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Callum McCaig (Aberdeen South) (SNP)
1. What steps the Government are taking to support the global abolition of the death penalty.
The Minister for Europe (Mr David Lidington)
We oppose the use of the death penalty in all circumstances and advocate global abolition. The Government support a number of programmes around the world to promote both abolition and a moratorium on executions in those countries where the death penalty is still on the statute book.
Callum McCaig
I thank the Minister for his response. Will he present a new strategy for the abolition of the death penalty, following on from the 2010 to 2015 strategy? Will that new strategy include Saudi Arabia?
Mr Lidington
We oppose the death penalty in every country in the world, including Saudi Arabia, where it is still part of the criminal law. The abolition of the death penalty remains integral to all the human rights work that my Department does.
Andrew Bridgen (North West Leicestershire) (Con)
I welcome the fact that the long-term trend is for reducing the number of executions and also the number of states carrying out executions. Will the Minister join me in expressing concern about areas of the world where that is not the case? Does he agree that if it is wrong to take a life, it is wrong for the state to take a life in revenge?
Mr Lidington
That is certainly my view, and the Government’s position is to oppose capital punishment. We need also to bear in mind the fact that while capital punishment exists, it is potentially a risk for a British citizen, anywhere in the world, who might be found guilty of a criminal offence.
Fiona Mactaggart (Slough) (Lab)
Does the Minister share my horror that the United States remains in the top five countries for executing people, despite a reduction in the number of executions last year? When did he last speak to his American counterpart about the US record on executing people?
Mr Lidington
As I am sure the right hon. Lady knows, in the United States this is largely a matter for a state legislatures and state governments, rather than for the federal Government. We do take up cases with the relevant authorities, as appropriate, and when the lawyers and British citizens ask us to do so.
Mark Pritchard (The Wrekin) (Con)
Belarus is the only country in Europe that still executes its citizens. Does my right hon. Friend share my concern that in the past three months two of its citizens have been sentenced to death? If Belarus wants to become a full member of the Council of Europe, should it not abide by international norms and the European regulations?
Mr Lidington
I very much agree with what my hon. Friend says. In all our dealings with the Belarusian Government, we do make clear the need for them not only to move to international and European standards on capital punishment, but to take action to improve what remains a dismal human rights record in that country.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
Further to the Minister’s answer to the question from the right hon. Member for Slough (Fiona Mactaggart), is he aware of the concerns of Reprieve that drugs manufactured by UK company Hikma Pharmaceuticals were exported last year to the state of Arkansas for use in lethal injections? Hikma has told me in correspondence that it does not export for this purpose but that
“any sales to these entities usually occur through the use of distributors”.
This seems such an obvious loophole, so why is nobody closing it?
Mr Lidington
I am happy to look into the case that the right hon. Gentleman describes and to write to him in due course.
Helen Hayes (Dulwich and West Norwood) (Lab)
2. What assessment he has made of recent progress on the Syria peace talks.
The Secretary of State for Foreign and Commonwealth Affairs (Mr Philip Hammond)
On 11 February, the International Syria Support Group, meeting in Munich, reached agreement to deliver humanitarian assistance to besieged communities and to implement a cessation of hostilities. I am pleased to say that the first deliveries of aid have now been made, and yesterday there was an announcement of agreement between Russia and the United States on the detailed arrangements for the cessation of hostilities, which will come into force at midnight on Saturday. If that cessation is fully implemented—faithfully implemented—by all the parties, this could be an important step towards a lasting political settlement in Syria.
Helen Hayes
The bombing of two hospitals and other health facilities in northern Syria is completely unacceptable and a clear breach of international humanitarian law. Does the Minister agree that those responsible must be brought to justice and that that reinforces the need for the UN Security Council to refer the situation to the International Criminal Court?
Mr Hammond
The hon. Lady identifies an incident that has caused widespread outrage across the world, but in her question she has put her finger on the problem: a referral to the International Criminal Court requires a resolution of the United Nations Security Council, one veto-holding member of which is the Russian Federation, so it is unlikely that we will succeed going down that route.
Crispin Blunt (Reigate) (Con)
Turkish policy towards Syrian Kurdish forces seems inconsistent with our own; inconsistent with the prospect of supporting Syrian peace talks; and inconsistent with the opportunity to form a united front against Daesh. What is the Foreign Secretary’s assessment?
Mr Hammond
My hon. Friend is right that the Syrian Kurds are an important part of the equation and they have to be brought into any enduring solution in Syria, but Turkey has a problem with links between PKK—a terrorist group that is designated as such in both Turkey and the UK—and Syrian Kurdish groups. There are overlaying conflicts here, and the Turkish-Kurdish conflict is a major complicating factor. What we have seen over the past weeks is very disturbing evidence of co-ordination between Syrian Kurdish forces, the Syrian regime and the Russian Air Force, which is making us distinctly uneasy about the Kurds’ role in all of this.
Mr Ben Bradshaw (Exeter) (Lab)
With the Russian indiscriminate bombing of civilians in Syria driving the refugee crisis in a deliberate foreign policy tool to destabilise and weaken Europe, does the Secretary of State agree that now is not the time even to talk about weakening EU sanctions against the Putin regime?
Mr Hammond
I very strongly agree with the right hon. Gentleman that now is not the time to send Russia any signals of compromise or of pulling back. The only language that Mr Putin understands is the language of strength and, I am afraid, the language of confrontation. When unacceptable behaviour on the scale that we have seen in Syria occurs, we have to stand up to be counted, however inconvenient that may be for some who have to be counted.
Sir Edward Leigh (Gainsborough) (Con)
Whether we like it or not, Russia is an essential prerequisite to any successful talks. The American Secretary of State has a close working relationship with the Russian Foreign Minister, talking to him nearly every week. When did the Foreign Secretary last talk to the Russian Foreign Minister and what is he doing to improve his personal relationship with him?
Mr Hammond
Our relationships with our Russian counterparts are difficult. I last spoke to Sergei Lavrov on 11 February during the Munich International Syria Support Group meeting where he and I had some prolonged and robust exchanges around the table. I do speak very regularly with the US Secretary of State, most recently meeting him on Saturday morning, so I am very much aware of the discussions that he is having with our mutual Russian counterpart. The problem is that Russian policy on Syria is made not in the Russian Foreign Ministry, but inside a tiny cabal around President Putin at the heart of the Kremlin.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
What dialogue has the Minister had with our French counterparts as a result of the Syrian crisis regarding the safety and child protection arrangements for unaccompanied child refugees who are at grave risk and who are due to be dispersed from the jungle camp in Calais?
Mr Hammond
I have had discussions about the situation in Syria with my former French counterpart who retired the week before last and with my new French counterpart, Jean-Marc Ayrault, on a regular basis. The issues relating to would-be migrants accumulated around Calais are for the Home Secretary, and she has very regular discussions with her counterpart, Bernard Cazeneuve.
Alec Shelbrooke (Elmet and Rothwell) (Con)
My hon. Friend the Member for Gainsborough (Sir Edward Leigh) is absolutely right that the Russians are a key part to establishing a meaningful political settlement in Syria. Does my right hon. Friend agree that that does not mean that we give in to the Russians across the rest of Europe and that the NATO commitment in the Baltic states is just as important to counterbalance whatever partnerships we use the Russians for in Syria?
Mr Hammond
My hon. Friend is right. We are dealing with a raised level of Russian assertiveness—indeed, aggression—in many areas: in the Baltic, in Ukraine, and now in the middle east, and we have to be robust in all areas. He is also right—and our hon. Friend the Member for Gainsborough (Sir Edward Leigh) was right—that Russia holds the key to the situation in Syria. I have said in the House before, and I shall say again today, that there is one person in the world who has the power to bring the misery in Syria to an end by picking up the phone and making one phone call, and that person is Vladimir Putin.
Diana Johnson (Kingston upon Hull North) (Lab)
The whole House will welcome the ceasefire agreement, which is badly needed, but there have been promises from Russia before. The Russians have repeatedly claimed to attack terrorist groups when, in fact, they have attacked moderate opposition forces and civilians, so can the Foreign Secretary set out how breaches of the ceasefire agreement will be assessed?
Mr Hammond
The hon. Lady has put her finger on the problem. The ceasefire agreement will allow continued operations against Daesh, al-Nusra and associated terrorist groups designated by the UN Security Council, and no one would disagree with that. The problem is that the Russians claim that all their action to date has been against those groups. On the face of it, the Russians could be entering into this arrangement on the basis that they will not change their behaviour at all. Clearly, the cessation of hostilities will fail before it has even got off the ground if that is their intention, so everything hinges on Russian good intentions.
Diana Johnson
So can the Foreign Secretary explain what consideration has been given to a UN resolution to strengthen the ceasefire agreement and support the peace talks?
Mr Hammond
First, an arrangement has been agreed between the Russians and Americans for investigating alleged breaches of the ceasefire, and there is a commitment on both sides to working up a co-ordination cell to try to identify legitimate targets that can be struck during the ceasefire. As for the UN dimension, we are looking at that, and we would very much welcome a UN resolution behind the ceasefire. We already have UN resolution 2254, which we agreed on 18 December in New York, but we welcome further UN resolutions. That can only happen if the Russians are prepared to work with us, because they have a veto.
Nusrat Ghani (Wealden) (Con)
3. What diplomatic support the Government are providing in Kurdistan to tackle ISIL/Daesh.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood)
Daesh is progressively being defeated in Iraq as the competence of Iraqi security forces improves. Specifically on Kurdistan, we are providing the Peshmerga with air power, logistical support, weapons and training.
Nusrat Ghani
Reports suggest that 45% of Kurdish forces are composed of women. Nesrîn Abdalla, a unit commander in the Syrian Kurds women’s protection units, recently said:
“We do this not just to protect ourselves, but also to change the way of thinking in the army, not only to gain power, but to change society, to develop it.”
What particular steps have the Government taken to ensure women’s participation in regional diplomatic talks, post-Daesh?
Mr Ellwood
May I pay tribute to my hon. Friend for that quote and for the work that she has done in pioneering the role that women can play? That is something that Staffan de Mistura, the UN envoy, recognises, and he is trying to include women’s voices in the peace talks that are taking place at the UN. On our front, British training is taking place in northern Iraq, and UK training teams will train female units in the Peshmerga.
Ian C. Lucas (Wrexham) (Lab)
Further to the question from the hon. Member for Reigate (Crispin Blunt), who chairs the Select Committee on Foreign Affairs, what is the Minister’s current assessment of relations between the Turkish Government and the Kurdistan Regional Government?
Mr Ellwood
It is an important relationship that the two are developing, not least because there are economic benefits for both from the sale and movement of oil. As my right hon. Friend the Foreign Secretary has outlined, there are concerns in Turkey because of the role, involvement and influence of the PKK, and we will monitor that carefully.
Natalie McGarry (Glasgow East) (Ind)
Since the breakdown of the peace process last summer, there have been reports of an escalation in violence and of breaches of human rights in south-eastern Turkey in Kurdish areas such as Diyarbakir and Cizre, with the deaths of hundreds of innocent civilians, curfews, the imprisonment of democratically elected politicians who would be key interlocutors in any future peace process, the imprisonment of academics, and lack of access for journalists to key areas. Will the Minister assure me that that will form part of the peace talks on Syria?
Mr Ellwood
I am grateful for the hon. Lady’s question. I was able to raise the matter during my visit to the north of Iraq at the end of last year. We are concerned about the reports of alleged human rights abuses and we need to make sure that those are not overlooked.
Julie Cooper (Burnley) (Lab)
4. If he will take steps to support self-determination for the people of Kashmir.
Mr Speaker
I much appreciate the right hon. Gentleman’s courtesy in notifying me of his travel plans. I know that he has only relatively recently got off a plane, so we are delighted to have him here, especially in view of the fact, of which he has previously informed the House, that he is responsible for three quarters of the world.
Mr Swire
Mr Speaker, you have just stolen my first line again.
On this important subject, it is, I repeat, for India and Pakistan to find a lasting resolution to the situation in Kashmir, taking into account the wishes of the Kashmiri people. It is not for the UK to prescribe a solution or to act as a mediator.
Julie Cooper
Undoubtedly, this House has a great deal of respect for UN resolutions, and I am sure the Minister is aware that in 1948 the UN Security Council passed resolution 47 instructing the Governments of India and Pakistan to prepare for a plebiscite to determine the future of Kashmir. Almost 70 years have passed, thousands of Kashmiri men, women and children have been slaughtered, atrocities are committed daily, yet there is still no sign of any action to allow these people to vote on this most important issue. Does the Minister agree that the people of Kashmir should have the right to self-determination, and will he give an assurance—
Mr Speaker
I am extremely grateful to the hon. Lady. I hope she is near the end of the sentence.
Julie Cooper
Will the Minister assure us that the British Government will do everything in their power to make that happen?
Mr Swire
We do not intend to support an international conference or plebiscite on Kashmir. Our long-standing position is that it is for India and Pakistan to find a lasting resolution. We are acutely aware of the allegations of human rights abuses in Kashmir. This was discussed with my right hon. Friend the Prime Minister when Prime Minister Modi was here in November 2015, and we continue to monitor the situation closely.
Mr David Nuttall (Bury North) (Con)
Many of my constituents who are of Kashmiri origin and heritage take the view that this entire problem was left behind by the UK when we ruled that area. Does the Minister not feel that there is an obligation on the UK to take a more proactive role and to do something positive to bring about a resolution to this long-running problem?
Mr Swire
My hon. Friend will be aware that we are talking about two sovereign countries, India and Pakistan. It is not for the United Kingdom to come between them, other than to urge them to talk. There are some good moves and communications between the leaders of Pakistan and India and they are discussing the subject, among other things, which we very much welcome.
Chris Leslie (Nottingham East) (Lab/Co-op)
But I would say to the Minister that the situation has been going on for decades, and the UK has some expertise in building more peaceful settlements. Is there not a bit more that the UK could do to promote confidence-building measures between India and Pakistan, and at the very least raise this as a priority with the EU special representative so that some of our other allies know that this is more of a priority?
Mr Swire
We do things as best we can without getting directly involved, and we welcome the fact that on 25 December Prime Minister Modi visited Prime Minister Nawaz Sharif in Pakistan, the first such visit for 11 years. That must be good news, but the hon. Gentleman knows full well the long-standing position of the Government—and when he was in government the position was no different—that this is a matter for the Indians and the Pakistanis to resolve, not the United Kingdom.
Maggie Throup (Erewash) (Con)
5. What steps the Government is taking to promote trade and diplomatic connections between the UK and other Commonwealth countries.
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
The United Kingdom is committed to strengthening the engagement with the Commonwealth. My right hon. Friend the Prime Minister led a strong delegation to the Commonwealth summit in November, where my noble Friend Lord Maude, then the Minister for Trade and Investment, and I promoted trade opportunities within the Commonwealth.
Maggie Throup
The renaissance in British manufacturing and engineering is not only testament to the Government’s determination to rebalance our country’s economy, but has greatly contributed to a record 62% fall in unemployment in my constituency since 2010. Does my right hon. Friend agree that our historical links—especially trade links—with other Commonwealth countries are vital to the continued success of those sectors and to the jobs they support?
Mr Swire
I am pleased to hear the figures from my hon. Friend’s constituency, and they can be echoed around the country as a result of the Government’s economic policies. We are an open, free-trading state, and we trade around the world. Trade within the Commonwealth is extremely important, and we need to do more to promote it. Trading between two Commonwealth countries is, on the whole, 19% or 20% cheaper than trading outside the Commonwealth. That is something we need to do, and we need to involve Commonwealth Trade Ministers more formally in working out how we can increase intra-Commonwealth trade.
Keith Vaz (Leicester East) (Lab)
Last year, Prime Minister Modi and our Prime Minister designated next year as the year of culture between India and the United Kingdom. Will the Minister join me in welcoming the British curry festival, which is taking place in New Delhi in March? British chefs from Leicester, London and Reading will be going to Delhi to make curry. Does he not agree that that is a real example of good relations between Commonwealth countries?
Mr Swire
At the risk of currying favour with the right hon. Gentleman, let me say that we must all wish our curry chefs every success when they travel to India. We must hope that they make a speedy return, because we would all miss our curry were they not home in our country.
Mark Field (Cities of London and Westminster) (Con)
Characteristically—or maybe uncharacteristically—the Minister has more or less answered the question I was going to ask. Leaving aside trade between the UK and Commonwealth countries, the functioning of the Commonwealth will surely be enhanced if there is more trade between all Commonwealth countries. To what extent can the UK play a role in enhancing that intra-Commonwealth trade, particularly in areas where we have substantial Department for International Development, as well as Foreign Office, representation?
Mr Swire
It is as well to remember that we are an equal partner in the Commonwealth; we do not run the Commonwealth, and we wish Baroness Scotland every success in so doing. [Hon. Members: “Hear, hear.”] She clearly has the universal support of the House, which is manifestly a good thing. We want her to refocus the Commonwealth, and we want to spend much more time—similar issues are being discussed elsewhere in the world—discussing boosting trade, getting rid of tariffs and promoting intra-Commonwealth trade. That we can do. My noble Friend Lord Marland is doing a great job at the Commonwealth Enterprise and Investment Council, and he had a great collection of 2,000 businesses at Valletta. We are hosting the Commonwealth Heads of Government meeting here in 2018, and business will play a large role in that Commonwealth conference.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
May I ask a more serious question about the Commonwealth and diplomatic relations? How many members of the Commonwealth do not have an extradition agreement with this country? Increasingly, people who commit ghastly crimes flee to Pakistan, and we cannot bring them back to face justice. What is he doing about that?
Chris Stephens (Glasgow South West) (SNP)
6. What progress the Government have made on preparations for the EU referendum.
Kirsty Blackman (Aberdeen North) (SNP)
14. What progress the Government have made on preparations for the EU referendum.
The Minister for Europe (Mr David Lidington)
The conduct regulations that set out the detailed framework of how the referendum poll will be administered have now been agreed by both Houses of Parliament. The date of the referendum must now be agreed by Parliament in a further statutory instrument, which was laid before both Houses in draft yesterday.
Chris Stephens
A record number of people registered to vote in the Scottish independence referendum— 97% of the adult population. What efforts are the UK Government making to match that success?
Mr Lidington
This is, as the hon. Gentleman will know, the responsibility of the Electoral Commission, which is planning a campaign to raise awareness of the need to register in good time for the referendum.
Kirsty Blackman
Will the Minister give comfort to the Scottish students who are studying through Erasmus across Europe by providing details of what contingency plans are in place should there be a no vote in the EU referendum?
Mr Lidington
My advice to Scottish students studying in universities elsewhere in the EU would be to ensure that they are registered to vote so that their votes in the referendum count along with everybody else’s. The hon. Lady puts her finger on one of the uncertainties about a potential British exit from the European Union, because, after all, it is European law and the treaties that give British citizens the right to live, study and work in other EU countries.
Paula Sherriff (Dewsbury) (Lab)
The Minister may recall that in response to my amendment to the Finance Bill last year, the Government promised to negotiate with the European Commission for a zero rate of VAT on women’s sanitary products, and the Chancellor repeated that pledge in his autumn statement. It is time the tampon tax was ended, so did the Prime Minister use his recent negotiations to raise this issue and, if so, what progress has been made?
Mr Lidington
As I think the hon. Lady knows, value added tax was already part of the EU system before the United Kingdom joined the European Community in the 1970s. A review of the current EU directives on value added tax is due to take place this year, and that is the appropriate forum in which to raise this issue, where the Government very much hope to secure the reforms about which she speaks.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
Successive UK Governments have signed up to a range of EU agreements vital in protecting our environment, upholding workers’ rights, and ensuring an EU-wide energy market. The removal of such environmental controls and statutory maternity pay, for example, would be a backward step. I am sure, therefore, that the Minister will agree that our membership of the EU is vital in promoting the interests of the people of Scotland and across the UK. However, he will be aware that the Justice Secretary said last week that
“our membership of the European Union prevents us being able to change huge swathes of law and stops us being able to choose who makes critical decisions which affect all our lives.”
Can the Minister therefore confirm specifically—[Interruption.]
Ms Ahmed-Sheikh
Can the Minister therefore confirm specifically how his Government’s plans have been constrained by European legislation or regulation?
Mr Lidington
As with every member state of the EU, particular issues will come up—particular legislative measures—where we find some of the rulings irksome. On balance, however, as my right hon. Friend the Prime Minister set out very clearly yesterday, the Government are convinced that membership of a reformed European Union will make the British people more prosperous, more secure, and more influential in the world than any of the alternatives so far proposed.
Ms Ahmed-Sheikh
It is therefore important that voters have the full facts at their disposal when making a choice in June. Have the Government calculated the cost of implementing the proposals agreed at the EU Council last week, particularly those relating to the administration of the new benefits rules? What will the net saving to the Treasury be?
Mr Lidington
Some of this will be a matter for the implementing regulations that will now follow, both at European level and at national level. The answer to the hon. Lady’s question will depend in large part on the level of benefits and tax credits in the United Kingdom at the appropriate time. These matters will therefore become clear as time goes on.
Mr Nigel Evans (Ribble Valley) (Con)
I wish the Minister great success in trying to alter the level of VAT on sanitary towels. If the British people decide in the referendum to leave the European Union, would it then be up to the British Government to decide the level of VAT on sanitary towels and other products?
Mr Lidington
That would depend on the nature of the subsequent relationship. The reason that value added tax has, since before our membership of the EU, been dealt with, to an extent, at EU level is that the price at which goods are sold has a direct impact on the notion of a single market and free trade within Europe. The issues that my hon. Friend raises would have to be tackled in the course of negotiations about such a future relationship.
Martin Vickers (Cleethorpes) (Con)
7. What assessment his Department has made of the effects of high oil supply and low oil and gas prices on (a) Russia and (b) countries of the Gulf Cooperation Council.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood)
Brent oil prices are hovering around $30 a barrel—the lowest in 13 years—as a consequence of lower global demand, continued high OPEC production and the resilient production in the USA. GCC countries are taking action. They are, in fact, diversifying their economies and removing subsidies. Historically, about half of the Russian Government’s revenues have come from oil and gas, and Russia’s GDP declined by just under 4% last year.
Martin Vickers
Falling oil prices are clearly having a dramatic effect on the economies of many oil-producing countries. I was part of a delegation that visited Saudi Arabia last week, where we heard about what its Government are doing to diversify. What encouragement are our Government giving to other countries to help and support them to diversify, and what opportunities are available to British companies to provide assistance?
Mr Ellwood
As my hon. Friend outlines, there are enormous opportunities not just in Saudi Arabia but across the Gulf. We are working on diversification with countries that produce and export hydrocarbons, and helping them with renewables and green energy. Saudi Arabia has also expressed an interest in opening up tourism. Those are important aspects in which Britain can play an important role.
Nadhim Zahawi (Stratford-on-Avon) (Con)
8. What discussions he has had with other members of the international coalition on improving diplomatic co- ordination against Daesh.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
9. What discussions he has had with other members of the international coalition on improving diplomatic co-ordination against Daesh.
The Secretary of State for Foreign and Commonwealth Affairs (Mr Philip Hammond)
Britain was a driving force behind the creation of the global coalition. We hosted the first coalition meeting in London in January 2015. I frequently discuss the campaign against Daesh with coalition and other international partners, including at a coalition small group meeting in Rome earlier this month.
Nadhim Zahawi
The Kurdistan Regional Government army has been valiantly battling against Daesh over a 1,000 km frontline since summer 2014. Will my right hon. Friend pay tribute to the peshmerga and say more about the role they may play in the liberation of Mosul?
Mr Hammond
I am very happy to pay tribute to the Peshmerga. They have proved themselves to be an extraordinarily resilient fighting force and perhaps the most effective force operating against Daesh. The UK is training and providing equipment to the Peshmerga. I had an opportunity a couple of weeks ago to meet President Barzani of the KRG, to talk about the liberation of Mosul and the role that the Peshmerga might play. I am pleased to be able to report two things. First, the KRG appear to have become more open to the idea that the Peshmerga will play a role in the liberation of Mosul. That will be very important. They have also agreed to Iraqi Government security forces being based in the KRG to prepare for the assault on Mosul. Those two things make it much more likely that we will see a successful assault on Mosul earlier rather than later.
Michael Tomlinson
Seeking a diplomatic solution in Syria has gone hand in hand with our humanitarian aid in the region. Will the Secretary of State set out how increased diplomatic co-operation will improve and assist our humanitarian aid in the region, specifically in neighbouring countries such as Jordan and Lebanon?
Mr Hammond
As the whole House will know, we hosted in London on 4 February a very successful conference on Syria and the region, raising $11 billion in a single day. The real significance of that meeting, however, was that we moved on from the idea of simply collecting money and distributing it to working with the host countries in the region to ensure that refugees are able to access the labour market, get education for their children and access healthcare, making them less likely to feel the need to decamp and become irregular migrants heading towards Europe.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Daesh moves into areas of conflict and ungoverned spaces. King Abdullah of Jordan has asked that we reach out to areas such as Bosnia and Herzegovina, Albania and Kosovo, as he regards them to be among the next potential trouble spots. Are we making any progress?
Mr Hammond
Yes. The right hon. Lady is right. We should be very much focused not only on the countries that already face that challenge, but on the countries that are next in line for the challenge, and we should seek to reinforce them. I am happy to tell her, if she was not aware of this, that the Prime Ministers of all the western Balkan countries were in London yesterday, and I had the opportunity to meet the Prime Ministers of Bosnia and Herzegovina, Kosovo, Serbia, Albania, and Montenegro. We are working closely with them to ensure the resilience and the European trajectory of that region.
Mr Nigel Dodds (Belfast North) (DUP)
On the issue of Daesh fighters returning home to countries here in Europe, what diplomatic co-ordination efforts have been made to develop a common response among countries in Europe to ensure that we keep our citizens safe and prevent those people from coming back to wreak havoc, through terrorism, on towns and cities in the UK?
Mr Hammond
Different countries in Europe have different domestic legislation around that issue. We in the UK have some of the most robust measures available to us to deal with returning fighters. It is precisely because of the importance of the exchange of information between European partners that the Prime Minister was able to confirm yesterday that we believe that Britain is safer and more resilient against the threat of terrorism because of its co-operation within the European Union.
Royston Smith (Southampton, Itchen) (Con)
As operations against Daesh in Iraq are successful—[Interruption.]
Mr Speaker
Order. The hon. Gentleman must be heard. There is some chuntering from a sedentary position, by which he should not remotely be deflected. Stick to your course, man.
Royston Smith
You are very kind, Mr Speaker. As operations against Daesh in Iraq are successful, what is the threat of Daesh’s moving to Libya? Has the Foreign Secretary made an assessment of that eventuality?
Mr Hammond
There is clearly a risk that as Daesh is militarily defeated in Iraq and then in Syria, the embryonic Daesh presence in Libya, particularly around Sirte, could become a new base for operations just 100 miles off the coast of Europe. That is why we are working with our partners and allies to encourage the formation of a Libyan Government of national accord that we can work with to start stabilising the country and pushing back on the Daesh footholds in Libya.
Derek Twigg (Halton) (Lab)
Further to the last question, can the Foreign Secretary say how far ahead we are in bringing about that co-ordination and establishing a stable authority in Libya to take on Daesh? We have seen recently an increase in Daesh activity, and there is still a lot of disconnect between the different bodies in Libya. Will he give us a bit more information about what progress is being made?
Mr Hammond
There is progress being made among European partners and with the US on preparing the kind of support we could give to a Government of national accord in Libya when and if one is formed. The problem is that several months after we first expected that to happen, the Government have still not been formed. We are working very closely with the parties in Libya and with the regional powers who have influence, particularly Egypt, to encourage Prime Minister Siraj to take the necessary steps to get that Government formed and approved so that we can engage. There is a strong commitment by the European partners to engage once that Government have been created.
Clive Lewis (Norwich South) (Lab)
10. What assessment he has made of the effect of the outcome of the March 2015 election in Israel on the peace process in that region.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood)
Much gets said, as we know, during election cycles, and we were concerned by some of the statements that were made during the Israeli election. I was in Israel last week, and I can confirm that I had meetings with Prime Minister Netanyahu. He has made it very clear that he remains committed to the two-state solution.
Clive Lewis
It is more than 20 years since Oslo. There are now more than 350,000 illegal Israeli settlers in the occupied west bank and 300,000 illegal Israeli settlers in occupied East Jerusalem, and the Netanyahu Government continue to announce the building of more illegal settlements. Does the Minister believe that that will aid the peace process? If not, what is he doing about it?
Mr Ellwood
The Prime Minister, the Foreign Secretary and I have made it very clear on the record that that is unhelpful and takes us in the wrong direction. During my visit last week, I visited some of the settlements that are developing. Although announcements of new settlements have slowed, the existing settlements are starting to grow, and that happens without people seeing it. There is an area to the north of Jerusalem called the Ariel finger, which, if it continues to grow as it is doing, will eventually link up towards the north of Jericho. That will essentially mean that there will be no two-state solution. We need Israel to show that it is committed to the process and stop the settlements.
Andrew Percy (Brigg and Goole) (Con)
13. On the issue of words, something that is regularly rubbished is the issue of incitement. We are seeing increasing incitement from the Palestinian Authority and on media such as Palestinian TV, some of which has been referenced by those committing knife attacks on civilians. Last week I visited a Jewish school in Brussels, where I heard some appalling stories of anti-Semitism being perpetrated in Europe, with people deliberately conflating Jews and Israel. Will the Minister condemn not only the incitement coming out of the Palestinian Authority, but the sort of attacks we are seeing in Europe as a result?
Mr Ellwood
I absolutely agree with my hon. Friend that it is unacceptable for Israelis going about their business to be subject to some of the brutality and the murder we are seeing. Israel has the right—in fact, I would go further and say it has the obligation—to defend its citizens. We are seeing the anti-Semitism there, or such reactions, then reappearing, often through websites such as Facebook and so forth, in Europe or closer to home. We have been working hard with our international colleagues—the Prime Minister is very committed to this—to make sure that we stamp out anti-Semitism no matter where it is.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
A clear majority of Israelis consistently support setting up a Palestinian state alongside Israel. Does the Minister agree that actions such as Hamas’s rebuilding the terror tunnels to mount attacks on Israeli civilians from Gaza make that less and less obtainable?
Mr Ellwood
The hon. Lady is absolutely right. With some of the developments, it seems like déjà vu in the sense that we are going round this buoy again—rebuilding the tunnels, the aggravations, and then the missiles start to fly. Where does that actually take us? It is not a confidence-building measure, in the same way that building settlements is not a confidence-building measure. We need to make sure that we empower the Palestinian Authority to look after and take responsibility for the governance of Gaza. That is the way forward.
Sir Eric Pickles (Brentwood and Ongar) (Con)
Surely there is a big contrast in the growth of extremism. The Israeli authorities deal with Jewish extremism—they investigate, they prosecute and they condemn—whereas the Palestinian Authority names schools after violent extremists, names sporting events after them and glorifies them on television. Will my hon. Friend take this opportunity to condemn absolutely the attitude of the Palestinian Authority and urge it to cease this senseless encouragement of violence?
Mr Ellwood
My right hon. Friend makes a very powerful argument. It is important to see that affirmative actions can be taken on both sides to reduce tensions, but I would raise the specific matter of using words to inflame the situation. For example, the recent remarks by the Health Minister in the Palestinian Authority condoning the attacks that are taking place were unhelpful. That takes us in the wrong direction, so we should do things to encourage those involved to refrain from doing so, and take steps to encourage them to act as a consequence.
Several hon. Members rose—
Mr Speaker
Order. I wish we had more time, but I am afraid we do not. I call Nic Dakin.
Nic Dakin (Scunthorpe) (Lab)
11. By what date he expects to have set a timetable for overseas territories with financial centres to adopt central registers of beneficial ownership or similarly effective systems.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)
I had productive discussions at the Joint Ministerial Council with leaders of the overseas territories in December. We agreed progress on implementing central registers, and equally effective systems should be kept under continuous and close review. Discussions are still ongoing, but I want to see significant progress ahead of the anti-corruption summit that will be hosted by the Prime Minister in May.
James Duddridge
Final invitations for the summit have not yet gone out, but discussions are very much ongoing. In fact, the director for overseas territories and the National Crime Agency are currently visiting the Cayman Islands and British Virgin Islands to thrash out some of the detail that is needed.
Nigel Mills (Amber Valley) (Con)
Does the Minister expect the registers to be publicly available, or will they be closed registers that can be accessed only by the relevant authorities?
James Duddridge
There will be open registers available for law enforcement agencies to interrogate. There will not be publicly open registers. That is a long-term aspiration, but initially we want there to be access for law enforcement agencies. That will create greater transparency and reduce corruption and terrorist payments.
Catherine West (Hornsey and Wood Green) (Lab)
In April 2014, the Prime Minister said:
“I believe that beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion.”
Nearly two years have passed and there still appears to be no timetable for transparency arrangements in respect of the financial centres. Why is that?
James Duddridge
There has been much progress, which the hon. Lady dismisses too readily. There are checkpoints. Only last week, I spoke to overseas territory leaders. There are people out there at the moment and we hope to crystallise some of the improvements before the May summit on corruption. That summit was called by the Prime Minister and will be held here in London, which demonstrates the British Government’s commitment to this important issue.
Catherine West
Will the Minister tell the House the exact date by which he expects overseas territory financial centres to ensure that there are proper transparency arrangements, or will we continue to hear more excuses for inaction in the years to come?
James Duddridge
This is a matter of direction, rather than an ultimate destination. We will constantly ask the international community to do more to create greater transparency, but it is crucial that the international community, whether it is the Crown dependencies, the overseas territories or other overseas Governments, move together on this, because we want to eliminate the problem of corrupt and untransparent moneys, rather than shift it from territory to territory.
Mr Speaker
I remind colleagues that in topical questions, there are supposed to be quick-fire questions and quick-fire answers.
Mr Ranil Jayawardena (North East Hampshire) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Foreign and Commonwealth Affairs (Mr Philip Hammond)
The Foreign Office’s mission is to protect Britain’s security, promote Britain’s prosperity and project our values through our diplomacy. The Prime Minister’s deal with the European Union offers the basis for Britain’s future prosperity and security in Europe. The crisis in Syria, the resulting irregular migration to Europe, the increased levels of Russian aggression and the continuing terrorist threat from Islamist extremism remain the principal threats to the security of the UK and UK citizens around the world.
Mr Jayawardena
I should refer Members to the Register of Members’ Financial Interests and to my position as the chairman of the all-party parliamentary group on Sri Lanka. As we know from Northern Ireland, reconciliation is possible only if both sides want to move forward. Will my right hon. Friend welcome the progress that has been made by the Sri Lankan Government in uniting the whole island by growing the economy and building a strong democracy? Indeed, will he encourage them to continue doing so?
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
Yes, I most certainly will. I was in Sri Lanka last month, where I met the Prime Minister and the Foreign Minister and travelled to Jaffna in the north. I have subsequently spoken to Prince Zeid Ra’ad al-Hussein, the high commissioner in Geneva, who was in Sri Lanka from 6 to 9 February. We look forward to his update on Sri Lanka at the UN Human Rights Council in June.
Hilary Benn (Leeds Central) (Lab)
As events in Ukraine and the middle east have reminded us, nations that are committed to peace, security and democracy need to stand together in the face of aggression. Our membership of the European Union is one of the most important ways in which we do that. The Foreign Secretary knows that ending our alliance with the EU would send a dangerous signal, including to President Putin and Daesh. Why does he think some of his Cabinet colleagues cannot see that and are intent on a course of action that would weaken Britain’s voice and influence in the world and undermine our security?
Mr Philip Hammond
Each person in this country will have to make up their own mind about the question before them in the forthcoming referendum. I have always said that this is a balancing equation—there are plusses and minuses in any international relationship. However, I entirely agree with the right hon. Gentleman that on the question of Britain’s security and influence in the world, there is no doubt that we are stronger, safer and more influential by being part of the European Union than being out of it.
Hilary Benn
I am very grateful to the Foreign Secretary for that reply. The report of the UN Human Rights Council’s commission of inquiry on Syria, which was published earlier this month, found that:
“Flagrant violations of human rights and international humanitarian law continue unabated”.
The ceasefire that is due to come into effect this Saturday is desperately needed, but it will relieve suffering only if it is adhered to, as the Foreign Secretary said. What is his assessment of the prospects of ensuring that Russia respects the ceasefire by ending its attacks on the Syrian people? If it does not, what further pressure can be put on President Putin to do so?
Mr Hammond
As I have said, the Russians will say that they are complying with the ceasefire, and that continued attacks and airstrikes are justified by the terms of that ceasefire. It will be necessary to pore over individual attacks between the US and Russia in the co-ordination cell to identify exactly what happened. Whatever the technicalities, the big picture is this: unless the level of Russian airstrikes dramatically decreases, the ceasefire will not hold because the moderate armed opposition cannot and will not lay down their weapons while they are being annihilated from the air by Russian aircraft.
Stephen Phillips (Sleaford and North Hykeham) (Con)
T2. My hon. Friend the Minister for Africa will be aware that the Tanzanian electoral commission annulled the general election results in Zanzibar at the back end of last year, and there has been increasing electoral violence in Zanzibar as we head towards the poll on 20 March. What representations will we make to the Tanzanian Government to ensure that the poll passes off peacefully, and that we do not return to the violence of 2000 and 2001?
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)
We are deeply concerned by the decision of the Zanzibar electoral commission to annul the elections for the Zanzibar presidency, and indeed the House of Representatives on 28 October. Our position was set out in a statement by the British high commissioner on 29 October, and we have raised those concerns at the highest level, including when the Foreign Secretary made a telephone call to then President Kikwete in October and my telephone call to the new Foreign Minister Mahiga in December, and the Under-Secretary of State for International Development, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), met the same individual in January. I hope to visit Tanzania in the coming months and reinforce those points in person.
Angela Rayner (Ashton-under-Lyne) (Lab)
T3. Given the Minister’s response to earlier questions relating to the benefit to the UK of remaining in the EU, is it not a real concern that many of his Government colleagues would put our security and economic future at risk by a Brexit?
The Minister for Europe (Mr David Lidington)
In this referendum, Members of Parliament will each have one vote, along with every member of the United Kingdom electorate. In my experience, there are deeply held views both for and against British membership of the EU in my party and that of the hon. Lady. My view is clear: this country will be more prosperous, secure and influential in the world through continued EU membership.
Dr Andrew Murrison (South West Wiltshire) (Con)
T4. Given the ongoing Russian incursion into Georgian sovereign territory, does my right hon. Friend absolutely condemn the situation in the southern Caucasus? Does he think that the situation in Abkhazia and South Ossetia must now be regarded as the new normal?
Mr Philip Hammond
We should be alert to Russia’s aggressive actions in former Soviet Union countries wherever they are, not just in Ukraine. Arguably, we were too slow to recognise that what was happening in Georgia was the beginning of a new dimension to Russian foreign policy, and we should resist it robustly wherever it arises, and push back against it wherever we can.
Patrick Grady (Glasgow North) (SNP)
T6. Will the Secretary of States confirm whether his discussions with the United States about Libya have included the possibility of UK military action, and that there will be no UK military action in Libya without approval from this House?
Mr Hammond
As the hon. Gentleman knows well, we have a long-established convention that before committing UK forces to combat, in all situations where it is possible—that is, other than in a direct emergency or where considerations of secrecy make it impossible—the Prime Minister is committed to bringing the issue before the House and allowing it an opportunity for debate.
Chris Heaton-Harris (Daventry) (Con)
T5. What assessment has the Department made of the security situation in Burundi, and what steps have been taken to bolster the presence of Her Majesty’s Government in Bujumbura?
James Duddridge
In response to the crisis, the UK has stepped up humanitarian support to refugees fleeing Burundi, providing £14 million to Tanzania and £4 million to Burundi. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), and I have also decided to recruit a full-time Burundian co-ordinator, based in Bujumbura. That will be good news as I know that hon. Members—including my hon. Friend the Member for Stafford (Jeremy Lefroy)—have been pressing Her Majesty’s Government to do that, and it will be welcome news on both sides of the House.
Stephen Kinnock (Aberavon) (Lab)
T7. On 12 January, the Secretary of State told this House that China’s claim to be treated as a market economy should be judged through the prism of steel. Given that 70% of the Chinese steel industry is owned by the Chinese Government, will the Secretary of State now confirm that China should emphatically not be granted market economy status?
Mr Philip Hammond
I think what the hon. Gentleman will find if he checks the record is that I had just come back from China where I had conveyed the message to the Chinese that their claim to market economy status, and the European Union’s consideration of that claim, would be judged through the prism of their actions in relation to steel. They gave me assurances then, as they gave us assurances in October, that they are seeking to address overcapacity in the Chinese market. We have just had a discussion this morning about this in Cabinet. I learned this morning that there are protests in China about the loss of steel jobs, just as there are in the UK and in other places throughout Europe. The reality is that we have a massive surplus of steel capacity throughout the world and we have to address it.
Luke Hall (Thornbury and Yate) (Con)
T9. Following the recent action against Daesh in Libya, will my hon. Friend update the House on the situation there, as well as his plans to create a permanent memorial to the victims of Sousse, whose murders were planned from Libya?
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood)
As my right hon. Friend the Foreign Secretary has outlined, there is a migration and a concern that Daesh is moving out, under pressure in Iraq and Syria, to other parts of the world, including Libya. My hon. Friend is right to make the connection between what happened in Libya, the training and the terrorist attack that took place in Sousse killing so many Britons. I am pleased to say that we will hold a memorial service on 12 April to mark this event.
Rushanara Ali (Bethnal Green and Bow) (Lab)
T8. A recent UN report suggested that, in a disturbing violation of human rights, Saudi Arabia’s military operation in Yemen is targeting civilians. Is the Minister confident that the UK Government are fulfilling their obligations under the arms trade treaty in relation to Saudi Arabia?
Mr Ellwood
We have discussed, and are looking in detail at, the UN panel of experts report. It was done by satellite evidence—we have to bear it in mind that the experts did not actually visit the country itself. We have shared and discussed information with Saudi Arabia. I had a letter from the ambassador this week confirming that every effort is being made to follow human rights law in support of President Hadi and UN resolution 2216.
Michael Fabricant (Lichfield) (Con)
Our immigration controls in Calais are governed by the treaty of Le Touquet, as my right hon. Friend the Member for Europe well knows. He will also know, and the House of Commons Library has said, that the treaty can be broken only if the British or the French choose to do so, and it has absolutely nothing to do with whether we are members of the European Union. Will he ask whichever person who said it to stop talking this nonsense that if we leave the EU we are suddenly going to find a massive great refugee camp in the heart of Kent?
Mr Lidington
The Le Touquet treaty is certainly vital to this country’s border security. Of the 100,000 people who have been prevented from entering the UK in the past five years, roughly a quarter were stopped at Calais at the juxtaposed controls. We co-operate very closely with the French Government, but I fear my hon. Friend underestimates the extent of domestic French opposition to and protest against the juxtaposed controls. If we left the EU, the stock of good will towards Le Touquet and this country would be severely depleted.
Mr Clive Betts (Sheffield South East) (Lab)
T10. On the Foreign Office website, there is very clear advice to private companies thinking of doing business with illegal Israeli settlements. It states:“Financial transactions, investments, purchases, procurements as well as other economic activities…in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks”and “we do not encourage or offer support to such activity.”Do the Government give exactly the same advice to public bodies, including local councils, with regard to their procurement decisions?
Mr Philip Hammond
Yes, we are clear with local authorities that they are bound by and must follow procurement rules, but we are clear that we do not support boycott movements. The Minister for the Cabinet Office was in Israel just last week and made that abundantly clear then.
Henry Smith (Crawley) (Con)
With the United States wishing to continue its military presence on Diego Garcia for a further 20 years, what discussions is the Foreign and Commonwealth Office planning to have with Washington about helping to facilitate the right of return of the Chagos islanders to the British Indian Ocean Territory?
James Duddridge
We have made it clear that we want the US presence to continue, but the Government have not yet held discussions with the US about continuing that arrangement. I very much welcomed discussing the issues with my hon. Friend a few weeks ago in connection with the all-party group visit to the Foreign Office. I will continue to liaise with him when the Government come to a conclusion, following the KPMG report and the consultation.
Ms Margaret Ritchie (South Down) (SDLP)
Following yesterday’s drop in the value of sterling, what other implications does the Foreign and Commonwealth Office anticipate for Britain and Northern Ireland as a result of the uncertainty around the referendum?
Mr Philip Hammond
Uncertainty always has a cost to business. Business hates uncertainty, and the markets will reflect it. That is why it is right to hold the referendum at the earliest possible date—23 June—and settle this issue once and for all so that Britain can get on with Britain’s business.
Robert Jenrick (Newark) (Con)
When I canvass the streets of Newark for the local elections, people ask me about the views of my local councillors on refuse collection or on potholes on Newark’s roads. I rarely hear them ask me their views on foreign policy. Does my right hon. Friend agree that foreign policy is set by the Foreign Secretary and by the Government and should be debated in this House—not by our town halls—so we should all support the Government’s action against boycotts and sanctions?
Mr Hammond
I am grateful to my hon. Friend. One of my colleagues has just reminded me that my hon. Friend is not the only one who pounded the pavements of Newark. I think everyone on these Benches did so. Yes, foreign policy is, of course, a matter for the Government of the United Kingdom, and it is the business of this Parliament. It is very important that we have a single foreign policy, which is clearly projected so that Britain’s position in the world is understood and strengthened.
Several hon. Members rose—
Mr Speaker
Demand always massively exceeds supply at Question Time, especially at Foreign Office questions. We do not really have time, but I am allowing time for one last question. I call Mr Richard Burden.
Richard Burden (Birmingham, Northfield) (Lab)
May I press the Foreign Secretary further on the answer he gave to my hon. Friend the Member for Sheffield South East (Mr Betts)? Is there anything in World Trade Organisation or other rules that fetters a public institution’s ability to act on the advice that the FCO puts on its website, which my hon. Friend quoted?
Mr Hammond
Public bodies in this country are bound by the EU procurement directive in their purchasing activity and must follow those rules.
Several hon. Members rose—
Mr Speaker
I am sorry to disappoint colleagues, but at least we know that there is huge interest in what the Foreign Office does and says. We will have to leave it there for today.
Petition
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Damian Collins (Folkestone and Hythe) (Con)
The petition to the House of Commons from a resident of the UK states:
The petition of a resident of the UK,
Shows that in August 2009, Sheikh Salman, then Bahrain Football Association (Bahrain FA) President, was accused of using FIFA-financed sports development budgets to fund his unsuccessful campaign for the FIFA Executive Committee election; and that in a leaked letter received by the Al Bilad newspaper it was claimed that Sheikh Salman had spent upwards of 855,000 dinars (£1.6 million GBP) on his campaign and that some of this money had come from FIFA-financed football development projects, in particular Goal 1 (intended to help fund a new Bahrain FA headquarters), and Goal 3 (intended to provide facilities for the development of youth and women’s football); that after FIFA requested urgent information from the Bahrain FA regarding the misappropriation of funds Sheikh Salman did not comment until early September 2009, at which point he denied those claims, however the Bahrain FA did not dispute the contents of the leaked documents; also notes that prior to Sheikh Salman’s election to the Presidency of the Asian Football Confederation (AFC) in May 2013, details of the flights that the Football Federation of Kyrgyz Republic’s (FFKR) delegation would be taking to and from Kuala Lumpur for the AFC vote were emailed to the private account of the ‘IT manager’ at the Olympic Council of Asia (OCA), of which a close associate of Sheikh Salman was Head; that three days before the vote, requests for support for 53 projects for Kyrgyzstan football to the tune of millions of pounds were discussed although there seems to be no legitimate reason for the FFKR, part of FIFA, to be seeking funding from the OCA, part of the International Olympic Committee; notes that the FFKR approached the OCA again after the AFC election asking when they would receive payment for their projects, which gives strong grounds to suspect that the FFKR voted for Sheikh Salman because they believed they would receive significant financial support from the OCA (including that OCA officials appear to have met officials from the FFKR during the AFC vote in 2013); and believes that this is a fresh ‘cash for votes’ scandal which needs urgent investigation.
The petitioner therefore requests that the House of Commons urges the Government to confirm that it would not support bids from the English Football Association to host FIFA tournaments should Sheikh Salman be elected as President of FIFA on Friday 26 February 2016.
And the petitioner remains, etc.
[P001673]
Mental Health Taskforce
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
(Urgent Question): To ask the Secretary of State for Health to make a statement on the Government’s response to the final report of the independent Mental Health Taskforce.
The Minister for Community and Social Care (Alistair Burt)
Achieving parity of esteem for mental and physical health remains a priority for this Government. I appreciate the hon. Lady’s raising of the urgent question this afternoon. We welcomed the independent Mental Health Taskforce launched by NHS England last year, with its remit to explore the variation in the availability of mental health services across England, to look at the outcomes for people who are using services, and to identify key priorities for improvement.
The taskforce, chaired by Paul Farmer, chief executive of Mind—I thank him, the vice-chair, Jacqui Dyer, and the whole team for the remarkable work they did—also considered ways of promoting positive mental health and wellbeing, ways of improving the physical health of people with mental health problems, and whether we are spending money and time on the right things.
The publication of the taskforce’s report earlier this month marked the first time a national strategy has been designed in partnership with all the health-related arm’s length bodies in order to deliver change across the system. This also demonstrated the remarkable way in which society, the NHS and this House now regard mental health and how it should be seen and approached.
This Government have made great strides in the way we think about and treat mental health in this country. We have given the NHS more money than ever before and are introducing access and waiting-time targets for the first time. We have made it clear that local NHS services must follow our lead by increasing the amount they spend on mental health and making sure that beds are always available. Despite those improvements, however—and I referred earlier to the way in which we view these matters—the taskforce pulled no punches. It produced a frank assessment of the state of current mental health care throughout the NHS, pointing out that one in four people would experience a mental health problem during their lifetime, and that the cost of mental ill health to the economy, the NHS and society was £105 billion a year.
We can all agree that the human and financial cost of inadequate care is unacceptable. The Department of Health therefore welcomes the report’s publication, and will work with NHS England and other partners to establish a plan for implementing its recommendations. To make those recommendations a reality, we will spend an extra £1 billion by 2020-21 to improve access to mental health services, so that people can receive the right care in the right place when they need it most. That will mean increasing the number of people completing talking therapies by nearly three quarters, from 468,000 to 800,000; more than doubling the number of pregnant women or new mothers receiving mental health support, from 12,000 to 42,000 a year; training about 1,700 new therapists; and helping 29,000 more people to find or stay in work through individual placement support and talking therapies.
I assure all Members that they will have ample opportunities to ask questions and debate issues as we work together to implement the taskforce’s recommendations.
Luciana Berger
The final report of the Mental Health Taskforce, commissioned by NHS England, provides a frank assessment of the state of mental health care, and describes a system that is “ruining” some people’s lives. It contains a number of recommendations which, if implemented in full, could make a significant difference to services that have had to contend with funding cuts and staff shortages at a time of rising demand, leaving too many vulnerable people without the right care and support.
It is extremely disappointing that the Opposition have had to compel the Minister to come to the Chamber today to ensure that Parliament can give the report and the Government’s response to it the attention and scrutiny that they deserve. It is all the more regrettable because the Prime Minister himself chose to announce their response to the media during last week’s recess—a courtesy which, had it not been for the urgent question, would still not have been afforded to the House. The Government’s apparent announcements included the announcement of a supposed “additional” £1 billion of investment by 2020, but a number of vital questions remain unanswered.
Will the Minister explain why the report was delayed and published during the recess? Did Ministers or No. 10 have a say in the timing, and, if so, does the Minister accept that such a level of interference on the part of Ministers raises questions about the independence of the report? Can the Minister confirm that no additional money will be allocated from the Treasury to fund what the Government have announced, and that it will be funded from the £8 billion that has already been set aside for the NHS to receive by 2020? Given that mental health is given just under 10% of the total NHS budget, surely mental health services would have expected to receive much of that additional money as part of the NHS settlement anyway. Can the Minister explain how the money can be expected to deliver the “transformation” in our mental health services that the taskforce says is urgently required?
Can the Minister also confirm that he is accepting all the recommendations relating to the NHS? Does he intend to respond to the other recommendations, and when can we expect that response? As the report makes clear, we do not solve the challenges of our nation’s mental health by means of the Department of Health.
On behalf of the many thousands of people who have been let down by the Government, who are desperate to see a change in the way in which we approach mental health, and who are owed a full explanation from the Government of their response to this damning report, I look forward to the Minister’s reply.
Alistair Burt
I thank the hon. Lady for her questions, which give me an opportunity to say still more about what we are doing in relation to mental health and how far it has come since 2010. For instance, she could have pointed out that 1,400 more people a day have access to mental health treatment than had access to it in that year, simply as a matter of comparison between what was done then and what is done now. However, it is absolutely right to make the essential point that there is more to be done—a view that we share—and that is what the report did.
The timing of the report was not up to the Government. It is an independent report, commissioned by the NHS from an independent taskforce, and the timing and the content were decided by the taskforce. I had the occasional meeting with Paul Farmer about it. I made sure to speak to him to say, “This is absolutely your report. Forget the guff in the papers about who wants what in the report and all that; this is yours and it’s got to be yours”—and it is absolutely clear that it was. The decision to publish it was theirs. The Prime Minister was able to respond, which was great, and that emphasises again the importance given to this issue now, as compared with times past.
On the finance, the important thing to note is that the Prime Minister announced in January how the £600 million in the spending review, which is included in the NHS bottom line until 2021, would be spent. That included the new money for perinatal mental health, crisis care, psychiatric liaison in A&E and the crisis care community work. What was said by the Prime Minister in relation to the taskforce report represents new money that will be available for the NHS and mental health by 2021. That will be £1 billion extra by 2021, with the additional number of people to be treated that I outlined.
I spoke to the taskforce after the issuing of the report. I do not particularly want just to produce a response to the taskforce report; I said that I would prefer a series of rolling responses, as it were, so that when we have responded to a recommendation and when we are moving on and delivering on it, I would say so. That will come in a variety of different forms, but will be related to what the taskforce has done. That may well involve announcements to Parliament, whether by written ministerial statements or other means. I did not want one big bang of a response, as it were, because the Prime Minister has already said that we will accept the recommendations, as they go with the grain of what the Government were going to do anyway. I wanted to give an indication that the report will not just sit on a shelf gathering dust. By making constant reference to it when we do something—saying, “This is a response to what the taskforce said we should be doing towards 2021”—it can get the stamp of support and recognition, which is important.
On the hon. Lady’s claim that thousands have been let down, again I would gently remind her that this Government were the first Government to set waiting times for physical and mental health—a chance missed by the hon. Lady’s Government when they were in office and set physical health waiting time limits. It is this Government who have actually made the commitment of £10 billion extra to the NHS, a commitment never made by her or her party. It is very easy for people to talk about new things in mental health when they do not have a budget or an economic team producing anything of any credibility, but this Government have got the responsibilities and are doing the work.
We are absolutely agreed that the state of mental health services cries out for more to be done; we have said that, and that is what we are doing. The direction of travel and the physical delivery is happening on a day-by-day basis. We will do more; we will continue to work together to do more, and I welcome the hon. Lady and her team’s very regular pressure on me and my right hon. Friend the Secretary of State to continue to do more. We will meet that challenge—and we are meeting it in a way that no Government have ever met it before.
Dr Liam Fox (North Somerset) (Con)
I congratulate my right hon. Friend and the whole of the Government health team on their personal commitment to this issue. Does my right hon. Friend accept that those who suffer from mental ill health are often poor advocates of their own cause, and that it is very easy for money to be diverted into other areas of healthcare spending where others are able to shout louder for the money? Will he and his Front-Bench team consider whether it is possible to ring-fence the NHS budget for mental health care so that it does not become the Cinderella subject in the future that it has been too often in the past?
Alistair Burt
I thank my right hon. Friend for the question and his own personal interest and work in this area. He, like me, has come across this conundrum: we talk from the Dispatch Box about more money going into mental health and then we go to areas and they say, “Well, it’s not happening here.” That has been a genuine reality that we need to do something about. We are being more hands-on towards clinical commissioning groups and having a more transparent system of examining their finances. In addition, guidance from the NHS says that it expects the increase in finance to the NHS to go proportionately to mental health services and we have now given specific commitments to the series of services announced by the Prime Minister and contained in these recommendations. In that way, we hope to make sure that the diversion of funds that has happened in the past will not happen in the future. Local areas will thus feel that they, too, must ensure that they have the share of the resource.
Dr Philippa Whitford (Central Ayrshire) (SNP)
All of us in the House welcome the strides made in changing the stigma around mental health, and people have been brave enough to speak out. In Scotland, we had the “See me” campaign, which was about seeing the person, not the condition.
Despite all the great talk, the money has often not gone to the services. Mental health trusts suffered a 2% cut in their budget between 2013 and 2015, and the number of psychiatric nurses decreased by 1.4%. The right hon. Member for North Somerset (Dr Fox) talked about money often ending up somewhere else, and we must avoid that. We need also to focus on children, because one in 10 of our children suffer from mental health problems between the ages of five and 16, and they are waiting a very long time to get help. We face the same challenge in Scotland. We measure it, we know how difficult it is to deal with, and we have managed to improve things by increasing staff and funding, but we also have a long road to walk.
One thing we are not doing enough is thinking about the whole spread of mental health support out into the community and about the way people work: people having insecure jobs; and people struggling to keep a roof over their head. Later, we are going to debate welfare reforms, and mental health issues arise from that. Three times as many poor children will have a mental health issue as children who are in a stable and well-financed family. Are we not going to try to join up our decisions and look at our other policy areas, in terms of how people work, how people are supported, and the mental health suffering that comes from the lack of that?
Alistair Burt
I thank the hon. Lady for her usual well-informed contribution to the debate on these issues, and for what she says about stigma and the general approach the Government have been taking. She is absolutely right about that. We have supported the Time to Change anti-stigma campaign, which has had some success, although we have to do more.
The hon. Lady is also right about children and wider cross-government work. On children and young people, for the first time we have a Minister in the Department for Education in England who has responsibilities for mental health, and the Under-Secretary of State for the Home Department, my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) is here to demonstrate that we take those cross-government responsibilities very seriously. One way in which we are going to manage the response to the taskforce is by having a cross-governmental team to make sure that Departments are joined up. Housing has something to do with this, as do education and work and pensions, as the hon. Lady said. We will make sure that that is done.
I should have said, but did not do so for reasons of time, that what has been said by the taskforce and what the Prime Minister has said is in addition to the £1.25 billion announced in March for the development of the child and adolescent mental health services in England and the £30 million a year eating disorder work, in order to recognise the increased pressures on children. As the hon. Lady rightly says, the more prevention work that can be done earlier, the better.
Dr Sarah Wollaston (Totnes) (Con)
I remind the House that I am married to the registrar of the Royal College of Psychiatrists. I join the Minister in thanking the independent mental health taskforce for the work it has done. Will he go further on how we are going to track this money, with greater transparency, to ensure it is spent in the right place, not just within health, but within social care? He will know that many of those who are suffering from mental health problems are cared for in the community, under social care, and it is therefore vital that we have parity of esteem across both health and social care.
Alistair Burt
Yes, I thank my hon. Friend for that and recognise the work of the royal college. Its president, Simon Wessely, was also much involved in the report, as was the college, so I thank them for that. It is very important to track this money. The CCG assessment framework will help us to do that through the health service. The money that the Prime Minister announced in relation to community crisis care—the extra £400 million announced in January—will be spent throughout the community, and it is essential that we track it.
There has been a data lack; the hon. Member for Liverpool, Wavertree (Luciana Berger) knows about that well, because I answer far too many of her questions by saying, “This information is not collected” or, “This information is not collected centrally”. [Interruption.] I have noticed that. We are in the process of changing that situation; the dataset was in the process of being changed and more information will be available. In order to track things properly, we have to have the information available. The question is right and we are improving the data. It is important to track this, both in local authority work and in NHS work.
Mr Speaker
I know that the right hon. Gentleman will take it in the right spirit when I say that it is immensely encouraging that he notices his own answers.
Mr Kevan Jones (North Durham) (Lab)
Parity of esteem and extra resources are important, but one of the main messages from this report is that we need to hard-wire mental health and well-being into public policy. Twice as many people take their own lives as are killed on our roads each year. Does the Minister agree that it is now time for a national campaign to address this issue?
Alistair Burt
Yes, I do, and I thank the hon. Gentleman for his comments and for his work and interest in this area. Included in the taskforce’s recommendations is a national ambition to reduce by 10% the number of suicides—that would be a reduction of some 400 a year. Three areas are already piloting a “zero suicide ambition strategy”, and this probably needs to be given more prominence than it has been. A national suicide prevention strategy is in place, which I am reviewing to see how it can be better implemented locally, because not all local areas have a similar strategy. It is right that that gets extra prominence, and we had a debate on it not too long ago in Westminster Hall. We recognise that it is a significant issue for men in particular, because three times as many men as women take their own lives. The recent increase in the number of women doing so, which was noted just a few weeks ago, is also significant. It is important that we talk about this more, recognise that suicide is not inevitable, and have a national ambition to challenge it and do more. I am confident that the hon. Gentleman will be able to champion that work, just as he has championed other things.
Dr Andrew Murrison (South West Wiltshire) (Con)
It is a very sad fact that in healthcare those professionals who add the most to the service do not necessarily receive the same acclamation as those working in more glamorous specialties. What does the Minister think can be done to improve the status of those working in mental healthcare and thus mental healthcare as an attractive career option?
Alistair Burt
That is a good question. It is very important that true value is given to those who work in such an area, at all levels. When we have seen examples of poor-quality care and the tragedies that have occurred, we realise the value placed on those who display kindness as well as skill and demonstrate their qualifications. We need to talk about the quality of good care. We need to make sure that people who go into these professions have a career path, whatever their entry level. We want to encourage greater psychiatric awareness in medical training and clinical medical training for those who are leaving medical schools. Again, I know that Simon Wessely of the royal college has done much work in this area. We should emphasise that those who care for those in the most distressed situations, be they in hospital, community or specialist services, deserve our thanks, encouragement and proper training. Increased money for training is included in the package that the Government will be working on, and it will be a vital part of that.
Diana Johnson (Kingston upon Hull North) (Lab)
Two weeks ago, the Minister kindly came to Hull to talk to parents who are campaigning to get an in-patient facility for children and young people in the Hull area, as the previous one was closed several years ago. Will he update my constituents about any progress in the past two weeks and about whether any of the £1 billion allocated to mental health services will be used in Hull?
Alistair Burt
I thank the hon. Lady for her question. It was good to see her in Hull with her constituents and those of the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson). I do not think that any new money is specifically needed to deliver on the commitment to provide in-patient care for young people in Hull and the surrounding area. It seemed to me that people had already agreed on that; the problem was in the delivery of it. She will recall the frustration that I expressed when I was sitting round a table with representatives from the clinical commissioning group, the NHS and the trust, because for some reason it was impossible for us to reach a decision.
The update is that I have already taken that matter away with me to consider how to resolve it, because I had some concern about it. A national decision has to be made about the allocation of finance and priorities, but there is a clear local need that needs to be addressed. We will make progress on that. On beds generally, we have more beds for young people than ever before, and 50 more since I came into my role, but they are not always in the right places, as we saw in the hon. Lady’s constituency. I do not think that anything in the announcement affects the importance of that matter, which has already been recognised.
Mr Stewart Jackson (Peterborough) (Con)
I warmly welcome the Government’s initiative and the taskforce report. I am slightly disappointed by the Opposition’s rather churlish tone, as I thought this was a cross-party matter.
May I make two brief pleas to the Minister? First, we must not lose sight of acute mental health episodes among children and young people at weekends and out of hours, which is a long-standing issue, including in my constituency. Secondly, Tourette’s syndrome falls between the strategies and provision of education and health. One in 100 children are diagnosed with Tourette’s. It is an important neurological condition that we need to address. Will the Minister keep focused on that as part of his wider mental health review?
Alistair Burt
Absolutely. Attention is now being paid to crisis care in A&E, which recognises the fact that people who need urgent treatment will go to A&E. The Government are determined to ensure that there is emergency access 24/7 by placing more psychiatric liaison teams in hospitals and by improving crisis care in the community. My hon. Friend is right to recognise the problem. A number of syndromes and issues have particular qualities associated with them that need individual care, and he is right to raise his concerns about those who suffer from Tourette’s.
Joan Ryan (Enfield North) (Lab)
The taskforce emphasises the importance of supported housing for people with mental health problems. I think it is right to say that the Minister’s Department made no representations to the Treasury before the changes to housing benefit for tenants in supported housing were announced. It had made no official representations to other Departments as recently as three weeks ago. Will the Minister now make the case to his colleagues in the Departments for Communities and Local Government and for Work and Pensions on the need to exempt vulnerable people from the changes in housing benefit?
Alistair Burt
I understand the right hon. Lady’s point. I know that such issues are being considered extremely carefully by those who are responsible for developing the policy, but I will ensure that her further concerns are noted and that the Departments recognise them.
Helen Whately (Faversham and Mid Kent) (Con)
There is so much good stuff in this report that I must congratulate the authors on their work and my right hon. Friend the Minister on his interest. I particularly welcome the recognition in the report of the gap in the provision of psychiatric liaison services, and the commitment to have such services at the core 24/7 level in at least half of all hospitals by 2020. Will my right hon. Friend advise me on whether such provision is fully funded? Given the difficulties of getting such services in place at the moment, will he take a close interest in the plan to make it happen in practice?
Alistair Burt
I thank my hon. Friend for her interest in this subject, which she had expressed to me previously, and her work on it. Yes, our determination is that the extra £1 billion a year that will be spent on mental health services will cover the training and the commitment that we have made to 24/7 cover. It is very important that such cover is there. The issue was identified when the Care Quality Commission looked at the work of the mental health crisis care concordat, which has been so successful in its first 12 or 18 months. I can assure her that I am determined to ensure that we provide these facilities.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
The report adds to the consensus that arose from Lord Crisp’s commission and the cross-party work led by my right hon. Friend the Member for North Norfolk (Norman Lamb) on ending the practice of out-of-area treatments. Will the Minister commit to putting a timetable on that process so that we might know when it will happen?
Alistair Burt
The taskforce recommendation is that out-of-area placements should be eliminated by 2020; Lord Crisp’s report said 2017. I would like to see it done as soon as is reasonably practicable. We want to ensure that, where possible, people can be treated locally, as it makes a real difference. The hon. Member for Kingston upon Hull North (Diana Johnson) mentioned one or two cases of young people being treated some way away, and the impact that it has had on them. They lose local community links and the community work that can be done to assist them. We all want to see that ended, and I want it to be done as soon as possible. It will certainly be done within the taskforce’s recommended timescale. If it can be done any quicker locally, area by area, I will be very happy.
Mike Wood (Dudley South) (Con)
I welcome the Government’s positive response to the taskforce report. Although effective acute care is vital, prevention is better than cure. Will the Government look at ongoing training for all GPs in mental health so that all patients can have access to early diagnosis, care and treatment, to prevent problems from escalating?
Alistair Burt
My hon. Friend makes a good point. GPs are often contacted first when a problem is developing, as I know from my contacts with the British Medical Association and with the Royal College of General Practitioners, which was also very interested in the taskforce report. Those organisations want to ensure that doctors have enough training, because training levels tend to vary according to interest. I know that all GPs are concerned about the matter and want to ensure that they have the skills. Equally, they need to know that they can then refer to the right place. That is what the increased support for both emergency and community services is all about. It is to ensure that there are proper pathways so that people do not get stuck at any particular stage.
Helen Hayes (Dulwich and West Norwood) (Lab)
My 15-year-old constituent Matthew Garnett, who has autism, has spent the past six months in a psychiatric intensive care unit 30 miles from home. The unit does not have the specialism to meet Matthew’s needs and he has deteriorated significantly. The specialist bed that Matthew needs is in Northampton, where Matthew’s family have been told there are five young people who are ready for discharge but whose ongoing care cannot be arranged. Clearly, there is a crisis in mental healthcare for children and adolescents. When will the Minister bring a plan to the House to address that, and will he intervene to secure the bed that Matthew Garnett so desperately needs?
Alistair Burt
I thank the hon. Lady for her question. If she wants to make a particular approach on that case, I am ready to listen.
Alistair Burt
It is already in the works. Okay, thank you. Let me say a couple of things with regard to specialist care. First, even though we want most young people to have access to care close to home, there will always be some specialist care that will require out-of-area treatment—perhaps those are the circumstances to which the hon. Lady is referring. It is then a question of getting the place.
That issue emphasises why it is so important to have the community care available. We need to be able to discharge patients and put in place a proper care package. That is precisely what the taskforce considered and made recommendations on. That work is already ongoing. As my time in office has shown me, there are variations in practice in different places. Discharges are handled better in some areas than in others. The practice of the best must become the practice for all. Everything must be done to ensure that people are treated in the appropriate place at the appropriate time, and keeping people in hospital unnecessarily is not what anyone wants. That work is already going on, and I will make sure that the hon. Lady gets an answer to her particular question.
Stephen McPartland (Stevenage) (Con)
I welcome the Minister’s personal commitment to this issue and the Government’s investment in this area, which demonstrates the importance of mental health issues alongside physical health in the NHS. Will the Minister clarify how he will hold the NHS to account so that the money is spent on additional mental health services as opposed to just being frittered away?
Alistair Burt
The engagement of the NHS with the taskforce needs to be recognised and emphasised. The NHS set up the taskforce because it wanted to be clear about the state of mental health services and take a five-year forward view. That is what the taskforce does, but it goes beyond that to say that it has a 10-year vision, which I welcome. Not everything can be done in neat, parliamentary-cycle chunks, so it is important that people have a continuing sense of commitment. The certainty that my hon. Friend wants is demonstrated by the involvement of the NHS, the endorsement of the recommendation by the chief executive, and the work on transparency, which is important to us, to make sure that we can all see where money has been spent. That should hold clinical commissioning groups and the NHS to account on the expenditure issue.
Rachael Maskell (York Central) (Lab/Co-op)
Paul Farmer’s report highlights the fact that 50% of diagnoses of mental health challenges are made by the age of 14, and 75% are made by the age of 24. He also says in the report:
“Yet most children and young people get no support.”
Will the Minister explain what specific work will be undertaken to look at prevention and early intervention, including early diagnosis?
Alistair Burt
I thank the hon. Lady for her interest and her considerable knowledge of these issues, which she has raised a number of times.
There are two things to say. First, on expenditure on children and young people’s mental health services, £1.25 billion will be spent over the next five years to improve the baseline for child and adolescent mental health services, including early prevention. I would also mention the full roll-out of IAPT—improving access to psychological therapies—services for children by 2018. That is already in place for, I think, 70% of the country, and it will be completed by 2018. It is a way of ensuring that children have early access to the psychological therapies that they need. That is an important development, which I hope the hon. Lady welcomes.
James Morris (Halesowen and Rowley Regis) (Con)
As chairman of the all-party parliamentary group on mental health, I very much welcome the report, as Members in all parts of the House should. There is a high-quality public debate about mental health, in which we are addressing stigma, and the Prime Minister has made two speeches in the past three weeks about mental health, setting out the Government’s priorities. Does the Minister agree that there is a unique opportunity for him and the Government to drive forward real, quality change in mental health?
