank, and yet another example of the Government rolling back recent legislation. I am sure that we will come to that topic on another day.
Not only is the reverse burden of proof or the presumption of responsibility being removed before it is even implemented, but the oversight committee was established only in the Financial Services Act 2012, as hon. Members will remember. The Government clearly felt unable to sustain their line of argument, and in amending the clause to allow a majority of non-executive directors the power to initiate reviews, they have made a welcome concession. It remains our view that the abolition of the committee is a retrograde step. We are yet to be convinced that affording the non-executive directors this power without the existence of the previous forum for discussion will mean that power can be exercised effectively. Perhaps the Government can say how they believe the non-executive members will discuss their concerns outside of the meetings of the court. Will they have to organise something akin to a stand-alone non-executive directors meeting? Perhaps such a forum exists, and the Minister can inform and enlighten me about it.
Following the negotiations in the other place, we have decided to allow this change in the Bill to be made. We will keep a watching brief on how it works over the coming months and we will seek to take advice from the non-executive directors on how they feel it has affected their ability to carry out their oversight functions.
We have proposed a number of amendments to improve the clause, particularly amendment 12, which seeks to increase the authority of the non-executive directors. On Report in the Lords, the Government stated that the initiators of a review among the non-executive directors would determine that they have the power to decide who should carry it out. It could be someone external or someone internal, from the independent evaluation office.
During a Treasury Committee hearing, the Governor was questioned at length, and told the Chair of the Committee that the IEO’s work is set by the court. Therefore, our amendment seeks to give the non-executive directors a duty to bring in external expertise and analysis to conduct such a review into the work of the Bank. Amendments 10 and 11 would further clarify and strengthen the Bill in that regard.
George Kerevan
I, too, had reservations about the abolition of the oversight committee. I warm to it to the extent that we have clarified, or are in the process of clarifying, the role of the court in a narrower sense as a proper functioning board of a wider organisation, although the Minister’s responses in the previous debate have given me some cause for concern.
It is important to grasp that the existing oversight committee is nothing more than the non-executive directors meeting as a body, so the existing oversight body gives some official grounds for the non-executives to meet. I have been on many boards where it was quite the norm for non-executives to meet informally, and one trusts that the non-executives on the court are of sufficient experience to be able to do that. Nevertheless, there must be a worry if the current ability to meet separately and to be resourced as the oversight committee is taken away. Therefore, the amendments being proposed to the clause are a useful way of just stressing on the part of Parliament that what I have described is what we expect the non-executives to do.
It might be important to consider circumstances where the non-executives might want to discuss the overall direction of the Bank. We have had one such experience in the last couple of years. The major activity of the Prudential Regulation Authority, which is soon to be the Prudential Regulation Committee, has been to conduct the stress tests on the banks. It does so under separate legal obligations from Europe. The stress testing is a highly extensive and highly resource-driven activity, and there were issues in the first round of stress testing because resources were clearly being directed from other parts of the Bank to help the PRA to do its job. There were issues about who was making decisions, and about whether enough resources and staff time were being made available from the other parts of the Bank to the PRA. A number of the non-executive directors became slightly alarmed about how the stress tests would be conducted and about the availability of the necessary resources.
There can be quite significant points when the non-executive directors would have to say, “We are worried about the deployment of resources by the executive directors. We want to stand back and look at how this is being done.” The non-execs must have the power as a body to lean against the significant influence of the executive. The Bank of England is one of the major institutions of the UK and of global banking, and the Governor of the Bank, Mr Carney, for whom I have a great deal of respect, is one of the most senior central bankers in the entire world. Leaning against him when he says, “Do this or do that,” is difficult. The amendments would give the non-executives some backbone, so when they are worried about the direction of resources they can say, “Whoa.”
John Mann
My view is similar to that of the hon. Member for East Lothian, in that I do not object to removing the oversight committee if the functions are effectively outlined. In addition to the example of the stress tests, there are various potential events—some would call them calamities, others opportunities—that would affect the structure and ethos of the Bank of England. They include British exit from the European Union or Scottish independence. They would require the court to act effectively and strategically. If there is a feeling of conflict in direction—direction being what should happen and what people should spend their time on—the ability to draw in external reserves and expertise is key. The power to do that has to be there.
Amendment 12 in particular would be useful to the Government and would complement their approach. I put it to the Minister that it would be helpful, given the direction of travel. I tend to concur with the Treasury Committee’s general view on this point, but only if the court is right and the non-execs have that power. The Treasury Committee, on behalf of Parliament, has made it clear that bringing the non-execs from the court into the Treasury Committee and having that dialogue in public and producing transcripts of it, which has not happened in the past, will be an important feature in the future.
Harriett Baldwin
The line-by-line consideration of this provision in the other place and here this morning has been extremely helpful. Before I speak to the amendments, let me give the Committee an example of the problems in the oversight committee’s current arrangements which I think will inform our debate. The hon. Member for Bassetlaw mentioned the 2013-14 foreign exchange market investigation, which sought to establish whether any Bank officials were involved in or aware of the FX market manipulation. In October 2013, the Bank’s governors initiated an extensive internal review, and they regularly briefed the court at its meetings from November 2013 onwards. In March 2014, it became clear that an independent investigation would be appropriate. The oversight committee took over the investigation and appointed Lord Grabiner QC. That is a very good example of the oversight functions. In practice, the executive needed to join the oversight committee discussions for the oversight functions to work and be effective, both as the investigation progressed and once attention turned to delivering the recommendations. It would be better practice to make the oversight functions the responsibility of the whole court. That is the purpose of the clause.
I welcome the opportunity to speak to the amendments and to explain the improvement in the oversight arrangements at the Bank of England and the power we have ensured for the court’s non-executive majority. The Bill brings the court closer to the model envisaged by the Treasury Committee, which called for a board with powers to conduct ex-post reviews of the performance of the Bank; for board members to be authorised to see all the papers submitted to the Monetary Policy Committee and the Financial Policy Committee; and for the board to be responsible for reviewing the processes of the Bank’s policy committees. Making the oversight functions the responsibility of the whole court makes it clear that every member of the court, executive and non-executive, can be held to account for the use of these functions. No member of court can claim that the oversight functions were not their job, since they will now rightly be the responsibility of all.
That replaces the current arrangement in which there is effectively an oversight committee overseeing the work of an oversight board. That is neither efficient, nor best practice. In fact, on Second Reading my right hon. Friend the Member for Chichester (Mr Tyrie), Chair of the Treasury Committee, put it well when he said:
“The oversight of the executive will be the responsibility of the court itself, rather than a sub-committee. Even though it was not called a sub-committee, it was, in fact, a sub-committee, and a weaker committee than the court.”—[Official Report, 1 February 2016; Vol. 605, c. 668.]
During the Bill’s passage through the House of Lords, we introduced the power, which has been welcomed by members of that House, that this amendment seeks to alter. This part of the Bill ensures that a majority of non-executives can always initiate performance reviews without needing to secure the agreement of a majority of the whole court. If just four non-executive directors want a review, they will be able to initiate it. Under our proposal to give more powers to the non-executive directors to do their job effectively, the initiators of a review would determine who should carry it out. This could be someone external or someone internal, including the Bank’s relatively new Independent Evaluation Office. The amendment would take away their discretion and make the new Independent Evaluation Office irrelevant.
The Bank’s Independent Evaluation Office reports directly to the non-executive chair of court. A few months ago, it published a review into the Bank’s use of forecasting—a clear example of where an internal review is appropriate. In our opinion, Lord Grabiner’s inquiry into Bank officials’ awareness of market manipulation in the foreign exchange market was an example of where an external review was appropriate.
The Bank’s non-executive directors, as we have heard in a previous debate, are selected for their ability to bring new perspectives and experience and to challenge and scrutinise the Bank’s executive. It is right to give them the powers to ensure they are able to fulfil this role. The amendment would send a message that we do not trust the non-executive directors to do their job. For the discretion of those high-quality non-executives to determine what reviews should be carried out and who should carry them out, it would substitute a conveyor belt of external reviews.
Those commissioning a review, whether the court as a whole or the non-executive directors, are best placed to decide whether an internal or external review is most appropriate. The Bill rightly allows that discretion for the whole court and for the non-executives. The amendment would take away that choice, which we think would be bad news for effective oversight. I hope the hon. Member for Leeds East has listened to the arguments. We all agree that the important power in the Bill for the non-executives to act independently to initiate reviews of the banks should not be constrained in this way, and I hope that after due consideration, and after the extremely valuable debate in both Houses, he will withdraw his amendment.
Richard Burgon
We do not intend to divide the Committee on the amendments to clause 3, although I will make one observation. I might get the quote wrong, but I remember a line in Shakespeare’s “Julius Caesar”:
“I come to bury Caesar, not to praise him.”
The oversight committee was praised by the Minister, but now, under clause 3, it is to be buried. It was praised by the Minister in response to an intervention by my hon. Friend the Member for Bassetlaw, and now we see that it is about to be buried, which we regret. We welcome the concessions that have been made. We do not wish to press the amendment, but we reserve the right to return to these issues on Report. I also point out that the Internal Evaluation Office can continue, tasked by the court. The amendment refers to decisions by non-executive directors. Internal evaluation is the Bank marking its own homework, which should worry us all. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Harriett Baldwin
The clause gives the oversight functions previously delegated to the oversight committee, which has been a sub-committee of the court, to the full court. What do we gain by making the oversight functions the responsibility of the whole court? We want to keep those functions, which we all agree are important, and now every member of the court, executive and non-executive, can be held to account for the use of those functions. Should something go wrong, no member of court could ever claim that the oversight functions were not part of their job. They will now rightly be everyone’s responsibility.
We have heard how that arrangement was endorsed by my right hon. Friend the Member for Chichester on Second Reading, but it is worth harking back to what the Parliamentary Commission on Banking Standards recommended when it set up the oversight committee. In its report, the commission endorsed the Treasury Committee’s recommendation that the Bank’s board should be responsible for conducting the ex-post reviews of the Bank’s performance and we believe that that is precisely what the Bill will achieve. The commission went further—I am sure that hon. Members will have read its report before arriving this morning. On page 482, the commission rejected the oversight committee created in the 2012 Act. The commission denounced the committee and despaired that
“It, rather than the Court as a whole, will be responsible for monitoring the Bank’s response to, and implementation of, the recommendations of any review it commissions.”
It is therefore important to stress that, through the Bill, the court as a whole will be made responsible for ensuring oversight of the Bank.
We have also talked about how the clause will enable full and frank discussion involving both the executive and the non-executive majority on how best to exercise the court’s oversight functions. The non-executives bring challenge, scrutiny and outside experience while the executive minority provides the in-depth knowledge of the Bank’s operations. By abolishing the oversight committee, we bring the court closer to the model envisaged by the Treasury Committee, which called for: a board with powers to conduct ex-post reviews of the Bank’s performance; board members to be authorised to see all the papers submitted to the MPC and the FPC; and the board to be responsible for reviewing the processes of the Bank’s policy committees.
It is important to emphasise that the Bill protects the ability of those non-executive directors to initiate performance reviews. We do not need them to secure the agreement of a majority of the whole court. Should a majority of non-executives wish to initiate a review, the rest of the court will not be able to block it. The initiators of such a review would determine who should carry it out. It should be someone external or internal, including the Bank’s new Independent Evaluation Office.
The clause safeguards the non-executives’ oversight of the Bank and provides additional protection against the emergence of groupthink. I commend the clause to the Committee.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Functions of non-executive directors
Question proposed, That the clause stand part of the Bill.
Harriett Baldwin
I can canter right through the clause, which requires the court to establish a sub-committee of at least three non-executives to determine the remuneration of the Governor and deputy governors. Clearly, we would not want the executive to set its own pay, so to require that that power be delegated to at least three non-executives brings the legislative requirements for the Bank’s remuneration committee in line with UK corporate governance code. The current remuneration committee has four members.
Richard Burgon
I too will be brief. I will not be cantering as I know very little about horses, but as we have already discussed non-executive directors in the debate on our amendment to clause 1, I have nothing further to add.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Financial stability strategy
Harriett Baldwin
This will be more of a trot—[Interruption.] There are no Trots opposite me today, obviously.
Clause 5 will provide the court of directors with an express power to delegate the production of the financial stability strategy within the Bank. Subsection (3) makes it clear that the court retains the ultimate responsibility for any delegated duty or power, including its duties in relation to the financial stability strategy. The clause will allow the Bank to utilise its internal expertise to produce the strategy, while maintaining a clear line of accountability to the court. The drafting reflects the discussion in the other place, where it was felt that the Government’s initial proposal lacked sufficient clarity. Those concerns were addressed by the Government amendments that bring us the clause as it stands today. I hope that the Committee agrees that the clause will afford the Bank the necessary flexibility when producing the strategy while ensuring that the court will be held to account for its contents. I commend the clause to the Committee.
Richard Burgon
In the debates on the clause both on Second Reading and in Committee in the Lords, it was argued that it should not simply confer on the Bank the power to set the financial stability strategy. The original proposal was vague, but although it was subsequently clarified by the Government amendment that conferred the power on the court of directors, the Opposition are not convinced that that is sufficient.
The impact assessment says:
“At present, the Bank’s financial stability strategy is set by the Court after consultation with the FPC…and HMT.”
It goes on to say that making the Bank responsible for setting the strategy and allowing the court to delegate its production within the Bank will ensure that the court is responsible for the running of the Bank and the Bank’s policy committees are responsible for making policy. The clause does not make it clear exactly what the financial stability strategy is supposed to be. All it does is create a power and impose the responsibility to create such a strategy relating to systemic risk in the UK financial system.
I shall repeat a concern raised by my colleague Lord Tunnicliffe regarding the financial stability strategy, because the response in the other place was not sufficient. Lord Tunnicliffe highlighted how a five-page strategy document was produced in 2013; it was then revised and published in the 2014-15 report, wherein it had been reduced to one column. In the Bank’s 2015-16 report, there was no mention of a financial stability strategy in the court’s ownership. Will the Minister confirm the importance of the financial stability strategy? It should be clear who is responsible for such a strategy.
Clause 5 creates a problem. A future financial stability strategy will emerge from somewhere within the Bank of England. It would be preferable if the people who are to be directly responsible for its production were identified in the Bill, rather than responsibility being conferred on the court with powers to delegate elsewhere. It would make most sense if the people made responsible for producing the strategy were the members of the Financial Policy Committee, as we have set out in new clause 6, which we will discuss later.
John Mann
The debate on the clause is very important, because the little-discussed danger is that we are creating an all-powerful Governor who determines, in his or her ultimate wisdom, a financial stability strategy for the country—as if everything will then be fine.
The current Governor obviously has a bit more time on his hands because interest rates have not risen since 2009. The MPC, with its monthly meetings having gone down to eight a year, has not had a great deal to do other than maintain the status quo. In some ways, that is precisely the problem that was there previously. Before the 2008 crisis the Governor was responsive—looking at things, making speeches about what had happened in the past month or two and trying to tweak the system—and examination of the underlying problems in the system, in the sector and on occasion in the economy as well simply did not happen. The danger is that we again become complacent about such things. That is precisely why the Treasury Committee was keen to see an enhanced and powerful court of directors taking responsibility. It would be useful to have a clear statement from the Minister, endorsed by Parliament, that the model being created is not that of the all-powerful Governor, and nor is it one that we expect to see in future.
The Treasury Committee is a wonderful body, with great membership over the years and reasonable membership even to this day, but a clear message about what is expected of it by Parliament would be valuable: the Committee, on behalf of Parliament, is expected to hold the court to account properly and effectively. That has not been the case over the past decade. The chair of court has appeared, but the non-execs have been invisible. With the court having a more important role, it is critical that the Treasury Committee be given a clear indication by Parliament that it is expected to give a reasonable amount of its time to holding the court to account publicly for the new powers, whether the Committee likes it or not, or does it joyously or reluctantly.
It will be useful to hear from the Minister about those two points, so that we get her views on the record.
George Kerevan
In itself, the clause is innocuous. It is a tidying-up operation, but lurking beneath it is a danger. Standing back from the restructuring of the policy committees of the Bank, we appear to be ending up with an exercise in bureaucratic symmetry—a committee to do this and a committee to do that, micro, macro, prudential or supervision, and the Monetary Policy Committee. The different committees are not supposed to talk to each other, doing discrete policy. That looks all right—someone is doing it—but what we are in fact ending up with is what I want to underline to the Minister and, through her, to the Treasury team.
The danger is that in creating bureaucratic symmetry, we have not got very far in creating a workable regulatory regime that is robust enough to meet the next crisis. One of the problems is that we are creating a silo for fiscal stability—basically, checking when a bubble arises and stopping it—and a silo for monetary policy, but the two are not talking to each other, so we are in danger of creating conflicts between the two main policy committees.
It is perfectly possible for the Monetary Policy Committee to go in a separate direction. At the moment it is refusing to raise interest rates, but that is leading to the committee in charge of fiscal policy and financial stability starting to discuss whether it should use its financial buffers to slow down a bubble in the housing market. It is possible, but a bit crazy, for the two different committees to take two different stances when the whole point of putting financial stability and monetary policy under the same roof—the Bank—was meant to be a co-ordinated policy.
Assigning responsibility for financial stability to the Financial Policy Committee does not get us off the hook of someone somewhere laying down broad policy objectives. The MPC has broad monetary policy objectives—I think that in the present climate of deflation, they are probably the wrong ones—but the FPC has very vague guidelines as to what it should be doing, and so suddenly we discover, in default, that the only person in the land who is actually overseeing all the different policy options is the Governor himself, and he is not even getting clear enough direction from the Treasury. By all means support clause 5 as a tidying-up operation, but it still leaves big holes in terms of who is actually laying down the major policy directions for the committee.
Harriett Baldwin
Opposition Members have suggested that the Bill, in and of itself, makes a change to the power and importance of the role of the Governor of the Bank of England. I would submit that the Governor of the Bank of England is an incredibly powerful and important appointment, but I would not say that the statutory powers of the Governor are increased from their already elevated level by the Bill. Obviously, he is the one who has a role across all the different committees, but he has always had a very important role.
The hon. Member for Leeds East is absolutely right to highlight the fact that in the other place there was extensive debate on the precise wording of the clause. Convincing arguments were made to change it and the Government tabled amendments to provide the court with an express power to delegate determination of the strategy. That is a change from the original intention after the consultation undertaken in the summer. To be clear, it will be for the court, as the governing body of the Bank, to decide who is best placed to set and review the strategy.
The hon. Member for Bassetlaw asked specifically about the role of the Treasury Committee in continuing to scrutinise the role played by the Bank of England, the Governor and the court. I see nothing before us today that would change the current arrangements whereby the Committee has an important role in taking evidence.
Hon. Members asked about the co-ordination between the Monetary Policy Committee and the Financial Policy Committee. They are independent committees with separate objectives. It is important that the Governor sits on both committees and is able to see what is going on in both committees, but we think it right to strike a balance to ensure that each of the committees remains focused on its individual remit while fostering interaction between monetary and macroprudential policy.
There has been a good debate in both Houses, illustrating the value of line-by-line scrutiny. I think that we have landed in the right place and I commend clause 5 to the Committee.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
Monetary Policy Committee: membership
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 6—Financial Policy Committee: procedure—
“In paragraph 11 of Schedule 2A to the Bank of England Act 1998, after subsection (7) there is inserted—
‘(7A) The Financial Policy Committee shall inter alia at least each year commission and publish promptly external research into the level of systemic risk to the stability of the financial system in the UK.
(7B) As soon as reasonably practicable after each meeting of the Financial Policy Committee, the Bank shall publish a record of the meeting before the end of the period of 6 weeks beginning with the day of the meeting.””
Harriett Baldwin
It will be useful to consider the new clause, tabled by the hon. Members for Leeds East and for Wolverhampton South.
Clause 6 brings the Financial Policy Committee into line with the Monetary Policy Committee and the Prudential Regulation Committee. It makes the Financial Policy Committee a policy committee of the Bank, rather than a sub-committee of court.
Richard Burgon
As the Minister explained, the Financial Policy Committee is to be transformed into a committee of the Bank of England. As she explained, it had existed previously as a sub-committee of the court. Again, we see what one commentator, Professor Alastair Hudson, described as a spaghetti of committees. Perhaps we need to look at simplifying them so that the people we represent can understand better the system that is intended to serve them.
The FPC should be a body that takes a much more visible role when there are systemic challenges to the UK financial system. The problem that is created by the so-called spaghetti of committees issue is that it is unclear when and if it will relate to finance as opposed to economic policy more generally, and when it will relate to systemic risk rather than simply to the solvency risk associated with an individual financial institution. The spaghetti of committees issue means that the individual bodies have to fight for their role within the regulatory structure, instead of having their regulatory role clearly established by statute.
We believe that considerable thought should be given to how the FPC could play a more active role in the creation of policy relating to systemic risk. At one level, the body that is supposed to analyse the highest levels of risk to the UK economy ought to be one that regularly takes the lead in relation to policy formulation in that context. The Minister explained and reiterated quite rightly how many external views are published, but it would be helpful for the economy as a whole if the views of the members of the FPC were given greater publicity.
Our intention in proposing new clause 6 is to propose requirements on the FPC to regularly publish external research into the level of systemic risk to the stability of the financial system in the UK. I note the points that the Minister has made on that. Furthermore, as we seek greater transparency, we have again sought publication of a record of the meetings of the Financial Policy Committee within a reasonable timeframe. I am delighted that the Minister has clarified that that is indeed the case, and that that takes place within six weeks. I am reassured by much of what she has said regarding the provisions of section 9W of the 1998 Act on research and surveys and the provisions of section 9U on the publication of that research. Given that, and given the comments made by the Minister, we will not press new clause 6.
John Mann
The shadow Minister is such a moderate these days. I am feeling nervous, because new clause 6 is an excellent amendment that I wholeheartedly endorse. If we look at the FPC’s membership, they have huge experience of being in companies that have not paid a great deal of tax in the United Kingdom, so some expertise is brought to bear. The multinational structure of the UK economy, lauded as being the most open in the world, is also a potential systemic risk. The tax avoidance scandal demonstrates the scale of that potential systemic risk, not only in terms of the amount of money we are not getting in—that is an ongoing problem—but in terms of the structure of our economy.
For example, if some of the commentators are right about the response of capital to a British exit from the European Union, and if that coincided with a collapse in the euro, our economy would be vulnerable. The FPC needs the ability to work through the scenarios and the options and to see whether our structures are sufficiently good—I put it to the Minister that they are not and that we remain hugely vulnerable. That is one reason.
The second reason is that our housing market has a perverse structure that is worse than that of any other advanced economy. We have an absurdity that we have not been able to deal with, whereby there is huge housing price inflation in London and the south-east, yet the vast majority of houses we are building are in areas such as mine. They take a long time to sell because there is not a huge amount of demand for that new housing, but there is plenty of land and plenty of people willing to build housing, especially if the Government subsidise it. The Government are pressing for more and more housing, yet at the same time they face a systemic risk in the housing market. That is not a problem created by this Government; it goes back several generations. If the housing bubble were to burst in a range of different ways, that would be a fundamental problem.
The third systemic risk, which we saw in 2008, is the level of indebtedness. It was the American sub-prime market that led to the chain of events that caused the world financial crisis, not a specific collapse in this country, but we are hugely vulnerable. We, as a nation, are far too indebted. What is different now from any time in our history for both the corporate sector and individual households is that interest rates are at a record low. There is therefore a whole generation of people—two generations, in effect—whose expectations and economic behaviour is predicated on permanent low interest rates.
Commentators machinate—the Treasury Committee machinates at great length—about whether there will be a 0.25% increase in interest rates, yet we only need to go back 25 years and they were at 15%. That is part of the systemic risk. We therefore do not want to rely on the same old commentators—the OECD or the IMF—who got it wrong before 2008 and are using the same old paradigms.
The FPC should do precisely what the new clause suggests: ensure robustness in the British system. In a sense, that is the point of the FPC; otherwise, it has no point at all. What is proposed in the new clause is exactly what is needed. Indeed, we probably need more than that, but it is a good start. It will get minds concentrated on the scenarios and the options and, critically, whether the financial culture in this country’s businesses and households is sufficiently understanding to deal with the shock to the system that could come and which, by definition, will be outside our national control. That seems to be the point.
I will end on this point. It is quite a feasible scenario that at 7 o’clock in the evening of 12 March, after the German regional elections, the German media will be announcing the end of Chancellor Merkel. It is also a feasible scenario that the main opposition party—Labour’s sister party, the Social Democratic party—will come an unprecedented fourth. It is being seen as the most significant political day in 50 years in Germany, and it will have a huge immediate impact on the euro and the stability of the eurozone. We do not have an approach to dealing with that, because we presume that such major shocks to the system are not going to come. That is precisely the point of having the FPC and that is why the new clause is such a good one. We ought to be robust.
Harriett Baldwin
I would certainly be very concerned if the hon. Member for Leeds East were developing a reputation as a moderate, not least because that might cause him not to be put forward as a Labour candidate at any future election. That would be a very worrying development. My analysis of his political point of view is that no one in this country could describe him as a moderate. This may be the first occasion on which he has been described as such. “Trot” might have been a more appropriate description of some of his political views, but I digress in an entirely inappropriate way.
I want to respond to some of the points raised and indeed to the important speech made by the hon. Member for Bassetlaw about the fact that the UK is an open economy. Therefore, by its very nature, it is open to economic developments in the rest of the world. He highlighted three topics with which the Financial Policy Committee should rightly be concerned. The first was the importance to financial stability in this country of the UK Government being able to receive tax revenues in order to pay for public services. He will know that it is incredibly important in this regard that we work with other countries and, notably, the OECD on the base erosion and profit shifting work, which is an important matter, perhaps not so much for this Committee but for other Committees in this House. That is an incredibly important issue on which we work internationally.
I reassure the Committee that, in terms of the overall resilience of the UK banking sector today, compared with the resilience at the time of the last shock, it does appear to be increasingly resilient. We would like to put that on record. The aggregate capital ratio, the common equity tier 1 ratio, is currently 12% for the banking system as a whole, which is a full 3.7% higher just since the end of 2013. The major UK banks all came through their stress test with the FPC at the end of last year without being asked to raise more capital. The FPC concluded that the UK banking system would have the capacity to support lending to the real economy even in the context of a severe global economic slowdown triggered by a downturn in the emerging economies.
The hon. Member for Bassetlaw also mentioned the housing market. Again, I think that it would be really valuable for the Committee to put on the record that the Government have granted the FPC powers of direction regarding residential mortgages and are also consulting—I hope that Opposition Members will support this—on extending its remit to cover powers regarding buy-to-let mortgages as well. Those are important points.
The hon. Gentleman also mentioned the rise of private sector borrowing. On that point, we argue that progress has been made to improve the personal financial position of households in the UK. Household debt relative to income has fallen from 168% in 2008 to 142% at the last reading. That includes both mortgage and unsecured debt. The FPC does study these numbers very closely. It stated, the last time that it looked through them, that given the actions that it has taken household indebtedness currently does not pose an imminent threat to financial stability, not least because underwriting standards are currently more prudent than in the past. Of course, however, the FPC must and will continue to monitor the household sector and will take further action if necessary.
George Kerevan
I appreciate the Minister’s overview of the financial markets and how stable they are. Obviously, she has not read the financial press this morning. The whole basis of the international bank resolution regime that we have brought in since 2008 is based on convertible bonds. The convertible bond market has gone berserk in the past two days. Constant default rates on commercial paper covering bonds have spiked by a whole number of points. Let me assure the Minister that the markets are not anywhere near as quiescent as she tells us.
Harriett Baldwin
Again, the hon. Gentleman puts words into my mouth that I did not utter. However, I did want to point out that the FPC looks at the financial sector’s resilience. No one would deny that the markets are going through rough and troubled times, but the FPC’s role is important and I hope he will agree that its powers to look at different aspects of the economy have improved the architecture of financial regulation since the last crisis. I highlight the way in which the Bank of England, as part of its monetary policy remit, has kept inflation as low as it has.
The hon. Member for Leeds East pointed to the “spaghetti” of the Bank’s organisation. I agree that we need clarity to be able to tell our constituents about how the architecture works. I share that objective. The Bill improves the pasta-related shapes of financial architecture. I would argue that the current situation, with a subsidiary and so on, is more like spaghetti. When I was trying to think of an appropriate pasta-related analogy for what the Bill does in establishing new architecture that we can explain to our constituents in simple terms, I came up with the idea of three ravioli—independent, but, importantly, in the same bowl.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 7
Monetary Policy Committee: membership
Question proposed, That the clause stand part of the Bill.
Harriett Baldwin
With all this talk of food, I was hoping that we might break for lunch. I am not sure what time we will do that, but I will deal with clause 7, which I think will be quite brief. It makes the deputy governor for markets and banking an ex-officio member of the Monetary Policy Committee. Previously, the only ex-officio members of the committee were the Governor, the deputy governor for monetary policy and the deputy governor for financial stability.
As I set out in my remarks on clause 6, following the expansion of the Bank’s responsibilities, the Government and the Bank made a number of new appointments, including the creation of the post of deputy governor for markets and banking. It is currently held by Dame Minouche Shafik and she sits on the MPC as one of the two members appointed by the Governor of the Bank of England after consultation with the Chancellor of the Exchequer. The clause formalises that arrangement and ensures that expertise for monetary policy operations is maintained on the committee.
The clause also reduces the number of members of the committee who may be appointed by the Governor of the Bank of England from two to one, ensuring that the committee’s current balance is preserved. It provides that anyone appointed as a member of the committee by the Governor must carry out monetary policy analysis in the Bank and it gives that member the title of chief economist of the Bank.
In addition, the clause formalises existing practice in relation to conflicts of interest by introducing a statutory requirement for the Chancellor to take account of the interests of potential appointees in deciding whether they would be able to do the job. I do not think that the clause will be controversial.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Bank of England and Financial Services Bill [ Lords ] (Second sitting)
(8 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Economic Secretary to the Treasury (Harriett Baldwin)
The clause is the last one to do with the governance of the Bank of England; the others we covered this morning.
The clause amends the existing statutory requirement to publish the Monetary Policy Committee minutes within six weeks of the occurrence of the meeting so that they will be published as soon as is reasonably practicable. That, too, was a recommendation of the Warsh review, which set out that it would improve “effective communication” of the MPC’s policy judgment and stated:
“Publishing the details of the vote contemporaneously would bolster individual members’ independence and accountability.”
The MPC accepted the recommendation and since last August has published the minutes of its policy meeting at the same time as its policy decision. The clause simply formalises that arrangement, enhancing the transparency and accountability of MPC practices.
The clause also reduces the number of times that the Monetary Policy Committee is required to meet each year, changing the requirement to meet at least once a month to a requirement to meet at least eight times in each calendar year and at least once in every 10-week period. That, too, is implementing a recommendation of the Warsh review, which concluded that the change would bring the Bank’s practice into line with that of
“other leading advanced-economy central banks”
and support effective policy making.
The clause also amends the quorum rules in line with the changes to the MPC membership that I set out in my remarks on clause 7. Finally, clause 8 formalises processes and strengthens procedures on conflicts of interest for the MPC that are already delivered in practice.
Richard Burgon (Leeds East) (Lab)
Clearly, the decisions of the MPC are important for the financial markets. In essence, those markets may react immediately upon seeing the detailed minutes of the MPC meetings. A system in which all discussion between committee members was made public would be the ideal, because financial markets and, importantly, the general public would then understand the discussions being held behind closed doors. Running as a distant second to that is the less desirable policy of simply producing minutes of the meeting. The minutes, however, record only a general sense of the participants’ contributions. However, we have tabled no amendments to the clauses on the Monetary Policy Committee while the former committee member David Blanchflower conducts a review commissioned by the shadow Chancellor. We look forward to returning to debate the MPC in another forum at a future date, when we will be pursuing our amendments on the measure.
Question put and agreed to.
Clause 8 accordingly ordered to stand part of the Bill.
Clause 9
Audit
Richard Burgon
I beg to move amendment 14, in clause 9, page 7, line 15, at end insert—
“(6A) The Comptroller may enquire into the Bank’s success in achieving its stated policy objectives but shall not enquire into the desirability of such objectives having been set.
(6B) Reports by the Comptroller into the functioning of the Bank shall be published promptly unless in the opinion of the Treasury Committee of the House of Commons such publication would be likely materially adversely to affect the stability or functioning of the UK’s financial or banking system.”
The Chair
With this it will be convenient to discuss amendment 21, in clause 11, page 11, line 30, at beginning insert—
“Subject to sections 7E(3) and 7ZA(6A) of the Bank of England Act 1998,”
I remind the Committee that if amendment 14 is withdrawn or negatived, amendment 21 falls.
Richard Burgon
Here we turn to the role of the National Audit Office and the new proposals to afford the NAO power to investigate the functions of the Bank. This is a positive development, which we welcome, but it is important to get the legislation right and to ensure that no loopholes are left to prevent the NAO from conducting its necessary work.
The Comptroller and Auditor General was clearly concerned about the proposals in the Bill as published that would have allowed the court of directors a veto over the new powers for the NAO. There was significant discussion, however, at the Treasury Committee and at all stages in the other place. At the Treasury Committee Andrew Bailey said that the issue was to do with
“getting the boundary right between what is appropriate, in my view, which is value for money in terms of the way we run the Bank of England, and questioning the basis of monetary policy, which would not be in my view appropriate.”
Our amendment fits in with that, though I expect that the Government will disagree with us.
The draft memorandum of understanding that the Minister provided the other day stated that the comptroller does not expect to second-guess expert discussions by Bank officials. The amendment asserts that the comptroller may inquire into the Bank’s success in achieving its policy objectives. We believe that that does not encroach beyond the boundaries of questioning the merits of policy decisions, but would assist the National Audit Office in ascertaining whether the Bank is delivering value for money. Amendment 21, which is consequential on amendment 14, would require that reports by the comptroller into the functioning of the Bank be published promptly to allow relevant Select Committees, should they wish, as well as other Members of the House, to make an assessment of the National Audit Office’s findings.
Harriett Baldwin
We are moving on to the part of the Bill that covers the role of the National Audit Office and the publication of its reports. One of the Bill’s objectives is to enhance the Bank of England’s accountability and clauses 9 to 11, which allow the National Audit Office to conduct value-for-money examinations of the Bank for the first time, are key in that respect.
The independence of the Bank and of the National Audit Office, which are two vital public bodies, was carefully considered in developing the arrangements, and I believe that the clauses in the Bill strike the appropriate balance. It is probably best if I first set out some background on the important role of the National Audit Office’s value-for-money studies in supporting transparency to Parliament and the public.
The National Audit Office scrutinises public spending on behalf of Parliament. It reviews whether public bodies have used public money efficiently, effectively and with economy and makes reports on those issues to Parliament. In carrying out its work, the NAO is precluded by the National Audit Act 1983 from reviewing the merits of policy objectives. That is the case in relation to all the bodies with which it currently engages and the Bill ensures that the same restriction will apply in relation to its oversight of the Bank.
That is an important point in relation to amendment 14, which I believe is unnecessary. The amendment states that
“The Comptroller may enquire into the Bank’s success in achieving its stated policy objectives but shall not enquire into the desirability of such objectives having been set.”
The Bill as drafted will have that exact effect. The comptroller will be free to question the Bank’s success in achieving its policy objectives, but not the merits of the objectives. The Bill reinforces that by setting out specific areas in which the NAO cannot question the merits of the Bank’s policy decisions. That extra protection, which has been agreed to by both the Comptroller and Auditor General and the Governor, reflects the crucial importance of protecting the independence of the Bank’s policy decisions.
In all of those areas, the Bill will allow the NAO to examine the economy, efficiency and effectiveness of the implementation of policy decisions and of the resources underpinning them, but not the merits of the decisions themselves. Specifically, the Bill carves out the merits of policy decisions taken by the Monetary Policy Committee, the Financial Policy Committee and the Prudential Regulation Committee, the merits of policy decisions taken by the body within the Bank responsible for the supervision of financial market infrastructures and the merits of policy decisions taken by the body within the Bank responsible for the exercise of its resolution functions, but where the Bank has used its statutory resolution powers in relation to a financial institution in difficulty, the NAO would be able to consider any resolution policy decisions relating to the institution concerned. That is particularly important given that the Bank is now the resolution authority for the UK and has primary operational responsibility for financial crisis management. In future, therefore, the NAO will be able to examine the role of the Bank in interventions like Northern Rock—it is a shame that the hon. Member for Bassetlaw is not in his place to hear that exciting news. That bespoke arrangement recognises the unique and crucial role that the Bank plays in UK economic policy. I believe that it strikes the right balance and will bring about a significant improvement in the Bank’s accountability.
The second part of amendment 14 would require the comptroller to publish reports promptly, unless the Treasury Committee judges that publication was likely to have a material adverse effect on financial stability. Again, I submit that that is unnecessary. Adequate protections are already built into the legislation to prevent the disclosure of certain types of sensitive information. Proposed new section 7H of the Bank of England Act 1998, inserted by clause 11, will ensure that the comptroller is subject to the same limitations on disclosure as the FCA in relation to information received by the Bank. Those limitations are set out in the Financial Services and Markets Act 2000 and will restrict the NAO from disclosing information held by the Bank for the purposes of monetary policy; financial operations intended to support financial institutions for purposes of financial stability; and the provision of private banking services.
Furthermore, the subject of sensitive information is covered by the memorandum of understanding between the NAO and the Bank, which ensures that there is a codified agreement between them on how sensitive information should be treated. It makes it clear that there may be instances in which the Bank is prohibited from disclosing information. Where that is the case, it will explain why that is the case to the comptroller. The memorandum also makes it clear that there may be situations in which the Bank is able to disclose information to the comptroller but legal restrictions apply to onward disclosure or publication.
In terms of the timing of publication, Parliament has rightly delegated to the comptroller discretion over the content of NAO reports and the timing of their publication. He acts independently on Parliament’s behalf, and it is important that he is able to use his judgment on how Parliament and the public are best served.
I hope that I can reassure the Committee by saying that once the comptroller has signed off a report for publication, there is an in-built incentive to lay it in Parliament and publish it within a short timeframe. Prompt publication mitigates the risk of the report’s conclusions being overtaken by events. Moreover, the process from completing the report to publication is very simple. Typically, it takes between two and four days, but it can be speeded up if required.
Amendment 21 seeks to disapply the restrictions on the disclosure of specially protected information that the National Audit Office has received from the Bank for certain reports by the Comptroller and Auditor General. As I have said, information is specially protected from time to time if it is held by the Bank for the purposes of monetary policy or for financial operations supporting financial institutions to maintain financial stability. A good example, which we heard about this morning, is emergency liquidity assistance.
The reason why restrictions are placed on the disclosure of such information is that its publication could harm the financial stability of the UK or adversely affect the Bank’s monetary policy operations. A report by the NAO on the extent to which the Bank has achieved its financial stability objective could, in fact, be destabilising if, for example, it revealed market-sensitive information about financial operations undertaken by the Bank to preserve financial stability in a particular period.
I trust that all Committee members will agree that those restrictions on disclosure are entirely appropriate and, indeed, vital. I urge the hon. Gentleman not to press his amendment.
Richard Burgon
My colleagues and I have listened to what the Minister has said. She went, with characteristic detail, into the Government’s position on this matter. My hon. Friend the Member for Bassetlaw, who is not in his place, scolded or praised me—I do not know which—for moderation earlier. We did not press our amendment to a Division on that occasion, but having listened to what the Minister has said, and because transparency is a key principle when it comes to the work of the Bank of England and we want to expand that transparency, we seek a Division on amendment 14.
Question put, That the amendment be made.
Richard Burgon
I beg to move amendment 15, in clause 10, page 7, line 37, at end insert—
“(6A) The Treasury must lay before Parliament a copy of any report it receives under subsection (5) within one calendar month of receipt.”
As the Bill reads, clause 10 applies where the Treasury gives an indemnity or guarantee to the Bank in respect of an activity or series of activities that it undertakes. Our amendment 15 simply seeks to maximise transparency and accountability with regard to this by requiring the Treasury to publish a copy of such a report within a reasonable timeframe. We hope that the Government will accept this amendment.
Harriett Baldwin
If I may, I will speak to clause 10 at the same time as speaking to amendment 15. Clause 10 obviously defines the process which will deliver greater oversight of activities undertaken by the bank or a company of the bank, where that activity has been indemnified by the Treasury. In such circumstances, the Treasury takes on the risk of the activity and will bear any associated losses. It is right that the Bill allows for full NAO oversight of these activities.
The occasions on which the Treasury grants an explicit indemnity to the Bank of England are very rare. Examples include the provision of emergency liquidity during the financial crisis and, more recently, the asset purchase facility, which is the vehicle by which the Bank of England has purchased £375 billion of Government bonds to deliver the Monetary Policy Committee’s quantitative easing policy. Clearly, these are very different examples. The former relates to an operation undertaken on the Bank’s balance sheet to provide assistance to an institution in distress. The latter case is an example of an activity undertaken by a subsidiary company of the Bank. Given the Bank’s varied role, it is difficult to predict every circumstance in which an indemnity of a Bank activity might be considered necessary in the future. Clause 10 allows for discretion to be applied to each case of indemnified activity. In some circumstances a financial audit may not be required. However, the objective of this clause is clear. It will facilitate greater accountability of indemnified activities where this is appropriate.
Amendment 15 would require the Treasury to lay a report on activity indemnified by the Treasury before Parliament one calendar month after receiving it from the Bank. Let me say first that Treasury indemnities of specific Bank activities are very rare. I have cited a couple of examples. In the example of the provision of emergency liquidity during the financial crisis, clearly the information being shared between the Bank and the Treasury would have been extremely sensitive. It would have included commercially confidential material and potentially information that put at risk the stability of the wider financial sector. It is clear from just that one example that publishing a report of this kind could really work against the public interest in the future, especially if the Treasury were bound by a specific statutory deadline. The Treasury must retain that flexibility over whether and when such reports should be published. I urge the hon. Gentleman to think hard about that and withdraw the amendment, while urging the Committee to agree that clause 10 stand part of the Bill.
Richard Burgon
I mentioned earlier the possibility of compromise on the part of the Government when it comes to balancing the protection of information they believe needs to be confidential because of financial risk with the requirement for transparency. I mentioned the practice of having some matters under the line and some over the line in local authorities and on boards of school governors. I encourage the Government to think further about that possibility in relation to the areas where transparency has been requested. We reserve the right to return to the matter on Report but I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 ordered to stand part of the Bill.
Clause 11
Examinations and reviews
Harriett Baldwin
I beg to move amendment 1, in clause 11, page 9, line 11, at end insert—
“(b) the economy, efficiency and effectiveness with which a Bank company has used its resources in discharging its functions.”
Amendments 1, 2 and 3 extend inserted section 7D of the Bank of England Act 1998 to enable the Comptroller and Auditor General to examine the economy, efficiency and effectiveness of Bank companies, as well as the Bank itself. “Bank company” is defined by amendment 3.
Harriett Baldwin
Mr Wilson, you will have to bear with me, because we have quite a few Opposition amendments to this clause to cover and I will seek your guidance on when you would like me to touch on those. I will start with Government amendment 1 and move on to Government amendments 2 to 6.
The Chair
Can I just ask you to stick to the first group of the Government amendments? We can then move on after that debate.
Harriett Baldwin
Thank you, Mr Wilson. That is what I am trying to do. I am just buying some time while I go through great wodges of paper here, to ensure that I do not rush ahead.
I will speak to Government amendments 1 to 6 on National Audit Office oversight of Bank subsidiaries. As we know, the Bill makes provision for the first time for the NAO to initiate its value-for-money studies of the Bank of England. As we have discussed, that delivers an important increase in the accountability of the Bank and its operations. The intention in the Bill was to grant the NAO these powers to the Bank in the broadest sense, subject to the bespoke policy carve-out, which also features in the Bill, protecting the independence of the Bank’s policy decisions, but as the Bill is drafted, the NAO’s powers to conduct value-for-money examinations in relation to companies owned by the Bank differ from its powers to conduct value-for-money examinations of the Bank itself. That was not the Government’s policy intention. The amendments will ensure that the NAO’s value-for-money powers apply on the same terms to the Bank, its subsidiaries and other Bank companies that are indemnified by the Treasury.
I will briefly outline the inconsistencies that arise through the current drafting. First, the NAO would have powers to conduct value-for-money examinations of Bank companies that have been indemnified by the Treasury only where the Treasury has directed the company concerned to send its accounts to the NAO, as provided for in section 7C of the Bank of England Act 1998, inserted by clause 10 of this Bill, and the NAO’s examination would be made under the powers given to it in section 6 of the National Audit Act 1983. Those NAO examinations would not, therefore, be subject to the bespoke policy carve-out that has been defined in the Bill. Secondly, under the Bill as drafted, subsidiaries or companies of the Bank that do not benefit from a Treasury indemnity would not be within the scope of NAO examination.
I hope that the Committee agrees that we should make the NAO’s power to initiate value-for-money examinations applicable on the same terms across the Bank, its subsidiaries and other companies indemnified by the Treasury in which the Bank has a minority interest. The amendments seek to do just that.
Richard Burgon
Having considered this matter and listened to the Minister’s detailed explanation, I can confirm that we will not oppose amendment 1.
Amendment 1 agreed to.
Amendments made: 2, in clause 11, page 9, line 12, leave out
“of the Bank (however described)”
and insert
“(however described) of the Bank or the Bank company”
Amendment 3, in clause 11, page 10, line 3, at end insert—
““Bank company” means—
(a) a company which is a subsidiary undertaking of the Bank, within the meaning of section 1162 of the Companies Act 2006;
(b) a company not within paragraph (a) in respect of which a direction under section 7C(2) has effect;”
Amendment 4, in clause 11, page 10, line 16, at end insert “or a Bank company” —(Harriett Baldwin.)
This amendment extends inserted section 7D(11) of the Bank of England Act 1998 (which provides that section 6 of the National Audit Act 1983 does not apply to the Bank) to Bank companies. Section 6 provides for economy, efficiency and effectiveness examinations by the Comptroller and Auditor General.
Richard Burgon
I beg to move amendment 16, in clause 11, page 10, line 19, at end insert
“and the Comptroller must lay a copy of the first memorandum of understanding to be prepared, and of any subsequent revisions, before both Houses of Parliament”.
The Chair
With this it will be convenient to discuss the following:
Amendment 17, in clause 11, page 10, line 26, after “procedure” insert
“which may be reviewed by the Treasury Committee of the House of Commons”
Amendment 18, in clause 11, page 10, line 32, at end insert—
‘(3) The Comptroller must lay before Parliament a copy of the Memorandum within one calendar month of its preparation.”
Amendment 19, in clause 11, page 10, line 32, at end insert—
‘(4) The Treasury Committee of the House of Commons may in its absolute discretion enquire into the genesis and contents of the Memorandum.”
Richard Burgon
There was significant discussion of the extent to which the Comptroller and Auditor General is to be involved in the audits of the Bank during the Treasury Committee autumn hearings attended by the Chancellor and the Governor of the Bank of England and at various stages of the Bill’s passage through the other place. From statements made by the National Audit Office’s chair, Lord Bichard, and from the Chairs of the Treasury Committee and the Public Accounts Committee, I am aware that positive movement is believed to have been made following significant early criticism.
On Report in the House of Lords, the Government spokesperson said that
“to protect the Bank’s independent status the Bill provides for a policy carve-out from the scope of NAO value-for-money reviews”—[Official Report, House of Lords, 15 December 2015; Vol. 767, c. 1996.]
and that there had been significant discussions between the Bank, the NAO and the Treasury. We welcome the removal of the original proposal to allow the court a veto over NAO investigations. I thank the Minister for forwarding to my office yesterday a copy of the memorandum of understanding being discussed by the Bank and the NAO. I understand that it may be approved or finalised in the days ahead. I stated on Second Reading that I had written to the Minister asking that the memorandum be published during the lifetime of the Bill, and she acknowledged in her response that that would be her preference, so I am pleased that that has been possible.
I believe the draft memorandum has been circulated only to members of this Bill Committee—I hope the Minister will correct me if I am wrong and it has been seen anywhere else. We tabled amendment 16 to require that the memorandum be published and laid before both Houses of Parliament, which it appears will now happen. I also recognise that amendment 18 is somewhat repetitious on this point. We may require further discussion on the draft memorandum on Report. When it appears, it will have been finalised or approved by all parties to it. My initial reading of the draft memorandum is that it does not move us on significantly, in that both sides are able to publish letters that set out whether they agree with each other’s proposals to carry out or refuse an investigation, but there is no clear information in the memorandum on how such a dispute would be resolved. Of course, resolution is key in such matters.
We tabled amendments 17, 19 and 20 to allow for further scrutiny of the dispute procedure. It is our view that a role for the Treasury Committee could be a useful one, where such a dispute was left unresolved and it was clear the procedure was not working.
George Kerevan (East Lothian) (SNP)
I speak as a member of the Treasury Committee, although obviously I do not speak for the Committee. I remind the Minister of the Committee’s view that one of our principal roles is to protect value for money on behalf of the taxpayer. Regulatory bodies are often, for very good reasons, concerned with regulating and may be remiss when it comes to consideration of value for money. This is particularly important because regulatory functions have to be carried out effectively, and there is a cost in terms of resources: sometimes regulators do not have these resources, and sometimes resources are put in in the wrong way. The Select Committee is keen to ensure that the auditor plays a distinct and effective role. I underline to the Minister that, regardless of formal decisions here, the Treasury Committee has an ongoing brief to ensure that the relationship between the Bank and the auditor runs smoothly and the auditor is allowed to do his business.
Harriett Baldwin
I thank the hon. Member for Leeds East for his good summary of the deliberations so far on this. As I said in my letter to him last week, I did push both the Comptroller and Auditor General and the Governor on whether or not they would allow the draft memorandum of understanding to be shared with this Committee. I confirm that yesterday we were able to send copies of that draft memorandum of understanding to all members of this Committee, the Chair of the Treasury Committee and the Chair of the Public Accounts Committee, which of course scrutinises and works most closely with the National Audit Office. That is the extent to which the draft memorandum of understanding has been shared at this point.
The expectation, as I understand it, is that the court will meet on Thursday, and that is the forum in which amendments to the current draft may be suggested or approved. I assure hon. Members that as soon as we have the final version, the memorandum can be more widely disseminated—certainly in time for Report and Third Reading. Amendments 16 and 18 are therefore not necessary.
Amendments 17 and 19 would give the Treasury Committee express powers to consider various aspects of the memorandum. I am sure that the hon. Members for East Lothian and for Bassetlaw know that the Treasury Committee already has the power to examine all matters connected with the policy and administration of the Bank of England and can choose what inquiries it undertakes. In addition, the National Audit Office works closely with the Public Accounts Committee, so one can imagine conversations taking place between the Chairs of those two very important Committees about what aspects they want to look at. If the Treasury Committee or indeed the Public Accounts Committee determines that it would be appropriate to conduct an inquiry into the memorandum of understanding, it could do so. The amendments might suggest that the powers of the Select Committees to conduct inquiries are in some way limited to those powers that have expressly been given to them in this primary legislation. That would be an unfortunate suggestion, so I hope that the amendments will not be pressed.
The hon. Member for Leeds East asked about arbitration in a dispute resolution process. The memorandum of understanding sets out the dispute resolution process, as required by the Bill, but we should not expect that process to be called upon. We expect that the Comptroller and Auditor General would be able to reach an agreement with the Bank regarding his work, in the same way that he does with all the other public bodies with which he engages. The dispute resolution process set out does not call upon any independent arbiter. The draft document simply indicates that the Bank and the Comptroller and Auditor General are both content with attempting to resolve any disputes between themselves, and that they commit to the publication of their difference of view where any disputes remain unresolved. If this is a framework with which they are both content, I do not see any need to involve a third party in that process. When we have received the final version of the memorandum of understanding and are considering the Bill again on Report, I am sure that we will return to this question. On that basis, I urge the hon. Gentleman to withdraw the amendment.
Richard Burgon
Again, I welcome the Minister’s confirmation that the court will consider the draft memorandum further on Thursday and that it will be approved or amended that day. I also welcome the fact that the final version will be more widely circulated in time for Third Reading and Report. We recognise that events have overtaken our amendments and therefore will not pursue them. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Richard Burgon
I beg to move amendment 20, in clause 11, page 11, line 6, after “must” insert “promptly”.
We wish to make the point that we need the report to be published promptly. Otherwise, for example, the Treasury Committee, with all its expertise, cannot review using its powers, as the Minister has just referred to.
Harriett Baldwin
With regard to amendment 20 and the Treasury value-for-money reports, new section 7F of the Bank of England Act 1998, which is inserted by clause 11, preserves the existing power for the Treasury to commission value-for-money reviews of the way the functions of the Prudential Regulation Authority are exercised by the Bank. There is an equivalent power for the Treasury to commission such reviews of the functions of the Financial Conduct Authority. Taken together, these important powers ensure that the Treasury can carry out cross-cutting reviews of the operation of financial regulation in this country.
Amendment 20 would require the Treasury promptly to lay before Parliament any reports it receives following reviews into the PRA. It is, of course, vital that those reports are made available to Parliament to inform its deliberations into the regulation of financial services. Indeed, the Treasury is already required to lay reports into the operation of the PRA and the FCA before Parliament and to publish them. I assure the hon. Gentleman that the Treasury takes its obligations to this House very seriously and is concerned to fulfil them in good time. I am happy to confirm that any such reports will indeed be promptly laid before the House. There is no need for that requirement to be in the Bill.
Richard Burgon
I welcome the Minister putting on the record her desire for the reports to be published promptly. I would welcome it even more if she would, therefore, accept the amendment in order to insert the word “promptly” into statute. That would be one of many pieces of history that I am sure she will make in her role of shadow City Minister.
Richard Burgon
I do apologise for the role reversal. I was even called a moderate today so we are getting confused, although I am most moderate. I invite the Minister to reconsider her position on the amendment. Or shall I assume, unless she intervenes, that the matter is closed?
Harriett Baldwin
I am afraid the hon. Gentleman has not convinced me at this stage. I am sure we will return to this on Report.
Richard Burgon
Like the Minister, we have put on record our thoughts on this matter. Although we reserve the right to return to it at a later stage, we will not be pushing for a vote, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 5, in clause 11, page 11, line 20, leave out “only”.
Amendments 5 and 6 amend inserted section 7G of the Bank of England Act 1998 to provide that where the Comptroller is examining a Bank company under inserted section 7D, he will have access to documents and information held by that company and its auditors.
Amendment 6, in clause 11, page 11, line 24, at end insert—
‘( ) In the case of an examination under section 7D(1)(b), subsection (1) also applies to documents in the custody or under the control of—
(a) the company to which the examination relates;
(b) the auditor or auditors of that company.”—(Harriett Baldwin.)
Question proposed, That the clause, as amended, stand part of the Bill.
Harriett Baldwin
At this point I will simply commend clause 11 to the Committee. I cannot be certain of the Committee’s enthusiasm, but I cannot imagine that anyone disagrees with a clause that will increase the Bank’s accountability while protecting its independent status and recognising the complex nature of its activities. The clause, as amended, will achieve that.
Question put and agreed to.
Clause 11, as amended, accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Sarah Newton.)
Enterprise Bill [ Lords ] (Second sitting)
(8 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Bill Esterson (Sefton Central) (Lab)
I beg to move amendment 38, in clause 1, page 1, line 11, at end insert—
‘(c) to consider complaints from small businesses relating to their access to finance, and, where the Commissioner considers it appropriate, to make recommendations to the Secretary of State about measures that should be taken to improve small businesses’ access to finance.’
This amendment would extend the remit of the Commissioner to receive complaints about the access of small businesses to finance, and would enable the Commissioner to make recommendations to the Secretary of State about measures to improve small businesses’ access to finance.
The Chair
With this it will be convenient to discuss the following:
Amendment 39, in clause 1, page 1, line 11, at end insert—
‘(2A) The complaints at subsection 2(b) include complaints from
(a) small businesses relating to cash retentions and
(b) construction firms regarding cash retention by companies.’
This amendment would make it clear that the Small Business Commissioner’s remit included complaints from small businesses about cash retentions and from construction firms about cash retention by other companies.
New clause 12—Payment practices: protection of retention monies in the construction industry—
‘(1) Any clause in a construction contract or related contract enabling a party to withhold retention monies shall be of no effect unless, upon their withholding, the monies are deposited forthwith in a retention deposit scheme authorised by the Secretary of State.
(2) Where a clause is rendered ineffective under this section any retention monies already withheld and not placed in a retention deposit scheme must be refunded in full to the party providing them.
(3) For the purpose of section (1) the Secretary of State shall make regulations to govern arrangements for establishing and operating retention deposit schemes.
(4) Arrangements under section (3) must be arrangements under which a body or person (“the scheme administrator”) undertakes to establish and maintain a retention deposit scheme (“the scheme”).
(5) The regulations made under section (3) must include requirements relating to—
(a) the selection and appointment of the scheme administrator;
(b) the funding and management of the scheme; and
(c) the release of retention monies from the scheme.
(6) Where the Secretary of State is satisfied that a proposed scheme complies with the regulations made under section (3) he may give authority for the proposed scheme to operate as a retention deposit scheme.
(7) The Secretary of State may delegate his power under subsection (6) to the Scottish Government, Welsh Government and Northern Ireland Executive.
(8) The monies held in the scheme must solely be retention monies and any interest accruing on the monies.
(9) In this section—
“construction contract” has the same meaning as in the Housing Grants, Construction and Regeneration Act 1996.
“retention monies” refers to monies which are withheld from monies which would otherwise be due under a construction contract, the effect of which is to provide the paying party with security for the current and future performance by the party carrying out construction operations of any or all of the latter’s obligations under the contract.’
This new Clause would require retention monies provided for within construction industry contracts to be placed in an approved retention deposit scheme.
New clause 16—Information on the Enterprise Investment Scheme and Seed Enterprise Investment Scheme—
‘The Secretary of State must publish information and guidance, for investors, about the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme.’
This new Clause would place a requirement on the Secretary of State to publish information and guidance on the availability of Enterprise Investment Scheme and the Seed Enterprise Investment Scheme, which provide tax relief for investors in early stage small businesses.
Bill Esterson
Welcome to our deliberations, Ms Buck. It is a pleasure to serve under your chairmanship.
This group of amendments and new clauses covers access to finance, cash retention, the enterprise investment scheme and seed enterprise investment scheme, and how they relate to the small business commissioner. When we talk about the small business commissioner’s remit being extended to cover complaints about access to finance, it is not so much about dealing with specific complaints about specific funding applications, but about having someone who will listen to small businesses’ concerns about access to finance, who can signpost them to help them navigate the system—one of the roles that the Government do envisage for the commissioner—who can take complaints about flaws in access to finance and who can advocate at a high level for small and medium-sized enterprises, something which the US Small Business Administration does extremely well.
In the 2014 Department for Business, Innovation and Skills small business survey, 39% of SMEs said that they had difficulty in getting the money they wanted when applying for finance. For microbusinesses, that figure rose to 42%. It was 32% for small businesses and 25% for medium businesses. Some 48% of SMEs had difficulty accessing finance through bank loans. For Government grants, it was 53%. It seems odd that the small business commissioner’s remit would be so narrow as to overlook such a basic issue faced by so many SMEs. Most small businesses who talk to me say that late payment is the No. 1 issue, but that is closely followed by a lack of access to finance, as borne out by the Federation of Small Businesses, which is why this is such a potentially important area of interest for somebody called a small business commissioner.
If the commissioner is to offer a signposting service, although that is not what is needed on late payments, it would certainly suit the question of access to finance, particularly when it comes to the opportunities of peer-to-peer lending and Government contracts, because SMEs cannot navigate the system and do not know what is available to them. As the Chair of the Business, Innovation and Skills Committee told us on Second Reading last week:
“The problem of access to finance remains a pertinent issue for firms, which is why the Select Committee has launched an inquiry into it. If the Bill’s purpose is to make the UK the best place in Europe to grow a business, why does it not tackle access to finance? If the Government are serious about ensuring growth, why does the Bill not put in place measures to facilitate an expansion of scale-ups to power employment and economic growth?”—[Official Report, 2 February 2016; Vol. 605, cc. 837-838.]
Lord Mitchell, using his vast experience in business, spoke on the matter during deliberations in the Lords and discussed the problems in various Government schemes, saying that there had been good growth in non-Government schemes, but not so much in Government initiatives. He said that the market for alternative finance had grown, but
“largely as a result of the paralysis of the high street banks”—[Official Report, House of Lords, 3 March 2015; Vol. 760, cc. 129-130.]
Challenger banks have made good progress—Metro Bank and Aldermore, and Santander, if it can be regarded as a challenger bank, are changing the landscape. Peer-to-peer lending has taken off and is providing an interesting opportunity for many small firms. The changes are welcome and most hon. Members would accept that the traditional high street banks have not done the job of providing good sources of finance, to smaller businesses in particular, over many years. Having alternative sources of finance stepping in is welcome.
We need to know what is happening, and this is where the opportunity for the small business commissioner comes in. We need to know whether what is happening or what is changing is adequate.
Lord Mitchell gave the example of a start-up company from Merseyside, similar to the one I quoted earlier. A start-up company director found access to government funding so incomprehensible she gave up searching—a young entrepreneur with a tech start-up in the north-west, a prime example of the sort of start-up the Government have said repeatedly that they want to help to get off the ground. When she ran her postcode on the Government site she was presented with several hundred schemes for Wales and Scotland. When she entered her details for updates on suitable funding schemes she could bid for, she received a call from a company that wanted several hundred pounds upfront, not to help her put together bids, but to navigate the Government website on her company’s behalf, and email her with a list of schemes she could bid for. Many companies exist to charge start-ups for understanding the Government funding scheme for them. While this is clearly an example of entrepreneurialism on one level, I suggest it says more about the difficulties in navigating the Government’s funding processes.
A small business commissioner would be in a very strong position to represent the interests of small businesses, especially start-ups, when it comes to championing their interests on access to finance, whether from Government or elsewhere. Traditional lending is not doing the job that it needs to do. Alternative finance is a major opportunity and the small business commissioner should be a part of that.
Research undertaken by Everline and the Centre for Economics and Business Research towards the end of last year found that although small businesses have big growth plans for 2015, they are unable to carry them out due to a lack of finance and talent with the right skills. In the current market, most SMEs will only approach larger banks when seeking finance, even though the process can be time consuming and the rejection rate is about 50%. Those small businesses have the potential to drive growth and employment in the UK but are hampered by not only a lack of finance but a lack of confidence in trying to access the working capital they need—more than half think that traditional lenders are not interested in lending to them, and they may well be right, given the feedback that I have received.
Although a large number of alternative finance providers are willing to lend, and might also have more suitable product solutions, small business owners often are not even aware of their existence. As a result, small businesses need support to increase their knowledge of other finance options and prevent banks from always being the default choice. That should ultimately improve the supply of cash flow to viable small businesses who need additional working capital to aid growth, fill a cash gap or take advantage of a market opportunity.
How can we improve access to finance for small businesses? There is clearly a significant demand for easier access to finance for small businesses. To date, the market has been dominated by banks, whose products are often not adequately tailored to the specific requirements of small businesses. Particularly problematic are short-term cash flow needs, which demand a level of control and flexibility around speed of access and repayment timeframes that simply is not available from traditional lenders.
The small business commissioner could provide two things, if we are considering the scope of the office, both of which sit logically with the signposting and advocating approach that the Government want the office to take. They both also offer a shift from a person who reacts to complaints to one who actively supports SMEs and helps them to grow. The first thing it could provide is an accessible signposting service that offers clear advice to SMEs about the finance options available to them and helps them to capitalise on alternative funding, similar to that offered by the Small Business Administration in the United States. The other provision is also similar to what is offered by the US system. It would give the interests of small businesses on the issue of access to finance a real voice before Government. So much of the problem is not about whether the money is there or not, but about making sure that the Government do the right thing in making SME funding available. The Public Accounts Committee report in 2013 made many of the same points: SMEs do not know what is available to them, or their appeal rights, and the Government are not doing enough to link them to finance options.
Let me move on to cash retentions. Cash retentions in the construction industry are a particular problem of late payment covered by this group of amendments. They have been particularly problematic over many years, particularly for smaller firms in the supply chain. For example, a firm in my constituency, Jenkins, showed me the shelf full of files of cash retentions from contracts it has been involved in—some of them reaching back two or three years or more, some five, six or even 10 years.
Lucy Frazer (South East Cambridgeshire) (Con)
I am looking at the amendments—does the hon. Gentleman think that they are really necessary? Clause 1(2)(b) refers to “payment matters”, and clause 4(4) defines “payment matter” as relating to a request for payment, which generally relates to a question of supply. Is it not possible to say that cash retentions, which are in effect a request for payment, are included in the Bill? Would that definition not give some flexibility to the small business commissioner to focus on what really matters to him, whether that is late payments per se or some aspect of late payment?
Bill Esterson
That is an interesting point. I am sure that the Minister will have some theories in response to that intervention. This was debated at length in the Lords, and the Minister there accepted that cash retentions are an important, separate set of issues. I am sure the Minister will talk in detail about why the Government have agreed to set up a review of the issue and make proposals. These are very much probing amendments to consider this particularly acute issue of late payment within the construction sector. That is why we have tabled the amendments and why the Lords spent so long on this issue and a similar amendment.
Cash retentions in the construction industry are withheld as a form of security to encourage firms to return to remedy defects. In practice, the prime motivation for the withholding can be to improve the working capital of the withholding party. In our deliberations this morning, we talked about some of the problems of late payment being used as a form of working capital, or to support treasury in the public sector; a similar point applies in the construction sector. Cash retentions are ultimately funded by small and medium-sized enterprises in construction supply chains. Each year, small businesses lose millions of pounds of retention moneys because of upstream insolvencies or because they give up chasing the release of the moneys. New clause 12 is designed to ring-fence retention moneys by placing a statutory obligation on organisations withholding retentions to deposit moneys in a retention deposit scheme. It should be noted that retention moneys legally belong to the party from whom they have been withheld. They are required to be released to that party—half on handover of the work and the other half normally 12 months later. In practice, the period is considerably longer. I mentioned Jenkins, a firm in my constituency where that has often been the case, but where it is common for it to take three or four more years.
Subsection (1) of new clause 12 states that unless the party withholding retention moneys deposits them immediately in a deposit retention scheme, any contractual clause enabling such withholding has no legal effect. Any moneys previously deducted must be returned in full. Construction firms already have a statutory right under part 2 of the Housing Grants, Construction and Regeneration Act 1996 to suspend their work for non-payment. The retention deposit scheme could be modelled on the tenancy deposit schemes introduced by regulations issued under the Housing Act 2004, as amended by the Localism Act 2011. Currently, three tenancy deposit schemes are Government-approved. Landlords of shorthold tenancies must place tenants’ deposits in one of these schemes. Tenants’ deposits are provided as security for the performance of the tenants’ existing and future obligations; retention moneys serve the same purpose.
One of the schemes is run by a not-for-profit enterprise. The Dispute Service Limited, not surprisingly, operates a scheme called the Tenancy Deposit Scheme. The scheme held—at least when my notes were written—more than a million deposits. It is funded by the interest earned on the deposits and any excess profit is channelled into a charitable foundation to be used to raise standards in the letting sector of the property industry. I am informed that the CEO of the scheme has already expressed his interest in expanding the scheme for the purpose of depositing retention moneys. Therefore much of the new clause reflects the requirements of the Housing Act 2004 in so far as they relate to tenancy deposit schemes.
The Chair
I am not minded to allow a stand part debate on clause 1. If any Members want to make any general remarks, this would be the right time for them to do so.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship, Ms Buck. I want to focus on the issue of retentions, which relates to amendment 39 and new clause 12. I spoke about retention on Second Reading, and one of the reasons I wanted to serve on the Bill Committee was to push for this.
We have already had two votes—very much partisan votes—on amendments that I had imagined were uncontroversial. This is a major issue for the industry, so I was hoping for some cross-party consensus on these amendments. I note the intervention from the hon. and learned Member for South East Cambridgeshire, which seemed to be an intervention against new clause 12 and amendment 39. If the setting up of the new small business commissioner was a way of addressing this long-standing issue, I do not think the business experts would be lobbying so hard for these amendments to resolve it. Also, if this was a method of dealing with it, it seems strange that the Government should set up a review specifically to looks retentions. That seems counterintuitive to me.
Just to recap the main issues, retentions are basically to do with a cash-flow problem. Retentions usually equate to about 5% of the cost of a job, which is held until the end of the maintenance period, which is usually a year after completion and commission of the main job. That 5% quite often equates to the profit margin, especially for small companies, so if major companies are not releasing these retentions, then companies do not have access to their profits. That is a major cash-flow issue, and it does not take a genius to see that if there is no profit, there is no company in the long run.
We heard earlier that up to £3 billion can be held at any one time in retentions. Last year, £40 million was lost due to insolvencies—that is, one company going bust that was holding retentions that were due to other companies. Those companies lose that money and, of course, end up paying off workers.
The cash-flow issue also means that companies cannot invest in training and apprenticeships. I tried to draw a parallel on Second Reading, in that one good aspect of the Bill is the attempt to create new apprenticeships in England and Wales, yet retention actually prevents the creation of apprenticeships in the engineering industry. These are specialist apprenticeships, which can lead to rewarding and well paid jobs. We should be doing everything we can to sustain that industry, to sustain those jobs and that training.
The suggested model is for a retention deposit scheme, modelled on a tenancy deposit scheme. This accords with housing legislation in this country and legislation in other countries that, as we have heard, have already looked at resolving the matter of retentions. Retentions in trust still provide a waiver over subcontractors who pay cash retentions. It is still a method of getting subcontractors back on site if there are defects to be fixed, or it provides money that can be accessed to pay for the defects. More importantly, it means that subcontractors can get the money that is legitimately due to them.
I urge Members to think carefully about amendment 39, which would help to address the question of cash retentions, and new clause 12, which would resolve the matter once and for all.
Hannah Bardell (Livingston) (SNP)
It is a pleasure to serve under your chairwomanship, Ms Buck.
I want to speak briefly to amendment 38 and new clause 16. Small and medium-sized enterprises have a vital role in driving the UK’s economic recovery, and it is a vital task of Government to ensure that finance is available to them to encourage investment and growth.
We welcome the findings of the British Business Bank’s small business finance markets report, which was published this month. It paints an encouraging picture of lending to small businesses in the past year, with an increase in equity finance for smaller businesses—there was growth of 43% in the year to October 2015. Bank lending, which continues to be the main form of finance for smaller businesses, continues to improve too, but obviously there are still significant challenges there.
However, as was mentioned earlier, 56% of smaller businesses are looking to grow their turnover this year. It is essential that suitable finance should be available to support those growth ambitions and that the Government should not rest on their achievements of the past year. By accepting the amendment, which we support, the UK Government would give the small business commissioner the power to champion lending for small businesses and to make constructive recommendations to the Government on how to encourage lending to SMEs.
As for new clause 16, we recognise that new rules were introduced for venture capital trusts, enterprise investment schemes and seed investment schemes by the Chancellor, and that the scheme would be a mechanism for incentivising investment in small enterprises. Again, we support the new clause, and encourage the Government—I hope we can see some cross-party consensus—to bring forward details and guidance about the availability of the scheme. What we are talking about is somewhat of a marketing exercise, but it is a question of getting the information out. All too often—certainly when I worked in the private sector, in the oil industry—the schemes that were available were various. Companies were not aware of what was available. It is important that we market schemes and put them out there, so that as many companies as possible take up opportunities.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
It is a pleasure to serve under your chairmanship, Ms Buck. I join the hon. Member for Sefton Central in welcoming you to your Committee Chair role for the first time. I am sure that we will all do all we can to make your experience one that you will remember enjoyably.
I will speak to the amendments—and oppose them—beginning with cash retentions. We had an extremely good debate just the other week in Westminster Hall. It was called by the hon. Member for Upper Bann (David Simpson), who rightly brought the matter before the House yet again. It is fair to say that there is absolute cross-party agreement about the need to reform cash retentions in the construction industry. I am very open about it: I think they are outdated and I do not think they are fair. They are particularly unfair to small businesses.
If the Committee will forgive me, let me say that the amendment has come too soon, and the reason is the work we are doing. We have set up a full review, and I am grateful to the Construction Leadership Council. Andrew Wolstenholme, the chief executive of Crossrail, is overseeing a full review of cash retentions in the construction industry. His work will not be completed until some time in March. His review will then come forward with recommendations.
It could be that the trust—an idea that I am familiar with—is the best way to make sure we sort out the problem of cash retentions, but there are other ideas that were debated in Westminster Hall. For example, a better way to do it might be some sort of bond scheme. Many hon. Members will be familiar with that from section 106 agreements in our work in our constituencies. To make sure that roads in housing developments are completed, the developer has to put money into a bond scheme.
There may be merit in what is being proposed, but now is not the time to do it. I think that the hon. Members for Livingston and for Kilmarnock and Loudoun have come to it too soon, because there may be alternatives. It may be that, as a result of Mr Wolstenholme’s review, other things might need to be added to legislation in the future. I think it has come too early, though I have huge sympathy for where it is going in its thrust.
Hannah Bardell
I am grateful to the hon. Lady for her comments. I appreciate that we are in the middle of a review, but is she not tempted to put this in legislation, given there is such support for it across the parties and the industry? I met with the specialist contractors association recently. We are talking about businesses that are going out of business because of this issue. I wonder whether the hon. Lady would consider a pilot scheme—perhaps we will write to her collectively.
Anna Soubry
Everybody is jumping too quickly. Let us have the review. One of the big mistakes we make in this place, whichever party is in control, is that we often rush into legislation in a knee-jerk way. What is important is that we all agree there are problems that need to be solved. Let us trust Mr Wolstenholme to do a thorough review and come up with recommendations. Those will then go out to public consultation. If legislation is needed, we can draft that, with, it is hoped, cross-party support—that would be marvellous. We can then make sure that we address every single feature of it and get the right result for our construction industry.
Jo Churchill (Bury St Edmunds) (Con)
May I say what a pleasure it is to serve under your first chairpersonship, Ms Buck? I want to say how much I concur with the Minister. I have run a construction firm for over two decades and retention has blighted that industry for that time. If we rush at this and get the wrong solution, we will merely be knotting the ball of wool in a different place. That will not serve any construction firm well, small or large. I welcome the review and look forward to being able to work on a cross-party basis, because we all have builders and we all need builders and small businessmen to work with those large companies, so that the system is not sclerotic but works well.
Anna Soubry
I absolutely agree with my hon. Friend. Only yesterday I met somebody with whom I specifically discussed the problem of the retention scheme and the adverse effect it has on small businesses. I hope that this matter would not necessarily need to be pushed to the vote, if only because we are in agreement. We are all going in the right direction, but now is not the time.
Alan Brown
I hear what the Minister is saying about not rushing in with a knee-jerk solution, but let us not be kidded: this problem has been around for a long time. It is not that this solution came from nowhere recently; it has been mooted before. Is it not the case that when the Bill was in the other place, an amendment was tabled that effectively put a review on a statutory footing in the Bill, which was not passed? Therefore it seems a bit contradictory that we are now having a review. How can we have any comfort that the review is going to come to something? The opposite of a knee-jerk reaction is a Government review that kicks things into the long grass. I am not saying that the Minister wants to kick it into the long grass, but there is always a risk that things get delayed and delayed. We want to do something now, but how can we get a firm commitment that it is going to happen?
The Chair
Order. I gently reinforce the fact that we must have short interventions, not speeches.
Anna Soubry
I know that we do not know each other well, but the hon. Gentleman can be assured that this Minister gives absolutely her word that this matter is not going to be kicked into any long grass. In fact it is very short grass, which has only just grown, because the review will be completed by March and then recommendations will go out to public consultation. If legislation is required as a result of that consultation, I will be happy to be the Minister to take that through.
I do not wish to chide the hon. Gentleman, but he may not realise that there is a statutory adjudication scheme already in place for disputes in relation to the construction retention problem that we know is there. That system does exist. I know that small businesses often do not want to go to the adjudicator because they are fearful of complaining about a big business and souring relations—they fear that future business relations will be damaged—but it must be said that the system does exist. I wanted to put that on the record.
Kevin Brennan (Cardiff West) (Lab)
Until the Minister made that point, I think the whole Committee was with what she was saying about legislating in haste and repenting at leisure, but she then seemed to say not that she was looking forward to legislation in the next Queen’s Speech—which seemed to be the road she was going down—but that she thought what was already in place might well be adequate. Is that what she is telling the Committee?
Anna Soubry
No—the hon. Gentleman knows I do not mean that. Do not be silly.
Kevin Brennan
If not, she must clarify it on the record. That is why we are here. She does not need to look at the clock every five minutes. We need to hear it and have it on the record.
Anna Soubry
Some might say I was being slightly patronised there, Ms Buck, but I am sure that that was not the hon. Gentleman’s intention. There will be a review, which will report in March, from which a series of recommendations will go out for public consultation. I am very keen that we reform the retention system in the construction industry. If anyone wants me to repeat that, I will say it yet again, because I have said it not only in this Committee, but in the Westminster Hall debate last month: it needs reforming and we need to get on with it. I could make the point that some people were in government for 13 years and did not deal with the problem, but that would be churlish of me and I would not do such a thing. Nevertheless, the point I am making is that there is an adjudication system to help those companies that suffer.
I have also conceded that I am told on very good authority that, for reasons that we know and understand, the existing system is not working as we would like it to. In any event, I think it is out of date and unfair and it needs sorting out. I would be delighted to be the Minister who sorts it out once and for all, so that we have a modern, fair system that protects those who need to take care of all the snags and things that come to light after a build has been completed and, at the same time, ensures that the money is there so that they can make good any defects. There is a way to sort it out. It might not be what is proposed in the amendment—there might be a better way to do it—but those are exactly the things that the review will explore.
Amendment 38 specifically says that the new small business commissioner would consider complaints relating to access to finance, not complaints about whether or not small businesses have knowledge about the various schemes. One of my predecessor’s achievements was bring together as many of the Government’s schemes as possible through one portal: the British Business Bank. If someone wants access to finance, they can go to their bank or to their accountant and ask for advice, or they can seek the advice of the Federation of Small Businesses. Equally, they can google it, and one of the results will be the British Business Bank, which gives all the details of all the various schemes, not only those operated by the Government—start-up loans being an extremely good example—but also advice on peer-to-peer lending, the angel schemes, crowdfunding and so on. We are beginning to see a real change in the amount of information available, especially from that one-stop-shop, the British Business Bank, so that small businesses know where to go if they are looking for finance.
The amendment, though, is about small businesses’ complaints about their access to finance. With respect, the Financial Ombudsman Service already deals specifically with such complaints. Were we to extend the role of the small business commissioner, all we would be doing is duplicating an existing system that everyone seems to accept is working well. As I said earlier, we learned from the consultation that the one thing no one wants is the duplication of services.
The Financial Ombudsman Service is working well, and it has respect. Small businesses can go there to make their complaints; Members may well have referred their constituents. We already have exactly the device required. I argue strongly that expanding the remit of the small business commissioner would not be appropriate when it comes to finance, because we already have a very good system. Small businesses are within the remit of the Financial Ombudsman Service if they have a turnover of less than €2 million and fewer than 10 employees. So it is there for the microbusinesses.
The Financial Conduct Authority is currently consulting on whether even more small businesses should be given access to the FOS. The FOS analyses the complaints it receives from microbusinesses and reports on them every year. It also publishes occasional stand-alone reports, such as, in August 2015, “Micro-enterprises and financial services—a review of complaints”, which had the express purpose of highlighting areas of good practice and promoting change where it is needed. Access to finance for businesses is also regularly considered by Select Committees.
With respect, I really believe that the amendment would represent an unnecessary extension of the remit of the small business commissioner. Again, we must make it very clear that the primary function of the small business commissioner is to address the big problem that all small businesses complain about, which is late payment. That is where I want his or her focus and resources to be.
I turn to other matters. I think I have dealt with cash retentions in the construction industry, but I want to deal with the other amendment, which deals with the enterprise investment scheme and the seed enterprise investment scheme. Details are already published, with guidance and information, on gov.uk. We in BIS support and complement this work with promotional activity. Again, with respect, I really do not think the amendment is necessary, because what it wants to achieve is already being done.
I think that is it, unless there is anything else I need to add. I ask for the amendment on cash retentions to be withdrawn because I honestly think we are going to make huge progress very quickly and we are all on the same page. I respectfully suggest that the other amendment is just not needed: we do not need to extend the remit of the small business commissioner in this way, because others are doing the job very well for small businesses.
Bill Esterson
Let us deal with access to finance and the EIS and seed schemes. The Minister needs to read the whole of amendment 38 to consider where it is going. If the word “complaints” were replaced by the word “representations”, it might be easier to follow. The point is for the commissioner to make recommendations to Government about improving access to finance; that is the intention behind the amendment, as I thought I had explained. That is also in the explanatory statement that came with the amendment, but I will not pursue the point by pushing it to a vote.
When the Minister says that late payment is the priority, I understand that. Clearly, one has to start somewhere and that is what the Government want to do. However, as I said in my opening remarks, the second issue—it is a very big second issue—is access to finance. It is really important that we get to grips with that as well. Please understand the importance of the amendment and what it is driving at.
The Minister commented on the schemes and their advertisement on the gov.uk website. I understand that. The point I made earlier was that not enough businesses are finding them. That is why if the small business commissioner has a signposting role, he or she should use it as much as possible. Perhaps the Minister will take that away and consider it.
Anna Soubry
We want the small business commissioner to have his or her own website, and I want there to be portals—the hon. Gentleman understands these things—so somebody can click on something that says “access” and go through to the various information. That is terribly common on so many websites, so I want there to be that sort of access. The hon. Gentleman makes a very good point, and we agree that one-stop shops are the way to get information about a lot of this work out there.
Bill Esterson
That is a fair point. I will come back to some of the challenges and our concerns about the portals. Many small businesses do not use the web, so encouraging greater digital use is one of the many challenges for the Government.
There is great concern about retentions. The amendment has cross-party support, and hon. Members who spoke made their points extremely well. Often, between 2.5% and 5% of moneys are retained under the cash retention system, so it is massively difficult for small businesses to be as effective as possible. The hon. Member for Kilmarnock and Loudoun made a point about businesses not taking part in apprenticeships and not investing in the future as a result of the scale of retention.
Hannah Bardell
Does the hon. Gentleman agree that it is important that the review and these proposals are added to the Bill before Report?
Bill Esterson
It is incredibly important that that happens as quickly as possible, but SNP Members are in the same position as us: we are ultimately dependent on the Government for this to work, so we have to take the Minister’s bona fides. She is now on the record as saying that she will take action. I made the point that the recommendation was first made 52 years ago and it has been made on numerous occasions since. The problem is that businesses do not understand why we are waiting and why the Government and Parliament are taking so long to act. It is probably not until we come to this place that we start to understand why.
The Minister said it is too soon. A similar point was made in the Lords, and Labour peers accepted similar comments from Baroness Neville-Rolfe. We will wait and see for now, but if the review is finalised in March, the Bill’s Report stage may happen at about the same time.
I leave this thought with the Minister: if there is the opportunity, will she consider tabling amendments to take that into account? Let us challenge her Department and officials to table such amendments on Report to satisfy Members on both sides of the House. With that, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn,
Clause 1 ordered to stand part of the Bill.
Schedule 1 agreed to.
Clause 2
Small businesses in relation to which the Commissioner has functions
Question proposed, That the clause stand part of the Bill.
Bill Esterson
The clause deals with the definition of small businesses. I do not intend to detain the Committee for long on this subject, but it is important to consider what it says. There have been wide-ranging debates in the Lords and here about what the small business commissioner ought and ought not to do. The clause, which defines the small business commissioner and who they will serve, is an opportunity to reflect on the importance of exactly that remit.
Although debate on the Bill has covered a variety of issues, I believe that on both sides it has had at its heart the recognition of the value of small businesses to the UK economy. Members across the House have had an opportunity to offer valuable support to the companies and entrepreneurs that fall within the definition laid out in the clause. The debate is an opportunity to speak about the importance of small businesses, but the Bill carries an opportunity to boost the prospects of companies all over the UK.
What are we talking about when we lay down these technical definitions of a small business? There are now thought to be 5.2 million small businesses in the UK. They employ 48% of the UK’s workforce and, on the back of sheer hard work, account for 33% of private sector turnover. The definitions laid out in the clause single out incredibly hard-working people. My wife still runs a small business and is a constant reminder to me of how much effort and how many sleepless nights it takes to start, grow, run and maintain a business—all those things and more. The Bill is for those who deserve our support on late payment, which is one of the most vexing issues facing small businesses today and one that we simply have not done enough to resolve. It is also one of the issues that my wife lobbies me on almost daily.
The Bill presents us with an opportunity radically to change the outlook for some of the most important contributors to our economy. It offers the small businesses in the definition some level of support or guidance on late payments, but it could serve the business owners or the budding entrepreneurs also captured in the definition who have brilliant ideas but do not have the knowledge base needed to grow. It could serve the businesses that are struggling with not only late payments but investment challenges, ongoing legal disputes, access to finance, lack of mentoring and difficulties with public sector and private sector clients.
The clause captures a body of people whose challenges go far beyond late payment and who need far more than supportive words and signposting to systems that, as time has shown us, simply have not tackled the problem. All the challenges they face are tackled by specialists in big companies, but the definition in the clause demarcates a group who largely are so busy keeping the wheels of local economies turning that they do not have time to be legal or financial experts. The Bill is an opportunity for us to provide them with real support.
Beyond the technical definitions laid out in the clause are the owners of 5.2 million small UK businesses. If they are not watching this debate, they will still feel over the coming months and years the outcome of whether we focus on limited support for the specific challenge they face or whether we take this chance to offer meaningful answers to some of the key issues that stifle their growth and prosperity—and by extension, the growth and prosperity of the local economies in which they operate.
We would like the small business commissioner’s remit to go much further than the one in the Bill. Even if we just focus on late payments, it does not take a great deal of prodding of the definitions to see how limited the scope of support is. One fifth of UK small businesses—more than 1 million firms—have experienced or come close to insolvency as a result of a total estimated by BACS to be £26.8 billion in outstanding late payments. Sage estimates a significantly higher figure—I cannot remember it.
Bill Esterson
I thank my hon. Friend. The Government’s proposed small business commissioner is likely, according to the Government’s own predictions, to help just 500 small businesses a year. The commissioner will serve as a signposting service to mediation services that already exist and have failed to deal with the crippling problem of late payment in the past. In fact, it was the Minister’s colleague, the hon. Member for Huntingdon (Mr Djanogly), who said on Second Reading:
“On capacity, the new £1.1 million SBC website should handle 390,000 disputes from 70,000 businesses, yet the SBC will deal with only 500 complaints a year. That gives rise to the question of what will happen with the rest of the disputes and what the real impact of the proposal will be. Could the site cope with the workload of significant numbers qualifying for assistance? That remains unclear.”—[Official Report, 2 February 2016; Vol. 605, c. 828.]
That is just the website, which the Minister mentioned. The small business commissioner will employ only a handful of staff, and there is nothing in the Bill to say that they will be legal, financial or even business experts.
We have to be honest when we look at the definitions laid out in the clause. The aspiration to support small business is lofty and laudable, but it prompts a question: without the legal clout of the Australian small business commissioner or the wide-ranging agreement with the US Small Business Administration, and without anything like the budget or staff numbers of either of them, how many such companies is the legislation actually likely to help?
Anna Soubry
I will keep this as short as I can, because I do not think that there will be a vote on the clause.
I agree with a large part of what the hon. Gentleman says. The clause defines small businesses that may access the commissioner’s functions as those with a headcount of fewer than 50 people. Financial thresholds may also be applied under secondary legislation—for example, if it transpires that there are businesses with relatively few employees, but high financial worth. They might be excluded from the commissioner’s scope, because our emphasis is small business.
I think Lord Mendelsohn talked about the “asymmetry of power”; the measure is about small businesses, especially very small businesses—the actual definition for small business is 250 employees, but we are taking that down to 50 and fewer, because those businesses simply do not have the sort of power that other, bigger businesses have. We want to redress that and to change the balance.
Perhaps the small business commissioner will not at the moment deliver as we all want them to deliver, but it is a terrifically good beginning to have someone in situ specifically looking after the needs of small businesses, concentrating on the primary role—I will be boring by repeating this—of tackling the problem of late payment, because that is the big issue that troubles the majority of small businesses. The commissioner will be their champion.
I hope to be—I like to think I am—the champion of small businesses, and that is why I was appointed. I do not know whether there has been a small business Minister before and, although I do other things as well—I seem to do everything—the emphasis is on small business. I actually sit in Cabinet because the Prime Minister wanted a Minister with responsibility for small businesses at the Cabinet table—unfortunately, he could not find one, so he got me. No! To be serious, that is why the role was created.
I am so proud that we will have the small business commissioner as the small business champion, especially for late payment. I do not think that there will be any dispute about the clause.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
General advice and information
Bill Esterson
I beg to move amendment 40, in clause 3, page 3, line 10, at end insert—
“(d) tax rates, allowances and thresholds of relevance to small business owners.”
This amendment would extend the general information and advice that may be published by the Commissioner to include tax rates, allowances and thresholds of relevance to small businesses.
The Chair
With this it will be convenient to discuss the following:
Amendment 41, in clause 3, page 3, line 10, at end insert—
“(e) guidance on payday loan rates and their appropriateness.”
This amendment would extend the general information and advice that may be published by the Commissioner to include information about payday loans.
Amendment 43, in clause 3, page 3, line 29, at end insert—
“(5B) The Commissioner must publish, or give to small businesses, general advice or information about the relationship between the Small Business Commissioner’s complaints scheme and any other legal remedy available to a complainant.”
This amendment would require the Small Business Commissioner to give general advice or information to small businesses about the relationship between the Small Business Commissioner complaints scheme and any other legal remedies available.
Amendment 44, in clause 3, page 3, line 43, at end insert—
“(9A) Where a recommendation is made under subsection (8), the Commissioner may take the relevant action in response to the recommendations where she sees fit.”
This amendment would give the Small Business Commissioner the power to act directly on recommendations he has made.
New clause 14—Guidance for local authorities—
“The Commissioner must prepare and publish guidance to local authorities outlining—
(a) the functions and services she may offer to small businesses, and
(b) related to the complaints process.”
This new clause would require the Small Business Commissioner to provide information about her functions and services to local authorities.
Bill Esterson
The group of amendments and new clause 14 look at tax rates, payday loans, the small business commissioner’s complaints scheme and other remedies, at ensuring that the commissioner has power to act on his or her recommendations, and at providing information to local authorities.
We want the small business commissioner to have not only a broader remit as the office develops, but greater powers to investigate, to mediate and to advocate for small businesses on regulation and legislation. If the Government want the commissioner to be a signposting service, we at least need the remit for it to be broader. The start would be to equip the commissioner with the tools to advise and signpost on the main issues that matter to small businesses—we talked about access to finance in our debate on the last group of amendments—so that the commissioner can in turn equip entrepreneurs with the knowledge necessary to access the support available to them. The amendments deal with some of those issues.
Bill Esterson
I thought the Minister might say that. However, we have included it precisely because it does not seem to happen every time. After the introduction of the Groceries Code Adjudicator, both the GCA herself and commentators found that the take-up of her services by suppliers was hampered by the fact that not enough people knew about her and the services she provides. It is a simple issue of communication, or good marketing, but it takes more people than the postholder himself or herself to ensure that an awareness that they exist and an understanding of what they do reaches more than 5 million small businesses.
On a whole host of issues that we will come to later in another new clause, it seems that the Government are going to great lengths not to learn important lessons from the introduction of the Groceries Code Adjudicator. This is a simple one: make sure people know that the office exists and use the local authorities as an ideal vehicle for raising that awareness. Raising awareness is not done straight from the small business commissioner and it is not currently done from the Groceries Code Adjudicator to the many people they are trying to help. That would not be possible, given that, under the small business commissioner, we are talking about reaching more than 5 million companies. By equipping local authorities with the understanding of the post, they need to triage small local businesses into signposting the small business commissioner where appropriate, and in that way we can make light work of spreading the news. The website on its own will not do it. Local authorities will also no doubt appreciate that, not least because it will plug the gap left by so many of the Government’s cuts to councils and to national schemes designed to give advice to small businesses.
Anna Soubry
In resisting the amendments I will put the following arguments. The commissioner will give small businesses general advice and information that would be helpful for their dealings with larger businesses. I have given one such example as portals through websites. Many of us as Members of this place have our own websites, so we are more than familiar with how best to talk to constituents and provide them with information. We know that there are ways to do it that never existed before, but that will be for the commissioner to decide. I respectfully suggest that we do not need to write all this stuff down in legislation. We can allow him or her to use the abilities that they will undoubtedly have to ensure they provide the services and the general advice and information that they believe will best suit small businesses.
The commissioner will also direct to relevant bodies and sources of assistance, as I described. Our consultation showed that there is widespread support for that function, and that small businesses—I think the hon. Gentleman will agree—do not always know about the services available to them. The commissioner will address those information gaps. For example, I have no doubt that some small businesses will contact the small business commissioner with a complaint about a utility company. The small business commissioner will ensure that their complaints go to the right place, such as Ofgem or Ofcom. We all know small businesses that have huge problems accessing superfast broadband or have difficulties with their landline, BT and so on. The commissioner can give them direct access at the click of a mouse or a button to Ofcom. I have already talked about the financial services ombudsman, which is another way of helping small businesses to resolve problems and disputes.
The commissioner will not cover specific issues such as taxation, because such information and advice is already available. Nobody wants duplication. I am confident that good advice is available, so why would we double it up and confuse people further? The commissioner’s information will be sensibly integrated with other sources of business advice—as I said, access to finance is a very good example. The commissioner will decide what advice and information will assist small businesses. It can already include his or her own schemes and remedies.
I agree that awareness of the commissioner is crucial. However, he or she will be best placed to decide how to promote their services. I will absolutely trust whoever is appointed, because part of the skill set I expect them to have is the knowledge of how to get out there and ensure that everybody knows about them.
I recognise that the payday loans market has caused serious problems for consumers, but, with respect, I do not think it should be in the Bill because we took the action that was needed to address it in the previous Parliament. The Financial Conduct Authority’s more stringent regulatory regime is already having an effect on the payday loan market. It found that the volume of payday loans fell by 35% in the first six months of regulation, even before a cost cap was introduced last year.
The commissioner’s power to make recommendations about the information that the Secretary of State gives simply allows for different ways of providing information. The commissioner already has the power to publish and provide information.
New clause 14 is a good example of bad legislation. We do not need legislation to tell people to talk to one another. While the hon. Gentleman was talking about it, I wrote down off the top of my head what local authorities can and should do—many are already doing these things—to support small businesses. They should ensure that they have good, sensible business rates; create the right environment; free businesses from unnecessary regulation and undue checks; support high streets with imaginative parking by, for example, providing access for wheelchairs and buggies; ensure their local plans, core strategies and planning matters are small business-friendly; and support the high streets and all of the wonderful small businesses that we have in our constituencies. Finally—as I said, this is just off the top of my head—they should ask whether planning applications include access to superfast broadband. Good digital technology must be at the heart of their planning decisions and everything they do as local authorities.
I respectfully suggest that that sort of legislation is not needed. Local authorities, with few exceptions, know how best to work with small businesses, but it is not their job to give them advice. It is their job to create the right environment in which they can thrive and grow. That is why I urge everybody to reject the amendments.
Bill Esterson
The Minister talked about constituents contacting us via our websites. I have constituents who contact me via my website, too. I have an electorate of something like 68,000. [Interruption.] That is quite a small electorate, but not all 68,000 contact me via my website.
Anna Soubry
I am sorry; I did not say that they contact me via my website, but I understand how websites work and how they can disseminate information and enable people to access the information they need by way of portals. Obviously, an MP’s website does not have many portals, but we are all familiar with how websites operate in a modern world so that people can get the information that they need. That is all I am saying.
Bill Esterson
We can also measure how many people are looking at a website. I do not have the technical know-how to do that, but some do. I know that 68,000 people do not visit my website or anything similar to that, and 250,000—the borough’s voting population—do not visit Sefton Council’s website, either. I do not think that websites are therefore anywhere near the answer to providing access to the small business commissioner.
The Minister talked about new clause 14, which is not about getting local authorities to work on how they access business, much as I want them to do all the things that she talked about. I do not disagree with that, but that is not what the new clause is about. It is actually about ensuring that local authorities know that the small business commissioner exists and what he or she does so that they can work together to improve life for small businesses. It is a shame that she did not grasp that.
On tax, in my experience most small businesses want to pay tax; they just want to ensure that they pay the right tax. Whether that is true of some rather larger businesses, we can all speculate from time to time. To pay the right tax, however, businesses sometimes do not find that the advice from HMRC is what they need. In the Lords, we heard an example of a business attending a seminar organised by HMRC so that it could get its tax right and when, having followed HMRC’s advice, it approached HMRC to say what it thought it should be doing, HMRC disagreed and said:
“We are not bound by our own advice”.—[Official Report, House of Lords, 26 October 2015; Vol. 765, c. GC137.]
That was something of a shock to the company, which had invested all that time and effort in dealing with its tax affairs in an attempt to pay the right level of tax. That is why it is important that the small business commissioner is involved in helping businesses to understand tax rates and to pay the right tax so that they are not dependent on HMRC, which does not always act as we might reasonably expect. As that was a probing amendment, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Bill Esterson
I beg to move amendment 42, in clause 3, page 3, line 29, at end insert—
“(5A) The Commissioner may assist small businesses by taking an active and direct role in resolving, mediating or facilitating the resolution of disputes.”