Alistair Burt
I pay tribute to my hon. Friend for the work that he has done as chair of the all-party group, and indeed to all colleagues in the House who have raised these issues over a period of time and, partly as a result of their personal experiences and their bravery in talking about them, have helped in the process in which we are engaged.
Yes, we have a great opportunity. The taskforce has set out a 10-year vision, and there is a commitment from the NHS. At the top level, in all parts of the House, there is a commitment to the issue, and I hope that we will have an opportunity to develop the services that people want and for which, in all honesty, they have waited too long.
Tom Elliott (Fermanagh and South Tyrone) (UUP)
I welcome the taskforce report and the Government’s response. The Minister indicated that £1 billion would be made available by 2021. What is the relationship between that and the devolved institutions in Scotland, Wales and Northern Ireland, and are there any Barnett consequentials?
Alistair Burt
Although I read the answers to my own questions, I cannot recall one on that point, so the hon. Gentleman has caught me out. I genuinely do not know the answer, so I will write to him about the devolved Administrations or place an answer in the Library. I think we are talking about responsibility in England, because this is a devolved matter, but there is good, close co-operation between officials on the development of mental health services in the devolved Administrations, which will certainly continue. I will make sure that an answer on the finances is placed in the Library.
Alec Shelbrooke (Elmet and Rothwell) (Con)
The work that the Minister has outlined is, to my mind, one of the most important pieces of work in this Parliament, and I very much welcome the investment and improved services that have resulted.
May I build on the comments of my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) and the hon. Member for Central Ayrshire (Dr Whitford) about the stigma of mental health? Depression is one of the most terrible diseases that people can suffer, and they often suffer because of the stigma attached to it, too. I congratulate the writers of “Coronation Street” on the Steve McDonald storyline, which was dealt with sensitively and addressed some of the stigmas and stereotypes. I urge my right hon. Friend the Minister to ensure that as much effort is put into tackling the stigma of mental health as into the practical investment in services.
Alistair Burt
My hon. Friend is absolutely right. I praise the storyline editors of “Coronation Street” just as much as I do those of “EastEnders”, which has done a remarkable job in relation to perinatal mental health with Stacey’s story over the past few weeks.
The Government’s anti-stigma campaign will certainly continue. We are much informed particularly by young people, with whom we have worked on Time to Change, to which we have made a further commitment of financial support. Stigma is a terrible thing, and is partly responsible for breaking the link between physical and mental health. The taskforce recommended that the Government deliver on the objective to make sure that more people with mental health problems receive help for their physical issues, so that we can deal with the terrible difference in mortality rates between those with mental health difficulties and other people. Dealing with the stigma, so that people feel able to raise their problems, is an important part of that.
Mark Durkan (Foyle) (SDLP)
I thank the Minister for his statement, and I acknowledge the work of the taskforce and its report.
I encourage the Minister, along with his colleagues in the Department for Education, to take a particular interest in the mental health in schools training programme, which has been developed by practitioners to ensure that schools are better equipped to support the mental health and wellbeing of pupils. Will they help to safeguard those interests in a system that is designed to be run in a similar way to the child protection system, with which schools are familiar?
Alistair Burt
The hon. Gentleman has a long-standing interest in these issues. He is absolutely right: in England, a pilot project with 27 schools is being run by the Department for Education to locate and identify a single point of contact in those schools on mental health issues for young people. Depending on the results, more projects can be rolled out. Early identification and support in school are absolutely essential, and that work is under way.
There are a number of different initiatives, sometimes inspired by people who have experienced personal tragedy in their own family. They realise that the tragedy that has befallen their young person might not have happened if their friends had been more aware of their circumstances, or if the school or college had been more aware. We look at all those different initiatives to see how best practice can be spread, but the hon. Gentleman is right to raise the issue.
Jeremy Lefroy (Stafford) (Con)
I congratulate the Minister and the Government on their commitment on this. He has just spoken about best practice. Last month in Stafford we held a round table on mental health. One of the issues that came up was that there were a lot of good local initiatives, both in the public and the non-governmental organisation sector, but sometimes they did not know about each other. Will he point us to best practice in the sector?
Alistair Burt
I am happy to do so, and I welcome my hon. Friend’s question. As I indicated earlier, something that has perplexed me since I have been in this role is the variation in practice in different places. It has never been easier to transfer information by electronic means and make people aware of best practice, but it is still difficult to move things around. We need to make sure that there is a website—a clearing house—for ideas in such areas.
Alistair Burt
Absolutely. We need to make sure that we have proper ways to access all the different ideas. A lot of work has gone into this, and we need to make sure that it is easy to access different ideas. There is a lot going on, and a lot can be done in relation to spreading best practice.
Mr Speaker
I gently remind the House that exchanges in the Chamber are not a private conversation. It is quite important, from the vantage point of those who take a full and complete record of our proceedings, that they can hear what is said.
Mr Speaker
Thank you for that helpful interjection from a sedentary position.
Conor McGinn (St Helens North) (Lab)
The Minister welcomed the work of the taskforce and its comprehensive report. I agree entirely. He said that he would seek to implement the measures in a rolling programme, but can we infer from that that he is committed to implementing all the measures and that he fully accepts all the recommendations?
Alistair Burt
Yes, we have indicated that we accept all the recommendations by the taskforce. I would like to roll out responses to them over a period of time so that they are regularly brought back to the House. Our commitment to expenditure, training and dealing with the recommendations is clear.
Mr Speaker, you would not want to hear all the private conversations that go on on the Floor of the House, nor would those who report our proceedings, but I see the hon. Member for Liverpool, Wavertree (Luciana Berger) so often at events such as this that it is not unnatural that we have the odd exchange over the Dispatch Box.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I declare an interest as a registered clinical psychologist. I thank the Minister for his commitment and the taskforce for its informative report. In considering mental health across the lifespan, the report highlights the fact that 40% of people living in care homes are affected by depression, which contributes to morbidity. Alongside medical and social care, will the Minister commit to funding specialists in older adult psychological treatment, to address the growing mental health needs of our population?
Alistair Burt
I thank the hon. Lady for her work in this area, for her commitment to this area since she has been in the House, and for being at the National Autistic Society event last night, where she again demonstrated that interest. May I look at the suggestion that she makes? It is well recognised that with the growing incidence of dementia and other issues, and with those in care homes being increasingly frail, there will of course be a need for further specialised work. May I look at that area in particular and come back to her in due course?
Short Money
(8 years, 9 months ago)
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Chris Bryant (Rhondda) (Lab)
(Urgent Question): To ask the Leader of the House to make a statement on the Government consultation on Short money.
The Parliamentary Secretary, Cabinet Office (John Penrose)
I am happy to confirm that since we last discussed this topic on the day the House rose for recess, we have completed the steps I promised at the time. On Friday 12 February I tabled the statutory instrument required to change the allocations of policy development grants to fund political parties, in line with the recommended changes put forward by the independent Electoral Commission. Last Thursday the Deputy Leader of the House and I tabled a request for views about potential similar changes to Short money. I hope the House will therefore appreciate why I am responding to this urgent question.
The parallels between policy development grants and Short money—both forms of taxpayer funding for political parties—are strong and, since Short money is larger and more valuable than policy development grants, it seems sensible to take a similar approach. The request for views asks some important questions. For example, the cost of Short money has gone up by 50% since 2010, and will rise by a whopping 68% by the end of this Parliament if nothing is done. At a time when everybody else outside Westminster has had to tighten their belts, why should politicians expect to be treated differently, feathering their own nests at taxpayers’ expense?
The rises in Short money are linked to the retail prices index inflation every year, but benefits claimants get rises linked to the lower consumer prices index inflation each year, so how can any politician look their constituent in the eye and say that they deserve a bigger rise every year than someone who is looking for a job or is on a pension or living with a disability?
The rises in Short money are also linked to the number of votes cast at elections. That has contributed this year to an enormous 30% increase, from £7.25 million in 2014-15 to almost £9.5 million this year. How can that be justified when many vital public services are having to cope with cuts of 19%? Short money is notably untransparent. It is taxpayers’ money after all, but there is no requirement to publish details of how it is spent. There are, rightly, requirements, on the parallel policy development grants and on pretty much every other area of Government funding, too. How can it be right in the modern age for politicians to expect to be bunged a load of hard-earned taxpayers’ cash—more than £35 million in total since 2010 for the Labour party, for example—without at least explaining how it gets spent?
Finally, the distribution of Short money between parties throws up some pretty odd results. For example, UKIP gets £688,000 for its one MP, although the hon. Member for Clacton (Mr Carswell) has, in an impressively principled stand, turned some of that down. The Greens, also with one MP, get less than a third of that. Clearly, it makes sense to ask whether that can be improved.
These important questions need to be answered. The request for views runs until 7 March so there is plenty of time for everyone on all sides of the House to submit their views and opinions, and there will be plenty of time for us to debate these issues here or in Westminster Hall if anyone wants to do so. We are already off to a flying start with this second urgent question, and I will take contributions from everybody here today in the spirit of constructive submissions and suggestions in answer to the questions that the request for views has raised.
Chris Bryant
That is all very well, but Short money has nothing to do with the Cabinet Office. It is House business, not Government business. The whole point is that it enables Parliament to do its business properly. The accounting officer is not the permanent secretary of the Cabinet Office, but the Clerk of the House. The Leader of the House should be here doing his job properly and answering questions.
Can this Minister confirm that any changes will have to be debated, and voted on, on the Floor of the House? Can he confirm that because this is House business, it will not be subject to a Government Whip? This is the shoddiest so-called consultation I have ever come across. It deliberately forgets to mention that Short money is linked to how many seats and how many votes all the Opposition parties got at a general election, so the main reason Short money has increased in 2015 is that this Government have a much smaller majority than the Labour Government or the coalition Government, and the Opposition parties got more seats and more votes than in previous Parliaments.
Can the Minister confirm that, contrary to what he says, this is not a 19% cut? With inflation, it is a 24% cut. How can that be right when the Chancellor has increased the cost of his political office to the taxpayer by 204%? Or is there one rule for the Opposition and quite another for the Government?
The Minister said last time that the cost and number of taxpayer-funded Tory special advisers—the only bit of this that he is responsible for—is coming down, but that is not true either, is it? Since the general election that figure has gone up, so will the Government be taking a 19% cut on 1 April? No, I do not suppose they will.
The consultation, published in the half-term recess—the Minister should be ashamed of himself—allows just 11 working days for responses, and then seems to intend to implement a decision less than three weeks later. Will that give the two Conservative-chaired Select Committees that have expressed an interest in doing inquiries time to complete those inquiries? I do not suppose it will. That is another affront to this House.
Fair-minded people will conclude that the Government are developing a nasty authoritarian streak, and that an overweening Executive wants to crush all opposition because they are afraid of scrutiny. When we were in government we trebled Short money and the Tories did not hesitate to bank £46 million, so we will not take any lessons from the Minister. When I was Deputy Leader of the House in 2009, some people suggested that we should cut Short money for the Conservative party because other Departments in Government were facing significant cuts. We said, “No, democracy is worth protecting.” This is not a consultation on cutting the cost of politics—we would welcome that. It is a pernicious ultimatum and the Government should withdraw it unless they are prepared to put Spads on the table as well. To quote the Minister, why should the Government be treated any differently from the Opposition? Feathering their own nest—that is what they are doing.
John Penrose
I am happy to reassure the hon. Gentleman that the cost of Spads, as I mentioned when we last met to discuss this, has fallen since the general election. The request for views is entirely clear about the various different causes of the rise in Short money, and the consultation asks for views and expressions of how it might be amended point by point, so the hon. Gentleman is quite wrong about how the request for views is done.
Even if no changes are made to some of the proposals in the request for views, the Labour party will still receive more funding in real terms than did the Conservative party in 2009-10. It will receive an estimated £11 million of taxpayers’ money over this Parliament. There will be no real reduction in cash terms; in fact, there will be a small increase in cash terms, even after a 19% cut, compared with 2014-15. [Interruption.]
John Penrose
I was hoping for a more constructive response. I was hoping for a more balanced response. I was hoping for a set of proposals I could use as a response to the request for views. I am afraid that that is not what we have had, and I deeply regret that. I hope there is still time for us to move forward in a more constructive fashion.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I thank my hon. Friend for launching a consultation, which, I have to confess, seemed to be lacking earlier in the process, so that is obviously a step forward. It is legitimate to ask whether it costs more or less to run an Opposition depending on how big the Government’s majority is. The official Opposition have a function that should be carried out regardless of the number of seats they have. I assure my hon. Friend that the Public Administration and Constitutional Affairs Committee will continue to take an interest in this matter, although I hope it can be resolved rather more consensually than in today’s exchanges.
John Penrose
I thank my hon. Friend for those comments and particularly for his final point about trying to resolve these issues more consensually. I look forward to any conclusions his Committee arrives at. I completely agree that it must make sense at least to ask, and to request views about, what the proper cost of running an Opposition—the official Opposition or, indeed, some of the other opposition parties—should be. That does not necessarily vary depending on the number of votes cast at an election, which is something the current system requires, for example.
Patrick Grady (Glasgow North) (SNP)
I declare an interest as the national secretary of the Scottish National party. It is a good thing that a consultation is taking place, but why limit it just to political parties? Why not extend it to the public and other stakeholders who might have an interest? There is nothing wrong in principle with reducing the cost of politics, so can we get some assurances on reducing the number and cost of special advisers and, indeed, of Members of the House of Lords? Given the proximity of the end of the financial year, when will the Government be in a position to confirm to the parties and the staff they employ what the settlement will be?
John Penrose
Obviously, the conclusions of the request for views will depend on what views are expressed, and I do not want to prejudge that. We will, however, want to move promptly and swiftly to make sure that any staff who might be affected by any changes that are announced have the maximum time for planning and that there is certainty as soon as there can be.
John Glen (Salisbury) (Con)
I regard Short money as a critical part of our democracy, but given the realistic comparison with special advisers, and the steps the Government have taken to have transparency in the publication of senior special advisers’ salaries, does the Minister not think it appropriate for the Opposition to show greater transparency in the salaries of their senior appointed researchers?
John Penrose
My hon. Friend, who was involved with administering Short money and policy development grants before he came into the House, knows whereof he speaks. He is right that it is essential that we demand the same transparency for taxpayers’ money in all areas. That should include not just the cost of Spads, which is already transparent, but, equally, policy development grants and Short money.
Tom Brake (Carshalton and Wallington) (LD)
I have no problem at all with the transparency that has just been asked for. The Minister is a decent man, but I think he has been tasked with doing someone else’s dirty business. What he is proposing is not actually about the cost of politics; if it were, he would also propose a cut in the budget for special advisers. This is actually about gagging the Opposition. Will he scrap this rushed consultation, abandon the attack on the scrutiny of the Government, and look again at how the cost of politics can be reduced by, for instance, chopping the budget for special advisers?
John Penrose
I thank the right hon. Gentleman for his kind comments about me, and as a member of the Whips Office with him in the last Government, I reciprocate, of course. He is right that there are other ways of cutting the cost of politics. For example, we have in front of us proposals to reduce the total number of MPs in this House. I would not, therefore, want to limit what we plan to do just to Short money, but we should not let that be the enemy of doing the right thing on this issue either. Therefore, it is essential that we proceed with these proposals, and I hope we can rely on the right hon. Gentleman’s support.
Mr Andrew Tyrie (Chichester) (Con)
Having had a hand in the creation of the policy development grant, and having argued vigorously for Short money increases when the Conservative party was in opposition, I will have to look carefully before arguing for anything other than that this decision to make such a substantial cut needs to be reconsidered. It certainly seems unacceptable that it is being introduced in one year. Everybody understands the need for financial stringency, and for this House to takes its share of reductions, but could the Minister at least look at whether this reduction can be phased? Could he also carefully examine the point that has been made about special advisers, whose numbers have grown enormously? The Labour Government bequeathed about 80, and the coalition Government got up to about 110, although the number has been reduced a little recently. Still, those numbers are very large. Those people do provide a lot of political assistance to the Government, and there is—although not a symmetry—a relationship between the two numbers. Looking at Short money in isolation would be a mistake.
John Penrose
May I start by reassuring my right hon. Friend that we are talking not about a cut, but about a slower rise? The cost of Short money has already risen by 50% since 2010, which is a significant amount. We are talking about reducing the rise, which, if nothing were done, would continue to ratchet up between now and the end of the Parliament. I would also say to him that the total salary bill for Spads is still lower than the total cost of Government funding for policy development grants, Short money and other areas of expenditure. Therefore, while I agree that the two things are not directly comparable, there is some symmetry. I hope he is reassured by the fact that the Spad salary bill is much lower overall than the bill for the total funding of Opposition parties.
Mr Nigel Dodds (Belfast North) (DUP)
Will the Minister clarify his thinking on policy development grants and how it ties in with the views of the Electoral Commission?
John Penrose
The House will be aware that the independent Electoral Commission has undertaken a fairly careful consultation over some time and has made some recommendations. The statutory instrument I mentioned in my initial remarks implements some of those, but not all as yet. We are holding off on deciding how we proceed with the remainder of the recommendations until we have the results of the expression of views. Given the obvious parallels between Short money and policy development grant, we thought it was sensible to make sure we had one set of answers before we proceeded with the other recommendations.
Suella Fernandes (Fareham) (Con)
The cost of Short money has increased by 68% cumulatively since 2010. Is that really justifiable at a time when councils of all colours are making very large efficiency savings? Surely, taxpayer-funded political parties can do the same.
John Penrose
I could not agree more. People outside this place—outside the Westminster bubble—who are looking at our discussions today will not understand why politicians feel that they should treat themselves separately and as a special case. Those people will look at what has happened to their budgets over the last five or six years and say, “What is sauce for the goose should be sauce for the political gander as well.”
Hywel Williams (Arfon) (PC)
Setting aside for a moment the outrageous detail of the request for views, will the Minister tell the House what effect a cut in Short money would have on scrutiny and on the comfort, or discomfort, the Executive feel as they go about their business?
John Penrose
As I mentioned, the amount of Short money has gone up by 50% since 2010, so Opposition parties have a great deal more money with which to do their job than they did before. I refer the hon. Gentleman back to the comment made when we last considered this issue, about 10 days ago, by the hon. Member for Clacton, who pointed out that the costs of research and many other political functions are now potentially lower. Given what is being asked of many Departments and local authorities, it is certainly reasonable to ask people to work more efficiently in future.
Tom Pursglove (Corby) (Con)
I think the public will be astonished that full accounts do not have to be published in this age of transparency. How is the Minister going to put that right?
John Penrose
I devoutly hope that the result of this process will be an increase in transparency. We already have improved transparency in pretty much every other area of taxpayer-funded spending, and we already have transparency that is far better than that for Short money on policy development grants—a very similar kind of grant. It would therefore be increasingly out of step with the modern world for us to assume that Short money should somehow be magically exempt.
Dr Alasdair McDonnell (Belfast South) (SDLP)
I would challenge the Minister, because I do not see this money as being for politicians; it is for our staff and our support teams. It is essential that we have those staff and support teams so that we deliver, and deliver well, for our constituents and the people we serve. Transparency is not an issue. None of us in this House, as far as I am aware, will dispute the need for transparency, and any moves towards transparency would be broadly supported. However, the problem is that my arithmetic seems to have gone awry. My figures tell me that in 2010 the Chancellor employed four special advisers, at a total cost of £230,000, and today he employs 10 special advisers at a total cost of £700,000. That is a 204% increase, according to my arithmetic; perhaps I am wrong. How can the Minister defend a 24% cut to those of us who are trying to make things work and a 204% rise for those in the Chancellor’s office? The Chancellor’s Spad team now costs more than the total cost of policy development grant given to all of us on these Benches—DUP, Plaid Cymru, SNP and SDLP Members. The Chancellor gets more than we get.
John Penrose
As I said, the cost of special advisers has fallen since the last general election. I would just point out that Gordon Brown, when he was Chancellor, had more Spads than the current Chancellor, and that the average salary of a special adviser is currently £2,000 less than it was under Gordon Brown’s Government in 2009.
Edward Argar (Charnwood) (Con)
Short money, quite rightly, exists to enable Opposition parties to undertake scrutiny and parliamentary duties. Many of my constituents will therefore find it hard to understand the funding received by Sinn Féin when its Members neither attend this House nor participate in its activities. Will my hon. Friend undertake to look at this anomaly?
John Penrose
For a long time, the funding received by Sinn Féin has been treated as a separate but parallel consideration, subject to a separate resolution of this House. I would expect that to continue and for it to receive separate, special consideration as a result.
Mr Douglas Carswell (Clacton) (UKIP)
I welcome the Government’s announcement that they will be cutting Short money, and I urge Ministers to stick to their guns and not to retreat. The sight of special pleading from political parties wanting to get their hands on taxpayers’ cash is disgraceful. I urge Ministers not only to slash Short money but to insist that all political parties publish fully audited accounts of what they spend it on, as my party will at the end of this year, so that we can see the hotel bills and precisely what they spend that taxpayers’ money on.
John Penrose
I strongly agree with the hon. Gentleman. It is a timeworn phrase but it bears repetition: sunlight is the best disinfectant.
Kevin Foster (Torbay) (Con)
I am sure that the Minister will agree that it is vital that the Government secure value for money. Given that the purpose of Short money is to provide a credible Opposition, does he agree that the display that we have seen so far, with the announcement of policies such as nuclear submarines without nuclear missiles, shows that much of it has been completely squandered?
John Penrose
I hesitate to follow my hon. Friend down such a path, but if the purpose of Short money is to provide a credible Opposition and it has gone up by 50% since 2010, perhaps we now have an incredible Opposition instead.
Mr David Winnick (Walsall North) (Lab)
Since, with the one exception that we have just heard, there is such strong feeling among those on the Opposition Benches that the Government are intending to undermine the work of the Opposition, would it not be sensible to do what was done originally when Short money was introduced—namely, to have constructive talks with the Opposition, with no ultimatum at the outset, in order to reach a fair settlement?
John Penrose
I had rather hoped that the request for views would elicit a strong and perhaps constructive response. I am afraid that has not been visible so far, but none the less I hope that that may change between now and the end of the period of the request for views. I also point out to the hon. Gentleman that because we are facing a deficit, time is pressing and we have less fiscal slack to play with.
Andrew Bridgen (North West Leicestershire) (Con)
Will the Short money reforms mean that Labour has to name and state the salaries of its special advisers, particularly those who write the Leader of the Opposition’s speeches, because although I do not know their remuneration, I think they are hugely overpaid?
John Penrose
Given the level of transparency that is already rightly expected of the Government when employing Spads, for example, it is reasonable to ask for an equivalent level of transparency with regard to how Short money is spent on people such as Damian McBride, who I understand has just rejoined the Labour party’s payroll, and Seumas Milne.
Justin Madders (Ellesmere Port and Neston) (Lab)
The Minister talks a lot about savings to the taxpayer, but can he confirm that any savings that will be made by these proposals will in fact be dwarfed by the extra cost to the public purse as a result of the Prime Minister’s prolific rate of appointments to the other place?
John Penrose
Actually, the cost of the House of Lords, I am told, is falling even while its numbers are rising, and so the cost to the public purse will be reduced as a result of the changes that are happening at the other end of the building.
On the hon. Gentleman’s broader point about whether saving this amount of money is worth while, I would say, at the risk of angering my colleagues from Scotland, that mony a mickle maks a muckle. It matters what we save and it matters that we pay attention to every single detail, given the scale of the deficit that we inherited from the previous Labour Government.
Mark Spencer (Sherwood) (Con)
I hope the Minister will recognise that there appears to be consensus in the House on transparency. Would it be fair enough, given that the Government have reduced their travel costs during their time in office, that the Opposition should publicise their travel costs and claims for special advisers running up and down the country?
John Penrose
That is an intriguing proposal, and I thank my hon. Friend very much for it. I will take it as a constructive suggestion for the request for views.
Julie Elliott (Sunderland Central) (Lab)
Given the increase in costs of Spads since 2009 by some 56%, the proposed cut in Short money of 24% over four years is disgraceful. Is the Minister not ashamed of his Government’s attack on democracy and scrutiny in this House?
John Penrose
We have already covered these points. Short money has already gone up by 50%, and it has gone up by 30% in the past year. I think that people listening to these exchanges will be asking themselves how much it costs to run an Opposition and why politicians feel they are so much more deserving of cash than, for example, benefits claimants whose money has not risen at anything like the same speed.
Dr Matthew Offord (Hendon) (Con)
Given the public’s perception of the performance of the Leader of the Opposition, perhaps we should just take the Opposition’s money away completely.
John Penrose
I will take that as a suggestion and a proposal. I suspect that the weight of views across the House may probably be rather against it and that people do feel that there is a place for Short money, if it is properly reformed, in the same way as there is a place for the policy development grant, in order to make sure that an effective Opposition, properly, not excessively, funded, can function.
Ms Margaret Ritchie (South Down) (SDLP)
Again, I ask this question: with the cost of Government Spads rising, will the Minister concede that a disgraceful 24% cut to the Opposition parties’ funds is a case of double standards and an impediment to the Opposition parties’ scrutiny of the Executive?
John Penrose
I am afraid that I respectfully disagree with the hon. Lady, if only because, as I said, the cost of Spads has fallen since the general election and will still remain lower than the total funding for Opposition parties.
Christopher Pincher (Tamworth) (Con)
Spending of Short money is unnecessarily opaque, so in his consultation, will my hon. Friend seek representations from senior, and numerate, Opposition Members such as the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) and the hon. Members for Nottingham East (Chris Leslie) and for Islwyn (Chris Evans) as to whether they think that the taxpayer, and indeed their own party, gets value for money from the likes of Seumas Milne?
John Penrose
I will take submissions from any Member on either side of the House on what would involve good value for money. My hon. Friend is absolutely right to focus on the questions of what represents value for money, how much it costs to run an Opposition office and whether we can make sure it is done as efficiently as possible with taxpayers’ cash.
Helen Goodman (Bishop Auckland) (Lab)
The fact is that the number of special advisers has gone up to 96 and the Prime Minister has appointed a record 236 peers to the other place. Meanwhile, the Government have introduced the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 and are attempting to gag the trade unions and cut the Short money. That shows that the Government are not interested in cutting the cost of politics. It is absolutely clear that they want to silence any opposition in this country.
John Penrose
I am afraid that I do not accept the premise of the hon. Lady’s question. We are proposing to cut the number of MPs in this place—which is not an easy thing to do—so we are very serious about cutting the cost of politics. I therefore hope that, in that spirit, people will contribute constructively to the request for views.
Paul Maynard (Blackpool North and Cleveleys) (Con)
Does the Minister agree that my constituents at least have the right to as much transparency as possible on how Short money is being spent? For all they know, it could be being used by hon. Members to help them write their books.
John Penrose
I am sure that none of the Opposition parties would spend taxpayers’ money in such a disrespectful fashion, but they will, of course, have nothing to hide, so I am sure that nobody will be at all concerned about proposals for increased transparency.
Paula Sherriff (Dewsbury) (Lab)
Will the Minister confirm that this will have to be done by a resolution of the whole House? Does he have a date in mind for such a resolution?
John Penrose
The usual parliamentary process will be followed, so there will have to be a proposal. The statutory instrument for positive development grants has already been laid, and that can be either passed or prayed against in the usual way. The hon. Lady is right to say that, when we come up with proposals for Short money, they will have to be passed by a resolution of this House.
Jake Berry (Rossendale and Darwen) (Con)
Will the Minister confirm that during the consultation he will specifically look at protecting and supporting the interests of minority parties? They have a hugely important role to play in this Parliament, especially when we have such a divided and weak official Opposition.
John Penrose
I gave in my initial remarks an illustration of some of the peculiarities of the distribution of Short money. I gave comparisons between the money received by UKIP and the Greens, but there are other examples. Many Members of smaller Opposition parties will be able to quote examples of why they feel they are being either under or over-remunerated, depending on who they are. Therefore, it is certainly sensible for us to ask how that can be improved and whether the basis of allocation can be made better.
Andrew Gwynne (Denton and Reddish) (Lab)
“Cutting the cost of politics,” the Minister says, meaning cutting the number of elected MPs while stuffing the other place full of his mates, and cutting support to Opposition parties while greatly increasing the number of Government special advisers. If he wants to cut the cost of politics, why has the Conservative party claimed £1.27 million in policy develop grants since 2010?
John Penrose
The allocations of money as per policy development grants are based on recommendations by the independent Electoral Commission, not on Government proposals. I would also point out that we are practicing what we preach, because in previous years the allocation of policy development grants to the Conservative party has been scaled back. We have handed some of that money back, for precisely the reasons that I described earlier about wanting to cut the cost of politics.
Robert Jenrick (Newark) (Con)
With a national debt of £1.5 trillion, or £24,000 for every man, woman and child in this country, and some Government Departments making heroic efforts to cut back-office functions—the Ministry of Justice is cutting 50% of its back-office functions—what possible signal does it send out to the country and to the civil servants doing those jobs when they see some political parties refusing even to engage with sensible reforms of their own funding?
John Penrose
I could not agree more. The general public will not understand why politicians feel that we should be a special case. They will look at and listen to this debate and ask, “Why should these guys think they are in any way deserving of better treatment than people who are on benefits and struggling with their budget? Why should they get a special deal?”
Diana Johnson (Kingston upon Hull North) (Lab)
I do not think that the general public will understand why the Cabinet Office has 50 press and communications officers or why the Ministry of Justice has 42 external communication officers. Should not the Government start to tighten their own belt and cut their own cloth first?
John Penrose
The Government are putting their own house in order. We made dramatic savings in the public sector over the course of the last Parliament and we are continuing to make further savings, including of 19% in unprotected Departments, across the whole of Government in this Parliament, so I respectfully reject the hon. Lady’s starting assumption.
Conor McGinn (St Helens North) (Lab)
In the last Parliament, I was an adviser to the then shadow Secretary of State for Defence, my hon. Friend the Member for Gedling (Vernon Coaker), along with one other part-time member of staff. By contrast, the Government Ministers had four special advisers, a series of private offices and hundreds of press officers and policy advisers. There is no equivalence. Will the Minister accept that Short money is not profligate, but the minimum required for opposition in a healthy parliamentary democracy?
John Penrose
If it is the minimum required for sensible opposition, perhaps the hon. Gentleman can explain why it is so much higher now than it was five years ago in real terms, and why it will be higher than it was in 2014-15. If the costs of running an Opposition are consistent—they may even be lower than they used to be—the current levels of Short money, having risen so far, must be over-budget and something where savings can be made.
Crossrail: Elizabeth Line
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Transport (Claire Perry)
With permission, Mr Speaker, I would like to make a statement to the House.
I am delighted to announce that from December 2018 the Crossrail route will be known as the Elizabeth line and will be marked on the nation’s transport maps in royal purple.
Today Her Majesty took part in a naming ceremony at the line’s new Bond Street station, where she met just some of those responsible for delivering Europe’s most complicated engineering project, which is now more than 70% complete and running on budget and on time.
Her Majesty has served our country for more than 60 years. She has been a symbol of wisdom, continuity and stability in an age of unprecedented change, and she has long been associated with many aspects of this nation’s transport. Our Queen opened the Victoria line service in 1969. The Fleet line was renamed the Jubilee line in honour of her first 25 years on the throne in 1979, and she is the first reigning monarch to travel on the London underground. More recently, Her Majesty opened the redeveloped Reading and Birmingham New Street stations and Heathrow airport’s new terminal 2 building. I am told that trains are Her Majesty’s favourite form of travel and that she is a frequent user of both the royal train and scheduled train services. I hope that Her Majesty will consider an invitation to travel on the first passenger train that will pass through the Elizabeth line’s tunnels in December 2018.
Even before that date, the project is breaking new ground. It is not just the largest infrastructure project in Europe, but the most technically challenging and the most ambitious. In a little over three years, the thousands of people who have worked night and day on the project have dug 26 miles of tunnels under London. Thanks to their work, the line is now more than 70% complete.
Last May, Transport for London began operating the first section of what will become the Elizabeth line route from Liverpool Street to Shenfield. Network Rail has completed most of the work to connect the line to the existing rail network. In Derby, as I have seen for myself, Bombardier is building the first carriage of the first Crossrail train—a British-built train for a Great British rail line.
When the Elizabeth line opens fully in December 2018, it will change dramatically the way in which people travel around London and the south-east. It will bring an extra 1.5 million people within a 45-minute commuting distance of London’s key business areas. It will increase the total railway capacity by 10% in the south-east, adding much needed capacity to some very crowded lines. It will support our ambition of city-wide regeneration and shorter journey times for passengers. I am pleased to confirm that all 40 Elizabeth line stations will be step free so that they are accessible to all.
We are proud of this investment, but it is not just about the current project work. The project will bring a lasting skills legacy to Britain—in particular, a skills legacy that will benefit many thousands of women. As Terry Morgan, the project’s chairman, has said, Crossrail has always been more than a transport project. It has been a blueprint for how infrastructure should be built in future.
Today’s construction sites are sophisticated places, which require communication skills, the ability to multitask and manage complex projects, work in teams and win the trust of clients and site neighbours. Those are all skills that make such projects natural places for women to work. Through the building of Crossrail, they are steadily becoming a hallmark of modern construction. As a result, the project has broken new ground in the diversity of its workforce. Women make up almost a quarter of those in its graduate programme. Those are people who will go on to become the future leaders of the industry. Of the 10,000 people working on Crossrail, nearly one third are women. Through Crossrail, women are forging careers they never thought possible—a fact that we celebrated at a cross-party reception here in January that we called “She’s Building It”.
Crossrail—soon to be the Elizabeth line—the Olympics, Heathrow terminal 5, and Reading and Birmingham New Street stations are rejuvenating the image and the economics of British engineering and opening career opportunities to our best and brightest, among them increasing numbers of women. I know that people working on the Crossrail project are already immensely proud of the legacy that they are helping to create. I believe that their pride can only be enhanced by the announcement that this amazing, groundbreaking engineering project will forever be known by the name of our sovereign, Queen Elizabeth. With permission, I commend this statement to the House.
Andy McDonald (Middlesbrough) (Lab)
I am grateful to the Minister for advance sight of her statement. On my behalf and that of Her Majesty’s Opposition, I am in the happy position of being able very much to welcome the announcement. Crossrail has had cross-party support over its lengthy gestation period, and we all look forward to the considerable benefits that the new line will bring in the years ahead.
The naming of the line as the Elizabeth line is very much welcomed by Opposition Members. We have become used to the title Crossrail in recent decades. The renaming is a significant improvement on Cross London Rail Links Ltd, and Elizabeth is undoubtedly a much more elegant and fitting title for such an innovative and important transport infrastructure development, which will bring the benefit of better transport to millions of passengers from Reading in the west to Shenfield in the east. Given the enormous public commitment that has gone into developing the Crossrail brand, will the Minister give us an assurance that the Crossrail brand and livery will continue to be used?
I pay tribute to the last Labour Government, who took the Crossrail project forward in their 10-year transport plan, “Transport 2010”, in which they reasserted that an east-west rail link should go ahead. Alistair Darling, the then Secretary of State for Transport, announced that the Labour Government supported the new east-west Crossrail link and committed to bringing forward legislation to enable Crossrail to proceed, which was critical in turning the aspiration and ambition of Crossrail into reality.
One of the first ideas of the previous coalition Government, after they came into power in 2010, was to consider cancelling the Crossrail project altogether. Labour Members are delighted that not only is the project back on track, so to speak, but the Government’s conversion to supporting Crossrail has been so all-embracing that they have not only given the project their full backing but decided to dedicate it to Her Majesty. In that, they have our support.
We all expect Crossrail or the Elizabeth line to change the face of transport in London and the south-east, whatever its name. I would like to draw the Minister’s focus to a few points. Crossrail is largely on time and on budget, so can the Minister confirm that it will indeed open on schedule? Will she inform the House of what lessons have been learned from the successes of Crossrail that can be applied to High Speed 2? The Crossrail service will share the Great Western main line to Reading, but sadly the electrification programme has slipped and will cost more than was first estimated. Will the Minister take the opportunity to confirm to the House that the rescheduled electrification of the Great Western main line to Reading will be completed in time for the opening of the Elizabeth line?
I was delighted by the fact that after some 35 years of planning and development, Crossrail finally broke ground on 15 May 2009, when the Mayor of London and the then Transport Secretary, the noble Lord Adonis, sank the first pile into the docklands at the new Canary Wharf station. As we approach the conclusion of this most magnificent engineering undertaking, we remember the name of Crossrail with much affection and admiration. Although Crossrail is not dead, I wish the Elizabeth line a long and successful life.
Claire Perry
It is a delight to share, as we often do, a cross-party view—total agreement—on transport infrastructure. I would like to answer some of the hon. Gentleman’s questions.
Crossrail branding will apply for now, but the intention is that from December 2018 the Elizabeth line branding will come into force. The trains are currently under construction, as the hon. Gentleman knows, and it is not expensive to repaint and rebrand them, so I do not think that there are any costs associated with this welcome decision.
The hon. Gentleman asked about lessons that have been learned from Crossrail and that can be applied to Network Rail. I would argue that there are lessons that can be applied more broadly. One thing that has worked well is the fact that the project has stuck to its guns—stuck to its knitting. It has resisted demands for deviations from the route and proceeded with its original plan, which it has delivered very effectively. Crucially, it has blazed a trail in engagement with communities who are affected by the work. I have been surprised, when I have visited stations, by how little the people around the stations realise that the work is going on. That is a tribute to the care and consideration behind that engagement. Another enormously important factor has been the engagement of the supply chain. The majority of supply contracts are let to companies outside the south-east and, in many cases, to small and medium- sized enterprises. Those are two important lessons for the future.
The hon. Gentleman is right to talk about bringing the project in on time and on budget. I emphasise that that is part of the project’s careful planning.
On the question about the vital link between the Crossrail line and the Great Western main line to the west, I am happy to confirm that that work is on time and on budget, and it will absolutely be in place to ensure that the line runs. It is an enormous priority for all of us to ensure that the first trains can run from December 2018.
Tom Pursglove (Corby) (Con)
I strongly welcome the Minister’s statement. Can she guarantee that in the final 30% of the construction process we will be trumpeting the use of British steel wherever possible?
Claire Perry
I am happy to confirm that that is absolutely the case. Indeed, 85% of the supply chain providing steel to the project is UK-based, and the 57 km of rails that run through the central tunnel are 100% provided by UK steel suppliers. I am sure that my hon. Friend will also welcome the fact that 61% of the firms that have won work associated with the project are based outside London.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I, too, thank the Minister for providing an advance copy of her statement. I will come to the name of the line in a moment, but may I first welcome the increased opportunities that the project has provided for women? More needs to be done to get the message out to women and young girls about the opportunities that are available for them. I also welcome the accessibility aspect, which is an important factor.
A change of name can be invigorating. In Scotland, we found that the change of name from the Scottish Executive to the Scottish Government provided a new sense of purpose, from which people were able to take confidence. In general, the change of name is a good move. The royal theme is continued in Scotland by the Queensferry crossing, the name of which was chosen by public vote. Will the Minister tell us about the mechanism for renaming Crossrail? The public have certainly embraced it with some vigour. The Minister described Crossrail as a great British rail line. On that basis, can she guarantee that all the ticket machines on the new Elizabeth line will be able to accept Scottish notes so that we can actually travel on it?
According to figures announced just last weekend, the Scottish Government are investing twice as much per person in transport as England is, and have spent more per head on improving infrastructure than all the other nations in the UK since the Scottish National party came to power in 2007. I am glad to see some ambition today. May we have more of it to make sure that the people of the nations of the UK are better connected?
Claire Perry
I thank the hon. Gentleman for a very important list of questions. He is absolutely right to focus, as we are, on the diversity opportunities that have opened up as a result of this project. People too often think of engineering skills, particularly on the railways, as involving joining the wheel-tappers and shunters club, but it is not like that. It is a high-tech world in which people are more likely to go to work with a laptop than with a spanner. As I say, it is a growing industry partly thanks to this Government’s record in transport infrastructure, so it is one to which we would like to attract more women. There have been some little but subtle changes. The so-called man cage that takes people down into the giant hole where the tunnels start has, at the suggestion of the very feisty woman in charge of the work at Farringdon station, been renamed a people basket. That is a brilliant example of how small changes can make a difference.
The hon. Gentleman asked me about the mechanism. Many people would like to claim credit for what is a very good idea, but I am sure if we put it to the British people in a referendum, they would—if they do not have referendum fatigue—overwhelmingly support this decision. Of course, the Queen did approve the decision. I think its genesis lies in the fact that she is now our longest-serving monarch—she has been on the throne for 64 years—and the name change is a very fitting tribute to the length of her reign.
The hon. Gentleman asked about Scottish pound notes. Based on my experience with London cabbies, I am very sorry to say that many people still do not believe they are legal tender south of the border. I will look into that matter and respond to him. Of course, I would like a revolution in ticket vending machines so that we can use mobile and smart ticketing much more often than cash when we purchase railway tickets.
The hon. Gentleman raised the importance of infrastructure north of the border. I am sure he is delighted, as I am, that the west coast main line—the vital passenger and freight route that crosses our borders—has been reopened two weeks early, after the devastation at Lamington viaduct. I went to see it in the snow, with his party’s Transport Minister from north of the border. It was a difficult site, and I am sure we all want to pay tribute to the orange army that delivered that result and got the line open.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
I welcome this announcement, and the Minister is right to praise Crossrail—the Elizabeth line. Does she think it is a suitable model to follow for Rail North, and indeed for the new northern transport body that has just been set up, Transport for the North, so there can be investment in new lines right across the north of England to make the northern powerhouse a reality?
Claire Perry
I thank the hon. Lady for her support for the announcement. She is right to focus on such parallels. Clearly, transport money is best spent when it is pulled through to satisfy local demands and to drive local economic growth. I am sure she welcomes what the Government have done. We have set up Transport for the North on a stand-alone basis and we have funded it, and we have asked the devolved authority to work on plans and proposals to drive forward infrastructure investment in the region. In his comments, the hon. Member for Middlesbrough (Andy McDonald) referred to the role of Lord Adonis. I pay tribute to him for generating this idea and pushing it through, often, as with many rail investments, in the face, frankly, of opposition—
Claire Perry
Well, the hon. Gentleman corrects me, but I am delighted to say that this is now happening. Lord Adonis now heads the Government’s National Infrastructure Commission, which has been tasked with looking at—this idea again has cross-party support and consensus—how we can best spend the ongoing investment in infrastructure for the benefit of the British economy.
Andy Slaughter (Hammersmith) (Lab)
Crossrail is a complex project, as the Minister says, especially where there are interchanges with other lines. At Old Oak, it interchanges with overground, underground, Great Western and, of course, HS2 services. Will she look at the very poor co-ordination of that interchange, where every company is doing its own thing, with the Crossrail depot being built in the middle of prime development land? She might like Lord Adonis to look at that, as he knows what he is talking about.
Claire Perry
The hon. Gentleman is right to point out the complexity of the project—some of the tunnels have been tunnelled to within 30 cm of existing infrastructure beneath the streets of London, which is an astonishing achievement—and of the interchanges, on which such decisions are often considered to be too complicated. The Government, TfL and Network Rail are working closely with the Old Oak and Park Royal Development Corporation—that is another example of a devolved authority—to make sure that it understands its aspirations for the publicly held land at Old Oak Common. It is a balancing act and it is difficult to get it right for the future, but we will continue to invest in this vital infrastructure and we will make it work for the benefit of the British economy and of rail passengers across the UK.
Alison McGovern (Wirral South) (Lab)
I agree wholeheartedly with what the rail Minister and the shadow rail Minister have said about Her Majesty and about our brilliant railway staff. I am a former Network Rail staffer, and I worked with some fantastic women engineers. May I, however, offer the Minister some constructive criticism? Her statement made more references to services to Liverpool Street than to those to Liverpool. Now that Crossrail is moving towards completion, will she turn her attentions northwards, and will she say when she will meet a delegation from Merseyside to discuss rail services there?
Claire Perry
I talked more about Liverpool Street only because Crossrail does not of course go very far north at the moment. I have great respect for the hon. Lady, but she will know from her constituency that we have electric trains running between Manchester and Liverpool for the first time ever. That is tangible evidence that the Government are delivering both on infrastructure promises in the north and on rolling stock. I am sure that she, like me, has long thought the Pacer should have been phased out a long time ago, because it is not fit for purpose in moving people around such a vibrant and growing part of the country—the north—which I know she is proud to represent. This Government are taking such investment decisions. My door is always open to delegations from any part of the country that wants to talk about how railways can further transform their local economy.
Wes Streeting (Ilford North) (Lab)
May I add my congratulations to the whole Crossrail team on this remarkable feat of engineering, which will bring enormous benefits to my constituents in Ilford? In particular, I want to pay tribute to my hon. Friend the Member for Ilford South (Mike Gapes), who, as chair of the all-party group on Crossrail, has batted particularly strongly, if I may say so, for the longer-term benefits for the residents of Ilford.
This weekend, I will join residents of St Peter’s church at Aldborough Hatch in my constituency to “Clean for the Queen”. May I therefore, on behalf of so many of my constituents, commend those who have come up with this fantastic and fitting tribute to our longest-reigning monarch for her more than 60 years of dedicated public service?
Claire Perry
I thank the hon. Gentleman for his support, and indeed for highlighting “Clean for the Queen”, which will have us all putting on our rubber gloves and getting out our litter pickers in the next few months. He raises the important point that this House is at its best when we come together to invest in major pieces of infrastructure that will transform the lives of those who will benefit directly, but also benefit those working for such a construction project or, indeed, supplying products for it.
An outbreak of cross-party consensus is just what we need, and we of course have such a project with HS2, which I believe completed its Select Committee stage only yesterday. Frankly, I pay tribute to the Committee, because it has been a labour of love—[Interruption.] I am not going to comment on that. Spades will be in the ground from 2017, and the skills that many hundreds of men and women have built up—we now lead the world in soft-ground tunnelling—will be very useful for the Thames tideway, the HS2 work that is coming and, indeed, with the A303 proposals that will benefit my constituency.
Clive Efford (Eltham) (Lab)
Could some of the efficiency that the Minister has spoken about with regard to Crossrail be applied to Southeastern, which has been providing an appalling service? Will she agree to meet a delegation of MPs from south-east London to discuss how that might be done?
Claire Perry
The hon. Gentleman has long been a doughty campaigner for improved rail services for his constituents. I hope that he received a letter from me just a few weeks ago, which said that I hope to make a decision shortly about the long-awaited capacity increases, because I know that he is very concerned about the crowding on those trains. I hope to have good news on that very shortly, but, as he knows, my door is always open.
Mr Speaker
I am sure that if the hon. Gentleman received the Minister’s letter, his happiness would be as unalloyed as hers obviously is today. We are extremely grateful to her.
Points of Order
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Alex Cunningham (Stockton North) (Lab)
On a point of order, Mr Speaker. There appears to be considerable confusion in the Government over which Department is responsible for making an application to the EU solidarity fund for assistance for flood-hit communities across the north of England.
This is what I have found out from vague answers to parliamentary questions. In December 2015, the Foreign and Commonwealth Office said that it was a Department for Communities and Local Government issue. In January, the Department for Business, Innovation and Skills said that it was a Department for Environment, Food and Rural Affairs issue. A week later, the Leader of the House agreed. In early February, the Secretary of State for Environment, Food and Rural Affairs said that she had not ruled out making an application, but a week later one of her civil servants wrote to me saying again that it was a DCLG matter.
Whoever is responsible, the deadline for an application is just days away. The Government’s confusion and subsequent failure to act will potentially deny our communities hundreds of millions of pounds of much needed help. Will you please encourage the Government to sort this out and get a Minister here to make a statement, so that we can hold them to account?
Mr Speaker
Certainly, it would help if there were clarity. The hon. Gentleman knows that it is not for the Chair to adjudicate between what one Department says and what is said by another, but it is very important that Members know which Department is responsible and from whom they can expect an authoritative answer. My request to those on the Treasury Bench, therefore, is that they ensure that this matter is clarified authoritatively sooner rather than later. Pursuant to that objective, it might help if the hon. Gentleman is in his place for the business question tomorrow in order that he can probe the Leader of the House about it.
Gavin Robinson (Belfast East) (DUP)
On a point of order, Mr Speaker. It was devastating news for my constituents and the Northern Ireland economy last week that 1,080 jobs will be lost at Bombardier. Indeed, jobs will also be lost at Derby in mainland Great Britain. Is it in order to inquire of you whether Departments have made any approaches to come to this House so that we can not only raise the consequences of the decision, but seek an assurance from Her Majesty’s Government that there is support for innovation and aviation in our society?
Mr Speaker
I have received no approach thus far, as far as I am aware, from any member of the Government asking to make a statement on the matter. The hon. Gentleman may use the Order Paper to pursue his objective. Moreover, if he is so seized of the importance and, perhaps, the urgency of the matter that he wishes to debate it on the Floor of the Chamber, he will be aware of the opportunities that are provided by Adjournment debates. I have a hunch that he will seek to take advantage of those opportunities.
Chris Bryant (Rhondda) (Lab)
On a point of order, Mr Speaker. This is a two-headed point of order, if that is okay. The first refers to the exchanges that we had earlier with the Parliamentary Secretary, Cabinet Office, the hon. Member for Weston-super-Mare (John Penrose) on Short money. Will you confirm that it is indeed true that the accounting officer for Short money is the Clerk of the House, not the permanent secretary to the Cabinet Office? Has the Clerk of the House therefore been consulted about Short money? Why has the Vote Office—this is still the first head—still not been provided with copies of the consultation, when it pertains directly to the House of Commons?
Secondly, will you confirm, Mr Speaker, that there is a process for Ministers to correct the record when they have inadvertently made a mistake? The Cabinet Office Minister, to my reckoning, made about 18 factual errors. The biggest was when he said that no cut was planned, despite the fact that his document says:
“By contrast… A 19 per cent reduction will take Short money back”.
I do not know what the difference is between a reduction and a cut, but I am sure that there is a means of correcting the record. I wonder whether we can make a special exemption on the number of special advisers for the Minister, because he is making so many mistakes that might be corrected by proper research.
Mr Speaker
I am grateful to the shadow Leader of the House for his point of order. Let me answer his two inquiries. First, I can indeed confirm that in respect of Short money, the accounting officer is the Clerk of the House. On whether the Clerk has been consulted, I am not at all sure. The Clerk is well aware, as I am well aware, of the consideration of policy on this matter. Moreover, I have seen a copy of the consultation document. Beyond that, I would not go.
Secondly, there are any number of opportunities for a Minister, if he or she believes that the record needs to be corrected as a result of an inadvertent misstatement, to correct the record. Knowing the hon. Gentleman as I do, I feel sure that he will look to see the development of events. If he is dissatisfied, I have a hunch that his dissatisfaction will percolate through his contribution at the business question tomorrow.
Mr Speaker
Thursday, I beg your pardon. I am getting ahead of myself. It will be difficult, but we can just about wait for the hon. Gentleman’s contribution at the business question on Thursday. That is not to say that the matter will not be raised before then. I hope that that is helpful for now.
Air Quality (Diesel Emissions in Urban Centres)
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Geraint Davies (Swansea West) (Lab/Co-op)
I beg to move,
That leave be given to bring in a bill to make provision about urban air quality targets; to require vehicle emissions targets and testing to reflect on-road driving conditions; to provide powers for local authorities to establish low diesel emissions zones and pedestrian-only areas; to restrict the use of roads in urban centres by diesel vehicles; to make provision about the promotion of the development of electric tram systems and buses and taxis powered by liquefied petroleum gas in urban centres; and for connected purposes.
The invisible hand of diesel fumes is prematurely killing some 1,000 people per week in the UK. The Bill is designed to put the death-by-diesel epidemic into reverse, saving thousands of lives and billions of pounds. Today, the Royal College of Physicians and the Royal College of Paediatrics and Child Health have published a joint report that shows that there is now killing by diesel on an industrial scale, with some 40,000 premature deaths each year. The Bill is supported by those organisations, the British Lung Foundation and the British Heart Foundation because, as is becoming increasingly apparent to all of us, air pollution is killing people through lung cancer, through lung diseases such as bronchitis and asthma, and through strokes, heart attacks and heart disease. It is also linked to diabetes, obesity and dementia. It is a public health disaster. In the UK, it is causing the loss of some 6 million working days a year and costing our economy £20 billion a year. In Europe, it is costing the economy €240 billion a year and killing 380,000 people.
Diesel particulates that are absorbed by pregnant women can harm and hurt the foetus, causing low birth weight, organ damage, premature birth and stillbirth. Children who live in urban and highly polluted areas suffer from reduced lung capacity of about 10% on average and lower lung function in later life. Diesel particulates cause, rather than just exacerbate, asthma because they cause an allergic reaction and cell mutation in the lungs. In children, they cause coughs, wheezes, asthma attacks, worse concentration, worse memory and worse physical and mental development. Children are nearer the ground, so they suffer more. The first duty of mothers and fathers is to protect their children, but they are unable to protect them from this awful, poisonous belching.
In 1952, 12,000 people died in the London smog. Today, similar numbers are dying every year owing to the invisible fumes that are being emitted on an industrial scale by diesel-powered vehicles. Instead of coal fires, the new killer is diesel. The volume of traffic has grown tenfold in the last 60 years. Much has been done to stop the emission of carbon monoxide, hydrocarbons, sulphur and lead, despite the protestations of the motor manufacturers that it was impossible. Nitrogen dioxide and particulates now offer a new catastrophic threat to human life and life expectancy, and that threat has grown exponentially. In the 1980s, diesel cars made up only 10% of new cars, but by 2000 it was 14%. Between 2000 and now, that figure has grown from 14% to 50% of new cars that are pumping out diesel particulates and nitrogen dioxide.
The Government want to reduce carbon dioxide, and motor manufacturers took that as a pretext to encourage diesel instead of trams, hydrogen or green transport. In a similar way, after world war two, motoring manufacturers pulled all the trams out of our city centres for their own commercial interests. Now, the contribution of diesel to climate change is no better—indeed, it is arguably worse—than that of petrol, and we are passively smoking diesel emissions that are costing £20 billion and 40,000 lives.
Taxation levels on diesel and petrol are on a par and do not reflect the cost to the environment and to health. Laboratory testing across the EU systematically understates the amount of emissions in the air that we breathe, and road emissions contain levels of carbon dioxide that are two thirds higher than in lab tests. For nitrogen dioxide they are four or five times higher.
Things are made a lot worse by the revelation that Volkswagen was caught black-handed cheating emissions testing, and the difference between using a defeat device in a laboratory test and out in the field is twentyfold— 20 times the emissions are belching into children’s lungs from Volkswagen cars that are out on the road compared with those in the laboratory. Clearly, we need to sort that out. We have had the malignant growth of diesel pollution, and the mushrooming cost to public health. We have had the disaster of the industry saying that it will self-regulate but doing the opposite, and the first duty of a Government and a Parliament is to protect our children, the nation and the people of Britain.
The Bill will ensure that vehicle emissions testing in 2017 reflects on-road driving conditions such as accelerating, decelerating and standing still, and it will detect cheating devices such as those used by Volkswagen. The Bill extends low diesel emissions zones and pedestrianisation, and it restricts diesel vehicles that fail the Euro 5 emissions standards from polluted urban areas—those are the oldest and most polluting diesel cars, some of which have a worse pollution impact than lorries. It encourages the development of green public transport, including tram systems such as the one I pioneered in Croydon when I was leader of the council. It encourages liquefied petroleum gas, hydrogen-powered or electric-powered buses and taxis, and that in turn encourages walking and cycling because there will be cleaner air and less congestion.
We also need pollution warnings as we do with flood warnings—perhaps the Environment Agency should be given that responsibility because the Met Office has been told to shut up since the last time it gave a pollution warning in April 2014. The public have a right to know when they are at risk so that they can stay indoors, or roads can be closed because of excessive pollution. I hope that the House will support the Bill, and that the Chancellor will take the opportunity of the Budget on 16 March to support green transport and ensure that the polluter pays principle is carried through to taxation. We must signal to consumers who have bought diesel cars in good faith for the future, and ensure that measures are transmitted into behaviour, as with previous signals. We need the right signals so that we satisfy our fundamental ambition and duty to protect the lives of our citizens, and ensure that the air that we breathe in our cities is clean and that the lives we lead are sustainable.
Question put and agreed to.
Ordered,
That Geraint Davies, Peter Aldous, Dr Sarah Wollaston, Andrew Gwynne, Stewart McDonald, John Mc Nally, Jonathan Edwards, Alison Thewliss, Chris Stephens, Rob Marris, Ann Clwyd, and Ms Margaret Ritchie.
Geraint Davies accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 March, and to be printed (Bill 138).
Welfare Reform and Work Bill (Programme) (No. 4)
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Welfare Reform and Work Bill
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
17:36 - The House divided: - Ayes: 310 / Noes: 277 - Question accordingly agreed to.
17:51 - The House divided: - Ayes: 306 / Noes: 279 - Question accordingly agreed to.
18:06 - The House divided: - Ayes: 304 / Noes: 280 - Question accordingly agreed to.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 2 to 6, 8, 9 and 11. If the House agrees to any of these amendments, I shall ensure that the appropriate entry is made in the Journal.
Before Clause 4
The Minister for Employment (Priti Patel)
I beg to move, That this House disagrees with Lords amendment 1.
Mr Deputy Speaker
With this it will be convenient to discuss the following:
Lords amendment 8, and Government motion to disagree.
Lords amendment 9, and Government motion to disagree.
Priti Patel
The Bill is a vital part of the Government’s reforms that are moving this country to a high wage, low tax, low welfare economy. It is fundamental to our commitment to end child poverty and improve children’s life chances, and to ensure that work always pays more than a life on benefits and that support is focused on the most vulnerable.
As is right and proper, the Bill’s provisions have been carefully scrutinised by both this House and the other place. Where appropriate the Government have tabled amendments to bring clarity or to remove unintended consequences, and they have made important commitments on supported housing and the social rents measure, on kinship carers and sibling adoptions under clauses 11 and 12, and on guardian’s allowance and carer’s allowance in relation to the benefit cap. The Government remain firmly committed to the aims and principles of the Bill as it left this House, and for that reason we wish to resist the non-Government Lords amendments.
Before I address each area in detail, allow me to set out the key principles that underpin our disagreement with the Lords. Our view is that the addition of child poverty income measures is unnecessary because we have already committed to publishing statistics on children in low-income families through the “Households below average income”—HBAI—publication. Lords amendment 1 would also reintroduce a failed approach to child poverty that is focused on tackling its symptoms rather than its root cause, and it would drive perverse behaviour focused on lifting people just above the poverty line, rather than on a life chances strategy that could transform children’s lives.
Stephen Timms (East Ham) (Lab)
Does the Minister accept that income has a huge impact on life chances?
Priti Patel
Income is one of many factors that impact on life chances and poverty, which is why the Government are very much focused on tackling the root causes of child poverty. I will come on to discuss that issue even further—[Interruption.] I know that Labour Members disagree with that, and they will soon have their chance to comment.
On the change to the work-related activity component of employment and support allowance, and to the limited capability for work element of universal credit, I stress that the Government are fully focused on helping people who can work into work. We want to end a broken system that is patently failing those it should be helping, and ensure that a good proportion of the savings are recycled into long-term practical support that will have a transformative effect on people’s lives.
Neil Gray (Airdrie and Shotts) (SNP)
The Minister mentions the fact that income is a factor in poverty, but the executive summary of her own Government’s report from January 2014 states:
“The main factor is lack of sufficient income from parental employment, which restricts the amount of earnings a household has.”
It is not just a factor, it is fundamental.
Priti Patel
I say to the hon. Gentleman and to all Members that work remains the best route out of poverty. Moving people into work, and helping their income grow once they are in work, is exactly our focus.
Mark Spencer (Sherwood) (Con)
What would the Minister say to those of my constituents who have limited abilities? Would she say it is better to try to help and support them into some form of employment, albeit on reduced hours, or to write them off and say they cannot contribute to society?
Priti Patel
My hon. Friend is absolutely right. This is the fundamental difference between our party and the Labour party in government. We are committed to supporting people to get into sustained employment, rather than consigning them to a life of dependency on benefits, which has counterproductive consequences.
Alison McGovern (Wirral South) (Lab)
The Minister is wrong, isn’t she? The new deal got more people into work than ever before, whereas this Government are taking money out of the pockets of working families. How can she say that she wants working people to feel the benefit when universal credit will make them poorer?
Priti Patel
The hon. Lady is wrong in many, many ways. For a start, this Government have supported more people back into work than ever before. Our welfare reforms are helping, through universal credit and our work coaches in particular, and by giving individuals dedicated support to help them not just get into work but remain in work.
Priti Patel
I will come back to the hon. Gentleman shortly, but I would like to make a bit of progress. Before I come on to discuss the child poverty income measures, I would like to touch on ESA. I will come back to some of the detailed questions.
When the Labour party designed the work-related activity component, it was intended to act as an incentive for people to take part in work-related activity and therefore move into work more quickly. However, with just one in 100 work-related activity group claimants leaving the benefit each month, it is clearly not working. It is crucial to make sure we have the right support in place to help people move closer to the labour market. As we all know, a large body of evidence shows that work is generally good for physical and mental wellbeing. There is also a growing awareness that long-term worklessness is harmful to both physical and mental health. Indeed, some of the major charities that the Department is working with agree that work can be right for some people after a diagnosis, and that improved employment support is crucial to helping people with health conditions and disabilities to move into work or get closer to the labour market.
As we speak, the Government are working on a White Paper for this year, which will set out plans to improve support for people with such conditions, including the role of employers and improved integration between health and employment. I will expand on that later, but I will begin by addressing Lords amendment 1 in detail.
Lords amendment 1 is wholly unnecessary, as statistics on low income are already published in the HBAI report. That information is available for all to see, and it will continue to be so. [Interruption.] Labour Members are chuntering away. They will get their chance to speak shortly. I think they should show me the courtesy of allowing me to make my points. Ministers in both Houses have committed to the continued publication of the information contained in HBAI. I hope it is clear to hon. Members that more than adequate safeguards are already in place to secure the continued publication of low income data.
Dawn Butler (Brent Central) (Lab)
Macmillan Cancer Support has warned that cancer patients could be at risk of losing their homes if proposed Government cuts to ESA go ahead. Does the Minister have anything to say to Macmillan?
Priti Patel
What I would say is that Macmillan has also said that many people diagnosed with cancer would prefer to remain in real work or return to their job during or after treatment. It is important that the House recognises—[Interruption.] If the hon. Member for Pontypridd (Owen Smith) would like to intervene he is very welcome to do so, but I think he should let me finish my point before he starts chuntering away. It is essential that people suffering with cancer get the right support. Obviously, when people are in the ESA support group and are unable to work, they will remain in the support group and be supported financially.
If I may come back to the point on Lords amendment 1—
Owen Smith
I am grateful to the Minister. She prays in aid Macmillan. Will she confirm that it is opposed to the £30 a week reduction for members of the ESA work-related activity group? It is not in favour of it; it is opposed to it.
Priti Patel
I think Macmillan, alongside the Government, recognises that those on the support group will, rightly, not be affected. They will be supported, because they are in the support group and therefore obviously ill.
Priti Patel
I am going to make some progress on Lords amendment 1, and then I will give way to the hon. Gentleman.
I turn to why statutory income measures failed. They are flawed as they do not drive the right action to transform children’s lives. It is worth demonstrating that with a few examples. The Government are undertaking crucial reforms to improve people’s life chances, such as introducing the national living wage and increasing the personal allowance for the hardest-pressed families. Those policies will provide support for the hard-working families who need it the most, yet, according to Labour’s failed approach to measuring child poverty, their introduction would have supposedly led to an increase in child poverty. That failed approach incentivised the wrong actions. For example, it led the previous Labour Government to tackle the symptoms of poverty through expensive income transfers, such as spending more than £300 billion on working-age welfare and tax credits between 2003-04 and 2008-09, with very little return. The strategy failed to tackle the root causes of child poverty and did not make a long-term difference to children’s prospects.
Several hon. Members rose—
Priti Patel
I will give way shortly.
The number of children in relative poverty remained broadly unchanged. In short, there are fundamental weaknesses in that system, which the Government are seeking to put right through our life chances measures.
Andrew Gwynne
The Minister would perhaps want me to remind her that child poverty fell by 1 million under the Labour Government, which is something we should be proud of. Her own advisers advised against removing the child poverty indicators, so why is she headstrong in ignoring the advice not just of the other place but her own commission, which has said that this is wrong?
Priti Patel
We discussed this issue in Committee. I just reiterate that the Government are right in our approach: we are focused on tackling the root causes of poverty. Ultimately, as the Prime Minister said in his recent life chances speech, we are here to make sure we can tackle those long-term root causes. This is not just about measurement. The economy cannot be secure if we spend billions of pounds on picking up the pieces of social failure. Economic reform and social reform are not two separate agendas, they are connected to one another. Therefore, it is imperative that we focus our resources on how we can transform people’s lives, which is through tackling the root causes.
The path I urge the House to take is the one that will incentivise the right action, and the one that the evidence tells us will make the biggest difference to children’s life chances. That is precisely why the Government are seeking to introduce the life chances measures contained in the Bill. The statutory measures on worklessness and educational attainment, combined with the non-statutory measures in the forthcoming life chances strategy—such as family breakdown, problem debt, and drug and alcohol dependency—will drive the right actions to transform children’s lives.
Priti Patel
Just bear with me a second. [Hon. Members: “Ooh!”] There is no need to be childish. I will give way to the hon. Member for Ilford North (Wes Streeting).
Wes Streeting
I am grateful and surprised that the Minister has given way. I am sure the Prime Minister is delighted to see her back on message today, as she has not been in the past few days. She talks about the measures in the Bill. How can she go against the advice of her own Government’s commission when it says that
“it is not credible to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty, lack of money.”?
When is she going to listen to the Government’s own advisers?
Priti Patel
Let me remind the hon. Gentleman that we continue to publish data on low-income households. This information is still being published—[Interruption.] It might not be the information that the hon. Gentleman wants to know about, but we are publishing it, alongside doing something that previous Labour Governments successively failed to do—transforming lives, addressing the root causes of poverty and, importantly, ensuring that we tackle the causes that have led to child poverty in the long run.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
The hon. Member for Denton and Reddish (Andrew Gwynne), who made a point about child poverty but is no longer in his place, seemed to indicate that owing to the recession under the last Labour Government, child poverty fell. Does that not show the fallacy of Labour arguments and reveal that we are trying to seek the root causes of poverty rather than provide some measure that simply does not work?
Priti Patel
My hon. Friend is right. It is absolutely clear that when children are the future of our country, it is right to focus on delivering better life chances for them. When we publish the life chances strategy in spring, we will make the biggest difference to children’s life chances now and in the future. We must seek to rescue a generation from poverty by extending life chances right across our country. We must build a country where opportunity is more equal, with stronger communities and young people who can face the world with a background of experiences and characteristics that we know are vital for their success. As my right hon. Friend the Prime Minister said, we must seek to
“transform the life chances of the poorest in our country and offer every child who has had a difficult start the promise of a brighter future.”
Stephen Timms
Did the Minister see the report published by the Centre for Social Justice last month, which set out a way of combining the life chances indicators—interesting information will be provided in them—with income indicators, so that we do not ignore income, which is so clearly a key aspect of the whole issue?
Priti Patel
I thank the right hon. Gentleman for his intervention and his comment. We will publish the life chances strategy in the spring, and I think it will give us every opportunity to consider holistically all the factors that can lead to better outcomes for children and families. I recognise the right hon. Gentleman’s point. On the back of the remarks I have made, I urge hon. Members to support the Government motion and reject Lords amendment 1.
Let me deal now with Lords amendments 8 and 9, which as you indicated, Mr Deputy Speaker, impinge on the financial privileges of the House. These amendments would simply delete clauses 13 and 14 from the Bill. This would reverse the plan, announced in the summer Budget and endorsed by this House, to align the amount paid to ESA claimants in the work-related activity group to that which is paid to JSA claimants, and to align the amount paid to universal credit limited-capability-for-work claimants to that of the UC basic rate. Let me take this opportunity to stress the Government’s strong belief that this reform is the right thing to do. It is part of our efforts not just to improve people’s life chances but importantly to support them going into work so that they can reach their full potential. Let me explain why.
Record employment levels and strong jobs growth in recent years have benefited many, but those benefits have yet to reach those on ESA. While one in every five JSA claimant moves off benefit each month, this is true of just one in 100 ESA claimants in the work-related activity group. This Government believe that people with health conditions and disabilities deserve better and deserve more support. [Interruption.] I appreciate that Labour Members have no solutions for tackling the wider issues surrounding welfare and would rather simply continue to spend public money in an unsustainable way. We have listened to charities and campaigning organisations who say that improved employment support is key to helping people with health conditions and disabilities to move closer to the labour market and, when they are ready, into work.
Neil Gray
I look forward to reading the Minister’s White Paper, but is she not approaching the matter the wrong way round? Should she not introduce the White Paper first and then look at making changes to ESA? What does she say to her colleague, the hon. Member for South Cambridgeshire (Heidi Allen)—I look forward to hearing her contribution later—who said on “ConservativeHome” this morning:
“The beauty of this intermediate WRAG group is that it is just that—intermediate, on the road to returning to work but not quite there yet”?
Priti Patel
I rather think the hon. Gentleman makes my point for me in the sense that those in the work-related activity group need more support. Currently, they have been getting too little support. That is exactly the purpose of our reforms. We believe that we must tackle this issue, and provide—yes—the right financial security for individuals, but at the same time also look at the most effective ways to improve the wellbeing of those individuals by giving them support to get back to work. Almost half a million people in the work-related activity group get too little support to move back into work. We currently disincentivise them from doing so. As I say, they deserve better than that, and the Government are determined to take the necessary steps to transform their life chances by supporting them into work.
The Government are committed to ensuring that disabled people are able to participate fully in society, and we have set out our ambition to halve the disability employment gap. It is a duty of Government to support those who want to work to do so, and most people with disabilities and health conditions, including the majority of ESA claimants, tell us that they want to work. Some 61% of those in the work-related activity group tell us that they want to work, and we mean to put those people’s ambitions at the centre of what we do.
Stephen Timms
We have established that Macmillan Cancer Support disagrees with the Minister on this issue. Parkinson’s UK, Mind, and Rethink Mental Illness, whose chief executive wrote to all of us, say that they strongly disagree. So can the Minister tell us the name of any organisation representing disabled people that agrees with the position that the Government have taken?
Priti Patel
What I would say to the right hon. Gentleman is that we have been working with organisations and disability groups, and we have actually been listening to them. [Interruption.] Rather than making generalised comments from a sedentary position, Labour Members should realise that we are working with those organisations as we move forward with our White Paper—
Dr Roberta Blackman-Woods (City of Durham) (Lab)
Will the Minister give way?
Priti Patel
No, I will not.
The ESA system was set up by Labour in 2008 to support people with health conditions and disabilities into work. Despite being set up with the best of intentions, it has failed the very people it was designed to help. The original estimates were that far more claimants would move into work. A White Paper was published in 2008, setting out that the then Labour Government aimed to reduce the number of people on incapacity benefits by 1 million by 2015.