This amendment would give the Small Business Commissioner the power to take an active role in resolving, mediating or facilitating the resolution of disputes.
We are talking about the important topic of mediation and facilitating the resolution of dispute, which is sometimes known as alternative dispute resolution. The amendment looks to learn from what goes on in Australia and would provide the commissioner with the opportunity to insist on mediation as a better way of solving disputes between two business parties than going to court, for example.
In the foreword to the July 2015 BIS publication “A Small Business Commissioner”, the Minister said:
“In Australia, the Victorian Small Business Commissioner is having a real impact on the ground.”
She told us earlier about her meeting with him. One reason why that commissioner is having an impact on the ground is that he has so many more powers than is proposed in the Bill. One such power involves being able to insist on mediation and to ensure that unfair payment practices are dealt with on a case-by-case basis. That is not what is being proposed here. If the Minister really wants the United Kingdom’s small business commissioner to match the performance we see in Australia, she must give them the same tools and powers to do the job.
The staff of the New South Wales small business commissioner are formally trained in mediation. In Australia, attendance at mediation may be legally required by a court, and the small business commissioner may insist on mediation after the initial consideration of the complaint. Any decisions or agreements reached during mediation are signed by both parties and are returned to the small business commissioner, who can hold them to account if they do not keep their side of the agreement. Mandatory mediation is vital as far as the Australian model is concerned. The office of the Australian small business commissioner says:
“Mediation is so successful that most of all matters referred to us for mediation are resolved prior to having a court decide the matter… The mediation process is essential in minimising the costs of business and commercial disputes.”
Compulsory attendance at mediation in the Australian model is enshrined in the legislation that set up the New South Wales small business commissioner. Section 17 of the Small Business Commissioner Act 2013 states:
“If an application is made to the Commissioner for assistance in resolving a complaint or other dispute involving a small business and the Commissioner decides to deal with the complaint or dispute, the matter to which the complaint relates or the dispute may not be the subject of any proceedings before any court unless and until the Commissioner has certified in writing that alternative dispute resolution services provided by the Commissioner under this Act have failed to resolve the matter or dispute.”
There are various other requirements in other sections of the Australian legislation. At a national level, the Australian small business commissioner has similar powers. The Australian Government are undertaking to absorb the role into the proposed small business and family enterprise ombudsman, but the legislation is clear about mediation.
The value of mandatory mediation is not only in enabling the small business commissioner to see a complaint through to resolution but in ensuring that both parties follow a process that minimises cost and the risk of the complaint ending up in court. The balance of power must not be so weighted against the small business supplier that it is put off pursuing a complaint for the lack of cheap, accessible dispute resolution, something which we discussed earlier. This is about fairness, ensuring a level playing field, reducing costs, and producing commercially realistic solutions to disputes, including those involving late payment. I look forward to hearing the Minister’s response.
Hannah Bardell
Following on from the hon. Gentleman’s comments, we also welcome, as we did on Second Reading, the creation of a small business commissioner, but as we said then and as we believe now, it is important that the commissioner has real power and teeth to arbitrate and to take on issues when they are brought to them, rather than just to give advice. The Federation of Small Businesses has said that it is important that the commissioner is endowed with real powers to assist small business. It is important for the integrity of the office of the commissioner that it is regarded by small businesses as a route by which they can achieve a meaningful outcome. The current suggestion of a commissioner making recommendations or highlighting particular cases is simply not enough if they are to gain a reputation as a small business champion. All too often, such bodies do not have the power to bring companies into line. If we want a fair system across the board, further powers, such as those in the amendment, are important.
Anna Soubry
It is important to refer to our consultation because it represents the voice of small business, and it showed us that small businesses want to understand what options are available through existing dispute resolution services. Small businesses have told us that there are plenty of existing resolution services and that we should not—here comes the word again—“duplicate” them. They need support to navigate the services more easily. The commissioner will provide general advice and information to raise awareness of alternative dispute resolution and direct firms to those approved mediators. Obviously, I am an old lawyer, though, of course, I was a criminal barrister, but one thing that has struck me about the changes that have occurred in the civil side of English law—I cannot speak for the situation up in Scotland—is the widespread use now of mediation, which means that people do not end up in court.
We know the cost of going to court, we know that it can actually be very traumatic. It is not just matrimonial or family matters; a business dispute can still exert a huge pressure, especially for a small business. There is a human as well as a financial cost. So the court system, certainly in England and Wales, has bent over backwards to encourage people to go to mediation, for all the very good reasons that I hope are obvious to everybody.
When we looked at the creation of the small business commissioner and what we were seeking to achieve, I was very keen to understand—I was worried, to be very honest—whether there were enough mediation services available to businesses in the event of a dispute. I was encouraged that there definitely are enough. So it is not the job of the small business commissioner to mediate, because, frankly, there are other people out there who will do the job and are doing the job.
I should say that I have not actually had the honour of meeting Mark Brennan, the Australian small business commissioner; unfortunately I could not attend the meeting, but I spoke to him at length on the phone. I will be very blunt about it: it was one of the best conversations I have ever had in this job. He spoke with all the frankness and robustness that I was hoping for—“This is difficult, you cannot legislate for this, but in tackling late payment, which is what this is all about, what we seek to achieve is to change the culture so that small businesses no longer feel the need to complain about this problem, because it does not happen, because we have changed the culture.” At the moment there are already laws to prevent unfair terms and conditions in contracts, late payment penalties and so on. There is a code of practice and, of course, if someone has already signed up to a contract and somebody has, in effect, breached the contract, they can go to law. So there are lots of protections there, but we want to change the culture so that people are not paid late in the first place.
Mark Brennan impressed on me that it is very difficult to legislate for this; this is why we are doing it in this way. He said, “The real power I have on late payments is that when I am aware of a trend or a practice by a particular business, I pick up the phone and speak directly to the chief executive”. He said that nine times out of 10—I think it was actually more than nine times of out 10, if there is such a thing—the chief executive took the phone call. That is why we need to make sure we have somebody big business respects; there was no messing about, they took the phone call. He said that as soon as he said to the chief executive, “Do you know what your finance team are saying to a whole group of small businesses?”, the chief executive said “What? They’re doing what? This is not how this business works, I had no idea this was going on” and then he or she sorted out the problem.
That is the huge power of the small business commissioner in Australia and that is what I want ours to have. I want them to have the respect of businesses—so they will take the phone call and listen to what is being said—as well as the confidence of small businesses.
John Howell (Henley) (Con)
My right hon. Friend is absolutely right to speak of the power of mediation. I happen to be the chairman of the alternative dispute resolution APPG. We had a meeting only the other evening on this, and I can assure her that she is absolutely right about the number of mediators that are available to deal with late payment disputes and other forms of dispute.
Hannah Bardell
I recognise what the Minister is saying and that there is a range of mediation services. Does she not recognise, however, that in the example she gave where the small business commissioner could phone up the chief executive, it would force the hand and have greater power if he or she were able to say, “If you can’t get this sorted out, we have an overarching power”?
Anna Soubry
We can talk about powers, which will come up later in the Bill, but we are talking about remit. It is not the remit, in my view, of small business commissioners to offer services that are already available. They can point people in the right direction, but Members must be under no illusion about what the commissioner’s role will be. If someone comes to the small business commissioner with a case that is within scope and says, “Will you mediate?” the commissioner will say, “No, I’m not going to mediate. You go off to mediation, but if you’ve got a complaint about bad practice relating to late payment, come back to me. I’ll deal with it.”
The services are there. Let us concentrate on what the commissioner’s role is. The role is to tackle late payment and to change the culture, so that we do not have so many small businesses that are not paid in time or have unfair conditions put on them in terms of when they are paid. That is why I urge hon. Members not to support the amendment. It is not the direction of travel. Mediation services are already out there, and it is the job of the commissioner to direct people to existing services.
Bill Esterson
Well, we will find out in time whether that works. The reason for quoting the Australian example is that both parties have to accept that mediation will have consequences. I think I am right in saying—the Minister will correct me if I am wrong—that if a party refuses to engage in mediation, there may be penalties if matters end up in court. That is an interesting approach.
Anna Soubry
If someone has a legal dispute and therefore issues proceedings, they will be pointed—there is no debate about it—to mediation. If they are a belligerent party and refuse to use mediation, when they come to court and lose, they will take the heavy toll of costs accordingly. At the moment, all the courts point people in the direction of mediation, and it is a very belligerent party that does not go down the mediation route. In fact, it may be almost impossible in the English system for a case to get into a county court or the High Court unless it has gone through mediation or some judge has determined that the case needs to go before it because mediation is not the correct route. In other words, we have a good system that is working.
Bill Esterson
That is interesting, but we come back to the huge problem of late payment that we are still grappling with after all these attempts. The Minister mentioned the number of pieces of legislation that have attempted to help with that.
The Minister has mentioned a number of times, including on this matter, her concern about not duplicating. If we have things that are not working, we need to consider new approaches; that is at the heart of the creation of the small business commissioner. However, it is about making the commissioner as effective as possible. That is why we have looked at mediation in the way we have. The amendment does not make the power compulsory, but it gives the commissioner the opportunity to be one of the services available.
While I do not dispute what Members on both sides of the Committee have said—that plenty of mediation services are available—if the system was working well, businesses would be finding those mediation services and using them. Something is not quite right, because it sounds like that is not happening. The constituents who have come to me have certainly not been taking advantage of such services; they have been suffering in silence when it comes to challenging those who owe them money.
I agree with the Minister; we need to change the culture. I have no doubt about that, but the question is how best to do it. This probing amendment was about doing just that. We absolutely need to raise awareness of the services that exist. If that is not sufficient in time, I hope that she and the Secretary of State—she may by then be the Secretary of State—will decide to give the small business commissioner those additional powers. Perhaps then we will have made further progress in helping to achieve the outcomes we want in reducing the level of late payments. As she quite rightly says, ideally we want it to stop being the problem that it is now. 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 SBC complaints scheme
Bill Esterson
I beg to move amendment 47, in clause 4, page 4, line 25, at end insert?
“or is made by a small business (“the complainant”) which has an agreement to supply, or has supplied or may supply, goods or services to another small or medium sized business (“the respondent”), which has the same meaning given by section 7(1) in the Small Business, Enterprise and Employment Act 2015.”
This amendment would extend the Small Business Commissioner’s remit to complaints made by an SME against another, to which it is providing goods or services.
One day, someone else will be moving an amendment, but not today. Amendment 47 is about the remit of the commissioner and the ability to consider complaints made by one small business against another, which can be due to supply chain issues. Behind a problem in payment from one small business to another, there often lies a chain in which larger businesses and, indeed, the public sector are the real problem. A small business cannot pay another small business if it is owed money itself. That was addressed in detail in the Lords. In Grand Committee in the Lords, we found out that 70% of small businesses trade with other small businesses.
The amendment is an attempt to unpick some issues and challenges that enable the commissioner to be as effective as possible. It would protect small and medium-sized businesses and enhance competition, creating a fairer environment for all businesses. Government involvement in small business matters should aim to ensure that prospective and ongoing small businesses have sufficient knowledge to make informed business decisions. Although any business has a fundamental right of control over positioning and maximising its business opportunities, that right does not extend to engaging in unfair business practices. This is not just about situations where small businesses cannot pay; it is also about situations where they choose not to.
I could not understand from the explanatory notes why the Government have not included complaints made by small businesses in the remit of the small business commissioner. The amendment would set that straight.
Alan Brown
I echo what has been said. The amendment seems to be a logical extension. Earlier we supported the extension to public bodies, which I thought would strengthen the Bill, and I think this amendment would too. Fellow SMEs should be protected as well. There should not be a loophole. We do not want to get to a stage where there is an argument about what constitutes an SME. All businesses should be treated equally, and this simple amendment would allow that opportunity.
Anna Soubry
This is why we have done it in this way. As we see from the clause, the commissioner will handle complaints by small business suppliers about payment-related issues with larger businesses—that is, any medium-sized or large business. The intention of all this legislation is to help small firms where they suffer from the imbalance in bargaining power. I have referred to the words of the noble Lord Mendelsohn about asymmetry. We know that smaller firms, by virtue of their smallness—especially microbusinesses—are at a disadvantage, especially against medium and larger companies. We believe that that is where the real problem is, and that is what we particularly want the small business commissioner to address.
That is not to say that if a small business is in dispute with another small business, it will not have access to all the sorts of dispute mechanism that we have heard about, but we do not believe that is where the real problem is, or the real imbalance of power. That is why we have specified businesses of fewer than 50 employees. They are disadvantaged by their size against medium and larger companies. We know that such businesses often feel unable to challenge contract terms proposed by larger businesses, as I think we have all agreed and mentioned, because it could breach or damage existing or potential commercial relationships with those companies.
Smaller businesses may not have the time, money or expertise to take a legal challenge, which is another consideration. However, as we know, sometimes it is because they are simply frightened that if they take any form of legal action—even something like mediation—it will completely thwart the future commercial relationship between them. They are in a much weaker position by virtue of their size, so that is where we are putting all the emphasis. Their big problem is medium and larger businesses. That is why I resist the amendment.
Bill Esterson
The Minister rightly makes the point about the imbalance in bargaining power, but I repeat that 70% of trade is with other small businesses and that when a larger firm is behind the problem due to delays elsewhere in the supply chain, there does not seem to be a mechanism for addressing that. Perhaps she can take that away, if she is resisting our attempts to include small businesses: how can we deal with problems in the supply chain that come ultimately from a large or medium-sized business? With those comments, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Bill Esterson
I beg to move amendment 48, in clause 4, page 4, line 26, after “(4))” insert
“or relates to allegations of unfair treatment or unfair contracts”.
This amendment would empower the Small Business Commissioner to investigate allegations of unfair treatment or unfair contracts.
The Chair
With this it will be convenient to discuss the following: amendment 54, in clause 5, page 6, line 10, at end insert—
‘(12) On application by the Commissioner a court may declare an unfair contract term void.”
This amendment would empower the courts on application from the Small Business Commissioner to declare void a contract term that is unfair.
Amendment 57, in clause 8, page 8, line 32, at end insert—
‘(3) The Commissioner must ensure that all information provided by complainants, litigants and other parties against respondents is handled with confidentiality.
(4) The Commissioner must not release the information outlined in subsection (3) without the consent of the complainant, litigant or relevant party.”
This amendment would provide protections for those either providing information to the Small Business Commissioner or from complainants or litigants with large businesses.
New clause 7—Companies: Payment terms with suppliers—
‘(1) On the advice of the Commissioner, the Secretary of State may make regulations—
(a) imposing a limit on the number of days after receipt of a supplier’s invoice a company can seek to challenge that invoice,
(b) prohibiting the practice of a company seeking to change the payment terms of a supplier company unilaterally, and
(c) prohibiting a company from requiring a supplier company to make a payment in order to join that company’s list of suppliers.
(2) The regulations may make provision for a prescribed breach by a prescribed description of person of a requirement or prohibition imposed by the regulations to be an offence punishable on summary conviction—
(a) in England and Wales by a fine, and
(b) in Scotland or Northern Ireland, by a fine not exceeding level 5 on the standard scale.
(3) The regulations may specify the size of company and supplier company to which they will apply.
(4) Before making regulations under this section the Secretary of State must consult such persons as the Secretary of State considers appropriate.
(5) Regulations under this section are subject to affirmative resolution procedure.
(6) For the purposes of this section—
“company” has the meaning given by section 1(1) of the Companies Act 2006,
“prescribed” means prescribed by the regulations.”
This new Clause would empower the Secretary of State to make regulations: (a) to impose a limit on the number of days after the receipt of a supplier’s invoice a company may challenge that invoice; (b) to prohibit a company changing the payment terms to a supplier company unilaterally; and (c) to prohibit a company from requiring a supplier company to make a payment in order to join that company’s list of suppliers.
Bill Esterson
We move to the topic of unfair treatment or unfair contracts and how they are or might be dealt with by the small business commissioner, starting with amendments 48 and 54. The issue is similar to some of the problems faced by consumers that were dealt with in the Consumer Rights Bill—is it an Act now?
Bill Esterson
I look for inspiration, and I am sure that we will get it. [Interruption.]
Bill Esterson
Thank you. Whips always know.
I think that there was an agreement in Committee on that Bill, which is now an Act, that microbusinesses have a lot in common with consumers, and that there is merit in considering them in the same way when they are purchasing goods and services, and certainly those that are not their core business. Examples include a hairdresser, who would buy shampoo or scissors as part of the business, whereas an individual would perhaps buy such things from Boots. When the hairdresser was buying coffee or a kettle for staff, however, it would perhaps be reasonable for them to be treated as a consumer. One-off business-to-business purchases made by a small business, such as somebody who is self-employed, should attract the same protection as would be afforded to consumers.
Anna Soubry
I think I ought to say to the hon. Gentleman, and to hon. and right hon. Opposition Members, that I am actually enjoying this Committee. I do not mean to be rude to previous Committees, but—[Laughter.] Members know what I mean, though. Some important points have been made by the hon. Member for Sefton Central and I want to be clear that I am listening. It is not that my mind is absolutely set and that I will not budge on anything—although I am not making any promises. What I am saying is that we are setting up a new commissioner, and the hon. Gentleman has made a good point that the Government might look at that if it is not working, so I am in listening mode. However, I am not convinced by these amendments.
The hon. Gentleman talks about the rights of the consumer apropos the rights of a small business owner, and there are arguments about that. I am not saying that it is working just because it is there, but there is quite old legislation—that does not mean to say that it is not good, just because of its age—such as the Unfair Contract Terms Act 1977, so we have to set this against pre-existing legislation. The reason that legislation is often not relied on is because, as we have already understood, very small businesses are reluctant, for all the reasons we have identified, to use existing legislation, or indeed to sue for a breach of contract. We all know the reasons—because we have already debated them—but there is existing legislation covering unfair terms and conditions, by way of example. I strongly suggest that the amendments are not necessary.
As we discussed earlier, business groups have said that the commissioner’s role should be to focus on the business of late payment and changing the culture. The commissioner absolutely should not alter the fundamental basis of contract law. It is not the role of the small business commissioner to get involved in contractual negotiations, contractual relations and, indeed, changing the law of contract. That is the role of Government. The Bill provides appropriate protection against identifying complainants to third parties, and the Government are already implementing a package of measures to address late payment to small businesses.
Alan Brown
On the previous point about it being up to the Government to change the law, amendment 54 would allow the commissioner to apply to a court to declare an unfair contract. That would not interfere with Government law. The commissioner would be making an application to a court of law for the court to decide, which is different from interfering with Government law.
Anna Soubry
If the hon. Gentleman will forgive me, amendment 54 is a very bad idea because the commissioner would be able to undermine the fundamental freedom of two businesses to agree commercial transactions on such terms as they see fit. I strongly resist that amendment.
The commissioner will consider a complaint on the basis of what is fair and reasonable in the particular circumstances, but it is absolutely not the role of the commissioner to begin to interfere with a contractual relationship between two parties, any more than it is for the commissioner in any way to undermine or begin to change contract law, for example. Laws are made in this place, not by a commissioner. Otherwise, we would be getting into the very dangerous territory of a quasi-judicial role, and I hope the hon. Gentleman might trust my admittedly very old knowledge of jurisprudence, certainly in the English and Welsh law, to know that that would be a very bad route to go along.
On amendment 57, if a complainant does not want to be identified to the respondent—[Interruption.]
Anna Soubry
I shall now deal with new clause 7, which is really not necessary given the package of legislative and non-legislative measures we have taken to tackle late payment. I shall give some examples.
We plan to make regulations this year to require large companies to report six-monthly on payment practices and policies. That information will be available for public scrutiny. We have strengthened the prompt payment code to enforce a maximum 60-day payment term for all signatories from this year. Public sector buyers are required to have 30-day payment terms in contracts and throughout their supply chains, as we discussed this morning. We have to sharpen that up—we have to be better—but it is there. From 2017, public sector buyers must also publish annually their liability to debt interest payments. Central Government will publish quarterly on liability to debt interest from April 2016, and we will monitor the effectiveness of the measures.
There has been a little jollity—if one can be jolly about the mystery shopper service—but, in all seriousness, I have been absolutely convinced by that service because I have seen the evidence of the work it does. I might not be happy with the name, but it does investigate poor payment performance by public sector bodies and in their supply chains, and it is having an effect and making a difference.
Stakeholders—that dreadful word, but they are important people who have an interest—tell us that they want more public exposure of the payment practices of larger companies, and I agree with them. Bans on certain practices would be easy to sidestep and substitute with others. However, as we all know, publicity—casting a spotlight—is one of the best disinfectants against bad practice. That is the way forward. Were we to go down the sort of legislative route suggested by the new clause, it would become all too easy to sidestep and get around, so we would not make the advances that we need to make. For those reasons, I urge the hon. Gentleman to withdraw the clause or, if he pushes it to a vote, I urge the Committee not to support it.
Bill Esterson
I am still intrigued about the mystery shopper—at some point we may find out.
Bill Esterson
The Minister is making a joke of it. I am intrigued to discover what it is finding and what is happening with its findings. I hope that we might hear that at some point. We do not need to hear today, but I would be very interested. I do agree that mystery shoppers can be very important in improving the quality of service and operation in a number of organisations.
I accept the Minister’s assurances on new clause 7, but, again, when the commissioner has been up and running for a while, it might be good for them to look at some of the payment-terms issues in the new clause and how well things such as the prompt payment code are bedding in—that is, is it as effective as we want it to be? That might be something useful that the commissioner could do in future to make a real difference.
Before the Division, the Minister talked about whether the commissioner should take unfair contract terms to court. She said that a quasi-judicial role would be inappropriate. Take the example of somebody in an imbalanced business relationship being offered a three-month payment term on an invoice, knowing full well that it is unfair and completely wrong, but, given their dependence on that contract and business relationship, feeling they have no choice but to go ahead with it. At a later date—this is what the amendment is getting at—there might be an opportunity for them to get some kind of redress. That would be the sort of issue in which the commissioner might intervene. The amendment suggests the commissioner might recommend to the court that the term was inappropriate, rather than take a quasi-judicial role. Nevertheless, I take the Minister’s points and, as the amendments were intended to be probing, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
Let me see who is speaking to the next group of amendments—ah yes, Mr Esterson.
Bill Esterson
Thank you very much, Ms Buck. I have never been more popular—often this popular, but never more.
I beg to move amendment 46, in clause 4, page 4, line 27, at end insert—
‘(3A) A relevant complaint may be made anonymously.”
This amendment would enable the Commissioner to act on anonymous complaints from small businesses against a larger business.
The Chair
With this it will be convenient to discuss the following:
Amendment 49, in clause 4, page 4, line 27, at end insert—
‘(3A) A “relevant complaint” at subsection (3) may be made anonymously by a small business (“the complainant”) which has an agreement to supply, or has supplied or may supply, goods or services to a larger business”.
This amendment would allow the Small Business Commissioner to be able to act on anonymous complaints.
Amendment 51, in clause 5, page 5, line 37, at end insert—
‘(4A) In enquiring into, considering and determining a complaint, the Commissioner must take all reasonable steps not to identify the complainant, unless the complainant consents.’
This amendment would provide anonymity to complainants who raise a complaint with the Commissioner.
Bill Esterson
The amendments deal with anonymity and confidentiality. I do not intend to spend too long on them, but this is an important subject area, because it is one of the places where we can learn lessons from the Groceries Code Adjudicator. One concern raised by the adjudicator was that many of the supermarket suppliers that wanted to make complaints were nervous of doing so for fear of loss of business. That explains why the investigation into Tesco that recently concluded was not the direct result of complaints being investigated; it was prompted only when the adjudicator herself decided to intervene because of suppliers’ fear of the consequences of complaining and being publicly identified. She has encountered that theme on far too many occasions over the past two years. Indeed, there are some unfortunate examples of that confidentiality not being maintained for a number of reasons when suppliers have approached the adjudicator that has no doubt created a concern among businesses, which have therefore chosen not to approach her.
Anna Soubry
I have to say, of course, that the Bill already protects the complainant from being identified to third parties. A Government amendment was introduced in the other place to ensure that complainants are not identified through freedom of information requests, which is also an important protection. Complaints made anonymously could be covered in the annual report, if they were significant—exactly the point that the hon. Gentleman made about a pattern emerging among complaints, some of which may be anonymous and some not. If the commissioner sees a pattern, that is absolutely something that he or she can pursue. To consider a complaint fully, however, the commissioner will invariably need some detail, notably the name of the complainant.
The commissioner will not, of course, have to name the complainant to the respondent. So someone can go to the commissioner and say, by way of example, “My name is Fred Bloggs”, and then make it clear that they do not want their name to be disclosed: “I am making a complaint about Freda Bloggins Ltd. I do not want my name disclosed to them, but this is the nature of my complaint”.
If the complaint is completely anonymous, that could make the commissioner’s job difficult if not almost impossible, because they can go to Bloggins and Co. and say, “I’ve had a complaint from someone. I haven’t got a clue who it is, but they have emailed me.” That person could be vexatious and there could be an underlying dispute between them, but the commissioner would be almost bound to take up and try to pursue the complaint while not knowing anything about the complainant. That is just plain wrong and could involve a great deal of wasting the commissioner’s time.
There is no difficulty with someone coming forward and then saying, “I want to be anonymous.” That will curtail the commissioner’s ability to investigate, because if they go to Bloggins and Co. and say, “Look, I am told that one of your people who is in charge of contracts has said to someone from another business, ‘I’m going to impose payments of 180 days’ and that is absolutely outrageous and wrong,” it would be difficult for the person receiving the complaint to make full representations. They may say, “I’ve spoken to our representative and he spoke to 10 people that day. We need a bit more detail as to who he is meant to have said this to.” In other words, it is very difficult for them to defend themselves.
We have to ensure that things are done fairly, and it would be quite wrong for someone to be able to make a complaint completely anonymously. The Bill allows someone to make a complaint and then retain their anonymity and, depending on the nature of their complaint, they will be properly advised as to the consequences that might flow. Anonymity will prevent the small business commissioner from making the sort of investigation that he or she may want to make.
Mary Creagh (Wakefield) (Lab)
I apologise to the Committee for arriving late. May I pose an alternative view? During the horsemeat scandal a stream of anonymous tip-offs came in through my email that were helpful in pointing me in the right direction of where to look to see who was putting horsemeat into the human food chain. That enabled me to ask questions in Parliament and of Ministers that revealed that a variety of very large companies had knowingly or unknowingly been accepting it in. Most of those tip-offs came from legitimate suppliers who were looking around and saying, “I don’t understand how X can supply burger meat at this price when for me to do it legitimately it has to cost Y.” Does the Minister agree that it may sometimes be useful for the small business commissioner to know where to look when issues are happening?
Anna Soubry
I do not disagree at all. That is why a flexible approach rather than an overly prescribed legislative approach is what I seek, and I am told that our model reflects the small business commissioner model in Australia. If as the hon. Lady describes the small business commissioner receives a flood of anonymous complaints and—even better—some have substance to them, it is difficult to believe that the commissioner would not grab that and take it forward. However, this is about accepting and understanding the difficulty of anonymity for the person against whom the charge or complaint is made, because they cannot take part in the investigation without some more detail to answer the charge. The small business commissioner must act and be seen to act in a way that is fair to both parties.
That is why the Bill does not prohibit anonymous complaints from being made. In legislation we are making the dangers of anonymity clear and ensuring that it is fair, but not for small businesses alone. We might be biased in favour of small businesses, but when looking at complaints the commissioner must be absolutely fair to both parties.
Bill Esterson
I think the point was well made by my hon. Friend the Member for Wakefield and by the Minister that if a pattern of anonymous complaints emerges, that is absolutely something the commissioner may act on. Having carefully reread amendments 46 and 49, I accept that they might potentially be read in that way—that was the intention—but I am satisfied by what the Minister says and having it on the record is extremely helpful. Amendment 51 deals with confidentiality and I agree that in an individual case it might be difficult for the commissioner to act if complainants did not give information to the commissioner. Granted they might want to give it confidentially, but those are two separate matters and I am satisfied by what the Minister said. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 ordered to stand part of the Bill.
Clause 5
Enquiry into, consideration and determination of complaints
Bill Esterson
I beg to move amendment 50, in clause 5, page 5, line 35, at end insert—
‘(3A) Where the respondent fails to provide information voluntarily the Commissioner may investigate the failure and can enforce compliance with information requests on contract terms.’
This amendment would allow the Small Business Commissioner to investigate and require compliance with information requests on contract terms.
The Chair
With this it will be convenient to discuss the following:
Amendment 52, in clause 5, page 5, line 37, at end insert—
‘(4A) In support of the consideration and determination of a complaint made under the Small Business Commissioner complaints scheme, the following bodies may be required to provide information or answer questions during the course of the Commissioner’s investigations—
(a) Government departments,
(b) local authorities,
(c) public sector bodies, and
(d) companies.’
This amendment would require Government, local authorities and public sector bodies and companies to provide information or to answer questions when a complaint is made.
Amendment 53, in clause 5, page 5, line 44, at end insert—
‘(6A) A recommendation made under subsection (6) may be that the complainant and respondent enter mediation to resolve their dispute.
(6B) Where a party declines mediation the relevant party shall provide an outline to the Commissioner on costs relating to litigation.’
This amendment would allow the Small Business Commissioner to recommend that the parties attend mediation and to make a commentary on costs in litigation where a party declines mediation.
Bill Esterson
All three amendments are drawn from what happens in Australia. The Australian small business commissioner is a great success and we have discussed that in some detail, so it would be as well for the Government to consider what happens in Australia.
Legal powers to demand information relevant to an investigation form a crucial part of what the Australian commissioner does—note that that includes the public as well as the private sector. That is an important reminder that as the office of the small business commissioner in this country develops, the opportunity to continue to learn from the very best practices in the world remains available. The amendments are probing ones designed to allow the Government to do just that. We have discussed such matters previously, so I need say no more. I will wait to hear the Minister’s response.
Anna Soubry
It is really important that the commissioner wins the trust of small and large businesses. We need to ensure that we do not take an overly heavy-handed approach at the outset.
The commissioner will seek to change the culture of payment. The best way to do that is to take an approach that balances disincentives to encourage larger businesses to behave reasonably towards smaller businesses with support for those smaller businesses, so that they may become more savvy contractors. To do that, the commissioner needs to build trust.
The commissioner may publish a report about the inquiry, consideration and determination of a complaint, or any of those aspects. This could include reporting on whether or not a party provided information and should be sufficient to obtain engagement on all sides. In other words, it uses the huge power of naming and shaming. Compelling the production of information—I do not like that as an idea—from the parties or third parties will get us into an awful quasi-judicial situation and bring an adversarial flavour to the process, and it will invite legal argument and therefore delay. That is why I resist that.
The key issue from consultation responses on alternative dispute resolution is the need to raise awareness of what it is and what it can achieve. The commissioner will do that, as we have described. Adverse costs inferences can already be drawn by the courts, as I described in my previous comments, in the event of an unreasonable refusal to participate in mediation. I think we have got the balance right. I am grateful for the probing nature of the amendments, and I hope that what I have said will satisfy the hon. Gentleman. We have made it very clear that if things need to come back in some way after the commission has been set up—if it is not working—we are always here to listen, but we want this person to work for the benefit of small businesses in relation to late payment.
Bill Esterson
I agree that there needs to be trust and the right relationship between businesses of all sizes. I have used the term level playing field a number of times. I am not against the concept of naming and shaming, either. But there is the matter of what happens if it does not work. To be fair to the Minister, she has acknowledged that we might have to come back to some of these points. The prompt payment code is not compulsory, and perhaps we will revisit that. So, there is the question of businesses that do not co-operate and provide information and do not go through mediation. Equally, we still have the challenge of those businesses that feel unable or scared of the consequences, or feel that it will disadvantage them if they complain. We do not know what will happens then, so I think there is a long way to go. This is the start of a process, and the amendments, as I said in my earlier remarks, are about drawing on the good practice from Australia.
I am reassured that the Minister has every intention of this being a learning organisation and that it will continue to evolve. With those remarks, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Stephen Barclay.)
Enterprise Bill [ Lords ] (First sitting)
(8 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
The Chair
Good morning and welcome. Without wanting to seem pompous or arrogant, I should say that the Panel of Chairs has been told to tighten up on procedure because, nine months after the election, it is easy to get into bad ways.
If new Members, including our two Scottish National party Members, who are taking part in Public Bill Committee proceedings for the first time need any guidance, they should come and see me or the very wise Clerk. Tea, coffee and champagne are not allowed during proceedings. Wednesday is Lent so it is sackcloth and ashes, and just water. First, we will consider the programme motion, followed by the motion to enable the reporting of written evidence for publication. As time is tight, I hope those matters can be taken formally.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 9 February) meet—
(a) at 2.00 pm on Tuesday 9 February;
(b) at 11.30 am and 2.00 pm on Thursday 11 February;
(c) at 9.25 am and 2.00 pm on Tuesday 23 February;
(d) at 11.30 am and 2.00 pm on Thursday 25 February;
(2) the proceedings shall be taken in the following order: Clause 1; Schedule 1; Clauses 2 to 14; Schedule 2; Clauses 15 to 19; Schedule 3; Clauses 20 to 35; Schedule 4; new Clauses; new Schedules; Clauses 36 to 40; and remaining proceedings on the Bill; and
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 25 February. —(Anna Soubry.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Anna Soubry.)
The Chair
Copies of written evidence received by the Committee will be made available in the Committee Room. If, for any reason, Members cannot get hold of those papers, let the Clerk and me know.
Before we begin our line by line consideration of the Bill, I would like to tell Opposition Members that my fellow Chair Karen Buck and I do not intend to call starred amendments, which are those not tabled with adequate notice. The required notice period for amendments in Public Bill Committees is three working days, so amendments should be tabled by the rise of the House on Monday for consideration on Thursday, and by the rise of the House on Thursday for consideration on the following Tuesday. The Public Bill Office will be open on Thursday 18 February, during the recess, from 11 am to 4.30 pm to receive amendments for sittings on Tuesday 23 February, when we return.
The selection list for today’s sitting is available in the Committee Room and on the website, and it shows how the selected amendments have been grouped together for debate. Amendments on the same or similar issues are generally grouped together. A Member who has put their name to the lead amendment in a group is called first. Other Members are then free to catch my eye on all or any amendments within that group.
A Member may speak more than once in a single debate. At the end of a debate on a group of amendments, I shall call the Member who moved the lead amendment again. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or seek a decision. I emphasise that if any Member wishes to press any other amendment in the group to a vote, they need to let me know. I shall work on the assumption that the Minister wishes the Committee to reach a decision on all Government amendments.
Please note that decisions on amendments do not take place in the order in which they are debated, but in the order in which they appear on the amendment paper—in other words, debate occurs according to the selection and grouping list. Decisions are taken when we come to the clause to which the amendment relates. In accordance with the programme order, new clauses will be decided after we have finished clause 35 and schedule 4, and before clause 36. I shall use my discretion to decide whether to allow separate stand part debates on individual clauses and schedules following debates on the relevant amendments. I hope that is helpful and answers a few questions.
Bill Esterson (Sefton Central) (Lab)
On a point of order, Mr Amess. It is a pleasure to serve under your chairmanship on this important Bill. I am delighted to be on the Front Bench with this opportunity to talk about enterprise, which is very dear to my heart; I have run my own business.
There are many good attributes to the Bill, which has been described as something of a Christmas tree of a Bill, with a number of not immediately obviously related parts. It could be described as having had baubles hung on it, some of which sparkle more brightly than others. Some of the sparkle is due to amendments tabled in the Lords, including on the ability of the small business commissioner to appoint his or her own staff and the market rent-only option in the pubs code.
However, some new clauses have yet to be tabled, and that is the reason for my point of order. The new clause I am thinking of relates to the Sunday trading laws. It was not tabled in the Lords, when there was ample opportunity. We were told that it was going to be included only in answer to BIS questions last Tuesday, as was confirmed on Second Reading the same afternoon.
The Government have not been short of time. I want your guidance, Mr Amess, on how to approach the matter. Have you had an indication of when the new clause—a whole new element in this Christmas tree Bill—will be tabled? How will we adequately scrutinise the new clauses? What opportunity will we have to table our own amendments, given your advice at the start on the short time that we have and how difficult it is to get our amendments debated unless we table them in enough time?
The Sunday trading issue is a cause of widespread interest—some would say concern—not just in this Committee, but around the country. It causes concern to faith groups, families with workers affected by Sunday trading, trade unions and the independent retailers. Some larger retailers also have great concerns.
At the moment, we have what is often described as a good old-fashioned British compromise. What advice can you give me, Mr Amess, about when the new clause is likely to come forward, how we as an Opposition can adequately address it and whether we will be able to table our own amendments? Is there some other way in which we can deal with what is—we must face it—a very contentious matter, possibly the most contentious element of the Bill? We do not know, because we do not know the wording of the new clauses to be put forward by the Government.
The Chair
I am being generous and kind to the hon. Gentleman because this is his first point of order. Points of order must be brief and succinct; they cannot be like a Second Reading debate. I am very pleased to tell the Committee that new clause 21 on extended Sunday opening hours and Sunday working was tabled last night. I think the hon. Gentleman heard what I had to say about the Opposition’s tabling of further amendments.
Bill Esterson
Further to that point of order, Mr Amess. I asked whether we were able to amend the clauses that have already been tabled by the Government.
Bill Esterson
Thank you for clearing that up.
Clause 1
Small Business Commissioner
Bill Esterson
I beg to move amendment 33, in clause 1, page 1, line 5, at end insert—
‘(1A) Her Majesty may by Letters Patent from time to time appoint a person to be the Commissioner.
(1B) A person appointed to be the Commissioner shall hold office until the end of the period for which he is appointed.
(1C) A person appointed to be the Commissioner may be—
(a) relieved of office by Her Majesty at his own request, or
(b) removed from office by Her Majesty on the ground of gross misconduct.
(1D) Her Majesty may declare the office of Commissioner to have been vacated if satisfied that the person appointed to be the Commissioner is incapable for medical reasons—
(a) of performing the duties of his office; and
(b) of requesting to be relieved of it.
(1E) A person appointed to be the Commissioner is not eligible for re-appointment.”
This amendment would provide a level of independence for the Small Business Commissioner, adapted from the arrangements for the appointment of the Information Commissioner and the Parliamentary Commissioner for Administration who are appointed by the Crown following advice from both Houses of Parliament.
The Chair
With this it will be convenient to discuss the following:
Amendment 34, in schedule 1, page 56, line 7, leave out paragraph 2.
This amendment in conjunction with amendment 33 would establish the Small Business Commissioner as an appointment by the Crown.
Amendment 35, in schedule 1, page 56, line 19, leave out sub-paragraph (d).
This amendment in conjunction with amendment 33 would establish the Small Business Commissioner as an appointment by the Crown.
Amendment 36, in schedule 1, page 56, line 21, leave out sub-paragraph (e).
This amendment would remove the Secretary of State’s powers to dismiss the Small Business Commissioner.
Bill Esterson
Small businesses are the lifeblood of our economy and are at the heart of communities up and down the country. There are more than 5 million businesses employing 10 people or fewer. It is vital that the people running such enterprises are given the opportunity to thrive and that their businesses can flourish.
The creation of a small business commissioner is a good step towards helping small businesses and follows the examples of the Small Business Administration in the US and the small business commissioner in Australia. In our manifesto, we proposed the idea of creating a UK small business administration and we support the principle of a small business commissioner as a step forward. The Enterprise Bill provides an opportunity to explore the proposed terms of reference of the small business commissioner and to look at how he or she can be as effective as possible in championing the cause of small business, in creating a level playing field and encouraging enterprise from the start-up to growth and beyond.
According to the Department for Business, Innovation and Skills impact assessment, the purpose is to
“make it easier, quicker and cheaper for small businesses to settle payment issues with larger companies by setting up a Small Business Commissioner. The Commissioner will give advice, provide information and refer businesses to services that can mediate in disputes. It will have the power to look into complaints about poor payment practices and report back on its findings.”
Small and medium-sized businesses, particularly new entrants to the market, drive economic growth by stimulating innovation, acting as a competitive spur to existing businesses. That occurs through the process of productive churn, when new entrants and existing firms become more and more enterprising, with new ideas for products and processes, and win market share, and less productive businesses exit the market. New and small businesses also complement larger firms by operating in local or niche markets and by being the first to enter new markets. Small and medium-sized businesses stimulate innovation with research, suggesting that such businesses in particular act as an important seed bed for innovations. Those businesses either grow in their own right or are taken over by larger businesses that take on board their ideas.
As global competition intensifies, the ability of businesses and individuals to identify and take advantage of entrepreneurial opportunities becomes increasingly important, hence the need for Government to ensure that support for small businesses is in place. It is in the spirit of the Government’s role in creating a level playing field that we approach the Bill, to scrutinise, challenge and propose amendments.
The purpose of the small business commissioner is to support small business. We want that commissioner to be as effective as possible and believe that he or she will therefore need to work independently of large business and Government. The small business commissioner is being set up to support small business, according to the BIS impact assessment. That includes making it easier to resolve commercial disputes, not least relating to late payment, and to resolve contract negotiations related to late payment or otherwise. It also includes having someone to turn to for dispute resolution and in respect of being treated unfairly in tendering for work, as well as being able to maintain business relationships while in dispute, ensuring that good mediation options are available and dealing with supply-chain matters.
We welcome the small business commissioner’s having a remit that supports small business in addressing those challenges. As the impact assessment says,
“…small businesses thrive and grow, to help support our economy, both locally and nationally”.
The impact assessment goes on:
“It is proposing to establish a service to complement existing provision and lead a culture change in how businesses resolve—and ultimately avoid—commercial disputes. It is proposed that the new Small Business Commissioner (SBC) would: empower small businesses to resolve disputes and avoid future issues through general advice and information, related to dispute resolution and contract principles; signpost to appropriate services eg sector ombudsman or regulator, existing independent advice service, approved alternative dispute resolution (ADR) provider or SBC complaints handling function and; consider complaints by small business suppliers about payment matters arising with larger businesses which they supply. These disputes may relate to pre-contractual negotiations as well as terms of the contract and new arrangements proposed once a contract is in place; for instance, if a firm feels it is being harmed by the other party’s unfair behaviour.”
Helping small businesses thrive and grow to help our economy is very much the right way for Government to intervene in support. The list of intended responsibilities I have just read out are all concerns shared by many small businesses. There are too many examples of larger customers treating their smaller suppliers in an unfair way, but one large group of larger customers is the public sector.
The Bill at present gives the Secretary of State the power to appoint and to dismiss. The Lords amended the Bill to allow the small business commissioner to appoint his or her own staff. However, the Secretary of State still has the power to appoint and dismiss the small business commissioner. This group of amendments seeks to make the appointment a Crown appointment, to ensure that the small business commissioner is in a position to help when the source of complaint or unfairness is the public sector. If the Secretary of State appoints and has the power to abolish, there may well be a reluctance on the part of the small business commissioner to challenge the very organisation that appointed him or her and which can abolish his or her role.
Kevin Brennan (Cardiff West) (Lab)
My hon. Friend makes a very interesting point. Perhaps there is a contemporary analogy with what the Government are currently doing in relation to charities: they are saying that where Government funding has been given to charities, those charities should not be able to use it to campaign in any way against Government policy. If the Government have such influence over the appointment and the very existence of the small business commissioner, does my hon. Friend think there is a danger, without our amendments, that the Government might seek to exert the same kind of influence on the small business commissioner as they do over the charities?
Bill Esterson
My hon. Friend makes a very good comparison. There are many examples where the closeness of the relationship means there is the potential for a conflict of interest. There are other examples, which I will come to, where there is an arm’s length relationship: our amendment attempts to forestall this potential conflict.
We certainly do not want the Secretary of State to have undue influence and the commissioner to feel constrained in his or her ability to act. After all, if we want small businesses to be as successful as possible, we want them to have independent support from the small business commissioner. People will rightly look to the commissioner to give a lead and give support, advice and encouragement to small businesses, which are, as I said at the start of my remarks, the backbone of our economy.
The Government do not intend the small business commissioner to have a role when it comes to disputes between small businesses and the public sector. As that is a source of much concern among small businesses, it seems certain that many complaints will go to the commissioner about the public sector. Even in relation to complaints against larger public sector businesses, if the Government do not like the way the commissioner is operating—this is at the heart of my hon. Friend’s intervention—the Secretary of State may decide to intervene and that implied threat could cause the commissioner to be less effective, through a reluctance to act.
Mary Creagh (Wakefield) (Lab)
I apologise to colleagues on the Committee, Mr Amess; I was cycling through and dropping my daughter at school.
The definition of what constitutes the public sector for the purposes of the Bill is an interesting one. We have all been up and down the Embankment and seen Transport for London’s cycle super-highway, but the definition of the contractors working on it, two or three steps removed from a Government body, is interesting. Perhaps Ministers might like to explore that further in their response to my hon. Friend’s comments.
Bill Esterson
I thank my hon. Friend for her intervention. The whole area of the supply chain and whether the Government have thought through some of the implications of exactly that example are among the challenges that we have tried to deal with not just through this group of amendments but elsewhere by giving the small business commissioner the opportunity to be as effective as possible. One of the problems of the commissioner only dealing with larger businesses is that they miss an opportunity and may be constrained in many ways, an example of which my hon. Friend has just given.
This group of amendments seeks to remove a potential obstacle to the small business commissioner’s being as effective as possible. Other amendments attempt to do the same thing with other elements of the way in which the Government have structured the office.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
indicated assent.
Bill Esterson
I am pleased that the Minister is confirming that from a sedentary position.
If the small business commissioner is to be as effective as possible on late payments, we need someone who can work not on the basis of a press release or the exhortations of Members of whichever House but constructively with businesses, learning the right lessons and creating the right solutions. That means not being an appointee of the Secretary of State, doing the Secretary of State’s bidding or wondering whether the Secretary of State will intervene with the potential for abolition.
It is important to note that the Institute of Directors has been forthright in its support of the amendments. The institute represents many directors, owners and operators of small businesses, so I suggest that it is worth listening to what it has to say:
“Together, these amendments would give the Small Business Commissioner a stronger footing from which to be a champion for small business. We fear that the possibility of abolition by the Secretary of State could potentially negatively impact the ability of the Small Business Commissioner to challenge that same Secretary of State. We hope for and anticipate a positive working relationship between the Commissioner and the Secretary of State”.
Lucy Frazer (South East Cambridgeshire) (Con)
It is a pleasure to serve under your chairmanship, Sir David. I want to ask the hon. Gentleman a question, for clarification. Do these two clauses stand alone, or are they conjoined? Would the hon. Gentleman be pressing for the appointment he suggests if there were not a successful amendment to include public authorities?
Bill Esterson
We are debating the first set of amendments, which are about appointment and dismissal. We will come to public bodies later. However, it is relevant to speak about them both; I have done so because the independence of the commissioner enables small businesses to have confidence that they can deal with the commissioner and that the commissioner will not be constrained by their relationship with Government, either in relation to other businesses or the public sector.
Mary Creagh
It is, of course, a pleasure to serve under your chairmanship, Sir David—my apologies for failing to pay that courtesy earlier.
Is there not a wider point about public appointments and open competition? The Groceries Code Adjudicator was appointed after open competition. The great merit of putting out an advertisement and seeing who wants the job is that all sorts of people apply who may not be on the cocktails and canapés circuit frequented, perhaps, by the Secretary of State for Business, Innovation and Skills. Is there not also a gender equality point, which is that people sometimes appoint in their own image and we end up, sadly, with an establishment group of figures who all—dare I say it— tend to look like many of the MPs in this place? We end up with a self-perpetuating group of people who may not be acting in the interests of the entrepreneurs. Many of the new entrepreneurs who have started will be young, tech savvy people. To see one of the usual suspects appointed to this position might risk alienating some of the people who might have need for his or her services.
Bill Esterson
I thank my hon. Friend for reminding us about the difference in how the Groceries Code Adjudicator has been set up. We will talk about the Groceries Code Adjudicator at a number of points during our deliberations. Indeed, we will be discussing an amendment later on the need to review the performance of that office so far.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
It is a pleasure to serve under your chairmanship, Sir David.
Does my hon. Friend share my view that this is such an important issue for small businesses because we know that the issue of late payment, in particular, is a real challenge for them? It is in the Government’s interest that this body is as influential and powerful as it can be and that those small businesses see it as a visible presence and feel that it is their champion, not the Government’s or anybody else’s.
Bill Esterson
My hon. Friend is absolutely right. This is why we have tabled not just these amendments, but others, which are about making the post as effective as possible, so that it really is about championing business. This is the Enterprise Bill: it is about promoting enterprise as best we can. Small businesses are absolutely critical to driving enterprise, pushing forward productivity and improving the overall state of the economy. Getting this post right is a great opportunity to do just that. The interventions of both my hon. Friends just now demonstrate the importance of getting that appointment process right, so that the best person possible is appointed. As my hon. Friend the Member for Wakefield said, opening it up to the widest field possible is an important way of doing just that.
The commissioner will be someone whose terms of reference are quite clear. As things stand, he will be the creature of, and appointed by, the Secretary of State, and will have little security of employment, given the ability of the Secretary of State to dismiss him or her at the drop of a hat. He will be capable of being thrown out at the whim of a Minister. It would afford the business community a sense of confidence if our amendments were adopted. A small business that has problems with payment and other concerns about administration will find that this place person is in a job that affords the small business little or no protection or opportunity for redress of an independent character. At the end of the day, the operation of the office, as things stand, will be subject to the most minimal scrutiny and the report will be given, not to Parliament, but to the Secretary of State alone, which leaves one with grave concerns.
In the other place, the Minister said that if the commissioner was ineffective, there would be grounds for abolition. Surely the point is to set the post up in the first place to ensure that it is effective by giving him or her the necessary powers and independence. That means being outside the control or remit of the Department or the Secretary of State.
The Regulatory Reform Committee made an assessment which said:
“We therefore consider that it is inappropriate for the Bill to confer on the Secretary of State a Henry VIII power to abolish the Small Business Commissioner without any of the procedural restrictions (beyond the need for an affirmative resolution in each House) of the nature set out in the Public Bodies Act 2011, particularly that requiring consultation”.
I am concerned, as are my hon. Friends, that the general perception of how this provision was planned and developed under-appreciated the role that the body should play. The estimate is that it will deal with 500 complaints. I mentioned the Victoria commission in Australia. It dealt with 430 complaints of a comparative nature in its first year. Victoria is a state with 5.8 million people, a GDP perhaps one-tenth the size of that of the UK and with perhaps one-fifteenth of the number of small businesses. It had 430 cases, while our commissioner is planning to handle 500. That does not seem very ambitious for the role of the small business commissioner. Perhaps that is related to the way that it has been set up as part of the Department, reporting directly to the Secretary of State.
If the small business commissioner is set up only to address a tiny amount of work, it might raise the question how serious the Government are about making a difference to small businesses. Some might even suspect that the Government do not really intend for the office to be a great success and that therefore they will be in a position to deliver abolition down the line. It would be a great shame if that were the case.
The Government say that they envisage the role of the small business commissioner evolving over time. The workload grows and as businesses grow accustomed to the idea that there is someone to turn to, that is a likely development. If that happens, how will the office cope with the increased workload? Perhaps the Minister will consider that in her response. Remember, BIS faces sizable budget cuts. How will the small business commissioner be protected from those cuts, let alone be in a position to recruit additional staff?
We know that late payment is a significant problem, as my hon. Friend the Member for Newcastle upon Tyne North reminded us in her intervention. The 500 anticipated cases a year will be the tip of the iceberg. What will happen if the small business commissioner does not have the opportunity to expand his or her office? The issue of who appoints and whether the office can be abolished by Ministers is part of the wider question of whether the office will be effective or not, a point made very well on Second Reading by the hon. Member for Huntingdon (Mr Djanogly). It was also made many times by Members of the other place across the parties.
Catherine McKinnell
My hon. Friend is making a very important point. I wonder whether the Government have considered the importance of the role of the small business commissioner and the number of businesses that are likely to get in touch with them, because there is such a gap in the market for advice for small businesses. I know that from my constituency postbag, many small businesses come to me looking for advice and signposting for where they can get help and advice. My hon. Friend rightly points out that the proper resourcing and independence of the post are important for businesses to feel confident in the service provided.
Bill Esterson
My hon. Friend is right: businesses will expect this office to be able to handle their complaints. We might reasonably expect the level of complaints to be significantly higher than 500 from a small-business population of well over 5 million. It is not a good idea when standing on one’s feet, Mr Amess, to calculate the proportion of small businesses that would be involved if more than 500 out of 5 million were to approach the small business commissioner. I am sure somebody can work it out and give us the figure at some point. It is certainly a very small number.
Catherine McKinnell
To clarify, I feel the reason so many businesses come to me as an MP for advice on this issue is because the support and assistance provided to small businesses under the previous Labour Government disappeared in 2010. That has had a huge impact on small businesses and their ability to understand and navigate the system to find help and advice. Therefore, they come to their MP. I am always pleased to hear from businesses but it is a gap in the system in that they do not know where to go locally.
Bill Esterson
That is an excellent point. Like my hon. Friend, I find myself performing some of the roles and responsibilities set out for the small business commissioner on behalf of my constituents. Having been owner of a small business, I have sometimes been able to point them in the right direction. We would expect the small business commissioner to be in a position to give advice, support and encouragement. Later amendments will look at how that might be achieved if that office is to be given additional responsibilities.
Hannah Bardell (Livingston) (SNP)
It is a pleasure to serve under your chairmanship, Sir David. Does the hon. Gentleman share our concern? We are aware that the Government have targets for prompt payment but, as some Governments do, they have occasion to miss those targets. If the commissioner does not have the power in that jurisdiction, he or she cannot bring the Government and other larger organisations into line.
Bill Esterson
I thank the hon. Lady for her intervention, with which I agree. We will deal with that point in more detail in the next set of amendments, although it does have an impact on the appointment and dismissal process, as she rightly points out.
We want the commissioner to be effective. We want him or her to be able to help with late payments and to look at what other functions might make good additions as the office evolves, and that includes the point made by the hon. Lady.
The Federation of Small Businesses, the Institute of Directors and the British Chambers of Commerce often offer good advice, legal services and access to discounted business products such as insurance, and they are also good at helping businesses with disputes, but they are member organisations. Not every small business has a lawyer or accountant who is able to offer the full range of services. Many small businesses will need the office of the commissioner—just as an advice service was available under the previous Labour Government for businesses that had nowhere else to go—to provide advice, support, encouragement and dispute resolution directly, rather than just signposting elsewhere.
If the Minister expects the small business commissioner to signpost to those excellent organisations, she will need to ensure they can cope, because they might face a deluge of additional work. They have raised that concern with me, and no doubt also with the Minister. She will need to ensure that every business that approaches the small business commissioner wants to go to a membership organisation, where, of course, they will have to pay a fee—because I suspect that the Institute of Directors, the Federation of Small Businesses and the chambers of commerce will continue to charge for their services, as will solicitors, accountants and other professionals, if that is what the intention is when it comes to signposting. The small business commissioner will therefore also need to be in a position to develop his or her own capacity to help with disputes, whether related to late payment or not, to consider developing an advice and support function, and to look at areas such as procurement in the supply chain.
The ability to explore the options as the office develops will be restricted if the small business commissioner is, in reality, restricted by his or her relationship with the Department for Business, Innovation and Skills. We want the small business commissioner to have the chance to be as effective as possible, and an important part of developing that effectiveness will be the way in which the small business commissioner is set up and his ability to operate as independently as possible. Otherwise, the question will remain whether the small business commissioner has the teeth to deliver for business and do the job of enabling enterprise to flourish.
The amendments to make the small business commissioner a Crown appointment are based on the legislation that set up the office of the Information Commissioner. The Information Commissioner is a public body, sponsored by a Department—the Ministry of Justice. In the case of the small business commissioner, we propose that BIS would sponsor the small business commissioner, so that he would not simply be part of the Department, answerable only to the Secretary of State. The Information Commissioner reports directly to Parliament. The office cannot be abolished by the Secretary of State; the individual office holder cannot be removed by the Secretary of State. The office’s decisions are supervised by the courts, not the Department. That is the level of independence afforded by a Crown appointment, and that is what is needed for the small business commissioner to be as effective as possible and to deliver for small businesses and enterprise.
The Australian model, for example, is not an appointment by a Minister; it is an appointment by the Governor-General, the Queen’s representative. That is the direct equivalent of what we are proposing. Three significant steps in the right direction were taken in the other place on this matter. The first was the designation of the small business commissioner as a corporation sole. The second was the amendment to have the small business commissioner appoint his own staff. The third was the new requirements on the Secretary of State to consult on any proposal to abolish the role. That is certainly a sign that we are moving in the right direction. It is a heartening indication that there is a shared sense that the small business commissioner needs to be free to act in the interest of small business. [Interruption.] I am fascinated to know what the Minister thinks is interesting, having heard what she has just said—she is very welcome to intervene and tell me. She is going to wait until her response.
Late payments and unfair payment terms are a long- term problem and they call for a long-term solution, with a role that is absolutely protected from the outset. These amendments to strengthen the independence of the small business commissioner offer that protection. The current commitment to establishing the role—the commitment to championing the interests of small businesses—is laudable. By strengthening the independence of the small business commissioner, our amendment would capture that commitment and change the conditions of appointment, removal and abolition of the post, which, as they stand, may leave the small business commissioner vulnerable in future.
That is a level of protection that remains even if the small business commissioner’s role sets him on a collision course with the Government of the day, as happened with the Information Commissioner over NHS IT programmes and the citizen information project. The Information Commissioner disagreed with the Government and did so publicly. We need that protection for the role of the small business commissioner—a clear statement in the legislation that says, “This post is here to stay and it will stand independent of Government, no matter the political priorities or budget constraints of the day.”
Establishing the small business commissioner as a corporation sole is a step in the right direction, but a corporation sole is more about the continuity of the post. It allows the post to pass without interval from one office holder to the next. It lays powers and legal status with the office, not the office holder, securing a level of continuity as the post passes from one person to the next. It gives the office holder some guarantee of independence, but the level of independence needed for the small business commissioner is not guaranteed purely by virtue of a designation of corporation sole.
Removing the ability of the Secretary of State to abolish the role is the key. If the small business commissioner is not appointed by, cannot be removed by and cannot be abolished by the Secretary of State, then he really achieves independence. This is the distinction between a corporation sole and a Crown appointment, and that is why our amendments are so important.
Anna Soubry
It is a pleasure to serve under your chairmanship, Sir David. I hope that I am right in this, but I would like somebody to check: I note that 50% of the members of this Committee are men, which means that membership is half men and half women. I do not know whether that is a first, but it certainly must be for a business Bill going through this House. It is a welcome development. Too often, in my experience, the highest levels of businesses tend to be dominated by men. I just thought I would say that.
Catherine McKinnell
I very much agree with the point that the Minister has made, but I must say that it is Labour that has upped the ante in terms of female representation on this Committee. As ever, in terms of 50:50, the Government are letting us down.
Anna Soubry
I am not responding to that; the hon. Lady may be right.
I will address my comments to the amendment moved by the hon. Member for Sefton Central. I will rebut much of what has been said by establishing the history of how the small business commissioner came to be placed within the Enterprise Bill. I agree with everything he said about the value to the economy of small businesses. We are absolutely and utterly agreed on that. We understand their huge value and their importance to building a successful economy.
The idea started with the Conservative party manifesto commitment to consider setting up a conciliation service specifically on the point of late payment, which as we all know is a serious matter for concern, notably for small businesses. Having come into office, as I considered how to achieve that, it became obvious that there are already a number of ways to supply such a service. That is the sort of matter that we will undoubtedly debate in this Committee. Having learned of the great workings of the Australian small business commissioner—hon. Members will hear much about the work of Mark Brennan; I have spoken to him at length—I came to the conclusion, and I assure hon. Members that my Secretary of State absolutely agreed, that a small business commissioner should be created specifically to address the problem of late payment.
I put it on the record clearly: it would be utterly bizarre of this Government to want to positively create an office with the apparent intention of abolishing it at some later date. The idea has come from me and the Secretary of State; it is a position that we want. We would love for the position to abolish itself in time, because we would love it if there were no complaints about late payment. Unfortunately, we think that is an ideal that we will not achieve, however much we might strive.
Kevin Brennan
The Minister is making a reasonable point, but she knows that she cannot fetter what future Administrations of any party do. Neither can we, but we can ensure that the body cannot be abolished at the whim of a Minister rather than by going through some other due process.
Catherine McKinnell
I agree that the Minister is making a reasonable point, but does she accept that the Government are being cautious in setting up the body, possibly out of fear that it could become more powerful than she anticipates? If it begins to direct any concern towards the Government or state changes that the Government ought to be making to support small businesses, it will run the risk of a conflict of interest with the Government’s direct appointment of the commissioner.
Anna Soubry
It may be a surprise, but I do not agree with the hon. Lady. I can understand why she might raise that concern, but I honestly believe that because of how we are introducing the office—it will be a public appointment just like any other—the sort of proposal made by the hon. Lady through the shadow Minister would not make much difference, if any, to the person appointed. I am going to explain why that is.
Hannah Bardell
The right hon. Lady is making a powerful speech and strongly advocating for the commissioner. We support the notion of the commissioner, but does she agree that if the commissioner does not have the powers or the teeth to enforce its decisions, it cannot ultimately do justice to its office?
Anna Soubry
That is not part of these amendments, and I want to confine my comments to these. We will have that debate later, as we discuss other amendments.
Mary Creagh
The hon. Lady says that she wants the person appointed to command not just the respect of the large companies and organisations that will be accountable to this person, but the confidence of small businesses. Is not the lesson from the Groceries Code Adjudicator that it is imperative to gain the confidence of small businesses and small suppliers, and that any perception—real or imagined—that this person is the creature of big business would be devastating to this office? This person’s authority comes from the office that they will hold.
Anna Soubry
Hon. Members on both sides need to have confidence in the system that exists, whereby the person we appoint will have all the qualities that we know they must have in order to do the job. That person is going to be the most critical factor in the success of this office. We absolutely know that.
Anna Soubry
I am not going to give way; otherwise, we will be full of interventions.
Anna Soubry
I am sorry, but we need to make some progress. The appointment of the small business commissioner by the Secretary of State will not compromise his or her independence. It will be a public appointment, subject to all the usual public appointments rules and procedures. There would be little material difference to the appointment process if this were a Crown appointment.
Catherine McKinnell
While the Minister is on her feet, will she clarify exactly why this should not be a Crown appointment, rather than a ministerial one? Will she clarify that for the Committee and members of the public, because it is not clear why that is the case?
Anna Soubry
I absolutely will. A Crown appointment is made on the advice of Ministers. Effectively, we get exactly the same process, but with a different stamp on it. This will be a public appointment that will go through the usual procedures. It will be advertised. As for the idea that this is going to be somebody from the cocktail and canapés circuit, forgive me, but those days have long gone. That is certainly not the way that I operate or that my Secretary of State operates. We take considerable care to make sure we get the right person in place. I actually take a little exception to the idea that I go to cocktail and canapé parties to select someone. I personally make a great effort to ensure that we have people who represent the diversity in our society. I am quite robust in my views, as I am rather anti-establishment, and I will bend over backwards to ensure that we get the right person in place. I am confident that when we advertise this job, a large number of people will come forward with exactly the sort of qualities we need.
The amendments made by the Government in the other place have already increased the independence of the commissioner by giving him or her a separate legal identity as a corporation sole. As we know, the commissioner can appoint staff and receive public funding. Those are the key hallmarks of an independent body. Nothing stands to be gained in practice from the suggested amendments, which would only add considerable delay and complication to getting the commissioner up and running. It is normal practice for the Secretary of State to be able to terminate public appointments. The Secretary of State cannot dismiss a commissioner at will, but only if the individual is unable, unwilling or unfit to perform their functions.
It is good that we are having this debate so that we can give people the confidence in what we hope to achieve and in the mechanisms by which we will make the appointment to get what we all want—an independent small business commissioner who will be utterly focused on looking at late payments, free from any form of interference or abuse of office. The commissioner will have an independent spirit but will come from the right background, so that they have the confidence, most importantly, of small businesses to be their champion in solving the problem of late payments.
Bill Esterson
Thank you, Sir David. I apologise for omitting your title earlier. I thank the Minister for her brief response, but I do not think that she has really answered the questions we posed. I am glad that there is broad agreement about the value to the economy of small businesses, and I reiterate that our approach to part 1 of the Bill is about trying to strengthen the post as much as possible so that businesses and the wider economy really can benefit from it. I understand why the post has been set up to look at late payments, rather than at some of the wider issues, as the problem of late payments has existed for more years than many of us will remember. I understand why the Government have gone down that route, although it is a shame that the commissioner has not been set up to draw on some of the successful experiences as well as the remits of the arrangements in America and Australia.
The Minister said that the commissioner would not—I am not sure whether she said “could not”, so I will assume that she said “would not”—be abolished at will. However, the role can be abolished by affirmative resolution of both Houses and, in Parliament, that is pretty close when one party has an overall majority in the Commons. It is unlikely that the Lords would object. I take on board the point that if it were proved that the commissioner was not up to the job, the commissioner would be removed, but there is a difference between that and abolishing the post.
The Minister said that the small business commissioner needs to command the respect of large and small businesses alike. I completely agree but there is a concern among the representative organisations that the lack of independence that comes from being an effective part of the Department will make it difficult for the commissioner to command that respect, particularly the respect of the small business community. Large business is effective at lobbying and has effective relationships with the Government, and that is much harder for individual small businesses and for small businesses collectively.
Catherine McKinnell
The Minister gave a short but fairly robust response to some of the concerns that our amendment seeks to address. Would my hon. Friend agree that it is not just about the reality—whatever that might be—but about the perception as well? It is really important for small businesses to have confidence in the commissioner. Perhaps the Minister is not taking on board some of the concerns that people have, whether real or perceived, about the Government’s relationship with big business.
Bill Esterson
That is right. We are trying to achieve a level playing field. This is not about preferring small business over large, it is about making sure that the relationship is equitable. In the same way, the Groceries Code Adjudicator was set up to make sure that the behaviour of some of the large supermarkets was not excessive and their relationship with their suppliers was fair and equitable.
I did not get the sense of an answer or a justification of why this should not be a Crown appointment. I thought the Minister’s argument could equally have reached the conclusion that it should have been a Crown appointment. For that reason, I would like to test the will of the Committee and press the amendment to a vote.
Question put, That the amendment be made.
Bill Esterson
I beg to move amendment 37, in clause 1, page 1, line 9, leave out paragraph (b) and insert—
“(b) to consider complaints from small businesses relating to matters in connection with the supply of goods and services to—
(i) larger businesses and
(ii) public authorities
and to make recommendations.”
This amendment would widen the consideration of complaints function to cover complaints from small businesses relating to matters in connection with the supply of goods and services to larger businesses and to public authorities (as defined in clause 13).
The Chair
With this it will be convenient to discuss:
Amendment 45, in clause 3, page 4, line 9, leave out paragraph (c)
This amendment would include public authorities in the definition of “larger business”, and therefore extend the Small Business Commissioner’s remit to include consideration of complaints by small businesses relating to public authorities.
The Chair
I refer the hon. Gentleman to the remarks I made at the start of the proceedings. That comes after this debate; the hon. Gentleman is a little ahead of himself.
Bill Esterson
I apologise. My notes are slightly out of order. Some might say that there is much about me that is out of order, but I leave that to others to decide. Amendments 37 and 45 relate to the public sector, which we have already touched on once or twice. While late payment in the public sector is less prevalent than in the private sector, with £187 billion spent annually on goods and services by the public sector, any level of late payment is damaging to the economy and to small business.
Government Departments’ target to pay 80% of invoices within five working days might look good on the surface, but it tends to mask a culture of late payment to small and medium businesses, which fare far worse than large companies in dealing with the Government. EU directive 2011/7 on combatting late payment and commercial transactions makes payments within 30 days mandatory for public authorities, with administration fees and interest applied to late payments, but there is no evidence of public authorities automatically adding these penalties when invoices are paid late. More has to be done, and the small business commissioner should be championing small businesses’ rights with public authorities, as well as with larger companies. It is what small businesses will expect when they see the phrase small business commissioner, and when they approach that office.
Mary Creagh
I might be anticipating the Minster unfairly, but I remember from my days as a councillor and from working with small businesses that cash is king. That is not necessarily understood by civil servants working for local authorities. Does my hon. Friend remember the days of local authorities being able to get interest rates as high as 9% with certain Icelandic banks? I am thinking of several of the ones that collapsed in 2007-08.
When interest rates are high, there is an incentive for treasury managers in public authorities, such as councils and generally central Government, to take that money and use it. When interest rates are 9%, if an authority has £10 million, that is a significant amount of money that could be earned while, unintentionally I am sure, it starves small local businesses of the cash they need to survive.
Bill Esterson
My hon. Friend is right. I was a councillor at the time as well and remember the investments in certain Icelandic banks. More than a few local authorities were caught badly as a result. Her point is well made.
On the benefits to larger firms—and we will deal with this when we discuss cash retentions in the construction sector—there is evidence of the use of moneys due, particularly to smaller firms, to help the cash flow of the larger firm. That is potentially true in the public sector, as my hon. Friend said. Dealing with that is one reason to explore bringing the public sector within the remit of the small business commissioner.
The last Federation of Small Businesses members’ survey assessing late payments by the public versus the private sector was conducted in 2012. It consisted of responses from nearly 9,000 FSB members and confirmed that although larger companies are the worst offenders with late payments, late payment in the public sector is still a big issue. According to the survey, 27% of Government agencies paid SMEs late and 29% of SME invoices from the UK central Government were paid late, so central Government were slightly worse than local. A more up-to-date assessment of late payment by central Government is found in the National Audit Office’s paper “Paying Government suppliers on time” from January 2015. The study covered all central Government Departments but looked in detail at the payment practice of the Ministry of Defence, the Home Office, the Department for Business, Innovation and Skills and the Cabinet Office.
Central Government spend £40 billion a year on goods and services, of which about £4.5 billion is spent directly with SMEs. An additional £4 billion is spent with SMEs indirectly where SMEs are subcontractors to Government contracts. The wider public sector—for example, local authorities and NHS trusts—spends £147 billion a year on goods and services.
Government Departments have a target to pay 80% of undisputed invoices within five working days and report good performance against those targets, but the NAO study calls into question the idea that Departments are paying their suppliers promptly.
Caroline Flint (Don Valley) (Lab)
My hon. Friend mentions the role of local authorities and health trusts as regards the supply chain in local communities. In my area of Doncaster, I would add the Prison Service. I have three prison establishments in my constituency, and there is another prison within Doncaster town, and we can add to that the fire service and policing. A huge number of our more provincial towns and communities do not necessarily have the big corporate companies but are the supply chain for the public service in all its diversity and in meeting the needs of local people. It would be short-sighted not to look at how we can ensure within our communities that those public services pay our small businesses in good time.
Bill Esterson
My right hon. Friend makes a very good point. The public sector is an incredibly important part of the economy in many parts of the country. We have a collective responsibility, whether in Parliament or elsewhere, to get this right and ensure that the public sector is doing its bit. That is really important.
Catherine McKinnell
Speaking of areas of the country that depend on these issues, I have a useful figure that may help my hon. Friend. The accounting, payroll and human resources corporation Sage, which is based in my constituency, has suggested that £55 billion in outstanding invoices is currently owed to the UK’s small and medium-sized businesses. That is an astounding figure and of great concern. The CBI’s recent survey of north-east SMEs found that 53% of the worst offenders are large firms, but that a third come from the public sector, so the public sector represents a significant proportion of the significant sum of money that is outstanding.
Bill Esterson
Yes, and those figures are higher than in the 2012 Federation of Small Businesses survey. The figures demonstrate that, as I touched on earlier, the smallest firms that lack the ability to pursue cases are the most vulnerable to the problem of late payment, wherever it comes from. Certainly in the case of the public sector, we have a duty and a responsibility to ensure that payment is on time and to look after the smallest firms in particular and business in general. That is an important part of what the Government should be doing to encourage and generate our enterprise culture—this is the Enterprise Bill—and to ensure that the economy is successful through the support that the public sector can give to business.
I was talking about the four Departments that the National Audit Office looked at in detail: the Ministry of Defence, the Home Office, the Department for Business, Innovation and Skills and the Cabinet Office. The National Audit Office shows that those Departments’ apparently good payment record is skewed by a high volume of low-value e-transactions with a few large suppliers. Those payments are dominated by large companies, such as the ones the Departments use to book train tickets and order office supplies. Basically, Departments can get close to hitting their payment performance targets just by using their procurement cards and by paying their e-invoices from a few large companies straightaway.
If we dig past the misleading top line and look past the e-invoices from large companies, we see a different picture. None of the four Departments that the NAO looked at measures its performance in paying SMEs, which typically use paper invoices. Looking at the average payment time for paper invoices shows that the time taken by the four Departments to hit the 80% payment target jumps from five days to between three and seven weeks—a very different picture.
The Asset Based Finance Association conducted research in 2014 that showed that the average wait for payment is still in excess of 40 days for some local authorities, and that the average wait for payment from local authorities is virtually unchanged over the past six years, from 17.7 days then to 17.3 days more recently. EU directive 2011/7 makes make it mandatory for all public authorities to settle invoices in a maximum of 30 days from receipt. It is aimed at making pursuing payment a simpler process across the European Union and making payment on time the norm. One point that occurs to me from my experience of invoicing is that sometimes the date on which an invoice is received is a matter of great debate, because accounting departments may say that they have not received an invoice for many days, if not weeks. It will be interesting to see how that is to be defined; there are ways around the problem using electronic invoicing or recorded postal delivery, or suchlike, but most SME invoicing does not happen in those ways.
Under the directive, the failure of public authorities to pay within 30 days leads to interest of 8% being added from day one of late payment, subject to agreement on when the late payment is recognised. There is an admin fee of £40, £70 or £100, depending on whether the invoice is under £1,000, under £10,000 or over £10,000. That is a step in the right direction. However, the Local Government Association released a paper in 2014 saying that there is no evidence of any public authorities automatically adding the penalties when invoices are paid late. The Institute of Credit Management has said it is not aware that interest is automatically being paid. The House of Commons Library has also confirmed that it has not seen evidence of public authorities automatically adding the penalties—so the question is, how is this going to happen unless there is automatic addition of interest and penalties?
Although the user guide is clear, the automatic nature of the obligation is less clear when we review the specific statements in both the EU directive on late payment and the Late Payment of Commercial Debts Regulations 2013. Essentially, without automatic penalties, the interest and admin fees imposed for late payments still require SMEs to stick their head above the parapet and challenge their public sector customers. As I am sure all hon. Members are aware, that is a real problem. Once businesses start to challenge their own customers, they risk losing their custom later on, which is a real dilemma. It is the same dilemma that small businesses face with large suppliers, and it happens in the public sector as well. It is about businesses being asked to sour relations with their own customers.
I have an example from my own constituency. One start-up company had a contract with a public authority. The company was paid 30 days after the five-day terms laid out in the invoice. It had paid up front for the supplies needed to carry out the work, so it was left in a precarious financial position within six months of starting up. It could have made use of the rights available to it within existing legislation—a £70 administration fee and interest on the contract value. However, when the debtor did not automatically add the interest and fee, the company chose not to pursue it. It told me:
“As a start-up, repeat business with the public sector is no different to repeat business with the private sector: we rely on both to get by, and we know that they have more options than we do about who to do business with. Of course we don’t have to keep quiet, avoiding admin fees and interest on invoices—just like they don’t have to use us again. It’s a bad situation when you’re lurching from one loan to the next because you aren’t getting the money you’re owed. But whether it’s the public or private sector it’s the same point—you don’t bite the hand that feeds you.”
The Bill sets up the small business commissioner only to address complaints or disputes against large businesses. It currently excludes complaints against public sector organisations. Many small businesses find trading with the public sector very difficult, and we have seen some of the reasons why.
Mary Creagh
My hon. Friend has made an excellent point about the psychology of start-up businesses in particular—the David and Goliath psychology between the very small supplier and the very large purchaser. Does he agree that making the commissioner work with public authorities as well would force better financial management practice on those authorities? If the law states that they should pay within five days and they do not, but instead pay within 30, 60 or 90 days, the financial managers in the public sector who are doing that should be held to account. Levying fines and interest payments is a poor use of public sector money in these straitened times. At the end of the day, this is all taxpayers’ money, and it should not matter to the financial managers whether it is sitting in their Treasury account or going to the small businesses who are in the community and creating jobs.
Bill Esterson
Yes, that is right. We are trying to create an opportunity for the small business commissioner to make sure that payment practices are carried out correctly in the public sector. As my hon. Friend says, there is a massive opportunity here to make sure that all public authorities are doing their bit to support the economy. The money could be out in the economy, going through small businesses that will then reuse it elsewhere. We get the benefits and the economic growth that comes from that.
Mary Creagh
It also occurs to me that if we end up with a two-tier system with the small business commissioner, we could end up in a paradoxical situation where small businesses would choose to supply the private sector rather than deal with public sector purchasers, and the public sector would miss out.
Bill Esterson
I thank my hon. Friend for that point: we might almost think that the Government had designed it so that that would be the consequence.
Many small businesses find trading with the public sector very different, because of late payment and retentions in the construction sector, and because of the arrangements for contracting, procurement and tendering. Given that the public sector is such a large part of the trade of small firms and one of their biggest markets, it seems odd that the small business commissioner is not going to be constituted in a way that will allow support to be provided when the public sector is involved. That is the point my hon. Friend made. In fact, the issues of late payment and retentions, contracting, procurement and tendering are the same whether the business being contracted for is with the public or the private sector. The imbalance in the relationship between large and small is the same in both sectors, and the need for a level playing field is the same.
Public sector organisations that buy from the private sector should treat large and small businesses equally, yet many of the complaints from small businesses suggest that large firms have the advantage in tendering and other contractual matters in their relationships with both public and private sectors. Certainly my own experience in business was that it was almost impossible, as a small business, to get anywhere in tendering or even in getting past the pre-qualifying questionnaire. I know that that is a complaint often made by small firms: there seems to be an automatic decision to choose the larger firm when it comes to contracting.
If we want the small business commissioner to be as effective as possible, we should enable and, indeed, encourage him or her to explore and address the challenges where they lie and where small business wants support and advice. It makes sense for small businesses to have one place to go to for help, no matter the cause of complaint. If what the Government want the small business commissioner to address late payment as a priority, it makes sense for the commissioner to address late payment, not just some late payment. Whether a small business has difficulty being paid, progressing with tenders or developing its business with large customers, many of the same difficulties of anonymous organisations present themselves. The idea of a one-stop shop seems to make a lot of sense, and this group of amendments is an attempt to give teeth to the commissioner from the outset and not to limit his or her remit.
In the Lords, the Government said they did not want to include the public sector because there are other arrangements for complaints against the public sector, and for mediation. The obvious answer is that the difficulties that small businesses face are such that the existing arrangements are not sufficient, just as the existing arrangements are not sufficient in relation to late payment and other relationships between large and small firms in the private sector.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship, Sir David.
The hon. Gentleman makes a valid point. I agreed with what he said earlier about the relationships between businesses and their clients in the public sector. He pointed out that the current arrangements do not work. There is also a risk associated with Government cuts in the public sector, because one of the easiest places to make cuts is in the backroom staff who process invoices and so on. If the current system is not working, there is a risk that things will get worse for small businesses. It is really important that the public sector is included along with private businesses, so that the small business commissioner can hold them to account.
Bill Esterson
That is an excellent point, because it highlights the fact that when Ministers and Government MPs say that cuts can be made in administration or in non-essential roles, there are consequences. As the hon. Gentleman says, one of the consequences is in accounting departments, and there is a potential knock-on effect of the late payment of small businesses. One reason why it would be a good idea to include the public sector is that the commissioner could shine a light on some of those problems, gaps and staff shortages. They could say to the Government that they should rethink the scale of cuts in the public sector, that the consequences of those cuts also have an effect on the private sector and the wider economy, and that perhaps those Treasury decisions should be reconsidered. Of course, that is much harder to do if the commissioner is part of the Department and owes his survival in post to the Secretary of State.
The Groceries Code Adjudicator was set up, albeit on a limited scale, and we could learn much from that experience when considering how best to set up the small business commissioner. When I say “a limited scale”, I mean that a three-day-a-week adjudicator with five members of staff is responsible for 7,000 suppliers with 300,000 indirect suppliers that are not even part of her remit.
The Groceries Code Adjudicator was set up to address the imbalance between large supermarkets and their suppliers, because there had been a long-standing problem. There is also a long-standing problem in how many small businesses are treated by some public sector organisations, and the creation of the small business commissioner is an opportunity to address problems for small businesses, regardless of where those problems originate. That includes working with the Groceries Code Adjudicator.
One learning point from the Groceries Code Adjudicator, by the way, is that she has spent much of her time explaining to suppliers and others what her role and remit are, leaving her much less time to devote to addressing the concerns of the industry, which was why the office was set up in the first place. Maybe that is one reason why, after two years, she has held only one investigation, welcome though that investigation of Tesco is. We should take that experience on board.
The adjudicator has raised concerns about suppliers’ reluctance to complain and difficulties in ensuring confidentiality in the complaints process. We will move amendments on those points later in our discussions. Hopefully, we can learn from the Groceries Code Adjudicator to ensure that the small business commissioner is as effective as possible, as early as possible.
On the relationship between small businesses and the public sector, there are sometimes supply chain situations in which a small business supplies goods to a private sector customer, who in turn contracts with the public sector. My hon. Friend the Member for Wakefield made that point earlier. Construction is a good example; we will come to the issue of cash retentions in the construction industry numerous times in our deliberations.
If a small business is not paid by a larger customer, which in turn is struggling because of delays by a public sector organisation, I can see how the small business might approach the small business commissioner for help but be told that the complaint is beyond the scope of the small business commissioner due to the involvement of the public sector. The simple answer to that and other disputes with the public sector is for the small business commissioner to be able to intervene in all cases brought to him or her by small businesses. As the Minister did not respond earlier to the point made by my hon. Friend the Member for Wakefield about supply chains involving the public sector, perhaps she will do so this time.
The amendment also address the fact that most small business trade is with other small businesses; again, larger firms and the public sector are often somewhere in the supply chain. I believe that such disputes are also excluded from the small business commissioner’s remit, unless the Minister tells us otherwise. There is a wider business environment, and for the small business commissioner to deliver, it needs to be able to do so regardless of the nature of the parties involved.
During the debate in the other place, I noticed that there was discussion of how late payment could not be considered in isolation. It was suggested that to address late payment effectively, the small business commissioner would also have to consider commissioning and operations. As hon. Members will know, payment in business is due only if a contract has been properly agreed and completed to the satisfaction of both parties. There are legal definitions of what constitutes the completion of a contract, which go beyond my limited knowledge of the law. The argument was made in the Lords that late payment is often the result of disagreement about contract matters and about whether a product or service has been delivered as agreed. As a result, it is difficult to see how the small business commissioner will be able to consider late payment in isolation.
The point was also made in the Lords that if small businesses want help with late payments or anything else and are told that the Government have set up a wonderful new service, but are then told that the small business commissioner is not allowed to help with their particular problem, they will feel let down by the Government. It will reinforce the impression that the Government are not really interested in helping; that they are not really on their side; that they stand up for some groups, but not others; that they are there for the Googles and tax havens of this world but not for small businesses. That impression already exists through measures such as the introduction of quarterly filing of tax returns, the scrapping of the growth fund and business accelerator and the movement from grants to loans for small businesses. The creation of the small business commissioner is an opportunity to put some balance back, but only if it is done in the right way. That means not restricting where the small business commissioner investigates. It should be able to look at other elements of the business relationship, including commissioning, procurement and operations, and its remit should include the public sector and other small businesses.
The Government want the small business commissioner to concentrate on late payments. Given the scale of the problem, we do not object to that, although it is not the way in which the Australian commissioners have been set up. The advice from Australia, from the excellent Mark Brennan, has been that having late payments as the commissioner’s main focus might limit the role, because late payment is about a lot more than the immediate issue of whether a particular invoice is late. The commissioner could and should be able to do a lot more, and should have an important role in improving the wider business environment for small business and the economy as a whole. Better information is an important part of having a successful economy, with low barriers to entry, that encourages and supports the growth of businesses or all ages and sizes. Having the appropriate regulations to ensure fair competition is another important element.
It is clear from the successful work of Mark Brennan that there is an opportunity for our small business commissioner to provide information and work towards the right kind of regulation that ensures a fair economy. On Second Reading, the hon. Member for Huntingdon (Mr Djanogly) raised concern about the narrow remit of the small business commissioner, and I agree with him that it lacks teeth. There is an opportunity for the commissioner to do much more than look at 500 late payments a year when there are 5 million small businesses. That sounds like just scratching the surface.
Lord Mendelsohn made the point that the small business commissioner could look at so much more, including
“access to information and education; advocacy to government; investigation of small business complaints and business behaviour; facilitating the resolution of disputes, including and especially through mediation; influencing small business-conscious government and other key stakeholders, including regulators, media and the business community; and ensuring that such a commissioner would operate with an attitude of being concerned with substance rather than technicality and a dedication to resolving disputes by encouraging commercially realistic attitudes”.—[Official Report, House of Lords, 25 November 2015; Vol. 767, c. 733]
He also made the point that an effective small business commissioner should be expected to help the wider business environment and the economy as a whole, as his or her role is to ensure fairness, not to see one party succeed at the expense of another.
The Lords were also concerned that a mediation role was to be excluded from the function of the small business commissioner. In Australia, the ability to resolve disputes through mediation and direct involvement has been one of the reasons for the success of the office across the country and in a number of different states. Mediation has meant the commissioner working with large businesses as well as small and has enabled the small business commissioner to build profile, credibility and influence. In Australia, if a large firm refuses to take part in mediation with the small business commissioner, that can be taken into account when costs are being considered during court action. The Australian small business commissioner has teeth—very sharp ones—and it is a great shame that ours appears to be lacking in bite. The small business commissioner’s ability to direct small businesses to another organisation that may be able to help clearly has value, but in some cases the commissioner may well be best placed to help and, as in Australia, may be more effective in a wider sense. The purpose of the amendments, which relate to the public sector, is to give a wider sense of how we can build on the commissioner’s initial role of tackling late payments.
Anna Soubry
Again, I shall keep my comments specifically to the amendments. The small business commissioner’s main role will be to address the problem of late payments, and the biggest problem that small businesses face with late payments is bigger businesses not paying them in the way that they want. However, there is also a problem with the public sector. Our consultation made it clear that people did not want a duplication of existing ways and means by which small businesses can ensure that public bodies pay on time. If we expanded the small business commissioner’s remit to include public bodies, we would duplicate pre-existing ways of raising a complaint and dealing with the problem.
Anna Soubry
I am going to continue. I will take some interventions, but not yet.
This Government are on the side of small businesses and, in the Public Contracts Regulations 2015, we now have strict rules obliging central Government to ensure that 80% of undisputed invoices are paid within five days. As a result, I am pleased to say that my Department paid 98.6% within five days and 99.5% within 30 days. The first quarter statistics for 2015-16 show that, on average, central Government Departments paid 89% of undisputed invoices in five days. We have set clear rules for how we expect all public authorities to deal with small businesses in particular.
However, notwithstanding the regulations that we introduced, the strong messages that we are sending out and the way in which we are putting into practice what we preach, there is evidence that that does not necessarily go all the way through the supply chain. I think that was the point that the hon. Member for Wakefield was making, and no doubt the concern of the hon. Member for Doncaster—
Anna Soubry
Oh, she’s not right honourable. Anyway, that was their point, and it is important. At first blush, it looks like a good idea, but there are pre-existing ways of tackling the issue. If we were to extend the small business commissioner’s powers, the danger is that we would duplicate existing ways of curing the problem. It was made clear in our consultation that that was exactly what small businesses did not want. For that reason, I urge hon. Members not to support what looks, at first, like a good idea. The Public Contracts Regulations 2015 are in place, and the guidance is absolutely clear to everyone involved in the spending of public money through public authorities, whether local government or hospital trusts.
If the process is not working, there are ways of curing mischiefs. First, any small business will the ombudsman service available to it. The local government ombudsman is a good example of a pre-existing body that can take up complaints. The second—although I accept that it may not be well known—is the mystery shopper service. I completely accept that its title does not give much clue about the huge work it can do, but we know that it is working. I refer hon. Members to one of the excellent speeches—in fact, all her speeches were excellent—of my noble Friend Baroness Neville-Rolfe, who is a Minister in my Department. In Committee in the other place, she gave a really good example from the Ministry of Defence of where a small business in a supply chain had found it was not being paid in the way it should have been. It used the mystery shopper service, which can be done anonymously. The problem was solved and that small business got exactly the result it wanted.
I have no difficulty with ensuring that the influence and investigatory powers of the mystery shopper service are made more widely available. It is a good example of the pre-existing means and methods by which small businesses can take action against public authorities other than going to law. No doubt we will come to this in debates on further amendments, but we have to be very careful, because if a company has agreed to a contract and seeks redress, it will have to go to law. We are looking at alternatives to that, because of what we know about companies pursuing things by way of legal action.
Mary Creagh
I am delighted to hear about Baroness Neville-Rolfe’s conversion to being on the side of the small company, given that she spent most of her career working for Tesco, which has just been censured by the Groceries Code Adjudicator for its massive, systematic non-payment and late payment of small businesses, which was a clear use of late payment for treasury management and an abuse of its suppliers in asking them to pay up-front fees for the privilege of supplying Tesco. There is more joy in heaven over one small sinner that repented, as the prodigal son parable tells us.
I would expect the Department for Business, Innovation and Skills to pay its suppliers on time. If the Government Department charged with looking after small businesses does not do it, what hope is there for the rest of Government? Where is the evidence that the regulations brought in last year have forced changes in payments? For example, is there any evidence of that in the case of the largest purchaser of goods, services and equipment, the Department of Health?
The Chair
Order. This is an intervention rather than a speech, so will the hon. Lady come to a conclusion?
Mary Creagh
I now regret not making a speech—this only came to me as I was listening to the Minister. Is there evidence of any behaviour change towards small businesses in national or local government? Will she set out, for the record, what the mystery shopper service is, because I am sure that people reading Hansard will be keen to know.
Anna Soubry
I thought I had read out the figures that show a huge change; I am happy to read them out again. I am resisting all temptation to say that it is rather strange that the Labour party seems to have done diddly squat during the 13 years when they could have solved all these problems. This Government have made a significant change. For the purposes of Hansard, I repeat that BIS paid 96.8% of those undisputed invoices within five days and 99.5% within 30 days. I am happy for us to get all the statistics, if they exist, that show the real strides we are taking.
Anna Soubry
I will give way in a moment. I know that it is difficult for Labour Members—they can dish it out, but they can’t take it. There is real evidence that we are seeing this trickling all the way down. However, as I have conceded—I am being as fair as I hope to be—I am concerned that it is not going all the way down through the supply chain. I have conceded that the name of the mystery shopper service may be a little not brilliant, but what is important is whether it delivers. There is absolute evidence that it does.
I think my noble Friend Baroness Neville-Rolfe would take exception to the rather cheap dig made about her, because she is absolutely on the side of small businesses. I know that she has been involved with a number of small businesses. For the record, she was not on the board of Tesco when it behaved in that unacceptable way. Thank goodness that a Conservative-led Government introduced the Groceries Code Adjudicator to bring Tesco to book—but we are going off the point. She gave a good example from the Ministry of Defence of exactly how the mystery shopper service is working. The more we advertise it, the better.
Caroline Flint
Of course, as head of public affairs, Baroness Neville-Rolfe spent a lot of time defending how Tesco treated farmers and everyone else. The problem is not going to go away, whatever the outcome of these proceedings.
Can the Minister, to help the Committee, provide us with full details in writing of the record of every Department, and maybe also some other parts of the public sector, on payments? The issue is not just about payment from a Department to one supplier; often other, smaller suppliers are subcontracted as well. It goes way beyond that. It is a missed opportunity, particularly for the number of areas of the country, including my own, in which small and medium-sized businesses depend on the public sector in all its variety, not to include them in the Bill.
Anna Soubry
If those figures exist, of course I am more than happy to share them. However, as I have said, the first quarter statistics for 2015-16 show that on average, central Government Departments paid 89%—we have exceeded our own target—of undisputed invoices within five days. However, I absolutely agree with the point that the right hon. Lady was trying to make, which is—
Anna Soubry
At least let me finish my point. My point is that the problem may well exist within the supply chain. We know that regulations from central Government are hugely important in driving the change required. We also know three things. First, there are ombudsmen who can absolutely assist in curing such mischief. That is the first place where many small businesses can go. Secondly, there is the mystery shopper service, which, as I have said, is already providing evidence that it is curing the problem.
The third way in which we ensure that cultural change occurs—we must be honest about this—is when a small business comes to us as constituency MPs: we are in a unique position to go to our local authorities. We usually do so rather quietly; it does not have to involve bells and singing and dancing. We speak to the leadership of our local authorities, both officers and councillors—often of our own persuasion, although that matters not—to say, “I have an example of a small business. I won’t give you their name, but I have evidence, and I am concerned. Let’s change the culture within our local authority and do something about it.”
For example, somebody has approached me with a problem relating to a construction project of which I am aware. As the Minister, I am taking that up directly with the chief executive of the hospital trust involved to ensure that the trickle-down of cultural change goes all the way through the supply chain.
Caroline Flint
The Minister makes an interesting point about the role of MPs. One could say the same about MPs going to businesses in communities and making the point there, but the Bill offers support for the small business commissioner to deal with the private sector.
On the point that the Minister made about the percentage of undisputed bills that are sorted, does she not agree that the extent of business that goes on varies enormously across Government? I gently suggest that it might be interesting to compare the transactions between the Department for Business, Innovation and Skills and SMEs with the volume and size in monetary terms of the contracts between the Department of Health, for instance, and the small business community. I would say they are very different. I hope she will write to the Committee to provide more detail about volume and monetary value, because 89% in BIS may be very different from, say, 70% in the Department of Health or elsewhere.
Anna Soubry
The Department of Health, no doubt, has very few contracts because it is not the Department that delivers, but the clinical commissioning groups and hospital trusts. It is important that the Labour party understands how the Government and business work. The Government and the previous Conservative-led Government simplified public sector procurement and abolished the pre-qualification questionnaires for low-value contracts, to back up and assist small businesses and make our lives considerably easier. Those are examples of the real-life things that we have done.
Alan Brown
On the previous point about the trickle-down effect, the Scottish Government are trialling a project bank account system for public procurement, whereby payments to the main contractor go into a project bank account and smaller payments that would normally trickle down to the supply chain are ring-fenced for sub-contractors and other people in the supply chain. They get their money right away without going through middle men or the main contractor. Is that something that the UK Government will consider in due course?
Anna Soubry
As I said, I am going to try to confine my remarks to the amendments.
Lucy Frazer
The Minister is making a very good point about why public authorities are in a very different position from private entities, but does she agree that the duty of candour in litigation is an additional reason why they are different? When a case is taken against a public authority, it has a duty not to fight it as a commercial entity; fairness, not commercial success, must prevail at the end of the day. That is an additional reason why public authorities are in a different position.
Anna Soubry
I am grateful for my hon. and learned Friend’s very sensible contribution. She reminds us that this is not necessarily about Government. Public authorities are a huge sector in our society, and they rightly have different levels of accountability.
I remind hon. Members of Lord Mendelsohn’s words when this matter was debated in the other place:
“Of course, the origins of the Small Business Commissioner in Australia…came from very different circumstances and functions. In fact, late payment was never really part of the role. It still does not do that much.”—[Official Report, House of Lords, 26 October 2015; Vol. 756, c. GC116.]
We can learn from that experience, but we need to understand that it has different roots and seeks to tackle different problems. We can learn much from it about the qualities needed in the small business commissioner. We must ensure that he or she focuses on the real mischief, which is late payment between bigger and small businesses. We are determined to tackle that problem.
Bill Esterson
There has been a very interesting series of exchanges during the Minister’s remarks. She mentioned the Australian experience and quoted Lord Mendelsohn’s analysis of what happened. The Australian small business commissioner was set up not to resolve late payment, but to deal with a number of other matters, including advice, complaints, mediation and small business support. Mark Brennan, the Victorian small business commissioner, advised that this approach should not be used to go after late payments.
Anna Soubry
I am sorry, Sir David. I did not intend to intervene, but this is important. I spoke to that gentleman, and he gave the most outstanding advice about and support for the small business commissioner’s ability to deal with late payments. He advised me about the qualities that the commissioner needs to act as effectively as he did. It is important that I put that on the record.
Bill Esterson
Lord Mendelsohn had a long meeting with that commissioner and spoke to him a number of times. The clear sense we were given was that the success in Australia has been about other matters; actually, when it comes to late payment, there has not been a success. There has not been the progress on late payment and Australia is probably not the place to go to learn about action on late payment. That was the evidence that was taken and very clearly set out by Hansard in the Lords. That is, of course, one reason why we are tabling these amendments: they are about learning from the success that Mark Brennan has had and the advice he has been able to give on those matters.
The Minister talked about success. As my right hon. Friend the Member for Don Valley said in an intervention, we would expect BIS to pay every invoice on time—of course we would. It would be not just bizarre but quite disturbing if BIS did not have a very high success rate when it came to undisputed invoices being paid on time, but that does not take away from the fact that, right across those four Departments, a significant level of late payment still exists. The Federation of Small Businesses figures for 2012 show 27% in local government and 29% in national Government, and my hon. Friend the Member for Newcastle upon Tyne North cited a higher figure of 34%. There is still a phenomenally big problem of late payment in the public sector when it comes to small businesses.