We have spent £2.7 billion this year on the ESA work-related activity group, but as I mentioned earlier, only around 1% of people in this group actually move off the benefit every month. I think it is fair to say that this benefit is not working as anyone intended it to work and, most importantly, it is failing claimants badly. The Government are committed to spending taxpayers’ money responsibly in a way that improves individuals’ life chances, and helps to move people off benefits and into work.
Those in the work-related activity group are given additional cash payments, but very little employment support. As the Prime Minister has recently stated, this fixation on welfare treats the symptoms, not the causes of poverty, and over time, it traps people into dependency. That is why we propose to recycle some of the money currently spent on cash payments, which are not actually achieving the desired effect of helping people move closer to the labour market, and put it into practical support that will make a genuine difference to people in these groups.
In addition to the practical support, which is part of a real-terms increase that was announced in the autumn statement, we need to reflect on how spending the £60 million to £100 million of support originally set out in the Budget will be influenced not only by Whitehall, but by a taskforce of representatives from disability charities, disabled people’s user-group organisations, employers, think-tanks, provider representatives and local authorities. So far, we have worked with charities including Scope, Leonard Cheshire Disability, the Royal National Institute of Blind People, the National Autistic Society and the Disability Action Alliance.
During the passage of the Bill, Members of this House and the other place raised concerns that we are expecting claimants who have been found “not fit for work” to be able to work. That is not the case. Claimants in the work-related activity group have been found to have “limited capability for work” and that is very different from being unfit for any work. Of course there may be limitations on the type and amount of work people in the work-related activity group can do, and they may also need workplace adjustments, but employment is not ruled out. That is the reason for the ESA permitted work rules. The distinction is important, because the misconception helps to drive people further away from the labour market, perpetuates the benefit trap, and undermines the life chances of claimants.
Greg Mulholland (Leeds North West) (LD)
The Minister has mentioned fluctuating conditions. It is well known that mental health problems cause fluctuating conditions which are very hard to deal with, but 50% of the people affected by the cut in ESA have such problems. Surely that has not been built into the Government’s thinking. What analysis has the Minister made of the impact?
Priti Patel
I have just touched on what we are doing to find extra employment support. As I have said, we are working with other organisations, and I have named only some of them. However, the issue of mental health is crucial to the way in which we connect our systems, working with the NHS. A joint working group from the Department for Work and Pensions and the Department of Health is looking into how we can help members of the ESA work-related activity group with mental health conditions, provide signposts for them, and secure treatment for them as well.
Richard Graham (Gloucester) (Con)
When the Opposition talk about income, what they really mean are welfare benefits. That is not what we mean when we talk about income. All the evidence shows that 75% of children in relative poverty will be removed from the poverty indicator if both parents in the household are working. There are now more children in families in which people are working than ever before: that is this Government’s record.
As for ESA, some of us have met people with significant disabilities who are working, such as the people from National Star College in Gloucestershire who are now working with EDF Energy. It is amazing to see what a difference that makes not just to their incomes, but to their overall life chances and life happiness.
Priti Patel
My hon. Friend is right to highlight the importance of work to people who have previously been locked out of employment opportunities. We have many schemes, but Disability Confident is a very good example of how we can work with employers to deliver sustained employment opportunities for people with disabilities. The Government are doing additional work on a wide-ranging employer strategy, working with employers specifically to establish how we can address the disability employment gap and how they can give people with disabilities more structured and sustained employment opportunities.
It is important to recognise that the changes in employment and support allowance and universal credit work together, and cannot be dealt with in isolation. We have invested a significant amount in universal credit to ensure that we keep people connected and engaged with the labour market from the outset of their claims. Unlike those claiming employment and support allowance, universal credit claimants with a health condition or disability are offered labour market support, when that is appropriate, at the very start of their claim. That helps them to remain closer to the labour market, even if they are not immediately able to return to work. It also provides them with employment support, advice or training to get back into work, which, in the long run, will help them to obtain jobs.
I stress that this change does not affect those in the ESA support group or the universal credit equivalent. It also does not affect the premiums that form part of income- related ESA. Moreover, existing ESA claimants will not be affected. There will be no cash losers, and the policy applies only to those who apply for ESA and subsequently enter the WRAG from April 2017. We also aim to protect those who move off ESA to try to work. Those who were receiving the component and returned to ESA within 12 weeks because they could not cope with work will be able to reclaim ESA and receive the component again. Hopefully, that will help to dispel the myth that everyone who is currently in the work-related activity group will be affected by the change. Universal credit works in a different way from ESA, but we aim to put similar protections in place.
This reform is a first and necessary step towards a wider reform package. In the autumn statement, my right hon. Friend the Chancellor announced that the Government would publish a White Paper this year that would set out our plans to improve support for people with health conditions and disabilities to further reduce the disability employment gap and promote integration across health and employment. That will include exploring the roles of employers.
Clauses 13 and 14, together with the additional practical support announced in the Budget, will provide the right support and incentives to help people with limited capability for work move closer to the labour market and, when ready, into work. In the light of those arguments, I hope that Members will feel able to support the Government.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I support Lords amendment 1, which deals with child poverty reporting obligations, and amendments 8 and 9, which relate to the proposed cuts in the employment and support allowance work-related activity component and the universal credit equivalent.
Lords amendment 1 places a reporting obligation on the Secretary of State, requiring an annual report on child poverty to be laid before the House. The amendment stipulates that the report must include information on the percentage of children living in poverty as originally described in the Child Poverty Act 2010, and based on household income and material deprivation.
The Bishop of Durham, who moved the amendment in the Lords, emphasised the importance of income to an understanding of child poverty and children's wellbeing and life chances. He said that income measures would not supplant the Government's other measures relating to worklessness and educational attainment. These measures will ensure that the income-based measures of child poverty, which have been collected in the UK and other developed countries for decades, will be retained, allowing year-by-year comparisons and holding the Government to account.
Various charities, including the Children's Society, the Child Poverty Action Group and End Child Poverty, have called on the Government not to abandon the income-based measures of child poverty, as has the Equality and Human Rights Commission. In a letter published in The Times today, 177 child health academics have written in support of retention of those measures. Even UNICEF has urged the Government to retain the income-based measures that are used in the 35 OECD countries, and that allow inter-country comparisons.
As has already been mentioned, the Government’s own 2014 evidence review of the drivers of child poverty found that a lack of sufficient income from parental employment—not just worklessness—was the most important factor standing in the way of children being lifted out of poverty. Even the Minister, in a recent Westminster Hall Debate, acknowledged that
“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.]
The Social Mobility and Child Poverty Commission’s 2015 annual report found that 2.3 million children were living below what is currently defined as the child poverty line, and the Resolution Foundation has estimated that in 2016 alone a further 200,000 children, predominantly from working households, will fall into poverty. That is on top of the projections of the Institute for Fiscal Studies that the falls in child poverty at the beginning of the century risk being reversed. The 1% uprating of benefits by itself in 2013 was estimated to have pushed 200,000 more children into poverty.
Given the Bill and the four-year benefit freeze, it is entirely probable that the increase in child poverty will rise even more steeply. A recent inquiry by the all-party parliamentary group on health in all policies into the impacts of the Bill on child poverty and health showed clearly that it could lead to an increase in the number of children facing the misery and hardship of poverty by as many as 1.5 million by 2020.
Mr Jim Cunningham (Coventry South) (Lab)
I am sure my hon. Friend will agree that there are one or two things that we cannot allow Ministers to get away with. Tax credit, for example, was introduced by a Labour Government because the Conservative Government had done nothing about child poverty in the 1990s. More importantly, the Government say they want to get people into work, but in actual fact people who do get into work get zero-hours contracts, and women cannot get child tax credits as the Government have cut that. So much for doing something about child poverty! In Coventry there are 18,000 people using food banks. The Government are doing nothing about child poverty.
Debbie Abrahams
My hon. Friend makes some very valid points and I am going to come on to some of them in a moment.
The implication of these measures in terms of the future health and wellbeing of children is stark. There is overwhelming evidence that child poverty has a direct causal impact on worsening children’s social, emotional and cognitive outcomes. One witness to the all-party inquiry said:
“As children’s lives unfold, the poor health associated with poverty limits their potential and development across a whole range of areas, leading to poor health and life chances in adulthood, which then has knock-on effects on future generations.”
There was unanimous agreement from those who provided evidence to the all-party inquiry that although there is a positive correlation between worklessness and educational attainment and poverty, they are not indicators or measures of poverty. Let me reiterate that two thirds of children in poverty are from working families.
Dr Blackman-Woods
My hon. Friend is making an excellent case. Does she agree with the Institute for Fiscal Studies and others who have said that the prognosis for child poverty over this decade under this Government is bleak, and that what we are seeing in amendment 1 is the Government trying to hide information about what is happening to child poverty, rather than trying to tackle the underlying causes that lead to it, and that that is disgraceful?
Debbie Abrahams
My hon. Friend makes a key point, and I will come on to some of the specifics shortly.
Oliver Dowden (Hertsmere) (Con)
The hon. Lady talks about in-work poverty, but can she confirm that under the last Labour Government in-work poverty rose by 20%?
Debbie Abrahams
No.
So how does living in poverty affect children’s development? People—
Debbie Abrahams
May I just make these points? Then I will give way to the hon. Gentleman.
People on low incomes are often juggling to heat or eat, as we heard in this morning’s Westminster Hall debate on the bedroom tax. Being able to pay their rent is an increasing issue; 443,000 are currently affected. Having a secure, warm home with healthy, nutritious food are basic physiological needs. When these needs are not met, people’s health suffers both physically and mentally. This is particularly the case for children as they are developing. Being in work or well educated does not guarantee these essential needs; money does. Again, I make my key point: two thirds of children in poverty now are from working families.
The lack of evidence, to which my hon. Friend the Member for City of Durham (Dr Blackman-Woods) was alluding, is stark. Why was there no Government impact assessment of these proposals? We should look at the evidence from the United States, for example. It has been analysing the effects of its social security reforms, and that shows that programmes that focus specifically on parental employment failed; in fact, they had no effect or exacerbated children’s health issues. Conversely, programmes focused on supplementing the income of low-income families improved health.
Paul Scully (Sutton and Cheam) (Con)
Indicators are exactly that; they are not things that can be tackled, whereas this Bill seeks to refocus the Government position on the underlying causes and symptoms. Does the hon. Lady agree that far from being hidden, the figures that she seeks to include in this Bill will still be reported in the households below average income report?
Debbie Abrahams
The point here is about making the Government accountable for their policies that may in turn be affecting those measures.
I know the hon. Member for Gloucester (Richard Graham) wanted to intervene, too.
Richard Graham
The hon. Lady is very kind. Both her party and ours are committed to ending child poverty, so the starting point is the same. The difference, in a sense, is the value of the relative indicator. She knows that one of the difficulties with the relative indicator is that quite often it will apparently improve during times of recession, but go down in times of growth. How effective does she think that is, therefore? About £300 billion was spent on benefits between 2003 and 2008. How effective does she think that expenditure was?
Debbie Abrahams
As a former public health academic, I will answer in the following way. We know the value of having indicators that we can compare over a long period; that is internationally recognised. They provide an opportunity for this Government and future Governments—and past Governments as well—to be monitored and to be held to account for their policies and the way in which they affect child poverty.
Helen Goodman (Bishop Auckland) (Lab)
Does my hon. Friend agree that it is important to remind those on the Government Benches that the Child Poverty Act 2010 had four measures: a relative poverty measure; an absolute poverty measure; a persistent poverty measure; and a material deprivation poverty measure? We were not relying on one simple measure.
Debbie Abrahams
My hon. Friend is spot-on, and again this is what the Lords amendment is asking for: that the exact same measures be included.
I want to sum up on this point by referring to one of the witnesses, who is a clinical expert in child health. He said the Government are trying to refocus child poverty from “income-based indicators” to factors related to
“family breakdown, debt and addiction”,
conflating
“the consequences of child poverty, with the cause—a lack of material resources.”
That sums it up so well.
Let us turn now to the UK’s infant mortality rate, a proxy for the health of the nation. It is currently in the highest quarter of all EU15 countries. I was shocked when I heard that, and for under-fives we have the worst mortality rate in all of northern Europe. We should be ashamed of that. We know that infant mortality is strongly linked to poverty and material deprivation. We know from national statistics that there is a fivefold difference in the infant mortality rates between the lowest and highest socioeconomic groups. There is not a law of nature that says that children from poor families have to die at five times the rate of children from rich families.
Alison McGovern
My hon. Friend is giving a characteristically calm, evidence-based explanation of why money matters, so does she agree that it is disappointing continually to hear the myth from the Government Benches that educational attainment or poor health is what causes poverty, rather than poverty that causes those things?
Richard Graham
This is a serious question. If the hon. Lady is saying that the evidence shows that the mortality rate of poor children in this country is worse than in the whole of the rest of Europe and the benefits that we are giving are greater than those in the whole of the rest of Europe, something is not working. What does she think needs to be done to improve that?
Debbie Abrahams
Again, the hon. Gentleman possibly does not have all the evidence. On spending-to-GDP comparisons, we do not do particularly well. The Marmot review of health inequalities concluded:
“One quarter of all deaths under the age of one would potentially be avoided if all births had the same level of risk as those to women with the lowest level of deprivation.”
Again, we should recognise that we are talking about people living in our constituencies. Evidence to the all-party inquiry showed that eliminating UK child poverty would save the lives of 1,400 children under 15 every year. Furthermore, good early development is strongly associated with many positive outcomes in later life, including higher educational attainment and improved employment prospects in adulthood. As another of the witnesses to the inquiry said, we are facing a child poverty crisis. Having made real progress in reducing child poverty in the UK, it is imperative that we continue to invest in our children, and protect and support the most vulnerable in our society. The introduction of the so-called “living wage”, the increase in personal tax allowances and more free childcare will not, as the Institute for Fiscal Studies has clearly shown, offset the net loss to low-income households from tax and social security changes, including those in this Bill. I therefore urge Members from all parts of the House to support this amendment—our children’s futures depend on it.
Lords amendment 8 seeks to remove clause 13 and Lords amendment 9 seeks to remove clause 14. Clause 13 seeks to abolish the employment and support allowance work-related activity component for new claimants from April 2017 and replace it with universal credit. That would mean that social security support for people with a disability, impairment or serious health condition will reduce from £102.15 to £73.10, a cut of nearly £30 a week or £1,500 annually. The Government have argued that this is needed to
“remove the financial incentives that could otherwise discourage claimants from taking steps back to work.”
The Lords rejected this on a number of grounds. First, people in the ESA work-related activity group have gone through the work capability assessment and been found not fit for work. This includes 5,000 people with progressive conditions such as multiple sclerosis and Parkinson’s—conditions that will not improve. It also includes people with cancer. A survey conducted by Macmillan Cancer Support found that one in 10 cancer patients would struggle to pay their rent or mortgage if ESA were cut. The key issue is that these people are not fit for work, so suggesting that removing financial incentives will somehow make them fit for work is ridiculous.
Debbie Abrahams
I am sorry but I have given the hon. Gentleman a number of opportunities to intervene.
Secondly, there is overwhelming evidence of the extra costs faced by sick and disabled people, the associated poverty they experience as a result, and the clear implications for their condition. We know that 5.1 million out of the 12 million disabled people in this country live in poverty. We also know from the Extra Costs Commission that disabled people are twice as likely to live in poverty, 80% of which is due to the extra costs they face because they are poorly—because they have a disability.
Lord Low of Dalston, Baroness Grey-Thompson and Baroness Meacher’s excellent report “Halving the Gap?” expressed real concerns that the Government’s assessment of the impacts of this cut on disabled people, including the potential increase in the number of disabled people living in poverty, was inadequate. They assessed that the cut in financial support would have an injurious impact on this vulnerable group. The Equality and Human Rights Commission agreed, with its analysis being that it
“will cause unnecessary hardship and anxiety to people who have been independently found unfit for work.”
Thirdly, there is scepticism that there are employment opportunities for those sick or disabled people who may recover from their condition in the future. Approximately 1.3 million disabled people who are fit and able to work are currently unemployed, accounting for the disability employment gap of nearly 30% between disabled and non-disabled people. The Government have rightly said that we need to halve that, but they have been less open on how that can be achieved, and I agree with what the hon. Member for Airdrie and Shotts (Neil Gray) said about the disability White Paper. There is one specialist disability employment adviser to 600 disabled people trying to get into work.
Derek Twigg (Halton) (Lab)
My hon. Friend is making a powerful point. Like me, she will see many of these people at her regular surgeries. It is clear to me from talking to them that the required support just is not there, and it is very expensive support that is needed. The Government talk a good game but do not deliver.
Debbie Abrahams
My hon. Friend is absolutely right. I was about to move on to the support that is provided for disabled people through Access to Work. Last year, only 36,800 people received such support. Although I support the Disability Confident scheme, we must recognise that, across the country, there are only 112 active employers who support that initiative. How can we encourage and help disabled people who are fit to work into work when such limited measures are on offer? It is all topsy-turvy.
Hywel Williams (Arfon) (PC)
Does the hon. Lady agree that the incidence of disability and the incidence of lack of work opportunities do not go hand in hand, and the problem is not evenly distributed throughout the UK?
Debbie Abrahams
The hon. Gentleman makes a very valid point.
The suggestion that working four or five hours a week should recoup the loss of income with the introduction of the so-called living wage has been questioned by the Equality and Human Rights Commission. The Disability Benefits Consortium, a coalition of more than 60 disability charities, has said that the proposed cut will push sick and disabled people further away from work and into poverty. It will not help, as the Government have claimed. A recent survey shows the concerns not only of disabled people—seven out of 10 of them think that their condition will deteriorate with the introduction of the ESA WRAG cut—but of the public as well. A Populus poll of 2,000 adults in January revealed that 71% think that cuts to social security will make the UK a worse place for disabled people.
Graham Evans (Weaver Vale) (Con)
This Government spend £50 billion a year supporting people with disability and health conditions. That is more than France and Germany. If what the hon. Lady is saying is true, it is not just about money, is it?
Debbie Abrahams
Again, we need to look at our spend as a proportion of GDP. We are 19th out of 32—[Interruption.] No, France and Germany spend more. We spend 1.3% of GDP. We are 19th out of 32 EU countries. Contrary to what this Government perpetually claim about our generosity, we are not good at all in terms of the actual spend in relation to GDP. It was 1.6% of GDP in 1960. Now it is 1.3%. It is shameful. On those grounds, I ask all Members across the House to consult their consciences and support amendment 8.
Let me move now to clause 14. Again, the Government have been more than a little disingenuous when they suggest that the reduction in social security support applies only to new ESA WRAG claimants from 2017. From this April, 492,180 people currently on ESA WRAG will start to migrate across to universal credit, which, as many people know, combines a number of benefits, including ESA, into one amalgamated benefit.
Clause 14 removes the limited capability for work component for the work element of universal credit. That means that everyone currently on ESA WRAG will ultimately be transferred on to universal credit and will also have their support cut by £29.05 a week, or £1,500 a year.
Peter Dowd (Bootle) (Lab)
Does my hon. Friend agree that there is a stark difference between the warm words of the Minister for Community and Social Care earlier on, when he talked about parity of esteem for mental health, and the proposals to penalise people with acute and chronic mental health problems?
Debbie Abrahams
I thank my hon. Friend for his intervention. I absolutely agree with him.
What has been hidden so far is that this cut will also affect disabled people who are in low-paid work. Currently, 116,000 disabled people in low-paid work and working more than 16 hours a week receive the disabled workers element of working tax credit—about £60 a week—which they get as a result of being on disability living allowance or personal independence payments. They need that payment to cover the additional costs that they face as a result of work. Under universal credit, the limited capability for work component is the main additional financial support for disabled people in work and is meant to cover those extra costs. However, unlike the disability element of working tax credit, that is available only after working disabled people have been through a work capability assessment. If the Government go ahead and remove UC’s limited capability for work component from working disabled people, the inevitable impact will be disabled people dropping out of the labour market, thereby increasing, not reducing, the disability employment gap. It will have exactly the opposite effect to the one that the Government say that they want to achieve.
Debbie Abrahams
I am sorry; I am not going to take any more interventions.
Further cuts are bound to be made as the hasty consultation on the personal independent payment earlier this year is pushed through. The Government have tried to regenerate the economy on the back of the poor and disabled. Work does not protect against poverty, and the poor and disabled have been made to pay the price. This is about cuts to our social security system.
Debbie Abrahams
No, I will not.
Instead of denigrating claimants in our social security system, we should recognise the important role that the system plays. Like the NHS, the social security system is based on principles of inclusion, support and security for all, assuring dignity and the basics of life for all, should any one of us become ill or disabled, or fall on hard times. Many hon. Members in all parts of the House believe that the Bill is a step too far, and I urge them to support Lords amendments 1, 8 and 9.
Several hon. Members rose—
Madam Deputy Speaker (Natascha Engel)
Order. Everyone can see that a large number of hon. Members want to speak in the debate, which has to conclude at 5.36 pm. If Members can keep their speeches as brief as possible, we can get everyone in.
Paul Maynard (Blackpool North and Cleveleys) (Con)
Everything comes to he who waits—and that was a long wait, everyone will agree. I will try to be brief, as I have seen how many Members want to speak.
I want to explain why, despite some misgivings about minor details, the Lords amendments are not just wrong but a retrograde step that would make matters worse. No one in the Chamber would disagree that it is a policy failure that only 1% of WRAG claimants exit the scheme to take up employment. We should not lock that into legislation, as that policy failure is unacceptable. I see constituents who have come to my surgery because they are marooned in a no man’s land. Some have been found to have limited capability for work in the work capability assessment, and some have exhausted all avenues of appeal, but for various reasons they do not feel comfortable with transitioning to jobseeker’s allowance, even though in theory they might receive greater support to re-enter employment if they did so. I endorse the disability charities saying that we need more disability advisers in Jobcentre Plus. That is one use to which we could put the extra £100 million that the Government talk about.
Paul Maynard
I am sorry, I want to make progress so that everyone can get in.
For many people, a response in mental health terms to a sudden onset of or change in a physical health condition makes their willingness or ability to engage in the employment market that much harder. The work capability assessment has consistently failed to adapt and accommodate those individuals. I recognise that a handful of individuals may be encouraged into employment by the changes announced today, but I believe the operation of the work capability assessment will follow the age-old pattern—every time it is changed, more and more people, almost by osmosis, end up in the support group. We have seen that year on year, time and again.
Without further policy change, we could be back here in a few years discussing a sub-group of the support group. But that is a key point: we will not be back here in a few years’ time with the same policy framework. The Government are being more radical in their approach. If this were the sole policy intervention that they were aiming to make, I would share many of the concerns being expressed, but that is certainly not the case. We have recognised that the status quo is inadequate, and the Government are committed to reforming the work capability assessment. A White Paper is coming forward that will, I hope, reform employment and support allowance, which is a dinosaur of a benefit. It is unfit for purpose. It is the last remaining disability benefit that still sees disability as a matter of physical health, rather than a matter of physical and mental health. For that alone it needs to be taken to the knacker’s yard and put out of its misery. I welcome the Government’s intention to do that.
If we agree to Lords amendments 8 and 9, we will not get a £100 million fund placed in the hands of the third sector to support people with limited capacity for work to try to get back into employment. That would be a wasted opportunity. We have managed to get 339,000 more people back into employment over the past two years. Everybody in all parts of the House knows the commitment of the Under-Secretary of State for Disabled People to promoting the Disability Confident campaign. We all accept that the status quo is inadequate, and it would be the worst of all worlds to lock in a failed policy for the work-related activity group. That would benefit no one at all.
I shall briefly touch on Lords amendment 1. There is probably more consensus on how we view poverty-related issues than those on both sides of the issue would like to admit. I do not deny that levels of income have an impact on poverty levels in my constituency. Equally, I believe that there are more fundamental drivers of poverty in my constituency that also need to be addressed. As the exchange between the Minister and the right hon. Member for East Ham (Stephen Timms) indicated, this is not the end of the policy journey. There is to be a White Paper on how we implement our life chances strategy. There will be an opportunity to look at how we integrate into the policy package the different indicators that the right hon. Gentleman and the hon. Member for Bishop Auckland (Helen Goodman) referred to, but Lords amendment 1 is fundamentally flawed. It shows a misunderstanding of how Government work. The Bill cannot place an obligation on the Government to pursue two broadly contradictory policy objectives for tackling poverty.
If we focus solely on the “poverty plus a pound” approach as the answer to the problems, and at the same time oblige the Government to look at life chances indicators, that will divide the Government’s attention and the Department’s ability to focus on what matters. Opposition Members may disagree with the life chances strategy, and they are perfectly at liberty to do so, but they cannot expect to ride both horses at once and hold the Government to account for it. The Minister has made it clear that the data will still be collected and published. The Opposition will be able to look at that information, assess it and hold us to account for it, but Lords amendment 1 seeks to ensure that the Government fail on both strategies. It would not allow us any latitude to pursue what we have an election mandate for—welfare reform. When we get the life chances strategy, I suspect it will be far more sophisticated than what has gone before.
It has always struck me as utterly perverse to suggest that the most effective and best way to reduce child poverty in this country is to somehow provoke a recession, because that will bring the income numbers down. Surely no one could say that that is the best indicator to utilise to drive change. It astounds me that the Opposition parties—for the sake of posturing, and because of what has happened in the other place—have decided that this is their chance to make a stand on the backs of the most disadvantaged once again, and to try to prevent the Government from doing something about this issue.
I am proud to support what the Minister is trying to do. We have had decades of failure on this issue under Governments of all persuasions. At last someone is trying to do something, but from the Opposition we have nothing but cant, rhetoric and opportunism.
Neil Gray
I am glad to have the opportunity once again to set out the SNP’s opposition to this dangerous and despicable Welfare Reform and Work Bill. The SNP will vote to make these Lords amendments part of the Bill, to protect children and disabled people from poverty. In October, my SNP colleagues and I tabled a series of amendments to the Bill, which were, sadly, not successful. Today, I call on right hon. and hon. Members across the House to take this final opportunity to stand up to the Government’s regressive and punitive social security cuts.
In my contribution, I will focus on the scrapping of child poverty reporting obligations, the ending of the ESA WRAG and the universal credit disabled workers element. My hon. Friend the Member for Banff and Buchan (Dr Whiteford) will also seek to contribute, focusing on the cut to the ESA WRAG, and my hon. Friend the Member for Central Ayrshire (Dr Whitford) will, I hope, discuss the report on child poverty and health by the all-party group on health in all policies.
Let me turn first to the overhaul of the Child Poverty Act 2010, which removes the income-related measures of child poverty, replacing them with an obligation to report on children’s life chances and scrapping the target to end child poverty by 2020. Scrapping that target, when child poverty is on the rise under this Government, is a disgraceful dereliction of responsibility, which serves only to highlight the lack of will on the part of Conservative Members to do anything to reverse the growing numbers of low-income families—in and out of work—who live in poverty.
Lords amendment 1, from the Bishop of Durham, Baroness Sherlock and the Earl of Listowel, would impose an additional reporting duty on the Secretary of State, requiring him to lay before the Houses of Parliament an annual report on child poverty. That report should include data on the percentage of children living in households on relative low income, combined low income with material deprivation, absolute low income and persistent low income.
The Bishop of Durham, in moving the amendment, stressed the importance of income in understanding child poverty and children’s wellbeing. He tackled criticisms made previously by Ministers by arguing that income measures would not displace other statutory measures relating to worklessness and educational attainment. Speaking for the Opposition, Baroness Sherlock supported the amendment, noting that it would cost nothing and that it would allow the Government to be held to account on child poverty.
SNP Members find it unbelievable that the Government would wish to remove all links to income in reporting child poverty. Income is fundamental to whether someone is in or out of poverty—there is simply no getting away from that fact. We have no problem with the Government choosing to report on life chances, substance misuse, family break-up and unemployment by household, but they cannot get away from the fact that substance misuse, family break-up and unemployment are not unique to those in poverty—far from it. However, by using those alternative measures in isolation and not using any income-related measures, the Government are attempting to characterise poverty as a lifestyle choice, rather than looking at the structural causes of poverty.
Of course, such issues can impact on life chances, but income deprivation always will. An alcoholic single parent may be perfectly capable, for any number of reasons, of putting food on the table, a warm winter coat on their children’s backs or keeping their house warm. That may not be possible for a set of married parents who have no substance abuse problems but who are in low-income work. That has nothing to do with family breakup, substance abuse or unemployment—it is because of low income. So why on earth did the Government choose to ignore how many children do not have an outdoor space to play in safely or a place for the family to be able to celebrate a special occasion for them, or whether they can eat fresh fruit and vegetables every day? We know that 1.7 million children live in a family who want to heat their homes but cannot. The parents of 900,000 children want to put a warm winter coat on the backs of their bairns but cannot afford to do so. These are parents in and out of work, who are married or single. What is that if it is not poverty? We have to continue reporting on those matters.
Sammy Wilson (East Antrim) (DUP)
Given that the Government have emphasised time and again the importance of evidence-based policies, is the hon. Gentleman struck by the fact that there is no evidence to suggest that a reduction of £30 a week would push people towards work and off unemployment?
Neil Gray
I welcome the hon. Gentleman’s contribution. In fact, the opposite appears to be the case. Those third sector organisations and disability groups with knowledge of this area say that the cut will actually hinder people’s ability to find work.
Baroness Grey-Thompson’s speech on 27 January highlighted perfectly the issues at stake, and I urge those Conservative Members who are struggling with their consciences to read it. She said:
“if this measure goes through, a disabled parent who is working and qualifies as having limited capability for work will, under universal credit—the flagship element of government policy—have no extra support in work compared with a non-disabled parent in otherwise the same circumstances. What will this mean for a disabled parent? Single disabled parents working 16 hours or more, living in rented accommodation and making a new claim for universal credit in 2017, will receive about £70 a week, or £3,500 a year, less than they would receive now on tax credits, despite the rise in the minimum wage…For hundreds of thousands of disabled people, keeping Clause 14 in the Bill will be devastating. It means that far from there being an incentive for disabled people to get into work, find work and contribute to society in the future, those with deteriorating conditions will be less likely to stay in work.”—[Official Report, House of Lords, 27 January 2016; Vol. 768, c. 1311.]
Paul Scully
On evidence, the hon. Gentleman suggested in an earlier intervention that WRAG was an intermediate group on the route back to work, but the fact that only one in 100 disabled people is finding work shows that it is a long-term group.
Neil Gray
What that shows is that the Government’s Work programme has been an absolute failure and that those who are on ESA WRAG take more time to get back into work and require extra support, so by cutting £30 a week this Government will cut their ability to find job opportunities, and that is shameful. I again urge Conservative Members to read Baroness Grey-Thompson’s 27 January speech in full before voting later.
In October 2015, the Disability Benefits Consortium found that seven out of 10 disabled people said that a cut in ESA would cause their health to suffer. Almost a third said that a cut to ESA would mean that they would return to work later. Shockingly, a third said that they could not afford to eat on the current amount they receive from ESA WRAG.
Scope is concerned that reducing financial support for disabled people on ESA WRAG will detrimentally impact on their financial wellbeing, placing them further from work, as disabled people have lower financial resilience than non-disabled people, with an average of £108,000 fewer savings and assets, and 49% of disabled people use credit cards or loans to pay for everyday items, including clothing and food. Mencap has said that households with a disabled person living in them will be hit much harder. A third of them already live below the poverty line, and the additional reduction in income will have a devastating impact on those who are in most need of Government support.
As the WCA does not assess employment support needs, the financial support that a disabled person receives also determines their employment support. Those two things are not related, and they mean that disabled people do not get the back-to-work support that they need, in answer to the point made by the hon. Member for Sutton and Cheam (Paul Scully). Evidence from disabled people’s organisations and official independent reviews have all highlighted the inaccuracies of the assessment, which means that disabled people do not get the right back-to-work support.
There is insufficient evidence, if there is any at all, for the Government’s assertion that reducing benefit support incentivises people to get back into work. The impact assessment contains no evidence whatever to show that reducing support to disabled people in the ESA WRAG will incentivise them into work. Reducing the financial support available through the WRAG will create a bigger distinction between the support received by jobseeker’s allowance claimants and those who are placed in the ESA support group. The IFS supported that argument by commenting that abolishing the WRAG component could strengthen the incentive for claimants to try to get into the ESA support group. Ben Baumberg, of the University of Kent, agrees with that claim. He stated that the removal of the addition could lead to an increase in the proportion of claimants who are placed in the support group, because being placed in the WRAG could be a risk to their health.
The Minister said in her speech that she had worked with and listened to the likes of Scope and Macmillan, but they still oppose the cut, and she must say why she believes that to be the case. I was interested to read a story in The Guardian a few days ago, in which the hon. Members for Stafford (Jeremy Lefroy), for Stevenage (Stephen McPartland) and for South Cambridgeshire (Heidi Allen) were cited as possible members of a group of Tory MPs who are putting pressure on the Government on the matter. I am a less frequent reader of The Daily Telegraph, but I understand that they were also mentioned in that paper this morning. I read “ConservativeHome” even less frequently, but the hon. Member for South Cambridgeshire wrote very well there this morning. [Interruption.] On this occasion, it was a brilliant article. She said:
“What has suddenly changed in the lives of these individuals that they are suddenly fit enough or not fit enough to work? The beauty of this intermediate WRAG group is that it is just that, intermediate. On the road to returning to work, but not quite there yet. Recovering from chemotherapy, but needing to keep the heating on that little bit more. Many people who are ill are desperate to work, but need to be supported financially until their health improves. There are also structural and economic barriers standing in their way; reducing financial support only serves to create a further hurdle to be overcome. Many of these people have worked and paid in for many years before falling ill. They deserve better than this.
The voters who trusted us”—
that is, Conservative Members—
“to build a fairer society deserve better than this.”
I pay tribute to the hon. Lady and her colleagues who are thinking about supporting the Lords amendments. I desperately hope that those whom I have mentioned have been working on colleagues to join us in the Lobby later.
The issues at stake regarding ESA WRAG and universal credit work allowance are the very same issues as those with the cuts to tax credits, on which many Conservative Members honourably lobbied hard. The measure will impact on low-income families and on disabled people who are looking for work. The cut will, according to the organisations mentioned, including the Equality Trust and Citizens Advice Scotland, disincentivise people from going into work.
The Welfare Reform and Work Bill may well be the best example of doublespeak outside Orwell’s texts. The fact is that the Bill, as the Government would amend it, is unfit for work. The assessment of third sector associations, Opposition parties and the House of Lords is that the Lords amendments must remain. We have seen the Government forced through the courts into a welcome U-turn on the benefit cap for carers. They have also been told by the courts that the bedroom tax is discriminatory for disabled people. The UN is investigating the Government’s welfare cuts. Disabled people should not need the High Court to tell the Tories what is right and what is wrong.
This is our last opportunity to oppose the Government’s plan to stop measuring child poverty, and to oppose their shameful attempts to slash by £30 a week support for people who are unable to work because of ill health or disability—a proposal that is vindictive and woefully lacks the evidence base to support it. I hope that Members across the House will think carefully and consider the impact that their vote will have on the lives of people up and down these isles. Having considered that, there is only one course of action open to us today—to oppose the Government’s shameful proposals and support the Lords amendments.
Heidi Allen (South Cambridgeshire) (Con)
I rise to speak to Lords amendments 8 and 9. Reforming our welfare state was one of the greatest challenges facing the previous coalition Government and it continues to be one of the greatest challenges facing this Government. We are making phenomenal progress, with record levels of employment, and the Welfare Reform and Work Bill is unquestionably at the heart of this transformation.
Welfare needed to change. I saw the restrictions it placed on the aspirational potential of so many capable people. In my business, I had bright employees shackled to the state by the impenetrable barrier of the 16 hours of employment. I know some doubt the power of universal credit to transform lives, but as a member of the Work and Pensions Committee I have seen it operate. I am in absolutely no doubt that it marks the beginning of a new age, in which the individual and the state are partners in the future opportunities of the individual and their family.
Yet I feel an uncomfortable sense of déjà vu. Change needs to happen—but in a way for which those affected can prepare. We are debating whether we should cut the ESA WRAG allowance, which is typically provided to about 500,000 people recovering from significant illness as they transition from ill health to being fit to work. The Department for Work and Pensions talks about a White Paper that will set out its strategy of offering a different kind of support to help such people return to work, and some £100 million will apparently be made available by 2020-21. I listened intently to the Minister for reassurance about how that money will be spent. I acknowledge that she mentioned that a taskforce drawn from the Department and charities will be set up, but that should have happened before decisions were made to reduce financial support. I am uncomfortable about agreeing to the cuts until I know what the new world will look like for such people.
I do not believe mentoring and support alone will heat the home of someone recovering from chemotherapy or help the man with Parkinson’s who needs a little bit of extra help. I remain unconvinced that these people do not also have financial needs. The DWP states that many people stay stuck in the WRAG for too long—up to two years—but I would question its conclusion that they are financially incentivised to stay in that group. For me, the fact that they are stuck in that group says more about the failure of DWP processes than about claimants’ active choices. People in that group do not have an easy time of it. They must demonstrate an appetite to transition towards work, and they can be sanctioned if they do not do so. Anyone who has beaten cancer must surely burst with the desire to return to a normal life and be unlikely to want to be labelled as a cancer sufferer for any longer than is absolutely necessary.
From 2017, about 270 disabled people in my constituency of South Cambridgeshire alone stand to lose £30, or 29%, of their weekly income, if we accept the Bill in its original form and ignore the Lords. For them, I need to see more detail of the contents of the White Paper and to hear more about the financial support that will be made available before I can fully support the Government. If we do not get this right, we will damage not just the employment prospects and wellbeing of these vulnerable claimants, but our reputation and trust among the electorate. To secure my trust, I need to believe in the White Paper and that the £100 million will go some way to help those people. That is my warning shot to the Government. Today, I will not support them. I may abstain, but only for today. Let us get the detail right. Let us be a Government of sweeping strategic change, but let us also be one with the compassion and dexterity to look after the little man too.
Frank Field (Birkenhead) (Lab)
One of the big changes in this Parliament compared with previous ones is that when we debate welfare reform there are now too many speakers, whereas in previous Parliaments the Whips had the key job of pushing colleagues in to speak. I will try to speak briefly.
I am immensely pleased to follow the hon. Member for South Cambridgeshire (Heidi Allen) not only because of the role she plays in the House, but because of the particular role she plays on the Work and Pensions Committee, of which I am also a member. Like her, I will speak in favour of Lords amendments 8 and 9, but I question whether the Lords are right in amendment 1.
I do so not because I think in any way that it is not necessary for us to consider more regularly whether people who are out of work in our society have an adequate level of income. Most of us would find it near impossible to live on the scale rates, as they are cruelly called, that we give to people who are out of work. The fact that millions do so is a credit to their budgeting skills, which most of us do not possess. However, this debate is about more than what the minimum income is. It is about a strategy to prevent us forever and a day debating in the House of Commons the number of people who are poor in this country.
I do not know, but it may be that the report that the Prime Minister asked me to write, “The Foundation Years: preventing poor children becoming poor adults”, will play a small part in the Government’s strategy on life chances. I argued that although income is important, merely measuring income is inadequate if we are successfully to counter the extent of poverty in our country. We ought to look at the drivers of poverty.
As soon as I embarked on that analysis, I was struck by the information that was volunteered by the reception teachers I visited in different parts of the country. They could predict within a very short space of time—within the first half term of school—where children would end up. They could say quite confidently who would be head girl, who would find it easy to fly in this world, who would struggle and who would fail. That got me thinking about whether we needed to move beyond merely measuring income as the great driver of poverty and to look at life chances.
Dr Blackman-Woods
Does my right hon. Friend accept that all Lords amendment 1 does is to require that income-based measures of poverty be reported alongside and on a level footing with other life chances indicators? They would not be reported instead of, but in addition to, those other indicators.
Frank Field
The report that I issued made that very point. It said that we should continue to publish the poverty data and that, alongside them, we should have the life chances data.
Of course, there is much more to this debate than what is on the record. Historically, there has been a big divide between those who see money as the only agent to counter poverty—it clearly makes it easier for people if they have more money—and those who ask whether money actually transforms life chances in the way we wish. That is the question that I posed. Specifically, we wanted to know, while taking account of the importance of income and class in determining life chances, whether there were drivers of poverty more powerful even than income and class. The report lists the most powerful factors when income and class are held constant—those factors that enable us to make progress even if we are not making the progress that we would like to see on a fairer distribution of income.
Again, I make a plea to the House. Although we ought to debate the adequacy of the minimum levels of income, Opposition Members and the many Government Members who are disturbed by the growing and gross inequalities in our society must not think that we will deal with those through benefit changes, important though they are. Throughout the western world, there are clearly great engine drivers of inequality that serve up to the rich—particularly to the very, very rich—rewards that are grotesque when compared with the average, let alone with those who earn the least in our communities. There is no debate about that. The debate is about where, at any given point in time, we should put taxpayers’ money. Up to now, everybody has been talking about this as though the Government have money. Governments have to tax our constituents to get money to redistribute it, and we must win people’s support for that.
The House is beginning slowly to accept that it is dangerous to have a welfare system that is more generous to those out of work than to those in work, which is why I particularly welcome the Chancellor’s strategy of moving towards a living wage and implementing that over the life of the Parliament. It is only a beginning, but it is very important. If we are successful in moving to that living wage without big unemployment consequences—I believe that we will be—that will give us more freedom to manoeuvre on where benefit levels should be set.
My plea is that we should not think that this is either one thing or the other. The Government will publish the data, and I am sure that if we had a chat to them they could do so alongside the life chances data. That is not really what the debate is about; the debate is about those who believe that the only agent of change is on the income front, and I do not wish to concede ground to anyone in emphasising the importance of income, especially for those at the bottom of the pile who are working or who are not working. We have the report on the foundation years, and if we are serious about trying to prevent poor children from becoming poor adults, we need a different strategy from the one we adopted until that point. It was all about cash transfers—important as they are—and I thought it was inadequate.
Reception teachers said that by the time children come to school they already know who is going to succeed and who will not. I also started asking other people such as health visitors whether they could tell us which children entering toddlerhood would be successful in later life. Midwives have clear views when mothers turn up for their first scan about who has drawn the short straw and who has not. If we are serious about this strategy—I make this plea to the Government because we will need powers to add these measurements once we have agreed on them—we must measure whether we are increasing life chances by having more parents who are ready for the birth of their child, whether the interventions that we make after that will be successful and see more children successfully enter toddlerhood, and above all whether more children are entering school ready to benefit from the powers of education.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Is measuring at key stage 4 when a young person is 16 so utterly after the horse has bolted that it will not make any impact? Teachers report a year’s difference in a child’s ability to communicate and learn by the time they are five, and we need to change that. No Opposition Members are talking about money or life chances; most of us are arguing for both.
Frank Field
The genuineness of the hon. Lady in making that point shows how the debate is changing—it was not always about that issue and I am grateful for her intervention. Let me re-emphasise her point. I was staggered when the Secretary of State said that one of children’s key life chances is at age 16, given that he has done more than anybody in the House to teach us about how crucial life chances are before age five, if we are really to change people’s opportunities and allow them to develop their best selves. I hope that when we conclude the debate, the Minister will say more about how important it is to weight those life chances before age five. By all means we should measure children at 16 and all sorts of other ages if we wish, but if we are serious about changing the life chances of the very poorest children in our constituencies, we must consider a series of life chances long before they reach school. Every reception teacher I met would say that life chances have been decided by the time that children come into school.
I welcome how the debate has developed in the past 10 years, and I hope I have stated clearly why I think the Lords are mistaken with Lords amendment 1, and how much I agree with the case put by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), and by the hon. Member for South Cambridgeshire (Heidi Allen) who stated her support for Lords amendments 8 and 9.
Several hon. Members rose—
Mr Speaker
Ah, I did not realise the fellow had already spoken. [Interruption.] No, no, I do not think he needs to repeat his speech! He was on the list, but had not been ticked off it. Never mind. We will hear from another fellow instead, Mr Peter Heaton-Jones.
Peter Heaton-Jones (North Devon) (Con)
It is a particular pleasure to follow the right hon. Member for Birkenhead (Frank Field), who speaks with unrivalled expertise on these matters. I agree with his fundamental point. I speak to oppose Lords amendment 1, which seeks to amend clause 4, as passed by this House. I do so as a member of the Bill Committee that scrutinised the Bill—during 15 sittings or so, if I recall—last autumn. Clause 4, as passed by this House, introduces a new duty for the Secretary of State to report annually on two Life Chances measures: first, the proportion of children living in workless households; and secondly, as has been mentioned, their educational attainment at age 16. In effect, therefore, it repeals most of the Child Poverty Act 2010.
The Lords amendments in effect seek to replicate the parts of the 2010 Act that relate to the measurement of the proportion of children living in poverty. In particular, their lordships’ amendments seek to require the Secretary of State to report on four specific measures: relative low income; combined low income and material deprivation; absolute low income; and persistent poverty.
However, the Bill, as passed by this House, does not mean that the Government will stop measuring and publishing such data on household income. The Government will continue to publish annually low-income data in the HBAI publication. Those data include—Members may get a sense of déjà vu all over again—relative low income, combined low income and material deprivation. They probably ring bells, because those categories replicate almost exactly the measurements that the amendments from the other place seek to reinstate in the Bill. To put it simply, the Government are already doing it. The information is available for all to see and will continue to be so. The HBAI publication has protected status as a national statistics product and Ministers have undertaken in this House to publish the data annually. Lords amendment 1 is—I say this with the greatest respect—simply unnecessary. Its effect would merely be to replicate something the Government are already doing.
Peter Heaton-Jones
The Government have made a commitment to continue to publish the data annually. They have been very clear about that fact. When it comes to the relationship between those measurements and the eradication of child poverty, under the previous Labour Government the number of households where nobody worked doubled and in-work poverty increased: the Government missed their child poverty target by 600,000.
The Bill, as passed by this House, does not redefine poverty to exclude income, as some of its opponents often say. That argument assumes that measuring income is an effective, helpful or comprehensive way of measuring poverty in the first place. It is, in fact, none of those things. In that respect, the 2010 Act was flawed in its approach. The current income measures enshrined in the Act show that the number of children in relative poverty can actually go down in a recession and up in times of growth. That is simply perverse. Furthermore, the measures incentivise what is often known as a “poverty plus a pound” approach, where families can seemingly be moved out of poverty without any change whatever in the underlying factors that got them into the position of low income in the first place. The Act is simply not doing what it is intended to do.
Kevin Foster (Torbay) (Con)
It is interesting to hear my hon. Friend’s points. Does he agree that under current measures the only way completely to eliminate relative poverty would be to collapse the economy completely and make absolutely everyone poor?
Peter Heaton-Jones
It sounds like my hon. Friend has been reading the Labour party’s manifesto. The 2010 Act is flawed, and in seeking, in effect, to reinstate its provisions, the Lords amendments are similarly found wanting.
Let us look at what the Bill, as passed by this House, actually does in its current format and why their lordships’ amendments are not in my estimation constructive in seeking to reverse these measures. The Bill enshrines in legislation the Government’s commitment to end child poverty and to improve children’s life chances. It focuses on the actions that we know will make the biggest difference to the life chances of children and young people—both now and in the future. We need measures that drive the right action to tackle the root causes of poverty rather than just tackling the symptoms. That is why the Bill introduces the new life chances measures of worklessness and educational attainment.
The Government’s policies in targeting life chances importantly look at outcomes, not inputs—it is a comprehensive approach—recognising that the real route out of poverty is through work, not welfare. Some 74% of previously less well-off, workless families who found work have escaped “the poverty trap”, if one can use that phrase.
The Bill seeks to replace the wholly arbitrary measure that a household is in poverty if its income is below 60% of the median wage. That is totally arbitrary. In a recession, with all households’ income tending to reduce, it gives the completely false impression that fewer households are in poverty because their relative income is seen to rise. It is totally perverse—a recession leading to less poverty. The figures simply do not add up. It is a discredited system, and it did nothing under the previous Government to tackle the underlying root cause of childhood poverty. I therefore submit that these amendments are wrong to try to reinstate that old discredited system. It beggars belief that some people believe that we can base our strategy for improving children’s life chances on income measures that would suggest that the last recession somehow caused a significant fall in child poverty. Of course we should not do so, but that would be the effect of the Lords amendments if this House accepts them.
Neil Gray
That is why, of course, it is important to have a package of measures, so that we can look at all aspects of how children and their families are living in poverty. We should not assess just relative low-income measures; we should include other measures such as material deprivation, which is critically important.
Peter Heaton-Jones
Material deprivation is one of the things that will continue to be measured by the HBAI statistics. It will still be included—[Interruption.] I am sure that the Minister will rise to her feet and reflect this fact; a commitment has been made that the measure of material deprivation will continue to be published annually. It will continue to be part of the official ONS Government statistics. The hon. Gentleman says that we need a package of measures, but that is exactly what we get. We get the HBAI information; we get those statistics; we get the commitment that these data will be published annually and enshrined, as I say, by the ONS. On top of that, we get what the Government suggested in the original Bill, which this House passed—further measures of attainment. We get the best of both worlds.
Peter Heaton-Jones
If the hon. Gentleman does not mind, I will not give way again. He has already had a couple of bites at this particular cherry—
Mr Speaker
Order. Let me gently say to the hon. Member for Airdrie and Shotts (Neil Gray) that he has already given us the benefit of his views for no fewer than 19 minutes, by which I assure him we are all greatly gratified, but 11 Members still want to speak. The hon. Gentleman is perfectly in order in trying to intervene, but I am trying to set out the context, and I know colleagues will want to be considerate of each other.
Peter Heaton-Jones
Thank you, Mr Speaker. I shall take what you say as a gentle reminder for me to move things on, too. I shall do so.
Moving households closer to employment is what improves the life chances of young people in the long term. That is why the Government are focusing on getting parents into work, and then getting their children into work through education. We are tackling the cycle of deprivation that has stifled the ability of too many children to reach their full potential for too long, and has condemned generation after generation to a life in which underachievement and a lack of aspiration become inevitable.
The Government are seeking to change that cycle fundamentally. We are committed to the far more effective approach of targeting the root causes of poverty, which include a lack of educational attainment and family stability. Work remains the best route out of poverty, and higher educational attainment is the best route into work. That is why the Bill that was passed in the House of Commons seeks to introduce two key measures of poverty, namely the proportion of children living in workless households and educational attainment at the age of 16. The Government are focusing on those factors because they have the greatest impact on child poverty and the life chances of children. The Lords amendments propose a reliance on spurious measures which will do nothing to tackle the problems at their sources. They are misguided, and we should therefore not support them.
Alison McGovern
Thank you, Mr Speaker, for calling to speak in this important debate. I shall be as quick as I can.
Let me begin by pointing out to the hon. Member for Daventry (Chris Heaton-Harris) that we already measure educational attainment, and we already measure worklessness. It is not a question of what we should repeat; it is a question of what matters. I shall not go into detail about the hon. Gentleman’s comments about “spurious measures”. I am sure that my hon. Friend the Member for Bishop Auckland (Helen Goodman) will do that shortly, so I shall leave it to her.
I want to return the debate to the basics. What are we debating today? What do we mean by transparency in regard to child poverty? That is a very simple question about what we in the House believe poverty to be. Should it be defined as a measure of income, or as a measure of educational attainment or worklessness? We already apply those measures to other statistical estimates of what is going on in our country, but what does the law say about what poverty is?
I asked myself this question: does the amount of money that people have make them poor? Well, it seems obvious to me that it does. A parent—a lone parent, for instance—might not be well paid and might be unable to work many hours. That parent would not suffer from worklessness, but he or she would still be poor. A child might achieve great things at school, securing all the certificates and qualifications, and still suffer the effects of not having enough money at home. Plenty of children go to school, work hard and do well, despite seeing their parents suffer from the stress of trying to pay the mortgage or the rent, or not having enough money to put in the electricity meter so that they can wash their school uniforms. That happens to plenty of children. This is not about educational attainment or worklessness; it is about the fact that the cause of poverty is not having enough money.
Why does that matter? It matters because, in the coming years, the Tories are going to make people poor, and, specifically, they are going to make children poor. We know that, because the Institute for Fiscal Studies has told us. Families will be worse off, despite the so-called living wage—many of them will be in work—and their children will be affected, whatever the qualities of their teachers at school, which may be legion. We have some fantastic schools in this country, which help children to achieve despite poverty at home.
The next question is straightforward: what should we do about the situation? The Government have made it clear that they do not think money makes a difference to life chances. I have made it clear that I think it does, but why would anyone listen to me? I am a Labour politician. However, there is independent evidence. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) mentioned some of it in her fantastic speech, but I can add the information that Kitty Stewart and Kerris Cooper, of the London School of Economics, reviewed 34 studies of whether family incomes affected children’s outcomes throughout the OECD, and found that family income mattered. What is the point of having some of the world’s finest researchers if we do not listen to them? We know from an FOI request that of the 250 replies on the issue to Government consultations, only two agreed with their desire to forget about reporting on the income target. The vast majority of people agreed that money matters.
Jeremy Lefroy (Stafford) (Con)
I would like to address Lords amendments 8 and 9 and the question of employment and support allowance and the work-related activity group, which is the group of people who currently have limited capacity for work.
I support the Government’s intention to enable more people who are on ESA to go back into work, but, as the Minister said, that is not happening, with only 1% per month of that group of nearly 500,000 people returning to work. The Government’s proposal to combat that is to remove the additional amount paid, starting from the 14th week, to people assessed as being within that group, and at the same time they wish to introduce a completely new system of support designed to help people back into work. The new system of support will be set out in a White Paper, which has not yet been published. What we do know is that the system is expected eventually to be funded with approximately £100 million a year, and I will come back to that.
That White Paper is incredibly important to the matter we are discussing, because it is the replacement for what the Government are proposing to remove. I would like to set out four things that I believe the new system of support that the Government are proposing must have within it.
First, it must ensure that people’s assessments are done much more quickly than at present. Currently, people are waiting for assessments for months, and during that time they receive just the basic assessment rate, which is the equivalent of jobseeker’s allowance, regardless of whether they eventually go into the WRAG or the support group. For those whose condition means they have costs additional to what is assumed for those on JSA—for instance, as has been mentioned, energy bills—that can mean a struggle to pay those costs. That can lead to their going into debt, regardless of whether they eventually go into the support group or the WRAG, or indeed into neither. I believe that all work capability assessments should be completed well within the 13 weeks for which claimants are on the assessment rate so that they are not put at a disadvantage by the slowness of the system. I would like to see clear evidence in the White Paper that that is going to happen, because it would benefit not just people going into the WRAG but people going into the support group.
Secondly, the assessments themselves need to be more sensitive. That particularly applies to people with mental health conditions, who are about 50% of those in the WRAG. That is another reason for ensuring that people have their assessments rapidly. If they have mental health conditions and need support, the earlier they receive it, the better. As the noble Baroness Meacher said in the other place:
“Common sense tells us that someone with an anxiety disorder or depression will find rising debts and the prospect of eviction from their home impossible to cope with.”—[Official Report, House of Lords, 27 January 2016; Vol. 768, c. 1306.]
Thirdly, the new system of support will need to be based on clear evidence of what works for people, so I ask the Minister whether the proposals in the White Paper will be piloted to see whether they work, or whether they will be based on current best practice. If it is the former, there is little time, as they will need to be in place by April 2017.
Fourthly, the new system must include a full and accessible scheme for cash payments over and above the assessment rate to meet additional costs if people have them. I have already referred to the extra energy costs arising from people having to stay at home much more as a result of their illness or disability. There may also be costs for special diets and so on. I mention accessibility because I have seen schemes where support is available but very difficult to obtain—people have to jump through hoops to get it. Anyone who is assessed for the WRAG under the new system should therefore automatically be asked about additional costs resulting from their condition that are not covered by PIP. Those costs should be evaluated rapidly and, if accepted, met. When the White Paper is published, I will look for it to address those four points.
Sammy Wilson
The hon. Gentleman has made thoughtful points. Does he not accept that the problem is that we are being asked tonight to vote to take financial support away from people, without the safeguards that he has outlined being known? It is like taking a jump in the dark, and the Prime Minister has told us that that is not a good thing to do.
Jeremy Lefroy
It is like that, and I would have preferred to see an assessment such as I proposed in the amendment that I tabled on Report. I hoped that perhaps the Lords would take that up, because it is important. To some extent, it is an act of faith in the Government and in the White Paper, and that is why I am setting out these points now. As my hon. Friend the Member for South Cambridgeshire (Heidi Allen) said, we hope to see action on them.
I have already talked about accessibility, which is extremely important. When somebody is assessed for a group, they should be asked about accessibility instead of being referred to somewhere they might find difficult or somewhere they do not even know. That should be part of the assessment process and run by the Department for Work and Pensions, not other Departments
When the White Paper is published, which I hope will be as soon as possible, I will be looking for it to address all those points. If it does, the system may well work better for people on ESA who can move back into work. Let us remember that this is about people who have limited capacity for work, not people who cannot work, who must continue to be in the support group and receive the support supplement.
The risks of a scheme that does not meet those criteria are considerable, first and foremost for the people involved, who may end up in limbo, neither helped into work nor able to meet even their basic living costs. They may end up in the support group long term, which is not in their interest or the public interest.
This will cost more than £100 million per annum, which is what has been allocated—probably considerably more. But if the Government are serious about supporting people back into work, as I know they are, a good scheme that is initially more expensive will both be better for those who need support and probably cost the taxpayer less in the long run. I therefore urge the Chancellor to back such a scheme with the funding it needs, and the Minister and the Secretary of State to push for it. The status quo, as embodied in the Lords amendments, is not satisfactory, but its replacement must be an improvement for those in the WRAG—we cannot afford to go backwards.
Dr Blackman-Woods
I want to speak to Lords amendments 1, 8 and 9. When I came into the Chamber this afternoon, I did not intend to say much about Lords amendment 1, but I was so incensed by the way in which the Minister dealt with the issue earlier, and by her total lack of compassion for anyone who might be affected by the measures in the Bill, that I thought I must say something. I must point out to the House the contrast between her approach and that taken by the Bishop of Durham when he moved amendment 1 in the other place, because his approach was measured, based on evidence and full of compassion and care for the people affected. He pointed out what I think is self-evident to most of us in this Chamber, which is that
“low income is an important influence on children’s outcomes and life chances”.
In fact, we have had an often bizarre discussion today in which there is the suggestion that, somehow, child poverty is about a whole collection of measures, and nothing to do with income, which is clearly ludicrous. The Bishop of Durham said that
“the Government’s concern about the current child poverty measures is that they have encouraged an overdependence on income transfers, diverting attention from policies that tackle the root causes of poverty.”
He said that, as I pointed out earlier, Lords amendment 1
“does not seek to reassert the primacy of the existing child poverty measures: it simply requires that income-based measures of poverty be reported on alongside, and on a level footing with, other life chance indicators, such as worklessness and educational attainment, in order to acknowledge the significance of family income for children’s well-being and future prospects.”—[Official Report, House of Lords, 25 January 2016; Vol. 768, c. 1047.]
That is particularly important, because we have an assessment from the Institute for Fiscal Studies showing that the Government’s desire to close the fiscal deficit chiefly through spending cuts means that the prognosis for child poverty over this decade is bleak. We do not want a range of Government measures that make it more difficult for us to assess the impact of cuts on child poverty and the direct relationship between child poverty and low income. I have heard nothing from the Minister today to persuade me that she is following the right approach.
Mr David Burrowes (Enfield, Southgate) (Con)
I hear what the hon. Lady is saying, but is she not advocating a return to the past? Does she not recognise that it is not an either/or situation, but a both situation? Reintroducing child poverty measures is, at the very least, arbitrary and could have unintended consequences.
Mr Speaker
Order. May I just point out that if Members continue in this way, and it is perfectly in order for them to do so, there will be some who will not get in? It is as simple as that. If everyone speaks for five minutes or more and takes interventions, a number of people will not get called to speak. It will be no good blaming the Chair; you will have to blame each other.
Dr Blackman-Woods
There is no way at all that we can say that the relationship between a person’s income and poverty is an arbitrary measure. I say to the hon. Member for Enfield, Southgate (Mr Burrowes) that I have made it very clear, for the third time now, that Lords amendment 1 is about requiring an income-based measure alongside—not instead of—other measures.
We have heard many attacks on Labour’s record this afternoon. Labour reduced child poverty by almost 1 million. The independent assessment by the Institute for Fiscal Studies and others was that it was a remarkable achievement, certainly without historical precedent in the UK, and impressive compared with other countries too. Rather than deriding our record, perhaps the Conservative party should see what it can do to build on it.
I turn briefly to Lords amendments 8 and 9. I am sure that many Members have heard from a number of their constituents about them, and I wish to talk about someone who wrote to me yesterday. She sufferers from multiple sclerosis. She wrote:
“I’m writing to ask you to support the amended Bill and ensure Clauses 13 and 14 remain out of the Bill when it is debated in the House of Commons. If this benefit were reduced, it could have significant implications for people who have MS and other people living with a long-term condition, in some cases making their health worse and pushing them even further from employment. Having a long-term condition such as MS is expensive. It adds extra costs to finding employment or training that people who receive jobseeker’s allowance don’t experience. These costs include things like paying for taxis to get to and from interviews.
Lord Low’s review of the proposed reductions in ESA also found no evidence to support the Government’s argument that £30 was a disincentive to work, which has been given as a rationale for these Clauses. The report also highlighted the negative impact that this reduction would have for people with disabilities like MS . Keeping clauses 13 and 14 in the Bill doesn’t make sense.”
I could not put it any better. We have received a great deal of testimony from our constituents, along with the excellent review by Lord Low and Baronesses Grey-Thompson and Meacher, which the Government have simply ignored. I ask the Minister to think again and listen to the people who know something about the possible impact of this policy.
Paul Scully
I should like to speak to Lords amendments 1 and 8. In looking at child poverty, I am worried about the numbers for the income targets that we have discussed. My concern is that the Government are effectively just managing the situation, rather than tackling the problem. The Bill seeks to refocus our approach so that we concentrate solely on tackling the root causes of poverty, rather than wringing our hands and looking at the symptoms.
Between 2003 and 2008, the Government spent roughly £300 billion on child poverty, but the figures remained broadly unchanged. Such examples show that we need a different approach. We have heard that the reporting of incomes has had a perverse effect on child poverty. In a recession, poverty can decrease. Conversely, in periods of economic growth poverty can go up.
Let us concentrate on those root causes. The deadline for the elimination of child poverty has been discussed, but we need to think how we would meet an arbitrary deadline if we do not understand what we are trying to tackle. We need to understand the root causes of poverty, and focus on those.
The Minister has made a commitment to continue to publish the figures on low incomes in the annual report on households below average income. The report uses national statistics, so it is guaranteed on that basis. As I have said, we have heard the Minister’s commitment to publishing those figures every year. We have been asked by the Opposition if the figures can be reported alongside information on life chances. However, that reinforces the perverse consequences that can result, so it is important that we focus solely on what will help to eliminate child poverty.
Turning to changes to ESA, 61% of people in WRAG want to go back to work. The majority of people who are out of work want to go back to work, so it is important that we focus support and help people. We should offer a safety net for people who cannot go back to work, and we should do everything that we can to support people who can go back to work and want to do so. WRAG was set up with good intentions, but unfortunately it has not been effective enough. It is not right that we have a system in which only one in 100 people can find work, whereas one in five JSA claimants go back to work.
The intermediate WRAG arrangement has become a long-term waiting room, entrenching worklessness, because it focuses on the symptoms, not the root causes. That is why I am keen that we take the cash—up to £100 million a year by 2020-21—and repurpose it to address the needs of the people in that group.
I understand the concerns of colleagues about what will be in the White Paper and how the process will work, but as a member of the Committee considering the Bill I have seen the dedication of providers, disability charities and support groups, their commitment to the people they seek to help, and the skills and experience they have. That is why I know that the taskforce that is being set up will help to bring in the expertise of the charities, providers, support organisations, think-tanks and local authorities. I ask colleagues to have faith in the experience and expertise of those people, which will give us a solid basis on which to spend that money.
As the national living wage and personal allowances increase, we have an opportunity to tackle childhood poverty and bring people into work. We must make sure that work pays more than benefits, and that the system supports vulnerable people and is fair to people in work who pay their taxes.
Helen Goodman
I begin by addressing amendment 1. The Labour Government had four poverty measures when we took through the Child Poverty Act 2010—absolute, relative and persistent poverty and material deprivation. We measured all of them. Between 1997 and 2010 we cut the number of children living in relative poverty by 1 million, and the number of children living in absolute poverty by 2 million. There is nothing arbitrary about this. It is important to have those measures because they are used across the OECD. That enables us to compare our performance with that of the other countries that UNICEF studies.
Ministers want to abandon those targets because they intend to freeze benefits and cut child tax credits if there are more than three, four or five children in a family. Those measures will increase the number of children living in poverty. Because they do not want that to be evident to the whole world, they do not want to use the targets. We should not let them off the hook.
We all think life chances matter. We are all interested in the correlations between the kind of childhood people have and what happens to them later in life. No one is saying that we do not want to measure those things, but I remind the House that not being able to go on a school trip, never having a holiday, not having a birthday party—these things matter in themselves because children are not human becomings, but human beings. Childhood is a part of life. The quality of life in the early years matters just as much as it matters what our lives are like or what the quality of our parents’ life is like.
On amendments 8 and 9, I want to bring into the House the voice of the people affected. Those in the ESA support group are not people who are not working out of perversity or because they have not done the arithmetic and do not know what the incentives are. They are not in work because the jobs do not exist, or because of the barriers to work. They may have problems with transport, they may be stressed, they may be exhausted or they may be struggling against extremely difficult odds. In my constituency there are 860 people in the ESA work-related activity group. I get letters from them and have meetings with them every single week.
This week I heard from a woman who wrote:
“My husband…has been in receipt of ESA-Support Group benefit…for some considerable time due to long standing health problems of both a physical and psychological nature. He has recently had to resubmit the…questionnaire and we have just had notification that he has been placed in the Support Group but this will only be until November…His last award was for three years.
Considering the…letter from the GP”—
and the psychologist—
“we can’t believe the DWP think it is in any way appropriate to put my husband through this process twice within the same year…He will now spend…months worrying and becoming increasingly anxious about having to face the process again”.
She adds that he is “extremely vulnerable”. Treating this group of people in that way is not helpful. Making them poorer, not helping them to heat their homes or to eat properly, and making them anxious about whether they can pay their rent is not helpful.
The week before I received that letter, I had a letter from another constituent, who said:
“I’m petrified. Atos did my ESA medical...yet they still lied. I’d told them my disabilities and…they didn’t mention any of them…I was called by a woman from the DWP who told me my ESA was cancelled. She seemed happy (really happy) to gloat about this…I had to live on my 9 year old daughter’s £20 child benefit and child tax credit for 4 weeks. It takes a split second to stop benefits but 4 weeks to reinstate.”
She has now been told she must provide her own medical records, which will cost £500 because doctors are charging to provide them. She continues:
“I can’t afford this on £102 a week…I’ve not slept in ages”.
She adds that she has “cried a lot” because she knows what will happen to her.
That is the situation people are already in, and we absolutely cannot see them pushed down even further. I appeal to the Minister’s better nature. I appeal to her to think again about amendments 8 and 9.
Kevin Foster
It has been an interesting debate so far. The Opposition contribution that was of most interest to me was probably that of the right hon. Member for Birkenhead (Frank Field), and it is a pity that others did not take a lead from him.
Let me start with the measures of child poverty. Using measures of relative income as the main driver can have some bizarre impacts. For example, we focus on those just under the line, not those who are most in need or most desperate, and we try to get them over the line to make the numbers work. As I touched on in an intervention on my hon. Friend the Member for North Devon (Peter Heaton-Jones), that approach can inspire the view that making the whole of society poorer will end relative poverty, even though no one is better off. As we heard, the bizarre outcome is that a recession is, in theory, the best news when it comes to reducing child poverty, whereas, in a boom, things would be the other way round.
That is why it is right to focus on creating real life chances. I speak as someone whose mother grew up on a council estate and whose father worked for 37 years in Devonport dockyard—he had to work hard with his hands to get what he could for his family. That is important: this is about social mobility and achievements such as those.
A Scottish National party Member noted in an intervention that it makes sense to measure these things not just at 16, but all the way through education. There is perhaps more work to be done, therefore, and I look forward to what the taskforce says, but it is important to look at what our education system turns out at the end of the day. One example that has been given is that, a few years back, more children came out of Eton with three As at A-level, allowing them to get to top universities, than came out of the entire cohort of children on free school meals in England. That really is a thought-provoking point. We may disagree about how best to tackle it, but it is certainly no great compliment to our system.
Employers with jobs want people with skills. They want to employ people and to put them into high-paid job. However, they find that people just do not have the skills or the ability to take those jobs up. That is where educational outcomes have an impact on life outcomes and on whether people stay in poverty. If people do not have the skills to move into employment, that opportunity is not there. That is why looking at the life chances side is so important in tackling poverty and preventing people from being locked into a cycle, with parents being in a low-paid job, children going into a low-paid job and grand-children going into a low-paid job.
Dr Whitford
Following the comments of the hon. Member for Torbay (Kevin Foster), people in the ESA WRAG have been classed as not fit for work, unlike those on jobseeker’s allowance, so one would not expect the same success rate.
My concern about this change—in essence, this repeal of the Child Poverty Act 2010—is that the policy seems no longer to be about wanting to eradicate child poverty but about airbrushing it out of existence by removing the phrase, the measurements, and not just the reporting but the statutory aim of eradication. We see many measures: a benefit cap being reduced or a benefit freeze, changes to tax credits after having two children, and people in the ESA WRAG losing £30 a week. I dealt with patients like that as a breast cancer surgeon. These people are stuck at home; they do need to keep the house warm and they do need that extra bit of help. They have been classed as not yet fit to work. We have had impact assessments on some of these measures, but we have not had a cumulative impact assessment. Some families will be hit by all these measures, and the IFS is talking about losses of between £1,000 and £1,500 a year. To take that kind of money away from the poorest people will have a huge impact.
Like the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), I had the honour of taking part in the all-party group investigation into the impact of these changes on child poverty. We heard evidence from the Faculty of Public Health and from many charities on the changes that we can expect in child poverty and the impact that child poverty has on health. The University of Liverpool has estimated that we lose 1,400 children a year under the age of 15 because of poverty. That number is equivalent to the size of a big secondary school. If the roof of a secondary school was collapsing every year, we would be out there doing something about it, but we do not. This is about neonatal mortality, infant mortality, accidents, violence, suicide, addiction and alcoholism, and the problem is that we think we can just ignore it.
Earlier in the debate, we talked about mental health. Children in the poorest quartile have three times the incidence of mental health problems. If their parents suffer from depression and stress, which we know is aggravated by poverty, they have a 60% increase in mental health problems. There is a five times higher incidence of infant mortality. The Marmot report estimated that the deaths of one in four children before the age of one could be prevented if their mothers had had the same nutrition, health, chances and lack of stress as the people who are most comfortable.