The Minister cited the example of trying to support a construction firm involved with the NHS—I commend her for trying to solve the problem, as others of us have tried. She will have found it almost impossible, I suspect, to prevent the NHS trust from knowing the identity of that construction firm when she took that complaint to them. There is always the risk, as I said earlier, of a loss of business later on. That is one of the concerns expressed again and again by small businesses: that when they complain and put their heads above the parapet, they lose future business. It damages the business relationship irreparably. This is one reason why it is so important that there should be an independent opportunity. We will come to anonymity and confidentiality later.
A large number of small businesses are still involved. The Minister mentioned the point about prequalification questionnaires having been removed. I am sure that she speaks to businesses, as I do, who say they consider it a complete and utter waste of their time to even try to get business directly with the public sector. Their experiences and the experiences of associates, friends, business competitors and collaborators alike, has been of a lack of success in the past.
I do not think we have had an adequate response. I do not think we have dealt with the issues around the supply chain or with the problems around the scale of the problem of paper invoices for small businesses. We did not get an answer about how the mystery shopper scheme works; it is something of a mystery, the Minister seemed to say. I do not think she sounded confident in it herself.
Bill Esterson
I would love to know what the remedy is when the scheme identifies a problem, but we did not hear about that; perhaps we will later. With those remarks, I would like to press the first amendment in the group and test the will of the Committee.
Question put, That the amendment be made.
Westminster Hall
(8 years, 9 months ago)
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Emergency Services: Closer Working
(8 years, 9 months ago)
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Richard Fuller (Bedford) (Con)
I beg to move,
That this House has considered closer working between the emergency services.
It is a pleasure to serve under your chairmanship, Mr Bone. You and I share a passionate interest in the NFL and American football, so I am glad to see you here. I do not know whether you made it to the Super Bowl, but hopefully one day we will be at the Super Bowl at Wembley.
Today’s debate focuses on emergency services, and—by way of background—it follows a debate secured by my hon. Friend the Member for Cannock Chase (Amanda Milling) on 3 November 2015 at the beginning of the consultation period. There were a number of contributions to that debate, and the Minister was rightly somewhat reticent to explain his beliefs on what the Government would propose—he was waiting to see what the consultation would say. I have looked at the Government’s response, and it is clear that there was widespread participation, with more than 300 responses from organisations across the country. Today is our first opportunity to raise questions with him on the specifics of the Government’s recommendations and to probe him for more details on the Government’s thinking and on his next steps to take the matter forward. This debate is also timely because we will shortly be having police and crime commissioner elections across the country, so this will be a live issue as people make their democratic choice.
In their response, the Government say that
“the picture of collaboration around the country is still patchy and there is much more to do to ensure joint working is widespread and ambitious.”
It would be helpful if the Minister pointed to some examples today to give us a sense of what he thinks the direction of travel in collaboration is likely to be. If it has been patchy, we do not want to go into a sort of organised patchiness. We need a sense of what the Government think are good ways to collaborate and of where they feel the case has not been made so significantly.
Steve Brine (Winchester) (Con)
I congratulate my hon. Friend on securing this important debate ahead of possible legislation. He mentioned where collaboration is already happening, and I think he will concede that Hampshire is a good example. Some 750 staff now work across shared services between Hampshire constabulary, the Hampshire fire and rescue service and Hampshire County Council in the innovative H3 programme. We think that we are doing many things right, and hopefully we are letting other areas learn lessons for the future, so would he concede that Hampshire is a place to see where collaboration is already starting?
Richard Fuller
As a proud son of Bedford, and therefore Bedfordshire, I hate to give credit to other counties, but my hon. Friend is right that Hampshire is demonstrating a clear path, as evidenced by the fact that a significant number of Hampshire Members of Parliament are here today. One reason why I am pressing the Minister is that there are good examples. The PCC position is still new, and we should be honest about the record of PCCs across the country. Some have been very good and some—again, I speak from direct experience in Bedfordshire—have been less good, so we need a sense from the Government about what level of collaboration they believe makes sense.
The Minister will know—I do not—what is meant by
“a high level duty to collaborate on all three emergency services”.
That is what he intends to propose, so will he tell us today what it means? It would be helpful for us to know that before the Government introduce their legislation. What sanctions do the Government expect to impose on organisations that do not collaborate?
The Fire Brigades Union has spoken to me about same-service collaboration. For those of us who believe that we need to do more to reduce public expenditure to deliver public services more efficiently—I count myself as a fiscal conservative—a whole range of savings are available in the fire service through combinations of fire services across the country. One fear that the FBU and I have is that, by concentrating control through PCCs, the Government are giving up the opportunity for cross-border collaboration and the savings that will come from that. What is the Minister’s answer to the FBU?
One of my two main points is on the duty to collaborate with ambulance services. Other hon. Members are extremely disappointed, and I certainly am, by the half-hearted response of the ambulance services to this opportunity for them to participate in collaboration between the emergency services. On other issues raised in the consultation, page 19 of the Government’s summary states:
“By far the most commonly stated view was the need for ambulance services to engage more with the police and fire and rescue services.”
That is absolutely correct. There are many people in the fire and rescue services who believe that their humanitarian mission is much more closely aligned with those in the ambulance services, yet the ambulance services seem to drift along on their own thinking that it is okay to stay within their own silo and not participate in the Government’s positive and welcome change. Is collaboration by the ambulance services central to the Minister’s vision, or is it a “nice to have”? On the surface, it looks like a “nice to have.” If PCCs are to be the central organising point for emergency services, the Government have missed a step in not using this opportunity to propose measures to drag parts of the ambulance services into the overall responsibilities of the PCCs.
David Rutley (Macclesfield) (Con)
My hon. Friend is making a characteristically passionate and well thought-through speech. I understand his point about the importance of ambulance services being better involved in the debate, but it could be argued that there are unique pressures on them. In Poynton, to the north of Macclesfield, there is an interesting model of co-location between fire, police and ambulance services in an emergency hub. Does he agree that there are options, maybe at the margins or on the periphery, where ambulance services could play a more integrated role?
Richard Fuller
Not only do I agree, as usual with my hon. Friend, but I would take his idea and move it another step forward. There are opportunities not only for co-location but for training, skills development and establishing career paths that enable people to join a fire and rescue service and an emergency medical responder service and then determine whether they want to have a pure firefighter career path or whether they want to have a career path that includes achieving medical qualifications that make them capable of being EMRs. Such opportunities are relevant to the vision that the Minister wishes to outline, but the Government’s proposals give a free pass to the ambulance services to continue thinking in their own silo. There is an imperative on the Government to bring that under the overall arch of their recommendations.
Ian Lavery (Wansbeck) (Lab)
I spoke to firefighters on the frontline in my constituency last week about that point, and it is not a difficulty—they have a pilot with the ambulance service. Last week alone, the fire and rescue service saved two people’s lives in Northumberland because of that joint approach. However, there is a huge difficulty with amalgamating with the police service, which is quite different.
Richard Fuller
I have a lot of empathy with what the hon. Gentleman says, which is another reason why the lack of effort, as it seems from the Government’s proposals, to try to bring in the humanitarian, ambulance and EMR capabilities will store up problems for later. There is a concern that it will be not a merger but essentially a takeover of the fire services by the police. I know that that is not the Minister’s intent—I am sure that as a former firefighter himself, he has a passion for the fire service and understands the unique skills it has better than many hon. Members—but unless the Government introduce stronger measures on collaboration requirements for the ambulance service, the fears outlined by the hon. Gentleman are likely to continue. It is the Government’s responsibility to try to cut them off.
A number of points in the proposals deal with governance and PCCs, and with management. When I read the consultation document originally, I thought that on governance issues, a pretty straightforward case could be made for or against, but that the management issues involved quite a lot of detail and potentially some weeds that we would not wish to get into. In their response, the Government rightly clarified the issues for chief fire officers, such as that the position of chief officer in a combined service is now open to them. It is now clear that they can take part in that way, but what about the terms and conditions for the bulk of the workforce in the two arms of the police and fire service? What will the single-employer structure mean for them?
The Government has rightly considered potential back-office savings. That is quite right, and we know all about co-location—those are the easy bits—but a single employer also has responsibility for human resource management, training and development, terms and conditions and pay. What is the Government’s plan on that? Can they give us some reassurance on terms and conditions that the changes are not a stepping stone to a substantial change in working relationships and opportunities for the fire service and police?
I am sure that there will be questions about force boundaries, as there were in the debate in November. As the Government have moved forward with their proposals, I can see instances working where multiple fire authorities are under a single PCC, because the PCC is the apex, but what are the Government’s proposals for the admittedly limited number of areas where the PCC is not the apex of the fire authority? It is not just that the boundaries are not coterminous; they go beyond the scope of the apex. Can the Minister address those issues? For example, Cornwall and Devon police forces are merged, but Devon and Somerset fire services are merged and Cornwall is independent. What does he suggest there? It is also proposed to merge Wiltshire and Dorset fire services, but there will be two PCCs for those areas. Can he give us some thoughts about that?
Steve Brine
The H3 project that I mentioned in Hampshire also now combines its back office with Oxfordshire County Council. Clearly, that is outside the county boundary and the PCC boundary, but it proves that if local collaboration happens without being forced, where there is a will, there is a way.
Richard Fuller
That is right, but sometimes there is no will; what is the way then? PCCs are democratically elected figures, and they have a responsibility to the people who elected them to maintain their range of services. The proposals in the legislation are not clear about how that will be managed. It would be helpful to hear that from the Minister, because it will not apply to the vast majority of places across the United Kingdom. The number of places affected is small, but they are important. The people of Devon, Cornwall and Somerset will want to know the Government’s intentions, because in a few weeks’ time, they will be voting for someone who may well have that responsibility if Parliament passes the legislation.
I would like to make a few points about PCCs, starting with finance. All Members of Parliament will be aware that chief constables have made the case for a number of years now about the financial pressure involved in maintaining the desired levels of policing. Many of us on the Government Benches have pressed chief constables and others to look for savings and, sometimes reluctantly and sometimes positively, they have engaged with us. Guess what? Effective policing can be delivered with lower budgets. Who would have thought that possible? However, there is admittedly still pressure across the board on public and police financing, which is why my right hon. Friend the Chancellor was right to maintain police budgets in the autumn statement.
I am sure that we all look forward to that maintenance of funding, but I was concerned, not for the first time, by comments made by the police and crime commissioner in my county of Bedfordshire. Just last Sunday, the Bedfordshire on Sunday led with a story headlined, “Takeover threat for fire service”. It began:
“‘Help us with our funding or be taken over’, is the warning to the fire service from the county’s cop boss.”
The PCC may well be jumping the gun, because he does not have those powers yet, but I think that many of us would be alarmed to hear such an aggressive statement from a PCC who might be given responsibility for the fire service. The fire service is not a piggy bank for police and crime commissioners to raid for their budgets.
Richard Fuller
The PCC ought to know, and have responsibility for knowing, that he must—
Mr Peter Bone (in the Chair)
Order. If Front-Bench Members want to intervene on the hon. Gentleman, they can, of course, but otherwise, they should be quiet.
Richard Fuller
I am not sure whether the shadow Minister was speaking out in support of the PCC raiding fire service budgets. Perhaps she was; perhaps that is new news. Who would have known? Perhaps she would like to clarify.
Lyn Brown
I am grateful to the hon. Gentleman for allowing me to clarify, and I congratulate him on securing this debate and on the tenor of his contributions. I was merely agreeing with his suggestion that some PCCs may well see the fire service as a piggy bank from which to fund the police service, and I wonder whether that was the Minister’s intention.
Richard Fuller
I am grateful to the shadow Minister, who came to my constituency last year just before the general election. She was very welcome in Bedford. The issue is not so much that some PCCs may be incapable of managing their budget effectively and who therefore think that this is an opportunity to take money from our firefighters—as the Bedfordshire PCC appears to think—but that they should not be permitted to do so. On that, I think she and I agree. We want to ensure that the funding for our fire service cannot be raided by PCCs such as the one for Bedfordshire, who wishes to get his hands on it.
The Minister for Policing, Crime and Criminal Justice (Mike Penning)
Judgment is an important issue for PCCs, especially as they come before the electorate in May. I would argue that the judgment of the Bedford PCC has been flawed—I wonder whether my hon. Friend agrees—in that, with huge reserves, the PCC still went to the electorate and asked for a 15% increase in the precept, which was rightly rejected. He was trying to raid the piggy bank of the electorate, rather than that of the fire service. Perhaps he should concentrate on his own financial situation.
Richard Fuller
I am tempted by my right hon. Friend to go further and talk about the PCC for Bedfordshire, but that is a bit parochial. I have one final point, which I think is relevant for all Members of Parliament. In Bedfordshire, we consider the fire stations that exist around the county. In my constituency, we have one in Bedford on Barkers Lane and one in Kempston. My concern is that the PCC will close that station. If he is already firing the gun and saying that he wants to take money from the fire service, that could mean real reductions in fire service coverage for my constituents.
Can the Minister tell us a bit more about the financing for the new arrangements that he is seeking? In particular, council tax is in separate precepts at the moment. Will a single precept be charged? Secondly, what accountability will there be within the PCC organisations to ensure that one budget is not raided for another? If there is no clarity that people are being charged separate precepts for fire and police, and there is no oversight in the service about how that money is used between fire and police, that is of great concern.
In their response, the Government say that they are quite rightly considering the issue of an inspectorate and how that should roll. My personal view is that that inspectorate needs to have a very strong mandate and, in particular, needs to see itself as maintaining the correct financing for both the fire service and the police service. That should be a specific requirement in the inspectorate’s brief and it should not have an overall brief to ensure that money is being used effectively by the PCCs. If we do not maintain that idea of separation, the predations of certain PCCs will be too strong.
Richard Drax (South Dorset) (Con)
I will be very careful what I say, because Dorset’s PCC is a man who I respect a lot and he does a very good job within his remit, but it would be fair to say that this whole argument is made even more difficult by the fact there is still a lot of doubt about the role of the PCC. Personally, I have always thought that we politicised the police force in one straight swipe and now there is a danger of doing so with the fire service. Does my hon. Friend agree that this issue is adding angst to an argument that is very difficult to resolve?
Richard Fuller
That is a fair comment, but there is no better person to alleviate angst than the Minister himself and I am sure that at the end of this debate the angst will be significantly lessened.
Overall, I hope that Members welcome both the consultation process undertaken by the Government and the broad thrust of their proposals to take these measures forward. There is a lot of good stuff in these recommendations and I think that all hon. Members want to help the Minister identify where there are perhaps ongoing concerns, so that he can consider them and refine his thoughts before he introduces legislation, and to encourage him on the path that he has set, which is most welcome for the people of Bedford and—I am sure—for many people across the country.
Mr Peter Bone (in the Chair)
It is my intention to call for the two winding-up speeches no later than 10.40 am and I have seven Members who have indicated they wish to speak. My arithmetic tells me that means about seven minutes per person. I do not want to impose a time limit because that is not my way, but I ask Members to bear that guidance in mind.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate, Mr Bone, and I thank the hon. Member for Bedford (Richard Fuller) for setting the scene very well, as he always does, with his knowledge and experience. We thank him for that.
We look forward to hearing the responses from the Minister and the shadow Minister, the hon. Member for West Ham (Lyn Brown). There is no pressure on the Minister whatsoever—he just has to absorb all the angst in the room and come up with the answers. Knowing him as we do from when he was a Northern Ireland Minister, we know that he has a great interest in his job and a passion for it.
I look forward to giving a Northern Ireland perspective. I know that the issue has been devolved to us in Northern Ireland, but it is always good for the House to hear about experiences from across the United Kingdom of Great Britain and Northern Ireland, and in this particular case from Northern Ireland. I know that the Minister will encompass that in his response.
Just last September, a poll commissioned by the Police Federation of Northern Ireland was released. It found that 96% of those who took part believed that morale was at its lowest. That indicates how the pressures of budgets, the pressures on jobs and the changes in police officers’ circumstances have all lead to a reduction in police morale. The significance of the survey cannot be overstated. Some 2,527 serving police officers in Northern Ireland, which is just over a third of the total number, responded to it. Budget cuts, pension fears and internal changes have been blamed for the slump in police morale. We have also seen the hard-pressed Northern Ireland ambulance service declare major incidents, as it has been unable to cope with a combination of rising demand and cuts to funding.
What we are considering in this debate is closer working between the emergency services. I want to give a perspective from Northern Ireland, where the three services can work together, do better and respond to events because of some of the things that we have done in the Northern Ireland Assembly, to which power in this area is devolved.
We live in tough times economically, and all Departments are being asked to tighten their belt, but the statistics on police morale, and issues affecting the ambulance service and the fire service, are all causing concern. It is good to discuss how we can use co-operation between the emergency services to help those affected by the tightening of the purse strings to do more with less.
Mr Gregory Campbell (East Londonderry) (DUP)
My hon. Friend is coming to a point that will hopefully command widespread support across the House and the nation. People want to see a pragmatic, sensible and practical series of co-operations between the emergency services, not just to raise morale among the staff in those services, important as that is, but, even more importantly, to deliver a more efficient and effective service to people across the United Kingdom.
Jim Shannon
As always, my hon. Friend and colleague makes a very focused intervention. Yes, we need to have that co-operation, and that is what this debate is about. It is not about attacking anybody or giving anyone a hard time; it is about considering how better we can have that co-operation. In Northern Ireland, we have done some things better than elsewhere, and some things have been done better on the mainland. We can exchange views, and it is important that we do so.
The answer lies in innovation—learning to do things differently. Reducing bureaucracy and red tape is a simple measure that would make co-operation between our emergency services easily obtainable. It is the attractive thing to do and the right thing to do, and if we encourage that process we could see some real results.
I know that the issue of how the three services can come together and help each other when it comes to training is a different one for a different debate. A previous debate in Westminster Hall addressed such training. However, in Northern Ireland we have taken some steps towards achieving that joint training. A location has been identified for it, but we do not yet have the training school to bring the three services together. I know that the Minister is aware of that approach, because I think he will have overseen it during his time in the Northern Ireland Office. Once again, there are some good steps being taken forward.
We have already seen what innovative approaches can do in Northern Ireland. The Northern Ireland fire and rescue service adapted to a tighter budget rather than simply doing things as it had always done them before. Reallocating shift patterns, having less bureaucracy and providing more autonomy for local stations and fire service men and women are just a few of the steps that the command of the fire and rescue service in Northern Ireland has taken to adapt to the challenging financial environment.
The most interesting part of all the changes that have taken place, and of those that will be made shortly, is that they have come from those within the fire service themselves. They have acted rather than waiting for Government. The initiatives came from people within the fire service—they want to provide a better fire service, as they are part of it. If we can do things better, let us do so.
In Northern Ireland, fire stations that would otherwise have closed are now staying open, and fire service personnel who would have otherwise been out of a job are part of a fire service that is looking forward, despite the challenging circumstances. There is real innovation and there are real ideas, and people are working together. Replicating that innovation in the other emergency services, and sharing the methods by which improvements can be made, will surely go some way toward alleviating the pressure of cuts to our emergency services.
We do not have any Scottish colleagues here today, but I always say that we are better together, in every sense of the phrase, and we want to stay together. However, we also have emergency services across the whole of the United Kingdom of Great Britain and Northern Ireland that do a good job. If we are doing things well in Northern Ireland, let us share that, and if there is something in Scotland, Wales and the rest of the mainland that we can learn from, let us do so.
However, while it is encouraging to see what can be done, there is no replacement for funding. Cuts have been made to our front-line services, and particularly our emergency services. We have to look at those cuts again—surely there are other areas in which the Government, and indeed the Northern Ireland Assembly, should focus attempts to save money. Greater co-operation, while always desirable, cannot be a smokescreen for cuts. The people will not be distracted, and the figures cannot be swept under the carpet.
I return to my comments about the police service survey. Of those surveyed, 96% said that morale is low in what has to be one of the most important institutions for Northern Ireland’s future. We need law and order in place, and it is good that we have it, but we also need the emergency services to work together better. The fire and rescue service, the ambulance service and the police can do that. Co-operation is desirable and always beneficial, but it will not always be a good enough smokescreen to cover the fact that our emergency services are facing cuts to their budgets. What matters is how those cuts happen, how budgets are then brought together and how we deliver a service that our people can depend upon.
Richard Drax (South Dorset) (Con)
I congratulate my hon. Friend the Member for Bedford (Richard Fuller) on securing this interesting debate. I shall ask my hon. Friend the Member for Cannock Chase (Amanda Milling) to bash me when I get to six minutes; I would be most grateful if she did so.
I will quickly touch on the overall picture in Dorset, then I will give the views of four representatives in Dorset—the chief constable, the police and crime commissioner, the chief fire officer and the chief executive of the south-western ambulance service, Ken Wenman. I asked my team to tell them that I was going to participate in the debate and that I wanted to hear from the coalface, as it were, exactly what people in Dorset thought.
In Dorset, we already have close collaboration between the police and the fire service—it is already a fact of life. The Dorset police and fire services already share seven buildings and facilities, and two years ago Dorset police and fire became the first 999 blue light street triage service—I think that is the jargon—in the country, with police officers, fire officers and mental health professionals working together. First-aiders with in Dorset police advanced training will respond to life-threatening emergency calls on behalf of the ambulance service if the latter’s attendance is unduly delayed and police resources are closer. That is the overall picture in Dorset.
The view of Chief Constable Debbie Simpson is that blue light collaboration is not helped by the ambulance service being regional. The police and fire services are not regional, so who partners with whom? That is a question for the Minister. The chief constable says that although there will be some efficiencies, the majority of those working in each emergency service train for entirely different functions, and that
“we struggle to put together teams across forces, let alone across different blue light disciplines.”
She would prefer the police to look at the criminal justice family—courts and probation—as an area for closer collaboration. She thinks that the police have a closer affinity with those organisations than with the other blue light services.
Martyn Underhill, who I mentioned in my intervention on my hon. Friend the Member for Bedford, is the Dorset police and crime commissioner and also the national representative for PCCs to the Government. He says that there is a natural synergy between the police and fire services nationally and that the idea of the PCC being responsible for fire and rescue services is good. However, he feels that in Dorset it will not work. We already have the combined Wiltshire and Dorset fire services, which will merge on 1 April 2016. The merged service will be associated with two police forces and two PCCs, for Wiltshire and Dorset, but they are not coterminous—that is a dreadful word, but I think you understand what I am trying to say, Mr Bone. Will the Minister comment on how that situation can be resolved in the interests of further “efficiency and effectiveness”? In Dorset’s case, the PCC supports the chief constable’s view that collaboration across the criminal justice system might be more fruitful.
Darran Gunter, our excellent chief fire officer, and the new authority that has been formed—the shadow Wiltshire and Dorset fire authority—unanimously reject the proposal that the fire service should be governed by the PCC. They are concerned about over-complexity, but they support localism, local democracy and accountability. The fire service’s first priority is prevention and behaviour change, and only then responding to save lives. Joining up should not be viewed solely in operational terms.
Darran Gunter is not sure that there is any proven evidence of efficiencies from combining the blue lights, which have different vehicles, equipment, competencies, conditions of service, personal protection kit and so on. His view is that closer control of fire services in the past has failed. I cannot remember how many millions it cost, but I know the Minister is aware of the disastrous case of the past attempt to regionalise the fire service. The fire and rescue service area is shared by two PCCs—Dorset and Wiltshire—so how will overall responsibility be addressed? The PCC posed the same question. If the PCC takes control of the fire service, how will the fire authority, which is already elected and has a duty to the community, be consulted? What about the views of the community? There should be a demand-led culture.
Mr Gunter says that the fire services does not want to alienate other public services, such as those for children, families and adults, and health partners, by exclusive collaboration with other blue light services. It is disappointed that the duty of collaboration is limited to the three emergency services. He says that local authorities, clinical commissioning groups, the Maritime and Coastguard Agency, the voluntary sector and others should be included.
Responsibility for the fire service has now moved to the Home Office, which is responsible for the police. How will future funding work? Police budgets are protected, while the fire service is to be reduced by 30% over the next four years. In Dorset, 85% of operational vehicles are crewed by retained firefighters—one of the highest levels in the country. Some fire services are still in county councils, some are in combined fire authorities; and some are in metropolitan fire and rescue services. Further changes; could come with the new arrangements for mayors. There are significant challenges in combining services, so does the Minister agree that that is one area in which the Government should offer a blueprint?
I turn to the views of Mr Wenman, who is the chief executive of the South West Ambulance Service Trust and a trained paramedic who still goes out today. He is an extraordinarily nice man, and an affable and very able paramedic. His view is that the ambulance service
“is the emergency arm of NHS, not the medical arm of the blue light services.”
There is a big difference. Each regional ambulance service deals with anything from 750,000 to 2 million calls a year—10 times the activity of the fire service. The ambulance service provides a broader response than conventional fire and police services, with its responsibilities including the 111 and 999 services. Its services are aimed at “hear and treat”, with clinicians giving advice over the phone and pointing patients in the right direction. Some 85% of the response is urgent rather than emergency care.
I will make a few final points, so as not to go over my seven minutes and interfere with colleagues’ time. As far as first aid is concerned, the fire service is currently trained to “plug holes” and “manage airways”, backed up by paramedics from the ambulance service. Mr Wenman can envisage there being fire service paramedics, with three years’ training, and understandably many firefighters are keen to do that. In 2006, the ambulance service saved a significant amount of money through the reduction from 34 ambulance services to 10 statutory NHS ambulance trusts. Money could also possibly be saved through localism in services.
That was a quick sketch, covering the views of four professionals who deal with the very business we are talking about, and right hon. and hon. Members will see that their views are mixed.
Kate Hoey (Vauxhall) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Bone. I congratulate the hon. Member for Bedford (Richard Fuller) on his great speech. He has given so much support to the firefighters and the fire service. I declare that I chair the Fire Brigades Union parliamentary group, so I have a real interest in the issue.
First, I want to point out how disappointing I found the announcement in January that responsibility for the fire and rescue service was to be transferred from the Department for Communities and Local Government to the Home Office. That is no reflection on Home Office Ministers, or the shadow Minister. I was in the Home Office way back when the fire service was the responsibility of that Department, and if anyone spoke to my right hon. Friend the Member for Knowsley (Mr Howarth), who was the Fire Minister at that time—at the beginning of the century—it would have been clear to them that fire not only got a minimal share of resources but suffered a kind of neglect. It was very much the little bit of the Home Office, and that was characterised by the big issues, such as immigration and criminal justice, getting so much more priority.
Mike Penning
The hon. Lady is absolutely right. In those days, in the Home Office, the Fire Minister was separate from the Police Minister, and that is exactly why the Prime Minister has made me the Police and Fire Minister, to ensure that the mistakes of the past do not happen again.
Kate Hoey
I am sure that the right hon. Gentleman will be a very good Minister, particularly given his background. He was an FBU representative at one time, I think. For me, however, this is about all the emergency services working together, and somehow the ambulance service and the whole medical side have been left out. That will genuinely affect the very good work that firefighters do in prevention and protection. The level of that work is already falling, and there will be fewer school visits and that kind of thing—I can see that that is the way it is going.
I am also a little disappointed in the consultation. There is no substantial evidence in the document for bringing about the change, and it has the usual kind of civil servant feel to it, with questions being asked to get an answer that coincides with the preferred outcome, because the decision had already been taken. The document did not ask the crucial question, whether having a single employer for the two services is a good idea. I do not think it is. The public have great trust and confidence in firefighters, even when, unfortunately, they occasionally have to withdraw their labour. Support from the public has been enormous, unlike in many other areas where strikes have led to huge public dissatisfaction. There is huge confidence in them, and they are seen as independent and impartial lifesavers. The hon. Members for Strangford (Jim Shannon) and for East Londonderry (Mr Campbell) have left, but firefighters in Northern Ireland had to work hard for all the communities during the many years of difficulty, and there was confidence in them.
I have a lot of confidence in my local police, particularly Commander Richard Wood, but there is no doubt that the public do not feel the same way about the police as they do about firefighters. I genuinely think that the reforms could damage the reputation that firefighters have built up in their neighbourhoods over decades, so I am concerned. Co-operation will come about if people want it to happen, not because it is made to happen from the top down. The Hampshire examples are good, and the system works there because everybody wanted to work together.
The example that my hon. Friend the Member for Wansbeck (Ian Lavery) mentioned of the fire and ambulance service working together shows that it can work, and that it does not have to be just about saving money. Of course we all want to save money, but I am keen to hear from the Minister what is really at the bottom of the reforms—unfortunately, I will have to leave slightly early.
I particularly want to pick up on the point that the hon. Member for South Dorset (Richard Drax) made about the role of the PCCs. They are not popular, as the turnout at their elections showed. It is crass to try to lump the two services together. It means we will lose accountability, which is very important in London. We need democratically elected people who have an overview and a link into the community. We need to be able to feel that people can be got rid of, which I do not think people feel at the moment.
There are many questions I could ask the Minister, but I do not have time. The Minister should look at this matter again. As enforcers of the law, the police do not have the universal access that the fire service has to people’s homes and to the many hard to reach communities. It is vital that the fire service retains its distinctiveness to ensure continued trust in it. That is my most crucial point.
Ian Lavery
Does my hon. Friend agree that the fire and rescue service and the ambulance service could do a lot of business together? Those services are humanitarian services that have the confidence of the people in their communities. The police service, which seeks out crime, is not a life-saving organisation, and it does not have that same confidence of communities. Further integration will jeopardise any community spirit in the places we are trying to secure.
Kate Hoey
I could not agree more with my hon. Friend. He sums up why I feel so unhappy about this move. It has been rushed through, and I do not think it will work. Even people who felt that there was a role for PCCs are now beginning to say that their introduction was a mistake. If the reforms go ahead, I think we will be back here in a few years saying that they were a mistake.
Mrs Flick Drummond (Portsmouth South) (Con)
It is a pleasure to serve under your chairmanship yet again, Mr Bone. I congratulate my hon. Friend the Member for Bedford (Richard Fuller) on securing this debate. It is a great pleasure to praise the example that we have in Hampshire of how the emergency services and the local authority—Hampshire County Council—can work together. We already have some of the finest services in the county, with Hampshire constabulary leading the way in efficiency and focusing on the priorities of policing. I was sad to hear of the departure of Chief Constable Andy Marsh, and I know other Hampshire MPs will want to join me in paying tribute to him. His successor will inherit a strong and effective force, which I will be pleased to support in Parliament.
However, I must sound a note of concern about the plan that the police and crime commissioner has unveiled to close police stations in Portsmouth. I am going to be parochial for a couple of minutes to illustrate a point. The city faces unusual challenges of geography. We have only three main roads on to Portsea Island, and they lead into the most densely populated space outside London. It is unthinkable that we should be left without a fully supported police station and I hope that Mr Hayes will reconsider his options. The first that any of us heard about this plan was through our local newspaper, which is no way to manage a service that we all depend on for public safety. In the light of the proposals for the police and crime commissioners to take on greater responsibility, it is a real cause for concern. I know from my postbag that the closure plan is alarming to constituents, and I will continue to oppose it.
However, to get back to positives, in the fire service we have had the recent consultation on its future as a service in Hampshire, and how it can adapt to a changing physical environment and capitalise on a steady improvement in fire safety. We know that over the past 10 years, the number of call-outs to domestic incidents has halved. Call-outs overall are down by almost a third, and Hampshire fire and rescue is in the best-performing quartile in the country for response times.
As has been mentioned, in Hampshire we already have a highly evolved co-operation between the emergency services. It is called H3: Hampshire fire and rescue, Hampshire County Council and Hampshire constabulary. The sharing of facilities between Hampshire fire and rescue service and the police has been achieved without radical surgery to governance; it is all about common sense. The fire service works with the South Central ambulance service as a co-responder, and they share buildings in parts of the county, too. There is a genuine willingness to co-operate in Hampshire, which is perhaps at a more advanced stage than that assumed by the proposals to legislate. So I hope that any legislation does not impose unwieldy structures where there is flexibility at present. I know from the Hampshire fire and rescue service consultation response that that is of concern. It also makes the excellent point that there is the potential for co-operation nationally in bringing ambulance services into the mix. That is a very powerful argument from a service that already knows so much about collaboration.
Indeed, it is important that the differing roles and competences of our emergency services are respected when it comes to matters such as accountability for complaints and personnel. There are plenty of areas for potential integration, such as communications and service planning, and in outreach and safety issues of all kinds. Let us make sure we focus on what is practical first and keep that flexibility for our emergency services to design the best services for their particular region.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
It is a pleasure to follow the hon. Member for Portsmouth South (Mrs Drummond), who demonstrates that some local authorities are ahead of the game on this issue. It is also a pleasure to see you in the Chair this morning, Mr Bone. I congratulate the hon. Member for Bedford (Richard Fuller) on securing the debate and on the eloquent way in which he described the conundrums and dilemmas facing the Government.
I should declare an interest. I was a member of the London fire brigade for 23 years. It celebrates its 150th anniversary this year. I was a former Fire Minister. I am secretary to the fire and rescue service all-party group and am chair of Fire Aid. I am also a Member’s representative on the House’s Fire Safety Committee. If colleagues have not done their online fire training yet, go on to the intranet. Only 30 out of 650 Members have done the training for their own safety, let alone the safety of the staff and constituents who come in, and it takes only 10 minutes.
There are two key questions for me: governance and the question of operational issues. As has been mentioned, the Government recently changed control of the fire service back to the Home Office from the Department for Communities and Local Government. As the Minister has already said, it was there before. Government moves things around; I do not think that matters too much. We have had a national fire service and we have had local government controlling the fire service. In London we have had the London County Council, the Greater London Council, the Greater London Authority, the London Fire and Civil Defence Authority, the London Fire and Emergency Planning Authority, and now control is going to the Mayor. Do the public know? Do they care? I do not think it matters at all.
The key question, raised by my hon. Friend the Member for Vauxhall (Kate Hoey) and others, is about accountability. Having someone to go to to make a complaint or to congratulate and praise is the most important thing. Given the state of the fire service in recent years with the disputes and strikes, we have hardly had a model of a successful operation of the fire service. I do not think the integrity of the service will be affected by a transfer to police and crime commissioners, although my hon. Friend the Member for Wansbeck (Ian Lavery) made a powerful point about the integrity of the fire service, which was accepted by my hon. Friend the Member for Vauxhall and which the Minister knows is out there in the public domain. I am not a big supporter of PCCs. Police and fire services would be better located with local government, along with some health matters, as many colleagues know, although I do recognise the points made about shared services.
More important for me is operational effectiveness. As the Minister knows, the fire service will always respond. A great recent example is its response to the floods. There is a suggestion that the fire service should have a statutory flood duty, allied to those of the Environment Agency and the water companies. The Government’s response so far has been that we do not need a statutory duty because the fire brigade will always turn up. Well, the fire brigade always turned up to fires before it became a statutory duty. The point is to make somebody responsible, and for it be somebody’s job to do the planning and argue the case to Government for the resources for a particular job. That is another question that is out there.
The fire service is a victim of its own success. The reduction in the number of fires, deaths and injuries has led to reductions in the number of fire engines, fire stations and firefighters. The service is being cut because it has been successful. The Minister knows all the reasons why that has been the case: better building construction, double glazing, central heating, and fewer candles and paraffin heaters. As my hon. Friend the Member for Vauxhall said, there has also been much better fire protection, with the fire service reaching out to communities. That is another important factor, which goes back to the Fire Precautions Act 1971.
Ian Lavery
We need to be clear about the suggestion that there are now fewer fire deaths. That is generally the case in some regions, but regions such as Merseyside have seen a huge increase in fire deaths, and the trajectory is likely to go up over the next couple of years.
Jim Fitzpatrick
My hon. Friend makes a good point. If we cut services when the service has been successful, at some point it hits rock bottom so it has to start bouncing back. The statistics demonstrate that we do not have enough police officers or firefighters, but they show that only after there has been a rise in crime or in the number of fire deaths.
The hon. Member for Bedford made a powerful point about the number of fire brigades. One reason why the last Labour Government’s botched attempt at regionalising the fire service failed was the intrinsic opposition of so many fire empires throughout the country. The Minister knows only too well who I am talking about.
This is a missed opportunity: it is not until question 15 of the consultation document that the ambulance service is even raised. That is despite the successful operation of combined fire and medical services in most states in the United States of America and the fact that most European Union states have combined fire and emergency medical services. That is despite the greater need for first-aid skills in firefighters; despite the arrival of idiot-proof defibrillators—I am not saying that they have to be idiot-proof for my fire colleagues to be able to operate them, but it makes it easier for us all; and despite the 2013 report from the Government’s fire adviser at the time, Sir Ken Knight, called “Facing the Future”, which looks mainly at the more developed area of co-working with ambulance services. That ought to be a key recommendation.
The fire brigade in London has been cut because of its success. We see the London ambulance service under pressure, with a rising number of calls. It is criticised for not making its call times and is under budget pressures. More lives could be saved in London through the more efficient use of the emergency services, particularly the ambulance and fire services—frankly, if the Minister wants to add the police to that list, that is not the most important issue to me. More savings could be made in London through co-location, the disposal of property assets and closer working. I have not seen any of the candidates for the mayoral election bring that up, but I have been feeding it out to them and am still hoping.
In conclusion, I congratulate the hon. Member for Bedford again. He says that the Minister intends a higher level of collaboration. I look forward to hearing what both the shadow Minister, my hon. Friend the Member for West Ham (Lyn Brown), and the Minister, with his excellent knowledge of the fire service, have to say. I am interested to hear whether the ambulance service and the fire service can be brought together.
Amanda Milling (Cannock Chase) (Con)
It is a great pleasure to speak in this debate under your chairmanship, Mr Bone. I congratulate my hon. Friend the Member for Bedford (Richard Fuller) on securing the debate. At this time on a Tuesday morning we would normally be sitting in the Business, Innovation and Skills Committee, so this makes an interesting change.
Since I was elected to this place, the issue of closer working between emergency services—particularly police and fire—has been a priority for me, so I am incredibly grateful for the opportunity to speak today. Since I secured a Westminster Hall debate on closer working between the police and fire services in November 2015, there have been some welcome developments. In December 2015, Staffordshire fire and rescue agreed to undertake a review of how it could work more closely and collaboratively with Staffordshire police. That was welcome news, as it was something for which I, along with some of my Staffordshire colleagues and our police and crime commissioner, had been calling for some time. I was, however, disappointed that it took around six months to reach that point.
More recently the Minister, whom I am pleased to see in his place today, published the Government’s response to the “Enabling Closer Working Between the Emergency Services” consultation. I was particularly pleased to see the Government’s proposals, which include two matters that I shall discuss further: a statutory duty for blue light services to collaborate to improve efficiency and effectiveness, and police and crime commissioners’ taking over responsibility for fire and rescue services, where a local case is made.
First, I welcome the proposals on a statutory duty for blue light services to collaborate, because, as has been mentioned a few times, collaboration has been patchy to date—Sir Ken Knight highlighted that in his 2013 review of fire and rescue authorities. That is not to say that there are not some excellent and successful examples of collaboration. We have heard examples from Dorset and Hampshire from my hon. Friends the Members for South Dorset (Richard Drax) and for Portsmouth South (Mrs Drummond), but sadly that is not the case universally. As my hon. Friend the Member for Bedford said, there has not always been the will locally to collaborate. That is a challenge that must be overcome.
It is absolutely right that blue light services have a statutory duty to investigate where they can share control rooms, back-office staff, offices, human resources, payroll and procurement—I could go on. It is just common sense, as my hon. Friend the Member for Portsmouth South described for Hampshire. Eradicating duplication, which often exists at a local level, even within towns, will mean better outcomes for the public and taxpayers, and will ensure that funding can be targeted to front-line services.
Secondly, in the Westminster Hall debate that I secured in November 2015, I expressed my concerns that PCCs would take responsibility for fire and rescue services only where a local case was made. As the Minister may remember, I called for it to be mandatory. My concerns were based on the potential for resistance to considering such a transfer—again, there is the issue of patchiness and the possible lack of will locally. Although I look forward to seeing more detail, I am reassured to some extent by the Government’s proposal to enable cases to be put to the Secretary of State where parties are not in agreement about the transfer. It will then be up to the Secretary of State to make a final decision based on local consultation and an independent assessment of the business case. It is important that local priorities drive decision making, but equally important that decisions can be scrutinised if necessary.
Ultimately, I am keen to see police and crime commissioners universally develop into a broader role, potentially becoming public safety commissioners. In the first instance, they should incorporate fire services, but over time things could go further—for example, we have been discussing ambulances. That said, I do recognise that there are some complexities and that the regional structure of the ambulance service makes things more complex.
As the role of PCCs develops, might there be a need to consider whether their title should evolve? There are several reasons for that: we need to ensure that there is no perceived police takeover, as my hon. Friend the Member for Bedford said earlier, and that the public are clear about the role of these individuals. In terms of the latter, it will be particularly important to build on the benefits of the electoral accountability of PCCs. They, like Members of Parliament and local government councillors, are directly accountable to the public, and members of the public can express their satisfaction or dissatisfaction with them at the ballot box. To date, such direct, clear accountability has been lacking for fire authorities. Although I appreciate that elected councillors serve on those authorities, they are appointed to those positions, rather than elected by members of the public. We must ensure that the public are clear about who and what they are voting for. I think the name “police and crime commissioner” can cause confusion; are there any plans to create a new title for the commissioners in recognition of their broader remit?
I am a keen advocate of greater collaboration and I welcome the positive steps that have been taken in recent months to ensure more collaborative working across the blue light services, but I recognise that we can go much further. I look forward to seeing more detail when the Government’s proposals are brought before the House.
Mr Peter Bone (in the Chair)
Before I call the shadow Minister and the Minister, I remind Members that it is now tradition that the Member who moves the motion gets a couple of minutes to wind up.
Lyn Brown (West Ham) (Lab)
It is a genuine pleasure to serve under your chairmanship, Mr Bone. We have had an excellent, well-informed debate and hon. Members have made many good points.
Labour supports close collaboration among the emergency services, but we fear that these proposals come with significant risks and are being carried out in a cavalier fashion. The consultation exercise that preceded the proposals gives us the distinct impression that the Government decided that they would make radical changes before they spoke to the key stakeholders. In any serious consultation, stakeholders would be asked what they think of the substance of the proposals. Instead, they were merely asked to comment on the process by which PCCs will gain control of their local fire service, not on whether the process has any merit, and they were asked a litany of leading questions.
The proposed process by which a PCC takes control of a fire service is rather authoritarian. Although they must seek agreement from the local fire authority, if agreement is not forthcoming the matter will be arbitrated by the Home Secretary, who will decide whether a change is
“in the interests of economy, efficiency and effectiveness or public safety”.
That is a recipe for hostile takeovers.
Ian Lavery
In Northumberland, the police and crime commissioner was opposed to further integration with other blue light operations. Will my hon. Friend comment on the position there?
Lyn Brown
That one passed me by, but I will come to Northumberland and have a conversation about it. I am sure the Minister has an answer.
The Government are ignoring the advice of the 2013 Knight review. When Sir Ken Knight considered expanding the role of PCCs, he recommended that, if such a policy were pursued, it ought to be trialled through a pilot, rather than be rolled out immediately. Why did the Government choose categorically to ignore that key recommendation?
I fear that these proposals carry a number of serious risks, and I worry about the continuation of the successful, locally driven collaborations that have been talked about at length in recent years and have saved lives. When I was shadow Fire Minister, I visited a number of fire services, including Northumberland’s, and I heard of collaborations with ambulance services. I was particularly impressed by the Lincolnshire fire and rescue service and the East Midlands ambulance service, which ensured a swift, comprehensive service to isolated parts of the county. Firefighters responded to medical emergencies and took patients to hospital if they could do so more quickly than the ambulance. It really did save lives; it was an exceptionally good collaboration.
Only yesterday, we heard that the ambulance service has missed its targets six months in a row. Our paramedics work hard, but they cannot be everywhere at once. Our fire and ambulance services recognise that, and they work side by side to be part of the solution. What will happen to such innovations in the brave new world of combined police and fire services? Will PCCs be charged to continue that work, or will it simply fall by the wayside? What guarantees do communities have that such innovations, which are important to them, will be top of PCCs’ agendas?
To save money and be more efficient and effective, local services successfully share back office functions. A good example is the North West Fire Control project, which set up a single control centre for services in Cumbria, Lancashire and Greater Manchester. It works really well. What will happen to such collaborations? Will those services be disaggregated? I do not know. Perhaps the Minister does. I worry that there is a danger that such locally driven projects will be crowded out as energy is spent on responding to an agenda that has been dreamt up in Whitehall.
I also worry that dismantling the existing structures of accountability will cause a democratic deficit. The next PCC elections are in May, and the major political parties have already selected most of their candidates. Does the Minister expect the candidates to detail in their manifestos their intentions about fire services? Should that be a central issue in the election debates? I gently say that I do not believe that the Home Secretary or the Minister expect the fire service to be a central plank in the PCC elections. Is that not worrying in itself? It is as though the Government see the fire service as a secondary concern to policing.
Peter Murphy, director of public policy and management research at Nottingham Business School at Nottingham Trent University, said that
“if the current plans are implemented there is a very strong chance that the fire and rescue services would go back to the ‘benign neglect’ that characterised the service from 1974 to 2001 when the Home Office was last responsible for fire services. Police, civil disobedience, immigration and criminal justice dominated the Home Office agenda, as well as its time and resources.”
If the fire service becomes the lesser partner in a merged service,
“the long-term implications will include smaller fire crews with fewer appliances and older equipment arriving at incidents. Prevention and protection work, already significantly falling, will result in fewer school visits and fire alarm checks for the elderly, not to mention the effect on business, as insurance costs rise because of increased risks to buildings and premises.”
I think his assessment is right. There is a real danger that fire will become an unloved, secondary concern of management—a Cinderella service. Perhaps the Minister can tell us how he will ensure that the service is improved, that we invest in the best equipment and training, that vulnerable people continue to have fire alarm checks and that schools are visited and children educated.
I want to ask a basic question about reorganisation. The Government appear to assume that it will be easy for fire and rescue services to reorganise to suit the PCCs’ boundaries, but to talk simply about transferring responsibility from a local authority belies the complexity of the situation. Fire budgets are very integrated in some councils to ensure the efficiency and effectiveness of the service, so it will be difficult to unravel them, as has been shown by previous attempted mergers of fire services. Has any work been done to assess the complexity? What conclusions has the Minister come to about the difficulties he might encounter? What concerns have county and metropolitan councils raised with him about disaggregating budgets and the effect on important emergency services?
Finally, on funding, fire and rescue services have already had to reduce spending by 12% over the course of the last Parliament, which is a cumulative cash cut of some £236 million, and further projected reductions are to come. When I met some fire services, I was told that their service would not be viable in future as a result of the cuts. That is the reality of the tough financial context in which PCCs are being asked to take on fire services.
There are alarming signs that the front-line service is beginning to suffer. Response times are creeping upwards. As the Minister knows full well, every second counts when people are stuck in a car wreck or a burning building. What risk analysis has the Home Office done to ascertain how PCCs will be able to reduce fire spending without increasing response times and reducing resilience and safety? I ask him to publish that risk assessment so that we can all evaluate it. It is not as if police forces have spare money to pass to the fire service, as we heard in the effective speech by the hon. Member for Portsmouth South (Mrs Drummond). They are still absorbing cuts of 25% to their funding from the last Parliament and face further real-term cuts. They have done amazingly well in such tough circumstances, but one has to wonder whether PCCs are happy that the Government are handing them another Whitehall-imposed funding crisis to deal with. Again, does the Minister expect PCCs to cover the shortfall in funding by introducing privatisation into the fire and rescue frontline? The last time I asked that question, the Minister shook his head but offered no verbal or recordable assurances whatsoever. Will he allow PCCs to end the full-time professional fire service or to sell it off bit by bit? What assurances can he give the House that those paths will not be followed? What control will remain in Whitehall to ensure that our fire services are not privatised or sold?
In conclusion, we genuinely support closer and more effective working between the emergency services, which we have seen work really well, but we have serious concerns about the inherent risk in the Government’s proposals. If the Minister is convinced that they are the way forward, he should publish a risk assessment and be confident that a rigorous pilot will demonstrate their merits. Until he commits to that, I feel that the risks involved are too great and pose too much of a threat to our communities for us to be able to support the proposals.
The Minister for Policing, Crime and Criminal Justice (Mike Penning)
It is a pleasure to serve under your chairmanship, Mr Bone, not least because the Northamptonshire police and crime commissioner is one of the best in the country, offering the sort of innovation that we have heard about during the debate. It is sad that he is not standing for re-election in May.
I welcome today’s debate and the opportunity to bust some myths, which is important and can provide confidence going forward. I am generally a friend of the hon. Member for West Ham (Lyn Brown), and we get on 99% of the time, both inside and outside this Chamber, but some of her comments frankly amounted to scaremongering. I will address the points that have been made during the debate, but, as always, I will write to colleagues if I cannot cover everything.
Like the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), I have a passion for this country’s fire service. I was a member of it for a short time but nowhere near as long as him. The fire service that turns up to our homes and factories to protect us is a public asset and will stay so—let me throw this privatisation thing out of the window once and for all. However, when my constituency was blown to smithereens on 11 December 2010, I welcomed firefighters from anywhere, including the private sector, which has huge experience in the type of fire that we were fighting.
We must also get away from the London-centric perception that all fire stations stay open 24/7, because they do not. We have an absolutely fantastic voluntary service based on retained firefighters, who make up the vast majority of firefighters around the country. Brilliantly, we now have full-time retained firefighters—it was not allowed when I was in the job. I understand that there are retained London firefighters who live in my constituency, but I must be slightly careful about that as I do not want to get them into trouble. The Fire Brigades Union in London does not like retained firefighters. On Merseyside, there are only 25 retained firefighters for the whole area, even though many firefighters have told me that they would love to be retained when they go back to their villages and homes. We also have full-time day-manning, as I call it, with firefighters being retained and on call later. Only the other day, I was in Lancashire to congratulate firefighters on their fantastic work during the floods. They have just moved to a new system with no 24/7 stations, but the cover is safe and the unions have accepted it. We must therefore remember when looking around the country that one size will not fit all.
However, we must consider—the hon. Member for Poplar and Limehouse hit the nail on the head—that other countries often have emergency services that work together much more closely than ours and protect their public much better. Of all the countries that I could refer to, it is America, the nation of privatisation, where firefighters have paramedical skills vastly in excess of any fireman in this country. I am really passionate about that. I took five years to qualify as a military paramedic before paramedics were even heard of in civvy street. When I started the job in Essex after passing out, I was posted to the station in Basildon. I was given my trade union card—I had no choice in the matter—and I was then given my first aid certificate, because I was made to take a first aid course during my basic training. By the way, at no stage during my service was I asked to renew the certificate, which is quite fascinating.
We have moved on since then. The vast majority of firefighting appliances now have defibrillators, but so does the cashier at my local Tesco. It is fantastic that this life-saving kit is available to us. When I was in Hampshire the other day, I saw advances in skills for firefighters for which I have been screaming for years, and we could go further. The key thing is whether we can keep a person alive until the other professionals arrive. This is not about replacing the ambulance service or the police; this is about the fire service being able to save a seriously injured person when it is out on a job and an ambulance cannot get there. That happens in most other parts of the world. In Hampshire, I was chatting away with a fireman who had paramedical skills right up to just below being able to insert an IV. I think there are legal reasons behind him not being able to do an IV, but we will try to move on that as well, because, as I know from experience, getting fluids into the body is one of the most important things, alongside keeping the airways open. People have transferred from the ambulance service into the fire service and vice versa, because of their on-the-job experience.
The reason why legislation is so important is that this is not just about money. If it was, I would not be standing here. It is about whether we can get a more efficient service to protect our constituents’ lives day in, day out, 24/7, 365 days of the year. Are there things preventing us from doing that?
In some parts of the country we have gone forward in leaps and bounds, but in other parts we have not; in some parts of the country we have huge amounts of collaboration, but in others not. I freely admit—I will probably get myself in trouble with the Department of Health again—that when I was in opposition I was fundamentally opposed to regionalisation of the ambulance service. As a former firefighter, I saw problems with that. When the hon. Member for Poplar and Limehouse was the Fire Minister, I was fundamentally opposed to the regionalisation of the fire service control centres. Thirty-odd years ago, however, when I was a fireman, we had a tri-service control centre—only one of them—and it worked really well. Where such things are working in places around the country, issues such as contracts and job descriptions have been addressed, which is absolutely right.
On Thursday, I was at the police control centre in London when the Syria conference was going on here. That was a hugely difficult and tactical job for the Metropolitan police, with the fire service, the Army, the ambulance service and the London boroughs all in that control centre together, but it was a brilliant operation. I pay tribute to those involved in the mutual aid that took place in London last Thursday. We had armed response and other police officers from throughout the country, including from the Police Service of Northern Ireland—the hon. Members for Strangford (Jim Shannon) and for East Londonderry (Mr Campbell) have now had to leave the Chamber for other business.
Collaboration does take place, but what do we do when it does not? Do we simply sit back and say that that is acceptable? A locally appointed—not elected—fire authority might say, “No, we’re doing fine. There are 25 of us, and we turn up twice a month. We’re doing absolutely fine”, even though they know full well that in another part of the country collaboration is saving lives and doing the job. This is not about replacing a fireman with a policeman—that is clearly scaremongering. I know what the FBU has been saying, and I will try to work with it on the matter. This is about delivering better care and value for money.
Why are the emergency services not all coming together on procurement? I now publish the lists of what police authorities spend, and I shall do exactly the same for the fire authorities. The accountability of PCCs is in place—they are elected. There are people who are seconded or appointed to different authorities, but at the end of the day the PCCs are the ones in the community who are elected, and the vast majority of them want collaboration.
Nearly every chief fire officer has congratulated me on my new position, although that is probably natural—they do not want to get on the wrong side of me straightaway. They welcome the fact that I am the Fire Minister as well as the Police Minister, so the fire service is not the forgotten body, which to be fair they have felt in the past. I was aware of the extent of that when I took office.
We want collaboration to be as voluntary as possible, but where there is complete belligerence about not doing it, we will take powers. The Bill will be published shortly. There will be evidence sessions, because that is the modern way we do things now, and we will look carefully at a lot of the comments made in the debate today. All that, however, has to be about how to do things—the way we did things in the past is not necessarily the best one. Some of the work we are doing now I was pushing for 30 years ago, and I am pushing to go further.
I would like the ambulance service to work more closely with the others. That is much more complicated because of the regional structure, but we could do things locally. I know of at least one PCC—I will not name him, because I was told in confidence—who has been approached by the new commissioning group in his area to ask whether the PCC could provide emergency blue light cover for ambulances. That is starting to come about not from the top down but from the grassroots.
We should listen not only to the chiefs, the PCCs or the unions—more unions than the FBU alone are involved—but to the individual firefighters, who have had the confidence to talk to me in the past few weeks, since I had this new job, and to say, “Minister, we are thrilled that you are an ex-firefighter and that our voice may now be heard above all the other chatter of people protecting their jobs.” That is the sort of comment I have been hearing.
Ian Lavery
With regard to the grassroots and the people on the frontline, who the Minister mentioned—he was one of those people himself—in the event of a single employer model, will he guarantee the people in the fire and rescue service their rights to unionise, to collective bargaining and to industrial and strike action? The police have none of that, so will the Minister guarantee that firefighters may retain their rights?
Mike Penning
That is an important point. The operational control of the individuals will always be by the operational officers. There is no evidence whatever that PCCs, since we have had them, have interfered in cases or in operational work. It is crucial that that does not happen.
What are we really saying? More than half of all fire stations—I think this figure is right—have a police station or ambulance station within 1 km of them. Although it is difficult to put a fire appliance into a police station—some ambulance stations could take them, but not police stations—the reverse is easy, and we have seen that in Winchester.
The new fire station in Winchester, which a fantastic piece of kit, is fully bayed, and the police are in there, too. The two services are completely working together, without it affecting their operational control. Someone who dials 999 and asks for a police officer will not get a fireman—that is a ludicrous idea and will not happen. However, elsewhere in the country we already have, for example, police community support officers in Durham, I think, carrying first aid kits. They might even have short extension ladders. They have had the training and are doing that because of the sheer geographical issues involved.
One size will not fit all, and that gives us an opportunity. There are complications, and I am not shying away from the fact that doing something might be difficult, but nor will I shy away from the fact that we need to protect our public better than we do now. Where collaboration works, I will not have belligerence and bloody-mindedness blocking that sort of care in other parts of the country. That is why we are bringing it through.
Richard Fuller
I thank hon. Members for taking part in the debate. In particular, I thank the shadow Minister, the hon. Member for West Ham (Lyn Brown), and the Minister for their contributions.
The Minister was kind enough to say that he would write to Members with responses to their questions, because he did not have time to answer everything specifically. The key message that he will have received today is that there is broad and widespread support for collaboration in principle, but some important questions remain about how it will be developed.
We heard about some strong examples in Hampshire from my hon. Friends the Members for Winchester (Steve Brine) and for Portsmouth South (Mrs Drummond), and about the experience in Northern Ireland from the hon. Member for Strangford (Jim Shannon). As my hon. Friend the Member for South Dorset (Richard Drax) said, however, there are still mixed opinions among professionals, so the Minister will have to provide guidance. He will have to lead on this, so that others may follow and get the best of the opportunities presented by collaboration.
As the Minister himself mentioned, there are continuing questions about where the ambulance service and the responsibility for emergency healthcare response sit in the review. We heard about that from the hon. Members for Vauxhall (Kate Hoey), for Poplar and Limehouse (Jim Fitzpatrick) and for Wansbeck (Ian Lavery), as well as from me and the shadow Minister. That issue will not go away.
Let me just say to the Minister that, in my experience, workplace culture matters—the culture that makes men and women want to work together grows and matters, because it is an ethos and a motivation for people. Nowhere is that more so than among members of our public service whom we ask to put their own personal safety behind the safety of our public. Clearly there is such an ethos among those in the fire service whom the Minister has met. They see themselves as having a humanitarian mission.
When the Minister says that he is minded to do more, therefore, he really does need to do more. We have to find a way to bring those responsibilities into the changes he is making. If he can put that in the Bill, or if the shadow Minister tables amendments to that effect, they will find widespread support from Members of Parliament in all parts of the House.
Mr Peter Bone (in the Chair)
Before I put the Question, I thank all right hon. and hon. Members for their self-restraint, because every Member who wished to speak did so.
Question put and agreed to.
Resolved,
That this House has considered closer working between the emergency services.
Sports Clubs: HMRC Status
(8 years, 9 months ago)
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David Mowat (Warrington South) (Con)
I beg to move,
That this House has considered multi-sports clubs and HMRC changes to community amateur sports club status.
It is a pleasure to serve under you, Mr Bone. In many ways the context of the debate is the rather disappointing Olympic legacy, with participation reducing in sports. In the past four years, the number of people doing more than half an hour of sports a week has declined from 25 million to 23 million; and as has been widely reported, obesity has increased by something like two thirds since 1993. In the context of joined-up government, it is therefore somewhat surprising that the Government have chosen to increase taxes on a number of amateur sports clubs, which will almost certainly lead to some detrimental impact on participation.
I will use Warrington sports club as my example, but I could have used many others. In particular, I have been contacted by a large number of golf clubs that are also being hit by the tax changes that Her Majesty’s Revenue and Customs is in the process of bringing in, which will have an impact on participation. Warrington sports club has 750 members, of whom 400 are junior members. That high ratio of junior members is one of the factors that has led it to fall foul of HMRC. Another factor is that it is a multi-sports club that does six major sports: rugby, cricket, hockey, squash, tennis and archery. The club was founded in 1852, so it has been going for a long time. It costs £220 a year for a multi-membership and £130 for a single membership, so it is not a major, lucrative money-making venture. The two issues that have taken the club the wrong side of the legislation are that it is a multi-sports club and that it has a relatively high number of junior members.
In terms of the club’s financials, membership brings in something like £50,000 a year and the bar brings in £290,000 a year of which £140,000 a year is from non-members. Non-member income is the issue that the Revenue is trying to address. One of the reasons for the large non-member income is that the club has a significant number of junior members, so parents take juniors to play rugby, cricket, hockey and whatever and have a drink while their offspring are playing. That counts as non-member income, which is the crux of the HMRC requirements. In terms of profit and loss, in the past two years on a turnover of about £300,000 a year the club has made a total profit of just under £2,000. The club is run to break even; it is not a profit-making club.
The legislation from which the club and many others have benefited was introduced in 2002 to attempt to increase participation in sport by making concessions for amateur sports clubs. The concessions were an 80% relief on rates, some corporation tax relief and gift aid status if they registered to be a community amateur sports club. Something like 6,000 sports clubs registered as CASCs. The valuable part of that concession for Warrington is that it saves about £14,000 a year in business rates, which may not be huge in terms of its turnover, but that is a reasonable chunk for a club that broadly breaks even. It comes to something like £20 a member, which is about 15% of the membership fee.
The legislation brought in by the Government in 2002 had numerous sensible criteria. The club had to be open to the whole community—it could not be a private, restricted club—it had to be amateur and its main purpose had to be the promotion and participation of an eligible sport. Clearly that was the case for Warrington and up until now that has worked fairly harmoniously.
In 2013, HMRC started a consultation. Its concern was apparently that the existing legislation was complex and confusing. There was clearly potential that organisations that are not really sports clubs whose primary purpose is not sport could register for CASC and take the benefits, which would not be fair to aspects of the hospitality industry. I can see that and the people at Warrington sports club can see that. If abuse was taking place, it is reasonable that HMRC should look at how it might wish to stop that. That seems to me an easier loophole to close than some of the other issues it grapples with on our behalf, such as double Irish, Facebook, Google and all that goes with that, but the focus in 2013 was amateur sports clubs.
HMRC sent out a consultation with a number of options and I think it would be fair to say—I am sure the Minister will agree—that it was trying to develop quantitative criteria by which it could judge whether an entity should be CASC-registered. It would not be a judgment on whether something was a sports club; HMRC could say, “It is a sports club because of these quantitative criteria, so we can tick a box. This one clearly passes and that one doesn’t.” One can only imagine that it was trying to remove uncertainty and dialogue, with people arguing, “His club should be if mine is” and vice versa.
At the time of that consultation, there was no mention whatever of state aid being one of the drivers of what HMRC was trying to do. At no point was the reason given that there was concern that some sports clubs might have an issue with state aid, but I say that because recent correspondence with HMRC has given that as the reason for not changing some limits. The consultation ran its course and at the end HMRC decided to impose two quantitative criteria. One was a £100,000 a year maximum on non-member income. As I said, the club had £140,000 non-member income, which put it outside that limit. One reason why the club is outside the limit—this is why the debate is about multi-sports clubs—is that the club runs six sports, so it is a relatively big club. If it were six separate clubs, they would be beneath the limit, but that structure would be onerous to go to and difficult to achieve. The £100,000 limit discriminates against multi-sports clubs.
The other quantitative criterion that HMRC imposed was that 50% of members had to participate actively in a sport. I guess the reason for that is that it wants to ensure that CASCs are real sports clubs and that people are not joining just to enjoy the benefits of the £14,000 a year that the club enjoys. That has caused Warrington an issue, because roughly speaking—it is only an estimate—its non-member income is about £140,000 because it is a multiple sports club. The other point is that because it has a large junior membership—400 of the 750 members are juniors, which I would submit is a good thing—parents will sometimes join the club socially or whatever. Those who have to take their children to the club will have a drink. They may or may not be members. If they are members, they may not do sport 12 times a year, so they would fall outside that criterion. In any event, the criterion appears to be a complex one, with 16 measurements for participation.
The impact on the club is £16,000 a year. I do not suppose that that will close it. It is a material issue, but it will not break it. HMRC tells the club that if it wants to it can set up a trading subsidiary. That would involve accountants and lawyers, and all the rest of it. Obviously, the bar income would go into the trading subsidiary. The estimated cost would be several thousand pounds, and the trading subsidiary would pay corporation tax. Perhaps that is what the Revenue wants, but it is quite onerous, and it is unclear what the saving would be. The other possibility would be to split the sports club into six separate sport clubs—one for each sport. There would clearly need to be a method of checking which club people who bought drinks were in, and so on, because of the de minimis limit. The consequence would probably be something like a 20% increase in membership fees—£25 a year. Presumably, because everything in economics happens at the margin, that would cause a reduction in participation, which is not really what the Government want.
The club put a request to HMRC. It said, “Okay, we kind of understand the direction of what you are trying to do. We understand the abuse that you are trying to tighten up on, and the clarity that you want. Let’s change the £100,000 de minimis thing, given that this is a multi-sports club, to £150,000.” Obviously there is self-interest there, because the Warrington club would be under that, and would save £14,000. We got the answer from HMRC that—I paraphrase—it would be happy to help, but its hands are tied by state aid rules. That is the first mention we have had of state aid rules, and no one would think that Warrington sports club was the first entity to create a state aid issue for the Government—a Government, by the way, while we are on the subject of state aid, who have difficulty in stopping the German Government reducing electricity prices for their heavy industry by a factor of two, so that their steel companies do not close while ours do. Nevertheless, Warrington sports club was informed that HMRC could not help and that £100,000 was the highest the figure could be, because of state aid rules.
I have good news for the Minister, however, because in the past few days I have read the Department for Business, Innovation and Skills state aid manual, which came out in July 2015. It is a rattling good yarn, and explains that there is a de minimis limit on state aid of €200,000 over a three-year period. In the view of BIS that would not distort competition in the European market. We thought we were home and dry, because obviously the £14,000 or €20,000 that Warrington sports club and other sports clubs enjoy is clearly a factor of three or four below that state aid amount. It would appear to me from the BIS manual that we have found a way out for HMRC. It will no longer have to be concerned about being dragged through the European Court on matters of state aid and the rest, because of the de minimis limit and its impact on Warrington sports club. I am informing HMRC of that point in this debate, and I look forward to the Minister’s response.
I have five questions for the Minister. Why does the correspondence that we have received from HMRC—most recently the Lin Homer letter of November 2015—rest its case on state aid, when state aid was not mentioned at all in the initial consultation? Given that we now have the BIS state aid manual and know that there are minimum state aid thresholds, can we incorporate what we know into HMRC policy? Presumably the handbook applies to HMRC. In the opinion of the Minister, have the changes to the entire area that have taken place in the past three years, which will raise very small amounts of tax, if any, increased or decreased complexity? Does the Minister have an estimate of the number of clubs that are deregistering, and has there been any discussion with DCMS of the decline in sports participation that will be a consequence of that? Does he agree with me that instead of engaging in a drive to find a quantitative criterion for evaluating clubs it should have been possible, given all the value judgments that HMRC inspectors must make, to tell whether x or y is a sports club? That would not be beyond HMRC; it is something that could have been left to the judgment of tax officers.
The Exchequer Secretary to the Treasury (Damian Hinds)
It is a pleasure to see you in the Chair, Mr Bone, and to have the opportunity to respond to my hon. Friend the Member for Warrington South (David Mowat) in this important debate. I commend and congratulate him on bringing it to Westminster Hall.
Successive Governments have recognised the benefits of sporting activity in improving people’s health and wellbeing, and in strengthening community cohesion. I welcome the opportunity to express the Government’s continued support for community amateur sports clubs, which, among other things, play an important part in consolidating our Olympic legacy, as my hon. Friend mentioned. It is right that the Government should use the tax system, as well as other forms of support, to encourage the benefits offered by those clubs.
There are about 7,115 community amateur sports clubs, and they certainly deserve the Government’s backing. The new regulations for CASCs continue to ensure that support through the tax system is correctly targeted at them. The community amateur sports club tax scheme provides a number of vital charitable tax reliefs to support local amateur sports clubs. Following a detailed review by HMRC of how the scheme was operating under the old rules, which showed that they were confusing and difficult to understand, the new CASC regulations came into effect on 1 April 2015. They included, as my hon. Friend said, a new income ceiling of £100,000 for non-member income.
Extensive consultation took place before the new rules were formulated. The Government formally consulted on outline proposals for reform of the scheme in June 2013 and published their response that November. Between November 2013 and September 2014 officials were engaged in regular and intensive dialogue with representative bodies individually, as well as establishing a forum for representatives of the sports sector.
The forum has a membership drawn from several sports’ national governing bodies and representative organisations. It met regularly during development of the new policy and the drafting of the new regulations. Particular issues of interest to members were aired at the forum and more detailed working group meetings ensured that HMRC understood specific issues for different sports as it developed the rules. As a result, changes were put in place to address the genuine concerns of some members of the forum, and the draft regulations were amended to increase the generosity of the social membership rule. Throughout the consultation process HMRC worked closely with officials from the Department for Culture, Media and Sport and its agency, Sport England.
The new regulations have made the scheme more generous than it was, which makes membership more attractive. However, the scheme works by providing tax advantages only to those that need them, and it is of course important that taxpayers’ money should be spent wisely. To take an extreme contrast as an example, clearly a youth football club with a tuck shop should get the tax advantages, but a pub with a darts team should not. That said, the new rules were developed to enable as many clubs as possible to remain within the scheme. Eighty-five per cent of existing CASCs are not affected by the new rules, as they operate fully within both the old and new rules.
It is worth noting that HMRC has not received evidence that the rules significantly increased the administrative costs for clubs within the scheme. However, some clubs inevitably are disappointed that the rules are not more generous. HMRC has continued to give help and guidance to clubs to help them remain within the scheme, and the dedicated HMRC charities helpline remains available to CASCs. If my hon. Friend or the club in his constituency wish to have a further conversation, they can do so by calling the helpline on 0300 123 1073. I would also be happy to arrange for either him or representatives of Warrington sports club to meet with officials to discuss the situation.
Some clubs may decide that complying with the new regulations is not financially viable and decide to leave the scheme instead. While we will not know the numbers involved accurately until after the 12-month grace period expires on 1 April 2016, we know that clubs are applying for CASC status at approximately the same rate as in 2014-15, before the rules changed.
The main purpose of a CASC must be the promotion of sport by providing facilities for the whole community. Clubs that generate a disproportionate amount of their revenue from non-sporting activities may be primarily social or commercial clubs. If a club’s main purpose is not sporting, it is obviously not eligible to be a CASC. It is important that the generous tax reliefs available only go to genuine amateur sports clubs. The Government recognise that many sports clubs raise funds from social functions and other non-sporting activities to subsidise membership fees and consider that the £100,000 income threshold provides sufficient flexibility to do that.
The consultation document was clear that the tax reliefs afforded to CASCs are not meant to support clubs that could be seen as competing with other commercial businesses such as pubs and restaurants, as my hon. Friend said. A higher limit could increase the risk of a state aid challenge because clubs could be seen to be engaging in economic activity. I must make it clear that in the event of a successful state aid challenge, HMRC would have no alternative but to seek to recover what would then be deemed underpaid tax from each club—a situation that all of us would want to avoid. The stakes when considering any potential state aid challenge case are therefore really quite high.
When considering the state aid threshold of €200,000 over three years—my hon. Friend was right to raise this important point—the relevant rules require all forms of potential state aid provided to be taken into consideration. As well as the tax reliefs provided by the CASC regime, CASCs also benefit from lower business rates and may in addition receive grants or other forms of financial assistance. The amounts in question will vary from club to club. The income limit is set at a level that seeks to ensure the de minimis limits will not be breached once business rates and any other form of financial assistance are taken into consideration.
I reiterate that the main purpose of a CASC must continue to be the provision of facilities for an eligible sport or sports, and the encouragement of participation in those sports. If a club has a lot of non-sporting income, it is unlikely to be primarily a sports club. The new CASC regulations allow clubs to earn up to £100,000 a year from non-member trading and property income. There is no limit at all on the amount of income clubs can generate from members, apart from property income from members, which also counts towards the £100,000 cap.
During consultation, representations were made for a more flexible approach and perhaps a more bespoke income limit. However, that would greatly increase the complexity of the regime and regulations. Different rules for different sports or sizes of club would increase the administration for both clubs and HMRC, and that approach was rejected on these grounds.
If clubs that are already registered as CASCs have high levels of non-member trading income and/or property income and do not want to be deregistered, they may choose, as my hon. Friend said, to consider setting up a trading subsidiary in the same way as many charities have trading subsidiaries. This is important: any income generated by a trading subsidiary will not count towards the club’s income threshold.
Trading subsidiaries should be owned and controlled by the CASC, allowing the subsidiary to trade but not be entitled to CASC reliefs. However, the trading company may gift-aid its otherwise taxable profits to the CASC and not pay corporation tax. Similarly, separate supporters’ clubs may be set up to assist clubs with high levels of junior membership—another important point that my hon. Friend raised—in meeting new rules for participation levels where it is a requirement that a non-sporting parent or guardian is also a member.
HMRC cannot register clubs that do not meet the income condition. It expects all clubs affected to take steps to reduce their level of non-member trading and property income, and in many cases that will be by setting up a trading subsidiary. The new income condition provides a sound regulatory foundation for the CASC scheme going forward that is fair and in keeping with one of the founding principles of the scheme: to support small volunteer-run community amateur sports clubs.
David Mowat
I listened carefully to the Minister’s point on state aid. The fact that the de minimis limit applies to all forms of aid is, of course, reasonable. I make the point again, though, that my local club—I do not believe there is any reason to think Warrington sports club is atypical—would be under the current de minimis state aid limit by a factor of four or five. It is hard to see that the figure of £100,000 is, in fact, responsive to that de minimis state aid limit.
Damian Hinds
To reiterate, the de minimis limit is €200,000, which applies over three years.
Damian Hinds
To actual aid, in all its forms. Officials had to, appropriately, make a judgment in designing a scheme that would apply across the sector on the safe level of non-member income, as a generally applicable rule that would keep clubs safely under that limit. The figure they arrived at for the limit was £100,000. In the particular case of my hon. Friend’s local club, which he rightly and ably represents today in Westminster Hall, I would be happy to arrange for further discussions on appropriate avenues forwards.
The vast majority of clubs currently in the scheme have been unaffected by the new income condition, and detailed guidance is available to them and to those considering joining the scheme in the future. That means the tax reliefs available under the CASC scheme continue to be a vital element in supporting small clubs within the scheme to deliver the benefits of participating in sport.
The new non-member income threshold continues to encourage and support community sports clubs. The Government believe the cap is set at an already generous level and strikes the correct balance between the interests of the CASCs to raise extra funds and the interests of local businesses. The scheme should not provide tax reliefs to clubs that derive significant amounts of income from non-member social and commercial activities, as that was not what it was designed for. I close by thanking my hon. Friend once again and commending him for bringing this important debate to the House.
Question put and agreed to.
Work Capability Assessments
(8 years, 9 months ago)
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Louise Haigh (Sheffield, Heeley) (Lab)
I beg to move,
That this House has considered work capability assessments.
It is a great pleasure to serve under your chairmanship, Mrs Moon, and to lead this debate, because it is one that we have been having in the House for many years and it has enormous repercussions for the people we are here to represent.
The debate comes at an important time. The amount of money that the Government spend on outsourcing has never been higher, but public trust in outsourced companies has never been lower. Only 22% of people believe that they are motivated by providing the best service to the public, and is it any wonder, with stories every week of high-profile failures, corruption, mistreatment, the falsifying of information and a premium being put on profit ahead of people? There is a sense from the public that this shadow state, providing the services that the public rely on, is acting with ever increasing impunity.
In the course of the last Parliament, as outsourcing grew, the public’s control over our own public services shrank and evidence of malpractice, mistreatment and utter contempt for those coming into contact with the services provided by such companies grew, private sector providers became the ogres for their appalling behaviour. However, we should not forget that it resulted from what were first and foremost political choices, the unpalatable consequences of which were contracted out and covered in the veil of secrecy that commercial confidentiality rules permit. Although it was Atos and is now Maximus that has carried out the Government’s massive expansion of work capability assessments, the choices made in the Treasury and in Downing Street, well before responsibility was contracted out, were the basis for where we are today—failing contractors acting with impunity, and the sick and disabled paying the price for the Government’s flawed agenda.
Hon. Members on both sides of the House agree that if people can work, they should—that is not a contentious statement—and that work is beneficial for many people suffering from illness, be it physical or mental. I have friends and family who have fallen in and out of depression and for whom work has been a lifeline. It gives people a routine and a purpose—a reason to get out of bed in the morning. I have been unemployed for stretches of time myself and have experienced how closely linked unemployment and depression can be for many. Helping people to get into work is therefore a laudable and necessary objective of any Government, but some things are not compatible with helping people with physical illness, disabilities or mental health problems to get into appropriate work. I am referring to targets, profit-driven motives and a focus above all on cutting expenditure. When one side is trying to cut costs and another is employed to maximise profit, something has to give, and unforgivably that has been the sick, the disabled and anyone who comes into contact with this failing and occasionally brutal system.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
I thank my hon. Friend for securing the debate. Is there not also an issue about the significant waste of taxpayers’ money in the Government failing to address the fundamental flaws in the system, which lead to an over-reliance on appeals and reconsiderations and the Department for Work and Pensions having to prop up a private company that is failing to deal with assessments appropriately the first time?
Louise Haigh
I could not agree more, and I will come on to that issue.
This is about providing not just a good-quality service for clients, but best value for money for the taxpayer. As I said, when one side is trying to cut costs and another is employed to maximise profit, something has to give. As report after report has identified, the contractors that the Government have employed to carry out cuts have been anything but successful. They have presided over failure after failure. There has been poor performance, a disregard for vulnerable people and, in this new age of outsourcing, a total lack of accountability for Government and operator alike.
Mr Jim Cunningham (Coventry South) (Lab)
I congratulate my hon. Friend on securing this timely debate. The cost to the taxpayer is some £80 million this year, up by £24 million on last year. Does she agree that these private companies are taking the taxpayer for a ride?
Louise Haigh
Again, I completely agree with my hon. Friend, and I thank him for that intervention. The contractors continue to get paid despite repeated failures. Even worse, after being deemed unfit to perform in relation to one contract, contractors simply get to continue with another lucrative long-term deal, as Atos has done. After failing to handle the work capability assessments contract, it is still running a seven-year contract for personal independence payment assessments for the same Department. Now Maximus is failing to meet a range of key targets—targets that, importantly, put far greater emphasis on saving money than on meeting the needs of people who unjustifiably suffer. Whatever the rhetoric about service quality, this is still a system designed to cut costs for the Government and maximise profit for Maximus.
We have undoubtedly all read last month’s report by the National Audit Office, but some of the figures deserve to be rehearsed. Despite the new contract—which followed Atos’s spectacular failure—being worth some £570 million a year, there is still a backlog of 280,000 employment and support allowance claims. The average cost of each individual assessment is now almost £200, and that is for a 15-minute assessment. One in 10 disability benefit claimants’ reports are rejected as below standard by the Government, compared with one in 25 when the shamed Atos was running the show.
Individuals have to wait an average of 23 weeks for a decision to be made on their benefits; there has been a huge rise in that timescale—almost a trebling—in recent years. For each person, that can and almost always does mean hardship, but the number being referred keeps rocketing as the Government, desperate to clear the books at any cost, lay the bill for clearing the deficit squarely at the door of the sick and disabled. The Government are forcing away from ESA people who need and rely on it, and the failing contractors are being overwhelmed. Despite all that undeniable pain, unbelievably, the Department is not expected to meet the initial £5.4 billion savings target originally envisaged for the 10 years to 2019-20.
Neil Coyle
I thank my hon. Friend for generously giving way again. Does she agree that the failure at ministerial level to get a grip on the backlog, the rising costs and the incompetence in the Department for Work and Pensions has led to the Treasury’s demand to take even more money from disabled people on employment and support allowance, which is why the Government are seeking to cut £30 a week from half a million of the most disadvantaged people in the country?
Louise Haigh
Again, my hon. Friend has neatly anticipated my next point, which is that the Office for Budget Responsibility has identified ESA and PIP as a major risk to planned public spending targets, given the uncertainty of the estimates. The NAO has gone so far as to say that PIP and disability living allowance performance issues have been the main contributing factor in the Department’s inability to save any money in the spending review period up to 2015.
It is clear that both the Government and contractors are failing on their own terms, yet still the cash is handed over to failing contractors. We are locked into long contracts whereby Departments do not have the capability to improve performance. The original policy itself is flawed, but it is in the treatment of individuals unlucky enough to come into contact with the system that the whole rotten trade-off between cost cutting by the Government and profit maximisation by Maximus is most apparent. Specific cases abound, and I am sure that hon. Members on both sides of the House would be able to relay evidence of deeply concerning practice, which is why it is interesting to note that not a single Government Back Bencher is in the Chamber today. I will list a few from my case load.
One man with learning difficulties whose case was highlighted to me attended his work capability assessment, but during the assessment his support worker was shocked at the lack of care and attention given to him. When the assessment came through, there were some glaring factual errors, but none the less his ESA was docked, just in case he was in any doubt about what comes first—the person or the profit. On making his request for mandatory reconsideration, he was appalled to find out that he would be ineligible for ESA, which was his lifeline, until the reconsideration decision was made, and he was unable to meet the conditions placed on him for jobseeker’s allowance. He now faces months of waiting until his tribunal, and potentially an annual battle if assessors continue to lack understanding of his learning difficulty.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Whatever my hon. Friend’s views about the contractors, does she agree that it is the Government’s responsibility to secure contractors whose assessors have sufficient knowledge of progressive conditions such as muscular dystrophy and sufficient awareness and training in areas such as learning disabilities? The contractors are not primarily responsible for that; is it not the Government’s responsibility?
Louise Haigh
Of course, I completely agree. The Government’s policy sets the direction for the contractors, which is why the contractors have such a huge gap in their understanding, particularly of mental health issues.
In another case, one of my constituents applied for a home visit after being unable to make their assessment. She has now been waiting for more than two years and still has not received a date. Throughout that time, she has been surviving on a reduced rate and is struggling, as anyone would, to get by. She is just one of 280,000 people in an enormous backlog.
Despite the fact that the Government have made it notably harder for people to appeal their decisions, as my hon. Friend the Member for Bermondsey and Old Southwark (Neil Coyle) mentioned, the latest figures show that 54% of appeals result in decisions being overturned. As in the case of the first constituent I mentioned, there seems to be an alarming trend of cases being rejected based on factual errors or even—I hesitate to say this—falsification. I have had several cases of people telling me that their assessment report bears absolutely no relation to the assessment that they experienced with Maximus or Atos. I am sure that other hon. Members have heard similar evidence. One or two cases could be dismissed as an honest mistake, but the situation appears to reveal a disconcerting pattern of behaviour that indicates that the trade-off between cost cutting and profit maximisation is being felt by very vulnerable people.
Maximus is not doing this to make a loss or out of the kindness of its heart, and it is failing on performance, which goes to the heart of the issue. Even if the Government were more concerned with the interests and wellbeing of the user, it would be extremely difficult for them to hold the contractors’ feet to the fire.
Mr Jim Cunningham
It is good of my hon. Friend to give way to colleagues. Does the situation not demonstrate that the Government’s intention—Governments do give contractors instructions, by the way—is to cut people’s benefits, and to make the system more difficult, through the contractors, so that it is harder for people to get those benefits? If anybody wants any evidence of that, it took the House of Lords to stop a £30 cut in people’s benefits a couple of weeks ago.
Louise Haigh
Absolutely. Clearly, there is an attempt by the Government to drive down benefits for people who are sick and disabled, and they are using private companies to outsource that responsibility.
Even if the Government were interested in ensuring that the contractors were doing the best for sick and vulnerable people, it would be very difficult for them to be able to do so. They need to be able to trust the data that the contractor supplies if they are to hold its feet to the fire. In a 2014 report, the NAO pulled the Government up on the poor management of contracts, the level of inexperience within Departments, their naivety and their “over-reliance” on data supplied by contractors in the management of performance.
Although some much-needed changes have been made since the calamitous Atos contract and that 2014 report, old habits die hard and inexperience in managing contracts remains a major issue for the Department. Although we know that contractors are performing poorly against a range of measures, because of the helpful insight we get from the NAO once in a while, assessment across the full range is not always forthcoming.
Across a range of vital measures, it is up to us to trust that the Department is doing the job and that Maximus is supplying the right information. They include the number of face-to-face complaints following an interview; the number of serious complaints; the percentage of face-to-face consultations without complaints, which is supposed to be at 99.5%; and the target of 100% payment of travel expenses within nine working days. Those targets are all noble and sensible, but there is no regular method for publishing whether they are met. That is why we talk about a democratic deficit in outsourced public services, the costs of which have rocketed since 2010 to almost £120 billion, covering vast swathes of services that we all rely on.
What exactly is the point in setting targets if the public cannot see whether they are being achieved? A supplier could manipulate the data, and we would have to rely on an overstretched Department to pick it up. Let us not pretend that that would be unusual or unprecedented. In 2007, Maximus was fined $30.5 million over accusations that it had cheated Medicaid in the United States by making tens of thousands of false claims on a payment by results contract. Maximus effectively stole money from US taxpayers by making claims for children who had not received care. After that was exposed, Maximus said it would not sign any more contingency-based contracts where it was paid from savings in state expenditure, but the contract we are discussing is just such a contingency-based payment by results contract.
In 2007, Maximus was sued by the state of Connecticut for the abject failure of its computer system, which was supposed to run a police database, including real-time police record checks. The state’s attorney general said:
“Maximus minimized quality—squandering millions of taxpayer dollars and shortchanging law enforcement agencies.”
He said that the database could
“make a life and death difference to police and other law enforcers”,
so the failure was unacceptable. In 2012, Maximus settled the case for $2.5 million. While the US sues companies such as Maximus, which spectacularly fail to deliver the contracts they are required to, we continue to hand over billions of pounds of taxpayers’ money.
We have an original policy based on a flawed and myopic view of the sick and disabled, and handed down by the Government to catch contractors that are undeniably failing. Meanwhile, the public’s right to know what is going on is limited by commercial confidentiality. We will all be forgiven for not wanting simply to trust that all is well when our constituents tell a different story and when well documented scandals seem to play on a loop.
Will the Minister commit to publishing regular updates to Parliament on Maximus’s performance against its targets? Will she release the latest spending on WCA appeals, given that the figures in the public domain date back to 2012, and when the contract comes up for renewal in three years’ time, will she release a cost-benefit analysis of bringing the service back in-house? Finally, will she confirm what steps are being taken to bolster the experience of civil servants in her Department overseeing contracts of this magnitude, to ensure that they are delivering the best possible service to vulnerable people and the best possible value for money to the taxpayer?
The fundamental problem is that regardless of which hapless and dubious provider is dragged in, and regardless of the operating system and oversight of the WCA, the need of extremely vulnerable individuals simply cannot come in third place behind a need to cut costs and maximise profit. Is not the lesson of this whole sorry episode and the episode before it that profit has no place in assessing need?
Corri Wilson (Ayr, Carrick and Cumnock) (SNP)
The WCA was introduced to assess an individual’s eligibility for ESA. The assessments have three outcomes, which determine whether claimants are in the support group, or the work-related activity group, or are fit for work. Claimants who wish to dispute the decision must go through a mandatory reconsideration before they can appeal. They have one month after a decision to request that and an additional month to supply supplementary evidence. ESA is not payable during that period, but may be backdated. Unbelievably, there is currently no statutory time limit for the Department for Work and Pensions to complete the process. Since March 2011, 35% of claimants went into the WRAG, 46% went into the support group and 19% were declared fit for work. The percentage of people placed in the first two groups has increased month on month from 75% in March 2011 to 96% in March 2015.
Panic, fear, distress, dread and anxiety are just some of the words people use to describe their experience of the benefits system while dealing with health concerns. For example, people with cancer—those who are terminally ill, those receiving treatment for cancer by way of chemotherapy or radiotherapy, and those recovering from treatment—will automatically be treated as having a limited capability for work or work-related activity. In some ways that is beneficial. However, according to Macmillan Cancer Support, by 2020 one in two people will get cancer in their lifetime but almost four in 10 will not die from it. That is clearly good news, but at least one in four of those living with cancer—around 500,000 people in the UK—face poor health or disability after treatment, with a significant proportion experiencing a wide range of distressing long-term problems, both physically and mentally. Many problems can persist for up to 10 years after treatment and can be significantly worse than those experienced by people without cancer.
Many healthcare professionals underestimate the long-term consequences of cancer and its treatment, and that low profile means that some of those affected are reluctant to report those consequences, particularly if they feel grateful to be free of cancer in the first place. It is good that we are curing people of cancer, but we have to recognise that not dying is not the same as being well. The impact of cancer and its treatment affects much more than just health and wellbeing. The physical and emotional effects of cancer and its treatment are the two most common reasons for employees who are diagnosed to give up work or change jobs. Almost half of those who do so say that it was because they were not physically able to return to the same role and one in three said that they did not feel emotionally strong enough. Having come out the other end of cancer treatment, the last thing they need is the stress of jumping through hoops to see whether they are entitled to benefits. The time after treatment is crucial for future health. It is a time when space is needed to process what has happened to them and a period when they need to concentrate on themselves and take time to heal and get stronger.
The issue with the work capability assessment is that there is no flexibility. It does not take people’s individual circumstances into account. It is not possible for people in the DWP to understand each and every health condition and its impact, and those who are contracted to do so seem very quick to overturn the diagnoses of GPs and health professionals. Sadly, everyone is expected to fit into the same box. Clearly, life is not so black and white, and cancer survivors and those with other health conditions want, more than anything, to have a normal life, but the opposite will happen if the benefits system continues to cause undue stress and hardship.
Although I have spoken about only one client group, there are many others in similar positions, and we can no longer ignore the damage that the system is doing. I ask the Government to re-examine the processes and to consider a better way of supporting people with health issues back into the workplace.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) on securing this important debate.
Work capability assessments are one of the issues most commonly raised with me, and I am sure with many other Members on both sides of the House. The system is flawed and discredited, and it has caused undue stress and hardship for too many claimants. Recent academic research estimates that for every 10,000 assessments carried out between 2010 and 2013 there have been six suicides, which is truly shocking. That alone requires the Government to undertake a complete review of the current system.
Rosie Cooper (West Lancashire) (Lab)
Does my hon. Friend agree that cases such as that of one of my constituents, who is disabled and does not drive and who has had to attend centres four times, only to be told that the assessment would not go ahead, exemplifies the administrative and financial shambles of the current work capability assessment scheme?
Gerald Jones
My hon. Friend illustrates a valid point that is replicated across the country.
I am sure that hon. Members are as concerned as I am when they hear that, according to the DWP’s own figures, around 50% of assessments are overturned on appeal. That surely calls into question the reliability of the initial assessments and raises the question why we are putting people through such unnecessary stress, which has undoubtedly had a negative impact on the mental health of many claimants.
I am also concerned that the work capability assessments do not seem to take account of individuals who have a limiting long-term illness that means their condition often fluctuates, such as kidney dialysis patients or people with Parkinson’s. I visited the kidney dialysis patients support group in Merthyr Tydfil last weekend, and a number of people told me of their concerns about the work capability assessment and the lack of understanding of their condition. Dialysis patients often feel reasonably all right on certain days between dialysis, but on the day following treatment they can feel very low, which means that if they are receiving treatment three days a week, the number of days when they feel okay are few and far between. The Government need to address that lack of understanding.
If the original clauses 13 and 14 of the Welfare Reform and Work Bill are reinserted, financial support for new claimants in the work-related activity group will be cut by around 25% from £102 to £73, which will have a drastic impact on disabled people. The Government have said that they are committed to protecting support for disabled people, so the clauses are deeply worrying. The cut will not incentivise people, as the Government say they want.
Neil Coyle
Could the Government’s proposed cut to half a million people, including people with learning disabilities or cancer, have the perverse incentive that those people will then try to go into the support group when there is already a 280,000 backlog due to the Government’s incompetence in handling that contract?
Gerald Jones
I agree, and it shows how ill thought out the Government’s proposals are.
Mark Durkan (Foyle) (SDLP)
On the Government’s justification for the measures in the Welfare Reform and Work Bill to cut the work-related activity group rate by £30 a week, the Government have said that that is to remove the financial disincentives that could otherwise discourage claimants from taking steps back to work. They have not produced any evidence for that disincentive in practice. Why does my hon. Friend think the Government are addressing a problem that is not there and ignoring the problems that are there and that hon. Members have raised over and again?
Gerald Jones
I will try to address my hon. Friend’s points later in my contribution.
I am concerned about the impact of the assessments on people with mental health problems. If the original clauses 13 and 14 are reinserted, the significant cut may mean that people with mental health problems become more unwell. They will be unable to spend money on support and activities that help them recover—things that the personal independence payment does not support—which will affect their ability to move closer to work. Rather than increasing the number of people in work, the change could hinder recovery and push people further away from work. The cut has been opposed in the other place, and I hope that the Government will listen and scrap the clauses.
The current work capability assessment is not fit for purpose. It has lost credibility, and an overhaul is desperately needed. The views and experiences of ill and disabled people must be at the heart of the process. We need a compassionate and effective system that supports people, not one that causes such misery for so many ill and disabled people in our country.
We in the Labour party feel that disabled people should be able to play a central role in monitoring the work capability assessment system and helping to ensure that it is managed with dignity and fairness. There have been concerns about the assessment over a long period, which has resulted in the DWP changing its contractor from Atos to Maximus, which I understand will be paid substantially more than Atos to carry out the contract. I fully support the calls from my hon. Friend the Member for Sheffield, Heeley to the Minister to make public the performance of the contractor, which will improve awareness of the situation.
The Government are trying to defend the indefensible. I hope that the Minister will signal today that she is willing to consider what action she and the Government can take to review this appalling situation and bring about some common sense and, above all, compassion.
Patricia Gibson (North Ayrshire and Arran) (SNP)
We know that today’s debate is important because, in my constituency of North Ayrshire and Arran and in constituencies across the entire UK, some of our most vulnerable people—those with long-term and quite debilitating health conditions—are relying on us to be their voice. People who have undergone the work capability assessment tell us that they find the entire process at best demeaning, and at worst intimidating. It is a cause of deep distress, which is particularly alarming when one considers that some claimants live with challenging health and mental health conditions and find going through such assessments almost more than they can bear. The assessments can exacerbate or even precipitate mental health problems.
New research from the universities of Liverpool and Oxford has found that in areas where more people are assessed for employment and support allowance there is a greater increase in mental health conditions, prescriptions for antidepressants and even the number of suicides. The research estimates that that may have led to 590 additional suicides. The research is robust and suggests a correlation between mental health problems and the roll-out of work capability assessments. The result of the research is sobering for us all.
As my hon. Friend the Member for Ayr, Carrick and Cumnock (Corri Wilson) has said, why are there such strict limits for claimants when there is no time limit for the DWP to complete the mandatory reconsideration process? As has been said, we know that an individual’s condition may fluctuate, which means that symptoms can rapidly decline and abate over the course of a week, a month or even a single day. What about folk with a condition such as Parkinson’s? What if they are assessed on a good day? The assessor would be unable accurately to evaluate the condition’s impact on the person’s functional ability. Work capability assessments also focus on a person’s typical day. Their best and worst days are therefore averaged out, which can create a totally misleading impression of their condition. A snapshot of a person’s health is not a true and accurate view of the profound and often difficult challenges they face.
Work capability assessments do not take account of whether a condition is progressive. That is a significant oversight and leads systematically to incorrect assessment decisions about people with Parkinson’s.
Steve McCabe
The hon. Lady has mentioned progressive conditions and delays that sometimes happen with mandatory reconsiderations. Can she think of any logical reason for the Government’s refusal to give statistics on the outcome of mandatory reconsiderations? Is there any obvious explanation for the withholding of that information?
Patricia Gibson
I am afraid the only possible reason I can think of for that is that the information does not present the work capability assessments in a flattering light. I leave others to draw their own conclusions about how bad it might be.
The worst thing about the system is that those caught up in the controversy and confusion are people with long-term health conditions, and some of the most vulnerable people in our communities. There is a lot of consensus in the Chamber about the need for an urgent review of the work capability assessment. As the hon. Member for Sheffield, Heeley (Louise Haigh) pointed out, the cost is increasing, and it is expected that £595 million will be paid for 3.4 million assessments—about £190 per assessment. There has also been a problem with the recruitment of enough medical professionals to meet the demands of the assessments. At least £76 million of taxpayers’ money has been wasted through the failure to get a new IT system up and running more than two years after it was supposed to be in place. As has been mentioned, the National Audit Office report, which was released only last month, revealed that
“recent performance shows the Department has not tackled—and may even have exacerbated—some of these problems when setting up recent contracts”.
Neil Coyle
The points about rising costs and the backlog are well made. Perhaps we can help the Minister by asking her to consider removing some of the routine retests for those with progressive conditions and conditions that will not change. We have all had the excellent briefings from Parkinson’s UK and Mencap, for example. Perhaps the Minister should look again at the frequency of testing for some people, to save the taxpayer money and save some of the stress and anxiety that the hon. Lady has mentioned.
Patricia Gibson
That is an excellent, well made point and I thank the hon. Gentleman.
There is also a problem with transparency. In December, the Work and Pensions Committee concluded that it was unable to scrutinise benefit delays fully because of lack of available data. Its report said that
“if the DWP has this data, they should publish them. If they do not, then they are making policy decisions in the dark. The Department should address the lack of data immediately.”