Five times as many children who are in the poorest quartile are likely to die as a result of road traffic accidents, while 15 times as many are likely to die as a result of a fire. Malnutrition is on the increase. There is evidence of low iodine and low folate in teenage girls as a result of poor nutrition. That leads to cretinism and spina bifida. We are going to produce generations of children who will suffer in the future. Marmot said that disadvantage starts before birth and accumulates through life.
I am not against including a measure of life chances. I do not accept that we have to choose between two separate horses. We can measure both. The only life chances that are being talked about are worklessness and educational attainment at 16, which is long after the horse has bolted. Two thirds of children in poverty have a working parent, so they will simply be dismissed. At 16, we have no chance to do something.
I accept the argument of the hon. Member for Torbay that we need to develop measures, but we also need interventions. We keep hearing that there is going to be a focus on changing these children’s lives, but how are we going to do that? There should have been a White Paper first so that we could know what was being offered to change their lives, because they will cost us throughout their lives, through failed education, worklessness, ending up in the justice system and addiction.
It makes sense to invest money in their childhood so that they are not a year behind. American research has also found that their brains do not develop to the same level as others. We need to change that, but we must not simply think that by ignoring the phrase “child poverty” it will disappear. There should be a statutory obligation to report it and we should aim, as was promised, to eradicate it by the end of this Parliament.
Stephen McPartland (Stevenage) (Con)
It is a great pleasure to be given the opportunity to speak in this debate. I consider myself to be a proud and loyal member of the Conservative party, and as such I believe it is my duty to hold the Government to account and to help them when they lose their way. I am very proud to have had a number of conversations with the Minister for Employment, who is very happy to listen and talk. She is very welcoming and tries to work with others to achieve change. I was very happy with some of the reassurances she gave me, but I am sure that Opposition Members will be delighted to know that I will join them in the Lobby when we vote on Lords amendments 8 and 9 in about half an hour, because I am not happy with all the assurances I was given by others in the Department.
I want to clarify a few things. On the ESA WRAG and ESA support group, we are talking about 500,000 people who have been defined as being too ill to work under the measures introduced by the coalition Government in 2010. They have already been assessed as needing more support to go into work.
The fact that one in 100 are leaving that group and going into work is our failure. Something has gone wrong with the back to work programme. I am not proud of that. I was very keen to support the back to work programme, and disabled constituents of mine were very happy when we introduced it, because they felt that, for the first time in their lives, they would be given the opportunity to get out there and get real, practical support to get back into work. They do not want training sessions or to be taught new skills that are of no use whatsoever to them by a company that gets paid to do so. They are interested in getting back to work, and that is what I and the Government are interested in, too, but the problem is that, although we all want the same thing, we differ on how to get there.
The ESA support group consists of people who are just too ill to work. We are effectively saying, “We’re not writing anybody off, but if you’re in the support group you don’t need to find work, we won’t really give any support and we’ll just leave you there.” I am concerned that, by abolishing the ESA WRAG for new claimants—the Minister has been clear that that does not apply to existing claimants—from April 2017, we will push more people into the support group. Someone with a progressive disease such as motor neurone disease, which is getting worse and worse, will end up being pushed into the support group as fast as possible. I have a problem with that.
The Disability Benefits Consortium has said that almost half of those in the ESA WRAG have mental and behavioural disorders, which include mental health issues, learning disabilities and autism. Before the debate, we had an urgent question about the Government providing an extra £1 billion for mental health. Almost half—248,000—of the 500,000 people in the ESA WRAG have mental health issues. With that £1 billion going to the NHS, we have to wonder what we can do to support back into work those who have learning difficulties, autism or a variety of other issues. Some employers simply do not want them. Some small businesses find it very difficult to employ them. How do we go out and find them that opportunity? How do we find them a real job, as opposed to a fake job?
Parkinson’s UK, Rethink and Mind jointly say:
“This policy is poorly conceived. It will ultimately cause unintended harm and push sick and disabled people further from employment.”
Scope has said that the changes will disincentivise disabled people from finding work and will create a greater incentive for people to want to be placed in the support group. Macmillan has said that the changes will have a significant, detrimental impact on people affected by cancer. The bottom line is that the charities with which the Government will work in the taskforce to help to deliver the changes that will be in the White Paper are very concerned about the changes and do not see how they will work.
I do not accept that £30 a week is an incentive for somebody not to go to work. Most Conservatives do not accept that. Most Conservatives consider it to be their proud duty to look after the disabled. Ideologically, we have no issue about providing a welfare system that is a safety net for those who need support when they fall on hard times, to help people back into work. My concern is that the way in which the Bill will be perceived, and its practical implications, will lead some people who have disabilities to feel as though they are being pushed into the support group or into work.
I have a technical question for the Minister, which I hope she will be able to answer later this evening or in the next few weeks. If some of the original 500,000 people in the ESA WRAG find work but cannot cope with it, will they be able after April 2017 to go into something like the ESA WRAG, which will no longer exist? Or will they just have to push themselves towards the support group? Will there be an incentive to do so?
There are lots of other points that I would like to make, but as we are running out of time I will make one quick point. We have heard that £100 million is being reinvested, but we are taking £640 million away, so £540 million is going. If we are that keen on it, why do we not reinvest the whole £640 million into helping people back into work?
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
I will be brief, because other Members have covered some of the points that I wanted to make. The Welfare Reform and Work Bill will create hardship across our country and push people further into poverty. Child poverty is rising, and independent projections from the IFS show that the fall in child poverty rates that we saw under Labour is at risk of being reversed. We hear from the Children’s Society that if the proposals in the Bill are enacted, we should expect child poverty to rise even more steeply.
Research by End Child Poverty identified that 4.1 million families and 7.7 million children have been affected by below-inflation rises in child benefit and child tax credit over the past three years. One in five families said that they had cut back on food and heating because benefits have been increased below inflation. The Government’s attempts to mask the impact of child poverty by removing income as a measure will fool nobody. Child poverty should be something that we all recognise and want to combat. Sadly, the Government seem to be trying to bury the effects of their social security policies on child poverty; it appears that the Government are far from taking the situation seriously.
The Social Mobility and Child Poverty Commission has indicated that 1.5 million children live in poverty because their working parents do not earn enough to secure a basic standard of living. As was mentioned earlier, the commission stated in its December 2015 report that
“it is not credible to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty, lack of money.”
I believe that the Government’s position is just not credible.
I turn to the Government’s proposals to cut ESA in the WRAG. If clauses 13 and 14 of the Bill are accepted, the financial support for claimants in that group will be cut by 25%, from £102 to £73. That will have a drastic impact on both disabled people who are in work and disabled people who are out of work. In view of the fact that the Government have committed to protecting support for disabled people, that is deeply worrying. This cut will not incentivise people, which is what the Government say they want to do. The cut has been opposed in the other place, and I hope that the Government will now listen and scrap clauses 13 and 14.
Mr Burrowes
I will speak to Lords amendments 1, 8 and 9. Let us be realistic: we can get involved in adversarial politics on poverty, but we are all in the same business of wanting to alleviate child poverty. Whether or not Lords amendment 1 is agreed to, we need to recognise that it would not in itself transform the lives of children in poverty. Similarly, the previous Government’s focus was on income-related measures, but they were not in themselves going to transform child poverty.
The issue could be used, as it was in the speech by the hon. Member for Bishop Auckland (Helen Goodman), to parade the child poverty credentials of the previous Labour Government. We could spend our time—we have not got much time—criticising that approach and saying that it did not get to the root causes of poverty and truly transform the outcomes for those most in need.
Lords amendment 1 is about reporting data and about how to focus activity, including Government measures, on those who are most in need. We need to ask what will focus Government policy on this issue like a laser. Despite some of the lurid claims, not least those made by the hon. Lady, the policy was not in any way a device to hide cuts. Let us get rid of that idea, because that is not what this is about. This is about making a genuine attempt not so much to redefine child poverty, but to refocus attention on its root causes.
As has been seen during the long passage of the Bill, this reiteration of the policy has had cross-party support, as well as support from many NGOs involved in fighting child poverty, particularly the Centre for Social Justice, which has worked hard in this area. The right hon. Member for Birkenhead (Frank Field), the Chair of the Work and Pensions Committee, hit the right tone. We want to ensure that we do not distract attention from what is needed to transform people’s life chances. That is what the issue is about.
I am concerned about what Lords amendment 1 would do. This well-intentioned amendment received support from many in the other place, but it would go back to and reintroduce arbitrary measures. Such points have been made—I will not repeat them—by my hon. Friends the Members for Torbay (Kevin Foster), for North Devon (Peter Heaton-Jones) and for Sutton and Cheam (Paul Scully). For example, Lords amendment 1 would risk the reintroduction of measures based on current parental income, which would take away the focus on raising attainment and on increasing life chances for disadvantaged children.
I do, however, have a way forward to propose. I cannot deal with it in relation to Lords amendment 1, which will simply reintroduce child poverty measures with all their failings, but we must look for such a way that recognises the potential opposition in the Lords. As we all acknowledge, financial poverty has a significant effect on life chances. We cannot ignore that, and Government publications on such measures have proved that point. We must therefore look at how to make reference to financial poverty, but keep the particular focus on tackling the risks to life chances.
Eventually, if the Bill goes back to the other place, I propose that consideration is given to an income measure that will act not as a focus in itself, but as a gateway to other measures, and that will ensure Government policy is directed, as it currently is, to those most in need of support. We should consider introducing a gateway measure for families based both on whether they have a low income and on life chances risk measures, with a particular focus on those in permanent poverty. It would ensure that maximum support is given to those stuck in poverty, and that the Government focus on those who are most in need.
Briefly on Lords amendments 8 and 9, I share the concerns that were well rehearsed by my hon. Friends the Members for South Cambridgeshire (Heidi Allen), for Stevenage (Stephen McPartland) and for Stafford (Jeremy Lefroy). We met the Minister together. I recognise that the Minister and the Secretary of State have a genuine commitment to this as a reforming measure. We really need to get the White Paper out there so that the Government’s commitment to reform can be seen clearly.
I recognise that the WRAG is not fit for purpose, as only 1% are getting into work, but it does have a purpose. It has a purpose for the most vulnerable individuals, for whom the financial element of £30 really matters. The way we show our compassion is in how we treat the few, not the many. For those few people, that £30 will have a big impact on their lives. Whether we like the WRAG or not, whether we think these people should be in the support group, which they may well be moved into, or benefit from PIP, they are concerned about the loss of this payment. When dealing with those with progressive illnesses, remitting illnesses or mental health conditions—the Government’s commitment of £1 billion of investment is wonderful—what we do must be matched by careful concern.
As we move towards 2017, with the flow of new applicants, we must do all we can to reassure everyone that we are in the business of reform. We must not only enable more people to get into work, but deal with the practical elements. My hon. Friend the Member for Stafford mentioned energy costs. That is undeniably an issue that must be dealt with practically. I will support the Government tonight, but we must get the White Paper out and show our practical support in meaningful ways before 2017.
I will hold the Government to account, as will my hon. Friends, to ensure that we deliver. We must show that we are on the side of these people, we must show our compassion and we must do all we can, for example through Disability Confident events like the one that I have on Friday, to show that we are on this in a way that previous Governments have not been. We must show that we want to see people’s lives transformed through work, but also that we will support people with the safety net, which we are proud of. Even after the WRAG measures, we are more generous than the previous Government were in relation to the disabled. We must not be deflected from the task of supporting people into work and supporting people in the safety net. It is not a pull factor—let us not make that case. We want to reform the measure to ensure that it really works for people who need support and are not able to get into work immediately, but let us keep our focus, as the poverty measures will do, on those who are most in need. I will hold the Government to account over the coming months to ensure that they really mean what they say.
Dr Eilidh Whiteford
Earlier today, I attended the vigil outside Parliament that has been organised by Disabled People Against Cuts to draw attention to this debate and to urge the Government to listen to what the House of Lords said about the cuts to support for disabled people and to accept its amendments. I will focus on Lords amendments 8 and 9.
The proposal to reduce employment and support allowance for WRAG by about £30 a week for new claimants has been a focal point of this debate, precisely because the Government promised that they would not cut the support for disabled people and yet are doing exactly that. They have done it indirectly through policies such as the bedroom tax and the inclusion of carer’s allowance in the benefit cap, on which I am glad the courts have forced a U-turn; and they have done it directly through cuts to the independent living fund, DLA, Motability and Access to Work. Now, they are cutting direct financial support to disabled people through the measures in this Bill. They are putting sick and disabled people on the frontline of their austerity agenda, hitting the incomes of those who are already disadvantaged. These people are being asked to take the biggest hit, even though they had the least to begin with.
The first critical point that we need to understand today is that to receive ESA, a person has to be assessed as unfit for work. Believe me, the bar on that is already pretty high. People who are too sick or disabled to work are placed either in the support group, meaning that they are not expected to look for work, or in the WRAG, where it is recognised that they have only limited capacity, but could potentially undertake preparatory activity with a view to returning to the labour market at some point. So let us be quite clear: the people who are set to lose out from the Government’s £30 a week cut to ESA are people who are not able to work because of their health.
That is why the Chancellor was talking nonsense when he spoke about this measure removing “perverse incentives” in the benefits system. It is his logic that is perverse, although his choice of language is damning and revelatory. If someone is seriously sick or disabled, reducing their income will not make them better quicker. There is not a shred of evidence to support that ill-founded fantasy, but there is plenty of evidence that financial worries and the stress associated with work capability and PIP assessments have a negative impact on people’s health. A large and growing body of evidence suggests that hardship and stress slow down recovery and push people further away from the labour market.
Some people affected by the proposed cuts will have faced long-term disadvantage because of a serious health condition or disability, and they may find it difficult to access the labour market or sustain employment. In contrast to ESA, jobseeker’s allowance is for the most part a short-term benefit. Depending on the state of the economy, the vast majority of jobseekers move off JSA in a few weeks or months, but those with long-term health conditions and disabilities are far more likely to face long-term unemployment. The barriers we face are very real, and many people will have to live on extremely low incomes for lengthy periods. Many also incur extra living costs simply because of their condition or disability.
Having to get by on an extremely low income for an extended period is one factor that entrenches poverty among disabled people and those with long-term illness. People use up their savings and end up selling their assets, and they depend on others. The poverty experienced by disabled people is well documented, but it often becomes family poverty as other family members try to support loved ones financially from their own incomes, while providing unpaid care that limits their own earning potential.
The cuts to ESA will cause real hardship and are quite unnecessary. They are based on a flawed and frankly offensive misconception that people with serious long-term health conditions are malingerers who need to be prompted into work with “tough love”. A large proportion of the people who rely on ESA are those who have become disabled or developed a condition in adult life—people who have paid taxes and national insurance contributions for many years previously, with the perfectly reasonable expectation that if they become unable to work for health-related reasons, there will be a safety net for them. That safety net must take realistic account of the extra costs of living with disability, and to reduce support is callous and plain wrong. Even the Lords recognise that, and the Government must acknowledge it and think again.
The Lords also expressed concern about the implications of universal credit for working disabled people. We know that disabled people are more likely to work in low-paid jobs, and they are at higher risk of living in poverty. The disabled worker element of working tax credit currently provides support for disabled people who are in work to cover the extra costs that they incur by holding down a job—costs that in some cases would otherwise make it financially disadvantageous to be in work. With the move to universal credit, the loss of the limited capability for work element to everyone except those in the support group means that a lot of working disabled people will be around £1,500 worse off every year. Among those who will be worst affected are disabled working parents who currently receive the disabled worker’s element of working tax credit. Under universal credit, disabled working parents will lose that extra support.
Around 43,000 families in the UK with at least one working disabled parent will take a substantial drop in income when universal credit is rolled out. As Baroness Tanni Grey-Thompson pointed out in the Lords, a couple with two children and both parents working in low-paid jobs, where one parent has become disabled, could receive a massive £3,000 less in 2017. The Government say that they want to improve employment support for disabled people, but slashing the incomes of those who are already in work, and who depend on that support to keep them in work, is not the way to go about it. Surely the Government have learned lessons from the failure of the Work programme—we have heard quite a lot about that today, and I think they acknowledge that it has not worked.
Surely it is far more effective, empowering and dignified to provide extra support directly to working disabled people, so they can spend it on the transport or equipment that they need to make work viable for them. Instead, the Government seem to think that it is more effective to take money out of the pockets of working disabled people, and give it to highly paid executives and private sector companies to tell those disabled people how to stay in work, without any of the resources to back that up. It makes a mockery of the Government’s claim that they want to support disabled people into work.
The Government have based their whole argument on the notion that work is the way out of poverty, but they have conveniently ignored the fact that two thirds of children in poverty have parents in work, and that the introduction of universal credit will leave millions of working families financially worse off. The Minister’s claim that the Government want to support disabled people into work would be a lot more plausible if they had not already cut the independent living fund, mobility allowances and DLA—the very forms of support that help disabled people to get a job and stay in work. The Government now plan to cut support for working disabled people on universal credit. Their position is simply not credible.
If the Government choose to ignore the Lords today and push ahead with these measures, it will be testament to an arrogance and unwillingness to recognise the needs of disabled people that has already seen them dragged through the courts for indirect discrimination. The Lords have made eminently reasonable amendments to the Bill that would ensure that those who need support get support at perhaps the most difficult time of their lives.
I urge Conservative Members who are wondering what to do this evening to take heed of the experiences of sick and disabled people in their own constituencies—maybe even in their own families—and support the Lords amendments in this group this evening.
Jim McMahon (Oldham West and Royton) (Lab)
I place on record my thanks to my constituency neighbour, my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), for the work that is being done to shine a light on the Government and expose them for what is a cruel attack on the people who can least afford it.
It is clear that the Minister believes poverty is an inconvenience. On the Labour Benches, we believe strongly that poverty is an evil. What is the Government’s response? To see no evil, to hear no evil and to speak no evil. Why would the Government seek to hide the true scale of poverty, if not because they realise that, through their targeted attacks on the poor, including the working poor, poverty will increase? The Government do not want to see poverty, because to see it would be to expose it and would be a cause of guilt—if guilt is possible with this Government. That is why, through the benefits cap, communities will be displaced as towns and cities are socially cleansed.
The Government do not want to hear the truth about poverty, either, because to hear it would create a noise so loud that the country would not sit back and take it. That is exactly why they want to silence charities such as Barnardo’s and the Children’s Society with the gagging Act that is the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014.
The Government do not want to speak the truth about poverty, because to speak it would be hypocritical. They know that their actions are pushing more and more people into poverty and on to the breadline. That is precisely why they are blocking their own officials from publishing data on the number of people living in true poverty. We can talk about life chances, and we know how important education, health and housing are, but let us be honest: if you have to put the electricity or gas on, or put a uniform on the backs of your children, or make a decision about whether you or your children eat, then money is very, very important.
That evil affects too many families in Oldham West and Royton. Take the Coldhurst ward in my constituency, where more than 51% of children are growing up in families in poverty. Take Oldham as a town, where 40% of children are growing up in families living in poverty. It is getting worse, not better, under this Government. That is not surprising. Could any Member in this Chamber really live on £13 a day to cover food, heating, electricity, clothes, transport and toys for the children? There are too many mothers who go hungry just to feed their children. By 2021, it is estimated that 1 million more children will have been pushed into poverty. No wonder the Government do not want to report on how many people are living in poverty. It is a national scandal.
Research by the Children’s Society—a charity still able, at the moment, to give a voice to those who need one—highlights that 14,400 children in my constituency alone live in working households that will be affected by the freeze on benefits. As corporations such as Google laugh all the way to the bank, it is for my constituents to queue at the food bank. Not measuring how many people are in poverty is like driving a car with the instrument dashboard disconnected: you do not know how fast you are going; you do not know how long you have been going, or the distance you have travelled; you do not know whether you have enough fuel to last the distance; and you do not know if the car is overheating until it is too late. This is the real crux of the issue: the Government’s view is clearly that the welfare system is not a well maintained machine to be looked after and to last but a banger to drive into the ground and send to the scrapheap.
Marie Rimmer (St Helens South and Whiston) (Lab)
It has been a regular occurrence in my nine months in Parliament that we face another lamentable situation in which this Government, and specifically the Secretary of State for Work and Pensions, are called upon to think again. Opposition Members in the other place have once again provided us with an opportunity to pause for reflection.
I wish to focus my remarks on the cruel and utterly devastating cuts to employment and support allowance for those in the work-related activity group. Let me set that out in context. A cut of £30 a week would have a huge impact on nearly all affected families and individuals in this country. We have heard in previous debates about tax credits and universal credit about the kind of impacts such a drop in income would have. The amount of £30 a week is equivalent to raising council tax for a household in a band D property in St Helens by 7.5% every year for the next decade. This cut does it in one go.
Child benefit is £20.70 a week for the first child and £13.70 for an additional child. When the Government proposed to withdraw those amounts from individuals earning enough to pay the 40% tax rate, putting them among the top 15% of earners in this country, they produced huge outrage among Government Back-Bench Members. There were newspaper campaigns—
The Secretary of State for Scotland (David Mundell)
On a point of order, Madam Deputy Speaker. May I confirm that this afternoon the United Kingdom and Scottish Governments have reached agreement on the fiscal framework? This is the arrangement that underpins the significant new powers being delivered to the Scottish Parliament by the Scotland Bill, which is currently being considered in the other place. I believe that this agreement will allow the Bill to proceed through this Parliament, and I hope very much to receive a legislative consent motion from the Scottish Parliament. I intend to make a full statement to the House tomorrow, and I will this evening appear by video link before the Scottish Parliament’s Devolution (Further Powers) Committee, but I wanted to use this opportunity to draw the House’s attention to the fact that this significant agreement has been concluded. It will allow the Scottish Parliament, after the forthcoming Scottish elections, to take on the significant new powers in tax and welfare that will make it one of the most powerful and accountable devolved Parliaments in the world. I am sure that the whole House will welcome the fact that this agreement has been concluded.
Madam Deputy Speaker (Mrs Eleanor Laing)
I am grateful to the right hon. Gentleman for his point of order. The House will note that he will make a statement to the House tomorrow, which will be the opportunity for the House to discuss this matter, but he was absolutely right to bring this information to the House as soon as he was able to do so.
Angus Robertson (Moray) (SNP)
Further to that point of order, Madam Deputy Speaker. Is it in order to congratulate the Scottish and UK Governments on reaching a funding deal for devolved Government in Scotland, and is it appropriate to take this opportunity to thank the Secretary of State for giving me personal advance notice of his point of order? I look forward to his statement tomorrow. I think it is appropriate to commend First Minister Nicola Sturgeon and Finance Secretary John Swinney for their efforts in fending off Treasury attempts to short-change Scotland to the tune of £7 billion. It would also be churlish not to acknowledge the final acknowledgement by the Chief Secretary to the Treasury that the rule of no detriment was key to reaching success between the Scottish and UK Governments.
Madam Deputy Speaker
I thank the right hon. Gentleman for his point of order. He has duly given notice to the House of the arguments he will make tomorrow.
Ian Murray (Edinburgh South) (Lab)
Further to that point of order, Madam Deputy Speaker. May I add my congratulations to the Secretary of State and the Chief Secretary to the Treasury, and indeed to the First Minister and the Finance Secretary in Scotland, on reaching this agreement? It shows us that when two people want to tango, they certainly can dance. Will the Secretary of State indulge the House by letting us know whether we will see some of the documentation before the statement tomorrow? This is a hugely complex agreement with significant figures, and I wonder whether it will be possible to get advance sight of the fiscal framework well ahead of tomorrow’s statement.
David Mundell
Further to that point of order, Madam Deputy Speaker. I am able to confirm that the documentation will be available for scrutiny. On the timing of my statement, I cannot commit to exactly when it will be.
Mr Chuka Umunna (Streatham) (Lab)
On a point of order, Madam Deputy Speaker. I wonder whether you might provide some advice and give me your view. This afternoon in our proceedings, we were scheduled to have a Backbench Business Committee debate on serious youth violence and gang violence, which are blighting many of our inner-city areas. Unfortunately, because our business is overrunning, we will not have time for that debate and I will not be able to move my motion. However, do you not think it appropriate that we send out a message today, for those who may not be familiar with the proceedings of the House of Commons, that the fact that this debate has been delayed in no way sends a signal that this House does not appreciate the importance of the issue? I am pleased to inform the House that the Chair of the Backbench Business Committee has indicated to me that an alternative slot will be found for us to have the debate at the earliest opportunity, which I hope will be next week.
Madam Deputy Speaker
The hon. Gentleman is well aware that that is not strictly a point for the Chair to deal with. However, I commend him for taking the opportunity to make that very important point for those who are not familiar with the proceedings of this House, and to emphasise the fact that the subject matter of the debate that he tried to instigate today is extremely important and taken very seriously by Members from all parts of the House. I sincerely hope that the Backbench Business Committee will find time in the near future, when I am quite sure that the House will welcome the opportunity, to debate the hon. Gentleman’s very important motion.
Education and Adoption Bill (programme) (No. 3)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Education and Adoption Bill for the purpose of supplementing the Orders of 22 June 2015 (Education and Adoption Bill (Programme)) and 16 September 2015 (Education and Adoption Bill (Programme) (No.2)):
Consideration of Lords Amendments
(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement at today’s sitting.
Subsequent stages
(2) Any further Message from the Lords may be considered forthwith without any Question being put.
(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Margot James.)
Education and Adoption Bill
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
19:06 - The House divided: - Ayes: 187 / Noes: 302 - Question accordingly negatived.
The Minister for Schools (Mr Nick Gibb)
I beg to move, That this House agrees with Lords amendment 1.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to consider the following:
Lords amendments 2 to 6.
Lords amendment 7, and amendments (a) to (d) thereto.
Lords amendment 8, and amendment (a) thereto.
Mr Gibb
I am pleased to welcome the Education and Adoption Bill back to the House for consideration of amendments made in the other place. As a result of the careful scrutiny of both Houses and the strong advocacy of my noble Friend Lord Nash, the Bill returns to the House in good shape and with the potential to ensure that many more children and young people have the opportunity to realise their full potential.
Since 2010, educational standards in England have risen rapidly, and 1.4 million more pupils are now taught in schools that are judged by Ofsted to be good or outstanding. More than 80% of our schools are now good or better. Further improvements are required, however; 1.5 million pupils are still taught in schools that Ofsted judges to be less than good. To deliver educational excellence in every part of the country, we need a school system that consistently delivers high academic standards. This Bill brings forward important reforms to raise standards across the country. It will speed up the process by which failing maintained schools become sponsored academies, introduce new measures to allow us to intervene in coasting schools for the first time and ensure that we have consistent powers to take swift and decisive action when academies underperform.
Alongside reforms to improve school standards, the Bill introduces a reform of the adoption system so that more of our most vulnerable children can find stable, loving homes without delay. The way the sector has embraced the challenge of regional adoption agencies has been impressive, and my hon. Friend the Minister for Children and Families has recently announced that future funding will be available to support the sector during the transition. The move to regional adoption agencies is a widely supported manifesto commitment, and I have been delighted to see the support from across the House and in the other place for the Government’s vision. I am pleased to confirm that the adoption clause, clause 13, stands unchanged from when the Bill was first introduced.
There are eight Lords amendments to the education provisions for the consideration of the House, and the Labour party has proposed changes to two of the Lords amendments. All eight of the Lords amendments were either Government amendments or amendments that were supported by the Government, and each was accepted by all sides in the other place without a Division. I hope that we will be able to reach the same conclusion today.
Lords amendments 1 to 5 relate to coasting schools. I want to speak to the most substantive amendment in the group first, Lords amendment 5, regarding parliamentary scrutiny of the coasting regulations. The Government recognise the importance of Parliament scrutinising the detail of the coasting definition. Lords amendment 5 therefore requires that coasting regulations to be made under the Bill will be subject to the affirmative procedure the first time they are laid. Subject to parliamentary timetabling, we hope that that will take place once the 2016 performance data have been published and before any school is formally identified as coasting for the first time. In making the change, the Government have listened carefully to the concerns raised in both this House and the other place regarding appropriate parliamentary scrutiny of the coasting definition.
Subjecting the regulations to the affirmative procedure when they are laid for the first time represents the most proportionate approach. It will allow both Houses to scrutinise and approve the detail of the final coasting regulations without creating an ongoing burden on parliamentary time. Minor and technical changes could be required to the regulations following the publication of school performance data, which currently takes place twice each year, or as a result of changes to the layout or content of performance tables. Such changes would of course be uncontroversial, but if the regulations were subject to the affirmative resolution procedure each time we made such changes, they would require a full debate in both Houses. Under the negative procedure, Members of both Houses can still call a debate should they have any concerns about the changes proposed.
Lords amendment 1 seeks to improve the drafting of the Bill and to remove any unintentional element of subjectivity that could be read into its original wording. The original text states that a school will be eligible for intervention when it has been notified that the Secretary of State “considers” it to be coasting. We have been clear from the outset that we want schools to be certain about whether or not they meet the coasting definition. That is why our proposed definition is firmly based on school performance data. To ensure that schools are not left in any doubt about this, Lords amendment 1 proposes to revise the wording of clause 1 to remove the term “considers”. In doing so, it clarifies that whether or not a school is coasting is based on the absolute terms of the definition.
Lords amendment 2 provides the Secretary of State with the power to disapply the coasting clause of the Bill from certain types of schools. As currently drafted, the Bill would apply to all maintained schools, as defined in the Education and Inspections Act 2006, including special schools and maintained nursery schools. We have no intention of applying the coasting definition to some of those schools, such as maintained nursery schools, which is why we have proposed this change.
Lords amendment 3 would change the Bill’s wording to ensure the Secretary of State must make regulations to define coasting. Amendments seeking this change were tabled by the Labour party in this House, and the Government supported the amendment when it was brought forward in the other place. It has always been our intention that coasting regulations be made, and this Lords amendment will remove any doubt.
The final amendment to the coasting schools clause, Lords amendment 4, is consequential to Lords amendment 1, and is a technical change to ensure correct cross-referencing within the clause. Lords amendment 6 is also a consequential and technical amendment to make explicit two further sections of the Education and Inspections Act. I will not go into any further detail about that.
Lords amendment 7 will ensure that parents are kept informed when their child’s school is causing concern. Their ability to understand the action that is being taken to bring about improvements has been an important issue throughout the passage of the Bill. In response, the Government brought forward Lords amendment 7, which we hope will provide assurance that parents will always be kept informed when underperforming maintained schools are becoming sponsored academies.
Every parent wants their child to attend a good school. It is right that they demand quick, effective action when concerns arise. We are clear that becoming a sponsored academy will always be the solution for a maintained school that is judged inadequate by Ofsted. The Bill delivers on our manifesto commitment in that respect.
John Pugh (Southport) (LD)
The Minister mentions parents. Does the balance of the Bill not concern him in that it gives at least seven new powers to the Secretary of State, but not one new power to parents?
Mr Gibb
The amendments we are debating give parents an additional entitlement to receive communication from the new sponsor of an academy while the process is being undertaken. We are unapologetic about the powers we are taking in the Bill, because we want to tackle all failing schools from day one when they become failing. That was in our manifesto, so this Bill is helping us deliver yet another manifesto achievement.
Mike Kane (Wythenshawe and Sale East) (Lab)
Does the Minister not worry that there is no proper procedure for a good school to decouple from a failing multi-academy trust? Time and again in my constituency, we see MATs that are not doing so well. I do not want to name the schools, but the Secretary of State knows about them because I have written to her personally about the issue. There is no proper procedure for such schools to decouple and we need one.
Mr Gibb
The hon. Gentleman raises an important point, but the regional schools commissioners, of which there are eight around the country who know the local conditions and the local schools, will take action—indeed, they are taking action—when a multi-academy trust is failing to raise standards in its schools. We have taken action over 120 times to remove schools from multi-academy trusts that have not been delivering the support and sponsorship that we seek.
Once a sponsor has been identified for a failing school, it is commonplace for the sponsor to engage with parents about its plans for the school to ensure that they know what to expect. Often, parents are given the opportunity to share their views about any changes that the sponsor proposes to make. Lords amendment 7 will ensure that there is greater consistency for parents because the sponsor that is identified to take over a maintained school that is eligible for intervention will always be required to communicate to parents its plans for improving the school before the school is converted into a sponsored academy.
The hon. Members for Manchester Central (Lucy Powell), for Scunthorpe (Nic Dakin) and for Manchester, Withington (Jeff Smith) have proposed four amendments to Lords amendment 7 that would replace the requirement on the proposed sponsor to communicate information about its plans to parents with a requirement for sponsors to consult parents about their improvement plans. I hope the House will recognise that that proposed change is more than just semantics. To ensure that underperforming schools are turned around as quickly as possible, clause 8 removes the requirement to consult on whether the school should become an academy so that that process cannot be misused to delay decisive action.
Mr Gibb
The Government consider that to be an important step that will allow failing schools to begin receiving the expert leadership and support that the hon. Gentleman seeks from day one.
Underperforming schools are carefully matched to sponsors. Trusting educational professionals to improve schools based on their experience and expertise is central to the academies programme. The proposal to impose a requirement on sponsors to consult parents about their plans to improve a school would represent a return to the rigid approach that allowed vested interests to prevent sponsors from taking decisive action and to delay the process of transformation.
Lucy Frazer (South East Cambridgeshire) (Con)
Does my hon. Friend agree that the Government’s proposals offer flexibility? Although there is no obligation to consult and discuss, it is always open to the regional schools commissioner and the school to discuss the issue and consult as much as possible. For example, there is a school in special measures in my constituency, and the regional schools commissioner and I have had a meeting with parents to discuss the situation at the school and the potential new sponsor. It is always open to those who are involved in education to consult as widely as possible.
Mr Gibb
My hon. and learned Friend is right, and nothing in the Bill prevents any amount of consultation, or a new sponsor from talking to staff, parents and so on. The amendment imposes a requirement on sponsors to communicate with parents. Elsewhere the Bill also prevents ideologically driven organisations and community groups that are determined to prevent a failing or underperforming school from becoming an academy from doing so. We will not tolerate failure in our school system, and we want to take action from day one.
Mr Gibb
In Committee I gave the hon. Gentleman and other members of the Committee ample illustrations of that. One example was Downhills school in Haringey, which was deeply underperforming. The process of conversion to an academy—it is now run by the Harris Federation—was drawn out, which delayed improvement in that school. It is now a highly performing primary school in Haringey, and it provides a much better quality of education. I hope that the hon. Gentleman does not want such a process to be delayed in future.
Amendment 8 relates to underperforming academies. We have always been clear that we will tackle under- performance wherever it occurs, whether in a maintained school or an academy. We recognise, however, that our formal powers on failing and coasting academies vary depending on the terms of an academy’s funding agreement. In some cases, particularly in earlier academies, that can restrict our ability to take action as strongly or as swiftly as we would want. Regional schools commissioners already take swift and effective action to secure improvements in a minority of academies that underperform. We have issued 134 formal notices to underperforming academies and free schools, and we have moved to change the sponsor in 124 cases of particular concern.
Andrew Gwynne (Denton and Reddish) (Lab)
The Minister will know that I have an academy in my constituency, which my middle son attends. It was an excellent school when he started out, but unfortunately it began to require improvement and is now inadequate—indeed, Ofsted is there today. The regional schools commissioner has no powers to intervene in that academy, so will the Minister clarify that these powers will give Vicky Beer, the north-west regional schools commissioner, the powers she needs to go in and sort out the school?
Mr Gibb
The hon. Gentleman gives an example of where such powers are needed. Regional schools commissioners are industrious and energetic in tackling underperformance in academies, but some have older funding agreements. The new funding agreements have explicit powers for the Secretary of State to intervene, and amendment 8 seeks to give the powers of the Secretary of State, and through her the regional schools commissioners, to all academies, even those with old funding agreements that do not have the powers to intervene.
In practice, Lords amendment 8 will mean that when an academy’s performance meets one of two triggers in legislation—an inadequate Ofsted judgment or performance that falls within the coasting definition—its funding agreement will be read as having broadly the same provisions as apply to failing and coasting schools in our latest model funding agreement. That will give regional schools commissioners consistent powers to move a failing academy swiftly to a new sponsor, and to require a coasting academy to demonstrate that it can make sufficient improvement. The same coasting definition will apply to academies and maintained schools, and where an academy is coasting, as with a maintained school, it will be given the opportunity to demonstrate that it can improve sufficiently.
Andrew Gwynne
Does the Minister also recognise, when the regulations are drawn up, that it is possible for a school to be “coasting” at what appears to be a relatively high level, but that nevertheless the children are underperforming compared with what they should be achieving?
Mr Gibb
Yes. Again, the hon. Gentleman makes a very good point. The definition of coasting incorporates a progress measure, because schools that on the surface may look as though they are performing well could easily fall within the definition of coasting when we look at the progress the children in that school make. We are determined that every child, regardless of starting point, will fulfil their absolute potential. Whether they are high performing or struggling, all pupils deserve the best education possible. That is the purpose behind using a progress measure in the definition of coasting.
Nic Dakin
First, I pay tribute to my hon. Friends the Members for Cardiff West (Kevin Brennan) and for Birmingham, Selly Oak (Steve McCabe), who led for the Opposition when the Bill came through the House, as I do to all other right hon. and hon. Members who, as the Minister bore witness in his opening statement, contributed in Committee and in the Chamber to improving the Bill. I commend those in the other place who have worked hard at least to extract some small movements in the right direction, which come before us today in the form of Lords amendments.
It is quite amazing that, when there are so many real challenges facing the education system on the Conservatives’ watch, the first education Bill of the new Parliament does nothing to tackle them: parents concerned about the crisis in school places; parents anxious about the crisis in teacher supply; parents worried about changes to the school assessment system. Parents get no answers to the things that matter to them from the Bill and this Government. Instead, the Education Secretary brings forward another Bill obsessed with structures, seizing more powers for herself while marginalising parents and local communities—the very people who understand their areas, their local economy and what their children need to succeed.
Let us take the amendments in turn. I welcome the Government’s proposals in Lords amendments 1 to 5 that the coasting regulations will be subject to an affirmative procedure the first time they are laid. Hopefully, things will then become much clearer—they are still pretty murky at the moment. We do know, however, that primary and secondary schools will be identified on the basis of their 2014 to 2016 pupil results through a devised progress measure. We do not know when that final designation will occur for primary and secondary schools, with GCSE results about a month behind final key stage 2 results. We can only wonder how many schools will be identified. It could be 200, it could be 2,000.
We do not know whether the measures will work. After all, the Schools Minister has form on promising to fix the problem of coasting schools. He came to this House in November 2011 to say that we must concentrate on the schools in the leafy suburbs that are not challenging their pupils as well as they should be. He promised that all schools would be subject to scrutiny to make sure that they raised standards and he placed his faith in the new performance tables that would identify how schools perform in relation to children of high academic ability as well as to those of lower academic ability. There is no evidence that the new panacea of academisation will be any more effective than the old panacea of performance tables.
We welcome amendment 7, as it finally recognises that parents exist and have an interest in their children’s school. Frankly, though, it does not go far enough. The 2015 Conservative party manifesto boldly states that “power to the people” is “a core Conservative belief”. [Interruption.] Thank you. I am not sure whether that is right, but I do know that in this Bill that belief is not extended to the people most concerned about their children’s education—their parents. Surely parents deserve to be as fully engaged as possible in decisions affecting their child’s education. Where the ownership of the school is changing, they should surely have the right to be consulted, and not simply, in the Secretary of State’s words,
“given the opportunity to understand just how a sponsor aims to transform their child’s school.”
The right hon. Lady serves up advertising jargon when she should be giving power to parents.
The selection of a sponsor is a critical strategic decision. As the Sutton Trust has shown, not all sponsors are as effective as others. Some are failing to provide an acceptable standard of education. Indeed, Ofsted recently said that the Academies Enterprise Trust, the largest academy chain, is “failing too many pupils” and that poorer pupils are doing “particularly badly”. None of us wants that. We are agreed across the House on that, but the reality is that that is what is happening in a number of multi-academy trusts. Ofsted has also branded standards at secondary schools at another multi-academy trust, E-ACT, as “too low”, while the performance of pupils from poorer backgrounds was “causing serious concern.” This is the chain that wants to cut local people out of governance arrangements, replacing them with “academy ambassadorial advisory bodies”—more jargon.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
My hon. Friend mentions Ofsted and power to local people. He may have seen the comments of Michael Wilshaw about Liverpool and Manchester. Does he agree that it vital to have solutions to bring about school improvements in great cities such as Liverpool and Manchester that are owned by local people and by local communities? Will he welcome the Liverpool challenge, which is seeking to address precisely the issues that Michael Wilshaw was talking about?
Mike Kane
To follow the comments of my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg), Michael Wilshaw also commented today from London that Greater Manchester and Merseyside schools should have greater local involvement or more direction from local politicians. Has Government policy changed— we should now have a devolved structure for school administration—or has Ofsted under Sir Michael’s stewardship between 2012 and 2016 failed to improve standards?
Nic Dakin
I think everybody recognises the very good work that Sir Michael Wilshaw has done, but he lays down a challenge to us all when it comes to connecting what we want to do in a way that empowers local communities. In a sense, that is one of the things missing from this Bill.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
To follow that up with another quick intervention, does my hon. Friend agree that too few MPs get involved in school improvement in the local area? Many MPs of all parties talk about schools as though they were experts, but they do not roll up their sleeves and do what our hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) is doing—actually trying to make a difference on the ground.
Nic Dakin
I always listen carefully to what the former Chair of the Education Committee has to say, and he is right on this occasion. We all have a leadership role in our communities when it comes to supporting our schools and colleges and ensuring that they deliver.
This is the second occasion on which AET and E-ACT—the two largest multi-academy trusts in the country, responsible between them for 85 schools—have received significant criticism from the Independent Schools Inspectorate. That is telling. The Secretary of State is ultimately responsible for holding academies to account, but, two years after Ofsted’s warning that the trusts were failing to raise standards, we are again being told that their schools are not delivering for many pupils. I am sure we all agree that that is not good enough, and that it illustrates the size of the challenge.
Parents have a fundamental wish to be involved in their children’s education. A recent survey by PTA-UK found that 97% of parents wanted to be consulted when big changes were made to how their schools were run. When a school becomes a sponsored academy and the sponsor is chosen, that represents a big change and a big deal. Parents have an important role to play in challenging—and helping—school communities to improve, and their views should be taken into account at such important moments.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Might there be a risk that the Government are laying the foundation for future legal challenges against academy trusts if the duty to inform turns out to be a duty to misinform, because they misrepresent the information to parents and they are not allowed to consult on it?
Nic Dakin
My hon. Friend has done a great deal of work on the Bill, and I am sure that Ministers have heard what he has said. No doubt their legal advisers will have already looked into the point very carefully, but they may want—with his assistance—to double-check the position. Why the Government cannot trust parents is beyond me, but the House has an opportunity to put that right by voting for our amendments (a) to (d).
There is real concern about whether the pool of current and potential academy sponsors has the capacity to improve additional schools. The Government’s own statistics show that only 15% of the 20 largest chains are performing above the national average, compared with 44% of maintained schools. Since September 2012, 75% of maintained schools have gained good or outstanding judgments, compared with 69% of academies. According to the National Foundation for Educational Research, in 2014 pupils at maintained schools achieved the same high standard of GCSE results as those attending academies. The facts suggest that the Government would help schools to improve by ending their ideological obsession with academisation, and pragmatically removing the bureaucratic barriers that prevent councils from intervening in underperforming schools.
In my constituency, Priory Lane school received an Ofsted judgment that meant that it needed significant improvement. The governors indicated that they wanted to go down the academy route, but that they wanted a choice of academy sponsor. Owing to a lack of academy sponsor capacity, the Department for Education and the regional schools commissioner could offer only one option, so governors and parents were presented with a “take it or leave it” choice. Despite representations from all and sundry—including myself—the Government remained adamant that the shotgun wedding would go ahead.
I understand where the Government were coming from, and, indeed, their sense of urgency and exasperation has been made clear today. In the event, however, owing to the skilled intervention of the local authority, a better solution was found. The school formed a federation with a successful partner, Westcliffe Primary, and that process is now benefiting both school communities. Ultimately, the local authority’s skilled intervention has produced a better outcome for children and parents—the very people on whom we should all be focusing. That is the sort of best practice that should be applauded and learnt from in the interests of children and parents everywhere. Of course we are pleased that the Government acceded to our arguments, and have included academies in the “coasting arena” so that action can be taken when necessary.
We come to the 80 lines of amendment 8, which was inserted to recognise that academies—as we already know—can also fail or be coasting and need improvement. Academy governance is a mess. There are 5,000-plus academies and 5,000-plus funding agreements. The private contract, as opposed to public law, cannot work for such a large number. It is a bureaucratic nightmare.
It baffles me that this Bill insists on treating schools differently depending on what type of school structure they have. If Ministers truly believe that no parent should have to put up with their child spending a single day in a failing school—to be fair, they have reiterated that today, and we agree wholeheartedly with them on it—and that leadership and governance should be replaced immediately, I simply cannot fathom why that would not apply to failing academies, too. Rather than double standards for pupils, there needs to be robust, purposeful action taken over any school that should be doing better.
In conclusion, let me remind Members of the words of Sir Keith Joseph, one of the Secretary of State’s illustrious predecessors, in introducing his 1984 Green Paper:
“Parents care about their children’s progress—how they develop and what they learn. They share the general desire for higher standards of education…We have not yet… allowed parents sufficient scope for discharging their unique responsibilities. Our education system is poorer for this. The Government now intends—while fully respecting the responsibilities of local education authorities—to extend its policies for raising standards in schools by enabling parents to improve the work of the schools.”
This is an old-fashioned one nation Tory who respected local authorities and wanted to empower parents. I applaud his words.
How times have changed when it is now a Labour Opposition who have to remind a Conservative Government of the need to respect parents and recognise the role of local government in providing oversight and accountability. Amendment 8 goes a tiny way towards bringing improvement by stating what funding agreements should say—whether they say or do not—about Government action when a school causes concern. Much more robust legislation is required, and the Minister might like to indicate whether it is true that the Government’s much touted next White Paper will ideologically academise the rest of the school estate. If so, will there be further reams of words trying to make sense out of nonsense?
The Labour amendment highlights the fact that when an academy has an Ofsted inadequate judgment, the Secretary of State must listen to representations from the school’s academy trust before taking further actions. No such opportunity is afforded to local authority-maintained schools.
The noble Lord Nash said amusingly in the other place when introducing amendment 8 that a myth had grown that Government
“somehow favour academies and hold them to account less robustly than maintained schools”,
adding:
“That is not the case.”—[Official Report, House of Lords, 16 December 2015; Vol. 767, c. 2095.]
He is clearly a dab hand at irony. The reality is that this clause further treats academies more favourably than maintained schools by giving them the right of appeal to the Secretary of State in these circumstances when maintained schools cannot.
Mike Wood (Dudley South) (Con)
Is it the shadow Minister’s party’s policy to retain existing academies? We are a little confused as to where it currently stands on the issue of the academy system.
Nic Dakin
There is absolutely no confusion. We are just arguing that, whatever title there is above the door to the school—academy, free school, maintained school, university technical college or whatever—the same rules should apply, and all those rules should recognise the importance and the role of parents.
Labour believes that all schools should be treated equally. There should not be preferential treatment of schools that are academies compared with maintained schools when either are failing or coasting. Academies that are failing should have no more rights than maintained schools that are failing. There should be a level playing field for children, parents and communities, whatever the structure of the school. Labour believes that a partnership with parents is key to a strong education system, which is why we continue to argue that when their child’s school is to academise or the academy’s sponsor is to be changed, parents should be consulted.
Lords amendment 1 agreed to.
Lords amendments 2 to 6 agreed to.
After Clause 12
Amendment (a) proposed to Lords amendment 7.— (Nic Dakin.)
Question put, That the amendment be made.
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Delegated legislation
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Madam Deputy Speaker (Mrs Eleanor Laing)
With the leave of the House, we shall take motions 7 to 10 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Infrastructure Planning
That the draft Infrastructure Planning (Onshore Wind Generating Stations) Order 2016,which was laid before this House on 14 January, be approved.
Criminal Law
That the Andrey Lugovoy and Dmitri Kovtun Freezing Order 2016 (S.I., 2016, No. 67), dated 22 January 2016, a copy of which was laid before this House on 22 January, be approved.
Companies
That the draft Register of People with Significant Control Regulations 2016, which were laid before this House on 25 January, be approved.
Limited Liability Partnerships
That the draft Limited Liability Partnerships (Register of People with Significant Control) Regulations 2016, which were laid before this House on 25 January, be approved.—(Stephen Barclay.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Road Traffic
That the draft Passenger and Goods Vehicles (Tachographs) (Amendment) Regulations 2016, which were laid before this House on 12 January, be approved.—(Stephen Barclay.)
The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 24 February (Standing Order No. 41A).
Estimates
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HIgh speed rail (london – West Midlands) Bill
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Election of FIFA President
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Damian Collins (Folkestone and Hythe) (Con)
The petition to the House of Commons from a resident of the UK states:
The petition of a resident of the UK,
Shows that in August 2009, Sheikh Salman, then Bahrain Football Association (Bahrain FA) President, was accused of using FIFA-financed sports development budgets to fund his unsuccessful campaign for the FIFA Executive Committee election; and that in a leaked letter received by the Al Bilad newspaper it was claimed that Sheikh Salman had spent upwards of 855,000 dinars (£1.6 million GBP) on his campaign and that some of this money had come from FIFA-financed football development projects, in particular Goal 1 (intended to help fund a new Bahrain FA headquarters), and Goal 3 (intended to provide facilities for the development of youth and women’s football); that after FIFA requested urgent information from the Bahrain FA regarding the misappropriation of funds Sheikh Salman did not comment until early September 2009, at which point he denied those claims, however the Bahrain FA did not dispute the contents of the leaked documents; also notes that prior to Sheikh Salman’s election to the Presidency of the Asian Football Confederation (AFC) in May 2013, details of the flights that the Football Federation of Kyrgyz Republic’s (FFKR) delegation would be taking to and from Kuala Lumpur for the AFC vote were emailed to the private account of the ‘IT manager’ at the Olympic Council of Asia (OCA), of which a close associate of Sheikh Salman was Head; that three days before the vote, requests for support for 53 projects for Kyrgyzstan football to the tune of millions of pounds were discussed although there seems to be no legitimate reason for the FFKR, part of FIFA, to be seeking funding from the OCA, part of the International Olympic Committee; notes that the FFKR approached the OCA again after the AFC election asking when they would receive payment for their projects, which gives strong grounds to suspect that the FFKR voted for Sheikh Salman because they believed they would receive significant financial support from the OCA (including that OCA officials appear to have met officials from the FFKR during the AFC vote in 2013); and believes that this is a fresh ‘cash for votes’ scandal which needs urgent investigation.
The petitioner therefore requests that the House of Commons urges the Government to confirm that it would not support bids from the English Football Association to host FIFA tournaments should Sheikh Salman be elected as President of FIFA on Friday 26 February 2016.
And the petitioner remains, etc.
[P001673]
Waste Recycling: South Gloucestershire
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Chris Skidmore (Kingswood) (Con)
After the heady political events of the past few days, I wish to turn the House’s attention to a matter that is rather more local, but nevertheless of the utmost concern to residents in my local area. It is a matter that has the power to win or lose elections—a matter that, as I am sure the Minister knows, local councillors mess around with at their peril. I am, of course, talking about local waste collection and bins.
This is not the only occasion I have used an Adjournment debate to raise my concerns about waste collection services in my local area of South Gloucestershire. I am sure, Madam Deputy Speaker, that you will recall the memorable debate I had in the House on 30 June 2014, in which I raised constituents’ concerns regarding the introduction of a separate charge for green bin waste collection—dubbed the green bin tax—which was opposed by local Conservative councillors, but voted through by Labour and Liberal Democrat councillors. In that debate, the Minister was highly critical of the council for introducing what has been termed a stealth tax and imposing extra charges on residents for services that, if we are honest, should quite simply be paid for by council tax.
Together with my hon. Friend the Member for Thornbury and Yate (Luke Hall)—he is in his place and will contribute to the debate later—who had not yet been elected to this place, I collected more than 4,000 signatures on a petition opposing the introduction of the green bin tax. Local Conservatives also pledged in their manifesto to scrap the charge over the next council term. It is therefore welcome that, only last week, local Conservative councillors signalled their first move towards removing the green bin charge, reducing it by £6, with the aim of phasing it out over four years. The Conservative-controlled council was elected on a mandate to do that, and I expect it to meet its manifesto commitment.
That just goes to show that debates such as this have the power to sway local opinion and to lead to a sea change in local policy. It is with that optimism in mind that I wish to speak about the potential changes to waste recycling in South Gloucestershire. South Gloucestershire is soon to face its greatest shake-up in waste recycling services in over a decade. As the local MP—I should probably declare my interest in that I am also a South Gloucestershire council tax payer and user of its waste recycling services—I wish to use this debate to ensure that my constituents’ concerns about this massive change are properly represented.
The changes can be broken down into two components. The first is the welcome introduction of weekly recycling for all recyclable materials. Currently, we have a system where metals, glass and cartons are collected in a 55-litre green box every two weeks, alternating with the collection of paper, plastics and cardboard in three separate 60-litre bags. It is a messy, overly complicated system which, as any resident will know, clutters up the house and, once the bags are emptied, they risk getting blown across the streets. Thankfully, that will end, to be replaced with the weekly collection of a single recycling box with dividers to separate the various recyclable materials. So far so good: residents will now have the chance to recycle all their materials weekly, rather than having to wait for them to be collected every two weeks. But the second change will be far less welcome, as the black bin, which will still be collected every fortnight, is set to be reduced in size from 240 litres to 140 litres.
The council’s reasoning for making these changes is clear. As a council, South Gloucestershire needs to do more to increase its recycling and composting rates, which have fallen from 53.1% in 2010 to 47.5% in 2015—though it would be interesting to know to what extent the introduction of a green bin charge has proved counter-productive in causing fewer people to recycle green waste. The council’s research shows that of the 44,868 tonnes of black bin waste that was collected last year, 52% could have been recycled. Given that any rubbish that goes into the black bin is sent to landfill, costing the council approximately £80 a tonne, we are literally throwing away council tax payers’ money. In 2014-15, £4.5 million was spent on disposing of black bin waste—23% of the council’s total waste budget. If the recyclable material in the black bins had been recycled, the council would have saved an extra £3 million—in effect, £11 for every man, woman and child in South Gloucestershire. In making this change, the council will be following Bristol City Council and Bath and North East Somerset Council in making similar reductions in their black bin size.
While the rationale behind the reduction in size of the black bins is clear, I nevertheless feel that many residents will struggle with the change. Personally—I must put my personal thoughts on record—I feel that the reduction in the size of the black bin from 240 litres to 140 litres is a reduction too far. Other councils with far higher recycling rates have not reduced their black bin size by as much. South Oxfordshire District Council, which has a 67.3% recycling rate, has a black bin size of 180 litres, and Vale of White Horse District Council, with a 65.6% recycling rate, has the same bin size. Again personally, I believe that the change to weekly recycling will do enough to drive up recycling rates alone without penalising residents with the introduction of vastly smaller black bins, which, after all, have a significant initial capital cost.
Although my hon. Friend and I welcome the weekly recycling, we have written to the leader of the council, Matthew Riddle, setting out our concerns over the proposed changes and suggesting amendments that could be made to the future of waste services in South Gloucestershire. In the letter, we have called for three key amendments to the council’s waste policy. First, there should be no reduction in the overall capacity of the waste services for householders. Indeed, we wish to make the case that South Gloucestershire Council should use the opportunity of this change to increase the amount of waste that it collects from residents, giving far greater value for money. To do this, we are calling for the council to give an unlimited number of the new recycling boxes to residents who request them. It will be up to local people to request the number they would like, but there should be no cap, so that people will be able to recycle as much as possible without restraint in capacity. A reduction in the size of the black bin—or the landfill bin, to give it its proper name—should be accompanied by a clear understanding that people will be given the chance to recycle more and to do so more often.
Secondly, we have been contacted by many families with young children who are concerned that the change will impact heavily on them. I know exactly how they feel, as I am the father of an 18-month-old girl, and my wife is expecting our second child in less than a month—[Hon. Members: “Hear, hear!”] Thank you. Indeed, I feel their pain, as I am sure does the Minister, given that he has a young toddler roughly the same age as mine. Therefore, to help those families who are struggling and overloaded with nappies and other waste that no one would ever consider fit to be recycled, I am calling for the establishment of a free universal nappy collection service for any family that requests it.
Thirdly, the new single recycling box will, in all honesty, make things a lot easier for my constituents, but I would prefer a single recycling wheelie bin, which is what has been adopted by many other councils. However, if a single recycling box is to be adopted, elderly, vulnerable and disabled people may be unable to carry a heavy box and their needs must be taken into consideration. That could include allowing them either to keep a larger bin or to have some form of adaptive device that would allow the recycling box to be wheeled in place for collection.
I hope that my and my hon. Friend’s requests will be considered seriously by the council when it makes its decision. This change will be significant for many residents and needs to be handled sensitively. I hope that my proposals do precisely that, and that they will help to create a better and more efficient way to recycle waste in South Gloucestershire.
Luke Hall (Thornbury and Yate) (Con)
I am grateful to be called to speak in a debate that, as my hon. Friend the Member for Kingswood (Chris Skidmore) has said, the record books may not show to be as animated as others held this week. Nevertheless, the issue is still important to people in South Gloucestershire. I thank my hon. Friend both for securing this debate and for his tireless work and commitment on the issue over the years I have known him.
Before being elected to this place, I made the case as strongly as possible, alongside local Conservative councillors and my hon. Friend, that recycling services should be enhanced and protected, so the issue is close to my heart. In that vein, I want to comment on South Gloucestershire’s draft waste strategy.
I welcome the council’s proposed additional measures to provide the means for local people to reuse, repair and refurbish items from their homes, as well as the council’s affirmation of its confidence in the success of the Thornbury Revive shop and its commitment to consider avenues to expand that service.
The draft waste strategy document produced by South Gloucestershire Council suggests that bulky waste is a significant contributor to waste going from our area to landfill. It states that the reuse strategy
“aims to reduce landfill to below ten percent by addressing large bulky waste material.”
Given that bulky waste is an identified significant contributor to landfill, I welcome the potential savings to South Gloucestershire that would result from a reduction in such waste going to landfill. That will help the council significantly in its aim to reduce the amount spent on landfill tax. In fact, the Thornbury Revive shop’s success in reusing more than 160 tonnes of material itself represents a reduction in that liability of more than £13,500. It is clear, therefore, that that approach has real potential to achieve an important part of the 5% reduction target for the total waste going to landfill.
I also welcome the council’s proposed introduction of a weekly food waste recycling scheme. On recycling rates, it is clear that the majority of the best performing authorities provide a weekly food or compostable collection service. The proposed weekly collection of residents’ household recyclable waste is also welcome, because it will simplify the current service of three bags and one container.
My hon. Friend and I anticipate that the proposed changes in recycling services will help to reduce the amount of money South Gloucestershire spends on sending waste to landfill. They will reduce the burden of paying £80 per tonne of waste sent to landfill while at the same time increase income through increased recycling revenue. I urge South Gloucestershire Council, as we have done in our letter, to use the total amounts of money generated under the proposals to continue to phase out the green bin tax. I join my hon. Friend in welcoming the £6 reduction in the green bin charge as a first step to the council’s fulfilling its manifesto pledge, and I urge the council to use the extra funding generated by the changes to deliver that pledge fully.
Although I welcome the proposed changes to recycling services, the proposal to reduce residents’ standard black bin, or landfill bin, capacity from 240 litres to 140 litres is of considerable concern. The dramatic reduction in capacity could put real pressure on families across South Gloucestershire, leaving some families unable to adapt. The Department for Environment, Food and Rural Affairs compiled waste statistics from our 16 nearest neighbour authorities. Of those, the nine authorities with a higher recycling rate than ours—from 48% to more than 60%—have a black bin capacity larger than the 140 litres proposed by South Gloucestershire Council. The only exception is Bath and North East Somerset Council, which provides reusable bags.
Among the authorities with higher rates of recycling, there is an almost even split between those that offer a reduced bin size of 180 litres and those that offer a 240-litre bin. The only authority with a 140-litre bin, Northumberland, has a shown rate of below 40%, which is 7.9% lower than that in South Gloucestershire. In short, reducing the size of the black bin to 140 litres does not result in a directly proportionate increase in recycling. The widespread replacement of bins, in addition to the new recycling bins, would prove costly to local taxpayers with little absolute evidence that it would help families or the council achieve the stated aims of the strategy.
The proposed changes will affect residents across the area. I hope that the suggestions that my hon. Friend and I have made will help to inform the best possible service for local people across South Gloucestershire.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rory Stewart)
I thank my hon. Friends the Members for Kingswood (Chris Skidmore) and for Thornbury and Yate (Luke Hall) for bringing this important subject forward for debate. I do not say that facetiously; the question of waste recycling in South Gloucestershire has its equivalents across the country. It is not simply a South Gloucestershire issue.
I take this opportunity to congratulate my hon. Friend the Member for Kingswood on the forthcoming birth of his child. It is very good news that in a month’s time a baby is coming. It is good that my hon. Friend is already thinking about the nappies. He focused on the reduction in the size of the landfill bin to 140 litres; the decision to move from a separate waste collection to a single collection in a box in which the different types of waste—plastic, paper, metal and glass—are separated by dividers; and the question of whether elderly people will be able to move the recycling boxes.
Those are good points to raise, particularly as we are coming to the great moment of “Clean for the Queen”. It is a great ambition to create, for the Queen’s 90th birthday, that green and pleasant land of which Blake spoke. In Britain, we should take particular pride in that, because Britain has been famous for a long time for its neatness. Tourists who come here have long respected this country for being a tidy place. The steps that South Gloucestershire is taking show that continued commitment.
The points made by my hon. Friend the Member for Thornbury and Yate are particularly important because this country has more than 300 recycling systems. It is a little bit absurd. As we go from council to council, we see that some collect waste commingled, some—about 40—separate food waste, and about another 260 do not. There are different sizes and colours of bin, different types of truck, different types of recycling system and different types of anaerobic digester consuming waste. That all adds cost.
Rory Stewart
It is indeed. In London alone, we could probably save £19 million a year if we had a single standard recycling system. Across the country as a whole, the savings would be extraordinary. We spend more than £3 billion a year simply collecting waste. If we had a single, harmonised system across the country, we could drive up recycling rates, massively reduce the cost for ratepayers and achieve extraordinary things for the environment and for councils themselves. South Gloucestershire Council is therefore a good example on which to focus.
That South Gloucestershire example is also a good illustration of some of the problems involved in realising such a dream. The council has taken some fantastic steps. It has separated the waste, which, as my hon. Friend the Member for Kingswood has pointed out, means we can get out the value. If we commingle the waste—putting the glass, paper and card together in the same box—it can be a real problem, even with modern methods, to extract the glass as it goes through the system. We should be able to get much more value out of the paper or the glass, which can go back to the council and the rate payer, if we keep the waste separate. The council has a good system for doing that in South Gloucestershire—a single box, with dividers to make separation easier.
The challenge, as my hon. Friend pointed out, is making sure that the system is comprehensible to the public and something to which the public can respond and relate. I therefore encourage South Gloucestershire Council to take on board the points made by my two hon. Friends, along with our congratulations on the direction in which they are going and on the national leadership it is showing.
It seems sensible, as my hon. Friend the Member for Kingswood said, to look at the needs of the vulnerable and of large families. I believe that South Gloucestershire Council already takes into account the fact that if a family has six members, it may need a larger bin. The council may wish to show additional flexibility for exactly the kind of people mentioned by my hon. Friend.
I do not wish to talk simply about the negative aspects—both my hon. Friends made very good points—but to look at the positives. If South Gloucestershire Council gets this right, we will have a national model. Why do we need a national model? We need one because South Gloucestershire Council is recycling only about 47% of its waste at the moment, which is not quite good enough. Wales, which has a pretty challenging geography, is currently recycling about 53% of its waste. If Wales can do it, there is no reason why England cannot do it as well. There are no profound cultural differences there.
We are committed to getting to a recycling target of 50% across the country by 2020. We will get there by following the lead of places such as South Gloucestershire. I therefore urge my hon. Friends to work with the council to reach out to surrounding councils in Gloucestershire, Oxfordshire and the south-west and try to encourage harmonisation. That can be done. Manchester has now got 10 councils together to come up with a single recycling system. It is investing hundreds of millions of pounds over the next 25 years to make that work.
South Gloucestershire Council could be showing exactly that lead for the country—and, my goodness, we need it. The reason we need it is that we live in a world in which such resources are under pressure. We have talked about separating food waste. We are currently consuming 70% of the world’s water just on producing the food eaten by the current population. The average household in Britain wastes £65 a month by throwing away food that does not need to be thrown away. We are consuming and depleting resources—oil, precious minerals—that could be recycled and used again. We are creating a lot of unnecessary carbon by creating materials that could be recycled. We put into landfill 50% of the stuff that does not need to go into landfill, as my hon. Friend the Member for Kingswood pointed out.
If we can get this right, Britain can be a national example, our great environmental industries can take off, we can export some of these skills and we can show the world that we are an environmental leader. We can also make British jobs and generate energy out of it, we can have a much better circular economy and it will be good for our production. Thanks to the fantastic contributions from my hon. Friends, the South Gloucestershire example could be a very important part of such a solution.
Question put and agreed to.
Ministerial Corrections
(8 years, 9 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Justice
(8 years, 9 months ago)
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Kit Malthouse (North West Hampshire) (Con)
My right hon. Friend has made an important point about reoffending. I wonder whether he has had a chance to consider my suggestion that the probation and police services should be merged so that offender management outside the prison estate became the responsibility of the police, who, in the end, are having to pick up the pieces. Might we not see a step change in the numbers that he has just outlined if we made that move, as well as quite a large financial saving?
Michael Gove
I thank my hon. Friend for the work he did as Deputy Mayor of London, when he was responsible for policing and crime and made a significant contribution to reducing knife crime on our streets and in deploying the Metropolitan police more effectively. I think all of us would agree that prisons and probation cannot work effectively unless there is a close working relationship with the police service. However, I would caution against making a change at this point of the kind my hon. Friend suggests. It is a fascinating idea, and it has been put to me by others whom I respect, but we are just 12 months into the transforming rehabilitation programme initiated by my predecessor, and it is only appropriate that we acknowledge that that programme has already seen an increase in the number of frontline probation officers, again of more than 500.
[Official Report, 27 January 2016, Vol. 605, c. 341.]
Letter of correction from Michael Gove:
An error has been identified in the response I gave to my hon. Friend the Member for North West Hampshire (Kit Malthouse) in the Opposition day date on Prisons and Probation.
The correct response should have been:
Michael Gove
I thank my hon. Friend for the work he did as Deputy Mayor of London, when he was responsible for policing and crime and made a significant contribution to reducing knife crime on our streets and in deploying the Metropolitan police more effectively. I think all of us would agree that prisons and probation cannot work effectively unless there is a close working relationship with the police service. However, I would caution against making a change at this point of the kind my hon. Friend suggests. It is a fascinating idea, and it has been put to me by others whom I respect, but we are just 12 months into the transforming rehabilitation programme initiated by my predecessor, and it is only appropriate that we acknowledge that that programme has already seen an increase in the number of frontline probation staff, again of more than 500.
The Parliamentary Under-Secretary of State for Justice (Andrew Selous)
We have created the National Probation Service, and I should tell Members that 19 of the 22 CRCs are being run with a staff mutual or a voluntary, charitable or social enterprise sector body alongside their owners. We monitor their performance very carefully indeed, and the October 2015 performance figures showed that we are advancing in performance in almost all areas. South Yorkshire CRC has developed an action plan to deal with the issues it faces, but I can tell the House that no CRC is in a formal remedial plan. I can also tell the House that there are 560 more probation officers than there were 12 months ago. That is the largest intake of newly qualified probation officers for some considerable period.
[Official Report, 27 January 2016, Vol. 605, c. 376.]
Letter of correction from Andrew Selous:
An error has been identified in the response I gave to the Opposition day debate on Prisons and Probation.
The correct response should have been:
The Parliamentary Under-Secretary of State for Justice (Andrew Selous)
We have created the National Probation Service, and I should tell Members that 19 of the 22 CRCs are being run with a staff mutual or a voluntary, charitable or social enterprise sector body alongside their owners. We monitor their performance very carefully indeed, and the October 2015 performance figures showed that we are advancing in performance in almost all areas. South Yorkshire CRC has developed an action plan to deal with the issues it faces, but I can tell the House that no CRC is in a formal remedial plan. I can also tell the House that there are 560 more probation staff than there were 12 months ago. That is the largest intake of newly qualified probation officers for some considerable period.
Bank of England and Financial Services Bill [ Lords ] (Fifth sitting)
(8 years, 9 months ago)
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The Chair
For the convenience of the Committee, and with its leave, I propose that we group clauses 26 to 37 and allow remarks on all of them under the clause 26 stand part debate. Is that acceptable to the Committee?
Rob Marris (Wolverhampton South West) (Lab)
I have to say, Chair, that taking all those clauses in one group sounds rather cumbersome. I have a series of packages of comments and questions on the different clauses. I do not mean to cause difficulty, Sir, but taking them all as one group might do so. Might we take some of the pensions provisions together, for example?
The Chair
If the Committee wishes, I am happy to take all the clauses individually. I propose that we take clause 26 on its own, and then perhaps clauses 27 to 37 as a group.
The Economic Secretary to the Treasury (Harriett Baldwin)
I am happy either way, Mr Brady. It might also be worth touching upon Government amendment 7 to clause 38 as I go through the provisions.
The Chair
Thank you, Ms Baldwin. That amendment comes separately in any case. Shall we see how we go?
Clause 26
Enforceability of agreements relating to credit
Question proposed, That the clause stand part of the Bill.
Harriett Baldwin
It is a delight to be back here, again on a sunny Tuesday, to continue our scrutiny of the Bill under your chairmanship, Mr Brady.
The Government have fundamentally reformed consumer credit regulation, transferring responsibility from the Office of Fair Trading to the Financial Conduct Authority with effect from 1 April 2014. Clause 26 supports the effective operation of the FCA’s regime through minor amendments to the Financial Services and Markets Act 2000 in relation to the regulation of consumer credit. It is a technical clause and concerns the application of provisions relating to the enforceability of credit agreements. It makes it clear that when a person acting on behalf of a lender can lawfully undertake the relevant credit-related regulated activity in relation to the agreement, either by administering the agreement in relation to section 26A(4), or by taking steps to procure the payment of debts under it in relation to section 26A(5), they are also able to enforce the agreement.
Rob Marris
It is a pleasure to be here with you again, Mr Brady. I thank the Minister for her explanation—that is great.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
The Chair
We now come to clauses 27 to 37. I suggest that we allow all of them to be commented upon as a group.
Clause 27
Enforceability of credit agreements made through unauthorised persons
Question proposed, That the clause stand part of the Bill.
Harriett Baldwin
For the benefit of the Committee, I will highlight each of the clauses as I go through them, while grouping my speaking notes.