Chillingly, in answer to parliamentary questions about the connection between assessment tests and the incidence of suicide or mental health problems in disability claimants, the Department has admitted that it neither holds such information nor has any plans to collect it. I think that is significant. There has also been an admission that it does not have information on how much, on average, it costs the Department to fund an appeal against a fit for work decision. It is clear—and becoming increasingly clear to claimants—that the system is in a mess. There is clear capacity shortage; there are also wildly optimistic targets, a lack of transparency and problems with hiring and training staff—within the context of dealing with individuals with long-term and serious health problems who are simply trying to access the support they need to survive. The National Audit Office has concluded that this system has
“significant financial and human costs”.
The current situation is cruel, inhumane and demeaning; as has repeatedly been pointed out in the debate, the system is not fit for purpose. I sincerely hope that the Minister will respond to the debate in a positive way and consider the significant financial and human costs to those who need, rather than bureaucracy and judgment, our support and compassion. The debate is about much more than simple work capability assessments. Ultimately, it is about the kind of society we want to create, and the society we aspire to be.
Natalie McGarry (Glasgow East) (Ind)
It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate the hon. Member for Sheffield, Heeley (Louise Haigh) on securing an important debate, in which I am pleased to speak.
An essential part of any social security system that supports people with disabilities and long-term sickness is a fair and effective means of identifying who needs support, and in what way. The current system of work capability assessment cannot be said to fit that description. Indeed, it was clear from the initial roll-out under previous Governments that there were deep flaws in the system. Early on, horror stories began to emerge of the extremely difficult and distressing experiences of people with serious disabilities and mental health conditions. Atos, the company in charge of the assessment process until March 2015, became a word firmly associated with the uncaring inhumanity of the welfare reform agenda.
We can all recount stories of the effects on our constituents. One such constituent of mine has a serious long-term mental health condition, and resulting medicine-related physical disabilities. She was forced to go to Edinburgh from Glasgow, unaccompanied, for an assessment; she was in a panic. She was found fit for work, despite significant medical evidence of extended stays in mental health hospitals, and long-term conditions with an impact on her health and physical wellbeing.
We are all aware of high-profile cases such as those of Michael O’Sullivan and Stephen Carre, who were demonstrably failed by a system that provided nothing but an extremely distressing experience, rather than targeting the help that they needed. Coroners have ruled in those cases that the men’s ordeals, through the fitness to work test, centrally contributed to their suicides. Distressingly, in the case of Stephen Carre, the coroner sent an official legal warning to the Department for Work and Pensions of a potential risk of further deaths from its WCA practices. He urged that there should be an urgent review of the policy not to seek further medical evidence from a psychiatrist or GP in the case of claimants with a mental health condition. That letter was not passed on to the Harrington review, conducted in 2010. It appears that the coroner never received a response to his letter, despite the legal requirement for that to happen within 56 days. I think he is still waiting for a response.
In that case, as in others, the Government have failed demonstrably. They have failed disabled people and have abjectly failed to learn the lessons from their mistakes. The consequences of that are potentially disastrous. How many people could we tally who have lost their lives subsequent to those cases in which professionals such as coroners gave early warnings? With further revelations emerging of adverse effects on the lives of people who undergo the work capability assessment process, the system clearly remains unfit for purpose. People with long-term sickness and disability still have a hugely distressing experience, in a system they do not trust. Those with mental health conditions such as Stephen Carre have been failed particularly by a process that too often has seemed to persecute claimants instead of protecting and supporting them. The UK Government are systematically limiting, restricting and undermining provision for disabled people in the social security system as, yet again, austerity attacks those who need support the most. As the Government attempt to take another axe to employment and support allowance, they are actively making it even more difficult and distressing for disabled people to obtain the support they need.
We need to take a more holistic look at support for disabled people—at how to help those who want work and can do it to get into meaningful and accessible employment, and at how to support those who are unable to do that, and ensure that they have a decent quality of life. That means creating appropriate and sustainable new opportunities, and ensuring that financial support keeps disabled people out of poverty. Crucially, it also means having an assessment system that treats people fairly, preserves their dignity and does not make matters worse. That requires fundamentally rethinking the system, particularly how it interacts with more vulnerable people and those with mental health issues.
I understand that the Minister has come here in good faith and will argue that progress has been made, and I am sure her intentions are good, but the Government’s record of failing to learn the lessons from their mistakes has made it absolutely clear that we need an urgent and wide-reaching review of the work capability assessment process as part of a wider review of Government support for disabled people. The Government have simply got it wrong too many times for people living with long-term sickness or disabilities. It is about time that we started figuring out together how we can get it right.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
It is a pleasure to serve under your chairmanship for what I think is the first time, Mrs Moon. I congratulate the hon. Member for Sheffield, Heeley (Louise Haigh) on securing this debate.
The dysfunctionality of the work capability assessment has been a recurring theme in Parliament for as long as I have been here. It has been a running sore for the Government, so I am glad that in recent months they seem finally to have acknowledged that tinkering with the system will not fix it, and that a fundamentally different approach is required. I look forwarded to the much-heralded White Paper expected this spring, which I hope will tackle some of the problems.
We have heard about a wide range of problems associated with the work capability assessment. If the Government are serious about devising a better system, it is important that we all understand the present shortcomings fully, so that we are not destined simply to reinvent the wheel and create another heartless bureaucracy that fails to provide the safety net of support that people need when they are sick or disabled.
Over the last few years, successive reviews of the work capability assessment have been conducted by Professors Harrington and Litchfield, and various attempts have been made to improve the process, some of which it is fair to say have helped around the edges. However, due to recurrent problems with getting appropriate medical background information on claimants’ conditions, with how claimants are categorised and with the accuracy of the assessments, the impact has been limited. One private sector contractor has left early under something of a cloud, as the hon. Member for Sheffield, Heeley described in some detail, and another company has taken over the contract with a remit for changes, spending more money per assessment and awarding support to a larger proportion of claimants.
However, the underlying problems are still there. The work capability assessment itself remains unfit for work. Many claimants wait an inordinate time for assessment: as we have heard, it takes an average of 23 weeks for a decision, and the current backlog is 280,000 cases. I know that my constituents are still battling the challenges of travelling significant distances from remote and rural locations to assessments. In the past, constituents of mine who have made long and expensive journeys have been sent home unassessed because their appointment was double or even triple-booked. That does not apply only to my area; it echoes a point made by the hon. Member for West Lancashire (Rosie Cooper). Such administrative issues, particularly delays in assessment, cause claimants distress and financial hardship at a time when they may be exceptionally vulnerable and facing severe financial worries due to a sudden and sharp drop in income after a breakdown in their health.
However, the greatest weaknesses of the work capability assessment relate to how it measures the impact of fluctuating and progressive conditions on a person’s fitness for work. Several hon. Members, including the hon. Member for Birmingham, Selly Oak (Steve McCabe), my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) and the hon. Member for Glasgow East (Natalie McGarry), mentioned the situation of people with mental health conditions. My hon. Friend the Member for North Ayrshire and Arran mentioned Parkinson’s UK, which cites examples of assessments conducted by staff who lack the basic clinical knowledge to understand that Parkinson’s is a progressive and incurable condition that will deteriorate over time. I am not a medic, but even I know that. It seems pretty basic to me.
That is why it is crucial that additional evidence from qualified clinicians familiar with the claimant’s health be brought into the assessment process from the start. I pressed Ministers on this issue repeatedly during the previous Parliament, but we now have an opportunity to get it right and ensure that we have the information in the system to make good decisions possible.
Mark Durkan
Does it not strike the hon. Lady that although we often hear from the Government, in relation to many other arguments, that policy and Government decisions must be based on evidence, on this fundamental matter the Government rigged the legislation, so that medical evidence could be ignored in favour of the bizarre assumptions and interpretations that the people who carry out the tests come up with?
Dr Whiteford
As ever, the hon. Gentleman makes an important point clearly. There is no reason why people’s medical history should not be included in the assessments. Often, consultants—sometimes it is a GP, but in cases of serious illness it is more likely to be a consultant—are in a position to provide insight into the longevity of a condition as well as its immediate acute effects.
Neil Coyle
Is the hon. Lady aware that the Government, during the last Parliament, also shortened the timeframe within which individuals can provide independent medical evidence? As it takes longer to see a consultant or specialist, that inevitably means that some people cannot provide that information in time, which contributes to the number of reassessments, the backlog and the cost to the taxpayer.
Dr Whiteford
The hon. Gentleman is absolutely right. The shortening of the timeframe makes it extremely difficult for people to contribute, which is why that opportunity needs to be included right at the start. If people can nominate someone—an advocate, a consultant, a GP or a community nurse—to provide such information as part of the application process, we could get around a lot of those problems.
For people with complex disabilities, people who suffer from more than one condition or people whose condition fluctuates, the tick-box exercise of the work capability assessment fails to capture the impact of their health on their ability to work. Around half of those in receipt of employment and support allowance have a mental health condition, yet the work capability assessment has proved poor at accurately assessing conditions that are not visible, and people with mental health or incapacity issues are not always able to articulate well the effects of their condition.
I pressed hard during the last Parliament for improvements to how mental function champions operate within the assessment process, but there is increasing evidence that as things stand, the work capability assessment causes so much distress and anxiety for some people that it is actively harming their health, pushing them further away from being able to work and—in extreme cases such as the ones mentioned by the hon. Member for Glasgow East—towards harming themselves.
The Royal College of Psychiatrists has expressed serious concerns for some years about the impact of the work capability assessment on the health of people with mental illness, but as evidence of harm grows, the college is becoming more outspoken. As my hon. Friend the Member for North Ayrshire and Arran pointed out, robust research conducted at the universities of Liverpool and Oxford suggests a correlation between mental health problems and the roll-out of work capability assessments. That backs up the findings of voluntary sector service providers such as the Scottish Association for Mental Health, which has extensive experience of people who use its services suffering setbacks in their recovery due to the assessment process.
The bottom line is that too many people are still being wrongly assessed. We know that because of the extraordinary success rate when claimants who have been found fit for work appeal that decision. Between 2010 and 2013, it hovered around the 40% mark; since the introduction of mandatory reconsideration in 2013, it has shot up to around 54%. In other words, more than half of those who appeal are likely to get the original decision overturned. Successful appeals on that scale indicate major underlying flaws in the assessment process, and they cost the Government a lot of needless time and money. More than that, they mean that sick and disabled people are left feeling abandoned and desperate for months without the support that they need. The human cost is enormous, as is the financial cost, as the National Audit Office has pointed out.
We must also remember those who do not appeal but who are nevertheless extremely unwell or seriously disabled. Many people in our constituencies who are destitute or living in extreme poverty are people whose access to ESA has expired, or who have been found fit for work but cannot qualify for jobseeker’s allowance—because they really are not fit for work and cannot comply with the conditions attached to JSA, or because they have tried to comply but have been sanctioned, or because they have disengaged from the system altogether and have simply dropped out of view.
I have no idea how many people fall into that latter category, but I know that I am meeting such people regularly. They live off other family members or friends, some of whom are themselves not wealthy, and they depend on food parcels from church voluntary groups or food banks. Consequently, when the Government consider how they might proceed with a replacement for the WCA, they need to take on board the systemic failures of the current approach and think beyond simplistic functionality.
The first and probably the most valuable thing that the Government could do is to work with disabled people and their representatives from the outset. Throughout the past few years, health and disability organisations have been coming forward with constructive suggestions to improve the existing system, and contributing to the successive reviews. Some of their ideas have been taken on board, at least partially, but the opportunity presented by a new White Paper to get stakeholders around the table and—more significantly—really listen to what they say has never been more important.
I also urge the Government to go back to the work that was done around the evidence-based review of 2012-13 and the alternative assessment that was developed under that process. I know that Ministers were not convinced by that review at the time, but a lot of water has flowed under the bridge since then, a much stronger evidence base has been developed and I think there is a lot of substance in that review, not least in the way that it suggests descriptors that would account for the impact of pain and fatigue on a person with an illness or a long-term condition. That review could really usefully inform a new approach.
Lastly, I urge the Government to learn from international experiences. The UK does not have a disproportionately high number of sick and disabled people compared with the rest of the OECD. Clearly, there are regional variations, even within the UK, with higher numbers of claimants in economically deprived or heavily industrialised areas, where health outcomes and life expectancy are significantly lower than average. On the whole, however, we are grappling with the same challenges as other industrialised countries and on a broadly similar scale.
A number of countries have used what have been called “real world incapacity assessments” that take account of a person’s age, skills and work experience, as well as their health or disability, when assessing their fitness for work and considering what kind of work they might be able to do. This seems just to be common sense and means that someone is assessed as a rounded human being. The same condition with the same severity will affect two people differently in relation to their ability to work, depending on whether their work experience has been in physically demanding manual jobs, whether they sit at a desk or whatever. The Government should explore the models used in other countries to see what is working well.
We all agree with the Government that the social security system needs to support people to move towards work, but it also needs to provide a safety net and a dignified life for those who are not fit for work, and not only those who will never return to work but those with long-term conditions and those who need time to recover from serious illness or injury.
The work capability assessment has failed a lot of sick and disabled people, and it has proved extremely inefficient. What follows must be better, and I hope that the Government’s keenly anticipated White Paper will reflect the concerns that have been raised today.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
May I reiterate what other people have commented—that it is lovely to see you in the Chair today, Mrs Moon? I congratulate my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) not only on securing this debate but on an excellent speech; it really was very informative.
We have already heard a number of Members say that the current work capability assessment, which was introduced under the coalition Government, is failing on a number of counts and needs to be overhauled. I share the view of the hon. Member for Banff and Buchan (Dr Whiteford) that the fact no Government Members have spoken, and the imminent White Paper, suggest that the Government are finally getting it. I really hope that is the case. However, I need to reiterate some of the points that have been made about why the Government need to think again.
The WCA needs a complete overhaul. It is not fit for purpose, and we have heard that it is failing to assess a person’s fitness for work, or work-related activity, accurately or reliably. We have heard the figures about appeals. More than half of people—54%—who appeal against a decision that they are fit to work have the decision overturned. We have also heard about how the costs of the WCA have spiralled out of control, which reflects the woeful performance. Obviously, the National Audit Office report last month was very damning indeed, although I have to say that it came several weeks after it was clear what was going to happen.
Fundamentally, the WCA fails the most important requirement of any Government policy—that it will not knowingly harm citizens. For almost a year now, the Government have obfuscated and tried to evade revealing the toll that the WCA process is having on the people being subjected to it, even after stark warnings from the Select Committee on Work and Pensions. The mounting evidence against the WCA cannot be ignored any longer; hopefully the Government are listening to it.
There have been five independent reviews of the WCA since 2010. The Work and Pensions Committee undertook two of them in the last Parliament; I was pleased to be serving on the Committee when it undertook the review in 2014. The most recent report from that Committee included evidence taken from the reviewers, who warned the Government that in spite of all the reviews that had happened before—Professor Harrington and Dr Litchfield have produced reviews—the process was still flawed. They said that people with progressive and fluctuating conditions, such as Parkinson’s, were particularly likely to fall foul of the process. I will never forget taking evidence from people in Newcastle as part of that Select Committee inquiry in 2014 and hearing their personal testimonies. The evident pain and humiliation that they had experienced as part of the process was quite shocking.
Like other hon. Members we have heard from today, I have had evidence from my own constituents. A man who came to see me had a serious heart condition. In a WCA, he was told by the nurse undertaking it that he was in the process of having a heart attack; that was how stressful the WCA was. He was told to go to hospital, but two weeks later he received a letter telling him that he had been sanctioned because he had left the WCA. There are similar examples up and down the country.
The former chair of the Work and Pensions Committee, Dame Anne Begg, spoke on the issue and said:
“When my constituent, who has lost his job because he has motor neurone disease, scores zero on his WCA and is found fully fit for work, there is something wrong with the system. When that same constituent appears in front of a tribunal and in less than five minutes is awarded 15 points”—
that is the maximum score, which means the person is completely unfit for work—
“there is something wrong”.
I hope that we are seeing a different view from the Government now, but in their response to the Work and Pensions Committee at the end of 2014 they were having none of its report; there was the usual rhetoric. I would be interested to know what the Minister would say today if Dame Anne’s former constituent was standing here in Parliament now.
The Committee said that simply rebranding the WCA by taking on a new provider would not work, and it recommended a complete overhaul of the system. We still believe that that is needed, and such an overhaul is Labour party policy; I have said that consistently since my appointment to the Front Bench. What is required is not just a process to determine eligibility for employment and support allowance but an examination of health-related barriers to work. I agree with the hon. Member for Banff and Buchan that we need to look at the international data. I know that work has already been done to compare different processes, and adopting a more personalised and holistic approach is important. I remember producing such a piece of work before I came to the House, and there are lessons to be learned from elsewhere. However, as I have said, at the time of the Select Committee inquiry, the Department for Work and Pensions was not particularly inclined to consider those lessons.
When the Minister responds to the debate today, I am sure she will talk about the new work and health unit. However, I would also like her to describe, if she can, the discussions that the Government have had with the royal colleges, because I have some concerns. For example, the Royal College of Psychiatrists has raised the issues of medical ethics, treatments and interventions, the principle of consent, and the qualifications of the staff involved in WCAs. I would be grateful if she referred to those points in her wind-up.
My next point is about poor performance. We know that last month’s National Audit Office report reiterated that the WCA is not only unfit for purpose but poor value for money, as many of my hon. Friends have already mentioned. The Government have failed in their fiduciary responsibility to ensure that taxpayers’ money is spent wisely. They have failed to monitor and performance-manage work capability assessment contracts and hold the providers to account.
The NAO report stated that under contract with the Centre for Health and Disability Assessments, which is a subsidiary of Maximus, the cost of each assessment has risen to approximately £190, compared with £115 under the previous contract with Atos. If that was an investment in greater efficiency and a smoother process, one might possibly say that it was value for money, but the NAO described the performance output issues, with a backlog of 280,000 assessments and the contractor not being expected to meet its performance targets for last year.
The NAO went on to describe how the Department for Work and Pensions was struggling with target setting and had failed to test bidders’ assumptions during the tender process—for example, on staff recruitment and training. Will the Minister describes how that is being addressed? After six years, it is a real problem if we are trying to ensure that we live within our means.
The biggest indictment of the Government’s work capability assessment process is the potential harm it does to people who are put through it. As we have heard, last November the University of Liverpool and the University of Oxford published a study in the Journal of Epidemiology & Community Health. It is a peer-reviewed journal, and papers with Mickey Mouse statistics are not published in such journals—they would not be tolerated. It is a robust—[Interruption.] I hear some chuntering from the Government Benches. These are robust data; papers would not be allowed if the data were not robust—[Interruption.] There is still chuntering, but I will carry on. That study showed that between 2010 and 2013 the Government’s work capability assessment regime was independently associated with an additional 590 suicides, 280,000 cases of self-reported mental health issues and 725,000 antidepressant prescriptions.
The Royal College of Psychiatrists has raised the concern that, for people with mental health conditions, the work capability assessment process can cause a relapse, thus hindering rather than helping in their recovery. Just before I came to the debate I was provided with a list of coroners’ reports containing concerns that the deaths, including suicides, were associated with the work capability assessment. I am particularly concerned about the case of Stephen Carre, which has already been mentioned, in which the coroner wrote to Ministers and the Department and apparently did not receive a response, as required by law. I would be grateful for the Minister’s response to that point.
The findings reported in the paper in the Journal of Epidemiology & Community Health—in a paper entitled “First, do no harm”—came on top of published data relating to the deaths of incapacity benefit and ESA claimants between November 2011 and May 2014. The Government were compelled by the Information Commissioner to publish those figures. At the end of April, an appeal went to that body, which ruled in favour of the appellant and required the Government to produce the figures. But when did they produce them? Just before the end-of-August bank holiday.
The figures showed that the overall death rate for people on IB or ESA was 4.3 times higher than in the general population—an increase from 3.6 times higher in 2003. People in the support group are 6.3 times more likely to die than the general population, and people in the work-related activity group, from whom the Government want to take £30 more a week via the Welfare Reform and Work Bill, which is going through the House, are 2.2 times more likely to die.
The Government’s innuendo that people with a disability or illness might be “faking it” or are “feckless” or, as the Prime Minister said shockingly last week, are “making a lifestyle choice”, is grotesque and belies the epidemiological data. IB and ESA are recognised as good population health indicators, in that they reflect areas with an industrial backgrounds and areas of poor health.
Neil Coyle
My hon. Friend describes the impact on people. One of my constituents has referred to it as the Secretary of State adopting a pterodactyl style of management, flapping around high above, making a lot of noise and—pardon the expression—dumping on the little people down below. Does my hon. Friend share that view?
Debbie Abrahams
I would not put it in quite those words, perhaps, but I know exactly what my hon. Friend is getting at.
The Government’s own data show that the people involved are sick and disabled. They need support; they do not need vilification. Unfortunately, that is too often what happens, as at last week’s Prime Minister’s questions.
Being disabled or being ill is not a lifestyle choice. Alarmingly, we now hear reports of people in the ESA support group—people who have been found not fit for work, including people who are terminally ill—being required to go to work-focused interviews. The Minister might be aware of that. We have evidence only from England so far, but I would be grateful if she gave us an explanation.
For me, that latest revelation says it all. It is about cuts for disabled people and the seriously ill. The Government are not content with having cut £23.8 billion from 3.7 million disabled people since 2013 under the Welfare Reform Act 2012; they are going for more cuts, and the work capability assessment and the Welfare Reform and Work Bill are another way of achieving them.
The Government have tried to regenerate the economy on the backs of the poor and disabled. Their modus operandi is division and blame, deserving and undeserving. Like the NHS, our social security system is based on principles of inclusion, support and security for all, assuring us all our dignity and the basics of life should any one of us become ill and disabled. The Government need to remember that and stop their attacks on disabled people.
Mrs Madeleine Moon (in the Chair)
Before I call the Minister, I remind her to allow two minutes at the end for the mover of the motion, Louise Haigh, to have the opportunity to respond. I call Priti Patel.
The Minister for Employment (Priti Patel)
It is a pleasure to serve under your chairmanship, Mrs Moon. I start my remarks by commenting that the debate has been wide-ranging, and I thank everyone who has contributed. This is obviously an important subject, and we must put it in the context of the overall commitment we all feel should rightly be in place to support people who cannot work because of health conditions and disabilities. We must also reflect on the fact that we have a system that obviously seeks to support such individuals.
A range of comments have been made that pre-date me as a Department for Work and Pensions Minister. I will do my utmost to address as many of them as I can, but it would only be fair to write to hon. Members whose points I do not address directly. The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) mentioned the very tragic case of Mr Carre, and it might be more appropriate if I write to her about that.
We all recognise that work is good for individuals—it enhances physical and mental well being—and we also recognise that being out of work, for whatever reason and whatever the condition, can exacerbate poor health conditions and make people’s situations even worse. A system that supports people is vital. I will talk about contracting later, but we want to move away from a system that tells people they cannot do any work to one that supports them in what they can do. The hon. Member for Banff and Buchan (Dr Whiteford) touched on the forthcoming White Paper that will focus on the support that can be given to individuals, and I will address that shortly.
The work capability assessment was established under the previous Labour Government in 2008 and it has had quite a journey, not just in relation to the contracting process; the assessments have come under scrutiny under previous Governments and under the present Government. There have been more than 100 recommendations in response to the five independent reviews of the work capability assessment. That has made the assessment process more reliable and has improved the claimant experience
In the final independent review of the work capability assessment, Dr Litchfield commented that, having looked at the systems in comparable countries, there was
“no better replacement that can be pulled off the shelf”.
Neil Coyle
There is a concern among the disability and advice sector that the Government continue to say they have accepted the recommendations of the independent reviews. Will the Minister outline how many of the recommendations have been fully implemented?
Priti Patel
It is fair to say—this will link to many of the forthcoming reforms in the White Paper—that we have implemented many of the recommendations. On top of that, we will continue to review them and work with the system. Any system of financial support for people who are not able to work needs to have a reliable method of assessing entitlement to that support. That is the basis of this afternoon’s debate.
I will talk about the current provider before I address the points about contracting that were raised by the hon. Member for Sheffield, Heeley (Louise Haigh). Since the Centre for Health and Disability Assessment, known as CHDA, took over the contract to carry out assessments in March 2015, it has made a number of improvements to the claimants’ experience of assessments. It has focused on increasing the number of healthcare professionals by 39% since March 2015, and it has opened up 100 new assessment rooms, so that it can see more people in more locations. I do not want to rehearse many of the points already made in the debate, but a lot of the focus has been on the new contracting arrangements with CHDA, which has reduced the backlog of assessments by 62%. It has also introduced claimant-focused improvements, including setting up a customer representative group with leading charities that have regular meetings with the chief executive and clinical leadership team.
There is also a focus, because we are speaking about people and the experience of individuals going through the process, on rolling out greater disability awareness training for all staff. The recent National Audit Office report acknowledges the progress that has been made in improving contracted-out health and disability assessments, and we have taken steps to help people with mental health conditions in their assessments following the reviews. We have trialled new awareness training for administrative staff that will now be rolled out nationally. We are also improving services on telephone engagement and how claimants are assisted; and that level of interaction has improved.
I want to address the points about contracting, which the hon. Member for Sheffield, Heeley focused on. I hope she will forgive me because I cannot speak about Maximus in 2007 and what took place in America, but I must make it abundantly clear that there is a full and transparent contracting process, undertaken with a negotiated procedure to enable the Department for Work and Pensions to fully test bidders and their propositions to meet the objectives for service delivery. I am speaking about the previous contractor, Atos, and the improvements that we seek under the new contract with CHDA.
Louise Haigh
I am grateful to the Minister for giving way and for her response so far, but is she seriously saying that previous fraud and theft from taxpayers cannot be taken into consideration when the Government are handing out a very similar contract in the UK?
Priti Patel
I cannot speak specifically to previous contracting processes and bids that took place outside the United Kingdom—it is not for me to comment on—but let us be clear. The Department is responsible for hundreds of billions of pounds of public money—taxpayers’ money. On our processes of procurement, renegotiation and accountability, we have a clear approach to the scrutiny of providers, and rightly so. That applies to all Departments, and the same applies when it comes to failure. The contract has an open-book accounting approach and a robust validation of data. I think the hon. Lady mentioned falsification of data at one point. We have a clear process on the validation of data. She also went on to comment on how providers are incentivised, but our providers are not incentivised by benefits outcomes. We have a full range of balanced performance measures that focus on quality and volumes and customer satisfaction. That brings me back to the fact that we are speaking about people and how the interaction with people through assessments actually takes place.
Performance reviews and performance are fundamental in all Government contracts to ensure governance arrangements, and the Department takes steps to implement regular weekly and daily meetings with DWP officials and the CHDA.
Priti Patel
I will give way, but I want to emphasise that service credits are applied when a supplier does not meet an agreed service level.
Debbie Abrahams
I am grateful to the Minister for giving way and for her response so far. Will she tell us whether there is a requirement in the tendering process for disclosure of previous legal action?
Priti Patel
I cannot answer that question, but I will find out and write to the hon. Lady. I would be astonished if the Department did not have a system for looking back and assessing companies’ previous conduct before we engage with them. All bidders have to be thoroughly scrutinised by not only my Department but others. Much of that work is done with the Cabinet Office, which sets out guidelines and guidance. I have no doubt that the right systems and efficacy procedures are in place for contracting and the types of contractor with which the Government engage.
Bidder’s assumptions are tested as part of the negotiated procedure, and they are provided with information as part of the dialogue that takes place. The WCA contract was originally with Atos. Since the CHDA has picked up the contract, there have been challenges and backlogs, which have been referred to throughout the debate. It is only right that the Department continues to address those challenges and sets stretching and ambitious targets for its providers. We will ensure that we deliver value for money for our contracts. Again, the assumptions are tested through the bid process, but we are clear that a new financial support model has been in place as part of the CHDA contract. We have also contracted for a more sustainable service, part of which includes more face-to-face assessment—that direct engagement which did not take place under the previous contract. The focus is also very much on reducing the backlog and improving waiting times.
The NAO report has been mentioned several times. The report recognised that the Department has made particular progress and acknowledged the fact that there is now a relentless focus on performance when it comes to reducing backlogs and driving down delays. It also recognised the increased performance management capacity. Although there is more to do—we can never stand still in this space—we have learned from our experiences in the contracting process and will ensure that we continue to make improvements.
A number of Members mentioned cases from their constituencies. I would, of course, be happy to look at any individual cases that Members would like to refer to me, but I should emphasise that we clearly do support people through the system. A great deal of money has been put into providing support to help people to go back to work. Over the next three years, £43 million is being invested in trialling the provision of specialist support for people with mental health conditions. The Government also recognise the importance of promoting positive attitudes among employers when it comes to them employing people with disabilities or health conditions. That will be at the heart of the White Paper that will be published—
Priti Patel
I acknowledge that there is more to do to support people with health and disability issues. In the recent spending review, we outlined our commitment to support people with disabilities into work. We announced a real-terms increase in funding for Access to Work, which will enable up to 25,000 additional disabled people to receive support. We will expand the Fit for Work service to support more people on long-term sickness absence with return to work plans, and we will provide at least £115 million for the new joint work and health unit, including £40 million for a work and health innovation fund. We will set out some new long-term reforms in the White Paper, which will be published in the spring.
This is about not reinventing the wheel, but learning from insights. Hon. Members spoke about evidence, support and insights from charities, stakeholders and third parties, which the hon. Member for Banff and Buchan mentioned. My Department is working with stakeholders through the joint work and health unit, and a new taskforce has been set up to gain insights into providing support for individuals in a more targeted, tailored and personalised way. If people are assessed and put on a benefit, we do not want there to be no dialogue and interaction with them during that period about the additional support that they require to get back into work. The White Paper will be published in the spring, but we are open to thoughts and comments through the consultation process.
This not just about the WCA; we must have a much more holistic approach to supporting individuals. Before the Division, I mentioned employers, and there is a lot more that can be done to promote positive attitudes to employing people with disabilities and health conditions. Employers must find the right balance and the right way to support people in the workplace. For example, they can utilise occupational health and look at our Disability Confident campaign and the work that my hon. Friend the Minister with responsibility for disabled people is doing.
Looking at this issue holistically, our reforms are all aimed at improving the quality of life of those who need the support the most. It is right that we recognise that there is no single method for each individual and their particular circumstances. Every person in the benefits system is an individual and their situations will be different, difficult and challenging. No system can offer a one-size-fits-all interaction, but we must ensure that the system works with individuals and recognises their particular backgrounds and circumstances. Protecting the most vulnerable in society is this Government’s priority.
Debbie Abrahams
Given that 90% of disabilities are acquired, I recognise and support all that the Minister has said about ensuring that people can stay in work as much as possible and that people are helped back into work, but that does not currently happen. Some half a million disabled people will be affected by the change in the employment and support allowance and the cuts. How can the cuts be justified before the support to enable people to stay in or get into work is in place?
Priti Patel
The hon. Lady mentioned the current changes and referred to the Welfare Reform and Work Bill that is being considered in the House of Lords this afternoon. She will recall that this issue was debated extensively in Committee. I have emphasised that the Government have a clear commitment to protect the most vulnerable in society, including disabled people. No one who is currently in receipt of ESA will see a financial loss; the changes will not affect anyone whose capacity to work is significantly limited. The personal independence payment will also continue to help meet the extra costs of living that disabled people face, and exempted benefits contribute to the additional costs of disability and care resulting from the benefits freeze.
Looking at the debate holistically, we know that the WCA has caused many previous challenges. Yes, reforms are coming and, yes, changes are afoot, but I think hon. Members will agree that we cannot write off the people who, for various reasons, have not been supported into work. If they can work, we want to support and encourage them.
The Government spend a great deal of money on protecting the vulnerable not only through benefits, but through additional support to help with living costs. It is right that we provide that support and safety net. I hope that future debates and the White Paper will help to introduce new suggestions, new ways of working and new practices to ensure that we do not again see the situation that we had in 2008, 2009 or 2010 with Atos and the WCA. We should broaden the interface of support available through not only agencies or Government Departments, but specialist support organisations, stakeholders, practitioners and those in the care sector, recognising that we can always do more to support people. I am conscious of the time, Mrs Moon, so I will close my remarks there.
Louise Haigh
I thank the Minister for that, if I may say so, uncharacteristically measured and conciliatory response. It is fantastic to hear that we agree on so many matters, and that the Government recognise the issues with the work capability assessment. We disagree, however, about the reliability of assessments. The evidence, not least the huge increase in successful appeals over the past couple of years, shows that reliability has not improved.
The Minister referred to the recommendations that have been implemented, and my hon. Friend the Member for Bermondsey and Old Southwark (Neil Coyle) asked about those that have not been applied. It is important that assessments are documented so that records can be used as proof afterwards, because, as I mentioned earlier, there have been allegations of falsification.
On the Minister’s remarks about the previous performance of Maximus, as a shadow Cabinet Office Minister I can tell her that the guidelines for considering past performance are completely unsatisfactory. It is no surprise to me that a contractor with prior performance as appalling as that of Maximus, which has failed so singularly in the past, has been awarded a contract. We welcome the improved targets and oversight, but transparency on whether Maximus has met its targets, on spending and on WCA appeals is vital to hold the contractor to account.
As my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) said, the cuts are completely unjustified before the changes that the Minister outlined come into force. I hope the Government will rethink them in the Bill that the House of Lords is considering today.
I look forward to the response to my points and those of my hon. Friends, to the publication of the White Paper and to the much-needed long-term reforms, learning from the mistakes made by successive Governments in the management of the work capability assessment.
Question put and agreed to.
Resolved,
That this House has considered work capability assessments.
Communications Infrastructure and Flooding: North West
(8 years, 9 months ago)
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Simon Danczuk (Rochdale) (Ind)
I beg to move,
That this House has considered communications infrastructure and flooding in the North West.
It is a pleasure to serve under your chairmanship, Mr Percy. I think it is the first occasion on which I have done so, and I am sure it will be a delight.
As many people will have seen, before and after Christmas, many towns, villages and communities in the north-west witnessed some of the worst flooding for years, which inflicted a great deal of pain on the people of Rochdale, Littleborough and Milnrow. I want to begin by paying a few tributes and saying that I have never been more proud to represent the people of Rochdale than after I witnessed their reaction to the floods. I pay tribute to the many individuals who worked tirelessly to help those affected and to the council for its quick action in getting out on to the streets and ensuring that people had access to emergency funds of £500 and other grants. We also saw a fantastic response from various businesses, voluntary groups and community-spirited individuals. The people of Rochdale came together as a community to help one another, and it was a particularly moving moment in the wake of such destruction.
However, the people of Rochdale have been let down by some larger companies dragging their feet. The response from telecommunication companies in getting vital phone and broadband lines restored to hundreds of people and small businesses in Rochdale has not been so positive. It is hard enough for people who have been affected by the devastation of the floods, but that has simply compounded their misery. Without vital communications lines, many small businesses have lost thousands of pounds-worth of custom, which can easily make the difference between staying afloat and going under. I have received reports of businesses being unable to take card payments, receive any phone calls or access the internet. Those are vital services that so many people rely on and cannot do without in their everyday lives.
We too often refer to figures in debates—x number of people have been affected by this, or y number of people have received that—but the floods’ effects were not about figures or statistics; they hit individuals, and it was they who had to deal with the problems. We sometimes dehumanise the human and personal grievances in such cases. So I will use a personal example to explain the deeply concerning effect of the communications failure on my constituents. I also point out that I had to receive the information by text, because this person’s internet was still not up and running consistently.
Emma King runs a small business of her own called Lola Ashleigh Florist, on Oldham Road in Rochdale. On 31 December, after returning from Christmas, a few days after the floods, she was serving a customer and tried to process a £100 payment for a bouquet. When the customer tried to pay by card, there was a problem with the card machine, which was not taking payment. Luckily, the customer showed some Rochdalian spirit and kindly agreed to make the payment once the card reader was back up and running. Although that meant not receiving the payment, Emma believed it was a better option than letting her customer down and losing custom. She thought that there would be a quick solution to the problem.
Emma made contact with her phone line provider, Axis for Business, to inquire what was going on. The company informed her that a note on the system said that there were widespread problems, although Emma had received no warning of that—not an email, a letter or even a phone call. Axis told her that it could provide no further information, as the responsibility for repairs lay with Openreach, but she was assured that the problems were likely to be resolved in a couple of days. It was new year’s eve and Emma, like others, would be closed for a couple of days, so she accepted that and went on with her business as best she could.
New year passed and Emma returned to work on 3 January—still no phone lines and no card reader. She got on her mobile phone to Axis and was informed that there would be no solution until 5 January. That date passed with no resolution and no new information. Emma was left stranded, with no fix in sight and with no way of taking card payments or receiving calls from potential customers. In addition, the local banks were closed due to the flooding and, because she runs her small business on her own, she was unable to drive to the bank in the next town, Bury. Emma had money going out, cash building up and no money going into the bank. Her ability to trade and run a business was being constrained. The only information she was receiving was via Axis—Openreach believed that the problem would now be fixed by 11 January.
Emma was not alone. Many independent businesses throughout Rochdale were facing similar problems. They were given different dates for when the problem would be sorted out. They, too, were having to turn away custom because people could not pay by card. To put the problem into perspective, in November alone there were 127.5 million contactless card transactions in the UK. That shows the size of the problem. In 2016, it is vital for small businesses to have 24/7 access to card payment facilities. Periods when they cannot accept such payments can be fatal for them.
The problem persisted, however, with everyone being given little or no information. Emma tried to contact Openreach, but found it near impossible. She was told that Openreach would not even talk to individuals, who must contact their line provider. I see no reason why Openreach should be totally unaccountable to the people it serves.
Cat Smith (Lancaster and Fleetwood) (Lab)
Does my hon. Friend share my opinion that it is surprising that what is supposedly a communications company is so bad at communicating with the customers it should be seeking to serve? The experience in Lancaster during and after the floods is probably similar to that of his constituents in Rochdale. Cunningham Jewellers in Lancaster was flooded, but continued to trade throughout. However, because the card reader was not working and the staff had no idea when it would be working, they were forced to have cash-only payments. As the House can appreciate, for a jewellers that is a significant amount of cash in the run-up to Christmas.
Simon Danczuk
My hon. Friend’s intervention illustrates that the problem exists not only in Rochdale, but throughout the north-west.
Rosie Cooper (West Lancashire) (Lab)
Does my hon. Friend share my concern about the time being taken to fix the damage to communications infrastructure throughout the community? In my constituency, for example, Westhead Lathom St James Primary School and the village of Westhead have been left without telephones since Boxing day, when the exchange box was damaged by flooding. In recent days the school wrote to me to say that it was unable to communicate with parents and that people are being placed in danger. Neither Openreach nor any of the communications companies can simply walk away.
Simon Danczuk
My hon. Friend makes an excellent point—as she points out, it is not only businesses that are being affected but schools and individuals, such as people who need to use the phone to communicate with Careline. There is real danger attached to the inadequacies of BT Openreach and its failure to improve the situation.
I have outlined how little communication Axis was providing, but I find the next bit particularly ridiculous: the only written communication Emma ever received was the phone bill—I kid you not. She had no information on the floods, when service would resume or what compensation she might receive; she was asked only to cough up for a service that she was not receiving at all.
Dissatisfied with the situation, Emma decided that since the telecom providers were not fulfilling their duty, at a cost to herself, she would have to redirect the phone line to her mobile and connect her chip and PIN machine to the internet via her mobile. She was repeatedly told by Axis that that was not possible, but it was—another communications blunder. That solution provided some relief, but connections were intermittent at best.
Ironically, as my hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) pointed out, there seems to have been a severe communications deficit on the part of the providers. The only communication Emma got was when she made expensive phone calls to her providers. At an already extremely difficult time, why should the burden be on the small business to find out information? The negligence of the companies has put many small shops at risk. One might conclude that the telecommunications companies need a lesson in communications, and fast.
Emma and her florist business were not the only ones suffering. A renowned hairdressers in Rochdale faced similar problems: phone lines down and an inability to take card payments or to elicit any information from the providers. Only this past Friday I had another constituent, Christina Hammersley, at my surgery. She also runs a florist, on Whitworth Road, and receives a lot of work via the internet, but she says that the problems persist. She is extremely concerned that she will not be able to process orders for Valentine’s day, one of her busiest days of the year. She, too, has faced extra costs to get temporary solutions.
Such businesses are heavily reliant on receiving phone calls for business and on taking card payments. Businesses such as florists and hairdressers, due to the nature of the service that they provide, take large payments, which are more often than not paid for by card. The problems have had a clear and tangible effect on their business and yet, to my understanding, no compensation has been given. Even worse, BT has said that all faults have been repaired, and the regional director told me only last week that all problems would be fixed the following day, but that has not been the case. I am repeatedly hearing reports of continuing issues and problems with telecommunications access.
Even Rochdale Council has faced problems contacting those responsible for the phone and broadband lines and getting them fixed. Council officers raised issues with Openreach, but got the same limited information that was being provided to individuals and small businesses. Only when the council went to the regional director of BT did progress begin to happen. Regular updates were then provided. If local government struggles to get hold of adequate information and problems resolved, what hope do individuals and small businesses have?
Running a business alone is tough, and people effectively have to take on multiple roles on their own. Never mind the risks to their economic wellbeing, the last thing they need is to have to lobby their phone and broadband providers to get the basic services for which they are already paying. That is scandalous, and something needs to happen.
I arranged for the debate because the response from the telecommunications companies has not been good enough. We must shine a light on this shocking issue to ensure that it does not happen again. After the flood, Manchester city centre was back up and running in a matter of days. It might have seen less of the floods, but the fact that vital services for businesses in Rochdale are still not back to 100% more than a month after the flood is simply not good enough. There is clearly an accountability deficit.
The deeply concerning and personal story that I have referred to shows that we must do better to protect small businesses. We need to realise the importance to people of phone and broadband lines, which are essential services, and the reaction to problems with them must take into account that importance. We must also improve the communications between provider and recipient. Openreach should communicate directly with those affected. It should not be possible for providers to absolve themselves of their duties by making lines of communication so complex and long.
It is also unacceptable that it takes so long for action to occur. I was interested to see that Ofcom says in section 13 of its “Strategic Review of Digital Communications” that when networks fail to put things right in an adequate amount of time, that raises questions that the service providers need to answer to ensure that that does not happen again. I must ask the Minister: what will the Government and Ofcom do to ensure that the problems are addressed?
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
Thank you for that warm welcome, Mr Percy. It is a great pleasure to serve under your chairmanship. I know that your constituency has been affected by flooding, so no doubt you will be taking a personal interest.
I thank the hon. Member for Rochdale (Simon Danczuk) for securing the debate. He is a doughty champion on behalf of his constituents on numerous issues and I hope he will not think it too frivolous of me to note on Shrove Tuesday that Rochdale is also the home of the world’s largest pancake, which was made in 1994. This year, therefore, is the 22nd anniversary of that, but Rochdale also has a fantastic Member of Parliament who quite rightly brings this issue to the House’s attention. I also thank the hon. Members for Lancaster and Fleetwood (Cat Smith) and for West Lancashire (Rosie Cooper) for their contributions.
As Members know well, December was a record-breaking month for rainfall in many parts of the UK and exceptional amounts of rain fell on to already saturated ground. It was an horrific time for a great many people and those of us who were lucky enough not to be affected nevertheless saw what was happening on our televisions. Many Ministers went to see for themselves what was happening.
Rivers broke records when, on Boxing day, the River Calder in Yorkshire and the River Aire in Leeds reached their highest levels ever recorded. It goes without saying that the Government will stay squarely behind the residents and businesses affected by the floods. The hon. Member for Rochdale rightly focused his remarks on the effect of damage on his small businesses. Our task is to do everything we can to help the towns and communities to recover from the devastating floods.
Before I turn to the specific points raised by the hon. Gentleman, it is worth saying that we are investing nearly £200 million to help communities to recover from both Storm Desmond and Storm Eva. The first payments were made to councils in flooded areas within six days of the first floods and £48 million has already been paid out to 37 authorities in the affected areas. We have also made it clear that anyone displaced from their home or business premises will not have to pay council tax or business rates for as long as they are out of their properties. The fund includes £50 million for affected residents and businesses, £4 million in match funding for charities, and £40 million to repair roads, bridges and other key areas. We are also building 1,500 new flood defence schemes, which will better protect 300,000 more homes, with an extra £2.3 billion of capital investment to help our most at-risk communities.
In December, my right hon. Friend the Environment Secretary announced that there will be a national flood resilience review, the purpose of which will be to assess how the country can be better protected from future flooding and increasingly extreme weather events and, importantly for this debate, the effects of such flooding. We are due to publish the review this summer with a view to work beginning in autumn to implement short-term measures and to review longer-term strategy. I hope that the hon. Gentleman’s remarks will be taken into account in the review.
Julian Sturdy (York Outer) (Con)
The Minister will be well aware that not only the north-west but York suffered badly from flooding and we lost telecommunications for a number of days across the city. What can he do to bring the telecommunications industry to account to deliver a flood resilience scheme that can match the country’s need?
Mr Vaizey
My hon. Friend is quite right to bring me to account and ensure that I return to the subject matter in hand, but I wanted to mention the review because it will take telecoms resilience into account. I will go on to talk about that in more detail in a minute, but it is important to note that that work is in addition to that of the ministerial recovery group, which was established to ensure that local areas continue to receive co-ordinated support as they rebuild after the winter’s flooding.
Let me turn to what happened with telecoms infrastructure as a result of the floods. It is the case that it was affected badly in places, so my hon. Friend’s point was well made. Indeed, as the hon. Member for Rochdale pointed out, telecoms is essential to all our small businesses as well as to us all in our lives, so any disruption has a major impact on our ability to go about our lives and run our businesses. It is interesting to note that the main disruption was caused not by the telecoms network being taken out, but by power failures in the region. However, flooding did affect two key infrastructure sites: one was at the BT exchange in York and the other was at a Vodafone site—actually it was at a Cable & Wireless site, which is owned by Vodafone—in Leeds. The flooding in York on 27 December affected about 50,000 fixed-line and 46,000 broadband customers and there were knock-on impacts on mobile operators whose networks went through the exchange. BT brought the system back online within 24 hours and it worked with the fire service to protect the exchange, because Storm Frank was on its way.
The flooding at the Vodafone site, which also happened on 27 December, disrupted 999 services for a matter of hours as well as some emergency services communications. I stress that I was in touch with both companies throughout the incidents and the national alert for telecoms was invoked several times. That process brings together representatives from the UK’s major communications providers with Government bodies to ensure that everyone across the industry and Government has the latest information on what is happening.
In relation to Rochdale, there were four separate incidents that involved damaged cables. Two were quite complex, technical cable repairs that involved several thousand connections. The other two were located under carriageways, one of which was not damage caused by flooding per se but damage to a BT cable caused by other contractors. Obviously, it takes time to locate the exact point of the cable break and such repairs require permission from the local council to dig up the carriageways and various permits from councils in connection with access to manhole covers, putting traffic-light controls in place and so on.
Simon Danczuk
For the record, Rochdale Council was excellent in meeting those requirements and it acted as soon as it was contacted by BT Openreach. However, BT Openreach was lax in calling for the authority to take action.
Cat Smith
I remind the Minister that the debate is about communications in the north-west, and although it is important that we discuss what happened in Leeds and York, they are not in the north-west but in Yorkshire. To draw him back to the north-west, will he say something about the issues the fire brigade faced with communications? When mobile telephone networks went down, people found it difficult to contact the fire brigade. Cumbria fire and rescue also had a problem with its internal Airwave communications system, so will he comment on that?
Mr Vaizey
I thank the hon. Lady for bringing me back geographically to the subject of the debate. First, I am pleased to hear what the hon. Member for Rochdale said about Rochdale Council. I am glad that it acted promptly when contacted by Openreach and I hope that Openreach has noted that it is incumbent on it to contact the council as soon as possible. Some councils perhaps do not respond as quickly as they should, but it is good to hear that Rochdale acted immediately, particularly given the urgency of the situation.
The Airwave network is robust and resilient, but sometimes if a major cable is taken out, that can affect the backhaul, the mobile communications and mobile masts, so we need to look at that in the flood resilience review. I am sorry that I strayed towards the north-east, but those were the two most prominent examples of a major exchange being taken out by flooding and I wanted to reassure hon. Members that Ministers and the operators were alive to repairing the situation. We were also obviously aware of the concern when the emergency services network was affected, but I am pleased to say from my own experience of sitting on that committee over the Christmas recess that the co-ordination between the telecoms operators, the emergency services and local authorities seemed to be very robust.
Let me return to the specific subject of what has happened to the constituents of the hon. Member for Rochdale. I take this opportunity to extend my sympathy to them. We know that events such as flooding fundamentally affect the way a small business running on tight margins operates, and the people running those businesses are quite entitled to expect a speedy service to get them back on track.
The hon. Gentleman mentioned the excellent work of Rochdale Council. I am pleased that Openreach stayed in touch with the council on these matters. The council may have operated speedily, but it will also have been aware of the need to repair the cable and to keep the highways and carriageways running. Even when we have the excellent co-operation that happened between Rochdale Council and Openreach, such repairs can be technically and logistically complex.
I am not minimising at all what the hon. Gentleman says. We can learn lessons from what has happened, and particularly from the terrible disruption to the two small businesses that he highlighted in his remarks. As with any disruption on that scale, we will work with the industry to understand what happened and what measures we can put in place to ensure that the response to such events continues to improve.
It was mentioned that Openreach would not talk to individuals. Openreach is a wholesale provider of telecoms services to retail providers, including BT and other well-known retailers. I am certainly not here to defend either Openreach or, indeed, telecoms retailers’ customer services. What I am robust in defending, however, are broadband roll-out programmes.
I know, as a constituency MP and the go-to person for my colleagues’ frustrations, how woeful the customer service can be; it is sometimes utterly Kafkaesque. Why operators often cannot sort out their customer service in the most simple and straightforward fashion possible is baffling. I hope that Openreach and retail providers will take note of the hon. Gentleman’s remarks, because he brought to the House real case studies of people who frankly found themselves banging their heads against a brick wall when they wanted quick, robust service to get their business up and running.
Be that as it may, I turn to some better news: as of Thursday last week, 135 businesses in Rochdale had applied for financial support under the business support scheme, of which 107, as I understand it, have received payments totalling more than £53,000. The Government are committed to supporting those affected by the floods and to ensuring that the country is better protected from future flooding. I am grateful to the hon. Gentleman for bringing these matters to the House’s attention, and I am always available to any hon. Member who experiences frustrations with either Openreach or a retail telecoms provider.
I hope that customer service will improve. The outgoing chief executive of Openreach was effective and brought some much-needed changes to the organisation, but we now have a new chief executive. I hope he and his team will read this debate, take some lessons from it and perhaps even engage directly with the hon. Gentleman, so that they can hear at first hand how the systems and real people interact.
Question put and agreed to.
Social Mobility Index
(8 years, 9 months ago)
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Chloe Smith (Norwich North) (Con)
I beg to move,
That this House has considered the social mobility index.
May I ask, Mr Percy, whether we have an hour for this debate from this moment?
Andrew Percy (in the Chair)
Yes. There is an hour for the debate from this moment, with the Opposition Front Benches being allocated five minutes each and the Minister being allocated 10 minutes.
Chloe Smith
Thank you; that is very helpful.
I am not in the business today of doing my constituency and my city down. Indeed, only last week Norwich was named the happiest place to work in the United Kingdom. In 2014, it was voted the happiest place for children, thanks to a combination of open spaces, public amenities, safe roads and other factors. It is a great city. We from Norwich proudly call it “the fine city”, and you cannot beat Norfolk pride itself. Admiral Lord Nelson told us:
“I am a Norfolk man and I glory in being so.”
In fact, Nelson himself is arguably a fine example of social mobility. Born in rural Norfolk, the son of a vicar, to a family of modest means, he lost his mother when he was young and was only average at school. He took an apprenticeship, had the benefit of leadership mentoring and rose to lead the Royal Navy and be seen as one of the greatest Britons of all time.
Then there is Thomas Paine, radical and revolutionary, who wrote the best-selling work of the 18th century and helped to found America—not bad if anyone expects low aspiration from the son of a Norfolk manufacturer of ladies’ underwear. There is the fact that we invented the office of Prime Minister in Robert Walpole, and then there is the first woman writer in English, Julian of Norwich. From my reading of her stuff, she may well have been mad, but none the less she went and did it. Indeed, the first Act of Parliament held in the parliamentary archives—from 1497, no less—is about Norfolk apprentices.
However much I love my city and my county and want to talk it up, it is wrong to ignore important and serious research when it is presented. The Social Mobility and Child Poverty Commission recently produced its social mobility index, which shows that children growing up in the Norwich City Council area have some of the worst life chances in England. If Nelson said that
“England expects that every man will do his duty”,
Norwich children should now expect us to do our duty and put that right.
The commission’s analysis uses data about educational attainment from the early years through to further education and higher education and potential for people to be not in education, employment or training. It also includes adult prospects such as jobs, housing and pay. In simple terms, the report compares the chances for children across the country from poorer backgrounds in doing well at school, finding a good job and having a decent standard of living.
We also know, separate to the report, that Norwich has more children defined as being in poverty than the national average—in my constituency, around one in five. The commission that produced the report is sponsored by the Department for Education, the Department for Work and Pensions and the Cabinet Office. I am grateful to the Minister for being here today, and I am sure he agrees that there is plenty of work to do in the Government across Departments on this issue. There is also work for us in Parliament on any Bench to do to improve children’s life chances. Responsibility also, quite rightly, lies locally. The report is about the boundaries of Norwich City Council, and I hope that the council takes it as seriously as I do. We need to work together to improve Norwich children’s prospects.
The report also goes deep into educational data, and sadly—for that reason at least—it comes as little surprise, in the sense that the county council’s children’s services department has been improving from inadequacy for some time. A 2015 peer review of the council’s performance towards those not in education, employment or training found the overall impression that there were passionate and committed staff within the authority but no overall coherent political and strategic leadership commitment to the young people of Norfolk.
Let us look at what is in the report. The first half looks at the educational attainment of those from poorer backgrounds in each local area. I think we can all agree that background is one of the most important drivers of a child’s life chances. Under that heading, we start with early years provision. There is clear evidence that children from poorer backgrounds perform worse than their more affluent peers during the early years. For many children, that translates into worse outcomes as they go through their schooling. A Government-commissioned study of 2010 found that by school age, children who arrive in the bottom range of ability tend to stay there. The indicators in the report for that life stage are the proportion of nursery provision in the local area that is rated good or outstanding, and the proportion of five-year-olds eligible for free school meals who achieve a good level of development at the end of the stage.
I have been arguing for some time that we need more childcare provision in north Norwich in particular, where there is a shortage already. That is before parents become rightly keen to take up the 30 hours of provision that we will fund from 2017 and parents of the most disadvantaged two-year-olds make use of their entitlement. Let us ensure that that provision is of the highest quality.
I turn to the school years. There are a number of indicators in the report that determine how children who have free school meals do at primary and secondary school and then at key stages of achievement. The Norwich City Council area, I am sad to say, comes in as the 14th worst in the country in this section. It will be no secret to those who follow the issue that Norfolk has consistently performed below the national average when it comes to all students—not just the poorest—achieving the gold standard of five GCSEs. Indeed, in 2014 Norwich was the worst city in England for GCSE results.
I want every school in Norwich to be rated good or outstanding, and I would like to hear more from the Minister today about the Government’s part in that. I know that the local education authority and local academies are applying themselves to that question, too, for the thousands of students in Norwich who are being let down. I also want local leaders in schools to continue to use pupil premium money in the most imaginative and ambitious ways possible, to help the poorest students break out.
The report goes on to assess the years following school—in other words, a youth measure. As the report says, those years are crucial to social mobility, for two reasons. First, that is likely to be the first time that a young person will make a key choice about their own life and, secondly, what a young person has achieved at that point in their life has a significant impact on their chances as an adult, so it is important to be on the right track during that period.
The Norwich City Council area chips in as the 17th worst in the country in that section. The point about young people being able to go into work and make their own choices is precisely why I have worked so hard with many others locally to help young people into work through the Norwich for Jobs project, which I founded and which has helped to halve our city’s youth unemployment, but there is clearly much more to do. I would like to hear from the Minister how the Earn or Learn taskforce is addressing the problem and what else officials in Jobcentre Plus and other Departments are doing to help young people to make good and ambitious choices that suit them.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
The hon. Lady is making a compelling speech. Does she agree that this is about not just getting young people into jobs, but affording young people with potential the ability to start their own business and providing support in that regard?
Chloe Smith
The hon. Lady has anticipated one of the next things that I was going to say. She is absolutely right, and for the record I will add that this section of the report—I am sure that hon. Members have read it themselves—is also about further and higher education, so we should talk about a range of options and opportunities at this point.
The second half of the report looks at the outcomes achieved by adults in the area, and this is where employment, and the types of job and pay come in.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
The hon. Lady is explaining very cogently all the different indicators, but does she not agree that there is a glaring omission in turning away from income as a measure of child poverty? I wonder what she makes of the comment by Alan Milburn, the chair of the commission, that
“without acknowledging the most obvious symptom of poverty, lack of money”,
the Government’s
“agenda…will lack both ambition and credibility.”
Chloe Smith
Funnily enough, I had anticipated that line of argument. I think that most of it accrues to the Minister to answer, but I will say this. We need to understand child poverty across a number of indicators. That is the argument that I am putting in my contribution. I will go on to make a few more points about what adult prospects consist of. Of course the hon Lady is right to say that money matters, but it is not the only thing that matters, and that is what we should be aware of as we plough our way through this kind of analysis.
Let me recap what is in the second part of the report. It is about people’s prospects of converting good educational attainment into good adulthood outcomes, so it looks at the weekly pay of employees, housing affordability, the proportion of managerial and professional jobs, the proportion of jobs that pay an hourly rate less than the living wage and the proportion of families with children who own their own home.
In my constituency, unemployment and youth unemployment are now lower than the national average, which I welcome, but so are earnings. The gross median wage in Norwich North for full-time work in 2015 was £440—a whole £90 below the UK average of £530. In addition—this is why I welcomed the intervention from the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron)—Norwich North has started up new businesses at about half the rate of the UK. I share her passion to see that number rise.
In the report, the Norwich City Council area is in the bottom 20 for adult social mobility. Locally, we might generally understand that some of the brightest young people leave the area to study because other parts of the country seem to be more exciting and have more opportunities, but there are now so many exciting industries and avenues in Norwich that I could talk all day about why bright people do not need to leave. However, that is not the point. This debate is about the people whose prospects are not so obvious, who began life with less.
Let me pick out one other thing that is noted in the report as an ingredient for a social mobility hotspot, which is about practicalities, not abstract concepts. Norwich does not yet have good enough transport links. The report rightly notes that public transport links and links to the motorway network provide advantages for those from disadvantaged backgrounds in less isolated areas, through access to job opportunities and the attractiveness to education professionals of working in schools in the local area.
Before the debate, I asked a few constituents about their experience. One young man said that he was not surprised by the report because “that is the nature of living in such an area—fewer people, fewer opportunities, fewer jobs. It’s not something that can be changed easily.” It is obvious, then, that transport and the access to more people that it brings can help to create more opportunities. Norwich has only just been connected to the rest of the country by a fully dualled road, thanks to many campaigners’ efforts and this Government getting it done. I lead the campaign for better rail links for our city, which we estimate will bring thousands of jobs.
I want to add a personal view at this point. I went into politics because I was that 16-year-old growing up in Norfolk, frustrated by the lack of opportunities and keen to do my bit to make it better. I had loving and supportive parents and encouraging teachers, but little access to people or places. It could be said that I did not even know what I did not know. As a teenager, I laughed a lot at Harry Enfield—perhaps you did too, Mr Percy. Do you remember that sketch in which women were told to know their limits? Of course, it was funny because it had once been true; it was cutting because it had once been true, but I do not want it ever to be true that a child in Norwich today should see limits.
Clive Lewis (Norwich South) (Lab)
Picking up on Harry Enfield, which I think is an appropriate in-point—
Clive Lewis
Well, obviously the catchphrase of one of his key characters was “Loadsamoney!” I think that was the expression. I heard my hon. Friend the Member for Ealing Central and Acton (Dr Huq) raise the issue of income, and I heard the hon. Lady’s answer, which was that many factors go towards child attainment and social mobility. We all understand that, but one of the key ones for many Labour Members is child poverty. The hon. Lady and I both know that in our city of Norwich—
Andrew Percy (in the Chair)
No. Excuse me. This intervention is too long. The hon. Gentleman will sit down. I call Chloe Smith.
Chloe Smith
Thank you, Mr Percy. I look forward to continuing that discussion some other time. May I say that I am delighted that the hon. Member for Norwich South (Clive Lewis) has turned up and been able to take part in the debate? It is important that we work together on these issues, and I have every confidence that we will do so.
I had the luck, at that time in my own life, to meet an excellent role model—my then MP, who is now the noble Baroness Shephard and who is in fact the deputy chair of the commission that authored the piece of work we are discussing. As Norfolk women, we share the burning belief that it is not where people come from that counts, but where they are going. That is my credo and, indeed, it is the Conservative credo. That call can be answered only by opportunity, by ensuring that every person has the chance to make of themselves what they want. Work must pay and responsibility must pay off. Conservatives believe fundamentally in people and their freedom, because people are enterprising and can make their own choices best, but they need the opportunity and the means to do so.
I am proud that it is a Conservative Prime Minister who is now setting out action that spans families, the early years, education, treatment and support, an end to discrimination, and increased opportunity. He is right to look out of Downing Street at the hopes and the quiet wishes of mums and dads, rich and poor alike, for their children every minute of the day, and he is right to seek to give every child the chance and the tools that they need. It is particularly important, as he said in a recent speech, to hail work experience and mentorship, as they can often open up a new world of contacts. It is even better when relatable role models provide those chances. Young businesspeople—for instance, those who are under 30—can be massively motivational.
Another constituent told me about the value of work experience, which gave him “exciting things”. People gave him responsibility, looked out for him, checked on his wellbeing and gave him purpose so that he felt valued, and he needed that to make the jump into paid work. Of course, there is also value to businesses in providing such experiences, as there are a lot of talented people in Norwich who just have not had their chance yet.
Neil Gray (Airdrie and Shotts) (SNP)
I completely agree about work experience, but what message are we sending to our young people who are going into work when the new minimum wage premium will not apply to them as under-25s?
Chloe Smith
There has been an accepted principle that there are age gradations in the minimum wage. That is not new. Leeway is given for the time needed to train someone up to be able to do their job well. For me, that is the principle that drives age gradation.
We need to make more efforts to ensure that all Norwich children—and, indeed, children everywhere in the country—have the knowledge, skills, confidence and network to be able to meet the chances they require and take the chances they want. I am calling on Norwich businesspeople to step up even further and work with every school to provide a network and an opportunity for inspiration that is focused on the poorest children, who need it most.
Many good schemes exist or are coming in shortly, such as enterprise advisers. I urge the Minister to consider how to support those schemes stably over the long term. I want more great teachers to consider coming to Norfolk, because it is a great place to teach, and not to feel that they have to apply elsewhere because of the challenges that exist. I want every administrator who has the privilege to push a pen in the service of Norwich children to ask themselves, “How have I shown my ambition for Norwich children today?” I want the Government to understand that a lack of opportunity is hiding in perhaps surprising parts of our country, not just in traditional inner cities.
Most of all, I would like us to approach this debate without petty party politics. I have already mentioned the hon. Member for Norwich South, and it would be a pleasure to work with him on the issue. In fact, the Labour leader of Norwich City Council was a history teacher when I was at school. That is indeed history, and now we need to work together.
Tackling the issue is not about more welfare and more Government intervention alone, as that can address symptoms rather than causes and make dependency more entrenched. Nor is it only about the free market, although it is my view, with global evidence, that the free market has been by far the best thing ever invented for generating prosperity and improving living standards. There are obvious ways in which businesspeople can do more for the young people in their communities.
Breaking the social cage is not only about welfare or funding formulas. It is about ambition and leadership. It is our duty in Parliament and in local authorities to show ambition and to lead the hard work that is needed to break the cage. It is our duty to acknowledge the challenges of a city such as Norwich, as represented in the report, alongside the things that make the city great, so that it can be great for the poorest who grow up there as well. This is our opportunity to marshal an even more ambitious contribution from the business community, and from many others who can be role models and inspiring mentors to the poorest children in Norwich and help them access knowledge, skills, confidence and a network.
I used a series of Norfolk examples in my opening remarks to show that there are people who got on and did it from modest beginnings, but this is not only about what they did for themselves. It is about what they did for others. The issue is deeply rooted and will not be solved by one person or one solution. We need to understand what the report is telling us, raise our ambitions, show leadership and marshal more opportunities for the poorest children, who need them most.
Andrew Percy (in the Chair)
I am now imposing a five-minute time limit so that we can get everybody in. I ask hon. Members to keep interventions brief.
Wes Streeting (Ilford North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Percy. I congratulate the hon. Member for Norwich North (Chloe Smith) on initiating this debate on the important social mobility index that was published recently by the Social Mobility and Child Poverty Commission.
I begin by celebrating the fact that the borough I represent in outer north-east London—the London Borough of Redbridge—was identified as being third in England for social mobility across a range of factors. That is testament to the hard work of the young people, their teachers, the broader educational establishment of local authorities, academies and multi-academy trusts, and families. I represent an increasingly diverse community, and it says something about the character of that community that we have produced such results. However, I am afraid the report that was published a week or so ago painted a picture of England as an increasingly divided nation where life chances are determined by postcode rather than potential. I wholeheartedly agree with the words of Alan Milburn, the chair of the commission, who said:
“It is not ability that is unevenly distributed in our society. It is opportunity.”
It is clear from some of the results in the report that many people are let down from the moment they are born because of the opportunities that are available or not available on their doorstep.
Beneath that grim reading, I want to focus on the remarkable Labour success story that is our great city of London. When I was growing up, London was a byword for failure, and schools were notorious for failing young people and letting down whole communities. I stand here as a product of the remarkable progress that was made—first through the London challenge and, secondly, through the excellence in cities scheme. By 2005, London schools were performing above the national average, and by the time Labour left office in 2010, London had a higher proportion of good and outstanding schools than anywhere else in England.
We have to return to the mantra, “What matters is what works”, which underpinned Labour’s successful approach to the debate about educational opportunities. Looking back on the London challenge, a number of things made the programme particularly successful, including the fact that it brought a sharp focus on the quality of leadership, and on teaching and learning. It really was about standards rather than structures. The programme enabled collaboration between different schools and used data sets to compare schools serving similar populations. Frankly, there was no place to hide for people who would do down the aspirations and abilities of pupils because they happened to serve a particularly deprived community. There was an expectation that any child born in this city should be able to achieve their full potential, and that is why we saw those remarkable results. I am afraid that we seem to have moved further away from that with our increasing focus on structures rather than standards.
The Government should consider a number of things off the back of the report. First, they should consider introducing a coastal challenge and a rural challenge, taking the successful ingredients that underpinned the London challenge and applying them to the social mobility blackspots highlighted by Alan Milburn’s commission.
Secondly, the Government ought to reinvigorate the important but increasingly discredited northern powerhouse agenda by developing an industrial strategy for the north of England that includes a real focus on education and skills. In particular, there should be a focus on ensuring that people have opportunities not only for education and training, but for employment on their doorstep that matches a whole range of talents and abilities. That is difficult in the current climate given the industrial challenges faced, particularly in steel communities.
The third thing we need to do is to look seriously at the amount of money spent on widening participation in higher education. So many of our academically elite universities continue to be far too socially elite, and so many universities that claim to be success stories in widening participation in fact have poor graduate destination data and track records of retention. We need to start asking, amid all the hand-wringing and the emphasis that is placed on schools, whether the £718 million that is likely to be spent towards the end of the decade might be better spent on schools and early years. If we do that, we may be in a far better place when it comes to future reports. Every child—whatever their background and wherever they were born—should have the same opportunity to succeed as far as their abilities and talents will take them.
Lucy Allan (Telford) (Con)
It is a great privilege to serve under your chairmanship, Mr Percy. I am grateful to my hon. Friend the Member for Norwich North (Chloe Smith) for securing this important debate and for highlighting some of the issues arising in the report. Like her, I am proud of my constituency and of all the people who work so hard to do well by our young people.
I particularly wanted to take part in the debate because Telford has significant areas of disadvantage and underperformance of young people. In fact, my constituency ranks in the bottom decile of the Sutton Trust’s social mobility index, with a ranking of 494 out of 533 constituencies in England. Telford has pockets of significant deprivation, and there is no doubt that that affects the life chances of our young people. Only last week I secured a Westminster Hall debate to consider four of Telford’s secondary schools that were put in special measures following inadequate Ofsted ratings. Those schools have very high numbers of children in receipt of the pupil premium and serve disadvantaged catchment areas.
In that debate, I considered why the schools had failed, so that lessons could be learned for the future. The key reason for failure was the widening achievement gap for the most disadvantaged young people and a culture of low expectations in attendance, behaviour and achievement. There was also a failure in the multi-academy trust’s leadership and governance. The GCSE results in all the schools within the academy chain were below the national floor target, and two thirds of children at some of the schools in the chain were leaving without five good GCSEs including maths and English. Most worrying of all were the stats showing that of the children receiving the pupil premium—the most disadvantaged—only 20% were leaving school with five good GCSEs, including maths and English. I wanted to speak for the 80% who did not have those basic qualifications, about their life chances and the impact on their futures.
Even when disadvantaged young people in my constituency obtain qualifications, they tend not to go to university, and if they do, they tend not to end up in professional occupations. Telford ranks among the lowest areas for non-privileged graduates going on to professional occupations. Like my hon. Friend’s constituency, it is not about a lack of jobs in Telford. The figures for young people not in education, employment or training have completely dropped—they have halved in the past three years—and the number on jobseeker’s allowance has similarly fallen. The difficulty is that the most disadvantaged young people are going into low-income jobs, yet Telford has high-tech, new-economy professional jobs, and our employers say that there is a skills gap. They say that young people leaving school do not have the skills to do the jobs that are on offer. Soft skills are critical in a modern workplace, such as sociability, confidence, negotiation and influencing skills, relationships, communication skills, emotional intelligence and empathy. A good education helps a young person to develop those skills.
Despite Telford’s ranking, there are some welcome signs of improvement, particularly in the early years. We would all agree that that is where inequality starts. Equality of opportunity at the earliest stages is essential to prevent gaps in attainment from opening up. We also have some fantastic primary schools in Telford, such as Old Park Primary School in Malinslee—I thank Jayden, Keeley and Jamie, who came to work in my office before Christmas—and the very special Newdale Primary School, which is about to visit Parliament in a few weeks’ time.
We have thriving academies in disadvantaged areas, and I take up the point made by Opposition Members that poverty affects achievement, which is not always the case. We have good academies with good results for children from the most deprived areas. It is about leadership, good governance, high expectations and instilling a sense of personal responsibility, self-worth and valuing education.
Stephen Kinnock (Aberavon) (Lab)
The hon. Lady is making a thoughtful speech. She is talking in particular about areas with the greatest levels of deprivation, yet the Government have removed the key indicator for levels of deprivation, which is income. Does that not render meaningless the analysis that she is trying to present?
Lucy Allan
I refer the hon. Gentleman to Abraham Darby Academy in my constituency—the school is in a very deprived estate with the highest levels of pupil premium. His point is not correct.
In Telford, we also have organisations such as Juniper Training, which teaches employability skills, and increasing numbers of apprenticeships. I passionately believe that all young people, no matter where they come from and no matter what their background, deserve the life chances that a good education provides. A good education is an open door to future opportunity, and I urge the Minister to do everything possible to narrow educational disadvantage, so that all children in Telford can have the same opportunities and life chances.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I congratulate the hon. Member for Norwich North (Chloe Smith) on securing this debate on a vital issue. I also congratulate the commission on its work, and particularly its chair, and hopefully my friend, the Government’s social mobility tsar and former new Labour warrior Health Secretary, Alan Milburn. I have long been a great supporter of the Sutton Trust and its terrific work, of which the social mobility index is just one of many examples. I also endorse the conclusions of its report, “Missing Talent.”
My constituency of Mitcham and Morden is relatively average in the UK-wide social mobility index, but in London it sits in the 10 worst-ranked constituencies for social mobility and is part of a pocket of underperforming south London constituencies. The challenges on social mobility remain stark, especially for white working-class students. A significant attainment gap between children receiving free school meals and those who are not eligible exists even at pre-school level. By GCSE age, only 32% of white working-class British students achieve the GCSE benchmark, compared with 44% of mixed-race students, 59% of Bangladeshi students, 42% of black Caribbean students and 47% of Pakistani students—those figures are all for students receiving free school meals. On top of that, prospects have been improving much more slowly for white working-class students over the past 10 years than for almost any other ethnic group. Most importantly, there is a tremendous difference between the performance of white working-class students in inadequate schools and those in outstanding schools, which demonstrates the huge influence that a good school can have.
We know what works in schools. I will compare the Harris Federation academy chain in south London with national averages. Only about 56% of white British students nationwide secure five A* to C-grade GCSEs, but at Harris Academy Greenwich 60% of white British students secured such grades in 2015. Just five years ago the school was in special measures, but now, under the excellent leadership of its strong principal, George McMillan, the school has undertaken an unimaginable transformation. A staggering 73% of white British students at Harris Academy Falconwood secure five A* to C-grade GCSEs. Yet again, the rate of the school’s success is incredible. In 2008, only 17% of its students achieved such grades, but under the leadership of Terrie Askew the school is now judged outstanding by Ofsted. Those schools have demonstrated consistent relentlessness in both discipline and high achievement. They promote zero tolerance of bullying; they pick up children directly from their home if they have a habit of truanting; and they provide breakfast clubs and after-school network clubs, which serve nutritious food.
Members also have a responsibility to do all they can, which is why I set up my own work experience scheme in Mitcham and Morden to link young, unemployed constituents with local businesses and organisations to get the experience they need to access a full-time job. I am proud that since 2011, more than 350 participants in our scheme have found full-time employment, and I am planning my own mentoring scheme in the constituency to match children and young people with successful adults. Experts, including Robert Putnam, have argued that such social capital, defined as a young person having an older role model to look up to who is not their parent, is key to ensuring their future prosperity.
As “Missing Talent” argues, we urgently need to incentivise better use of the pupil premium to ensure that disadvantaged pupils receive the focused support they need. As well as greater support for highly able pupils from disadvantaged backgrounds, I hope to see more support for average students, because that is precisely what most of us are. I want students who get average GCSE grades to do better and have access to better-paid apprenticeships and better alternatives to university if they feel that university is not for them. Social mobility is not only about the children at the top doing well; it is about all children being able to aspire, and to surpass their own and everybody else’s expectations.
Justin Madders (Ellesmere Port and Neston) (Lab)
It is a pleasure to serve under your chairmanship, Mr Percy. I congratulate the hon. Member for Norwich North (Chloe Smith) on securing this debate. I am pleased to have the opportunity to contribute as the chair of the all-party parliamentary group on social mobility.
Improving social mobility is arguably one of the biggest and most complicated challenges of our times. This country is too unequal, too closed and too divided. It is a country where, far too often, where a person is born and who they are born to, define what their life chances will be. The income gap between the richest and poorest in society continues to widen, and the UK stands alongside the United States in having the lowest social mobility among advanced nations.
As they progress through life, young people from the most disadvantaged areas are nearly 10 times less likely than those from the most advantaged to take up a place at a top university. Our professions are disproportionately populated with people who studied at Oxbridge or in private education; the all-party group will shortly launch an inquiry into access to the professions. Tackling such issues is not just a moral imperative but an economic one.
As my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) said, the commission’s social mobility index is not a new concept, as it was pioneered by the Sutton Trust last year through its mobility map. However, it is instructive to look at both studies, as their findings were similar: that the issue is far more complex than the conventional wisdom of looking simply at rich areas versus poor areas, or urban versus rural.
Although the affluence of an area and the life chances of the young people who live there are undoubtedly linked, we now know that social mobility issues affect not only the poorest areas in our country but some of the wealthiest. In many cases, affluent areas are not doing as well by their disadvantaged children as places that are much more deprived. We also know that children living in similar areas, sometimes just a few miles apart, can have markedly different life chances.
Although the commission’s report considers local authorities, the Sutton Trust mobility map allows us to drill down into individual constituencies, where we can find significant differences within a local authority area. For example, in my council area of Cheshire West, City of Chester is shown to have a significantly higher level of social mobility than my constituency of Ellesmere Port and Neston, although they are both in the same local authority area and only a few miles apart. Such differences are simply not apparent in the commission’s index. In a local authority area with a population of more than 330,000, I suggest that pockets where social mobility is at its worst can be easily overlooked. Indeed, although a constituency basis is a much more useful indicator than a local authority one, I would go further: it ought to be done at a ward or super output area level.
Maybe we will get to that point in future, but we do not need that level of detail to conclude what is clear from both indexes: London and its commuter belt are pulling away from the rest of the country. Young people from disadvantaged backgrounds in those areas are far more likely than others in the rest of the country to achieve good outcomes in school. What is so valuable about the social mobility index and the mobility map is that at least we can now begin to map and question why such variations exist. Such is the variety of potential factors influencing outcomes that establishing the most effective way to improve social mobility can at times be a little like trying to nail blancmange to a wall, but there are some fundamentals with which we can start.
For example, we know that the effects of good teaching are especially significant for children from disadvantaged backgrounds. In one year with very effective teachers, a child can gain 1.5 years’ worth of learning, so we need to consider better policies to incentivise teachers to work in disadvantaged areas. We also need to give local authorities across the country the resources and powers to replicate what was done with the London challenge, which my hon. Friend the Member for Ilford North (Wes Streeting) discussed eloquently earlier. There is a huge amount of good practice out there. In London, we have seen that, through concerted effort by a range of partners, the gap between the most advantaged and the most disadvantaged pupils can be reduced.
I hope that this debate signals a genuine intention across all political parties to improve social mobility. I sense that it is there, but all good intentions need to be matched with a little self-awareness that some Government policies do not help social mobility but in fact hinder it. I have grave concerns about some of the recent changes to student finance and the proposals that will shortly be consulted on for changes to the nurse bursary system, which the shadow Minister will undoubtedly address in his comments.
Wes Streeting
My hon. Friend is giving an excellent speech. I also have concerns about housing. When I was growing up, I always had the security of the council flat where I lived, whereas many families in similar situations whom I represent live on the other side of London and commute in.
Andrew Percy (in the Chair)
I say to the hon. Member for Ellesmere Port and Neston (Justin Madders) that I wanted to call the Front-Bench speakers at this point. Can he please respond to the intervention and then conclude?
Justin Madders
I am happy to do so, Mr Percy. We could certainly spend a lot of time discussing the more divisive aspects of Government policy, but I will conclude. Giving everyone opportunity in life is a core part of why I am involved in politics. To me, it is about fairness, and it should be a basic ingredient in any progressive society. Let us ensure that every new policy and initiative is met with the same question from all parties: “Will this help improve social mobility?”
Andrew Percy (in the Chair)
I remind the SNP spokesman and the shadow Minister that they have five minutes each to respond, and that they should try to stick to that.
Neil Gray (Airdrie and Shotts) (SNP)
It is a pleasure to take part in this debate with you in the Chair, Mr Percy. I congratulate the hon. Member for Norwich North (Chloe Smith) on securing it, and on her positive contribution in admirably defending and promoting her constituency in light of the report. She said in her speech that she expects us all to do our duty to those children suffering poorer life chances. Absolutely; I hope that she will communicate that directly to this Minister, the Prime Minister, the Chancellor and the Secretary of State for Work and Pensions.
It is interesting that the hon. Member for Norwich North mentioned childcare provision. I absolutely agree. It should be a key area for improving children’s life chances, and we must do more on that front. I also support her comments on improving business links with schools in areas of deprivation to improve skills and access to the employment market. I congratulate her on her speech, and I pay tribute to the contributions made by the hon. Members for Ilford North (Wes Streeting), for Telford (Lucy Allan) and for Mitcham and Morden (Siobhain McDonagh), and by the hon. Member for Ellesmere Port and Neston (Justin Madders), the chair of the all-party parliamentary group. They certainly made for a good debate.
The social mobility index, released in January, shows the massive differences between different parts of England and the chances that poorer children who live there have of doing well in life. Although the Social Mobility and Child Poverty Commission covers Scotland, the index is for England only. Key findings include the fact that London and its surrounding areas are pulling away from the rest of the country. Young people from disadvantaged backgrounds who live in those areas are far more likely to achieve better outcomes in school and have more opportunities to do well as adults than those in the rest of England. In addition, coastal areas and industrial towns are becoming social mobility cold spots. Many such areas perform badly on both educational measures and adulthood outcomes, giving young people from less advantaged backgrounds limited opportunities to get on.
As the study related purely to England, we cannot compare figures for Scotland. The best comparison that can be made with Scotland involves educational attainment, and what is going on in Scotland may provide examples to be followed elsewhere. The Scottish National party and the SNP Scottish Government recognise that education is the best avenue for social mobility. The SNP is absolutely committed to closing the gap in educational achievement between children from wealthy and low-income backgrounds. The Attainment Scotland fund supports more than 300 primary schools that collectively serve more than 54,000 primary-aged children living in the most deprived 20% of areas in Scotland. That represents 64% of the total number of primary-aged children living in Scottish index of multiple deprivation areas 1 and 2.
The first seven councils to benefit from the £100 million attainment fund include Glasgow, Dundee, Inverclyde, West Dunbartonshire, North Ayrshire, Clackmannanshire and North Lanarkshire, which covers my constituency. They have been allocated £11.7 million in 2015-16 to raise attainment in schools in areas of greatest deprivation. An additional 57 schools based in areas of concentrated local need across a further 14 local authorities will also benefit from £2.5 million from the attainment fund.
There is more to do, but the attainment gap is narrowing in Scotland. There have been annual increases in the proportion of school leavers reaching at least SCQF level 5—from 73.2% in 2007-08 to 84.4% in 2013-14—and the gap between the most deprived 20% and the least deprived 20% of pupils achieving that level has decreased from 36 percentage points in 2007-08 to 22 points in 2013-14.
As time is limited, I will try to come to a conclusion. A key figure for me is that UCAS figures for this year show that since 2006 there has been a 50% increase in university applications from 18-year-olds in the most disadvantaged areas of Scotland. That is clear evidence that access to free higher and further education is working in Scotland, and that getting on has to be about the ability to learn and not the ability to pay.
Andrew Percy (in the Chair)
I thank the hon. Gentleman for staying within his time.
Nick Thomas-Symonds (Torfaen) (Lab)
It is a pleasure to serve under your chairmanship, Mr Percy, and I congratulate the hon. Member for Norwich North (Chloe Smith) on securing this debate. I thought she spoke extremely well, particularly about the importance of the early years.
There were some great contributions to the debate. My hon. Friend the Member for Ilford North (Wes Streeting) spoke very well about the situation in London. The quote that he used about life chances being decided by postcode rather than potential is an important one.
The hon. Member for Telford (Lucy Allan) spoke very well about her constituency. I am pleased to hear a Conservative Back-Bench contribution today, because the previous two times that I have been a shadow Minister responding to child poverty debates there has not been a Tory Back Bencher to make a contribution. I am pleased that she felt able to come along and do that today.
My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) spoke very well about the influence and importance of good schools. My hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) spoke with great authority in his role as the chair of the all-party group on social mobility.
Prior to coming to this House, I was involved for many years—well over 10—in Oxford admissions and examining work that could be done to address the problem of how we could attract applicants from a wider range of backgrounds. I was very proud to play a part in the Oxbridge ambassador for Wales project, which was run by my predecessor as the MP for Torfaen, Paul Murphy, who is now Lord Murphy of Torfaen in the other place. The project aimed to increase the diversity of Oxbridge applicants.
I was very sorry to see the Prime Minister’s attack in recent weeks on diversity at Oxford and Cambridge. Although I absolutely agree that there has to be greater diversity, the first thing that concerned me about the Prime Minister’s comments was the lack of acknowledgment of work that has already been done. Let me just give an example. In the period from 2005 to 2010, the number of applications to Russell Group universities rose far more quickly from students on free school meals than from students who were not. That is evidence of social mobility during those years.
The second thing that worried me was that the Prime Minister sought to avoid blame for the consequences of his own policies and to push it away somewhere else. My hon. Friend the Member for Ellesmere Port and Neston spoke, for example, about the abolition of nursing bursaries. However, there is a deeper point here. Let us remember that for all the talk of worklessness, 1.5 million children who are in poverty are in working households. That is what the Social Mobility and Child Poverty Commission says.
If we accept income as a measure of child poverty, which all Labour Members do, some issues must be extremely worrying, such as low pay, zero-hours contracts and the cuts to the universal credit work allowance that will be happening from this spring onwards, all of which affect people in work.
That brings me on to the central issue of how we measure child poverty, because measuring it is absolutely key. Let me just quote the Minister for Employment herself on 26 January 2016, and I look forward hearing her words endorsed by the Minister who is here today:
“Income is a significant part of this issue, but there are many other causes as well.”—[Official Report, 26 January 2016; Vol. 605, c. 72WH.]
If income is a significant part of this issue, why are the Government refusing to measure it? What possible rational explanation is there for them not doing so?
Clive Lewis
One of the issues that the hon. Member for Norwich North (Chloe Smith) did not mention is that a quarter of all the children in Norwich are from low-income families. She neglected to mention that.
Nick Thomas-Symonds
My hon. Friend makes an absolutely powerful point and I say to the Minister who is here today, “Be careful about this issue of defining child poverty.” The Centre for Social Justice—with which, of course, the Secretary of State for Work and Pensions is uniquely associated because he founded it—says:
“Growing up in a single-parent household could count as a form of ‘poverty’”.
That is an absolutely unbelievable comment and I really hope that the Minister will take the chance today to distance himself entirely from it, and to criticise it as stigmatising lone parents.
Dr Huq
I just wondered whether my hon. Friend was aware of Fiona Weir from Gingerbread, who says:
“Further stigmatising single parent families will do nothing to tackle child poverty. Family breakdown doesn’t cause child poverty. It is unaffordable childcare, low levels of maternal employment and poor wages—”
Nick Thomas-Symonds
I entirely agree with that point and I will conclude my remarks, Mr Percy. The Social Mobility and Child Poverty Commission said just before Christmas that
“the existing child poverty targets…will be missed by a country mile.”
I sincerely hope that the Government are not simply trying to redefine child poverty to hide their own failure.
The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)
Mr Percy. I am very proud to serve under your chairmanship, particularly because of your genuine interest in this topic, both as a former teacher at Kingswood High School in Bransholme and even now when, as a busy constituency MP, you find time to be a chair of governors at a local school, making a real difference in your community.
This debate is a real tribute to my hon. Friend the Member for Norwich North (Chloe Smith), who is continuing her tireless work in her constituency, including working at the local jobcentre, and vice-chairing the all-party group on youth unemployment. Time and again, I have been impressed by her hands-on approach, which is making a real difference in her community. That is a real sign of local leadership and my hon. Friend is a real credit to Norwich North.
Social mobility is a topic that I am particularly interested in. I know that it covers many different Departments, particularly the Department for Education. I went to a school that was bottom of the league tables; my father died at an early age; and all too often people seemed to think that someone in that position would have no opportunity or aspiration. That was my calling to enter Parliament, because I believe that everybody deserves a chance in life, regardless of background.
The hon. Member for Ilford North (Wes Streeting) and my hon. Friend the Member for Telford (Lucy Allan) both showed a real understanding of the opportunities and challenges. They both justified their growing reputations in this House and showed that they really understand the importance of creating opportunities, both within their constituencies and much more widely.
The hon. Member for Mitcham and Morden (Siobhain McDonagh) spoke and it was great to hear the namechecks for George McMillan and Terrie Askew for what they have done in terms of transformation. Again, it shows that under any circumstances real changes can be made—and good luck with the work experience scheme.
The hon. Member for Ellesmere Port and Neston (Justin Madders) provided a really good analysis of the sorts of challenges that exist, and I wish him good luck with his ongoing work with the all-party group.
I turn to the debate now. There are four fundamental components to the Government action on social mobility, so I will try to say something on each in the time I have. Turning to education first, we are determined to deliver educational excellence everywhere, so that every child—regardless of their background—reaches their potential.
In early years education, we are supporting parents of young children and investing in childcare at record levels. By 2019-20, we will be spending more than £6 billion on early years and childcare. I have seen in my own constituency what a difference this approach can make. In one of the schools, Seven Fields, on average the children would arrive one and a half years behind the national average, but through the leadership of the teachers and the headteacher, and working with the parents, the extra funding—
Justin Tomlinson
I will be tough on time, but I may give way at the end of my speech.
In that school, the teachers were able to get those children back up to the national average. That is a real transformation, which had to start in early years education as well as in the traditional school years.
We have a clear focus on quality and our early years education system is underpinned by the early years foundation stage statutory framework. The EYFS profile data results for 2014-15 already show a 14.6 percentage point increase in the proportion of children reaching a “good level of development” by age five in the past two years.
In schools, 1.4 million more pupils are now in good or outstanding schools than in 2010, which is much welcomed by parents. We are introducing new measures to transform failing and coasting schools, including creating a national teaching service and sending some of our best teachers to the areas that need them most. I know that my hon. Friend the Member for Norwich North will encourage them to head to Norwich with their great skills. We have also introduced the pupil premium, which is worth £2.5 billion in 2015-16; in the case of Norwich North, that is £3.7 million of additional spending.
Also, £137 million has been invested in the Education Endowment Foundation to research and share best practice with disadvantaged pupils. There have been examples of really good best practice, and we should rightly do all we can to share that information as far as we can.
On wider education, we have opened 39 university technical colleges and a further 20 are in development. There is an UTC in Swindon, so I have seen what a real transformation UTCs can achieve with young people, transforming them into young adults with real skills.
The Prime Minister has committed to ambitious goals, whereby we will double the proportion of people from disadvantaged backgrounds entering higher education by 2020. We recently announced that universities will be required to publish admissions and retention data by gender, ethnic background and socio-economic class, and in 2016-17 universities expect to spend £745 million on measures to support the success of disadvantaged students. I fully support the Prime Minister’s determination to extend the national citizens scheme to all young people. There will be a complete transformation in young people of all backgrounds who take advantage of that scheme.
On the economy, it is key to a strong labour market that we have a strong economy, and the Government’s long-term economic plan is delivering that. Since 2010, there have been more than 2.3 million more jobs in every region and country of the UK, wages have been rising—for 15 months in a row now—and inflation of about 3% compared with 0% is making a big difference. That growth has been dominated by full-time and permanent jobs. Someone mentioned zero-hours contracts. They make up only about 2%, which is exactly what the percentage was in the heyday of the last new Labour Government.
Nearly two-thirds of the growth in private employment has been outside of London and the south-east, with the east of England, Scotland, the north-west, the east midlands, the south-west and the south-east all having higher employment rates than London. We have the introduction of the national living wage coming forward, and we continue to increase the personal tax allowance. We all recognise that the current system of welfare is too complex. There is broad support for the introduction of universal credit, which will be a much simpler system and will improve work incentives and provide named coaches to support people. We are also committing to the creation of 3 million more apprenticeships.
On housing, we have increased the provision of affordable housing and are doubling our investment, from 2018-19, to £8 billion to deliver more than 400,000 new affordable housing starts. We are creating 200,000 starter homes to be sold to young first-time buyers at a 20% discount compared to market value, and delivering 135,000 Help to Buy shared-ownership homes. A quarter of a million people have already signed up for the Help to Buy ISAs. We are building 10,000 homes that will allow tenants to save for a deposit while they rent, and at least 8,000 specialist homes for older people and people with disabilities. We will extend the right to buy to housing association tenants, and extend Help to Buy by introducing an equity loan scheme by 2021.
On improving children’s life chances, as a Government we have set out an agenda of action. We are determined to do more to improve the life chances of all children. We are bringing forward proposals in the Welfare Reform and Work Bill that will drive action that will make the biggest difference to children’s lives, both now and in the future. We are introducing new reporting duties on worklessness and educational attainment in England, publishing a life chances strategy in the spring to set out a comprehensive plan to fight disadvantage and extend opportunity, covering areas such as family breakdown and problem debt, and reforming the Social Mobility and Child Poverty Commission to strengthen and expand its social mobility remit. The reformed commission will ensure independent scrutiny of progress to improve social mobility in the UK.
Nick Thomas-Symonds
Will the Minister explain how cuts to the work allowance of universal credit from this spring incentivise work and assist with child poverty?
Justin Tomlinson
We have had a number of debates on that point and even the Institute for Fiscal Studies acknowledges that such an analysis is a static one. What will need to be considered over time is the continued jobs growth and wage rises, the introduction of the national living wage and all the different opportunities that will come in. The criticism of the tax credit proposals was that the changes would not have had time to filter through. With universal credit, there will be a big difference.
As I said, for the first time ever, people who have been out of work and are going into work again will no longer just be waved off and wished all the best; they will have a named coach to support them, giving them advice and support with additional training, and with pushing for extra hours and getting promotion. Many of us had families who pushed us—“Go and seize the opportunities that are given”—but that is not the case for everyone, and that is the thrust of the debate. For the first time ever, we will extend the provision to people entering work and ensure that they can take advantage of it.
In conclusion, the Government are absolutely committed to improving social mobility and life chances. That is central to our Government’s agenda, and we will continue to extend opportunity for all. It is a credit to my hon. Friend the Member for Norwich North that she has once again highlighted an important area for the Government’s focus. There have been many examples of good and best practice, and the Government are keen to share and push them, so that everyone has an opportunity to succeed in life.
Question put and agreed to.
Resolved,
That this House has considered the social mobility index.
Written Statements
(8 years, 9 months ago)
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Devolution England and Wales
(8 years, 9 months ago)
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The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
I am today announcing the outcome of the joint consultation on devolving powers to extend Sunday trading hours to local areas.
The current Sunday trading rules limiting the Sunday opening hours of large shops in England and Wales were established over 20 years ago and have not kept pace with changes in the consumer environment. Most significantly, the rise of the internet enables consumers to shop online 24 hours a day and we need to support our high street stores so that they can compete effectively.
The Government launched the public consultation on 5 August and it closed on 16 September. The majority of respondents from local authorities, business representative organisations and large and medium businesses were in favour of our proposal to devolve decision making on Sunday trading rules to local authorities.
Following this consultation, I propose devolving the power to extend Sunday trading hours to shire district and unitary councils across England and county councils and county borough councils in Wales as well as the Mayor of London, the Mayor of Greater Manchester—when elected—as well as Mayors established through future devolution deals.
The Government consider it right that local leaders take decisions on whether they want to extend Sunday trading. Providing local authorities with the flexibility to target specific areas to be allowed to open for extended hours will let local decision makers take a tailored approach. This is crucial to enabling them to capitalise on or manage their specific circumstances and could support wider Government priorities, for example, allowing a local authority to extend Sunday trading hours on a specific high street in order to increase shopper footfall.
These measures will help our local high street retailers not just to survive but to thrive. Online sales did not even exist when the current legislation was first brought in, but they now account for a significant share of the retail market and continue to grow strongly—15% in 2015.
This change could lead to a significant boost in jobs. It has been estimated that a two-hour extension to Sunday trading in the West End and Knightsbridge alone would lead to the creation of between 1,070 and 2,160 jobs.
I recognise the need to continue to protect those shop workers across England, Scotland and Wales who do not wish to work on Sundays. Therefore, we will strengthen opt-out rights for shop workers in England, Scotland and Wales by introducing a number of key measures. First, we will reduce the notice period for shop workers at large shops to opt out of Sunday working altogether, from the current three months to one month. Secondly, we will introduce a new right enabling shop workers to opt out of working more than their normal Sunday hours, subject to a one month notice period at large shops, and three months at small shops.
We will update the requirement on employers to inform their workers of their rights to opt out, clarifying the wording and including information on where they can find support and advice about their rights. Where an employer does not comply with the requirement, the notice period for the opt-out rights will automatically reduce. Also, where a claim is brought at an employment tribunal and it is found that the employer failed to notify the shop worker of their opt-out rights as required above, the tribunal will be able to award the shop worker a minimum award of two weeks’ pay.
These measures will give shop workers who want to work longer on a Sunday an opportunity to do so, and those that do not will have increased protections.
We know that cities, towns and high streets are changing and the best are adapting to the needs of the 21st-century consumer. Local people want places where they can not only shop but also spend their leisure time, access services and enjoy a vibrant and exciting evening economy. For a growing number of people, that includes Sunday too.
Sunday trading rules are devolved to Scotland and transferred to Northern Ireland. So the measures in relation to Sunday trading hours I propose here will apply in England and Wales only. However, since employment law is reserved in regard to Scotland, existing shop workers’ opt-out rights contained in the Employment Rights Act 1996 extend to England, Wales and Scotland. Therefore, the proposed enhanced shop workers’ rights will apply in England, Wales and Scotland.
I intend to take these measures forward by tabling amendments to the Enterprise Bill.
A copy of the Government response on Sunday trading will be available on gov.uk and will be placed in the Libraries of both Houses.
[HCWS518]
Council of Europe: UK Delegation
(8 years, 9 months ago)
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The Prime Minister (Mr David Cameron)
This written statement confirms that the hon. Member for Brent Central (Dawn Butler) and the hon. Member for Dewsbury (Paula Sherriff) have been appointed as full members of the United Kingdom delegation to the Parliamentary Assembly of the Council of Europe in place of the hon. Member for Edmonton (Kate Osamor) and the hon. Member for Neath (Christina Rees). The hon. Member for Newport West (Paul Flynn) has also been appointed as a substitute member.
[HCWS519]