Clause 27 also supports the effective operation of the FCA’s regime by amending section 27 of the 2000 Act, which deals with agreements made through unauthorised persons, to ensure that it has a proportionate effect on consumer credit and consumer hire providers. Section 27(1) of that Act provides that an agreement made by an authorised person carrying on a regulated activity is unenforceable when it is made in consequence of something said or done by a third party in circumstances in which that third party should have had, but did not have, permission. The clause narrows the circumstances in which a credit agreement or consumer hire agreement is unenforceable under this section and ensures that this will only be the case when the provider of credit knows, before the agreement is made, that a third party had some involvement in the making of the agreement or in matters preparatory to it being made.
Clause 28 introduces a power into the 2000 Act for the Treasury to make regulations relating to transformer vehicles. Transformer vehicles—you may be wondering, Mr Brady—are used for risk mitigation purposes in insurance markets, particularly in the insurance and reinsurance industry. The Government plan to use this power to implement a new framework for insurance-linked securities business. Insurance-linked securities are now an important and growing part of the global specialist reinsurance market. The Government are working closely with the London market and the financial regulators to implement a fit-for-purpose regulatory regime for insurance-linked securities business. This will help the UK to maintain its competitive edge as a global reinsurance hub.
Clause 29 extends the definition of pensions guidance within section 333A of the 2000 Act to include the provision of guidance to consumers interested in assigning or surrendering—in other words, selling—rights to payments under an annuity on the secondary market. It also closes an unintended gap in guidance provision, ensuring that individuals whose schemes have transferred into the pension protection fund are able to access Pension Wise guidance—the free and impartial Government- supported guidance service.
In the March 2015 Budget, the Government announced our intention to remove the tax restrictions that deter pensioners from selling their annuities. This reform will enable retirees who were unable to take advantage of the Government’s new pension freedoms to convert their annuity into a lump sum, or another investment product if they choose, giving those who have worked hard and saved for their retirement choice over their financial arrangements.
The Government are committed to implementing the new secondary market in annuities in April 2017. The new market will offer consumers new freedoms but will involve potentially complex choices for them. The Government want to ensure that consumers are empowered and equipped to make the most of their assets. The offer of free, high-quality and impartial guidance through Pension Wise is a key part of providing the consumer with the relevant information to make the necessary decisions. That is why the Government are extending the Pension Wise service to provide guidance to those who will be able to sell their annuities on the secondary market, and to any dependants or beneficiaries with rights to payments under an annuity contract.
Pension Wise was launched in March 2015 to give impartial guidance to individuals with new flexibilities under pension freedoms. It has been a successful service, with high levels of consumer satisfaction, more than 2.2 million visits to the website and more than 50,000 individual appointments. In response to the Government’s consultation on allowing consumers to sell their annuities, there was strong support for expanding Pension Wise, both from consumer groups and from industry.
The expanded service will be similar in nature to the existing Pension Wise service, but it will need to be adapted to ensure that the content and service delivery are appropriate for this new group of consumers. By legislating at this time, the Government are ensuring that there is enough time to implement the expansion of Pension Wise before the secondary market in annuities opens in 2017. At present, Pension Wise can provide guidance only to a member, or the survivor of a member, of a pension scheme. As the pension protection fund is a compensation fund, not a pension scheme, individuals whose schemes have transferred into the pension protection fund are currently unable to obtain guidance from Pension Wise. Pension Wise should be available to all those who wish and are able to take advantage of pension freedom reforms, so it is right that we are taking action now to ensure that all have equal access to the service.
Clause 30 places an obligation on the Financial Conduct Authority to set rules requiring specified firms to check that relevant annuity holders have received appropriate advice before processing the transfer of an annuity. In practice, this will introduce a requirement for individuals to receive financial advice before selling their rights to an annuity income stream, where that annuity is valued higher than a threshold to be set in secondary legislation. The Government are committed to implementing the new secondary market in annuities in April 2017, removing the barriers that prevent people from making their own choices over how they use their retirement savings. However, we recognise that the regular income stream provided by an annuity is a valuable asset and that for the majority of individuals it will be in their best interests to keep their annuity. It is therefore important that annuity holders understand the value of their annuity and are informed about their options.
The Government have consulted on the consumer support measures that should be introduced for the secondary market in annuities. Elsewhere in the Bill, the Pension Wise guidance service is expanded to provide information and guidance for those with a relevant interest in an annuity that can be sold in the secondary market. As a further measure to support consumers, the Government believe that, for those with a higher value annuity, there is a real benefit to having a bespoke recommendation before they make the decision to sell their annuity income. By introducing a requirement to receive financial advice, the Government are ensuring that those consumers receive a recommendation tailored to their individual circumstances and risk appetite.
However, although the Government believe that all individuals would benefit from financial advice, we recognise that the cost of advice for those with small annuities might be disproportionate. That is why, in legislating for this advice requirement, the Government have taken a power to specify in regulations which annuities will be subject to the requirement, for example by introducing a threshold. That would mean that only individuals with higher value annuities will be required to take financial advice. That approach was broadly supported by both industry and consumer groups in the Government’s consultation last year. The Government will determine the threshold, along with other details of the advice requirement for this market, through secondary legislation, which will be consulted on later this year.
Clause 31 is technical in nature and allows appointed representatives of authorised financial advisers to advise on the conversion and transfer of safeguarded benefits. Safeguarded benefits are the special valuable features of certain pensions, such as defined-benefit pensions, and pensions with guaranteed annuity rates, which are defined for the purposes of the advice safeguard established in sections 48 and 51 of the Pension Schemes Act 2015. The changes to sections 48 and 51 amend the definition of authorised independent adviser to include appointed representatives. As a result, they will be able to give appropriate independent advice in order to satisfy the advice safeguard. The clause also makes changes to the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001, to the same end. Subsection 3 of the clause extends the change to Northern Ireland.
Around two thirds of financial advisers are appointed representatives who have a specific contract to provide services on behalf of their principal, who will be an authorised financial adviser regulated by the FCA. That measure puts the eligibility of appointed representatives to advise on these transactions beyond doubt. The clause extends eligibility to advise on these transactions only to the appointed representatives of financial advisers. What it will not do is reduce consumer protections or weaken the accountability of financial advisers or their appointed representatives. Where an appointed representative advises on these transactions, the directly authorised firm, as the principal, takes full responsibility for the quality of the advice and compliance with FCA rules. The pension freedoms that came into effect in April have given people real freedom and choice in how they access and spend their income at retirement. This change will help to ensure that they operate as intended for customers with safeguarded benefits.
Clause 32 refers to the duty of the Bank of England to provide information to the Treasury. As hon. Members will know, the financial crisis of 2008-09 exposed significant failures in the old tripartite system of regulation. Since then, the Government have implemented, and continue to implement, major reforms to address those problems of the past and make the financial sector safer and more stable. These include a number of measures designed to ensure that bank failure can be managed in a way that protects the wider economy and financial sector, without relying on taxpayer bail-outs.
Under the old tripartite regime of regulation, there was no single institution with responsibility, authority or powers to oversee the financial system as a whole. The Banking Act 2009 addressed that by putting the Bank of England firmly in the driving seat for managing a financial crisis, and the Financial Services Act 2012 overhauled the regulatory architecture in the UK, including making provision for collaboration between the Treasury and the Bank of England in relation to crisis management. Clause 32 builds on those important reforms while, crucially, leaving unchanged the clearly defined roles of the Treasury and the Bank, as established in the 2009 and 2012 Acts.
The clause also seeks to ensure that the correct arrangements are in place for the Bank and the Treasury to fulfil their respective roles as effectively as possible. It does that by providing the Treasury with two new powers to receive information from the Bank, as part of understanding the public funds risk associated with firm failure. First, it creates a duty on the Bank to provide the Treasury with the resolution plans and certain supporting information for firms that the Bank considers it may need to resolve using the stabilisation powers in the 2009 Act. That will ensure that the Treasury can understand well in advance of a crisis scenario the public funds risk associated with a firm failing. Secondly, it gives the Treasury the power to obtain any extra information from the Bank that it considers material to the Bank’s assessment of that risk.
The clause relates solely to information sharing and co-ordination between the Bank and the Treasury, as part of their fulfilling their respective roles. It serves to formalise the productive working arrangements that have developed between the two bodies since the 2012 Act, and it ensures that the framework for co-ordination reflects developments in best practice, both domestically and internationally.
Clause 33 corrects an error in the National Savings Regulations 2015. The regulations revoked a number of statutory instruments with effect from 6 April 2015 and the Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001 was included by mistake. The 2001 Order was used to make most of the consequential amendments and repeals that were required to give effect to the 2000 Act. It amended a range of primary and secondary legislation, including the Companies Acts, the Bank of England Act 1998, the Building Societies Act 1986, pensions legislation and other legislation relating to financial services. Some of the amendments made by the 2001 Order have been superseded by subsequent legislative developments, such as the consolidation of the various Companies Acts in the Companies Act 2006, but in many cases the amendments are still necessary and the repeal of the instrument making them has left the law in a state of considerable uncertainty. The clause removes that uncertainty by providing that the revocation shall be treated as not having been made, restoring the law to what it was before the accidental revocation of the 2001 Order.
Clause 34 makes changes to the legislative framework governing the issuance of Scottish and Northern Ireland bank notes. It gives the Treasury power to make regulations authorising a bank in the same group as an existing issuer to issue bank notes in place of that issuer. That will increase banks’ flexibility to restructure their operations, while preserving the long-standing tradition of certain banks in Scotland and Northern Ireland issuing their own notes. This is a particular issue at the current time, as some banking groups will be adjusting their group structure in order to ring-fence their retail banking operations.
Clause 35 enables the Treasury to make amendments consequential to the Bill, and any statutory instruments made under it, to other primary and secondary legislation. For example, the power is likely to be used to amend references to the PRA in other legislation where necessary to reflect the fact that the authority is no longer a separate legal entity from the Bank. The power can be used only in certain circumstances. The Treasury can make regulations under the power only if it is necessary to do so as a consequence of a provision in the Bill. Furthermore, the power applies only to legislation that is made before the Bill is passed, or in the same parliamentary Session.
Rob Marris
I congratulate the Minister on that fluent marathon. I fear that I shall less fluent, but in my defence I do not have quite the same resources behind me as the Minister, and of course I may not have her skill. I warn her that I shall be asking some questions. I hope that her officials will be able to help her and the Committee with the answers.
Clause 27(2), which inserts new section 27(1ZA) in the Financial Services and Markets Act 2000, appears to be a “see no evil, hear no evil” provision. I hope the Minister can reassure me. It says,
“this section does not apply to a regulated credit agreement or a regulated consumer hire agreement unless the provider knows before the agreement is made that the third party had some involvement in the making of the agreement or matters preparatory to its making.”
What has bedevilled legislators, regulators and those providing advice, whether in finance, the law or accountancy, is knowing when to inquire whether there is something else in the picture, to put it rather vaguely—for example, in conveyancing, whether those acting for the vendor of a house need to inquire whether there is someone besides the vendor living in the house, who would potentially have rights under the Law of Property (Amendment) Act 1926. I confess that it is 25 years since I did conveyancing, so that Act may have changed, but that is the general flavour—it is about when, as a professional, one has to make inquiries. New subsection (1ZA) is a great get-out for an adviser or a company entering into a regulated credit agreement, enabling them to say, “Well, I didn’t know.” On occasion, that is not good enough. One ought to inquire.
This is an example of my ignorance, I freely confess, but while I understand that the Financial Services Consumer Panel has said that these amendments are entirely technical—that was mentioned in the Lords by my noble Friend Lord Davies—it does not seem to me to be entirely technical and I cannot quite see why clause 27 is in the Bill. Will the Minister explain?
Clause 28 is headed “Transformer vehicles”. It reminds me of those kids’ toys—are they still around? The Minister is smiling in her usual sunny way, so I think they are still around; they were a little after my time, I have to say. I understand from the debate in the Lords that the Delegated Powers and Regulatory Reform Committee was consulted on the aspect of these changes dealing with hybrid instruments. New section 284A(6)(c) of the 2000 Act will
“authorise the FCA or the PRA to require the Council of Lloyd’s to exercise functions on its behalf (including functions conferred otherwise than by the regulations)”.
Under new subsection (11):
“If a statutory instrument containing regulations under this section would, apart from this subsection, be treated as a hybrid instrument for the purposes of the Standing Orders of either House of Parliament, it is to proceed in that House as if it were not a hybrid instrument.”
As I understand it, the hybrid instrument procedure is there to protect certain private interests. It appears that new section 284A will bypass that procedure—it is very clear, very up front—but that raises a question in my mind about whether, for convenience, the Government are proposing an end-run around protections for private instruments.
That is the least of my worries about clause 28, though. Transformer vehicles, as I understand it, are used for packaging or bundling. Section 284A(2)(b) refers to
“fully funding A’s exposure to that risk by issuing investments where the repayment rights of the investors are subordinated to A’s obligations to B in respect of the risk.”
In lay terms—I stress: lay terms—it is reinsurance; it is laying off the risk. Bookies do it all the time, akin to what sometimes goes on in the City. However, the bundling or packaging of debts, which I understand is what the transformer vehicles enable to be done, was precisely one of the major drivers of the meltdown of the US sub-prime market in 2007-08. To quote my friend and helpful adviser, Professor Alastair Hudson, “The investors then got the return generated by the mortgages. They then brought credit default swaps to provide insurance against the mortgage borrowers failing to make their repayments, or they bought credit default swaps to bet that those borrowers would fail to make those payments.” Ain’t capitalism great? You can have it both ways. In horse-racing, it is an each-way bet, but with an each-way bet in capitalism it is the punter who always seems to lose and the financial company that just about always seems to gain.
Those special-purpose vehicles were created, as I understand it, to bundle up and package sub-prime mortgages—SPVs were not just used for that, but it is perhaps the most notorious example—so that they were off the banks’ books and on somebody else’s books. Then, when things go wrong—as they did—the rest of us pick up the tab. That is the moral hazard. Transformer vehicles and proposed new subsection 284A of the 2000 Act appear to facilitate and encourage that kind of behaviour.
I hope that the Minister will be able to reassure me. It is possible that I have misunderstood what the new section will do and what transformer vehicles do, and that my fear about the risks involved is unfounded. I am not necessarily expecting her to do that now. I hope that she will catch your eye, Mr Brady, and reply to these points after my own marathon, which I have to tell the Committee has only just started.
The third thing that this clause highlights, and I use this as an example for the Government, is the complexity and overlapping nature of our legislation, which makes it difficult for anyone to understand. For example, new section 284A is a mere insertion. Later in our consideration of the Bill, we have all kinds of insertions: new clause 1 deals with a new section 333T; new clause 7 deals with a new section 137FBB; and, from memory, we have somewhere else the insertion of new paragraph (3GA) in a regulation. No wonder people cannot understand our financial regulations and legislation, when Tolley’s now runs to—what?—1,500 pages and we have amendment after amendment on top of scores of previous amendments. Will the Minister say whether the Government have any plans to simplify and/or consolidate the 2000 Act? It is getting incredibly complicated and further complication increases the chances of non-compliance, whether inadvertent or deliberate, because people can use the defence, “I didn’t understand what was in there.”
Turning to the pensions matters, I will take clauses 29 to 31 together. On pensions guidance, I hope that the Minister can say how far down the chain of advice to individuals the Government propose to go. Labour Members want an advice service that helps people to make informed decisions. There is a role for the state in either doing or facilitating that, and we are pleased that the Government recognise that, but we now have protection being built into the Bill for those who are considering selling on their existing annuity in a secondary market. That is set out in clause 29, which would amend section 333A of the 2000 Act. Subsection (2)(b) would insert a reference to
“guidance given for the purpose of helping an individual who has a relevant interest in relation to a relevant annuity to make decisions in connection with transferring or otherwise dealing with the right to payments under that annuity.”
As I understand it, that is principally to do with secondary markets for annuities. Paragraph 152 of the explanatory notes sets out that this would help by giving advice to annuity holders who are
“considering selling the income from their annuities to a third party on the secondary market”.
Today, the Minister mentioned beneficiaries of annuities, which is slightly different from annuitants selling on their annuity or contemplating doing so. How far do the Government propose to go with this? Will the beneficiaries of beneficiaries be able to access Pension Wise? Will the prospective beneficiaries of beneficiaries be able to do so? Will the prospective beneficiaries of annuitants be able to contact Pension Wise? There is a question about how far this coverage goes. When an annuitant sells their annuity on a secondary market and puts the proceeds into another instrument to provide for their pension in place of the original annuity, will Pension Wise, either before or after such a sale, advise the annuitant on that other vehicle into which the annuitant proposes to place, or is considering placing, the fruits of their sale on the secondary market?
I turn now to the report produced by the Work and Pensions Committee. I appreciate that the matter comes under the Department for Work and Pensions rather than the Treasury but, if the Committee will bear with me, I hope I can clarify that it is very germane to what we are discussing. That report was published on 19 October 2015 as House of Commons paper 371, entitled “Pension freedom guidance and advice”. The Government’s response to this report was published on 17 December. Good Government responses tend to go through the report line by line. This response by the Government to the Select Committee report is pretty comprehensive, and it goes through each recommendation suggested by the Committee.
The Financial Secretary gave evidence to the Work and Pensions Committee when it was working on that report, and she indicated that certain performance figures would be put on the Government website—in fact, she may have said that they had already been put on the website. I see her nodding. I have to say that if they are on the site, they are very well hidden. I looked at the Pension Wise website today and I could not find that kind of back-up statistic—not individual statistics, but figures such as the 2.2 million users to which, I think, the Minister referred earlier. Nor could I find the figures on the performance website—I did a search on both “Pension Wise” and “work and pensions”. I hope that the Minister is able to say what has happened to those performance figures.
George Kerevan (East Lothian) (SNP)
I just want to make some remarks about clause 28, on transformer vehicles, which is one of the most important elements of the Bill, even though it is somewhat technical.
I commend the Minister on her rapid and very clear presentation of the clauses, but she said something about clause 28 that caused me to worry, and I would like to press her on it. She seemed to imply that the clause is being introduced to ensure that the regulation of transformer vehicles will maintain, and in fact increase, the City’s competitive edge. I worry that we are enacting regulatory provisions that could be used to facilitate transformer vehicles, which are rather toxic.
Transformer vehicles have been around for a while—since the start of the millennium—but they began to grow rapidly in the reinsurance market in the past decade. The danger is that they are under-capitalised. The existing reinsurance market is well capitalised, and the risks are well catered for. The existing major insurers traditionally do not reinsure all of their risk. They keep some of it and capitalise for it, which is good, and pass on the bulk, but not all, to separate or wholesale reinsurers, which are heavily capitalised in case anything goes wrong. The companies use actuarial tables to make profit and invest, but if anything goes wrong—if there is a systemic crisis in the market—they are capitalised in both the insurance and the reinsurance parts of the market to cover that risk.
The point about transformer vehicles is that in the past decade we have moved away from a capitalised reinsurance market to one in which the risks are hedged by selling credit default swaps. If used sensibly, that is not a problem, because if an individual insurance policy runs into trouble a credit default swap can be called in. But as we saw with the mortgage-backed securities at the end of the first decade of the millennium, if there is a systemic crisis and the entire mortgage market goes, the credit default swaps cannot be up because everybody loses money. The worry is that if our reinsurance model is based wholly on hedging, individual transformer vehicles can pay up, but if there is a general crisis—if there is a massive weather crisis or a nuclear power station, such as Hinkley Point C, blows up—the credit default market will not be able to repay everybody. That is why we need to regulate it.
If we are introducing these regulations to put in place an easier approach to hedging, rather than a properly capitalised reinsurance market, and to ensure that the hedging is here rather than New York, we are creating a problem. The Minister could become famous. If she ensures that the regulations that are introduced by the Treasury, the PRA and the FCA are used to make the market work sensibly, we will avoid a crisis. But if we introduce regulations that move the market further towards hedging and away from proper capitalisation, her name will be on the crisis when it occurs.
I want to clarify what these regulations are for. Are they for ensuring discipline in the market and the capitalisation of reinsurance, or are they a way of evading capitalisation? That is where the problem would begin.
Harriett Baldwin
I will try to keep my response in order, Mr Brady, but forgive me if I occasionally slip out of order. The hon. Member for Wolverhampton South West started by asking about clause 27, which he described as “see no evil”. I want to reassure him that the change addresses an issue that arises as a result of the transfer of the regulation of consumer credit from the Office of Fair Trading to the Financial Conduct Authority and the consequent application of the Financial Services and Markets Act 2000 to the consumer credit market. The issue addressed by the clause, whether relating to a chain or third party, arises particularly in the context of consumer credit and the activity of credit broking.
We are confident that the change to section 27 of the Financial Services and Markets Act addresses the issue with regard to consumer credit, ensuring that the section is more proportionate on consumer credit firms, without unduly affecting the protections available to consumers in the market. That is in line with our broader policy intent for the consumer credit market, where the reforms that the Government have made balance the need to provide strong consumer protections with ensuring that the burdens placed on a diverse market that includes thousands of small businesses is proportionate. I reassure the hon. Member for Wolverhampton South West that firms remain under a regulatory duty, imposed by the FCA, to take reasonable steps to satisfy themselves that the firms that they deal with are authorised, where that is appropriate. The clause strikes the right balance between protecting consumers and placing a proportionate burden on firms that are lending to consumers.
We share with the hon. Gentleman an aspiration to simplify some of the legislation. I very much welcome his words of support for my dream goal in this post, which is to simplify and reduce some of the complexity not only of this regulation but of the FCA’s own rulebook, which has become quite a significant barrier to entry to sensible organisations that may want to move into, for example, the debt advice space. I welcome his support for any progress I am able to make to simplify some of that.
Clause 27 simply narrows the circumstances in which a credit agreement or a consumer hire agreement is unenforceable. I think that the hon. Gentleman will welcome that. Both he and the hon. Member for East Lothian mentioned transformer vehicles, which are not those fun toys that appeal to consumers but something completely different that, I assure Members, are not for the consumer market. Only sophisticated or institutional investors will be permitted to invest in insurance-linked vehicles.
From a policy perspective, it is important that London have the ability to establish insurance special purpose vehicles. London is the largest insurance market in Europe and is a centre for specialist insurance activity. Whether we like it or not, all Members face risks in their lives—indeed, all businesses face a range of risks. Insurance is a way to bring that risk down to a manageable level. London should be able to compete and innovate in new forms of risk mitigation. If London is able to offer a full range of innovative solutions, insurance entities will continue to come to London to meet their risk mitigation needs. I heartily hope that all Committee members support that.
Insurance-linked securities use a range of specialist skills and services to arrange the deals, including underwriting, risk modelling, brokerage, legal and capital market expertise. Nevertheless, Members are right to express concerns about the transparency and manageability of the risks, as well as about the importance of their being arranged by regulated entities, so it is important that I set out that insurance-linked securities business will be prudently regulated in the UK.
All special purpose vehicles will require Prudential Regulation Authority authorisation. All the wording in terms of the contracts must be clear and robust, and importantly risks cannot be bundled together in the way that the hon. Member for East Lothian feared. We require all special purpose vehicles to be fully funded to cover the full extent of the risk they take on, so we are not talking about the kind of very leveraged structures that he rightly said were so instrumental in the last financial crash.
I have said that only sophisticated or institutional investors will be permitted to invest in the vehicles. Of course, if they are arranged prudently—when someone is able to manage their risks prudently—those transactions will contribute to financial stability. They increase the capacity of the reinsurance markets. They provide investments that are not correlated with the economic cycle, and therefore they provide investors with good diversification characteristics. I hope that I have reassured hon. Members of the importance of clarifying the rules on transformer vehicles, but I sense that the hon. Gentleman has a further question on the issue.
Rob Marris
I am somewhat reassured by what the Minister has said. However, I would caution her about her remarks about innovation and the attractiveness of London, because I sat—either in this room or Committee Room 10—on the Finance Bill Committee when her predecessor, Ed Balls, was saying the same thing in 2006 and saying, “We are grateful that London is now the financial capital of the world, over New York, because we don’t have the millstone of Sarbanes-Oxley.” Look where that ended. Therefore, yes to innovation, and yes to London being the major financial centre in Europe, if not the world, but I urge the Government to be careful that we do not go round the same crazy merry-go-round that my Government let us go round in the past.
Harriett Baldwin
The hon. Gentleman and I agree on the importance of making sure that we try to strike the right balance. We must ensure that the UK retains the ability to innovate. I am sure that none of us would want to see that ability being reduced, but it should do that within the boundaries of sensible and prudent regulation, so that we do not commit the alternative policy error, which would be to throw up our hands in horror at the kinds of innovations that have happened and so harm consumers by not allowing that kind of innovation. It would harm jobs in the UK if such innovation were not allowed to happen here. I welcome hiss questions—he is absolutely right to ask them—but I hope that I have convinced him that, in this instance, we have got the balance right and that these are simply useful instruments that will be well regulated and certainly available only to sophisticated institutional investors.
Although there are no Government proposals to consolidate the Financial Services and Markets Act at the moment, consolidated versions—for the ease of reference of members of the Committee and members of the public who are following our discussions with such avid interest—are available on commercial databases, such as LEXIS, and the Government statute law database—legislation.gov.uk—is working to make up-to-date Acts of Parliament available free of charge on a consolidated basis to everybody.
I will move on to the questions that were asked about Pension Wise and pension guidance, and the important steps that we are taking to bring pension freedoms to those who are no longer required to buy an annuity but to extend them to people who have bought an annuity and who may decide in retrospect that it was not the right thing for them. We are promoting a secondary market in those pension freedoms.
To be clear, regarding the rules on beneficiaries—I am thinking of a situation where a spouse remains a beneficiary and there is a remaining annuity after the death of the primary annuitant—there might need to be the ability to provide Pension Wise guidance and other support to people in that circumstance. The exact characteristics of who is entitled to use the service will be set out in regulation in due course, as will the definition of a “relevant interest” and what a relevant annuity is.
Rob Marris
I am grateful. The statistics might be available on the website, but although I am an averagely competent user of websites I could not find them. They are therefore not readily available.
Harriett Baldwin
We have made huge strides with the gov.uk website, which is a lot clearer and simpler than it used to be, but let me be the first to agree with the hon. Gentleman that such things can always be made clearer. I have put on the record the most recent example of management information available, which is that 2.2 million people have clicked on the website, with more than 50,000 people having some sort of face-to-face interaction. Also, in the summer Budget last year we extended the ability of people from 50 onwards to use the face-to-face service.
Harriett Baldwin
The website is well used. The feedback on face-to-face interactions has also been positive.
John Mann (Bassetlaw) (Lab)
Is not the clause a huge wasted opportunity? I can confidently predict that this will be the next major mis-selling scandal, which in five to 10 years’ time will come to haunt us for failing properly to enact effective legislation. People will have thrown away their pensions, mis-sold to them by the industry for short-term gain. The advice, people have told me, is that they are liable to die so they had better get the money quickly in order to spend it before it disappears. That is the kind of mis-selling that is going on. The clause is a huge missed opportunity, is it not?
Harriett Baldwin
I sense that the hon. Gentleman does not welcome the freedoms that the Government are proud to have given British retirees. We no longer require them—this was the case for so long—to purchase an obligatory product that might not be right for them at the time. Indeed, the evidence suggests that two thirds of people were not shopping around to get the right price, so I accept that awareness and education are an important part of the reforms. I cannot agree with him that the reforms have not made a huge step forward in trusting people who have worked hard all their lives, saving their money, and they now have more freedom to do what they want with it.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I have some sympathy with the comments of the hon. Member for Bassetlaw. May I press the Minister on the numbers she quoted? She said that 2.2 million people have accessed the website, leading to in excess of 50,000 to follow through with more detailed face-to-face guidance. If my arithmetic is correct, that is a conversion rate of only 2%. That is a matter of concern to a lot of people. The type of advice being made available at a detailed level means that we are not adequately helping the numbers of people seeking to use the freedoms. There is concern that many people are cashing in early for different reasons with a lack of understanding of the long-term implications.
Harriett Baldwin
Again, I could not agree more that we need to take a long, hard look at the provision of advice in this country. As the hon. Gentleman is aware, the financial advice market review was launched last summer and the consultation closed at the end of December. A large range of people have been supportive of the aspirations set out in the review to make advice more widely available and more affordable for all our constituents. It is an ongoing piece of work, and he should wait for more exciting announcements—[Interruption.] He and I share excitement about many things, including the leptokurtic distributions that came up the last time we were on a Committee together. Clause 27 is narrowly focused on extending the Pension Wise service to those who are going to be accessing the additional freedoms that will come into force next April in relation to the secondary market in annuities.
People have rightly asked me about scams, and I want to put it on the record that there is absolutely no complacency about the potential for scams. However, the numbers thus far do not support the case that there has been an increase. Some people have a constant desire to take advantage of people, particularly the vulnerable elderly, in many ways. Nobody should ever accept a telephone call about pensions from anybody unless they have a pre-booked appointment for such a discussion. The single most important thing that we can do to alert people to the horrendous activities of people who prey on the elderly is to get that message out in our constituencies. The over-65s are the victims of some 80% of all attempts at financial crime. They are less familiar with the technology and more vulnerable when someone sounds plausible on the telephone. If any Member wants to work with me to spread the message more widely in their constituencies, I will be wholeheartedly in favour.
Harriett Baldwin
I will give way in a moment, but I first want to mention the National Crime Agency’s Project Bloom, a taskforce that includes the regulators, anti-fraud groups, Action Fraud and police forces. The FCA also runs ScamSmart and the Pensions Regulator has its Scorpion campaign, both of which give advice to businesses and consumers in writing about how to protect against scams. Action Fraud is the UK’s national reporting centre for fraud and internet crime. I am keen to work with hon. Members to see how we can get information disseminated widely in our areas.
John Mann
I thank the Minister for the offer to help her get the word out. We may be occupied with other things over the next four months, but, even beyond then, is it not Parliament’s role to legislate for regulation? Anyone who is a conduit to information or puts out information should be effectively regulated. Instead of hoping that the word will somehow get out, the Minister should be introducing legislative changes in regulation to improve the system. A gentleman came to see me and said that he had less than a year to live and wanted to get hold of his pension. He came back a year later, having survived through the NHS, and was doubtless reassured that he did not need to fritter his pension away, hoping to spend it on trips around the world because he was about to die. We do not need to get the word out; we need regulation. Will the Minister come back with additional proposals?
Harriett Baldwin
Clearly, it is regrettable that although we often pass regulations in this House—this is a very regulated area—people still choose to prey on the vulnerable, particularly older people, and do things that are illegal and completely against the regulations. We ought to combine regulation with informing people about the regulations and when they should have their antennae twigged to the fact that something might not be a good idea.
The hon. Member for Wolverhampton South West raised a range of important points about auto-enrolment, the reports in The Times today and master trusts. I can let him into a little secret on that: the Government will bring in legislation on master trusts and on the points he raised as soon as practically possible. We had considered bringing it in as part of this piece of legislation, but we felt that since the Bill had gone through the House of Lords it would be very late on in the legislative process to introduce something as extensive as that. That was my judgment, and I hope that he will support me on that. However, we aspire to find very soon the first appropriate vehicle that could be scrutinised by both Chambers to bring in the regulations relating to master trusts and auto-enrolment.
Rob Marris
I thank the Minister very much for that swift response to my plea. It is perhaps one of my first successes, and now she has indeed set my pulse racing.
Harriett Baldwin
No comment, Mr Brady, on that. I am making sure that I cover all the points that were raised by members of the Committee. I am shocked—deeply shocked—that the hon. Member for Wolverhampton South West is not aware that the Royal Mint is in Cardiff and that it continues to produce all our coins. Indeed, Wales plays a very important role in the issuance of our currency. It does not play a role at the moment in the production of bank notes. Obviously, that lapsed when the last issuing bank in Wales was taken over by either HSBC or Lloyds—I cannot remember which—and got subsumed into that bank, and the bank lost this ability at that point.
To answer the hon. Gentleman’s other questions about clause 31 and the reason for subsection (7), this provision is included in order to confirm that the amendments to the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001—a very catchy title—can be subject to further amendment by the Treasury if it comes to revise those regulations. That is to say that the fact that this secondary legislation is amended in the Bill does not narrow the scope of the Treasury’s powers in the Financial Services and Markets Act. I hope that that is as clear as day for the hon. Gentleman. I would also like to clarify that the amendments set out in clause 31 are intended to remove any doubt on this question by making it clear that financial advisers who are appointed representatives of authorised firms are eligible to advise on the conversion or transfer of safeguarded benefits.
The hon. Gentleman also asked some extensive questions about what the definition of a bank in insolvency should be. The wider fact is that here we are establishing a gateway for the transfer of what might be extremely sensitive material—non-public information about the financial health of a particular bank—into the Treasury to ensure that the Treasury can fulfil its important public role of understanding where or when there might be a risk to public funds. That is what we are trying to establish here. It is right to probe the word “insolvency”, because what we are really talking about is a bank in trouble. “In trouble” is a rather difficult phrase to define in legislation, but I think we both know it when we see it.
I was also asked whether the Treasury can request information in advance of a bank failing. The answer to that is clearly yes. The only condition would be that the Treasury considers the information to be material to the Bank’s assessment of the likelihood of a bank, building society, credit union or investment firm failing. This assessment would be done in advance. It influences the resolution plan that the Bank adopts in preparation for a possible failure of the institution in future.
I think that I have now touched on all the points that were raised about this section. I hope that I have satisfied hon. Members of the wisdom of these clauses and that they will join me in supporting their inclusion in the Bill.
Question put and agreed to.
Clause 27 accordingly ordered to stand part of the Bill.
The Chair
I propose that, with the leave of the Committee, we take clauses 28 to 37 stand part as a single opportunity.
Clauses 28 to 37 ordered to stand part of the Bill.
Clause 38
Short title
Harriett Baldwin
I beg to move amendment 7, on page 33, line 25, leave out subsection (2).
The amendment removes the privilege amendment set out in subsection (2). As hon. Members will be aware, this provision is inserted into any Bills that start in the other place and have implications for taxes or public funds. This recognises that it is the right of this House to control any charges on the people and on public funds. By providing that nothing in the Bill imposes such a charge, subsection (2) ensured that the House of Lords did not infringe the financial privilege of this House. However, that is no longer necessary when the Bill passes to this House, so the usual practice is for the provision to be removed by amendment in Committee in this House—I love this job; I learn something new every day. I commend the amendment to the Committee.
John Mann
What a palaver, when we have Governments bringing in Bills via a group of entirely appointed peers—or, in 92 cases, birth-designated peers—and then having to amend the legislation precisely because it has been brought in by a group of unelected people. Parliament should initiate all legislation through the House of Commons. All Governments, whatever their colour or persuasion, and whatever crisis they may be in at any time, should use the House of Commons, the elected Chamber, when bringing forward legislation.
There is only one other place in the world where this happens, and that is China. All other countries that have second Chambers, or part-appointed second Chambers, do not allow legislation to be formulated through them. Even the states of the former Soviet Union, now disintegrated into 16 countries, which have, and love to have, this patronage power that we retain, do not allow their second Chambers to initiate legislation. So this country—and now this Government—and China are the only two places where that happens.
It seems absurd that in the place where democracy is centred, which is dear to all our hearts at the current time, and therefore very important—and this is getting to the fore of the public’s attention—Governments are initiating legislation through the House of Lords. I suggest that they should not do so. The absurdity of having to amend legislation because they have done so would then no longer be needed. Let us therefore hope that this is the last time that such an absurd position is reached in Parliament.
Amendment 7 agreed to.
Clause 38, as amended, ordered to stand part of the Bill.
The Chair
We now come to new clauses, some of which have already been debated in our proceedings, but new clause 1 has not.
New Clause 1
Illegal money lending
(1) The Financial Services and Markets Act 2000 is amended as follows.
(2) After Part 20A insert—
“Part 20B
Illegal Money Lending
333S Financial assistance for action against illegal money lending
(1) The Treasury may make grants or loans, or give any other form of financial assistance, to any person for the purpose of taking action against illegal money lending.
(2) Taking action against illegal money lending includes—
(a) investigating illegal money lending and offences connected with illegal money lending;
(b) prosecuting, or taking other enforcement action in respect of, illegal money lending and offences connected with illegal money lending;
(c) providing education, information and advice about illegal money lending, and providing support to victims of illegal money lending;
(d) undertaking or commissioning research into the effectiveness of activities of the kind described in paragraphs (a) to (c);
(e) providing advice, assistance and support (including financial support) to, and oversight of, persons engaged in activities of the kind described in paragraphs (a) to (c).
(3) A grant, loan or other form of financial assistance under subsection (1) may be made or given on such terms as the Treasury consider appropriate.
(4) ‘Illegal money lending’ means carrying on a regulated activity within Article 60B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (regulated credit agreements) in circumstances which constitute an authorisation offence.
333T Funding of action against illegal money lending
(1) The Treasury must, from time to time, notify the FCA of the amount of the Treasury’s illegal money lending costs.
(2) The FCA must make rules requiring authorised persons, or any specified class of authorised person, to pay to the FCA specified amounts, or amounts calculated in a specified way, with a view to recovering the amount notified under subsection (1).
(3) The amounts to be paid under the rules may include a component to recover the expenses of the FCA in collecting the payments (‘collection costs’).
(4) Before the FCA publishes a draft of the rules it must consult the Treasury.
(5) The rules may be made only with the consent of the Treasury.
(6) The Treasury may notify the FCA of matters that they will take into account when deciding whether or not to give consent for the purposes of subsection (5).
(7) The FCA must have regard to any matters notified under subsection (6) before publishing a draft of rules to be made under this section.
(8) The FCA must pay to the Treasury the amounts that it receives under rules made under this section apart from amounts in respect of its collection costs (which it may keep).
(9) The Treasury must pay into the Consolidated Fund the amounts received by them under subsection (8).
(10) In this section the ‘Treasury’s illegal money lending costs’ means the expenses incurred, or expected to be incurred, by the Treasury—
(a) in connection with providing grants, loans, or other financial assistance to any person (under section 333S or otherwise) for the purpose of taking action against illegal money lending;
(b) in undertaking or commissioning research relating to taking action against illegal money lending.
(11) The Treasury may by regulations amend the definition of the ‘Treasury’s illegal money lending costs’.
(12) In this section ‘illegal money lending’ and ‘taking action against illegal money lending’ have the same meaning as in section 333S.”
(3) In section 138F (notification of rules), for “or 333R” substitute “, 333R or 333T”.
(4) In section 138I (consultation by FCA)—
(a) in subsection (6), after paragraph (cb) insert—
“(cc) section 333T;”;
(b) in subsection (10)(a), for “or 333R” substitute “, 333R or 333T”.
(5) In section 429(2) (regulations subject to affirmative procedure), for “or 333R”
substitute “, 333R or 333T”.
(6) In paragraph 23 of Schedule 1ZA (FCA fees rules)—
(a) in sub-paragraph (1) for “and 333R” substitute “, 333R and 333T”;
(b) in sub-paragraph (2ZA)(b) for “section 333R” substitute “sections 333R and 333T”.—(Harriett Baldwin.)
This new clause gives the Treasury power to make grants and loans, and provide other financial assistance, for the purpose of taking action against illegal money lending. It provides for certain Treasury costs relating to illegal money lending to be recovered from authorised persons by a new levy, administered by the FCA.
Brought up, and read the First time.
Harriett Baldwin
I beg to move, That the clause be read a Second time.
The new clause gives the Treasury a power to provide financial assistance to bodies for the purpose of taking action against illegal money lending. It also gives the Financial Conduct Authority an obligation to raise a levy, which will apply to consumer credit firms, in order to fund that assistance. Illegal moneylenders prey on some of the most vulnerable people in society. The new clause will ensure that the perimeter of the consumer credit market continues to be enforced effectively, and that vulnerable consumers remain protected from loan sharks.
The Government have fundamentally reformed consumer credit regulation, transferring the responsibility from the Office of Fair Trading to the Financial Conduct Authority, and we have ensured that the FCA has a wide enforcement toolkit to take action where its rules are breached. The FCA regime is already having a substantial positive impact, which is helping to deliver the Government’s vision for an effective and sustainable consumer credit market that meets consumer needs. However, the FCA is not best placed to investigate and enforce certain types of illegal money lending such as the type practised by loan sharks.
Loan sharks are currently investigated and prosecuted by the England and Wales illegal money lending teams and the Scottish Illegal Money Lending Unit. Those teams are made up of local trading standards officers who accordingly have broader powers than the FCA to prosecute the particular criminality that loan sharks are involved with, and relevant expertise in educating vulnerable consumers. They are also able to draw on geographically dispersed community intelligence officers who are crucial in identifying localised illegal lenders. The teams work alongside the FCA in policing the regulatory perimeter specifically to target loan sharks and to provide support and advice to the victims of illegal moneylenders. They also help educate local communities about the dangers of borrowing money from loan sharks.
The teams have been identified as the most efficient and effective way of combating loan sharks and they have a proven track record. The England and Wales teams have secured hundreds of prosecutions for illegal money lending and related activity and have written off £55 million-worth of illegal debt, helping nearly 24,000 people in the process.
Funding will be provided by the Treasury via a levy on consumer credit firms, which will be collected by the FCA. The Government believe that all participants in the consumer credit market benefit from the teams’ work and the credibility that comes from keeping illegal moneylenders out of the market. The current cost of the enforcement regime is about £4.7 million a year, so the cost to individual firms in the £200 billion consumer credit market is anticipated to be small. The FCA will consult on how the levy will be collected in its annual fees consultation.
The Government want a safe and fair regulatory framework for consumer credit that protects consumers from harm. As part of that, it is important that the market’s boundary is adequately policed. The illegal money lending teams provide crucial support to the FCA’s work in effective enforcement in the regulatory perimeter, which boosts confidence in the market. The new clause will ensure that funding for the enforcement of rules against illegal money lending is given a sustainable framework for the future and that the illegal money lending teams will continue to receive the funding they need to do their work. I hope that all hon. Members will support this move
John Mann
This is a most excellent new clause, which I hope my hon. Friend the Member for Leeds East and I will be able to use against those who may be doing illegal money lending in sports in the Leeds area. It prompts an interesting question, because the powers on claims handlers—the other side of consumer protection—are not vested in the Treasury. We would not expect them to be. They are vested in the Ministry of Justice, but here we see a power grab by the Treasury. We have the Chancellor versus the Justice Secretary, with the two battling for power. I appreciate that that may cause some concern and divided loyalty. It is essential, in supporting this new clause, that I give my wholehearted support to the Chancellor in his power grab. The Treasury, not the Ministry of Justice, is the best place for powers such as this to be vested in.
Should the Bill become law, I hope that the Minister will go back to the Treasury team and look at other powers that have been grabbed by the Ministry of Justice under previous Governments and used appallingly badly in protecting the people, from my experience—the coalminers’ compensation claim scandal being the prime, but certainly not the only, example. Let us have the Treasury take on those who fleece our constituents out of money, with the full might of the Chancellor, strongly supported by his party’s Back Benches—he is even more strongly supported on some matters these days by the Labour Benches. On this occasion, he has my entire endorsement in his battle against the Justice Secretary.
Rob Marris
What a pleasure it is to follow my hon. Friend. It is an historic moment when he is fully backing the Chancellor of the Exchequer.
My hon. Friend talks about power grabs, but I must say that I do not think it is just the Ministry of Justice involved in this area; it is the Department for Communities and Local Government and the Department for Business, Innovation and Skills as well, with which this overlaps. The fact that this is a cross-cutting area is perhaps another reason why it would be logical for the Treasury to have these powers.
Labour Members welcome the stability of funding. I am grateful to John Ludlow, who works in the office of my hon. Friend the Member for Makerfield (Yvonne Fovargue), for giving me some background information, of which I was not fully aware, on the lack of stable funding for the inelegantly named illegal money lending teams. There is one such team based just down the road from me in Birmingham. They work in England and Wales and have a relationship with trading standards, as has been mentioned—hence my reference to the DCLG. I understand that since 2004, when the teams were established, more than 26,000 victims of illegal money lending have been helped, with £62 million of illegal debt written off and 300 loan sharks prosecuted.
I say indirectly to the Ministry of Justice and to the Chancellor of the Exchequer that some of this stuff is rather simpler than is made out, in terms of the relationship with trading standards. Under section 21 of the Theft Act 1968, blackmail is a common-law criminal offence when someone makes “unwarranted demand” for money “with menaces”. The Minister quite properly referred to illegal moneylenders as loan sharks; that is the vernacular, which we all understand. As a description, “loan shark” highlights rather better what almost always goes on: behind illegal money lending is a pattern of people saying, “If you don’t pay up, you’ll suffer a physical injury.” Those are the menaces.
The 1968 Act is an elegantly worded piece of legislation. Section 16 of that Act, which is sadly now gone, is on obtaining pecuniary advantage by deception. Section 1 of the Act, which still obtains, has a wonderful definition of theft. It was a great piece of legislation in terms of its wording. New clause 1 is not quite so elegant. It refers in proposed new section 333T(1) to
“the amount of the Treasury’s illegal money lending costs.”
That is a bit inelegant, because what it means is the amount of the Treasury’s anti-illegal money lending costs. The Treasury has costs associated with illegal money lending, but I hope it does not have any illegal money lending costs. The new clause is inelegantly worded but, to be fair, we know what it means and we have had a helpful explanation from the Minister.
Harriett Baldwin
Mr Brady, you were here when the hon. Member for Bassetlaw agreed with something that I said. I am sure you will go home and remark on that historic moment in your diary tonight. He is absolutely right in his support for this approach to putting the funding for these important teams on a more sustainable footing. I do not want to be in the least bit confrontational on this historic occasion, but I will gently correct him.
The funding for the teams that tackle illegal money lending has previously come, because it is a trading enforcement matter, through BIS, so they were paid for out of general taxation through the BIS budget. We took the view, as we went through the different alternatives in terms of the comprehensive spending review for the autumn statement, that that meant the funding for a very important activity was constantly being questioned. One year it was funded from the Treasury reserve as well. So the levy is a way of putting the funding for this important activity on a sustainable footing in a way that will be spread judiciously across the wide range of different consumer credit firms. The hon. Gentleman argues that it does not seem fair, given that they are regulated, for them to have to pay the costs of enforcement against illegal moneylenders, but all regulated firms benefit from the fact that they are within the regulated perimeter, and that the perimeter itself is robustly enforced.
We do not anticipate that there will be anything other than widespread acclaim, as we have heard this morning in Committee, for putting these incredibly important and valuable teams out of that perennial uncertainty that they have had in terms of funding and into a more sustained and clear source of funding. I commend the new clause.
Question put and agreed to.
New clause 1 accordingly read a Second time, and added to the Bill.
New Clause 7
Early exit pension charges
(1) The Financial Services and Markets Act 2000 is amended as follows.
(2) After section 137FBA (as inserted by section 30) insert—
“137FBB FCA general rules: early exit pension charges
(1) The FCA must make general rules prohibiting authorised persons from—
(a) imposing specified early exit charges on members of relevant pension schemes, and
(b) including in relevant pension schemes provision for the imposition of specified early exit charges on members of such schemes.
(2) The rules must be made with a view to securing, so far as is reasonably possible, an appropriate degree of protection for members of relevant pension schemes against early exit charges being a deterrent on taking, converting or transferring benefits under the schemes.
(3) The rules may specify early exit charges by reference to charges of a specified class or description, or by reference to charges which exceed a specified amount.
(4) The rules made by virtue of subsection (1)(a) must prohibit the imposition of the charges after those rules come into force, whether the relevant pension scheme was established before or after those rules (or this section) came into force.
(5) In relation to a charge which is imposed, or provision for the imposition of a charge which is included in a pension scheme, in contravention of the rules, the rules may (amongst other things)—
(a) provide for the obligation to pay the charge to be unenforceable or unenforceable to a specified extent;
(b) provide for the recovery of amounts paid in respect of the charge;
(c) provide for the payment of compensation for any losses incurred as a result of paying amounts in respect of the charge.
(6) Subject to subsection (8) an early exit charge, in relation to a member of a pension scheme, is a charge which—
(a) is imposed under the scheme when a member who has reached normal minimum pension age takes the action mentioned in subsection (7), but
(b) is only imposed, or only imposed to that extent, if the member takes that action before the member’s expected retirement date.
(7) The action is the member taking benefits under the scheme, converting benefits under the scheme into different benefits or transferring benefits under the scheme to another pension scheme.
(8) The Treasury may by regulations specify matters that are not to be treated as early exit charges for the purposes of this section.
(9) For the purposes of this section—
‘charge’, in relation to a member of a pension scheme, includes a reduction in the value of the member’s benefits under the scheme;
‘expected retirement date’, in relation to a member of a pension scheme, means the date determined by, or in accordance with, the scheme as the date on which the member’s benefits under the scheme are expected to be taken;
‘normal minimum pension age’ has the same meaning as in section 279(1) of the Finance Act 2004;
‘relevant pension scheme’ has the same meaning as in section 137FB;
and a reference to benefits includes all or any part of those benefits.”
(3) In section 138E(3) (contravention of rules which may make transaction void or unenforceable)—
(a) omit the “or” at the end of paragraph (a);
(b) at the end of paragraph (b) insert “or
(c) rules made by the FCA under section 137FBB.”.—(Harriett Baldwin.)
This new Clause requires the Financial Conduct Authority to make rules prohibiting specified charges from being imposed on members of pension schemes who take, convert or transfer pension benefits after they have reached normal minimum pension age but before their expected retirement date.
Brought up, and read the First time.
Harriett Baldwin
I beg to move, That the clause be read a Second time.
Government new clause 7 places a duty on the Financial Conduct Authority to limit early exit charges, which act as a deterrent to people accessing their pensions early under the new pension freedoms, thus fulfilling a commitment that the Chancellor of the Exchequer made recently.
The Government introduced the pension freedoms in April 2015 because we believe that people who have worked hard and saved their entire life should be free to spend their retirement savings as they want. At that time, the Government wanted to ensure that everyone who was eligible could access their pension flexibly under the new freedoms, and they therefore strengthened the statutory right of members in defined contribution schemes so that people could, in all cases, transfer their pension savings from one scheme to another.
Following the introduction of the freedoms, it became increasingly clear that other barriers, including early exit charges and long transfer times, were preventing some people from using them. Evidence gathered for the Government by the FCA has shown a small but nevertheless significant cohort in contract-based schemes for whom early exit charges pose a barrier to their use of the freedoms. Some 670,000 people in FCA-regulated schemes face an exit charge, and for 66,000 of them—one in 10—the charge would exceed 10% of the value of their pension pot. In some cases, the charges could be high enough to make it uneconomical for an individual to access their pension flexibly, while in others the presence of an early exit charge could act to discourage individuals from accessing their pension, when that might be the best thing to do in their circumstances. It is therefore clear that the Government’s objective of ensuring that everyone who is eligible is able to access their pension savings flexibly is not being met, and that action is needed to ensure that all consumers are able to make use of the freedoms.
To ensure that the cap benefits current consumers who are eligible to use the freedoms now, the Government will ensure that any cap applies equally to existing arrangements and to those entered into in the future. The Government have not taken the decision to pursue legislation with retrospective effect lightly, and we recognise industry concerns about interference with existing contractual agreements. We have already made it clear that market value reductions should not be subject to the cap on early exit charges. However, in the Government’s view it is unfair that a significant minority of individuals have been deterred from accessing their pensions flexibly because of contractual terms they entered into long before the freedoms were introduced. Indeed, some providers have conceded that industry practices have moved on, and that the introduction of the pension freedoms means that the charges pose a much more significant barrier now than when they were first agreed. Fairness is not determined solely by reference to whether it was acceptable to include a term in a pension contract many decades ago; it should also be assessed in light of the reforms and changes in market practice over time.
In the context of the new pension freedoms, it is unfair that some individuals are being deterred from accessing their pensions flexibly because of terms in contracts from before the pension freedoms were introduced. Those people would not have been in a position to make an informed decision about potential early exit charges when they signed up, and that is why we have introduced the clause, to limit the charges and remove the deterrent.
In giving the FCA, as the relevant regulator, the flexibility to determine the precise level of the cap, we are ensuring that fairness is built into the setting of any cap. The FCA is best placed to determine how best to apply any cap, to ensure that early exit charges are not a deterrent to individuals using the freedoms. The new clause will provide consumers in contract-based pension schemes with genuine protection when exercising the pension freedoms, by ensuring that they are not deterred by early exit charges. Alongside that measure, which will apply to FCA-regulated pension schemes, the Department for Work and Pensions and the Pensions Regulator will work to ensure that any relevant concerns are appropriately addressed for trust-based schemes. We will ensure that all pension scheme members are protected against excessive early exit fees, regardless of the type of pension scheme they are in. I commend the new clause to the Committee.
Rob Marris
I am glad that the Chancellor has come on board fully. The Prime Minister did so yesterday; he came on board with Labour’s manifesto commitments on the European Union—good for him. The 2015 Labour manifesto said:
“We will reform the pensions market so that pension providers put savers first, and protect consumers from retirement rip-offs. We support greater flexibility for those drawing down their pension pots, but there must be proper guidance for people to avoid mis-selling.”
We have already discussed pension guidance and the welcome amendments on Pension Wise.
I have several issues to raise with the Minister. Paragraph 2.16 of the Government’s response to the consultation document on pension transfers and early exit charges referred to “further cost-benefit analysis” from the FCA
“in relation to the appropriate level of any cap.”
Can the Minister tell me—my research has not extended this far—whether the FCA has done that research? I gather from her remarks that it has not yet done so, but I may have misunderstood her. If it has done it, when was it done and published? If it has not, when does she anticipate that it will be done?
Can the Minister say something—again, I may have missed this in her remarks—about what she anticipates the level of the cap will be? She referred to the shocking 10% charges that some people have unfortunately been asked for on requesting a transfer. A press release from a couple of weeks ago referred to speeding up the process and to things being done “quickly and accurately”. I do not see any reference in new clause 7 to the timescale, although there is a reference to the cap, so I hope the Minister can elucidate that.
The bigger issue—again, this may be my reading of new clause 7—is that the Government seem to be conflating two things in the wording of the new clause. The Minister’s remarks did not reassure me about that. The first is the penalty for moving. One of the reasons why I signed up to Equitable Life years ago—what a great deal that was—is that it had what was then called an open-market option, which was unusual in defined purchase schemes at that time. It was attractive because it meant that decades down the road I would have the option of buying an annuity from a provider other than Equitable Life. It was not the only provider to offer such a scheme, but it was unusual; it was in the minority. That was back in the ’80s, when I was a very young man. Some schemes had a ban on moving—that has effectively been statutorily overridden—and others had penalties.
The other thing, which I fear that the Government have conflated with the first in their wording—perhaps the Minister can reassure me about this—is what in the trade used to be called an actuarial reduction. In other words, if the normal retirement age for the pension scheme is 65, as it is in the House of Commons scheme, to which many hon. Members have signed up, but someone takes it at 60—above the statutory age of 55; it used to be 50—in round terms they take a 50% reduction in the annual pension. Keeping it simple, instead of getting £10,000 a year from the age of 65, they get £5,000 a year from the age of 60 because they are getting it for an extra five years. It is not exactly 50%, but as a rule of thumb it is about 5% a year for taking it early, so if someone takes it at 55 they lose 50% of their pension. That is not, to most people’s minds, a penalty. Because people get the dosh for longer, they get a smaller annual amount. We could have a debate about whether 5% a year is mathematically accurate, with life expectancy and so on, but in terms of the principle and the concept that people lose pension because they have started to take it below the normal retirement age there is that actuarial reduction.
John Mann
May I disagree with my Front-Bench colleagues on their analysis? I have exactly the same question, but I am anticipating that this is a listening Chancellor—not least to the very point I made to him in the Treasury Committee three years ago, which he rebuffed in his stylistic way in giving a non-answer. I am seeking to clarify whether he is the listening Chancellor and that this is a bit of a roll, so that I can back him again, because he has listened to me on the issue, which I raised in some detail, including in correspondence and in other questions. At the time I did not get a sufficiently satisfactory response. This could be a significant moment. I am hoping that the Minister will clarify that the power being given to the FCA will be all-encompassing and include all ways of ripping off our pensioners, including the couple from Clayworth in Bassetlaw who first raised the issue with me some three and a half years ago.
Harriett Baldwin
I want to put on record that of course the Chancellor is a listening Chancellor. I am delighted that some of that listening includes listening to the hon. Gentleman, whose views on pasties I remember the Chancellor also listened to at one time. I see why his Whips put him on the Committee—because of his extensive and deep knowledge of so many of these things.
Let us face it, the topic of pensions can cause people’s eyes to glaze over—not of course those of hon. Members in Committee, but potentially those of people avidly reading the record in Hansard—so I want to clarify that the pension freedoms apply to defined contribution schemes. Those regulated by the FCA are covered by the new clause. The hon. Member for Wolverhampton South West asked about actuarial reductions, but schemes such as those that most Members of Parliament are members of are in the defined benefit section of the market. That is presumably why he has not found the language clear enough; the new clause does not apply to defined benefit schemes. In cases where actuarial reductions might be applied unfairly, we think it is important for the FCA to be given flexibility in the new clause.
The hon. Gentleman asked about the level of the cap. It is important to emphasise how well and constructively the industry has been working with the new pension freedoms to enable hundreds of thousands of people to take advantage of the freedoms. It is worth citing how excellent, innovative and adaptive many firms have been with the new freedoms, which came in with a degree of rapidity. However, there were some cases—I cited the example of a 10% cap—where charges were clearly egregious. The FCA will do further work in this area, in terms of its cost-benefit analysis process, but there have been efforts to collect evidence of the scale of the charges. In the vast majority of cases—I think that I am right in saying, off the top of my head, more than 90%—the charges have been under 2%. The industry, by and large, has worked very well with the reforms; I do not want people to get the impression that it has not. However, we think that where there are unreasonable barriers, in terms of charges that we would all regard as outrageous, the FCA is right to have these powers.
There will be cases in which, when someone removes their pension, the provider is right to apply a market value reduction, to readjust the value of the fund properly to reflect the performance of the market. Not all funds mark to market on a daily basis. We would not regard that as an early exit charge. It is right that market value reductions are specifically excluded from the new clause.
I hope that by answering all those questions, I have satisfied the Committee that this is another excellent clause from a listening Chancellor, and I commend it to the Committee.
Question put and agreed to.
New clause 7 accordingly read a Second time, and added to the Bill.
New Clause 3
Nomination of the Chief Executive Officer of the Prudential Regulation Authority: parliamentary oversight
“The Chancellor of the Exchequer shall not nominate a person as Chief Executive Officer of the Prudential Regulation Authority without the consent of the Treasury Committee of the House of Commons.”—(George Kerevan.)
Brought up, and read the First time.
George Kerevan
I beg to move, That the clause be read a Second time.
We on the SNP Benches believe that senior regulators and those charged with supplying independent advice to Government should be independent of the Executive and that the best way of achieving that is to have their appointments confirmed by Parliament. In the case of the PRA, we are suggesting that that should be done through the Treasury Committee. The principle has already been conceded by Government. The head of the Office for Budget Responsibility is confirmed by the Treasury Committee, so in a sense we are simply trying to widen that remit. We have chosen to begin with the head of the PRA, because major changes in the Bill involve the Bank and its relationship to the PRA. Also, Mr Andrew Bailey, the current head of the PRA, is moving on to the FCA, so sometime this year we will indeed be appointing a new head of the PRA.
The principle is simple. This is about the way in which we guarantee the independence of the regulator from the Executive. We accept that the Executive—the Chancellor, in this case—is the correct person to make the nomination, but the way we guarantee the independence of the regulator is to give them a wider base through confirmation by Parliament. Then, if there is ever a conflict between the regulator and the Executive, the regulator can fall back on the fact that they are there, having been confirmed by Parliament. That simple principle is accepted all round the world and, as I said, is already accepted with regard to the OBR.
I hope that the Government will accept this proposal; I hope that the principle is a broad enough one, but I stress that the aim is not to make the regulator in any sense a political figure, but to go in the opposite direction.
We have had some concerns in the last few months regarding the independence of the FCA. We will say no more about that. The point is that the issue of the independence of regulators is in the public arena. The best way for the Government to allay some of those fears is to accept the new clause.
Bank of England and Financial Services Bill [ Lords ] (Sixth 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: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
Richard Burgon (Leeds East) (Lab)
I would like to express my hearty support for new clause 3. Select Committees have routinely held pre-appointment hearings for a number of public appointments since 2008, with a number of candidates not approved. The previous coalition Government did develop the scrutiny agenda somewhat when the Chancellor agreed to the Treasury Committee having a power of veto over appointments to the Office for Budget Responsibility in 2010.
The Public Accounts Committee has a veto over the appointment of the Comptroller and Auditor General. Appointments to the Monetary Policy Committee and the Financial Policy Committee of the Bank of England are made by the Chancellor of the Exchequer and are then subject to a confirmation hearing by the Treasury Committee. The Treasury Committee has power over the chair and board members of the Office for Budget Responsibility, an arrangement that the Chancellor told the Treasury Committee he would put in place
“because I want there to be absolutely no doubt that this is an independent body”.
The Minister will be aware that, when it examined the proposals for the future Financial Conduct Authority in 2013, the Treasury Committee made a number of recommendations on the accountability of the new body to Parliament, including that the legislation provided that the chief executive of the FCA be subject to pre-appointment scrutiny by the Treasury Committee. The Treasury Committee was disappointed by the Government’s response, particularly in view of the deficiencies in the accountability mechanisms for the Financial Services Authority.
I would like to express support not only for the new clause tabled by the Scottish National party, but for the view of the Treasury Committee, as set out by its Chair, the right hon. Member for Chichester (Mr Tyrie), in his letter to the Chancellor of the Exchequer on 26 January, following the appointment of the current Prudential Regulation Authority chief executive, Andrew Bailey, to be the next leader of the FCA. In that letter the right hon. Gentleman set out his Committee’s view that it should have a veto over the appointment and dismissal of the chief executives of both the FCA and the PRA. Indeed, the letter said that the FCA’s chair, John Griffith-Jones, told the Committee that there was merit in that proposal when he met its members on 20 January.
It would be helpful to know whether the Chancellor has responded to that letter, and whether the Minister can share with us now the Treasury’s thinking on extending pre-appointment hearings and the power of veto to those two positions. I thank the hon. Member for East Lothian for flagging up this issue with his new clause, which we support and will consider returning to on Report, if the Government are not on board with it.
The Economic Secretary to the Treasury (Harriett Baldwin)
I am going to convince Opposition Members that this new clause is not necessary. I will give them an updated response on the Chancellor’s views and the process of recruitment for the new chief executive of the PRA, the deputy governor for prudential regulation. That newsworthy notification to the world is taking place in front of a large crowd, as we can see.
My understanding of the proposed new clause is that it would give the Treasury Committee a statutory veto over the appointment of the chief executive of the PRA, which is soon to be the Prudential Regulation Committee. I am well aware that the Treasury Committee, of which the hon. Members for East Lothian and for Bassetlaw are members, has proposed this measure. Last month, following the announcement of the appointment of Andrew Bailey as chief executive of the FCA, we received a letter from my right hon. Friend the Member for Chichester (Mr Tyrie), in which he argued that the Treasury Committee should have a veto over both the appointment and the removal of the chief executives of the FCA and the PRA. The Chancellor has replied to the Treasury Committee in a letter, which normally would be published by the Committee—I imagine that it has been published already. We believe that such an arrangement is neither necessary nor appropriate for the financial regulators, and I will articulate the reasons why.
First, such an arrangement is not necessary to protect the independence of the FCA and the PRA or of their chief executives. The model of independent regulation that we have in the UK gives the regulator a clear statutory framework of objectives and duties and ensures that regulatory decisions are taken in an objective and impartial way. Importantly, this legislative framework protects the independence of the PRA and the FCA chief executives. It includes provisions that require the terms of appointment to be such that the appointee is not subject to the direction of the Treasury or of any person.
We agree that it is important that the Treasury Committee holds a pre-commencement hearing before the new PRA CEO takes up their post. However, we believe that it is important that the Chancellor remains the person who is fully accountable for deciding on the right person for the job. Pre-appointment hearings are not common for chief executive posts. Hon. Members will understand that such a process would potentially introduce scope for delay and public disagreement, which would not help to recruit good candidates. For example, candidates who are otherwise very good might not want to disclose their interest to their current employer in advance of confirmation of the appointment.
The hon. Member for East Lothian has argued that the arrangements for the appointment of the chief executives of the FCA and PRA should mirror those for the senior leadership position at the Office for Budget Responsibility; that appointment requires the consent of the Treasury Committee. However, the financial regulators are materially different from the OBR. The OBR was established to examine and report on the sustainability of public finances and, by doing so, to help Parliament hold the Government to account for their fiscal policy decisions—the same argument applies to the Comptroller and Auditor General—and as such the OBR has a unique model of dual accountability to the Government and to Parliament.
The previous Government proposed the statutory veto of the Treasury Committee over appointments to provide an assurance of independence and to ensure that those individuals at the OBR have the support and approval of the Select Committee. However, we do not believe that that model of dual accountability is appropriate when regulators are independently carrying out executive functions of the state, such as regulating and supervising the financial services industry. As I have said before, I would welcome the Treasury Committee holding a pre-commencement hearing with the chief executives of the PRA and the FCA. That would provide an important opportunity for Parliament to scrutinise new appointees to those offices before they take up their posts.
Let me update the Committee on the process for appointing the next chief executive of the PRA, who will take over from Andrew Bailey. The Government are running an open competition. The post was advertised on Friday 19 February, which was last week, and the closing date for applications is 4 March—the window is still open should any members of the Committee wish to apply. The appointment is made by the Queen, on the recommendation of the Prime Minister and the Chancellor. Interviews will be conducted in mid-March by a panel chaired by Sir Nicholas Macpherson, together with the second permanent secretary, the chair of the court and one of the other deputy governors. It is expected that the new chief executive will take up the position as soon as possible, but by 1 July 2016 at the latest. You see, Mr Brady, we have all the breaking news after 2 pm in this Committee.
There is another argument that is not in my speaking notes, but which I strongly believe is the case. Let us hypothesise that whoever is appointed through that process then goes through the pre-commencement hearing with the Treasury Committee that we have agreed, and that Committee produces a report that is extremely unfavourable to the person nominated by the Government. I think we can all see that, from a practical point of view, that would be as powerful as having a pre-appointment hearing.
Let us look back at the recent examples of Andrew Bailey’s move to the FCA and, for those of us with slightly longer memories, the appointment in the previous Parliament of Mark Carney as the new Governor of the Bank of England. The Chancellor invested a lot of personal time in those appointment processes, persuading individuals to come across. Imagine if he had had to say, “It is not actually in my power to offer you these jobs; it is in the power of the Treasury Committee.” Would we have seen candidates of such quality prepared to put their names forward? I submit that we would not.
I therefore think that the Government have made the right judgment in agreeing to a pre-commencement hearing. I hope that I have explained to the Committee why I do not believe it would be appropriate to accept the new clause, and I hope that the hon. Member for East Lothian will withdraw it, or that the Committee will vote it down.
John Mann (Bassetlaw) (Lab)
Dear, oh dear. Democracy only goes so far. The United States, with all its systems, must be appointing terrible people, seeing as elected politicians there have a whole range of conferments or otherwise, from the top of the judiciary downwards. Not to give an august body such as the Treasury Committee, which is elected on a cross-party basis by Parliament, the ability to reject an unsuitable applicant demonstrates the fundamental weakness of the last few Chancellors and of the current one, in the style of his predecessor but one—Mr Brown was an example, and Mr Osborne closely mirrors him in every way. Chancellors perceive that they have all the wisdom, yet they are not confident enough to trust a cross-party Committee that would rarely even contemplate criticising, never mind vetoing.
Having sat on that Committee at four different times with a range of Members—indeed, I seem to recall that you, Mr Brady, were one of its leading members when I was first on it—I know that there has never been an instance when it has misused its powers on a partisan basis. Of course, there may be exchanges, particularly with Chancellors and Ministers, where one senses and smells more of a partisan element. However, there has never once been an inkling of that in decision making.
For the Executive to hold in these powers is dangerous for the Executive and for Parliament. The power is simply with a single name; there is no choice or selection process. The proposal from the hon. Members for East Lothian and for Kirkcaldy and Cowdenbeath, which is the same one unanimously put forward by the Treasury Committee in this Parliament, is for the ability to interview and, if necessary, vote against an applicant. That focuses on what the Government want from the post holder and the skills that the post holder will bring. It scopes out precisely how that remit is seen by Parliament. We are the elected representatives. Therefore, in exactly the same way, very successfully, Parliaments past brought in the Select Committee system and further democratised that process through elections to Select Committees. That is popular inside the House and, as time will show, it is increasingly popular outside, as the general public understand how it has strengthened our democracy.
Harriett Baldwin
If I may, I will come back on some of the points made by the hon. Member for Bassetlaw, who seems, I submit, to prefer American democracy to British democracy. I do not know whether this is a preference he has publicly stated, but it certainly seems to be his revealed preference, judging by his comments before lunch on the second Chamber and his comments now. American democracy is very different from ours, it is true, and I am sure that each has different advantages and disadvantages. In America, the judges are elected, for example. That is not something that we have chosen to do in this country. In America, obviously, their second Chamber is directly elected. That is not something that this Parliament has yet chosen to do.
Obviously, the power of the Executive in the British system of democracy is considerably greater when it comes to Budget matters than in America, where for a long time they were unable actually to pass a Budget. In America, where the Senate must confirm presidential nominations for many public appointments, there have been significant delays in filling vacancies. At the end of 2010, for example, 22%—over one fifth—of Senate-confirmed positions remained unfilled or temporarily filled by acting officials. Introducing scope for delay and public disagreement could impede the recruitment of good candidates to these positions. These are Executive posts and, as I said previously, candidates may not wish to reveal their interest to a current employer in advance of being confirmed in the appointment process.
George Kerevan (East Lothian) (SNP)
I remind the Committee that for most of last year the Treasury Committee was in touch with the Chancellor, who was very dilatory in making a fresh appointment to the head of the FCA. Delays can occur even when the Executive are in charge.
Harriett Baldwin
Again, I have to disagree with the hon. Gentleman. There has been a very capable and competent acting chief executive at the FCA throughout this time. I submit that the hon. Member for Bassetlaw would rather that Bassetlaw were in America, from what he has said.
John Mann
The Minister should know her history. The Pilgrim Fathers and the pilgrim contract that created western democracy in the style of the United States originate from Bassetlaw, as does the Great Reform Act of 1832. The writer of the Great Reform Act lived in my house at the time. Bassetlaw and American democracy therefore go together, but we are English. We are part of the United Kingdom. We want our Parliaments to be confident enough to make decisions. If it is not good enough for the Monetary Policy Committee and the OBR, is the Minister really saying that we are not getting people of suitable calibre for those posts?
Harriett Baldwin
The Minister really is saying that. I am saying that these are Executive roles, which the Executive should continue to be able to appoint, obviously with a pre-commencement hearing by the Treasury Committee. I fear that the hon. Member for Bassetlaw’s ancestor’s ticket for this voyage must have got lost, but it was very interesting to hear about the connection with his constituency. Without more ado, I urge the Committee to reject this amendment.
George Kerevan
I normally have a great deal of respect for the Minister’s judgment, but I detected something in her tone which said that even she did not fully agree with her position. On the first point, she argued that statute guarantees the independence of the regulators. If there is anyone is this room, including the Minister, who can put their hand on their heart and truly say that no regulator has ever been leant on by a Minister of any party, then I will accept where the Minister is going. I am a tiny, wee bit cynical that sometimes, despite statute, Ministers of all parties and all jurisdictions tend to lean. We should try to tempt them away from that by giving a parliamentary underpinning to the role and the position of the regulator. That is at the heart of this.
The Minister also cites the problem that might arise from dual accountability to the Executive and to Parliament. If there is conflict, I am always happy for Parliament to triumph over the Executive, but maybe the Minister wants this to be the other way round—indeed, she has said as much. My point is that we already have a degree of dual accountability. The Treasury Committee, standing for Parliament as a whole, questions the regulators on a regular basis to make sure that they are fulfilling their brief. The Committee is not questioning them on policy, but to make sure of their independence. The actual accountability already exists. We are just making it clearer here.
The Minister says that as an alternative there could be a pre-commencement interview. If there is a problem with confusion of lines of responsibility, that is actually a worse way to go than making it clear that the Committee, standing in for Parliament, does have the role of confirming the appointment.
My final point is that this would interfere with the quality of the candidates we might get. I remind the Minister that every single member of this Bill Committee had to stand for election. We put ourselves before the electorate; that is democracy. All we are arguing for is the principle of democratic accountability. If there are candidates for senior Executive positions who are frightened of democracy, they do not deserve the job.
Question put, That the clause be read a Second time.
George Kerevan
I beg to move, That the clause be read a Second time. Forgive me, Mr Brady; I do not normally like the sound of my own voice quite so much as to speak so often, but I will get this over as quickly as I can.
New clause 4 suggests a change in the title of the Bank of England to the Bank of England, Scotland, Wales and Northern Ireland. I know I am at risk of being accused of triviality. In defence, because we are talking about a Bank of England Bill, I thought it was pertinent to bring the matter up. I accept that it is a minor aspect of the legislation.
I am not claiming ownership of the Bank of England for Scotland, even though that institution was first mooted by William Paterson in the 1690s. He suggested the original project to lend His Majesty’s Government the sum of £1.2 million. The geek in me made a quick calculation of what that would be worth today, and it comes out at about £26 billion, so that was quite a serious project for the time. The yield on the original loan was 8%, which was a good deal better than one would get today.
Let me quickly get to the core: why change the name? I appreciate that it is an historic name known around the world and is a great brand. There is a minor irritation in the other parts of the kingdom at the use of the name England. That is no offence to the great people of England—my father is from Liverpool—but it is a minor irritation. But that is the least of it.
I talk of a great global institution, one that has played even more of a global role since the crisis of 2007-08. If it is to play that global role and represent a modern Britain, it needs a name that reflects a modern Britain. That is the issue for me. The intent of the Bill for the Government and the officers of the Bank of England is to modernise. What better opportunity to have a modern name?
I am suggesting a minimum change in legal terms to the Bank of England, Scotland, Wales and Northern Ireland. I suspect that in day-to-day operations it would be comparable to a company saying, “This is the legal name but trading as.” I am sure that for a generation to come it would still be known as the Bank of England, but honour would be settled by the fact that the legal title would be as I suggest. It is the minimum change, and it is put forward as an attempt to gain some common ground.
I know that a number of my colleagues—and not only in the SNP—are considering tabling other amendments with other names on Report. The issue is not going to go away, but I think this solution is doable and still retains the tradition of the Bank of England, which I am sure the Minister will defend.
Richard Burgon
What’s in a name? But we are happy to support the renaming of the Bank of England to the more accurately titled Bank of England, Scotland, Wales and Northern Ireland, purely on a principled basis, given that they all fall under its area of geographical responsibility.
John Mann
Before my hon. Friend sits down, would he like to contemplate that in the unlikely event that Scotland becomes independent and I am an elected Member of this House, I will certainly not be voting to allow Scotland to remain within sterling? Therefore, the likelihood is that Scotland will be required to have the euro as its currency. So if the name were to change and Scotland was using the euro, would the Government of the day not have to change the name back again in order to give some proper accuracy and balance?
Richard Burgon
I thank my hon. Friend for that intervention. It is very helpful. I have to say that I cannot foresee any circumstances in which my hon. Friend would not be re-elected and re-elected as the hon. Member for Bassetlaw—he truly is a man of the people—but I can foresee circumstances where the SNP’s desire might not reach fruition. My hon. Friend raises complicated and important questions and I look forward to the Minister’s response to them.
Harriett Baldwin
Members on the Opposition Benches have highlighted in a nutshell the essence of this debate and made some of the points I was going to make. The Bank of England as an entity predates the United Kingdom itself: it was founded in 1694, before the Union, and in the intervening 322 years it has built a globally prestigious brand, if I dare call it a brand. It is well known around the world and has a worldwide reputation as a strong and independent central bank, although independence obviously came quite a bit later. The hon. Gentleman’s amendment would not change this and it is not something we should dismiss lightly, but I think that people would still carry on referring to it as the Bank of England.
The Bank exists to serve the entire population of the United Kingdom. Its mission statement is:
“to promote the good of the people of the United Kingdom by maintaining monetary and financial stability”,
but I can understand from his political allegiance why the hon. Gentleman did not propose in his amendment that it be renamed the Bank of the United Kingdom, because his party’s aspiration is that we become a disunited kingdom, although we all sincerely hope that that never comes to pass.
I remember that in the referendum campaign there was some talk, not only of whether the euro would become the currency of Scotland, but of the groat becoming the currency of Scotland. I think that not answering that question was one of the real problems that the nationalists encountered in the 2014 referendum. It is worth reminding the Committee that the Bank has a clear framework for ensuring it understands the economic picture across England, Scotland, Northern Ireland and Wales, through 12 agencies located in the regions and countries of the UK. Naturally, Scotland, Northern Ireland and Wales all have their own individual Bank agencies, as do the regions of England, and the agents in these branches and across the rest of the country meet with some 9,000 contacts a year from a range of sectors, which provides a wealth of economic and financial intelligence to the Bank’s policy committees.
That vital source of information helps the Bank’s policy committees to understand both the financial and non-financial conditions for businesses in all four parts of the United Kingdom, whether it is a business’s ability to access credit, the condition of the housing market or the level of output. The Bank actively seeks to understand economic and financial conditions in all corners of the United Kingdom in order to set appropriate monetary policy in the United Kingdom.
It is not only the Bank’s agents who are the external face of the Bank. Members of the MPC, the FPC and the PRA board regularly make speeches and meet with businesses across the United Kingdom. In fact, in 2014-15, members of those three organisations conducted 54 visits in different parts of the UK. Engagement in the different countries and regions of the UK is clearly important at the highest levels of the Bank.
The Bank of England is known as the central bank of the United Kingdom. The hon. Gentleman’s new clause would make no practical difference on the ground. He himself referred to the name being a “minor irritation”. Changing a name steeped in more than 300 years of history, particularly to the name that he suggests, would be to the detriment of the institution. It has become internationally renowned and respected with that name, and the value of that recognition should not be underestimated. International confidence in the Bank of England helps to support international confidence in our economy. Changing the Bank’s name would undermine that international recognition of it as a world-class central bank, and I therefore gently urge the hon. Gentleman to withdraw his new clause.
George Kerevan
Any change to the Bank’s name would not affect coins because the Bank’s name does not appear on coinage, as far as I remember. It does, however, appear on notes. If there was ever an agreement to change the name of the Bank of England, that would have a knock-on effect on notes, but a sensible solution would be simply to let the notes wear out, as they do quickly, and then change them. I am certainly not proposing any name change that would have a major cost; I would not want that.
Members on both sides of the Committee raised the issue of what would happen if Scotland were to become independent. If I gather correctly the drift of the contributions, Members are worried that if Scotland becomes independent post Brexit, the name would have to be changed back. I am glad that Members are still alive to the fact that the independence issue is alive and well north of the border. I will not tempt the Chair’s patience by going too far into that; we will cross that road when we come to it, but I am glad Members are aware that the issue has not gone away.
The Minister’s final suggestion was that if there were to be a name change, it would be better to change it to something such as the Bank of the United Kingdom, and that I am being in some way devious by proposing this longer name. There was discussion about what the new name would be. I have tried to alert Members that that debate is going on in other parties within the House. I have heard suggestions such as the Sterling Central Bank. It seems to me that the longer form I propose is the least change and is therefore most able to encompass the Minister’s last point—we want to retain some of the tradition of the Bank, which was founded initially by a Scots person.
This is a live issue. The name will be changed at some point. Once a debate such as this emerges, it can only go in one direction. It would be better to choose a name that we can all agree on in the here and now. If the Minister rejects that on the basis of some grand tradition of the Bank of England, that undermines the essence of the Bill, which is to modernise the Bank and make it one that works for the whole of the nation as it is presently constituted. She and her Government are hiding behind the notion of modernity but they actually want to maintain a Bank which is run by the Executive, and which is not anywhere near as efficient as she thinks it is in terms of managing the prudential aspects of the economy.
Question put, That the clause be read a Second time.
Richard Burgon
I beg to move, That the clause be read a Second time. This is a simple new clause to change the terminology and move the Bank into the modern world. We have heard the Minister talk in this Committee about the importance of modernising the institution, and we have also heard eloquent discussions of the need to modernise from both the hon. Member for East Lothian and my hon. Friend the Member for Bassetlaw. The clause is a very simple way of showing that we are serious about this.
The Bank and the court of directors were established, as the Minister reminded us, in 1694. A lot of things have changed since then. The Bank is the second-oldest central bank in the world, after the Swedish Riksbank, and it is the eighth oldest bank. The Bank’s own website states that,
“the few public companies formed at the time of the Bank’s foundation, in 1694, tended to be governed by Courts of Directors”.
The phrase “courts of directors” is not used in relation to companies these days. It is worth asking whether the term “court of directors” survived into the modern day in other institutions, and whether this matters at all. Of course, this term did not survive into the modern day in other institutions, unless the Minister can tell me that I am wrong in that regard. If this does matter, should we continue to call what is currently termed the court of the Bank of England by that name? The Treasury Committee report of October 2011, “Accountability of the Bank of England”, stated:
“The Court is the governing body of the Bank of England. In this respect, it is the board of the Bank”.
The report also said:
“Given that the Court has changed recently, its name is outdated and does not give a clear picture of what the Court actually does. In terms of corporate governance the Court is the Board of the Bank and its name should change to reflect that. To reflect the shift of emphasis in its role, we recommend that the governing body of the Bank (Court) change its name to the ‘Supervisory Board of the Bank of England’. References below to the Board of the Bank of England in this report use this term. Whatever name is ultimately chosen, we strongly recommend that the term ‘Court’ is abolished”.
Those are the words of the Treasury Committee report in October 2011. I know that the court of the Bank, in replying to this report, did not express any opposition to this modest proposal to rename it. The court’s response read:
“Whether or not to rename Court is a matter for Government. We simply note that Court itself is divided on the balance of the arguments”.
In considering the cases for and against the renaming of the court of the Bank of England, the court stated:
“On the one hand, renaming would recognise the considerable changes in Court’s actual and prospective responsibilities in the past decade. On the other hand, it could give rise to serious misunderstandings, since amongst central banks ‘Board’ is often used to refer to an executive and/or policy making committee, as exemplified by the Federal Reserve Board and the Executive Board of the European Central Bank”.
We believe that such concerns can be overcome. The board—or the supervisory board, as the Treasury Committee would prefer to call it—would not be changing its responsibilities with this name change. Such a change, however, would be one small statement to help connect it to modern practice in terminology in major financial institutions. It would also cut through some of the mystery of the workings of the Bank and help make it more accessible to everyday people.
Harriett Baldwin
What is in a word? The hon. Gentleman has set out the case for changing the name of the court. I do not know about you, Mr Brady, but I rather like some of our old traditions in this country.
The court has existed since the Bank’s inception in 1694. The composition and structure have obviously changed over its long history. Initially, there were 26 individuals on the court, while today it is much smaller, with the executives and non-executives, and is much more characteristic of a modern, unitary board. The term supervisory board, used by the hon. Gentleman, is more redolent of the German approach to corporate governance than the British one. I am sure he will provide me with examples. It is not the Americans this time, but the Germans.
For me, there is charm in the term “court”, which is rooted in this long history. It has no particular mystery about it; it merely refers to the Bank’s governing body, which does indeed operate like a modern board. I do not feel we should argue over semantics. We should look at how the court functions. As the Committee has already heard, the court is now far smaller and far more effective than it was historically. There is a clear division between the role of the chief executive and the non-executive chair. The court is comprised of a majority of independent non-executive directors, and there are formal, transparent appointment procedures for executive and non-executive directors alike.
The changes in the Bill, which we have discussed at such great length, will further enhance the role of the court, making it a stronger decision-making body. In particular, to remind the Committee, we are making the oversight functions the responsibility of the whole court, ensuring that every member of the court—executive and non-executive—can be held to account for the use of these functions.
This brings the court into line with the recommendations in the Treasury Committee report. My view and that of the Government on the amendment is clear. Changing the name of the court would make absolutely no difference to how it operates in practice. It is the provisions in the Bill that will do that. I oppose the suggestion to change the name from the rather quaint and old-fashioned term of “court”, which has for me some charm.
Richard Burgon
That was indeed a charming oration from the Minister about how things were done in the past and continue to be done to this day. As much as I like many aspects of the history of this country, I am not persuaded that we should not press the matter to a vote. In the name of modernity, I seek to divide the Committee on this issue.
Question put, That the clause be read a Second time.
Harriett Baldwin
Mr Brady, as we come to the final question of our proceedings, I put on record the Committee’s gratitude to you and Mr Wilson for having chaired our sittings so effectively. I also thank the Clerks and the Hansard reporters. For their incredibly diligent work behind the scenes—so often it is unsung—I also thank the Treasury officials, the Treasury legal team and, in this case, the Bank of England’s legal team. I put those thanks and that gratitude on the record. I also thank all members of the Committee for the care and attention that they have given to the line-by-line scrutiny of the Bill.
Richard Burgon
I echo the sentiments expressed by the Minister. I thank you, Mr Brady, and Mr Wilson, the co-Chair of the Committee, for your chairmanship. I thank the Clerks and the staff. I thank the Minister for her patience and courtesy and for the detailed responses she has given throughout our proceedings. I also thank my hon. Friends and all members of the Committee. We have no objection to the Bill being reported to the House.
Question put and agreed to.
Bill, as amended, accordingly to be reported.
Enterprise Bill [ Lords ] (Fifth 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 Chair
Good morning, everyone. I hope that colleagues had a good half term.
Clauses 22 to 24 ordered to stand part of the Bill.
Clause 25
Disclosure of HMRC information in connection with non-domestic rating
Kevin Brennan (Cardiff West) (Lab)
I beg to move amendment 95, in clause 25, page 41, line 21, leave out from “to” to end of the subsection and insert—
“(a) a qualifying person for a qualifying purpose;
(b) a ratepayer for a hereditament.”
(1A) Information disclosed under subsection (1)(b) may—
(a) be disclosed for the purpose of providing the ratepayer with all information used to assist determination of the valuation of any hereditament for which the ratepayer is responsible for the non-domestic rating liability, and may be retained and used for that purpose, and
(b) include information relating to hereditaments not owned by that ratepayer.”
The Chair
With this it will be convenient to discuss the following:
Amendment 100, in clause 25, page 41, line 22, at end insert—
“( ) Regulations shall make provision for the disclosure of information as to the basis of valuation for a hereditament or class of hereditaments sufficient for an estimate to be made of the prospective non-domestic rates yield in connection with a Business Improvement District Scheme.”
Amendment 96, in clause 25, page 41, line 33, at end insert—
‘( ) an interested person for the purposes of an appeal against an assessment in the rating list;”
Amendment 97, in clause 25, page 42, line 1, at end insert—
“including purposes connected with an appeal against an assessment in the rating list”
Amendment 98, in clause 25, page 42, line 10, at end insert—
““interested person” shall have the same meaning as for the appeal regulations relating to appeals to the Valuation Tribunal for England in force from time to time.”
Kevin Brennan
Excitement mounts as we enter the third day of our proceedings and turn to part 6 of the Bill and amendments to clause 25. The common theme of the amendments is exploring the reform of the unwieldy nature of business rates and business rate appeals. How, without compromising fair access to justice, do we discourage appeals that have no chance of getting through and that may clog up the system? I will briefly go through the amendments in this group and I will make some more general points in the clause stand part debate.
The amendments are concerned with the information held by the valuation office and whether that information should be made available to parties that have a genuine interest, namely those whose property is being rated; hence amendments 95, 96, 97 and 98. The amendments would allow ratepayers to seek professional advice, armed with all the relevant facts and figures held by the valuation office. The Government have held a consultation, which started in late October, on the issue of information exchange between ratepayers and the valuation office. Will the Minister enlighten the Committee on the results of that consultation in relation to the group of amendments under discussion?
Amendment 100 covers the access to valuation office information for the billing authority on issues to do with business improvement districts. The local authority needs the information to judge the likely rate yield for a business improvement district in its authority area. In the Lords, Baroness Neville-Rolfe said that she was not aware of any rating issues involving business improvement districts or of any concerns about a lack of information. However, if that information is not commercially sensitive, why not make access to the information available anyway? That would allow a ballpark figure for a potential business improvement district bid to be known up front and could promote the take-up of future bids. I would be grateful for the Minister’s response on that.
We understand that the valuation office has a duty to respect commercial confidentiality and to protect the privacy of businesses that have supplied information in good faith. Although we understand the need to respect commercial confidentiality, there must be compromise when limited access to key information held by the valuation office is made available to ratepayers and billing authorities to allow them to fulfil their duties as businesses and public sector organisations. I am interested to hear the Minister’s response.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
I will deal with amendments 95 to 98, if I may. The Valuation Office Agency collects and holds commercially sensitive data from ratepayers, which it has a legal duty to protect. We understand the need for transparency to enable informed and well-founded rates appeals, but our recent consultation on rates appeals reform under the Bill proposed a check, challenge and appeal system that ensures that ratepayers will get more and better information earlier in the appeals process, while protecting sensitive information from excessive disclosure.
The amendments propose far greater disclosure of information and offer no protection to the ratepayer who provides that sensitive information, which is key to a successful valuation process. Although I understand why the amendments have been tabled, I firmly state that they are disproportionate and do not strike the correct balance between openness and the duty and need to protect privacy.
On amendment 100, I have some experience of BIDs. I do not know whether other Members have experience of them in their constituencies, but I had a BID in mine that did not work out. At the completion of the five-year tenure, the businesses—it should always be the businesses—voted not to have a BID anymore and, properly, have gone down a different route. I know that BIDs can be hugely successful; I have been told by my right hon. Friend the Member for Loughborough (Nicky Morgan) that the BID in her constituency works extremely well. Some are good and some are bad.
The proposals in amendment 100 are not needed and I am not aware of any evidence of anyone having said that they are a good idea. The amendment would require the information underlying valuations to be disclosed to the BID, and I do not think that that is based on any practical need. As we know, BIDs set their levies and collect from businesses based on rateable value information from the local authority that in effect operates the BID and collects the levies. We are not aware that the BIDs want any more information on valuation lists than they already have as they go about their business of setting levies.
The review is primarily within the domain of the Treasury, and I am sure we all look forward, the consultation having concluded, to the Chancellor making any such announcements on reviews as he sees fit and proper in his Budget speech. My views are widely known: I very much hope that someone’s rates will no longer go up if they do the right thing and invest in new plant and machinery. That seems perverse, and those of us in the Department for Business, Innovation and Skills continue to make representations to the Chancellor. As Members would expect from our exceedingly good Chancellor of the Exchequer, he is always willing to listen. I am also confident, based on his outstanding track record, that he will, as ever, be on the side of business, as we on the Government Benches always are.
Kevin Brennan
I thank the Minister for her response. I advise her not to have that extra Weetabix before our Committee in future; she needs to pace herself a bit before she reaches her red meat perorations in Committee.
I obviously agree with the Minister’s point about plant and machinery. She knows that Her Majesty’s Opposition completely agree with that idea, which could be of particular benefit to our steel industry; as we all know, it badly needs that kind of support. I hope we will have opportunities in the near future to press the issue further in Parliament and to discuss our steel industry, its future and the need for the Government to do more to support it. The Minister is very persuasive and influential, so I am totally confident that the Chancellor will announce those exemptions for plant and machinery in the Budget.
The Minister has just said that she is very strongly lobbying the Chancellor—whom she described as “listening”—for this exemption, which she sees as absolutely necessary to business, particularly to industries such as the steel industry. I will put my faith in the Minister as far as that is concerned, and I will not press these amendments to a vote today. I note that the Minister has said on the record how strongly she is lobbying for this exemption on plant and machinery, and I offer her my support on that. I am confident that there will be a result from the Government because it is simply common sense to do what the Minister said.
I take on board the Minister’s point about BIDs. That was a probing amendment, and it was useful to hear her views on the variable forms of BIDs and the fact that they can work in some cases, but do not work so well in others. It is worth the Government having on their radar the fact that these sorts of issues around rating could be quite important for BIDs. I note what the Minister said about the broader issues of the consultation, not only the issue of plant and machinery. We can expect to hear from the Chancellor in his Budget statement as to the outcome of that consultation, which Baroness Neville-Rolfe mentioned in the other place. We will obviously be listening very carefully to what the Chancellor has to say when the time comes. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Kevin Brennan
Clause 25 is about the disclosure of information by HMRC in relation to non-domestic rates. It is fairly generally agreed that the business rates system is broken, and probably has been for some time. It needs significant reform. There are an estimated 300,000 appeals in the system, and back in 2013 the Chancellor promised to deal with that backlog.
Businesses need a much better understanding of how their rates are calculated and to be able to be confident that they are paying the correct amount of tax, so that appeals are much less common than they are currently. There is probably broad agreement on that across the House. If businesses had more access to the information, they would be less likely to appeal. It would save time, effort and money all around. A more efficient, fairer and reformed business rates system would enhance the enterprise environment, which is, after all, the purpose of the Bill.
The actual workings and calculation of how the valuation office arrives at its conclusions are not generally available to businesses. The Department for Communities and Local Government and the valuation office have maintained that the information is commercially confidential, and businesses’ concerns about the process are very well known. Without access to valuation office information, ratepayers cannot have the confidence that their bill is absolutely correct.
A three-stage process is currently in place, which is overly long. It can take nearly three years before even the first two stages of the process are concluded. That sort of delay harms businesses’ cash flow. Under this system, the onus is on the business to prove, with evidence, that the bill is wrong, but they have very limited access to that information. There is no obligation on the valuation office to prove that the information is correct. In other words, in this system the valuation office is both judge and jury in appeal cases, and the appellant has no right to see the evidence used to assess their case.
Valuation tribunal hearings for England will now no longer be free. That represents an additional burden on businesses. Tribunals will listen only to original evidence submitted at the time of the appeal. By the time everything is determined, that evidence could be nearly three years old, as I said earlier. If any new evidence comes to light in the intervening three years, it will be deemed inadmissible. That applies both to the valuation office and to the appellant. It is also proposed that there will no longer be a right of appeal to the upper tribunal on matters other than points of law.
In this system, the valuation office has the monopoly on knowledge and power in terms of business rates and business rates appeals. Those concerns were all raised in the other place when the Bill was discussed there. Another concern was that the proposed challenges to the business rates appeal system will shift the burden of proof even further from the valuation office, which has access to all the relevant information, to the ratepayer, who has no access to it. Will the Minister accept that as a fair assessment of the changes being made?
Checking assessed values will likely become more costly and time-consuming for business. The burden will fall especially on SMEs, which will become increasingly susceptible to the activities of unscrupulous rating advisers. Is it acceptable for the state to impose a significant tax on businesses without any obligation to justify the derivation of that tax liability? I cannot think of any other tax that can be levied where the taxpayer does not understand in detail the basis on which the tax man or woman has calculated the tax due.
The valuation office is currently willing to share rental evidence as part of the procedures leading to a valuation tribunal hearing. Is there any reason why, in principle, that sharing could not be undertaken during the initial check stages? Surely that would make much more sense. The current system forces businesses to overcome many hurdles before they can access that limited information. How do the Government respond to the concerns raised by businesses that they are being given extra burdens rather than relieved of them?
Anna Soubry
I will speak directly to clause 25 and the reasons why I urge everyone to vote for it to stand part of the Bill. Clause 25 removes a major barrier to the efficient system that we all want. The Valuation Office Agency collects information about taxpayers and their properties. That may include plans of a property, details of property use and occupiers’ names. By virtue of the Commissioners for Revenue and Customs Act 2005, the VOA may be prevented from sharing certain information with local authorities, which can result in the same property being inspected by both the local authority and the VOA. Clause 25 reduces the burdens for business while protecting taxpayers’ information by creating a gateway for the exchange of information between the VOA and local authorities.
Clause 25 inserts new sections into the Local Government Finance Act 1988. New section 63A allows the VOA to share information with local government for business rates purposes, and new section 63B ensures that taxpayers’ information is safeguarded, with enforcement penalties for wrongful disclosure of information. New section 63C exempts the information from the Freedom of Information Act 2000, which is consistent with the Commissioners for Revenue and Customs Act 2005. In short, clause 25 will begin to reduce the burden on our businesses, and will make the system better. I am not pretending that it is perfect, but it will certainly make things considerably better.
Question put and agreed to.
Clause 25 accordingly ordered to stand part of the Bill.
Clause 26
Alteration of non-domestic rating lists
Amendment made: 10, in clause 26, page 43, line 31, after “English list” insert “or a Welsh list”.—(Anna Soubry.)
This amendment and amendments 11 to 15 extend the amendments made by clause 26 to section 55 of the Local Government and Finance Act 1988, which currently apply to England only, so that the Welsh Ministers have the same power by regulations to make provision in relation to proposals to alter local or central non-domestic rating lists for Wales.
Kevin Brennan
I beg to move amendment 99, in clause 26, page 43, line 41, at end insert—
“( ) provision for valuation officers to provide such information as to the basis of an assessment to alter or enter a rating assessment in the rating list as shall be sufficient for the ratepayer to understand the underlying valuation evidence;”
The Chair
With this it will be convenient to discuss the following:
Amendment 101, in clause 26, page 43, line 45, at end insert—
“(d) provision for a separate procedure for hereditaments with a rateable value below any threshold set out in regulations;
(e) performance standards for the Valuation Office of Her Majesty’s Revenue and Customs and the Valuation Tribunal;
(f) provision for a right to appeal to the Valuation Tribunal if the valuation officer has not given notice of their decision to the person making a proposal for the alteration of the list within 6 months of the proposal being made;
(g) a requirement that the Valuation Tribunal must determine any appeal submitted to it within 12 months of it being made, or within such extended period as may be agreed upon in writing between the appellant and Tribunal.”
Amendment 102, in clause 26, page 44, leave out lines 23 to 25.
Amendment 130, in clause 26, page 44, line 25, at end insert—
“(e) about the parties to be included in the appeal, including billing authorities.”
This amendment would provide for provision to be made in regulations about participation of billing authorities in the appeals process.
New clause 29—Alternative dispute resolution: appeals in relation to non-domestic rating list—
“The Secretary of State may by regulation make provision for a scheme of alternative dispute resolution for the purposes of any appeal against an assessment in the non-domestic rating list.”
New clause 30—Environmental considerations—
“The Secretary of State shall make provision for a scheme of exclusion from any assessment in the 2017 non-domestic rating list or thereafter of an item of plant or machinery required wholly or mainly by virtue of environmental or health and safety legislation and which does not of itself increase the market value or profitability of the hereditament.”
I think that the Opposition were still thinking about whether they wanted to refer to new clause 31 as part of this group.
Kevin Brennan
We will think about new clause 31, although my understanding was that we could not refer to it in this group. In any case, I will refer to the group before us. We are due to discuss new clause 31 on Thursday, and I might make passing reference to it.
Amendment 99 would require valuation officers to provide enough information for businesses to make sense of the underlying reason for their valuation. Amendment 101 is about trying to improve the service of the valuation office by introducing performance standards, appeals where decisions are not timely and time limits on determining appeals, and I would be grateful if the Minister could outline her response to those proposals.
Amendment 102 also deals with appeals. The Bill proposes that a charge be made to a business that puts forward an appeal. This is an enterprise Bill; to add an additional expense to businesses to access a review or appeal at this point in the economic cycle does not seem to be the most enterprising of proposals. As the Minister knows, the international and national markets are volatile at the moment and we are not yet out of the economic danger zone. Placing additional cost on businesses is a threat to recovery and to existing businesses and new start-ups. Why are the Government placing an additional cost burden on business in what they deem to be an enterprise Bill? Amendment 130 includes the billing authority in the appeals process, which seems to be a sensible suggestion.
New clause 29 makes provision for an alternative dispute resolution procedure to cover the work of the valuation office. Does the Minister agree that this is a reasonable proposal? Has any progress been made on the issue since it was raised in the other place, where there was some discussion about an alternative dispute resolution procedure? If the Government are still arguing that existing powers already provide for matters to be refereed for arbitration and that the addition of more processes would complicate and slow down the system, will the Minister agree to a review involving key stakeholders a year or two after implementation, with a view towards full ombudsman status if there are still problems around dispute resolution?
New clause 30 is about plant and machinery that, in this instance, is required for health and safety or environmental reasons. In the Lords Baroness Neville-Rolfe said that the Government were conducting a review of business rates, as we discussed earlier, including the rating of plant and machinery and the roles of reliefs and exemptions. She said that the business rates review was to report by the end of last year. With reference to what we said earlier, will the Minister confirm that the review has concluded and is on the Chancellor’s desk? Will she also tell the Committee whether the review will cover our proposal in the new clause, namely plant and machinery specifically required for health and safety or environmental reasons?
Anna Soubry
I do not know whether the hon. Gentleman will press the amendment to a vote. Although he is right that there is nothing wrong in tabling amendments in order to probe and see whether there areas where we agree, there is a real danger that these amendments would undermine the new appeals process by removing features: for example, the power to charge a fee for appeals, the flexibility for timescales to be determined as the new system beds in and the ability to respond quickly to address performance issues.
I am helpfully assisted, as ever, by my hon. Friend the Member for Great Yarmouth, who is also the Minister in the Department for Communities and Local Government, who makes a clear point about why we are so firm in our desire to make these reforms in relation to charging. It is to ensure that people are dissuaded from making spurious claims and that the whole appeal system concentrates on genuine appeals that must be heard. Unfortunately, there is evidence that the system is effectively being somewhat abused. It is also terribly important to add that we have consulted on proposals and discussed them with business groups, and that we continue to take a collaborative approach as we draw up the draft regulations, on which we will consult.
Kevin Brennan
I think that we all accept that we must reduce the number of appeals within the system, but is it not the case—this was the point behind some of our previous amendments—that the current system almost compels people to appeal due to the lack of information available to businesses? In charging fees before reforming that aspect of the system, the Government might be accused of putting the cart before the horse.
Anna Soubry
The danger, as the evidence suggests, is that businesses will just give it a punt. They will be encouraged by people out there saying, “We can reduce your bills if you let us appeal,” and will think, “I’ve got nothing to lose by doing this, so I’ll have a go.” That is one reason why the system at the moment is indisputably clogged up. I can understand why businesses will say that, but it is not the right way to approach any appeal, in whatever field.
Our other concern about amendment 101 is that it will interfere wrongly with the independence of the judicial body. The amendments will introduce unnecessary and unwanted complications through an alternative dispute resolution mechanism, greater involvement of billing authorities and inappropriate sharing of sensitive ratepayer information, and will pre-empt the outcome of the business rates review by addressing unrelated issues in appeals.
In summary, we have struck the right balance. We are making the necessary reforms, and part of that is ensuring that the appeals that go forward have some substance. The changes will help address that. For those reasons, I oppose the amendments.
Kevin Brennan
I thank the Minister for her response. She is right that we are probing the Government’s thinking in our amendments. Not only is that appropriate, it is our duty as Her Majesty’s loyal Opposition. It is our duty to probe forensically and in detail, and to press her and the Government if necessary, because that is how we make better law.
The Minister rather dismissed amendment 101. I remind her that the amendment simply says that the valuation office should perform according to performance standards, which I had thought would receive a better response from her. She might have said that there is a better way to achieve performance standards, rather than simply dismissing the idea. Our amendment would hold the valuation office—a public body that determines people’s taxation—to better standards for the time that it takes to respond to appeals. It would set a time limit that is not inflexible and that could be varied if there were reasonable grounds for doing so, yet she chose not to respond to the reasonable points made in our amendment.
The Minister almost suggested that the amendment simply seeks to add bureaucratic burdens to the system. It does not. It seeks to bring fairness into the system, rebalancing it away from faceless bureaucrats determining people’s taxation on the grounds of information that businesses know nothing about and back towards businesses, which are not simply composed of feckless individuals who appeal against their taxation on a whimsical basis but are struggling to get by and face significant tax bills, with no idea how they have been determined. To dismiss it, as the Minister for Housing and Planning did in reported speech via the Minister, as simply being a process by which they have a punt is very unfair to many of those businesses, which are trying to understand whether the tax determination that they face is based on real evidence—evidence to which they have no access.
The Minister for Housing and Planning (Brandon Lewis)
I appreciate the hon. Gentleman’s generosity in giving way. Does he accept that the point we are making is that currently the vast majority of appeals make no change? That highlights the fact that there are businesses out there—having been in business myself, I remember experiencing this—that specialise in going round small businesses, saying, “For no-win, no-fee, we will put in a claim.” Those spurious claims are therefore being put in, and that prevents genuine businesses putting forward genuine claims and getting heard in a quick and efficient manner. The Bill is trying to deal with that by changing the system. I hope that the hon. Gentleman accepts that we are looking to help businesses that have a genuine claim.
Kevin Brennan
I absolutely accept that point and the spirit in which the Minister made his intervention. My point is that that is simply one part of the imbalance in the system. The other part is the lack of information available to businesses on how their business rates are determined. That is a real issue, and we should not just dismiss it simply as inappropriate in terms of commercial confidentiality. Many business organisations believe that more information could be made available to them on how their tax is determined. That would also act as an incentive for spurious appeals not to be made.
All we are arguing with our amendments is for that balance to be in place. I remind the Ministers and all colleagues that amendment 101 would introduce performance standards for the valuation office. We want appeals to be timely and some limit to be set on the amount of time that the valuation office can take on determining those appeals, with some flexibility where it is not possible to meet that time limit for very good reasons. I reiterate that the response to the amendment did not adequately deal with those perfectly reasonable proposals. The Government have not offered another way, other than to impose a fee, of improving the service to businesses provided by the valuation office. I cannot see how our proposals are unreasonable.
As I said at the outset, and being a reasonable person, I will not press the amendment to a vote, because I am all for our trying to work through the issues together, but it is important to put on record that there is a real concern in this area, and it is important that the Government are not seen to be complacent about it. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 11, in clause 26, page 44, line 5, leave out “Consolidated Fund” and insert “appropriate fund”.
This amendment and amendment 14 ensure that, where regulations under section 55 of the Local Government and Finance Act 1988 provide for valuation officers to impose financial penalties regarding the provision of false information in relation to a proposal to alter a Welsh list, the regulations must require the sums received to be paid into the Welsh Consolidated Fund.
Amendment 12, in clause 26, page 44, line 14, after “English list” and insert “or a Welsh list”.
See the explanatory statement for amendment 10.
Amendment 13, in clause 26, page 44, line 24, leave out “Consolidated Fund” and insert “appropriate fund”.
This amendment and amendment 14 enable regulations under section 55 of the Local Government and Finance Act 1988 to make provision about the payment of fees into the Welsh Consolidated Fund where the fees are paid by ratepayers in relation to appeals relating to proposals to alter a Welsh list.
Amendment 14, in clause 26, page 44, line 27, at end insert—
“( ) After subsection (7A) insert—
(7B) For the purposes of subsections (4B)(b) and (5A)(d) “the appropriate fund” means—
(a) where the provision made by virtue of subsection (4A)(c) or (5) is in relation to a proposal to alter an English list, the Consolidated Fund, and
(b) where the provision made by virtue of subsection (4A)(c) or (5) is in relation to a proposal to alter a Welsh list, the Welsh Consolidated Fund.””
See the explanatory statement for amendments 11 and 13.
Amendment 15, in clause 26, page 44, line 39, at end insert—
““Welsh list” means—
(a) a local non-domestic rating list that has to be compiled for a billing authority in Wales, or
(b) the central non-domestic rating list that has to be compiled for Wales.””
See the explanatory statement for amendment 10.
Amendment 16, in clause 26, page 44, line 47, leave out from “unless” to end of line 48 and insert “—
(a) where those regulations relate to a proposal to alter an English list, a draft of the instrument has been laid before and approved by a resolution of each House of Parliament;
(b) where those regulations relate to a proposal to alter a Welsh list, a draft of the instrument has been laid before and approved by a resolution of the National Assembly for Wales.”
This amendment and amendments 17 and 18 provide for regulations made by the Welsh Ministers under section 55 of the Local Government and Finance Act 1988 as amended by amendments 10 to 15 to be subject to procedure before the National Assembly for Wales equivalent to the procedure before Parliament which is required for corresponding regulations made by the Secretary of State under that section.
Amendment 17, in clause 26, page 45, line 2, leave out from “is” to end of line 3 and insert “—
(a) in the case of regulations relating to England, subject to annulment in pursuance of a resolution of either House of Parliament;
(b) in the case of regulations relating to Wales, subject to annulment in pursuance of a resolution of the National Assembly for Wales.”
See the explanatory statement for amendment 16.
Amendment 18, in clause 26, page 45, line 3, at end insert—
“(3G) In subsection (3E), “English list” and “Welsh list” have the same meaning as in section 55.”—(Anna Soubry.)
See the explanatory statement for amendment 16.
Clause 26, as amended, ordered to stand part of the Bill.
Clause 27
Allowable assistance under Industrial Development Act 1982
Question proposed, That the clause stand part of the Bill.
Kevin Brennan
We may well return to some matters relating to clause 27 if and when we get to new clauses later in our proceedings. We are making good progress this morning, so, who knows, we may well get there on Thursday. In the meantime, will the Minister outline, on the record and for the benefit of the Committee, why the Government believe that clause 27 is necessary?
Anna Soubry
The Industrial Development Act 1982 is 30 years old, and the Government are updating it to reflect economic developments. The clause amends the threshold before which a parliamentary resolution is needed to authorise financial support under section 8 of the 1982 Act. It increases the threshold from £10 million to £30 million, which is a reflection of inflation. A resolution of the House of Commons would still be required for projects over £30 million. It is a technical change, which will result in more efficient procedures to fund section 8 projects worth under £30 million. This would have removed the need for a resolution, for example, in 2013, when support for the start-up loan scheme was increased from £10 million to £15.5 million. I am not saying that that is a small amount of money—of course it is not—but it is in Government terms. It is simply a reflection of the fact that the provision of £10 million was made all those years ago and here we are in this day and age, when inflation has taken that threshold to £30 million. We say that this is a reasonable thing to do and does not take away power from Parliament that it already has.
Kevin Brennan
I thank the Minister for that explanation. It makes sense to update the limit after such a lengthy period and on that basis we do not intend to divide the Committee on clause stand part.
Question put and agreed to.
Clause 27 accordingly ordered to stand part of the Bill.
Clause 28
Grants etc towards electronic communications services and networks
Question proposed, That the clause stand part of the Bill.
Kevin Brennan
I should say from the outset that we also support this clause, but we would like clarification on how, and how often, the Minister expects these powers to be used. I would like to discuss that before we give the clause a fair sending-off. Ensuring adequate infrastructure provision is obviously a very important role of Government. To be slightly controversial—though it is not controversial with Opposition Members—this Government and its coalition predecessors do not have a good record when it comes to infrastructure in general and digital or communications infrastructure in particular. As this week’s leader in The Economist makes clear, investment in infrastructure is vital to stimulate the long-term health of the economy.
It might look as though this clause represents a “get out of jail free” card for Ministers as regards communications infrastructure. This week a businessman in the north-east told the North East chamber of commerce that he can see his house, with its 50 megabit connection, from his office window; but he has to go home to send important work emails because the business park he works in does not have decent enough broadband.
Ministers have handed hundreds of millions of pounds to BT to roll out what a well-functioning market would potentially have delivered anyway, leaving harder-to-reach communities behind. The result is that we have a superfast broadband roll-out programme that is fragmented and monopolistic and that will be bad for consumer choice, bad for the taxpayer, bad for competition and bad for investment. The Government seem to have realised this and triggered their own Back Benchers, in a classic move, to clamour for the break-up of BT after the Government handed it the monopoly in their bungled procurement programme. Will the Minister assure the Committee that they have learnt lessons from these mistakes about broadband? Are the powers contained in the clause just for Ministers to cover over their own record on broadband roll-out, or will they fit into some kind of strategy and long-term vision for communications infrastructure? Broadband Delivery UK and Ofcom have no plans for broadband roll-out to business parks, meaning that many are being left behind as the Government’s superslow broadband roll-out creeps out to residential areas. Will the powers in the clause be used to address what is becoming an increasing problem for firms based in business parks, and what else are the Government planning to do to sort that out?
We have also tabled new clauses that might be debated on Thursday. I hope that between now and then, Ministers will take a good look at them. If they are serious about tackling the issue, I hope that they will support the clauses when we come to discuss them.
Anna Soubry
If I may, I will speak specifically to the clause. If we were to stray into discussion of the successes—there have been many—of the Government’s programme to roll out superfast broadband and generally improve access for individuals at home and businesses in a digital age, we could be here for the rest of the morning. We do not mind debating such things, but this is neither the time nor the place to do so; a number of hon. Members, particularly on the Government Benches, might want to make all sorts of contributions to that debate based on their experience and that of their constituents.
We know that there are concerns and that much more needs to be done and will be done. Clause 28 is essentially one of the pieces of the jigsaw. The Industrial Development Act 1982, to which I have referred, is now more than 30 years old, and some parts need updating.
Bill Esterson (Sefton Central) (Lab)
The Minister wants to keep us on the clause, but it is actually very wide-ranging. On line 22, proposed new section 13A, “Improvement of electronic communications networks and services etc”, says:
“This section applies if it appears to the Secretary of State that adequate provision has not been made for an area in respect of electronic communications facilities.”
My hon. Friend the Member for Cardiff West gave an example, and I have numerous cases in my constituency, as do the Minister’s hon. Friends. If not now, when we will address some of those concerns? When will the Secretary of State take the powers given to him in the clause to improve broadband, whether for trade in this country or for the important international trade on which we rely to close the trade deficit and improve prosperity overall?
Anna Soubry
Sorry, Sir David; I was enjoying an interesting piece of information from my hon. Friend the Minister for Housing and Planning. He was telling me, by way of giving an example of the progress that this Government are making on addressing the problem—I am waiting for him to give me a nod before I use these words—that a deal has been struck with the Home Builders Federation that from now on, all new homes will include access to broadband. That is excellent news.
I think that some of us had begun to create the argument that there is nothing to prevent local authorities from making it a condition of granting planning permission, especially to new business estates, that proper access should be included to superfast broadband, mobile phones or whatever it may be. Even if they cannot make it a condition of planning permission—we all know how these things work and the sorts of discussion that developers have with local authorities—those things should absolutely be there. There is a growing feeling that in this modern age, digital technology, superfast broadband and what I call full-fat mobile phone technology should be treated as a fourth utility. If we are making some movement towards that—my hon. Friend the Minister for Housing and Planning might be able to update us—it would be a commendable move.
Brandon Lewis
I thought I would join the gang in mirroring the interventions from those on the Opposition Front Bench. I hope that my right hon. Friend will agree that it is good news that we announced a deal a couple of weeks ago between BT Openreach and the Home Builders Federation. Now, all builders putting in a planning application, particularly small and medium-sized builders, will be encouraged to notify BT. There is now a clear and simple system for them to ensure that every new home built can have access to superfast, or indeed infinity, broadband. All the details are available on the Department for Communities and Local Government website. I hope that my right hon. Friend will agree that it is a big step forward for people across the country who, as she rightly says, now see broadband as one of the most important utilities.
Anna Soubry
That is excellent news. I am sure that all of us will ensure that it is communicated all the way down to our local authorities.
Kevin Brennan
We are enjoying this subject; I think the Minister made a further policy announcement in saying that in future, the Government intended to make it a requirement of planning applications—
Kevin Brennan
I am sorry; I thought that when Ministers spoke in this place, they spoke on behalf of the Government. Is it the Government’s intention, given what the Minister said earlier, to make broadband part of a planning application? Can she clarify that for the Committee?
Anna Soubry
The hon. Gentleman has a remarkable ability to take what I would have thought was the most innocuous of statements and turn it into some sort of great Government policy announcement. He does not understand localism. He thinks that all power must vest here in Parliament, centrally in Whitehall, but one of the great joys of our Government is that we believe in devolving power down to local authorities. All I was saying was that as far as I know, there is nothing to prevent a local authority from making such a condition, whatever the development might be. That is the joy of localism: planning officers can look at an application and say, “Let’s make it a condition of this planning application that you provide access to superfast broadband.”
What is not to like about that? We do not need the heavy hand of Government for that to happen. Local authorities are to be wildly encouraged to use common sense so that they deliver to householders and businesses the tools that they need in a modern age. That is what I am saying, and I do not think that there is anything contentious about it. I did warn you, Sir David, that if we got into this debate we would be here all day.
Anna Soubry
But we are not going to be stuck on this clause all day. This clause is technical and will enable financial assistance to be granted to improve electronic communication networks and services. The power will not and should not be used to displace investment by industry.
Communications infrastructure investment, as we know, continues to grow. I am happy to put it on the record that I have not enjoyed the best of experiences with BT. I was due to meet BT representatives one day, and on that very day BT decided to disconnect my constituency telephone. You couldn’t make it up.
Anna Soubry
I hope so. It was not because IPSA had failed to pay my bill; it was because my team had, quite reasonably, asked BT to improve the internet connection, which many of us know is not always the finest. For some reason—BT still has not explained why—in the attempt to improve my internet connection, it disconnected all the phones. Even more bizarrely, although it had taken about five seconds to disconnect them, it took about three days to reconnect them.
Anyway, you see how we drift, Sir David. However, my dear friends at BT are investing £3 billion in deploying fibre broadband. Virgin is investing £3 billion to extend its network footprint from 13 million to 17 million homes by 2020. We know that we must do more, but those are the huge advances being made. Investment by non-major operators such as UK Broadband, Gigaclear, CityFibre and Hyperoptic also plays a valuable role.
The clause is effectively a backstop. It gives Government the option to provide targeted support where it is most needed. That is why I hope that all hon. Members will not hesitate to support it.
Kevin Brennan
That was a surprisingly enjoyable exchange. I think that the Minister both overestimates and underestimates her power. She seems to think that when she says something as a Minister of the Crown, it does not have force. She is here, radiant with the lawful power of her office, so she should not underestimate the effect of her words, particularly in this kind of forum, even when she is expressing personal opinion rather than speaking in her role as Minister. Perhaps the Minister also sometimes overestimates her power in trying to decide whether we are venturing too widely on a clause. Of course, you have the authority and power to decide that, Sir David, and you would quickly call us to order if we were doing so.
This has, however, been a useful exchange. On that basis, having put our points on the record and with the possibility of extending this discussion when we get to the new clauses later on, I do not intend to divide the House over clause stand part.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Clause 29
UK Government Investments Limited
Question proposed, That the clause stand part of the Bill.
Kevin Brennan
The Government spokesperson in the other place said that the clause
“is an administrative measure to enable the Shareholder Executive’s ongoing work to continue after its functions transition to UKGI and ensures that a specific funding power is in place”.—[Official Report, House of Lords, 30 November 2015; Vol. 767, c. 937.]
A number of questions were raised in the Lords, and I want to give the Minister an opportunity to update the Committee on some of those issues. Will she give us some idea about the combined costs of UK Government Investments and whether there are cost savings as a result of merging the two entities under the clause? Will she give us any information about the status of civil servants if they are recruited to the new body? Will they become agency employees or secondees to the new organisation?
Will all the employees in every part of UKGI be subject to the proposed public sector exit payments that come later in the Bill? I assume that the restrictions under those public sector payments may well apply to the new employees of UKGI, but it would be helpful if the Minister confirmed that. Will guaranteed bonuses be offered to the staff? For higher earners in Government, that is the traditional method of incentive and is currently outside the public sector exit payments provision.
If the permanent secretary to the Treasury is on the board of the new body, how will that role be squared with their role as an accounting officer, given that they will have duties to the company under company law? Is there a conflict of interest, and what will the relationship to Ministers be?
On improving the service to customer departments, what are the current identified weaknesses and how will these arrangements help to improve that? How are the Government going to evaluate the new body’s performance in relation to improving the service to its customer departments? What independent body will be charged with evaluating whether it has provided a better service to those customer departments?
I would also be interested to know whether this arrangement has any implications—this is reasonably topical at the moment, given our recent discussions—relating to the requirements of state aid rules and Brussels? Do we need to be aware of any particular interplay here? What would the role of UKGI be in relation to the Department of Energy and Climate Change? That Department is responsible for environmental improvements, so how will it relate to UK Government Investments Limited? Do the Government have any intentions about—or have they given any thought to or had any discussions on—the possible privatisation of the company at some future date? Is that part of the Government’s thinking in setting up the body under the Act? I look forward to the Minister’s response.
Anna Soubry
I may not be able to answer all the questions that the hon. Gentleman has asked, but I assure you, Sir David, that I will write to him with any answers that I am not able to give today.
Clause 29 ensures that UK Government Investments Limited can carry out its important work, which is managing taxpayer stakes in businesses, running corporate and financial asset sales and providing corporate finance advice across government. The creation of UKGI will bring together the Shareholder Executive from the Department for Business, Innovation and Skills and UK Financial Investments Limited from the Treasury into a single company. I pay tribute to all the members of ShEx whom I have met. It has been a pleasure to work with them. I value the advice they have given me; I know I speak for all Ministers who have come into contact with them. I do not know United Kingdom Financial Investments Limited as well, but I know the Shareholder Executive and it has served me extremely well. I just wanted to record that.
This coming together with respect to Government investments—I do not know what one would actually call it, as it would not be a company; it is indeed a body—will provide corporate finance services across Government. The decision to establish it as an arm’s length company will provide it with additional independence and a clear corporate governance structure. Again, it needs to be stressed that ShEx has a level of independence that means that one trusts the advice given.
ShEx operators will transfer out of BIS to UKGI, and ShEx will be rebranded as UKGI. It will continue to offer impartial advice directly to the Secretary of State and to the permanent secretary of the Department. That point is worth mentioning: the advice is given not just to Ministers but to the permanent secretary and civil servants throughout the Department.
From 1 April, UKFI will become a subsidiary company of UKGI, continuing to operate as it currently does until, in time, it fully merges with UKGI. The Chancellor will be the Minister responsible for the company and will bring together expertise from the private sector with that of civil servants. The Government intend that UKGI will be directly funded by its parent Department, HM Treasury. That will enable ongoing ShEx work to continue after it becomes part of UKGI.
UKGI’s arm’s length status as a company means that it cannot be directly funded on a continuing basis as an element of administrative expenditure without a specific power. The clause is in line with HM Treasury’s manual, “Managing public money”, which requires specific statutory authority for significant items of ongoing Government expenditure. Given that the activity and staffing levels of ShEx and UKFI will continue in UKGI, costs for the company are not expected to depart greatly from the current costs, which are about £14 million combined. Of course that may vary, depending on the work that UKGI is asked to perform.
I am confident that I have not answered all the questions, and I apologise for that, but I will write with all the answers.
Kevin Brennan
I thank the Minister, and I appreciate that I asked a lot of questions. I am perfectly content for her to provide us with the answers to all of the unanswered ones via correspondence. I think it is right that the body should be part of the Treasury and it is right to legislate through the clause to give it authority. We will support the clause on that basis.
It would be useful if the Minister answered one of my questions if she can, although if she cannot I accept that. Quite soon we will discuss the UK Green Investment Bank, a Government-created company that has been put out to privatisation. My question is whether there is any intention—I do not think there should be—
Anna Soubry
I have been helpfully advised. I did not think there were any plans for privatisation, and I am more than happy to confirm that. Perhaps I can also add that there are no guaranteed bonuses—they are all performance-based. Any secondments would be on the same terms as the Home Department.
Kevin Brennan
Through that intervention the Minister has helpfully shortened the letter that she will have to write to the Committee. With her assurance on the privatisation question, I am happy, at this point, with the promise of correspondence from the Minister, to allow clause stand part to proceed without any intervention on our part.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Clause 30
Disposal of Crown’s shares in UK Green Investment Bank company
Mary Creagh (Wakefield) (Lab)
I beg to move amendment 129, in clause 30, page 48, line 2, at end insert—
“6B Report on remuneration of chair, non-executive directors and executive team
(1) For each year following a disposal of shares held by the Crown in a UK Green Investment Bank company the Secretary of State must lay before Parliament a report on the remuneration of the company’s chair, non-executive directors and executive team by the company.
(2) The report shall include a statement of the framework or broad policy for the remuneration of the above individuals.
(3) The report shall include the value of the following, where applicable, in respect of each individual—
(a) salary or fee;
(b) pension;
(c) other cash or non-cash benefits, including bonus or performance-related payments; and
(d) shareholdings in a UK Green Investment Bank company.”
This amendment would require, following a disposal of shares in a UK Green Investment Bank company, that the Secretary of State report annually on the remuneration of the Chair, non-executive directors and Executive Team of the company.
The UK Green Investment Bank began operating in 2012 as a fully Government-owned bank. It purpose is to invest in viable green infrastructure projects that would not otherwise be able to obtain funding due to market failure, or to stimulate the market. It has invested in 58 projects with a total value of more than £10 billion.
In June 2015, the Government announced plans to privatise the Green Investment Bank and this Bill, introduced in the House of Lords, is the legislative means to do that. The Government’s primary goal is for the Green Investment Bank to be reclassified as a private sector organisation, so that its finance will not contribute to public sector net debt. To achieve that, the Government believe that they must remove reference to the Green Investment Bank’s green purposes and identity from the Enterprise and Regulatory Reform Act 2013.
I am sure that the Minister will argue that a privatised Green Investment Bank will have access to a greater volume of capital and a larger range of sectors. I have just come from a meeting with the Aldersgate Group about the European Commission’s circular economy package, which was published on 2 December. That is a whole new area in which the Green Investment Bank could invest over the next five years and which is set to create 90,000 new green jobs in the UK economy.
The Green Investment Bank supports the move, and the Government have drawn on that support as a primary motivation for their plans to proceed. The Environmental Audit Committee heard in an inquiry that concluded just before Christmas that the Government had not undertaken enough consultation on the decision to privatise the Green Investment Bank. That is often contrasted with the detailed consultation that went into the original formation of the bank, from which, the Committee was told, privatisation so soon after creation was not discussed. The EAC also heard that the Government had not presented enough evidence for privatisation, or considered a wide enough range of alternatives to a sell-off. There are obviously many different ways in which a Government can decide to privatise or part-privatise their assets.
In its response to the EAC report, the Government said that their announcement to privatise had been followed up
“by substantial engagement with stakeholders and the media to explain the case”
for privatisation. The Government also claimed that they had undertaken unpublished market testing over the course of two years. I am interested to hear from the Minister whether she would be willing to publish that market testing.
The Government said that they would not publish an impact assessment because there were no regulatory or significant cost impacts of the sale of the Green Investment Bank or changes to its pre-existing policy goals. We will talk about that later when we come to clause 32.
So the only robust consultation that the Government can point to, if they do not publish the market testing, is that with the Green Investment Bank itself. The Government also relied heavily on the support of the Green Investment Bank and its executives for privatisation in evidence and in response to the Committee.
The amendment that I and my right hon. Friend the Member for Don Valley have tabled invites the Government to commit to providing information to Parliament on the remuneration of the Green Investment Bank’s senior management and board after privatisation. After all, what could they possibly have to hide?
The information set out in our amendment is currently provided in the Green Investment Bank’s annual report. How much will those in charge of the Green Investment Bank stand to gain personally from the privatisation process? How objective can their views be, if they are to gain personally from the bank’s privatisation?
This amendment follows a long series of difficulties with banks that have, by necessity, been taken into public ownership and in which large numbers of senior executives have continued to receive very large bonuses. At a time when people in my constituency have barely seen their pay rise over the past seven years, we do not want employees of a state-owned bank suddenly having a huge payday from the privatisation of this bank.
The Government will continue to act as a minority shareholder in the short term. The Environmental Audit Committee wants that minority shareholding to continue in the longer term, but the Government have implied that that will not happen. As such a shareholder—for the time being—will the Government continue to be represented on the remuneration committees of the privatised banks? As a shareholder, what are their current expectations for remuneration? Does the Minister envisage any change to those expectations post privatisation? With that, I commend the amendment to the Committee.
Caroline Flint (Don Valley) (Lab)
It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Wakefield on tabling the amendment and thank her for asking me to put my name to it. I also congratulate my hon. Friend on becoming Chair of the Environmental Audit Committee. I know that she will use all her talents and her tenacious approach to delving into the detail of policy areas to ensure that the Government are held to account by her colleagues from all parties on the Committee.
As my hon. Friend said, it is interesting that the Green Investment Bank drew cross-party support when it was established. It is important to understand the context. We are in the process of an energy industrial revolution in terms of technology for reducing the amount of energy we use and the different ways we can create energy in future. Not only can we make our planet safer but we can be imaginative and creative about the job prospects that the sector can bring for those in work today and for our children in the future. Something like 60% of the infrastructure projects that the Government are looking to support are energy-related, which gives a sense of the enormity of the process.
Why was the Green Investment Bank so important? As my hon. Friend said, it was an acknowledgement that sometimes the market does not deliver what we want and that, although not choosing winners, Governments can play a role in encouraging innovation. Take the defence sector, pharmaceuticals or academic research—there have been countless examples over many years and under many different types of Government of where the public sector, by which I mean the Government, has, by putting some resource into innovation and by understanding some of the related risk, led the way to some profound things that today we take for granted. For example, if it was not for the Apollo space missions way back then, we would not have Teflon in everyday use. I am not saying that we were behind all that, but it is an example of where creativity made a difference. Sometimes it is only Governments and Administrations that can get behind those sorts of projects.
The Green Investment Bank was set up to acknowledge the fact that, although there already has been innovation in the wider marketplace—for example, nuclear and other forms of technology—in a number of other areas it has been difficult to get the finance and to get people to take on the risk involved in looking at some of the more novel projects.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
My right hon. Friend is making a powerful speech. We should always bear in mind the fact that the Government have the ability to make an impact not only in supporting innovative technologies that perhaps would not get off the ground otherwise but in supporting regions and regional economies that would not otherwise be able to take advantage of certain opportunities. I will of course always mention my region, the north-east, which has led on some innovations in the low-carbon technology sector. It probably would not have been as successful as it has been without support such as that offered by the Green Investment Bank.
Caroline Flint
I thank my hon. Friend for her intervention. Having spent the past five years as a shadow Energy and Climate Change Minister, I find it most encouraging that, when we look at the investment going into these projects we can see that, despite the recession and the economic problems we have had for a number of years, green energy is one of the few sectors that has bucked the trend. More pertinently, when we look at the spread of investment, the research that goes into some of these projects and the jobs coming out of them, it is one of the few sectors where we can really talk about a one nation policy. Opportunities in the sector are far more open to all regions and countries of the UK than some other sectors such as finance, which is why it is such an interesting area to think about today and for the future. How do we protect those jobs for the future?
The Labour party has been at the fore, as the last Labour Government passed the Climate Change Act 2008 with all-party support. I think that only five Members of Parliament voted against it. I am not sure, Sir David, how you voted on that one. [Laughter.] Actually, I cannot quite remember whether you voted against it or not. Anyway, although there have been a number of wobbles in the past five years on a number of different aspects of green technology such as onshore wind farms and what have you, this country is lucky, compared to other countries, that there is political consensus on this important issue.
This is about saving the planet, but I am a bit of a meat and potatoes sort of person and this is also about creating the jobs and skills of the future. In that way, the issue is much bigger than for Friends of the Earth and Greenpeace. It becomes an everyday issue for everyday communities. In my part of the country in Yorkshire, I see what is happening on the east coast in Hull and in Grimsby, in my own area, and over in Sheffield regarding nuclear development, I can see how this picture comes together. The Government are yet to promote the story in the way that it deserves.
What is important about the Green Investment Bank and accountability is that, although it was recognised that investment came in from different sources and that the sector bucked the investment trend as the recession hit, it was also accepted that sometimes more novel and complex projects need a little bit of a push. That is why the Green Investment Bank was there—to focus on more novel and complex projects that struggle to find funding and involve a bit of risk. Sometimes Governments are a little too risk averse on different public policy fronts, and there is a balance to be struck.
As my hon. Friend the Member for Wakefield said, to date just about £2.3 billion of public money has gone into 60 projects with a total value of more than £10 billion. The Green Investment Bank has done really well. I will not make partisan points about it just because it was set up under the previous Government. However, the concern has been that, in a move to privatisation, its focus on the more novel, innovative areas will actually decline and it will just become a run-of-the-mill funding organisation for projects that, to be honest, are easier and less complex and for which funding can be sought in other areas of the marketplace. It will then be focused on issues that maximise shareholder return. Maybe in five or 10 years’ time, we could have had this discussion but, given the infancy of this project and, despite its youth, the good work that it has been doing, it is a shame that the Government have taken this route.
There has already been a discussion in the other place about how the green elements should be privatised. I am afraid that I am old enough to remember the privatisation of things such as our rail and energy services. As I used to say when I was doing the shadow job, if only Margaret Thatcher could have seen how some of these energy companies have behaved towards their customers in the past few years. I do not think that that was her vision when she set out to privatise the energy sector. In transport, energy and water the financial payback packages for those at the top of organisations seem over the top given the public service performances of some of those companies. These areas are of huge importance to the public, which is why I support the amendment. As my hon. Friend the Member for Wakefield said, everything that we are asking for in this amendment is currently covered in the annual reports of the Green Investment Bank remuneration committee.
As the UK Government would for now remain a shareholder, they would have influence over the policy of this privatised bank. The Government have already conceded that they do have a role to play in protecting the greener aspects of this bank and supporting innovation in this sector. It would be in the public interest and would aid transparency to continue the reports on how people are paid—whether the chair, the non-executive directors or the executive team—so that we can set how they perform against how they are rewarded. That is a safeguard and it is in the public interest. I cannot for the life of me see why anyone would object to this, and I therefore support this amendment.
Hannah Bardell (Livingston) (SNP)
It is a pleasure to serve under your chairmanship once again, Sir David. I begin by stating that we support the amendment. We support its intentions and we believe that transparency in any financial organisation is to be welcomed, especially when it is at the level of the executive of a large corporation. I pay tribute to and congratulate the hon. Member for Wakefield on her election as the Chair of the Environmental Audit Committee, and we look forward to working with her. The right hon. Member for Don Valley made a powerful speech and we agree with much of what she said.
I have had discussions and engagement with the Green Investment Bank, and we would like to hear the Minister give guarantees today that it will remain headquartered in Edinburgh. That is very important to us. We would also like to hear that the Government will retain their golden share and their interest. We would also like confirmation that the bank will seek to have responsible shareholders. As the right hon. Lady said, it is so important that whoever invests in this organisation keeps its green objectives and its intentions at the heart of what it does.
As the right hon. Lady said, we are at a tipping point in terms of energy development, technology and innovation. We have a low oil price that is providing significant challenges. In Scotland we have seen the removal of wind farm subsidies, and the carbon capture project competition was taken away. These have been huge disappointments.
We hope that the projects and investment that have already been undertaken by the Green Investment Bank will continue. Some of them are key to the development of green technologies in Scotland. If you will indulge me, Sir David, I will give a list of a few of these projects. There is a £2 million investment in a sewage heat recovery scheme with an installation programme in locations across Scotland, which began in Borders College back in 2015; a £28.25 million equity investment in the construction of the Levenseat renewable energy waste project; a £6.3 million loan to Glasgow City Council to enable the first wave of the replacement of 70,000 street lights with lower energy and low-cost alternatives; biomass boilers across a number of distilleries in Scotland; and a £26 million investment in the new biomass combined heat and power plant near Craigellachie. These are significant and important projects.
When we look at the challenges of the oil and gas industry and the talent that unfortunately has been lost as a result of a low oil price, we have to look at where those skills can be redeployed. Aberdeen and the north-east of Scotland have some of the most innovative and experienced people. I was in the service sector of the oil and gas industry before I came to this place. Every day I saw incredible, innovative and inspiring people and technologies. The Green Investment Bank plays a key role in ensuring that projects such as those I have listed can continue to thrive, and that the energy industry’s new technologies thrive and are invested in.
Kevin Brennan
Perhaps I might seek your guidance, Sir David, because we have ranged quite widely and I was going to make some remarks in the clause stand part debate that I could incorporate into our discussion of the amendment if you thought that was appropriate. You seem to be nodding, so I will do that and hope that I will not be ruled out of order if I range a little more widely. This will save us the later debate on whether the clause stands part of the Bill.
First, I congratulate my hon. Friend the Member for Wakefield and my right hon. Friend the Member for Don Valley on their amendment. It is a great advantage having such expertise available to us on our Back Benches. I also congratulate my hon. Friend the Member for Newcastle upon Tyne North and the hon. Member for Livingston on their contributions in support of the amendment. My right hon. and hon. Friends have put their finger on a very good point, to which I will return once I have made a few more general remarks, without detaining the Committee for too long.
Anna Soubry
The debate has been wide ranging, and I make no criticism of that. A number of questions have been asked that I intend to answer at this stage, but our discussions will continue in our consideration of the next clause.
The Green Investment Bank was a success and a product of the previous Government. We are proud to have introduced it. It is right that it is doing well. From market testing we know that there is a thirst and a desire out there to purchase it. We will sell it sooner rather than later and for all the right reasons. The bank has proved that investing in green projects is a financially sound and right thing to do. Many would say that it has led the way. As I said, the bank has proved that the sector is worthy of investment, which is why it is now time for us to sell it.
Specifically on the question asked by the hon. Lady whose constituency I will remember in a moment, when prompted—
Anna Soubry
Behave!
The hon. Lady asked whether the Government would guarantee that the bank will keep its headquarters in Edinburgh. GIB management have made it perfectly clear that Edinburgh is the best place for the bank to do business and why would they not say that, because Edinburgh is indeed a fabulous city in which to do business. Lord Smith, who is the chair of the bank—I will refer to him in our next debate—wrote to the Scottish Government, John Swinney in particular, to confirm his personal commitment as chairman of the Green Investment Bank to Edinburgh. We cannot of course force the bank to remain in Edinburgh, but I can see no good reason why on earth its management would not want to stay there.
The hon. Member for Wakefield asked whether we would publish the market testing. No, we will not. It is commercially confidential, as might be imagined, so that is perfectly normal. By the way, I congratulated the hon. Lady last week on her election—I add that in case anyone thought I was being churlish for not mentioning it.
The right hon. Member for Don Valley asked whether the Government would retain a minority stake in the bank. We intend to sell a majority. It is crucial that the Green Investment Bank is classified as being in the private sector—that is absolutely what we want. We may retain a stake, but at this stage we cannot commit to that. When we debate the next clause I will explain why and what we are seeking to do—in essence, to protect the green credentials, as so many hon. Members agree that we should.
To turn specifically to the amendment, once GIB is sold it will be subject to normal company law, under which a company of the size of the Green Investment Bank—GIB is a horrible term—that is not quoted and listed on the stock exchange is required to include aggregate information on total remuneration and specific information on the highest-paid director. Those are the minimum requirements—please note “minimum”.
The Green Investment Bank is currently required to report to higher standards, which is right, because it is entirely publicly owned. It currently reports the details included in the amendment and it may choose to continue to do so once it is in private ownership. I cannot see any reason why it would want to move away from its established principles.
When the Green Investment Bank is privatised the Government will not control its remuneration policy. We cannot control key aspects of corporate policy, such as remuneration, in a private company, and rightly so. There is no reason why the privatised Green Investment Bank should be singled out by the Secretary of State to report on its remuneration to Parliament, especially if it is not spending public money. If the Government do not hold any share in the Green Investment Bank, we would have no power to compel it to provide the amendment’s level of information if it chose not to do so.
Hannah Bardell
I hear what the right hon. Lady says, but does she not agree that this could be the start of something great? We could start a domino effect of companies being more open about their remuneration, which would send a very strong message about how we could do that and support it.
Anna Soubry
The thing is that we do have requirements for private companies, and I have explained what they are, but we cannot make the Green Investment Bank do anything more unless it chooses to lead the way. There are many companies, for example, that will only deal with Fairtrade products; many companies choose to do things in a certain way and can in many respects, it can be said, change the culture. I am firmly of the view that this amendment is not necessary and should be resisted.
Kevin Brennan
It saves time if the right hon. Lady gives way, because, as she knows, under Committee rules we can make further speeches if necessary. Is it not the case, following privatisation, that the Government intend to retain the ability to invest in the bank? Is it not still the Government’s intention to hold a stake in the bank following privatisation? Therefore, why is it inappropriate for the Government to have influence over remuneration policy?
Anna Soubry
I thought I had made it clear that we have not decided whether we will retain a stake. We do not know whether we will retain a stake at this moment. When it is privatised there is no reason why it should be subject to laws that are different from those that other companies are subject to. When we come to our second debate, which I think is the real bone of contention, or the cause of concern, I will explain what the Government are doing and, most importantly, what the Green Investment Bank’s chair has said about keeping its green credentials.
Mary Creagh
The Minister is saying, “Trust us. We’re not sure when we’re going to do it, but sooner rather than later,” but also, “We’re not sure whether we’re going to have a minority share, or when it will be fully viable.” There is a series of uncertainties around the privatisation of the bank, but surely the argument is that this is a bank that was created with taxpayers’ money; it is not one that was private and then taken over by taxpayers, as Lloyd’s and HBOS were. It was created by the people of this country, who have made it clear in no uncertain terms on our constituency doorsteps that they do not want to see bankers coming off with huge bonuses, which is what the risk is.
Chairs can change; they are appointed for three or four-year terms. I have every confidence in Lord Smith, but four years down the line, when it is fully privatised and the City of London is back rolling again, things could change and the pressure on the chair from the bank executives could be very high to double or treble their remuneration, as has happened in other former state privatised assets. I am thinking of QinetiQ, but also of the rolling stock companies that made multimillionaires out of managers who had previously been very happy on British Rail salaries.
Anna Soubry
I am afraid that I do not share the hon. Lady’s determination that Government always know best and we cannot trust the private sector to do the right thing. I absolutely do. When we sell the bank off, as I am confident that we will, I do see why it should be subjected to more onerous conditions than are already imposed on companies. It is a worrying feature of Opposition Members that they simply cannot trust people in business to do the right thing. They have to over-process and over-manage; they will not let business get on and do what it knows best.
Caroline Flint
I do not think this is some sort of willy-waving competition about who does best. I think it is about looking at where the public sector and Government have a role to play in setting out policy and setting up frameworks. The truth is that there is greater transparency in the corporate sector today only because, sadly, it let people down. It did not volunteer to do it itself, or to introduce a national minimum wage or much of the health and safety legislation that Governments of different colours have supported over generations. It is more transparent because the market failed and people were let down. Here is a really good example. I ask the Minister—[Interruption.]
Caroline Flint
I ask the Minister to consider this: the Green Investment Bank is not broken and has not caused a problem, so why would we not want to retain some of the best elements of what is, in effect, a public-private partnership to ensure that it can still do good and command public trust and support?
Anna Soubry
With respect to the right hon. Lady, that is not what her amendment is about. She is now talking about what is to come in the next debate. Clause 30 seeks to put something on to this business once it has been sold into the private sector. It is important that we remember that when it is sold is when taxpayers will get their money back. Having got their money back, that will be the end of their involvement in it, save for the bank, which we created, continuing to have its green credentials, as I will describe when we reach the relevant clause.
The amendment is unnecessary. When the bank is privatised, we will not control its remuneration policy, and rightly so. If the Government retained a minority stake, we could not control remuneration policy because it would be wrong of us or Parliament to seek to control the decisions that are properly for the board of the company and its shareholders to make. The bank will not be treated differently, nor should it be. As I said, the investment made on the behalf of the taxpayer will have been paid back and the bank will then be free to continue its great work, unconstrained by anything that Government might put on it. As a shareholder, however, we can still express views and agree with other shareholders as to the level of reporting that would be appropriate on this and other issues. I therefore suggest that the amendment might look good on paper, but is absolutely not the right thing to do in reality when we privatise 0the Green Investment Bank.
Kevin Brennan
Before my hon. Friend the Member for Wakefield responds to the debate, I want to reply to some of what the Minister said. It was interesting to hear the Minister accuse the Opposition of not being prepared to trust business. She is asking us to trust investment bankers. The Minister proposes that we should abrogate our responsibility and give way on our social and environmental consciences to the man from Deutsche Bank. I am afraid that that will not happen.
Anna Soubry
Is the hon. Gentleman suggesting that the clause should apply to all banks? If he is, why did he not do that during the 13 years that his party was in power?
Kevin Brennan
My view, which I have made clear previously and with which many people agree, is that we should have done more to regulate the City’s activities during our years in power. Having said that, some of the siren voices in our ear screaming that we should not do so came from Conservative Front and Back Benchers, who were saying that regulation was unnecessary and would spoil the UK’s position as a global financial centre. The very voices that were shouting at the previous Government not to do it were those on the Conservative Front Benches.
It seems pretty rich, in all senses of the word, for a Department that is led by a former investment banker, who was earning £3 million a year from a bank that was fined £600 million by the European Union, to lecture the Opposition on trusting investment bankers when the Green Investment Bank is privatised. The genuine concern is that it may end up being a Chinese-owned investment bank. That is the pathway the Government might be setting us on with this privatisation proposal.
Kevin Brennan
As I have already said no, I will in a moment, if the Minister will allow me to finish my point. We believe it is absolutely essential that we do not miss this legislative opportunity to make it clear that we want the Green Investment Bank, if it is to be privatised, not to turn into just another investment bank—a bank that is going to be investing in non-environmental projects, for example.
Kevin Brennan
I have already indicated that I will give way. The Minister should understand that the conventions of the House mean that I will do so when I have finished my point, and that any number of sedentary interjections from her will not stop me from finishing my point before I do her the courtesy of giving way, which is entirely my choice, as you will confirm, Sir David. I am happy to give way to the Minister.
Anna Soubry
I am sure that the hon. Gentleman is not trying to suggest that the Secretary of State for business is in any way untrustworthy.
Kevin Brennan
I certainly am not doing so. I am saying that the organisation that the right hon. Gentleman previously worked for was fined £600 million by the European Union for its dodgy dealings.
Kevin Brennan
That was not the Secretary of State’s responsibility, but I am pointing out that being lectured by Government Members on trusting investment bankers might occasionally provoke a response from us. If the hon. Lady does not like that, that is tough.
My right hon. and hon. Friends have made extremely important points about what could happen following privatisation unless better assurances are given by the Government. To complacently say that after privatisation the Government—who, despite what the Minister said, will probably retain a stake in this bank and will almost certainly have some part to play in providing finance to the bank for its green investments—should have no influence over the remuneration of the directors of the bank seems to be a complete abdication of responsibility. I encourage my hon. Friend the Member for Wakefield, should she choose to do so, to press the amendment to a vote.
Mary Creagh
This has been a lively debate, which is always a good thing. I take issue with some of what the Minister said. First, we have just had our half-term recess, so Committee Members may have seen the excellent, Oscar-nominated film “The Big Short”, but if any have not seen it, I recommend that they do so as soon as possible to see exactly what was happening in the banking industry in 2007.
Mary Creagh
I will when I have finished my point. That film demonstrates the mystification of investment. Selena Gomez explaining complicated financial terms, such as CDOs—collateralised debt obligations—is a highlight of the film. Essentially the film showed that a huge financial fraud was perpetrated on people in advanced western democracies through a series of reckless gambles by big banks in both the United States and the United Kingdom, as a result of which taxpayers lost $5 trillion, wiped off the value of stocks, pension funds and investments. In the case of the United States there was massive suffering with the foreclosures epidemic in certain areas. In my view, the Bill is an opportunity for the Government to intervene in the private market, as they are doing in other areas.
Anna Soubry
Does the hon. Lady agree that what this amendment seeks to do is not to have any influence over remuneration or otherwise, but to require the privatised Green Investment Bank to write a report.
Mary Creagh
If it is such a small deal, I do not understand why the Minister is resisting it so vigorously. I think the Prime Minister once said that sunshine is the best disinfectant. My understanding is that, at the moment, those Green Investment Bank executives are classified as public sector employees and as such cannot earn a greater salary than the Prime Minister of this country. I can 100% guarantee that that will change as soon as the bank is privatised. [Interruption.] This Committee can at least ensure that we find out what is happening. I may come back on Report with stronger amendments.
If the Minister chooses to criticise that, I may reconsider and see whether we want to table something more stringent—perhaps a pay cap. Other clauses of the Bill cap the pay and exit conditions of people in a private company, Magnox—I am sure we have all had plenty of letters from them—and interfere in the workings of private businesses to introduce an apprenticeship levy, which Labour Members support but which many private sector companies are most unhappy about.
Kevin Brennan
If there is a fundamental objection to interfering with the pay and conditions of people working in the private sector following privatisation, why are the Government doing that later in the Bill on exit payments?
Mary Creagh
Good point, beautifully made. The issue of remuneration is of concern to the Government. This started off as a probing amendment, but I will take it all the way to a Division. It has grown legs. The more the Minister has argued, the more that I think there is something here.
Hannah Bardell
Is this not about transparency? This could be a starting point to shine a light and set an example for other organisations and other banks. Fundamentally, lack of transparency has got us where we are today. If we are able to make banks and organisations more transparent, hopefully they will bounce off each other and set examples among themselves.
Mary Creagh
Yes, that is an excellent point, although I think those of us who are waiting for transparency from banks will have a long wait. We have been waiting for transparency on gender equality since the Equal Pay Act 1970.
My right hon. Friend the Member for Don Valley spoke about market turbulence and the postponement of the sale of shares in Lloyds. The Chancellor said in January that the share sale would be postponed because of market turbulence. The sell-off of Lloyds shares was scheduled for spring; he has now said that it will come after Easter. Over the past eight weeks, we have seen a bear market, great turbulence in the financial markets, panic selling of crude oil, and oil prices at a 13-year low. We had the news this morning that investment in North sea oil and gas industries has fallen from an average of some £8 billion a year over the past five years to £1 billion this year. These are worrying times for the global economy, and the market is hugely volatile. All bank shares are currently falling in price, whether they are UK bank shares, European bank shares or US bank shares. Whether this is a phased sale or a one-off sale, the Minister has still not committed to giving us the business case and to publishing the impact assessment, which is what the Environmental Audit Committee asked for.
Would the Minister care to intervene and say who is advising her on this, apart from the Green Investment Bank executives? Has she sought any outside firm from the City of London to advise her on the sale, or is it simply the advice of Green Investment Bank executives who potentially stand to gain from the sale? As the Minister is grievously unhappy about this, I will press the amendment to a vote.
Question put, That the amendment be made.
Kevin Brennan
So much for the Secretary of State’s fat cats after that debate. This stand part debate is probably a good way for us to move towards our lunch-time break—or should I say our break for prime time in the House, to be more accurate? We will probably come to the meat of this part of the Bill when we discuss clause 32, but I would be grateful if the Minister explained the purpose of clause 31 and why it is necessary that it stands part of the Bill. That might run us nicely towards that prime-time break.
Anna Soubry
As I rise, I am helpfully provided with those very reasons. The clause is a transitional provision relating to the clause 30 provisions on the Green Investment Bank that requires the Government to report to Parliament with details of a proposed sale of the bank before that clause, which repeals and amends parts of the Enterprise and Regulatory Reform Act 2013, can come into force. The report must include details of the type of sale that the Government intend to undertake, the expected timescale and the objectives to be achieved. That will ensure that Parliament is kept informed and demonstrates that we will bring the repeal into force only at the appropriate stage in a transaction process. Like the report in clause 30, this report must also be sent to devolved Ministers. That, in short, is the reasoning behind the clause, which I commend to the Committee.
Mary Creagh
I was not going to speak, but having heard from the Minister I think I will. It strikes me that the clause is a blank piece of paper that gives the Secretary of State carte blanche. He or a future Secretary of State may or may not make regulations or a decision to dispose of the share, and then they will lay a report before Parliament to say what type of disposal is intended. That comes back to my Committee’s request that the full impact assessment is published to Parliament. Parliament has not seen an impact assessment of the disposal of the bank or any such detail. Will the report be scrutinised by a Delegated Legislation Committee or will it go through on the nod as one of the remaining orders of the day? I seek clarification from the Minister on what type of scrutiny the House will have of the bank’s disposal.
Anna Soubry
I will have to write to the hon. Lady to do that. I apologise; I cannot do that in any other way, but I will do that. It goes without saying that when we get to the next clause, many of the issues that we have already debated will be further debated, and rightly so.
Question put and agreed to.
Clause 31 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Stephen Barclay.)
Enterprise Bill [ Lords ] (Sixth sitting)
(8 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Committee divided: - Ayes: 6 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 11 - Question accordingly negatived.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
Good afternoon, Ms Buck; it is a pleasure to serve under your chairmanship. I shall explain why this clause should not stand part of the Bill. The clause was inserted by the Lords, and I can understand why it was felt that that was the right thing to do. There is a general agreement that the Green Investment Bank—there is no debate about this—has been extremely successful. It is beginning to return some money and has also made it very clear to the market that it is possible to invest in excellent green projects and get a return.
The time has now come for us to sell the Green Investment Bank, so getting back the money that has been invested by the taxpayer and, most importantly, ensuring that it goes into the private sector not just for the sake of it, but so that it can continue to do its excellent work and, crucially, be free to raise equity.
We have always said that the Green Investment Bank will still be green after privatisation. Green investment is what it does, and it is difficult, frankly, to believe that anybody would want to buy it or have a share in it unless they subscribed to its fundamental core business, which is to invest in green projects. We have to be realistic: why would anybody buy it if they wanted to turn it into some other bank?
We also said that the only reason we had to repeal the green protections from existing legislation was to allow the Green Investment Bank to be off the Government’s balance sheet post-sale. In other words, we have to do this—repeal the green protections—or it will still, in blunt terms, be on the Government’s books. However, if we repeal them, it will be off the books and in the marketplace and able to trade in the way that it has been doing.
However, because we understand the concerns of hon. Members and noble lords in the other place—indeed, many of us share those concerns—we have found a device to protect the Green Investment Bank’s green purposes but without the need for legislation. In other words, to use a phrase that has been used quite a lot so far this week, we are having our cake and eating it.
The Green Investment Bank will implement a special share to be held by an independent company—that is, independent of the Government, Parliament and the Green Investment Bank itself. The special shareholder, as it will be called, will have the right to approve or reject changes to the Green Investment Bank’s green purposes if such a change is ever proposed. Work is under way now by the Green Investment Bank to put that in place and it will be implemented at the point of any sale. We will not repeal the current statutory protections until that point. In other words, there will be no gap in protection.
To provide further assurances to hon. Members that we will do this, the Secretary of State said on Second Reading that the special share will be put in place, and the chairman of the Green Investment Bank, Lord Smith, wrote to Lord Teverson on 5 February to give him that assurance. Baroness Neville-Rolfe, who is a Minister in Department for Business, Innovation and Skills, also wrote to Lord Teverson on 17 February saying the same. On that basis, we believe that we do not need green protections in legislation.
Kevin Brennan (Cardiff West) (Lab)
Were that proposal to be implemented, it would in effect do the same as is being proposed in clause 32, which still remains part of the Bill at the moment. The key question, however, is not that, but whether that will satisfy the Office for National Statistics in relation to whether the Green Investment Bank will be treated as being on or off the books, as that seems to be the Government’s primary concern. What guarantee can the Minister give about that?
Anna Soubry
The best thing that I can say and do is this. I am very grateful because I have copies not just of the letter from Baroness Neville-Rolfe, but of the letter from Lord Smith who, as we all know, is the chairman of the Green Investment Bank. He wrote to Lord Teverson of Tregony. I am more than happy to share the letter in whichever way is best, whether by sending a copy to all members of the Committee or even by putting it in the Library. Although, actually, it is not my letter to put in the Library, I am more than happy—and I know that the noble Lord is more than happy—for it to be shared with everyone. I will not read it all because it is rather long and, interestingly, deals with a number of matters, but I want to put his words on the record. He wrote:
“In this letter I would like to set out the steps GIB plans to take to deliver the full spirit and intent of the Lords’ amendment. The only substantive difference between this plan and the Lords’ amendment is that the establishment of a special share would not be required by statute. Requiring the special share by statute is a key indicator of public control preventing the company’s re-classification to the private sector. GIB instead will create a special share in the bank on a non-legislative basis, to enable the company’s re-classification to the private sector. This is essential to give GIB the freedom to borrow without this impacting on public sector net debt and more importantly to allow GIB to raise equity. GIB intends to have in place a clear process detailing how a special share will be created and will set out that process, and show our progress in delivering it, before the Enterprise Bill returns to the Lords. It is my intention to share our progress as transparently as we can, as a means of building confidence that the special share can be put in place without the requirement to do so in law. I would also note that the current statutory protections over the green purposes will remain in place until the point that the special share is implemented. There will be no gap.”
Now, we all want the Green Investment Bank to continue its investments in the green sector, but I hope that everybody in the Committee will accept the noble Lord’s words about exactly what he is now undertaking. As he says, we should protect the special green background of the bank—the whole thrust of it. He is already doing that to protect its special workings. There will be no gap, and it will therefore continue as it is sold and, no doubt, in perpetuity.
Kevin Brennan
I have a copy of the letter, as Lord Smith also sent it to Lord Mendelsohn on our Front Bench and he was also involved in the amendment. Will the Minister confirm, however, that the letter contains no indication of the view of the Office for National Statistics about using this mechanism, rather than the mechanism currently in clause 32? As far as I can see, the letter contains no reference to the ONS directly approving this mechanism.
Anna Soubry
I undertake to find Lord Smith, and I will ask him for his views. In the meantime, I can tell the hon. Gentleman that we believe that the proposal will satisfy the ONS. As he can imagine, my officials have engaged with the ONS for some considerable time and have continued to do so specifically about this proposal from the Green Investment Bank. We are satisfied that it will allow the Green Investment Bank to move to the private sector and to protect its green objectives.
Baroness Neville-Rolfe, in her letter to Lord Teverson, who moved the amendment in the other place—it matters not that he is not of the political persuasion of anyone on this Committee—said:
“I would like to reiterate the commitment that the Secretary of State made in the House of Commons during Second Reading of the Enterprise Bill on 2 February, that a special share will be created in GIB with the power to protect the green purposes.”
I therefore seek to persuade the Committee that there is no need for this clause, notwithstanding the fact that the noble lords, with great respect to them, inserted it in the Bill after a debate. Given that the Green Investment Bank has come up with this device—I do not mean that in a bad way; quite the contrary—I seek to persuade the Committee that the rightful concerns about the future of the Green Investment Bank’s green objectives are now properly secured for a very, very long time. On that basis, I will ask the Committee to agree that clause 32 should no longer stand part of the Bill.
Kevin Brennan
It is nice to see you again in charge of our proceedings, Ms Buck. We come to an unusual role reversal in that the Minister is arguing that a clause should not stand part of the Bill, and we are arguing that it should. In fact, she is so keen that clause 32 should not stand part of the Bill that she tabled amendment 30, which was not selected, to delete it. The amendment was not selected because, in essence, it was otiose, as the correct way to get rid of a clause is to vote against it following a stand-part debate, which is what she now proposes. I interpret the tabling of the amendment as a kindly way to indicate the Government’s position to the Opposition, rather than any incompetence on her part, although she wrote to my hon. Friend the Member for Wallasey (Ms Eagle), the shadow Secretary of State, following Second Reading to indicate that she wanted to get rid of the clause. As the Minister has rightly indicated, the Secretary of State gave such an indication on Second Reading.
The Minister wants to get rid of the clause because the Green Investment Bank would remain on the Government’s books after privatisation, according to the Office for National Statistics, if there was any suggestion of statutory control of its purpose. Of course, there is currently statutory control of the bank’s purpose. The first point one might raise is whether the Government should allow that ONS ruling to drive policy in this area. It seems pretty obvious that they should not allow the ruling to drive policy so powerfully, but they are so obsessed with being able to say certain things about public debt that they are unwilling to allow a technical issue—that is what this is—that does not truly reflect problematic public debt to spoil their narrative on public finances. That is driving their obsession with removing statutory protection for the Green Investment Bank’s purposes. Ironically, that does not always happen. The Treasury is all too ready to allow UK borrowing to be part of the financing of the Asian Infrastructure Investment Bank. The Treasury was not worried at all that public debt will be part of the financing of that bank, yet it is extremely reluctant to allow the same for our own Green Investment Bank.
The Green Investment Bank is a flagship Government policy, and it is a genuinely innovative policy in the public sector. I praise the coalition Government for introducing it, as I have in previous debates. I should point out that it was initially conceived during the previous Labour Government. It would be a terrible shame if we did not acknowledge that; I am sure that no one in the Committee would like me to leave out anything of factual importance for the historical record. It would be a terrible shame if the Government were not willing to do for our own Green Investment Bank what they were willing to do, and have done, for the Asian Infrastructure Investment Bank. Will the Minister tell the Committee why the Government were prepared to do that for the Asian Infrastructure Investment Bank but not for the Green Investment Bank?
Mary Creagh (Wakefield) (Lab)
I know from my time shadowing DFID that many questions were raised about the fact that we chose to be foundation sponsors of the Asian Infrastructure Investment Bank. There were a large amount of questions about the human rights implications, in particular about the sort of projects the bank would be investing in, given that—along with the other founding partners—it is under Chinese state Government control, when they have a completely different approach to human rights and natural resource exploitation, particularly in sub-Saharan Africa, to that of our own country and the Department for International Development.
Kevin Brennan
I wish I had spent my lunch hour more productively, because somebody pointed out to me that a report is out today on human rights, businesses and the Department for Business, Innovation and Skills. With a busy day in Committee, I have missed the opportunity to give a brilliant response to my hon. Friend’s intervention. Nevertheless, she is right, and on trend in terms of today’s news cycle.
I am not saying that it is easy to solve this problem. As Kermit the Frog said, it is not easy being green. This is not an easy area to navigate, but the Government seem to want to make it more difficult than it is already. As I said earlier, the Green Investment Bank was an embryonic idea under the last Labour Government. It was mentioned by the former Chancellor of the Exchequer, Alistair Darling, in one of his Budgets and it was being developed in the Cabinet Office and in the Department for Business, Innovation and Skills when I was a Minister in both.
I was very pleased when the coalition Government brought forward proposals, having worked up those ideas so that they were workable, and when the Bill was passed and the bank was set up. I was also pleased about the good start the Bill has had and how well it got under way, which Members have also mentioned. There have been some criticisms about the straitjacket the Treasury might have put on the Green Investment Bank, but nevertheless it has been able to participate in the financing of projects that otherwise probably would not have taken place and that make a real contribution to meeting our commitments under the Climate Change Act 2008. I think we are all agreed that its creation is a good news story.
The Treasury does not want it appearing on the books because of the targets the Chancellor set for debt and deficit reduction. However, when we consider what we are doing here, we have come to a strange pass when even something that we all agree would be a good thing—that is, even good borrowing—is bad if it is on the Government’s books, and for no other reason than that. Sometimes we seem in this country to be the prisoners of public accountancy conventions in making public policy, rather than people who use common sense, as we are supposed to do in Britain, about when borrowing is good and effective and is used to invest—after all, that is what we are talking about—in growing our economy in the future in a sustainable way. During very difficult years following the banking crash, in which we were sometimes in recession, a significant part of recent growth in the UK came from the green economy. By some estimates it accounts for a million jobs in the low-carbon sector, worth more than £100 billion. It is disappointing that the Government are in danger, if they are not careful, of undermining one of the key drivers of that sector. If we were able to tap into our country’s potential in respect of wind, wave and tidal power, we could create hundreds of thousands more high-quality, sustainable jobs for our economy.
The CBI’s “The colour of growth” report says we have a £130 billion share of a global low-carbon marketplace that is worth about £4 trillion. That will rise hugely, given the opportunities around the world in years to come, but we are in danger of slipping down the ranks. We must not abdicate at this point our leadership on this issue. If we do, our prosperity, as well as our environment, will ultimately suffer.
Privatisation is not the only way that the Green Investment Bank could go out and borrow in the market; that could be done under the current legislation, in any case. However, because of the Government’s financial orthodoxy and desire to be able to say what they want to say about their targets, they are extremely reluctant to allow the Green Investment Bank to do it.
Mary Creagh
One thing that came out in the Select Committee’s evidence session was that the Green Investment Bank was very keen for the Government to retain their minority shareholding in the bank. That confirms my hon. Friend’s point about the fiscal orthodoxy with which the Government are pursuing this sale. Obviously, the bank’s green purposes would be protected as long as the Government’s minority share was in place.
Kevin Brennan
My hon. Friend makes a valid point. I met and had discussions with executives from the Green Investment Bank, and I think it is fair to say that, like any good public servants, they are trying to carry out Government policy in the best way they can. I think it is also fair to say that they would see privatisation as a positive step for the bank. Whatever decision the Government ultimately take on privatisation, it is sensible at this early stage—we heard earlier about market conditions and whether this is the right time for the sale—for them to retain some sort of stake, at least into the near future.
In a sense, we are debating a notional concept. This is not the sort of debt on the books that will be of great concern to markets or to the City. It is part of the obsession of the boffins at the Office for National Statistics that where the Government, in any minor way, have an influence over what an institution such as the Green Investment Bank does, by setting out to limit the types of investment that it makes in any way shape or form, it has to be counted as being in the public sector for the purposes of Government debt. It is an incredibly esoteric and technical reason for requiring the Green Investment Bank to be privatised, even though there is clear evidence of real problems with that process, as we heard in our discussions earlier today.
When the Government announced their privatisation plans for the bank on 25 June 2015, the Secretary of State for Business, Innovation and Skills gave the following assurance to the House in a written statement:
“This should bring a number of important benefits, giving GIB greater freedom to operate across a wider range of green sectors in accordance with its green purposes, which are enshrined in legislation.”—[Official Report, 25 June 2015; Vol. 597, c. 27WS.]
In that announcement, the Secretary of State emphasised that the green purposes of the Green Investment Bank were protected by the legislation in which its duty to pursue them was enshrined. Obviously, something has gone horribly wrong since that announcement. The advice from the Office for National Statistics to which I referred earlier has led the Government to say that they instead intend to repeal the very legislative protection that the Secretary of State prayed in aid when announcing the decision to privatise the bank on 25 June 2015. That is why, by October 2015, they had to say—and this time I am not directly quoting, I am paraphrasing, bowdlerising, perhaps satirising—“Do you know what? That is not so important after all. It does not really matter if we repeal all that to make sure that the Green Investment Bank does not appear on the books”. The letter of 15 October, in which the Secretary of State for Business, Innovation and Skills announced his intention to repeal the relevant measures in the Enterprise and Regulatory Reform Act 2013, offered no assurance, at that point, that those green purposes would definitely be maintained. He said:
“We want to ensure the Green Investment Bank’s green principles continue to underpin its business in future and this will form an important part of our discussions with potential investors”.
That is all very well, and I am sure that potential investors will come along and happily assent to the green purposes of the Green Investment Bank prior to privatisation. That is not the question, however; the question is what happens after privatisation. That is what we are considering here and now.
At that point, when the bank is either fully or partly in the private sector, how are we to ensure that it maintains its green purpose and does not simply become yet another bank, albeit a very small bank that can easily be, and is likely to be, gobbled up by somebody else in the marketplace? That is why the Lords defeated the Government on this issue and introduced the special share that is the feature of the clause we are debating. The Minister said that the Green Investment Bank can create this special share itself and she quoted the letter from the chairman of the Green Investment Bank, Lord Smith, to our noble Friend Lord Mendelsohn and to Lord Teverson, one of the instigators of that amendment in the House of Lords.
I think the Minister said that this would satisfy the Office for National Statistics. She said she was confident that it would; I do not think she gave us a guarantee. We need, frankly, an absolute assurance on that before we relinquish this legislative opportunity to future-proof the purposes of the Green Investment Bank. I cannot see, having read the letter carefully and listened carefully to the Minister, that there is any such cast-iron guarantee in that letter or in what the Minister said. Surely, it would be better to leave the clause in place, if this is intended to be sent back as an assurance to the House of Lords, which is what the Minister seemed to be indicating, so the House of Lords can decide, ultimately, whether she has satisfied the concerns raised in that House. If she wishes to use her Government majority in this place to remove it from the Bill at this stage, she is doing so without having given such a cast-iron guarantee and I would not be surprised to see the provision put back in.
Can the Minister guarantee categorically to the Committee that the special share will be acceptable to the Office for National Statistics? Can she guarantee that privatisation will not dilute the green purposes of the Green Investment Bank, or is she just keeping her fingers crossed in that regard? Have the Government discussed or considered the possibility of some form of penalty for the privatised company should it depart from the green purposes currently enshrined in legislation when the legislative guarantees are removed?
Am I right when I say that the only reason the legislative lock on the green purpose is being repealed is purely in order to get the Green Investment Bank off the Government books? Is that the only reason for removing the lock? If it is, is it a good enough reason, given what I said about the technical nature of the issue? Can she give us any indication of the Government’s view about the stake that they expect to retain in the Green Investment Bank, if any, following privatisation?
There are other points under clause 32 that are relevant and about which the Government ought to be able to tell us, in particular as regards the £1.8 billion the Government set aside to fund the Green Investment Bank and its projects, much of which is yet to be committed. Do the Government intend that the £1.8 billion originally intended to be committed to green projects will stand? Or do they intend that the money will be taken back to the Treasury during the privatisation process? If it is the latter, what do the Treasury intend to do with that money? Will it be set aside against the deficit or will it be used for other green projects and initiatives? We need clarity on that.
Mary Creagh
I apologise for my late arrival in Committee, Ms Buck. I spent my lunch hour delving into the Green Investment Bank’s remuneration committee, and I have printed edited highlights to share with the Committee.
I am keen to put the record straight. In the discussion that we had this morning, I said that as public sector employees the bank’s executives could not earn more than the Prime Minister. That was the case in 2012-13, when the chief executive earned £139,000, but things changed quickly in 2013-14. The latest figures show that the chief executive is earning £325,000 a year, with £147,560 awarded under the long-term incentive plan. There is also a short-term incentive plan and an offshore wind fund that is linked to remuneration, as well as a 10% contribution to a defined benefit pension scheme, and also life insurance and medical insurance. I want to put that on the record to inform the Committee’s deliberations.
The current rules of the bank, as set out in statute, are to provide for best practice and leadership on remuneration in the financial services industry. That is indeed what the remuneration committee sets out: it sets out very clearly what people are paid. I will come back later to some aspects of the bank’s remuneration, but I was keen to put the record straight on the amount that the chief executive earns.
I return to the clause stand part debate. The Environmental Audit Committee concluded that the protection of the green purposes was the most important objective of any sale; in its view, the sale should not go ahead if those green purposes could not be protected. Our Committee argued that the protections proposed by the Government, centred on assurances from buyers and the commercial logic of continuing to invest in green projects, were not sufficient. We recommended that the Government support the creation of a special share in the Green Investment Bank to protect its green purposes. We accepted that the share should be owned in a way that did not compromise reclassification to the private sector—in other words, that the share was not owned by the Government or a public body.
At the time our report was published, just before Christmas, such a mechanism had been added to the Bill by the House of Lords under clause 32. We have heard from the Minister that she plans to approve the creation of a special share, which the bank itself is somehow going to do. I have a series of questions for her. If the mandate for the special share is not laid out in statute, what guarantee is there of its longevity? If the bank’s board or chief executive changes, or if the shareholders decide to change the special share through a vote at their annual meeting, how will it be protected? How will it be established? The Minister discussed some sort of separate company being set up; would it be registered at Companies House? Who would its directors be? What would their relationship be to the Green Investment Bank and what control would they have when eventually all the shares were sold off? How would it be maintained? What constraints would there be on how it could be used?
On the principle of the sell-off, I return to the Select Committee’s report. It is a shame that the evidence was not really consulted on and there was no real consideration of alternatives. Our Committee was disappointed that the Government appear not to have considered a wider range of options for recapitalising the Green Investment Bank, such as citizen finance—green projects are currently extremely popular given the very low returns people can expect to earn on cash deposits—or the European fund for strategic investment. We were surprised that the Government had apparently undertaken little or no external consultation on the move, especially as the bank’s inception was marked by a laudably high degree of consultation.
Before proceeding with the sale, the Government must publish a robust business case—this goes back to our deliberations on clause 31—and an impact assessment in support of the decision to sell and of the timing of the sales, in accordance with the lessons identified by the National Audit Office’s Comptroller and Auditor General after the Eurostar sale. As part of those publications the Government must also indicate whether the full range of options for the bank’s future, including innovative recapitalisation options, were considered before the announcement of the intention to privatise. If they were not, they should explain why.
On the Government’s minority share, the Select Committee’s report also recommended that, in line with the bank’s own wishes, the Government should retain a minority stake in the company for as long as possible to ensure the bank’s future success. It is not only a matter of protecting the green purposes, although that would be a happy by-product, but about the signals the Government are sending to the market at a time of high investor uncertainty and potentially low investor confidence.
In response to the Select Committee’s recommendation, the Government reiterated their plan to sell the bank as a going concern but disagreed that a continued Government shareholding in the GIB would be essential to its future success, without giving any specific reasons for that disagreement. The Government gave no commitment on their future stake, and the Minister’s comments when she gave oral evidence suggested that the plan is eventually to sell the entire Government stake. If there is a phased sell-off, how will the Government use their minority share in the interim period? What is the objection to continuing to hold it? When they have relied so heavily on the bank’s views in favour of privatisation, why do they disagree on that point?
I turn to the green purposes. In paragraph 46 of the Select Committee report, we made it clear that we were keen to ensure that the bank retained its unique role in the green economy. In terms of establishing a special share that is owned in a way that does not compromise reclassification to the private sector, we recommended that:
“The Government should examine and report on the possibility of including under the share’s protection: (a) a nominated set of priority sectors, which would be much wider than that allowed under the State Aid rules and could establish GIB’s focus on specific Sustainable Development Goals in which the UK already excels, such as Affordable and Clean Energy, Industry Innovation and Infrastructure, and Responsible Consumption and Production”—
all areas in which the UK has a clear lead—
“and (b) an explicit statement of GIB’s focus on projects which lack sufficient funding. If such protections via the special share are not practicable, the Government must say how it intends, through the sale, to preclude the possibility of ‘mission creep’ even if the green purposes are protected.”
For example, the new special share could specify, by either volume or value, the type of green investments. That would require some thought and preferably public consultation on either the volume or the value route, because we could end up with one big green project and lots of ungreen projects, or lots of very small green projects and one very big ungreen project. There are pros and cons to both volume and value. There could be some sort of lock between the two or a formula in the shares to ensure that, by volume and by value, the bank’s green purposes are protected.
Finally, our Committee expressed concern that a privatised bank could invest in questionably green projects, such as fracking and coal-fired power stations, although I understand that the Secretary of State for Energy and Climate Change has said that she wants the coal-fired power stations to close by 2025. That concern was exacerbated by the Minister’s comments in oral evidence, where she appeared relaxed about that possibility and implied that it could be possible within the bank’s existing green purposes. The Government’s response to our report claims that it is not possible to place controls on the Green Investment Bank limiting such investments while achieving their aim of reclassifying the bank to the private sector. Will the Minister say whether, through this workaround—the special company and the special share—questionably green projects can be ruled out?
The Government claim that the Green Investment Bank’s business plan sets out a clear path for investment in established green sectors over the coming years and makes no mention of a move into controversial sectors. However, as we know, markets change, economies change, times change and—one day, we hope—Governments change, so things may look very different in 2020. What guarantees can the Government or the bank provide about the nature of its future investments, and what constraints will there be to prevent it from altering its green purposes?
Representatives of the bank told the Select Committee that they are very happy for the Government to remain a minority shareholder. They said that the Government have been a very good shareholder, and they want that continuity in going from being purely publicly owned to being publicly and privately owned. They envisage some sort of hybrid stage. They also want the Government to retain a minority shareholding to demonstrate a commitment to the bank. The bank’s chief executive said in oral evidence:
“with that commitment you will get much more interest in the people wishing to buy the reciprocal 70%-ish, 75%, whatever that number is. That is important in terms of driving the competitive tension in the process to get the best possible price, to get the best possible commitment to the greenness of the Bank going forward, and to make sure that we have an enduring institution here that is around in five years’ time, in 10 years’ time building the clean, green infrastructure the country will still need.”
As I said earlier, any future sale of shares must be preceded by a period of consultation and evidence gathering, and a report to Parliament on the success and impact of the initial majority share sale.
Anna Soubry
I am going to talk about why I seek the support of the Committee in ensuring that the clause does not stand part of the Bill. I am not going to answer all the points that have been made, because, frankly, that would be way off topic. However, there are a number of points that I can address and questions that I can answer, and I hope that that will be helpful.
Kevin Brennan
On a point of order, Ms Buck. Is it in order to quote so extensively from a letter that has not been shared with all members of the Committee? I have seen the letter because it was sent to another Member of the House of Lords, but I seek your ruling.
The Chair
It is perfectly in order, but it would be useful, as the Minister has indicated, if she circulated that letter.
Anna Soubry
It is not mine to circulate, but I have no problem doing that. I am sure that Lord Smith will not have any problem with it either. It is all on the record.
Anna Soubry
The hon. Member for Cardiff West has said that he has seen the letter. What is important is whether what is in the letter is to be believed. That is what matters, and I respectfully suggest that Lord Smith’s fine words can be accepted. If anyone has got a problem or thinks that in some way I am reading something out inaccurately, I am sure—
Mary Creagh
What the Minister is saying is fascinating, but she is asking the Committee to remove clause on the basis of a letter we are hearing for the very first time in response to our remarks. My hon. Friend the Member for Cardiff West has seen the letter, but I have not, despite the big report that the Environmental Audit Committee did on the bank. It is the Minister’s responsibility to circulate things to the Committee in good time, so that we can look at them and all work from the same bundle of documentation.
What the Minister has said is interesting. I have more questions on the basis of the establishment of a charity and so on that come out of what she said. I would have made a different speech had I been in possession of that letter, but I was not, so I could not. I respectfully suggest that it is for the Minister, in asking us to remove the clause, to give us the reasons why we should do so, by circulating the documentation.
Anna Soubry
It is not for me to tread into what must be a dispute with the hon. Member for Cardiff West. He has the letter. Presumably, Opposition Members met to decide which way they would vote. If the hon. Gentleman has not shared the information, had the debate and said, “By the way, gang, I’ve got a letter here that absolutely sets out all these things,” that is not for me to tread into.
The most important point is not procedure and process—the Labour party has to learn and understand this—but content and delivering in the right way. That is what I am seeking to do. It is absolutely clear that Lord Smith and, most importantly, the Secretary of State and the noble baroness have all given an absolute guarantee in this place and the other place that we will take and have taken all the intent of the clause and put it into action. Members may remember that that is how I began my remarks. I explained what would happen, the process and how we would achieve what Members want us to achieve, and that is the most important thing and that is what is happening.
Mary Creagh
On a point of order, Ms Buck. A whole series of evidence has come to the Committee. Some of it has come in from people, such as the Magnox emails, and I seek your guidance on whether the Committee Clerk has received the letter under discussion. I have not seen or received it in any of the emails that have been sent to us. Given that it is a material point on which we are being asked to vote imminently, I cannot understand why there is this gap.
The Chair
The fact is that the Minister has the opportunity to circulate the letter, although it has not been circulated.
Caroline Flint
Further to that point of order, Ms Buck. If I understand correctly what you said, the Clerk has not received a copy of this letter. Can the Committee adjourn, so that we can get the letter photocopied and circulated to the whole Committee? Perhaps hon. Members can put up their hands if they have the letter in front of them. It seems that many of us do not.
The Chair
I do not believe that it is appropriate to adjourn the Committee, but the Minister has the opportunity to circulate the letter and I hope that that will be done. Given that we have taken a number of points of order and interventions, I hope that we can quickly revert to the substance of clause 32.
Anna Soubry
I am more than happy to circulate the letter, but the point remains that this is not about process, but substance. I started off by saying—I am happy to repeat it—that we understand hon. Members’ concerns. We have found a device to protect GIB’s green purposes. GIB will implement a special share, to be held by a company independent of the Government, Parliament and GIB itself. The special shareholder will have the right to approve—and so it goes on. I referred to letters, and I read out those letters, though I did not have to do so.
The simple truth is that Opposition Members perhaps now realise that we have grabbed hold of the intention of the noble lord’s amendment that was successfully moved in the other place. Nobody should have a problem with that. As I said from the outset, we have found a device to implement it without passing legislation, to secure the objectives of the Green Investment Bank. Nobody can have any complaint. On that basis, I hope that the Committee will vote to reject the noble lord’s amendment and that the clause does not stand part of the Bill.
Kevin Brennan
I say gently to the Minister that we are not discussing a matter of arid process.
Kevin Brennan
The Minister asks me from a sedentary position why I did not share the letter, yet she is the person whose legislation this is. She is the person who has the panoply of a Bill team of civil servants supporting her in her work. I have told the Committee that I am in possession of a letter to Lord Mendelsohn, which I presume is identical to the letter on which she relies in praying in aid her policy. I have a copy of a similar letter among my papers, which I happened to procure. If she wants to pray mainly in aid a document to support her position as a Minister in Committee, at the minimum, it is a simple courtesy to share that document with all Committee members in advance. She knows that to be true.
All manner of huffing, puffing and bluster will not take away the fact that that is the sort of courtesy from Ministers—whatever political party they come from—that is part of this House’s procedure and has been for a very long time. Rather than trying to defend her position, she should go away and think about what needs to be done, as a Front Bencher, in relation to making arguments and providing documentation to the Committee, as the normal courtesies require.
Apparently, we are going to get the letter circulated to hon. Members at some point, but not until after we have disposed of the very clause that she is praying that letter in aid of, so that she can expunge it from the Bill. That is not good enough. It is a slipshod approach to parliamentary scrutiny, so the Government must improve how they handle such matters in Committee.
Anna Soubry
I did not respond to that because I did not think it was particularly relevant, but I am happy to tell the hon. Gentleman that that is an international bank and, because of that, we are not aware of any legislation over it that comes from this country. I therefore do not think he can make that comparison.
Kevin Brennan
Frankly, sometimes the Minister seems to want to chair the Committee as well as be the Minister on it so that she can decide what is relevant, what is in scope and what is not in scope. The Chair is perfectly qualified to tell us what is in scope when we discuss clauses and amendments to the Bill and I am sure that, if we were out of scope, Ms Buck would be quick enough to tell us. That is not for the Minister to decide. As I have said before, the Government have their way and the Opposition have their say and it is her minimum responsibility to make a good attempt to answer questions that are put to her about the Bill. She really should respond to such inquiries in a more appropriate fashion.
The Minister did not answer that question in the course of the debate and she has not explained fundamentally what the problem is with the Green Investment Bank being on the books. She gives the impression that it cannot be privatised without getting rid of the statutory requirement for the bank to have green purposes to its investment, but it can be. The Government could privatise the bank and hold not a single share in it, it could be completely in the private sector, with every intent and purpose except one: the technical ruling by statisticians in the Office for National Statistics —I am not sure whether boffins is the right term, so I will call them statisticians. I will not call them boffins, as long as she agrees not to call hard-working public sector and private sector workers “fat cats”. The bank could be in the private sector completely, the Government could hold no stake in the bank whatever—to all intents and purposes it would be a private sector company—but it could retain, perfectly legally, a statutory obligation to invest in green projects.
Caroline Flint
My hon. Friend is making an interesting point about what happens when an entity is transferred from the public sector to the private sector. Presumably, when it was decided to privatise our rail sector, we must have ensured that in doing that we kept providing a rail service within its locus. When we privatised our energy, there must have been the condition that the companies were run as energy companies. I cannot really see why, for the Green Investment Bank, which was born in the public sector to meet a particular need, that cannot be enshrined in its transfer to the private sector.
Kevin Brennan
My right hon. Friend is completely right. I have heard no convincing argument from the Minister that there is any other reason than the desire to get the bank off the books at all costs, even at the expense of the statutory protection that the Secretary of State prayed in aid as necessary protection—[Interruption.] If the Government Whip wants to intervene, he is free to do so, although it is not the convention for Whips to do so during Committee sittings.
The Secretary of State prayed in aid that legislation when he was saying that he wanted to privatise the Green Investment Bank while maintaining those green protections. The Minister has said that she is confident, in creating the Green Investment Bank special share, that the Office for National Statistics will allow the Green Investment Bank to be taken off the books. My point is twofold. First, why is it so necessary for the Green Investment Bank to be taken off the books, other than the fact that the Government want to tell a particular story with regard to public sector debt? Secondly, she cannot offer a complete guarantee at this stage that the ONS will approve that mechanism. If we had in front of us a different letter—one from the ONS confirming that it has had discussions with Government, the Green Investment Bank and possibly others and that the arrangement the Minister says we should rely upon, in relation to the ruling and the bank not having to be on the books, is completely acceptable to the ONS—we might be in a different position. If that letter were circulated to us all, we might be better placed to make a judgment on whether it is right at this stage to give up the protection of the clause. We still have Report stage and an opportunity for the Lords to look again at these matters.
Hannah Bardell (Livingston) (SNP)
To clarify, Scottish National party Members have had sight of that letter through the Scottish Parliament. It was made available through the Scottish Parliament Information Centre—SPICe. However, I take the point that it should have been submitted to the Committee. That is not the responsibility of others, but it would have been respectful. There has been a legislative consent motion in the Scottish Parliament, and our Government in Scotland have sought assurances and come to an agreement, but there is a valid point in terms of procedure that I want to put on the record.
Kevin Brennan
The hon. Lady is right; that is a basic courtesy. Rather than resist that, it would be better if the Minister simply said, “Yes, it would have been better had the letter been circulated.” We could then move on from the issue. However, she is not prepared to say that. I say to her gently that in future, it would be better if she followed that procedure if she is going to rely so heavily on a particular piece of correspondence.
Anna Soubry
I realise that it is a bit embarrassing that the hon. Gentleman has a letter he has not shared with his colleagues, but in any event, it does not matter. The most important thing is that we are going to share it. I assure him—he need have no fear—that if there are any such letters that support a good argument, I will be more than happy to share them with everybody on the Committee. It is not a problem.
Kevin Brennan
I will interpret that in an extremely generous way and take it that the Minister is promising not to rely in future on a letter in this way without sharing it with the Committee, as per the usual conventions and normal courtesies of the House.
I return to the Government’s desire to remove the clause from the Bill. I am not satisfied—I sense, looking around me, that my right hon. and hon. Friends are not satisfied either—that that is the right thing to do at this stage. Not least because of the issue around the letter, we should at the very least be given time to cogitate further between now and Report on the protections in the clause. The Minister is confident on this; she always displays confidence, so there is nothing unusual about that, but it is still not a guarantee.
I cannot say in all honesty that I am convinced the special share proposal—interesting though it is; I am certainly not ruling it out—provides a guarantee that the green purposes of the bank will be protected, without a clear indication from the Office for National Statistics, rather than the coded message the Minister has given the Committee. On that basis, I will resist the removal of the clause from the Bill at this stage, so that we can consider it on Report. If Government Members choose to exercise their majority and the clause is removed from the Bill, despite the debate we have had, we will certainly want to consider that further on Report.
The Chair
The Question is that clause 32 stand part of the Bill. As many as are of that opinion say “Aye”.
Kevin Brennan
On a point of order, Ms Buck. The Question was that the clause stand part of the Bill. The Committee voted that the clause should stand part of the Bill. The Minister cannot then move that the clause should not stand part of the Bill.
The Chair
For clarity, I will put the Question again.
Question put, That the clause stand part of the Bill.
Anna Soubry
We announced on Second Reading that the Government will accept the intent of clause 33, but will table tidying-up amendments. That is what we now seek to do with new clause 5.
The clause was added by an amendment in the Lords and inserts a near-identical replica of a clause in the Small Business, Enterprise and Employment Act 2015, including the provisions on market rent options. Discussions with Opposition Front Benchers and pub tenants clarified that their main concern was that the first part of the pubs code consultation proposed that the market rent-only option should only be offered to tenants on a rent increase. The intent of the amendment was to prevent that.
The second part of the pubs code consultation, which was published on 4 September, sought views on whether the condition for a rent increase or rent assessment should remain or be removed. The consultation document confirmed that the Government did not intend to frustrate access to market rent-only options. The consultation on the pubs code regulations closed on 18 January.
The evidence in the consultation showed that there was a risk that our proposals would limit significantly the ability of tied tenants to choose MRO at rent assessment. Many recent rent assessments have resulted in no increase. So, contrary to our intentions, a large number of tenants would be denied the offer of MRO at their rent assessment. We have therefore tabled a new clause to ensure that the effect of the Lords amendment is absolutely clear. It puts beyond doubt that MRO will be available at rent assessment, irrespective of the level at which the rent is set. Finally, as the pubs code regulations will be made under the Small Business, Enterprise and Employment Act, we have ensured that the territorial extent of the new clause is in keeping with the 2015 Act by formulating the pubs provision as an amendment to it.
Other points at which MRO will be made available were subject to the consultation regulations. We will publish responses when we have analysed and considered the responses on all the issues raised in the consultation. The point, in short, is that the measure should have been in the Bill, but was not. The noble Lords understandably and rightly added it. We do not seek to undo their work. The new clause does nothing more than tidy up the measure and make it effective.
Bill Esterson (Sefton Central) (Lab)
What a lot of tidying up needed doing. Confusion reigned at one point. We have moved from one debate in which the Government have not exactly covered themselves in glory to another in which they have been in danger of making heavy weather of something on which there has been broad, cross-party agreement for quite some time.
The challenges faced by tied tenants have provided an opportunity for long discussions with publicans in my constituency, and MPs from across the House have had similar conversations with pub tenants and pub companies around the country. The relationship between pub companies and tied tenants has long been of concern to those of us who value our pubs. The average of four pub closures a day, according to CAMRA, is the highest closure rate since the early 20th century, when legislation forced one in 10 pubs to close. Implemented properly, the legislation we are debating could help many tied tenants in the UK, whose pubs account for around 29% of pubs according to industry research in 2012.
Jo Churchill (Bury St Edmunds) (Con)
I represent Bury St Edmunds, the home of Greene King. I just want to put it on the record that other beers are available.
Bill Esterson
My hon. Friend the Member for Cardiff West just suggested that I was about to be invited for a pint of something that is already on in the Strangers’, but we can discuss that later perhaps.
The market rent-only option will also benefit consumers. We have seen welcome growth in sales of real ale and micropubs that specialise in local, microbrewed ales. The Cornerpost in Brighton-le-Sands in my constituency opened last year and serves locally brewed beer; it is already popular in the neighbourhood. It is clear that many people, including me, have enjoyed access to micropubs. Giving more pubs the opportunity to go free of tie will be as welcome for pub goers as it is for tenant landlords.
The argument for a tie-free option is clear, but it has taken a significant amount of time for the Government to reach the point of putting real support on the table for tenant landlords. In January 2013, the Government announced a statutory code of practice and an adjudicator, but it was not until mid-2014 that they included the plans as part of the Small Business, Enterprise and Employment Bill—now the SBEE Act 2015. However, the option to give tenants the automatic right to go free of tie was not included in the Bill.
In November 2014, amendments to the SBEE Bill were agreed in this House, despite Government opposition. The amendments included a market rent-only option as part of the new regulatory regime. In the Lords, the Government accepted the will of this House, and in March 2015 Baroness Neville-Rolfe made clear the Government’s commitment to both market rent-only and the parallel rent assessment that goes with it. Following the assurances of the Minister, amendments were not pressed to a further vote. Baroness Neville-Rolfe told peers:
“I was clear at Second Reading that the Government accept the will of the other place that there should be a market rent only option. Our work since has been to ensure that it delivers the protections for those tied tenants without potential unintended consequences. The questions that have arisen and the discussions that have taken place are over exactly how the market rent only option should work in practice. I am pleased to say that we have now reached a position where the Fair Pint campaign and CAMRA are content with our amendments.”—[Official Report, House of Lords, 9 March 2015; Vol. 760, c. 448.]
On parallel rent assessments, she said that the pubs code would
“require pub companies to provide parallel rent assessments and turn the adjudicator functions in relation to PRAs into a duty. We have made a commitment to this House to introduce PRA. This commitment, together with the duty on the Secretary of State to produce the pubs code in Clause 42(1)”—
of what was then the SBEE Bill—
“means that the Government must deliver on these provisions in…secondary legislation one year after these provisions come into force, as I explained a minute ago. There can be no doubt that we will introduce these provisions.”—[Official Report, House of Lords, 9 March 2015; Vol. 760, c. 468.]
I note that one year is coming up very, very soon.
The promise of parallel rent assessments is of course important, as it means that pub tenants can compare like with like. As long as the parallel rent assessment is an independent process, then tenants can make a meaningful comparison between the situation they face as a tied pub tenant who buys beer and other supplies from their landlord on the one hand, and a tenant who only rents the pub premises, buying their beer where they want, on the other hand.
When Baroness Neville-Rolfe made her promises last March, tenants and pubcos alike had accepted the arrangement, and yet what followed was a lengthy delay, and the feeling among organisations representing tenant landlords that they were being kept in the dark about progress. The consultation on the draft pubs code, when published, caused dismay on all sides: parallel rent assessment was missing and conditions were placed on market rent-only that would block access to it for many tied landlords—a point that the Minister accepted in her opening remarks.
I will return to details of the draft code shortly, but for now I should like to reiterate the importance of improving the relationship between pub tenants and pub companies by quoting Dave Mountford. Dave used to be a tied tenant and now runs a free house called The Boat. I am sure Dave will be known to some Committee members at least from his work with the Pubs Advisory Service. Dave said:
“Between 2007 and 2012 I ran a Punch Taverns leased pub. During that period…I lost in excess of £85,000, eventually going bankrupt in 2013, despite running what became the busiest Pub in the area, achieving sales of £500,000 per year.
In 2012 myself and my wife took on a Free of tie Pub very close to our first Pub in The Peak District. This Pub was sold by Punch Taverns as being non viable, having had 5 tenants in the 6 years Punch owned it. It was purchased by a local business man for us to run.
Despite being closed when we took on the Pub it is now, 4 years later, a thriving and profitable business, and despite paying a higher rent than we did at our tied Pub, the ability to choose who we purchase our beer from means we can negotiate our own suppliers and prices.
Being able to utilise the huge range of craft beers, which were denied to us by the exorbitant price charged by Punch, we have developed a reputation for a wide range of choices, and an excellent reputation for food.
We have invested our own profits back into the Pub, developing it further, and in our 4th year we achieved a turnover of over half a million pounds running a Pub that Punch sold as being ‘unviable’.”
Dave goes on to say:
“It is important to remember that MRO is only an option and if the Pub Companies and Brewers run a robust and positive business model then they have nothing to fear from an alternative model. MRO should encourage competition between Pub Companies striving to recruit the best people to run their Pubs rather than exploiting the unwary and the inexperienced.”
Strong words. Sadly, Members on both sides of the House have heard numerous examples of similar experiences from pub tenants up and down the country.
The Government’s new clauses will in principle make it easier for a tenant to qualify for a market rent-only agreement. The inclusion of a parallel rent assessment should give tenants the opportunity to make an informed and objective decision about the best option available to them, as it will mean that tenants will be able to compare what they are being offered by their landlord—the pubco—with the situation if they pay only market rent.
The adjudicator will be able to take into consideration broader issues of unfair practice in what has become a very unbalanced relationship between many pubcos and their tenant landlords. It is hoped that that will mean that examples of pub tenants who have been promised major investment by the pubco but seen nothing, or who live in very poor living accommodation at their pub, will become a thing of the past, and that if the landlord promises to repair or maintain the public area or the living area, the repairs will take place in a timely fashion if they are part of the agreement with the tenant.
New clause 5 entitles a tied pub tenant landlord to market rent-only at rent renewal. When the Government published part 1 of the consultation, the impression was given that tenants would be able to access market rent-only agreements only if a rental increase was on the table at assessment, a point raised by a number of Members at Business, Innovation and Skills questions at the time. That was clarified by the Minister, and she has done so again today. We are pleased to see that the Government have listened to the many voices calling on them to confirm the position on market rent-only and parallel rent assessment.
New clause 6 enables the adjudicator to report on breaches of the code to the Secretary of State. It is a report mechanism to keep in check the large pubcos, both on the issue of market rent assessment and, more broadly, on the type of unfair business practices to which I referred a few moments ago. I commend Members in the other place for their dogged determination on this issue before the Bill came to this place. We should also commend the Pubs Advisory Service, which has done a great deal to fight for a fairer deal for tenant landlords right the way through the passage of this Bill and did so for a considerable time before the Bill was published.
Ultimately, the measures are about giving tenant landlords a transparent set of options when it comes to negotiating their rental agreements with pubcos. What was needed was an option for tenant landlords to choose to shake off their beer ties with the pubco and agree to pay them only rent while getting their beer elsewhere. That is what was agreed in the previous Parliament, it is what the Lords amendments sought to clarify and it is what we are told is the purpose of new clauses 5 and 6.
It is important to remember that there are significant concerns about what has happened since Baroness Neville-Rolfe made her promises in March 2015, hence the need for in-depth debate this afternoon. By including market rent-only in the Bill, Members in the other place intended to give us a chance to rectify any shortcomings in the pubs code that might still result from the Small Business, Enterprise and Employment Act 2015, not least following the apparent omissions in the consultation on the pubs code.
Market rent-only is a valuable option to have on the table at rent renewal, but its absence for the majority of tenants, according to the consultation, meant that until the amendments—now to be replaced by the latest round of Government changes—were agreed in the Lords, a significant question mark remained for many pub tenants about whether they would ever be able to consider it. Remember: that was because the Government’s consultation suggested that market rent-only would be available only for tenant landlords at rent renewal if the renewal was going to lead to a rent increase.
The problem with having a rent review that was triggered, among other things, only if rents were rising was that recent rental surveys showed that rents for some pubs were decreasing at rent review. Under market rent-only conditions, as indicated in the first part of the consultation, none of the pub tenants whose rent reviews were due would have been entitled to the market rent-only option. Market rent-only is not just about rent. Indeed, the whole point of it is to reflect the overall financial burden of being a tied pub. It is also about the beer tie, which places a financial obligation on the tenant, and any other obligations they face.
Anna Soubry
I am glad that we all agree. To make it absolutely clear, new clause 5 will replace clause 33. I hope all Members of the Committee will vote in favour of these amendments. I know it sounds strange to vote against clause 33, but the new clause will replace it and all that will happen is that we will honour the full intention of the other place by making sure that their amendment is better written and any loose bits are tied up. We want anybody who is listening to this to know and understand that the full weight of what the other place put into the Bill will stay in the Bill—it is just that we have tidied it all up. We are all as one.
Bill Esterson
Briefly, I hope that the Minister’s confidence is justified that this does what she says it does and that it achieves what was agreed by Parliament in the previous Session, what was in the Small Business, Enterprise and Employment Act 2015 and the essence of what the Baroness said in March and what was agreed in the Lords. I hope for her sake that that is all true and that it really will deliver for pub tenants. I take those assurances away. We have got to this point; it has not been the Government’s finest hour—I think the Minister acknowledges that—and with those remarks we will support what the Government are doing.
The Chair
For the sake of clarification, new clause 5 will come at a later stage. Now, the Question is that clause 33 stand part of the Bill.
Question put and negatived.
Clause 34
Report on pub company avoidance
Question proposed, That the clause stand part of the Bill.
Anna Soubry
Again, the new clause replaces clause 34; it tidies up and clarifies but does not change the intent of clause 34. I make that absolutely clear. It clarifies that it relates to avoidance of all regulations made under part 4 of the Small Business, Enterprise and Employment Act—the pubs code—not just the Act itself. It makes clear that business practices occurring after the Act was passed in March 2015 can be reported on. It amends the 2015 Act rather than leaving a separate provision in the Bill. It makes the territorial extent consistent with the 2015 Act; in other words, it makes it consistent in England and Wales.
Bill Esterson
I do not intend to detain the Committee on this section except to say that the Minister’s explanatory statement makes very clear where we stand: that this is intended to clarify the effect of the Lords amendment. With that assurance, as I said in my closing remarks on the previous provision, assuming that all is going to go ahead and that this will be brought back later to be voted on, the sector is happy as things stand.
We have finally got where we need to get to on the pubs code. I am sure there will be a decent degree of scrutiny of the implementation of the code, the role of the adjudicator and how the pub tenants’ relationship with pub companies operates in the future. With those comments, I am happy to go along with what the Minister is proposing.
The Chair
As with the previous clause, new clause 6 will be dealt with at a later stage. We are now considering the Question that clause 34 stand part of the Bill.
Question put and negatived.
Clause 35
Restriction on public sector exit payments
Kevin Brennan
I beg to move amendment 116, in clause 35, page 50, line 16, after “exceed” and insert
“a maximum of no less than”
This amendment would provide that regulations may make provision to secure that the total amount of exit payments made to a person in respect of a relevant public sector exit does not exceed a maximum of no less than £95,000.
The Chair
With this it will be convenient to discuss the following:
Amendment 109, in clause 35, page 50, line 16, leave out “£95,000” and insert “£145,000”
This amendment would increase the cap to a level similar to the NHS, £145,000.
Amendment 112, in clause 35, page 50, line 16, at end insert
“which amount shall be subject to annual re-evaluation”
This amendment would subject the amount of the cap to annual revaluation.
Amendment 114, in clause 35, page 50, line 16, at end insert
“except for payments made to a person earning below the national average wage”
This amendment would exempt from the cap those earning below the national average age.
Amendment 115, in clause 35, page 50, line 16, at end insert
“except for a person who has been in long-term service”
This amendment would exempt from the cap those who have provided ‘long service’
Amendment 128, in clause 35, page 50, line 16, at end insert
“the level of the provision made under subsection (1) will be linked to inflation and earnings growth.”
This amendment would ensure that the level that the restriction on public sector exit payments is set will be linked to inflation and earnings growth.
Amendment 104, in clause 35, page 50, line 34, leave out paragraph (c)
This amendment would exclude from the cap compensatory payments made by an employer to a pension scheme which do not go to the person leaving the service.
Amendment 121, in clause 35, page 50, line 40, leave out subsection (g)
This amendment would remove payment in lieu of notice from the public sector redundancy exit payment cap.
Amendment 105, in clause 35, page 51, line 7, at end insert
“including payments relating to employees earning less than £27,000 per year”
This amendment would provide that regulations may exempt from the public sector exit payment cap those earning less than £27,000.
Amendment 106, in clause 35, page 51, line 7, at end insert
“including cases relating to employees who have been in long-term service”
This amendment would provide that regulations may exempt from the public sector exit payment cap employees who have provided ‘long service’.
Amendment 108, in clause 35, page 51, line 7, at end insert
“including where the full council of a local authority decides to grant a waiver of the cap”
This amendment would provide that regulations may make exemptions where the full council of the local authority decide to grant a waiver of the cap.
Amendment 122, in clause 35, page 51, leave out lines 18 and 19 and insert—
‘(9) The amount for the time being specified in subsection (1) shall be increased by order made by the Secretary of State every year by a revaluation percentage.
(9A) The revaluation percentage to be specified in section (9) is the percentage increase in the general level of earnings in Great Britain in that year.”
This amendment would ensure that the level of the cap is maintained in real terms.
Amendment 124, in clause 35, page 52, line 35, at end insert—
‘(2A) All prescribed public sector authorities may relax the restrictions imposed by regulations made under section 153A, if certain conditions are met.
(2B) The Secretary of State shall by regulations made by statutory instrument specify the conditions to be met under subsection (2A).”
This amendment would extend the waiver in respect of the cap to all public sector authorities.
Kevin Brennan
We have had a very exciting afternoon, as I am sure you would agree, Ms Buck. The Government have adopted what might be called the “Boris principle” on voting—namely, that they can ignore the result of the first vote if they do not like the way it came out and demand a second. We live and learn about parliamentary procedure. We obviously respect your ruling on the matter, Ms Buck, with absolute and total respect.
We now come to part 8, which interestingly has nothing to do with enterprise, despite the Bill’s title. This has been called a “Christmas tree Bill”, because it has lots of different baubles on it. If that is the case, part 8 is an Easter egg hanging on the Christmas tree, because it has absolutely nothing to do with enterprise. Nevertheless, the Government chose to include it and it was ruled to be in scope, so it is completely in order for us to discuss these matters as part of the Enterprise Bill.
Let me make it clear from the outset that the Opposition agree that excessive exit payments in the public sector should not be paid, and that abuses in that regard should certainly be ended. The problem with the Government’s approach is that they are attempting to govern by headline in a very complex area. In doing so, they are creating anomalies and unfairness, and—that old favourite of ours—legislating to invoke the law of unintended consequences. That is what is likely to happen as a result of legislating rigidly on this matter, as they are doing.
Governments often resist legislating rigidly in Bills because they understand the mess that can ensue. It was Otto von Bismarck—not Leo from “The West Wing”—who first said that people should not see how two things are made: laws and sausages. This is a very good example of that. Putting such things in the Bill is basically a Government headline for the tabloid press about public sector fat cats—an odious remark that the Secretary of State made on Second Reading, which was an insult to many thousands of decent, hard-working people in this country. By legislating in that way, all sorts of messy, sausage-like substances will seep out.
The first group of amendments to clause 35 are about where an exit cap should be placed, who should be covered and who should be exempt. They are largely probing amendments, but I may press one of them later to test the Committee’s opinion on it, because it refers to what the Government said their intention was in introducing this legislation on exit payments. The amendments also cover an annual revaluation to ensure that the value does not diminish and that more workers are not caught inside the exit cap net.
Let me go through the amendments in turn. Amendment 116 would provide that regulations may make provision to secure that the total amount of exit payments made to a person in respect of a relevant public sector exit does not exceed a maximum of no less than £95,000. In other words, it seeks to ensure that the cap cannot be lowered further without legislation. I would be interested to hear from the Minister what the Government’s intension is on the question of whether it can be lowered without further legislation.
Amendment 109 probes why the cap has not been set at a level similar to the NHS level, which was £145,000. Although it is a probing amendment, I am interested to know why the provision introduces a disparity between different sets of public sector workers. The NHS caps underwent proper research, consultation and subsequent scrutiny, and were seen to be fair. I am afraid that that compares very badly with a completely rushed consultation with minimal research and the resultant limited scrutiny that these Government proposals have had.
In the other place, Baroness Neville-Rolfe said:
“A cap even at the level proposed by the Government will not affect the large majority of public sector workers”—[Official Report, House of Lords, 4 November 2015; Vol. 765, c. GC366.]
Will the Minister supply the Committee with the figures for the workers who would be affected by an exit cap payment of £95,000? The words, “a large majority” are a bit woolly; we need a bit more precision than that when we are legislating. What are the exact projections for the cap of £95,000 and what would the exact projections be if the cap were introduced at £145,000? I do not intend to press the amendment to a vote—it is a probing amendment—but we want to understand who is being affected and what we are talking about. Perhaps the Minister would supply the Committee with the cost to the public purse of the cap set at those two limits. I hope that she is able to do so. If she is not accepting on the grounds of costs, she will obviously have those figures to hand.
Mary Creagh
Has my hon. Friend looked into whether the employees of the UK Green Investment Bank would be covered by the cap? Obviously there are several executives who, as I mentioned previously, get significantly more than the £147,000 cap. Looking into their terms and conditions, I notice that they have a six-month notice period and that pay can be given in lieu of notice. In the event of that happening for one of the Green Investment Bank employees, does my hon. Friend think that this cap would click into force? Give that the Green Investment Bank might not be privatised until 2018 or 2019, how does he think that those employees would be affected?
Kevin Brennan
As I understand it from the Secretary of State, they would be affected only if they were officially classified as fat cats. If they are not affected, they are not officially fat cats in the eyes of the Secretary of State and if they are affected, they are officially fat cats according to the Secretary of State. It remains to be seen whether those employees are fat cats under the Government’s own definition.
Amendment 112 would subject the amount of the cap to an annual re-evaluation. Amendment 122 covers a similar subject. It is vital that any proposed cap is flexible and updated on a regular basis to take into account differences in pay and increases in separate areas of the public sector. In considering the scope and impact of the policy, it is important to note that the proposal to make the cap effective at £95,000 means that it will not just impact on higher paid senior managers.
If the £95,000 figure is not uprated, it is likely to affect more and more grades, so we ask the Government to consider re-evaluating it annually, perhaps using the same uprating as for public sector pensions. Similarly, will the Minister open discussions with the relevant stakeholders on technical considerations such as whether the cap will include other means by which an individual can access an unreduced pension, such as on compassionate grounds?
Uprating is important if workers are not to fall further behind. Having the uprating enshrined in primary legislation rather than being devolved to secondary legislation would ensure that it is reviewed annually. I would be interested to hear the Government’s explanation for why they are not picking this route and why they want to do it through secondary legislation. We will listen to that explanation with an open mind.
Amendment 114 would exempt from the cap those earning below the national average wage, who, by definition, could not be called the best paid—they would, however, be called fat cats by the Secretary of State. It is hard to see how the Government can include that group of workers if that is really what they think the measure is about. What are the specific reasons for not including people earning below the national average wage in an exemption from the exit cap? The only way those workers could get up to the cap is through decades of long service, and surely that kind of loyalty is not something the Government want to punish.
How many workers earning below the national average wage will be included in an exit cap of £95,000? I would be interested to hear the Government’s figures. I am sure they will have crunched the numbers carefully in considering and developing the policy, and I presume the Minister will have the figures to hand and examine them carefully before deciding whether to oppose our amendment.
It has been widely mentioned—this is really important and I will come back to it later—that the then Exchequer Secretary to the Treasury, the right hon. Member for Witham (Priti Patel), said in January 2015 on exit payments:
“This commitment, which will be included in our 2015 General Election manifesto, will cap payments for well-paid public sector workers at £95,000.”
I give her credit for her clarity on that. She went on to say:
“Crucially, those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants.”
That commitment was given by a Treasury Minister a year ago. When the Conservative party manifesto came along, it said on page 49:
“We will end taxpayer-funded six-figure payoffs for the best paid public sector workers.”
On Second Reading in the House of Commons, the Secretary of State for Business, Innovation and Skills said that the measures were needed because
“Too many public sector fat cats are handed six figure pay-offs when they leave a job”—[Official Report, 2 February 2016; Vol. 605, c. 817.]
If someone is affected by this provision, according to the Secretary of State they are a fat cat. The amendments will allow us to explore exactly why that is a dreadful thing to say.
Mary Creagh
Has my hon. Friend seen any figures on the impact of the measure according to gender? Does he know whether there has been a gender impact assessment? I am thinking in particular of people who have worked for a long time as, say, teachers or nurses and who will be above the £27,000 a year de minimis requirement set out by the Treasury Minister, but who find themselves unable to continue, perhaps after a traumatic event or injury at work, and are able after a period of 30 years to leave. How does he think they will be affected? Does he see that there could be a discriminatory impact?
Kevin Brennan
My hon. Friend’s astute intervention saves me from going into too much detail on that score, but she is absolutely right: we simply do not know the equality implications of the measures, particularly in regard to gender, because the Government have not supplied us with the figures. It seems intuitively highly likely that the impact will be skewed heavily against female workers in the sorts of occupation that she outlined and perhaps in other public sector occupations.
The Bill, as it stands, does not have any such exemption as the Treasury Minister indicated it would last year. As far as I can make out, that was not the initial intention or, indeed, what was stated in the Conservative party manifesto. Despite the Government’s arguments, while the public sector exit payment cap includes pension entitlement within its scope—that is a key issue—it will affect employees on even lower salaries, as current pension protections wither on the vine.
Mary Creagh
That is a key point. We know that people working in the public sector have certain protections. In some services, those protections kick in at age 50, and in others at age 55. By including pension rights, people who may be forced to retire on the grounds of ill health or their simple inability to carry on working will find a cap on exit payments, meaning that they can get the six months’ notice. But the far more lasting injustice will be that their pensions cannot be made up as though they had worked to 60 or, in some cases, to 65. They will suffer detriment for the rest of their lives through loss of pension income that will not have been made up.
Kevin Brennan
My hon. Friend makes that point far better than I would have made it. Again, her intervention is astute and understands the implications of what the Government have done by including pension payments within the exit cap. If the Government were serious in their rhetoric that doing so would affect only the best paid, it would be straightforward to include a provision in the Bill to exclude those on average earnings or below. On Second Reading, the Minister said:
“What we do know is that there is a very small number of workers in the public sector on about £25,000 who could be caught by this… But those are extremely rare conditions.”—[Official Report, 2 February 2016; Vol. 605, c. 886.]
We are concerned about the Government’s reluctance to make the necessary exemptions to ensure that those unfortunate few, which is what Ministers tell us they are, are not disproportionately affected. If the low and average paid are affected in rare circumstances only, excluding them from the cap will not result in the Government losing a great deal of money, so what is the problem with exempting the low paid from the provisions?
Lucy Frazer (South East Cambridgeshire) (Con)
Does the hon. Gentleman know of any private company that pays three times annual salary as an exit payment?
Kevin Brennan
That is not what we are discussing here. We are discussing the terms and conditions that public sector workers signed up to in agreement with the Government. In many cases, such people may have been in service for a long time and may well have given up the opportunity to earn more in the private sector by working as loyal public servants.
During the clause 26 discussion on Report in the Lords, Baroness Neville-Rolfe indicated that a drop of £500 would not be disproportionate for someone previously entitled to a pension of £12,500. I have to say that a drop of 4% is significant for somebody on a relatively small income, especially when that income is below that of someone on the national minimum wage. To say that a 4% cut is not significant is highly misleading.
The Government made the case in the House of Lords that leaving with a payment of £95,000 or above would be a large amount for any employee. For example, the Minister in the other place said that she does
“not accept that those exiting with a payment of £95,000”—
which is not the case—
“will generally be subject to hardship”.
The idea that someone will receive £95,000 is a myth. A large amount will never actually be seen by employees on low to average incomes, because the payment includes compensation paid to the pension scheme. My noble Friend Baroness Hayter pointed out that
“they cannot go off and use that money to live on while trying to retrain or move or find another job; it is an actuarial payment that never comes near their bank account… This is not a sum of money they can use to buy themselves an annuity to help train or move or anything else—it is money they never see.”—[Official Report, House of Lords, 30 November 2015; Vol. 767, c. 984-985.]
Mary Creagh
On the point made by the hon. and learned Member for South East Cambridgeshire, I did a quick Google search and discovered a headline relating to Tesco, which we have discussed in Committee previously:
“Ousted Tesco boss is handed £20million payoff”.
I do not know whether that was three times his annual income, but that is what the Daily Mail reported was received by Philip Clarke, 54, who stepped
“down after 3.7% drop in like-for-like quarterly sales”.
Kevin Brennan
As ever, I cannot fault my hon. Friend’s interventions, even if I might fault her sources from time to time. She is right to point that out to the Committee. Let us take a hypothetical example of how someone might be affected. The Government are trying to make out that people will not be affected, but, to take her point, if we take someone who has been a librarian in the public sector for 34 years and who has reached the age of 55 with a career-average salary for pension calculation purposes of £25,000, their pension accrued at one 49th per year of service would add up to £510.20 for each year of service. With 34 years of service that would come to £17,346.93. Under the regulations, if it came to pass that that person had to leave the service owing to redundancy, they would get a pension of £17,346 11 years earlier than the normal retirement age of 66. Therefore, if we take those 11 years and count in the pension, that adds up to £190,816 of pension paid before normal retirement age.
The payment required by the pension fund to enable that unreduced pension to be paid would be likely to breach the Government’s proposed £95,000 exit cap. There are technical reasons why it does not add up to the full amount of £190,000, but the so-called strain payment required is highly likely to exceed the Government’s proposed cap, so the employer would not be able to make the member redundant without breaching either the proposed cap or the current local government pension scheme regulations.
On Report in the House of Lords, Baroness Neville-Rolfe said of that example that that person would not be affected by the cap if they were aged 52. That is correct, but that misses the point as no pension payment would be in play if someone were made redundant earlier than age 55. That would be a simple redundancy payment, paid directly to the member of staff in the normal way, which would be unlikely to breach the cap. The issue is with people made redundant after the age of 55 who are automatically entitled to early retirement rather than a straightforward redundancy settlement.
It is important to note that in the example I gave the normal retirement age is 66 and while many local government employees who are currently 55 will have some protections in place to mitigate the worst effects of such a cap, that will not be true for all employees, nor will it be true for staff as time moves on. We must remember that the proposals are expected to be in force for some considerable time and all current protections are withering on the vine as we speak.
Amendment 115 would seek to protect workers who earn less than £27,000 and have many years of loyal service. The Government’s manifesto referred to “best paid workers”, so I wonder whether they consider a worker earning £27,000 a year to be one of the best-paid workers in the country who should be covered by the cap. I do not think that was the original intention—in fact, I know that, because as I said earlier the right hon. Member for Witham, when in the Treasury, said that
“those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants.”
She did not think that they were fat cats at that time and she thought they should be protected, so we need to understand why that is not happening in the Bill.
Why not accept amendment 115? Will the Minister outline the unusual circumstances, as Baroness Neville-Rolfe did, in which workers will be caught out? Why was a lower earnings floor not included given that the Government promised that a year ago in their manifesto, which said that they would pursue the “best paid workers” and that that was the cap’s intention? Of course, once the election was over, the Government ignored what they had said. The Minister referred to the small number of low-earning, long-serving public servants, but can this Minister supply the Committee with her estimate of how low-paid and long-serving workers will be affected by the cap?
I was going to talk about the poor quality of the consultation. I do not want to detain the Committee for too long, but the consultation was in no way of the same quality—I pay tribute on that score at least to Lord Maude—as the consultation done when caps were introduced previously in the civil service. Further problems have emerged as a result of how poorly the consultation was conducted. Usually, a full consultation takes 12 weeks rather than the four weeks taken by this one, which began on 31 July 2015 and concluded on 27 August 2015. Problematically for a lot of workers in education, of course, that coincides exactly with the summer recess, and the measure could have a big impact in schools and education. The National Association of Head Teachers has pointed out that there are particular problems relating to the proposals as a result, and that it did not get a proper opportunity to consult its membership about them.
That takes me to amendment 128, which would ensure that the restriction on public sector exit payments is set at a level linked to inflation and earnings growth, of which arbitrary fixed caps do not account. If the cap is introduced, there must be a commitment to index-linking it to ensure that it meets the original intention without becoming more and more punitive over time. Any cap must include a mechanism for index-linking in line with pay and prices.
This is a long group of amendments; I apologise, Ms Buck, but I must go through each one. Amendment 104 would exclude from the cap compensatory payments made by an employer to a pension scheme that do not go to the person leaving the service. That refers back to strain payments, which I was discussing earlier.
Mary Creagh
My hon. Friend is making an excellent point, and I agree particularly with his amendment to ensure that exit payments are linked to inflation and earnings growth. Otherwise, the cap would become an arbitrary bar that could dissuade people from going into public sector jobs.
For the record, I wanted to draw to my hon. Friend’s attention, particularly in terms of pensions, the payoff of £3.6 million made to Richard Glynn, chief executive of Ladbrokes. When Dalton Philips, chief executive of Morrisons, left after a chequered reign, his payoff was £4 million. The boss of Barclays, which of course is partially state-owned, left with £28 million in cash and shares. On the pensions point, the disgraced chief executive of Volkswagen, Martin Winterkorn, left with a €21 million pension pot. Just to be clear about the—
Kevin Brennan
Ms Buck, I will respect your ruling on my hon. Friend’s intervention, but I completely understand why she made it.
We were just about to discuss strain payments, which are made when workers in their 50s must take redundancy. The shortfall in their pension is actuarily adjusted at the time of redundancy. As I pointed out earlier, they do not receive the money in their pocket; it is paid by the employer to the pension scheme. I think we can agree that such payments are qualitatively different from the other payments covered by the legislation, which is why special provision should be considered to limit their impact.
Strain payments do not apply to the highest-paid workers. A middle-ranking public servant with long service is much more likely to be affected by the Government’s current proposals than a highly paid or best-paid worker who has worked in the public sector for a short period. Strain payments could make up a considerable amount of the £95,000 cap. If so, long-serving, loyal workers could finish work with a significant shortfall in the amount that should have been allocated to help them to deal with redundancy, unemployment and uncertainty. They will have little left over in their redundancy payments to pay for annuities to provide for long-term security. Some in areas of high unemployment will have little chance of getting alternative employment, and they will also be too old to retrain effectively. In other words, they will be left high and dry. I do not think that was the intention of the Minister, her Department or the Government, but surely she can see the difficulties for these workers if the vast majority of any settlement is taken up by strain payments, which are related to pensions.
Mary Creagh
I am not clear whether the provision applies retrospectively or about how far back it goes. Does it not potentially open the door to class actions from large groups of people? I can see one class action in development from the Magnox employees, who are working for a privately owned company that has been nationally owned. Does my hon. Friend find it interesting that the Minister was so keen to resist our amendments this morning that would have provided transparency on the remuneration of executives of the Green Investment Bank yet is so very keen to impose a cap on people working for a formerly state-owned company that is now a private company?
Kevin Brennan
I do not believe the provision is retrospective—retrospective legislation is rare in the direct sense—but it certainly affects existing agreements and undermines previous agreements that the Government made and said were fair and would stand for a very long time. In the case of contractual obligations, the provision raises serious questions as to whether the Bill as it stands is legally sound. As well as the practicalities of the measure to include notice pay in the cap, there is also the impact on those who are too ill to work. Modelling by the National Association of Head Teachers shows that a headteacher who is compelled to leave work due to developing a physical condition and who is unable to work out their notice due to illness will be significantly worse off compared with an able-bodied head because of the proposed cap currently being drafted to include pay in lieu of notice. Does the provision to include notice pay and holiday pay comply with the provisions of the Equality Act 2010? What advice has the Minister had on that?
My next point relates to the way in which schools are run, because they are different from other organisations in relation to notice for obvious term-time reasons. The Government have committed to academise poorly performing schools. That can often include the removal of a headteacher from a school. How would that be possible under the provisions if that same headteacher decided to work out their notice, rather than leave straightaway? That is what anyone would do if their payment in lieu of notice was to be included in the exit payment. If a school is trying to make a fresh start under a new head, it will find it very difficult to remove the incumbent swiftly, because that person will seek to work out their notice rather than depart immediately. That is understandable, because who would act in a way that was financially disadvantageous to them in such circumstances?
The real problem is that notice periods for headteachers are often exceptionally long. If a headteacher is leaving just after Christmas, their period of notice might not technically run out until after the summer holidays in some cases. Schools and pupils could suffer under these plans if there were such delays. Has the Minister considered that? What is her response to that problem?
Amendment 105, on which I may well seek the Committee’s opinion, provides that regulations may exempt from the public sector exit payment cap those earning less than £27,000. Amendments 115, 105 and 106 offer protection for low to moderately paid public sector workers who have provided long service. I will not repeat the arguments made earlier, but the fact remains that excluding workers who earn less than £27,000 per year would protect workers earning the average wage of £26,400. A promise to protect those workers was made by the Government; that is the point.
Kevin Brennan
The Minister shakes her head, but the then Treasury Minister specifically made that promise. I will read the quote again:
“those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants.”
I cannot imagine anything more emphatically clear being said by a Government Minister, so why has that exemption not been included in the Bill? Amendment 105 would provide that exemption. As such, unless the Minister can convince us otherwise, we should insist on the Government keeping their word by pressing the amendment to a Division.
Amendment 108 is about the waiver process. The Government’s consultation response made mention of a waiver process and said that the full council would
“take the decision whether to grant a waiver of the cap in cases involving Local Authorities and for local government bodies within their delegated powers”.
In the Lords, Baroness Donaghy said that despite the assurances made in the consultation response, there was no reference to that in the Bill. That is a crucial issue for local government and should be dealt with in the Bill, rather than through secondary legislation. The Government’s draft statutory instrument allowing a waiver if the full council agrees has been published. That does not give local government the certainty it needs if it is to continue the job of restructuring itself in the face of the huge cuts to it. We have already seen agreements dealing with pay and conditions that were drawn up in 2010 disregarded just six years later. There is a concern in local government that it is not being given the certainty on waivers that it expected to see in the Bill, and it would like to know why.
Which public authorities will be allowed to exercise a waiver, and which will not? If there are exemptions from the waiver, will the Minister explain her logic in deciding which public bodies should be exempted and which should be included? The Government have done much to try to remove schools from local authority control. Will the waiver apply to all schools in local authority control? Will waivers apply to academy schools? Will there be a level playing field between the two categories of taxpayer-funded schools, or will one be favoured more than the other?
The ability of a local authority or other public sector body to seek a waiver would concur with the Government’s professed desire for local democracy and localism in general. Will the Minister explain how she drew up the rules for including or excluding public bodies and her role in the monitoring of waivers?
Hannah Bardell
I echo much of what has been said by the hon. Member for Cardiff West. His comments have been extensive and detailed, so I will not keep the Committee for long. However, I want to support the amendments and highlight our concerns with the Bill. As we have heard, the Cabinet Office confirmed that someone earning less than £25,000 could be affected because of their long service. We share the concerns raised directly with us by Unison that the cap would affect redundancy payments for a wide range of NHS staff. Those people are not classed as executives, because redundancy calculations are made on the basis of length of service and earnings. Because a significant number of NHS staff work unsocial hours, capping the payments could affect staff in band 6 and above.
There is logic and sense in supporting the amendments and some of the comments made in the briefings. For example, the Local Government Association criticised the Government’s plans and the cap of £95,000. We understand the logic behind having a cap, but it is about how we legislate. In the other place there were concerns about the lack of an impact assessment to go with the proposals. Once again, we are seeing legislation that has not been clearly thought through. The Cabinet Office has admitted that a small number of people might be affected, but we need a proper impact assessment to understand that, and the amendments speak to such concerns.
My hon. Friend the Member for Kilmarnock and Loudoun, who was very keen to speak, has had to go to another debate. The issues that he wanted to raise relate to his experience and the experience of others in local government, particularly in Scotland. The Scottish Government have not been in favour of compulsory redundancies and have managed their workforce in a more creative way, which is something that should be considered. It is important that we look behind the pay cap and the details of it.
The overarching issue for us relates to the strain payments. As has been said, much of the payment does not actually go into people’s pockets; it goes to making up the shortfall in pensions. In summary, we support the amendments.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
It is a pleasure to serve under your chairmanship, Ms Buck. My hon. Friend the Member for Cardiff West, the shadow Minister, made a powerful speech to which I hope the Minister has listened. I hope we will hear about changes to the current proposals, and I hope that our logical amendments to what seems to be an irrational approach to dealing with a problem of the Government’s own making will be accepted. Ideologically driven cuts to the public sector have proved far more costly than the Government initially anticipated. We only have to look at the payments made as part of the top-down reorganisation of the NHS, which is estimated to have cost £1.6 billion in six-figure pay-offs alone to 1,000 highly paid officials. That goes some way to explaining the Government’s keenness to claw back some of those payments, or certainly to ensure that that does not happen in future. They appear to be trying to slam the gate shut after the horse has bolted.
Nobody questions the logic of what the Government are trying to achieve in trying to prevent significant pay-offs. However, it seems to be a sledgehammer to crack a nut approach. In my former role as shadow Attorney General, I came across examples in parliamentary questions to the Department that tried to uncover similar practices in the Law Officers Department. The Crown Prosecution Service had spent £83 million since 2010-11 on redundancy packages, and 24% of that went to just 153 individuals who received redundancy payments in excess of £100,000 each.
No one is questioning the principle behind what the Government are trying to achieve. They have clearly said that the measure is aimed at the highest paid officials, but in reality it will hit the redundancy packages of ordinary civil servants on modest wages—even some on wages below the national average—who have given long years in public service. It would, for example, hit a worker on just £24,611 who had worked for 34 years and was over 50.
When their lordships considered the proposal in Grand Committee, my noble Friend in the other place, Baroness Hayter, asked:
“Is this just a rather nasty, crafty little device that they have alighted on simply to help to reduce the deficit, given that the Chancellor seems to be having difficulty with it, by hanging that deficit around the neck of their own employees? Or is this just mistaken drafting, which the Minister will be happy to amend on Report?”—[Official Report, House of Lords, 4 November 2015; Vol. 765, c. GC359-60.]
Unfortunately, the answer given seemed to indicate that it was not a mistake, that it is the Government’s intention and that they do not intend to amend the measure. I very much hope that the Minister tells us something else today. It would be good to hear from her that the Government have taken on board some of the concerns about the impact of the measure. I hope that they will accept the amendments we have tabled or give some indication that they will amend the clause themselves, as they seem happy to do with other clauses. That does seem to have caused confusion with voting in Committee.
Anna Soubry
It has been a good debate and I will be the first to admit that there have been some good contributions. It is absolutely right that we should go into the matter in detail. It has to be said at the outset that the Government are acting on what was very clear in the manifesto promise upon which we were elected. We said that we would cap the public sector pay-out to end six-figure pay-outs. I am bound to say, as somebody who was self-employed for nearly 20 years, that this is the sort of stuff that simply never came my way at all. That does not mean to say that I do not have any sympathy for people who—and this is the most important point—are made redundant. That means that they had a job and, suddenly, they do not have a job. We have to recognise that we are talking about people who are being made redundant.
To answer the hon. Member for Wakefield directly, people who are made redundant because of ill health are not touched by the cap at all. I hope that we can deal with that claim. We have to set this in some context. In terms of statutory redundancy in the private sector, I am reliably informed that the maximum statutory payment that someone could receive if they earned £25,000 and had worked for some 30 years is £14,250. I am told that the evidence is that the average payment is in the region of £16,000. We have to set what happens in the private sector in sharp focus and contrast that with what happens in the public sector.
We have heard much about modelling, in effect, of what happens when people are on lower pay and find themselves being made redundant. They first thing to say, of course, is that nurses do not get made redundant. On the contrary. It is fair to say that we are rather keen to employ more nurses, not to make nurses—nor, indeed, teachers—redundant. In any event, the Cabinet Office has confirmed that no civil servant earning below £25,000 will be caught by the cap. We are not saying that there are not exceptions. To be truthful—and I always want to be truthful—we cannot actually find an exception. I will go through some examples that I hope will give some assurances to people. We cannot actually find an example—we are not going to say that there are not any but we cannot find one—of somebody who could be earning £25,000 but finds themselves having a payment, on being made redundant, of more than £95,000 and therefore having it capped.
A senior manager at grade 7 in the civil service with a classic pension scheme who leaves aged 55 with 30 years’ service would not be caught by the cap if he or she were earning below £50,000. A prison officer earning £28,000 with 34 years’ experience would be able, even with the cap in place, to retire on a fully unreduced pension aged 52. A tax inspector aged 52, earning £60,000 a year with 25 years’ experience, would have a pension of £17,500 per annum instead of £19,000.
The hon. Member for Livingston was specifically concerned, and many others would be concerned, at the thought of a nurse being made redundant. Frankly, it is difficult to conceive but it might happen. I am trying to imagine what the circumstances could be. No one earning below £47,500 in the NHS will be affected by the cap and the vast majority of nurses earn below that figure. To satisfy the hon. Lady—I know that she specifically raised that point—we said that we would go away and look at it all and that is exactly what we have done.
Catherine McKinnell
I thank the Minister for giving way, and I would very much hope, obviously, that she would be truthful. The information she provides gives some reassurance for today but, given that the £95,000 will not be indexed by the Government, will she explain how longer-term security will be provided? Also, if she is so confident that no one will be affected, why will the Government not accept the £27,000 cut-off that they seemed to promise before the election but are not delivering in the legislation?
Anna Soubry
Let us make it clear that what a Minister said before the manifesto was written does not count as a manifesto commitment. The manifesto is what matters the most, and in it we made it clear that we would place the cap at £95,000. I can go only on the figures—I specifically asked for them. Someone on £25,000 who has worked for 30 years in the private sector will get a maximum of £14,000 and we are talking about people in the public sector who have been working on that same salary for the same length of time having their payment capped because it might exceed £95,000. We really must see the cap in context.
Catherine McKinnell
Will the Minister clarify something? When she talks about someone in the private sector earning a maximum of £14,000—
Catherine McKinnell
Gaining a maximum pay-out of £14,000. Is the Minister talking about a statutory redundancy payment or a private contractually agreed one? If it is the latter, how does she know what all the private contracts provide for?
Anna Soubry
That example shows the profound difference between the private and public sectors. I do not for one moment say that people who work in the public sector do not work hard, but we must take a long, hard, honest look at the terms and conditions of those who are paid for by other taxpayers, to ensure fairness and equality between the sectors.
Catherine McKinnell
I thank the Minister for giving way. She is not comparing like with like by saying that the statutory redundancy payment is all that a private sector employee would get. In the vast majority of cases there would also be a contractual sum that would or could be agreed, and her analysis is, therefore, unfair.
Anna Soubry
I am just putting out the figures on statutory redundancy payments, and setting the context—it is important that we understand the context. That does not mean that there are not lots of people working in public service on low wages—my own brother works on a very modest wage within the NHS. We have to look honestly at those terms and conditions. My hon. and learned Friend the Member for South East Cambridgeshire made an important point. She struggled to think of examples of people on £25,000 who had worked for 30 years and would, in the event of being made redundant, be entitled to more than £95,000. That is all I am saying. That is why such examples are so interesting and, I think, make my point.
I will give some more examples. A librarian, earning £25,000 and with 34 years’ experience, would, even with the cap in place, be able to retire on a fully unreduced pension at the age of 55. A health and safety inspector earning £50,000, with 20 years’ experience, would receive a pension of £12,000 per annum, rather than the £12,500 they would have received before the cap. I think we would all struggle to imagine teachers being made redundant, but a classroom teacher earning £38,000, which is the maximum of the upper pay range, with a normal pension age of 60, would not be caught by the provisions.
We know that the armed forces are exempt. Again, I am grateful to my officials, because I asked why and whether they were put into a special case for good reasons such as the nature of their service. In fact, I am helpfully advised by my officials that, given the higher payments to those in more senior ranks, who can get quite substantial amounts of money for redundancy, we are looking at that situation and ensuring that there is a responsible attitude and pay-out.
Mary Creagh
Earlier, I made the point about the impact of potential gender discrimination. Has the Minister done any sort of gender impact assessment of the working of the two rules, in particular given the exemption for the armed forces, which are dominated by men?
Anna Soubry
I am not aware of any tooling, but I do not see this as a question of gender at all; rather, I think—
Anna Soubry
I am sorry, I really do not see it as a question of gender. If it was a question of a large number of public sector workers being women and tending to be low paid, the hon. Lady might be making a good point. Therefore, it behoves all councils, of whatever political persuasion, to ensure that they do not in any way, shape or form discriminate against women, nor should they see certain jobs as jobs for women or as in some way for pin money; and, if we are honest, local authorities of all political persuasions have done that over the years. I am delighted to see that those old-fashioned, outrageous attitudes are beginning to move.
Anna Soubry
No, I am going to make some progress, if I may. I did not intervene on any hon. Members, because I want people to be able to develop their arguments.
I will go through the list. Among firefighters there have been few if any formal redundancies. They receive statutory redundancy entitlements and the other staff fall under local government arrangements. People might want to know about the judiciary. Why are judges not covered? Judges cannot actually be made redundant. Magnox workers we will deal with in connection with the next group of amendments.
I was asked a number of other questions, including about academies, which are classified as part of the public sector—I will deal with that one in a moment. On pension top-up, it is often the case that those with the highest salaries will receive the greatest top-up, and we know that there are some examples of that. In answer to the hon. Member for Wakefield, the Green Investment Bank could well be in scope if it remains in the public sector as defined by the Office for National Statistics. If we are successful and the bank is sold into the private sector, it will not be in scope. Another important point is that the £95,000 cap represents only 5% of exits to date. As we might imagine, those primarily affected are the highest paid. That is an important statistic.
Catherine McKinnell
Will the Minister address the point about indexation? I appreciate that she is giving helpful statistics about the number of people affected or likely to be affected today, but it would also be helpful to keep in line with rising prices and wages into the future.
Anna Soubry
That is a good point. I am more than happy to take that one away and give her a response later.
Lucy Frazer
Subsection (9) states:
“Regulations may substitute a different amount for the amount for the time being specified in subsection (1)”,
so it looks as if there is provision to up the cap in future.
Anna Soubry
I am grateful to my hon. Friend. Another question that has been asked is why so much will be in secondary legislation. One reason why we are doing that is that it is genuinely a much better way to introduce something that will undoubtedly—I am not going to pretend otherwise—have its complications and nuances. It is important that we do not just introduce blanket rules, but have provisions to look at any cases that might or should be exempted.
Somebody asked a question—forgive me for not remembering who, but I think it might have been the hon. Member for Wakefield in an intervention—about the national health service, which, as she identified, has a cap of £160,000. This legislation will affect the existing cap, taking it down to £95,000.
I want to make some progress and deal with the amendments. Amendment 109 seeks to raise the cap to £145,000. I would argue that it is unclear whether the Opposition favour completely uncapped exit payments or a cap set at what could be over 10 times the maximum statutory redundancy. The Government have made it clear, however, that we want to put the figure at £95,000. We were very clear about that in our manifesto.
Amendment 105 seeks to impose a £27,000 earnings floor for the cap, but the cap will have no impact at all on the large majority of public sector workers. As I have said, it will affect only the top 5%. We are really struggling to find an example of any civil servant earning below £25,000, for example, who would be in any way affected by the cap. Those earning below £27,000 will not be caught and, in any event, we believe that this represents a generous package that many will be entitled to.
Amendments 106 and 115 would exclude those in long-term service. There may be some instances where individuals with very long-term service on more modest salaries could be affected by the cap, but as I have explained, the £95,000 represents a generous package compared with what is available to those on similar pay in the private sector. The majority of long-serving employees caught will be those with high or very high salaries.
Amendments 112, 116, 122 and 128 relate to annual revaluation. Amendments 112, 122 and 128 all seek to subject the cap to annual revaluation, while amendment 116 seeks to impose a minimum level of £95,000 for the cap. All those amendments fail to offer the flexibility that the clause provides for. The clause allows the Government to amend the level of the cap to take into account all prevailing circumstances, with the additional scrutiny of the affirmative procedure. Any form of fixed-term revaluation would just create an artificial and arbitrary mechanism. As any amendments to the cap require an affirmative procedure, the current mechanisms for changing the cap offer both flexibility and full parliamentary scrutiny.
Amendments 104 and 121 would exclude pension top-ups and payment in lieu of notice. We are not discussing retirement in the normal manner; we are discussing the additional top-ups linked to redundancy, funded by employers. As I mentioned previously, any earned pension that has been accrued by an individual is outside the cap. Again, it is really important that everybody appreciates that any sums of money paid by an employee into a pension pot of any description—anything accrued by them through their own money—is outside the cap. These top-ups linked to redundancy can greatly increase the value of pension payments above the level that has been earned through years of service. They often represent a substantial amount of an individual’s exit payments.
Payments in lieu of notice are also part of an exit payment and can be substantial for high earners—again, the emphasis really is on high earners—as some recent high-profile exits have shown. Excluding such payments would not just be unfair, but provide an obvious loophole to avoid the effect of the cap.
Amendments 108 and 124 relate to extending the waiver to local authorities and public authorities. Although we note and agree with the intentions of amendment 108 to give the full council of a local authority waiver power, I would argue that the amendment is unnecessary. Our indicative regulations, published on 3 November 2015, demonstrate that it is already our policy to give the full council of a local authority waiver power, and that will be articulated in the final regulations.
Amendment 124 seeks to grant all public sector authorities waiver powers. However, the potential inappropriate use of settlement agreements and exit payments more widely is precisely why the clause requires approval by a Minister of the Crown— rather than the employer—to relax the cap. Ministerial or full council approval means that the power will be exercised objectively with full accountability and will prevent circumvention and misuse.
For all those reasons, I very much hope that Committee members will take the view that the amendments add nothing and are not necessary, and that the Government have done the right thing by introducing the cap at £95,000. The reality is that in any event very few, if any, lower-paid workers will be affected if they are made redundant. It has to be said again that, compared with what is available in the private sector, an exit payment of £95,000 for someone who has been on low pay must be seen as generous.
Kevin Brennan
Let us make sure that that “very few, if any” is none. We have the opportunity to do that now. We could fulfil the Government’s objective and, if the Minister is right that no lower-paid workers will be affected, it would cost nothing at all, but it would provide assurance to people who are not fat cats on high pay in the public sector that the provision is not intended for them and will not affect them.
Mary Creagh
Does my hon. Friend think the Minister was being slightly misleading when she said that people in the private sector would be entitled only to the maximum statutory redundancy pay of £14,500? That is the statutory maximum, but, as I said in earlier interventions, when people are made redundant they are often entitled to pay in lieu of notice, so it is slightly misleading of the Minister to use the statutory maximum for redundancy in the private sector as a comparator.
Kevin Brennan
I do not think the Minister was being misleading, because had she been, it would have been out of order, but she was perhaps using an example that was not directly comparable, if I can put it that way.
Jo Churchill
I am listening to the hon. Gentleman and, having run a small business, I can say that when one faces decisions about making staff redundant, one is invariably looking at a situation in which one’s business is compromised by financial circumstances or a change in direction or whatever. To surmise that the majority of businesses—99%-plus of which are small and medium-sized enterprises in this country—give enhanced rates and so on is an illusion.
Kevin Brennan
That is certainly not what we are saying with the amendments, which are designed to ensure that the Government’s avowed intentions and the sentiments with which they were expressed are actually fulfilled. Without going over all the detail in this lengthy groups of amendments—the Minister made an effort to respond in some detail, for which I thank her—it is important that we test the Committee’s view on the Government’s previous position.
Last year, the then Treasury Minister, the right hon. Member for Witham (Priti Patel), said:
“This commitment, which will be included in our 2015 General Election manifesto, will cap payments for well-paid public sector workers at £95,000. Crucially, those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants.”
That is exactly what amendment 105 would do. It would fulfil the commitment that that Minister made to the British people at that time, which was the basis on which people understood the Government were intending to act to ensure that those earning less than £27,000 would not be affected. On that basis, I ask my hon. Friends and others to support me in voting for amendment 105, but I beg to ask leave to withdraw amendment 116.
Amendment, by leave, withdrawn.
Kevin Brennan
I beg to move amendment 110, in clause 35, page 50, line 16, at end insert
“except in the case of conciliation settlements”
This amendment would exclude settlements made at an early conciliation stage from the public sector exit payment cap.
The Chair
With this it will be convenient to discuss the following:
Amendment 111, in clause 35, page 50, line 16, at end insert
“except in the case of exit payments for potential claims under Part IVA of the Employment Rights Act 1996 (protected disclosures)”
This amendment would create an exemption from the cap for whistle-blowers.
Amendment 127, in clause 35, page 50, line 16, at end insert
“except for those payments made in COT3 pre-conciliation settlements.”
This amendment would ensure that Early Conciliation settlement via ACAS, cases when organisations use payments as an alternative to legal claims, which employers are legally obliged to attempt, would be excluded from the restrictions on public sector exit payments.
Amendment 118, in clause 35, page 50, line 16, at end insert—
‘(1A) Regulations under subsection (1) may not apply to exit payments paid under terms of settlement agreed between the parties in respect of litigation concerning claims of unlawful discrimination, harassment or victimisation (or both) brought under the Equality Act 2010, or exit payments that comply with an award order (or both) of a court or tribunal in relation to such claims.”
This amendment would exclude discrimination cases from the cap on public sector exit payments.
Amendment 125, in clause 35, page 53, line 24, at end insert—
“153D Reporting and referral mechanisms to be included in regulations under section 153A
(1) The Secretary of State shall by regulation make provision in relation to restrictions imposed by section 153A where the exit payment relates to a potential claim under Part IVA of the Employment Rights Act 1996 (protected disclosures).
(2) Regulations under subsection (1) shall—
(a) provide for the creation of a regulatory referral system, to apply where an exit payment relates to a potential claim under Part IVA of the Employment Rights Act 1996, in circumstances where—
(i) the Minister of the Crown as described in section 153C considers it appropriate; and
(ii) there has been suspected or likely wrongdoing, malpractice, health and safety risk, breach of law or regulation; and
(b) provide that any individual who is subject to an exit payment as described in subsection (1) shall have access to legal advice on section 43J of the Employment Rights Act 1996 (contractual duties of confidentiality).
‘(1) The Secretary of State or the Treasury shall periodically produce guidance on exit payments made in accordance with section 153D(1) for relevant public sector employees as described in section 153A(2).”
This amendment would provide further protections for employees who have made protected disclosures when being considered for exits.
Kevin Brennan
The amendments deal with the impact of the exit cap on conciliation and tribunal services for those who have been involved in disputes because of disability or whistleblowing, or general conciliation. Amendment 110 would exclude from the public sector exit payment cap settlements made at an early conciliation stage. I am discussing this in tandem with amendment 127, which would ensure that early conciliation settlement via ACAS—cases when organisations use payments as an alternative to legal claims, which employers are legally obliged to attempt—would be excluded from the restrictions on public sector exit payments.
Catherine McKinnell
My hon. Friend makes an important point. I hope the Minister is listening, because it is not just about the financial savings in these cases, but also the human cost involved where there may be a discrimination or whistleblowing claim, which is a very traumatic experience to have to take to tribunal. People should be able to get a fair settlement through the ACAS process if that is the most sensible course of action for them.
Kevin Brennan
I will come on to whistleblowing, but my hon. Friend is absolutely right to make that point.
Amendment 118 would exclude payments from the cap if they relate to claims of unlawful discrimination, harassment or victimisation under the Equality Act 2010. The Equality and Human Rights Commission is concerned that the provisions of clause 35 disincentivise the early settlement of disputes. The Government have given assurances that the cap will not apply to tribunal awards but, perversely, the cap will therefore encourage claimants to pursue their claim at tribunal, where awards in discrimination cases are uncapped, rather than settling at an early stage.
What assessment has the Minister made of the concern raised by the Equality and Human Rights Commission? Would a better approach not be to make it clear in the Bill that payments in respect of discrimination litigation, both tribunal awards and settlements, are excluded from the cap, while monitoring the existing, robust safeguards to ensure that the approval process continues to operate effectively? These safeguards will deter unmeritorious claims and encourage settlement where that is merited and offer value for taxpayers’ money. It is important that we hear the Government’s thinking on this matter.
Catherine McKinnell
Again, my hon. Friend makes an important point, which also highlights the Government’s glaring omission in not undertaking any form of equality impact assessment of these changes. Had they done so, it may well have highlighted the impact on these groups, who will obviously be disproportionately affected if the changes are not made by the Government.
Kevin Brennan
Yes, and that is exactly how bad law gets made, as we know. Therefore, I encourage the Minister to give some further thought to those points if she has not already decided how she will deal with them.
Amendments 111 and 125 would provide protections for whistleblowers—my hon. Friend mentioned this earlier—and remove them from the cap on exit payments. Capping payments could act as a deterrent to whistleblowers. There is concern across the House about the unintended consequences of an exit cap on whistleblowers’ willingness to come forward. Whistleblowers are public-spirited individuals who, when they spot an injustice or malpractice, make it public. We have seen their value not just in the public sector but in the private sector as well, but whistleblowing often leads to a backlash from the authority or business concerned. As a result, many whistleblowers do not continue to work in the same industry, understandably, and they often suffer financially as a result of their brave actions.
It is possible that such workers might think twice about whistleblowing if they are to be further punished financially by the proposed cap. Will the Minister update us on the latest view of the Treasury and her own Department on relaxing the cap for whistleblowers? The Government would do a grave disservice to openness and transparency in the public sector if they did not afford those brave individuals the protection they deserve.
Anna Soubry
I get slightly agitated when it is suggested that we did not think of something. Obviously we have thought about this issue, and we have already discussed with officials precisely those two points about people who have been booted out or unfairly dismissed for whistleblowing or through discriminatory injustice by their employer. As we know, tribunals—unusually, given the powers of the various tribunals—can give an award that is basically unlimited, meaning that in such circumstances, people who have done the right thing by whistleblowing or who have been treated unfairly through discrimination would find themselves unfairly treated by the imposition of a cap. We are absolutely alert to that issue.
Anna Soubry
I do not know why the hon. Lady is saying no. That is exactly the mischief that the amendments seek to cure. We understand exactly what the trap could be. The other thing that we absolutely understand is that only a tribunal can find that somebody has been made redundant or dismissed unlawfully because of their whistleblowing or because of discrimination. In other words, people must go through the whole process of giving evidence, with all the trauma involved, in order to get a finding. The difficulty is ensuring that we know on exactly what basis someone is entitled to a substantial amount of money in damages, in effect, for injustice.
If they have not gone all the way through to a determination by tribunal—everybody is wildly and rightly encouraged not to go all the way through the process but to settle, avoiding all the trauma, costs and loss of time—the problem is then that usually, although it should not be so, they will be subjected to a confidentiality agreement, or to some device that satisfies everybody. They get the money to which they are properly entitled, but nobody says, “Actually, yes, we did sack you because you are a whistleblower.” We are absolutely alert to the possibility that the measures could create problems.
That is why the regulations will deal specifically with such instances. We will issue good guidance to all public authorities so that in instances where there is a settlement—in other words, where an organisation says, “Yes, we accept that we made you redundant because you blew the whistle, and that was the wrong thing to do, but we are not going to go all the way to tribunal; we are going to settle beforehand”—the parties must clearly mark in some way the reason why they are settling, so that the payment can be exempted from the cap.
The hon. Member for Cardiff West and I are both trying to cure the same mischief. The question is how we achieve that. The trouble with the amendments is that they would open the process to abuse because somebody could claim to be a whistleblower without in fact being a whistleblower—they could be a fantasist. Such cases are rare, but it is a dangerous loophole that could be opened up, which is why we must ensure that we have a mechanism so that we know whether a person who is entitled to a large sum of money because they have either blown the whistle or have been discriminated against is not subject to a cap. We aim to do that through regulations.
In the case of a settlement agreement, where there is no finding by a tribunal, the claim might not be genuine for the reasons I have just explained, so appropriate scrutiny is essential before making exit payments over the cap. We will issue guidance to assist relevant authorities in determining when to use their discretion to relax the cap. Obviously, they should relax the cap if they have accepted that somebody has been unfairly dismissed or made redundant because they were a whistleblower. I hope that makes sense.
Catherine McKinnell
As a former employment lawyer, I can not help feeling that the Minister is creating a potential can of worms. Even though the issues may not be successful at tribunal for one side or the other, it is often in the employer’s interest to settle a case simply on cost grounds where the case would cost more to fight than to settle. From what the Minister is saying, it is not clear that the provision will allow for such circumstances and will not significantly complicate the situation for public sector employers across the board.
Anna Soubry
Forgive me, but I thought I had made it absolutely clear that this is about settlement agreements. Obviously we do not want people to go to tribunals; we want people to settle. In the case of a settlement agreement—this is the point—there is not a determination by a tribunal. Conciliated by ACAS or agreed privately, there is no finding by a tribunal, but the claim may not be genuine, so appropriate scrutiny is essential before making exit payments over the cap. [Interruption.] The hon. Member for Newcastle upon Tyne North says that I have not said that, but I have just said it again. Guidance will be in place to assist relevant authorities in determining when to use their discretion to relax the cap, so it will be made absolutely clear. If a public authority employer is of the view that somebody has been unfairly dismissed either because they are a whistleblower or because they have been discriminated against, guidance will make it very clear that they should relax the cap to allow for an extra-large payment to be made.
Hannah Bardell
Unison has raised concerns that a perverse incentive will be created for employees to avoid settlement via the early conciliation process, which is the optimum stage. What is the Minister’s view of that?
Anna Soubry
That is exactly what this is all about. It is about ensuring that, when two parties reach their settlement, the employer understands that it must not impose the cap. If the employer is admitting, “You have been made redundant in the wrong way. We accept that you are a whistleblower. Somebody said that they were going to make you redundant, and they did the wrong thing,” it has to make that clear when deciding the amount of damages to be awarded: “We find that you were a whistleblower. We find that you were discriminated against.” By doing that, the employer can relax the cap without any hassle or difficulty. I do not think it could be more clear.
Catherine McKinnell
To put it politely, the Minister is severely optimistic if she thinks that this is straightforward, because it is not. She will know that a settlement agreement is only entered into when neither party will accept liability. Therefore, it is not as simple as the employer accepting liability for something and entering into an agreement. Would it not make more sense to simply accept the amendment and to exempt all such agreements and arrangements from the cap altogether?
Anna Soubry
Absolutely not—and for the exact reason that the hon. Lady gave: we know that lots of people in settlement agreements will not accept liability. We also know that if we agree to the amendment, we will open the floodgates for people to make spurious claims that they have been made redundant on the grounds that they were a whistleblower. We will then get into a nightmare situation where there is a hearing to determine whether that person’s claim is accurate. Members are not letting me make progress, so that I can further explain this provision, which we have put some thought into.
Ministers of the Crown and Scottish Ministers will have discretion and be able to delegate it in the normal way. Under draft regulations, discretion will also be held by full council for local government bodies and for Welsh Ministers. A blanket exemption from the cap would unfortunately open the door to sweetheart deals designed to avoid the effect of the cap, based on dubious claims.
On amendment 125, there is no need for a regulatory referral scheme for whistleblowing claims. Whistleblowers can already make a disclosure directly to the relevant regulator or other prescribed person. Settlement agreements cannot stop them; the law is clear on that. There is no need to require that whistleblowing claimants have access to legal advice before entering into a settlement agreement. The Employment Rights Act 1996 already makes settlement agreements unenforceable unless the employee has received independent advice, so there is no need to require Ministers to produce guidance on settlement agreements for whistleblowers. In fact, we have already had three guidance documents in 2015 alone.
We have looked at this issue. Although I am not an employment lawyer, I am an old lawyer, so I can see the difficulties, but I am satisfied that the way we craft the regulations and, most importantly, the guidance we give to employers will cure the mischief that we all want to be cured.
Kevin Brennan
This is a complicated area. We have skirted over it a little bit, but there are real concerns about the implications for things such as early conciliation, which I raised under amendment 110. It has been rightly pointed out that that is a concern to trade unions, and Unison in particular. There is also a concern about the impact on whistleblowers. I think that the Minister was trying to give the Committee an assurance, in her own unique way, that the Government are committed to ensuring that genuine whistleblowers—
Kevin Brennan
And, as the Minister rightly says from a sedentary position, people who are discriminated against are not impacted when made redundant. I will not press the amendments to a vote at this stage.
Anna Soubry
As the hon. Gentleman might imagine, I often am quite robust with my officials. I am keen to ensure we get this right. If we need to go away and make another tweak, we will, because I want to be sure we get this right.
Kevin Brennan
The Minister said in response to one of our amendments that, in such areas, secondary legislation is often a better way to do things. If the Bill were rigid, it would create the kind of anomaly and cause the kind of concern raised by myself and other Opposition Members.
I take at face value the Minister’s commitment to go back and think about this, and we will have an opportunity on Report to explore some of these issues further and to ensure that we get the right sort of response from the Government. No doubt, those who watch our proceedings will have listened carefully to what the Minister had to say. Perhaps she will provide the Committee with some further information to help our proceedings on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Kevin Brennan
I beg to move amendment 113, in clause 35, page 50, line 16, at end insert
“except where exit payments are made under existing public service agreements”
This amendment would exempt exit payments made under existing public service agreements.
The Chair
With this it will be convenient to discuss the following:
Amendment 119, in clause 35, page 50, line 16, at end insert—
‘(1B) An exit is not a relevant public sector exit if, prior to regulations, the terms of an exit taking place after the regulations issued under subsection (1) coming into effect are subject to a contractual agreement made prior to those regulations coming into effect between—
(a) an employee of a prescribed public sector authority and their employer, or;
(b) a holder of a prescribed public sector office and the relevant prescribed public sector authority.”
This amendment would exclude from the public sector exit cap certain exit agreements that have already been entered between the employer and employee, prior to the implementation date of the cap.
Amendment 120, in clause 35, page 50, line 16, at end insert—
‘(1C) Regulations made under this section may not take effect before 1 April 2018.”
This amendment would ensure that redundancy schemes underway before regulations implementing the cap take effect are not interfered with retrospectively.
Amendment 107, in clause 35, page 51, line 7, at end insert
“including any period of institutional reorganisation being implemented within two years of the passing of this Act”
This amendment would provide that regulations may make exemptions from public sector exit payment cap for any period of institutional reorganisation being implemented within two years of this Act.
Kevin Brennan
I am afraid it is me again. Hopefully, we do not have too much longer to go this evening.
This third group of amendments on clause 35 is about exit payments, which we have already started debating, and whether the Bill—my hon. Friend the Member for Wakefield, who is not in her place at the moment but has been here for the vast majority of our proceedings, raised this issue earlier—will retrospectively apply to agreements that have already started.
Let me first turn to amendment 113. A public service agreement was introduced by Lord Maude in 2010 that saved a significant amount of money in the first year in which it was implemented. More than 90% of one union—Prospect—voted for it. The review was based on research, analysis, consultation and, I think some would agree, a degree of give and take. It was an attempt to find a solution that was fair to both the taxpayer and the employee. It was supposed to settle the issue of access to pensions for 25 years, but now 100 pension schemes will be forced to change their rules. People made plans on the basis of those renegotiated conditions, which were supposed to last for 25 years. They had a significant effect on those workers’ life plans and the decisions that they made.
Comparing the quality of the process and the outcome, the 2010 review and the present review are light years apart. That has added to the worry of many workers, particularly those who are in a state of limbo when considering the outcome of the Bill. Why have the Government not considered allowing workers who were covered by the 2010 Maude agreement to continue to be covered by its terms and conditions? If that is not possible, will the Minister at least consider letting workers who started the process under the Maude review continue through to completion?
On amendment 119, many workers would have already started and completed their redundancy process had they known of the Government’s true intentions last January. They were wooed into a false sense of security by the pledge that the Minister for Employment said would be made, which I referred to earlier. The Government are directly responsible for the many workers who are now trying to complete their redundancy process before the Government pull up the drawbridge with this change of approach. They would have been reassured by the Government’s manifesto pledge to end taxpayer-funded, six-figure payoffs for the best paid public sector workers, because they did not think it was intended to cover them. They would have looked at their pay packet and thought, “I’m on £25,000, £26,000 or £27,000. The Government couldn’t possibly mean me.” Many people who might have considered taking voluntary redundancy would have thought, “I have had that reassurance from the Government. It has been made twice, so they are not thinking about me. I won’t be affected by these measures.” If they had known the full story, they might have changed their decision. They might have finished the exit process by now, so they would not be caught in this widened net.
Many of those people are on low or middle incomes and have not had the ability or the time to save large amounts of money to see them through the crisis of redundancy that they might be facing. What assessment has the Minister made of the number of workers who are already in the process of negotiation? What would the cost to the public purse be if all those who have started the process were allowed to finish and not to fall victim to the retrospective nature of this Bill? I am interested to know what figures the Minister has on that, because if she opposes the amendment today, she will obviously be doing so for a reason.
Will the Minister give us an idea of the Government’s intended date for the implementation of the Bill, assuming that it completes its passage through Parliament? We found out today that it will be considered on Report in the Commons on 8 March, and then there may be reconsideration in the Lords. When does she expect that it will be implemented? What reassurance can she give to workers that, if they have already negotiated exit settlements, the Government will not overturn those plans at the last minute and in effect make them the victims of a retrospective measure? Many of the arguments that I used for amendment 119 also apply to amendment 120, and I respectfully ask for her responses to them.
I turn to amendment 107. In speaking to amendment 119, I mentioned how workers were caught unaware by the Government’s widening of the net. A sensible solution might be to accept that there should be a period of grace, given that there was a change of approach. Amendment 107 would propose a period of two years before the legislation takes effect. Baroness Neville-Rolfe said that that would frustrate the intention of the cap. It would not do that, but it would give people who have plans under way an opportunity to complete them before it comes into force. After all, their expectations were very different as a result of Government’s previous statements.
Anna Soubry
Amendments 113 and 119 would limit the cap to new entrants, as has been described, and therefore not stop existing highly paid individuals from receiving six-figure payouts. That is why I oppose those amendments. Public sector exit payments have cost £2 billion a year in recent years and asking taxpayers to continue to fund exit packages of more than £95,000 for those already employed does not represent value for money and goes against our manifesto commitment.
We signalled our intention to end six-figure exit payments as far back as January 2015. We committed to do so again in our manifesto and in the Queen’s Speech. We have since issued a public consultation and consultation response. Public sector employers can therefore be in no doubt about the Government’s intention to end exit payments of more than £95,000 and should be planning accordingly. To answer the hon. Gentleman’s question directly, the regulations giving effect to the cap will not be in force until 1 October 2016 at the earliest, giving employers and employees time to prepare. The power to relax the cap can address any unforeseen unfairness or hardships that arise, which will include cases where the exit is agreed and scheduled to take place before the regulations come into force, but, for a reason beyond the control of the employee, the exit occurs after they have come into force. For those reasons, I ask the Committee not to support the amendment and I ask the hon. Gentleman to withdraw it.
Kevin Brennan
I will not press the amendment to a vote. I am grateful to the Minister for indicating the earliest date at which the legislation can come into force; it is useful to have that guidance. I do, however, think that again the emphasis on the very highly paid is not correct. Many on lower pay who have made plans accordingly could be affected, but I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Kevin Brennan
I beg to move amendment 103, in clause 35, page 50, line 38, at end insert—
“( ) Regulations shall make provision to require prescribed public sector authorities to consider, prior to making a public sector exit payment—
(a) whether the payment being paid is appropriate; and
(b) whether the payment would provide value for money.”
This amendment would ensure that when considering staff for exits value for money is considered.
Value for money is a key concern, which is why it is mentioned in the amendment. The Government seek to justify a cap on exit payments solely on the basis of the cost of payments to staff between 2011 and 2014, which is not a helpful period to look at because the evidence provided fails to recognise that during that period employment across the public sector was reduced by 790,000, which inevitably affected the cost of exit payments. During that period, civil service employment fell by 107,350 using the current compensation scheme arrangements. No evidence has been offered to demonstrate that an exit payment cap would deliver real value for money and savings into the future, and it could do the opposite, as changing the compensation payments will naturally affect the willingness of staff to exit the public sector, which could lead to higher costs elsewhere.
We have already heard about the deal that Lord Maude described in 2010 as fair to the taxpayer as well as fair to workers; he also said that the deal was fair to employees. The agreement took into account length of service, salary and age, and there was a salary cap that protected against extremes, which resulted in a huge decrease in the number of settlements over £100,000, which is the Government’s intention in the measures before us.
Exit payment caps will have significant effect on workers, whose terms and conditions will be dramatically altered; there will also be an impact on the efficiency of the Government. Both of those issues should be of concern to the Minster. Baroness Neville-Rolfe said in another place that the amendments on value for money were not “necessary or desirable.” She went on to say,
“There is already a fundamental duty on the public sector to ensure that exit payments are value for money and that they are made in the most appropriate manner.”—[Official Report, House of Lords, 30 November 2015; Vol. 767, c. 981.]
What is the clear evidence that imposing the cap does not represent value for money or is not appropriate in a particular case?
Does the Minister now agree that it might have been a mistake not to have the formal impact assessment that colleagues referred to earlier? Even the Dangerous Dogs Act 1991 had an impact assessment that reached some 50 pages.
Kevin Brennan
That is exactly my point. Even the Dangerous Dogs Act had an impact assessment that was 50 pages long. The idea here is that we should not have an impact assessment of a measure that is extremely complicated and affects tens of thousands of workers and hundreds, if not thousands, of public and private sector businesses and bodies. It deserves an impact assessment. It would have made the issue of value for money far more transparent than it is to us in Committee. There is a lack of information about the likely savings to the taxpayer because a proper impact assessment has not been undertaken.
Perhaps the Minister can tell us what proof she is offering that what she is proposing will offer value for money and will bring genuine savings, and that some of the unintended consequences will not militate against that and make any net savings very small or even negative? Where are the facts and figures to support the Government’s claim that the previous schemes did not offer value for money and her new scheme will? In 2010, the scheme the Government introduced was said to offer value for money. Does it still offer value for money now? If not, what has changed in the meantime? Can the Minister guarantee that her changes will not damage the existing value for money that is being achieved as a result of that settlement?
What assessment has the Minister made of the impact of reduction of flexibility brought about by the exit payments cap on the ability of management to manage restructuring of organisations in terms of downsizing? What assessment has she made of the potential impact on staff morale? Is she satisfied that introducing exit payment caps will not actually result in moving costs from one section of the public purse to another. Why are the publicly owned banks the ones that are exempted from the value for money test in the Bill?
I want to mention the fact that the impact on value for money also affects the private sector. Private sector companies working in the nuclear industry will be affected by the exit payment proposals and their impact on value for money. We know about the specific concern in relation to Magnox, which we will discuss further at a later stage. When Magnox stopped producing electricity and moved into decommissioning, the staff were promised that their pensions and severance benefits would be safeguarded. If the Bill goes ahead as it stands, many hard-working and long-serving staff would lose a significant amount of money. There could be a significant impact on value for money in the private sector.
Value for money needs to be looked at in the round, taking in its impact on workers, employers’ ability to manage change, and the knock-on effect on other Government Departments and, indeed, on nuclear safety. I look forward to the Minister’s response.
Ordered, That the debate be now adjourned.—(Stephen Barclay.)
Westminster Hall
(8 years, 9 months ago)
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Under-occupancy Penalty
(8 years, 9 months ago)
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Jo Stevens (Cardiff Central) (Lab)
I beg to move,
That this House has considered the regional effects of the under-occupancy penalty.
It is a pleasure to serve under your chairship, Ms Dorries.
Our debate today on the regional impact of the bedroom tax is important and comes on the back of the Government’s recent judicial review defeat in the Court of Appeal, where it was determined that the bedroom tax discriminates against victims of domestic violence and the families of severely disabled children. I pay tribute to campaigners throughout the country who have put considerable energy and effort into challenging this iniquitous tax and raising public awareness of the Government’s continuing attempt to defend the indefensible. People such as Paul and Susan Rutherford have led the charge in one of the Court of Appeal cases on behalf of their severely disabled grandson, Warren, and Alan Lloyd of Cardiff Against the Bedroom Tax gives voluntary help to victims of the bedroom tax in my constituency of Cardiff Central and across south Wales by preparing and presenting appeals. I spoke to Alan Lloyd yesterday as he was on his way to appear at yet another tribunal to present an appeal on behalf of a woman whose long-time home is at risk because of the tax.
It is clear from the number of hon. Members present here today that the impact of the tax remains an important issue to many people and is not limited to those who pay the tax itself. The Opposition have opposed the bedroom tax since its introduction. Since this grossly unpopular Conservative and Liberal Democrat policy was forced on the public, exactly what we warned would happen has happened. The bedroom tax is not working; it is not achieving the aims that the Government set out to implement; and it is hurting some of the poorest and most vulnerable in our society and giving them a problem that is absolutely no fault of their own.
Ian Lavery (Wansbeck) (Lab)
I thank my hon. Friend, who has been a lawyer for many years, for bringing this important issue to the Floor of the House. Normally, people adhere to Court of Appeal judgments, but in the case of the bedroom tax, the Government are once again ignoring what the court said. In what way—the right, decent and honourable way—should the Government deal with the Court of Appeal judgment and listen to what is happening to the thousands of people out there who are suffering as a consequence of this now unlawful and illegal tax?
Nadine Dorries (in the Chair)
Can we keep interventions short and not make speeches, please?
Jo Stevens
I thank my hon. Friend for his intervention. The honourable thing would be to accept the decision of the Court of Appeal, but instead the Government are proceeding to the Supreme Court, where a decision is expected at the end of this month or early next month.
The bedroom tax and the tripling of tuition fees for students are two of the most painful scars left by five years of the Conservative and Liberal Democrat coalition, and I will take every opportunity to continue to remind the House that the bedroom tax would never have been introduced without the eager help of the Liberal Democrats, including my predecessor. Nearly 500,000 households and almost 750,000 people have been hit by this cruel policy. Two thirds of the households affected by the bedroom tax include a person with a disability. The tax impacts on 60,000 carers—people who undertake demanding and challenging responsibilities and are punished for doing so. Some 57% of those who have to pay the tax have had to cut back on household basics such as food and heating—things that we all take for granted. The bedroom tax has had a corrosive effect on many different households, including the single parent who needs a spare room for when their children visit as part of agreed contact visit arrangements following separation or divorce; grandparents who help with looking after their grandchildren, allowing parents to manage shift working and other working patterns, or following family breakdown; and people with severe disabilities who use their spare room for their medical equipment or care, such as kidney dialysis.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
This issue is big in my constituency of Hackney South and Shoreditch. There is an invidious part to this tax. If two children are of an age when they are supposed to share a bedroom, but one is within reach of their next birthday, when they would qualify for their own bedroom, the family are hit by the bedroom tax. So it is a fluctuating tax that hits people particularly hard.
Jo Stevens
My hon. Friend makes a very good point; the tax increases uncertainty. People cannot budget. Their circumstances change and the fluctuating nature of the tax impacts on them more heavily at different times. Then there are victims of domestic violence and rape whose lives are at risk and need the protection of a panic room.
The particular focus of this debate is the regional impact of the bedroom tax, and I want to outline its impact on my constituents in Cardiff Central and more broadly within the nation of Wales, where 31,217 people are affected by the tax. Across Wales, just under 500,000 people live in social rented accommodation. The tax has had a huge impact, affecting proportionally more housing benefit claimants than anywhere else in Great Britain. Some 46% of claimants in Wales pay the tax, compared with 31% for the UK as a whole. In Cardiff, 3,015 households currently pay the tax, and nearly 500 of those live in my constituency of Cardiff Central.
The cost of the bedroom tax to each household affected will be £3,500 during this Parliament. I am sure I do not need to explain to most hon. Members what £3,500 means to the families in our constituencies, especially the poorest families who visit our surgeries every week. That £3,500 would otherwise be spent on basic necessities such as food, heating, clothes and shoes. The Secretary of State for Work and Pensions claimed that the bedroom tax would encourage societal movement. However, when the bedroom tax was introduced, it affected about 3,500 households in Cardiff, and only just over 100 smaller properties were available for people to move into. I readily admit that maths is not my strong point, but even I can work out that that sum does not work.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Member on securing this debate. She knows that Northern Ireland did not implement the bedroom tax, although it has cost us financially not to do so. We looked at the issues that she has rightly highlighted, especially those affecting our older generation. In the first place, we did not have the housing stock, but, from a moral point of view, we felt that the hardship was simply too great to impose on older people.
Jo Stevens
I thank the hon. Gentleman for his intervention, which again shows the iniquitous nature of the bedroom tax.
Therein lies the truth about the bedroom tax and its impact and the number of properties that are available for people to move to. The Government knew before they introduced the policy that insufficient smaller properties were available for people to move to. That was the picture right across the country. Even if we gave the Government the benefit of the doubt about their motives before implementation, their own interim report on the bedroom tax after implementation revealed that the policy was not meeting its key aim of freeing up larger council properties. Only 4.5% of affected tenants have been able to move to smaller accommodation. At the same time, with just 4.5% of people able to move and be rehoused, 60% of people affected were in arrears within the first six months of the introduction of the tax. The policy is simply not working. People are not able to move to smaller accommodation because that accommodation simply does not exist, so long-standing, reliable tenants who were previously able to budget and pay their rent regularly now cannot pay it and have built up significant arrears.
Meg Hillier
In parts of London we are seeing people pushing to get two-bedroom properties because they are frightened they will be hit by the bedroom tax, but that also reduces, if there was availability, the stock for people to move down to, if they have the extra bedroom, so it causes a squeeze in both directions.
Jo Stevens
My hon. Friend makes a valid point.
The most vulnerable have been hit the hardest and, in the words of the Lord Chief Justice and his colleagues just a few weeks ago, the Government’s “admitted discrimination” in the judicial review cases to which I referred earlier
“has not been justified by the Secretary of State”.
We now have a farcical situation in which the Government have appealed that decision and the legal costs of pursuing the appeal are likely to be greater than the amount it would cost them to exempt all victims of rape and domestic violence with panic rooms who are paying the bedroom tax. I can conclude only that the Government would rather pay money to lawyers than to rape victims. I challenge the Minister to justify that action.
I think I can predict that, when he responds to the debate, the Minister will say that the Government have made additional funding available to local authorities in the regions and in Wales in the form of discretionary housing payments, but my local authority, City of Cardiff Council, has had its DHP funding cut by more than 26% between 2013-14 and 2015-16. The regional impact of Cardiff losing more than a quarter of its DHP funding has been hard, so it is disingenuous to argue that the DHP system justifies the bedroom tax.
At the same time as imposing the tax and relying on DHP as justification, the Government are cutting DHP funding. Their own report, which they sneaked out in a huge data dump on the very last day of the parliamentary term in December 2015—obviously in the hope that no one would notice—admitted that 75% of bedroom tax victims did not get DHP; that three quarters of those hit by bedroom tax were cutting back on food; that only 5% had been able to move; and that 80% regularly ran out of money.
The policy implementation of DHP has also been called into question. Evidence on its use has raised serious questions about local authorities adopting different practices, leading to allegations of a postcode lottery. There are references to disabled tenants—particularly those living in specially adapted properties—struggling to get DHP in some areas, and needing to submit repeated applications, with the consequential uncertainty and anxiety. That is not to mention the exclusion of people with lower levels of literacy.
This debate is not the first time that DHP and its impact on disabled people has been raised here. As long ago as 9 April 2014, five Welsh Government Ministers wrote to Lord Freud to call for an exemption from the bedroom tax for disabled tenants who had had adaptations made to their homes. They cited issues with DHP as one reason why such a broad exemption was necessary. They said:
“Disabled tenants cannot easily up sticks and move home. They should be exempt from these reforms and should not be left to rely on help from the discretionary housing benefit system…Our analysis of the discretionary housing payments system shows that demand far outweighs the number of applications being approved. In the first half of the financial year 2013/14 demand increased by around 260 per cent compared to the same period a year earlier in 15 Welsh local authorities.”
Cardiff’s 26%-plus cut in DHP funding, coupled with the increase in applications, presents another one of those stark sums that even I can work out. It simply does not add up to have households with disabled tenants having to pay the bedroom tax if that cannot be offset through DHP because DHP funding has been cut. It is another example of the Government’s policy hitting hardest those who can least afford it.
Tomorrow, we have an Opposition day debate on another of the policy responsibilities of the Secretary of State for Work and Pensions: the adverse impact on around 2.6 million women of the speeding up of the state pension age. I know from discussions with constituents that many of those being advised and represented in bedroom tax appeals in my constituency are those very same women who are adversely affected by the changes to the state pension age. They are also women who are disabled or carers, so there is a double, triple or quadruple whammy on women. As with so many of the Government’s policies, it seems that women are bearing the brunt yet again.
It is time for the Government finally to accept that the bedroom tax is a bad policy. In the words of David Orr, the chief executive of the National Housing Federation, it is:
“an unfair, ill-planned disaster that is hurting our poorest families”.
It does not work, it causes severe hardship and it hits the most vulnerable, so I say to the Minister: please, listen to the public. It is time for the bedroom tax to be binned.
Corri Wilson (Ayr, Carrick and Cumnock) (SNP)
I welcome this debate, which was secured by the hon. Member for Cardiff Central (Jo Stevens).
We already know that the bedroom tax is nothing more than an ideological attempt to reduce the housing benefit bill and make better use of social housing stock by penalising low-income households deemed to be under-occupying their homes, but the problem of under-occupation will not be solved by shuffling people around. That will do absolutely nothing to resolve the underlying problems, which we all know are related to the supply of affordable housing.
A house is not just somewhere we live: it is a home. For all the people it affects, the bedroom tax can mean having to move out of the place that they have lived in for many years, where they raised their children. They have to move away from friends, family, schools, work and, in some cases, their support networks. Each and every one of us is emotionally attached to our homes, and people in social rented accommodation are no different. Just because someone does not own their house, that does not mean that it is not theirs.
The reality is that the under-occupancy penalty affects thousands and will hit the most disadvantaged members of the community. Is it really working? The Centre for Housing Policy at the University of York tested the Department for Work and Pensions’ assessment of the impact on housing benefit costs and found that the expected savings might have been overestimated. The increased post-implementation costs faced by local authorities and the third sector should be taken into account in the overall assessment. Research carried out by Ipsos MORI on behalf of the National Housing Federation concluded that housing associations would spend, on average, an additional £109,000 in 2013-14 to address the implications of the under-occupation deduction.
We must consider not only the effects of the bedroom tax but the associated impacts, such as tenants being unable to move to smaller properties because of rent arrears; an estimated 46% of tenants reporting having to cut back on heating; landlords stating that some tenants face severe poverty and are unable to pay the shortfall; and the risk of homelessness. All that causes stress and worry and affects tenants’ health and wellbeing.
Mr Gregory Campbell (East Londonderry) (DUP)
The hon. Lady touched on the issue of arrears. Thankfully, Northern Ireland is exempt from this policy—at some considerable cost to us—but in many instances elsewhere there are vulnerable people, particularly the elderly, who find themselves in a very difficult situation, with minimal arrears, which are going to be compounded if this policy is continued over the next year and the year beyond.
Corri Wilson
I absolutely agree with the hon. Gentleman. People find themselves in a vicious circle and can never see the end. That is the problem. In other words, we are putting people through absolute misery for nothing.
As we have heard, the Government tell us that discretionary housing payments are available to tackle the shortfall, but Shelter says that that provision is already overstretched. With such extensive reforms to welfare, a shortage of affordable housing and drastically rising rents in the private sector, the reality is that there is only so much that discretionary housing payments can cover. They are a mere sticking plaster and will not solve the problem. Even the House of Lords has deemed the welfare reforms a step too far, causing the Government embarrassment. Worse still, the UK is, shamefully, the first country ever to be investigated by the UN in relation to the convention on the rights of persons with disabilities. The UN is currently looking at our welfare policies for the disabled.
Before the Scottish Government invested millions of pounds to alleviate the bedroom tax in Scotland, many people in my constituency of Ayr, Carrick and Cumnock were a thrown into turmoil by the policy, with some tenants receiving eviction letters that caused unnecessary anxiety and worry. We should not be spending our already diminishing budget on mitigating Westminster austerity policies. That money should be spent elsewhere. Meanwhile, the Scottish Government will ensure that housing continues to be a priority by building affordable housing, creating jobs and boosting our economy. I am pleased that the Scottish Government have committed to abolishing the bedroom tax as soon as they have the powers to do so. I ask the Tory Government to think again and to put the needs of people back at the centre of their welfare policy.
Carolyn Harris (Swansea East) (Lab)
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate my hon. Friend the Member for Cardiff Central (Jo Stevens), a fellow Welshwoman, on securing this debate.
This is a contentious issue of great concern to many people in my consistency. The bedroom tax is discriminatory and punishing. I want to share two short stories. The first is of Megan Wheatland from Bonymaen in my constituency, whose husband passed away in January 2013. He was of pensionable age and Megan was not; therefore, she was liable for the bedroom tax on the three-bedroom house she shares with her teenage daughter. Megan pays £11.85 a week for a small box room. Because of this, she is unable to pay for the extracurricular activities her daughter would like to take part in. She worries greatly that her daughter is missing out on all the other things that her teenage friends do. It really is an issue for Megan.
Then there is Sarah, a single mother with two children. She suffers from severe depression and has an arched spine. She struggles to engage socially and has suicidal thoughts. Because of this, her two children have been taken into care. Now Sarah is paying the under-occupancy penalty for a house that she should be sharing with her two children. It is an absolutely appalling situation.
We have heard about DHP, but it only kicks in after tenants have taken steps to downsize or—God forbid—take in a lodger. Some people who take in a lodger lose out on other benefits, because the rent on that room is classed as extra income. I am worried that taking in a lodger when there are children in the house is potentially dangerous, because it means that people are effectively taking a stranger into their home.
If disabled people have to move to smaller properties to avoid paying the bedroom tax, there is the inevitable cost of making adaptations. Surely supporting those who pay the bedroom tax—or, better still, scrapping it—would be a better use of public funds. It is estimated that 10% of disabled people renting properties live in homes specifically adapted to their needs. The cost of adapting a smaller property—or, potentially, a larger property—to suit the personal requirements of the new tenants surely outweighs any income gain from charging for the extra room in the first place. Of course, people can always move to the private sector. In Swansea, an above average number of homes were built between 1919 and 1944, but 15% of those old houses contain category 1 hazards, meaning that they have failed basic health and safety standards.
The Government do not hold data on how many disabled people are affected by the bedroom tax, so I contacted my local authority. I knew the number would be high, but I was shocked by just how high it is. In Swansea, the bedroom tax is paid on a total of 2,467 homes, of which 1,138 are in my constituency. Of the total number, 1,129 people paying bedroom tax are in receipt of at least one of the following benefits: attendance allowance, disability living allowance, personal independence payments or severe disability living allowance. That means that in Swansea a staggering 45.7% of the people paying the bedroom tax are considered to be disabled. The DWP’s evaluation of the removal of the spare room subsidy, which it published in December 2015, estimated that 75% of claimants have either a long-term illness or a disability, and they are living in homes to which the bedroom tax applies.
Historically, social housing policy in Wales has focused on creating sustainable communities and enabling families to become established, so there is a shortfall of one and two-bedroom homes. The Welsh Government’s pattern book for new social housing development requires landlords to build lifetime homes, so social landlords generally see one-bedroom homes as an inflexible and ineffective housing solution. The bedroom tax contravenes the principle of a lifetime home. Those in social housing at the start of their tenancy will have very different commitments and requirements from those they will have further down the road. The bedroom tax therefore creates a transient housing pattern, forcing continual relocation to suit housing needs. That is in direct contradiction to the concept of lifetime homes. The effect will be to damage communities, as they lose the momentum to develop as communities. If a resident is short term, they will not be there long enough to engage with the community and get active in social groups.
I go back to my original point: the bedroom tax is discriminatory and punishing. It financially punishes those forced to pay it and it discriminates—
Jo Stevens
On the point about the bedroom tax financially punishing people, does my hon. Friend think that it causes people to go to payday lenders such as Wonga and take out loans with extortionate interest rates to survive?
Carolyn Harris
I certainly do. I have casework involving people who have taken out payday loans from Wonga and other organisations and have been unable to repay them without not paying their bedroom tax. It is a Catch-22.
The bedroom tax financially punishes those forced to pay it. It discriminates against communities and individuals, and makes them unable to gel and enjoy stable, sustainable and adequate housing in a community where they can nurture and mutually support each other, and be part of a productive citizenship and community enterprise.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate my hon. Friend the Member for Cardiff Central (Jo Stevens) on securing this debate.
The spare room subsidy, or the bedroom tax as it is more commonly known, is causing stress and hardship across the country. It is the most unfair and pernicious tax since Margaret Thatcher’s poll tax. We are here to debate the regional impact of the tax, so I will outline some of the issues it is causing in my consistency and in the south Wales valleys more generally.
The principle of providing larger properties for families and smaller properties for single people and couples is understandable. People often decide for themselves to move to a smaller property when their children leave home or their circumstances change, but that is a choice. Unfortunately, there are not many one and two-bedroom properties in many communities in my constituency, so people affected by the bedroom tax must decide either to stay in their property—thereby incurring a financial penalty that places great strain on their ability to manage—or move to a smaller property in a village or community some miles away.
Before being elected to this place, I was cabinet member for housing at Caerphilly Council, which covers a third of my constituency. In that role, I met a number of people who wished to remain in the homes they had lived in for many years. They did not want to move to a smaller property miles from their family and friends. Unfortunately, the strain of paying the bedroom tax in addition to their utility costs and household bills meant that they often had little money left to put food on the table.
Meg Hillier
My hon. Friend is rightly highlighting the practical difficulties and the unfairness of the policy. Does he think that the fact that there is not a single Government Back Bencher present suggests that there is not widespread support for its implementation, even if it is Government policy?
Gerald Jones
As my hon. Friend says, the vacant chairs on the Government side of the Chamber speak volumes.
I know that the Government will say that they have provided discretionary housing payments, but that is only a temporary fix to an ongoing problem. I would like to reiterate the practical difficulties of moving miles away from family and friends. Many communities in the south Wales valleys are geographically isolated, which, coupled with public transport challenges in semi-rural areas, means that people often feel very lonely and isolated if they are moved to unfamiliar surroundings away from their families.
Last week I spoke to representatives of voluntary organisations that work with people affected by poverty and the welfare changes. I was told the story of a lady who, after being affected by the bedroom tax, was forced to move from her home village to another village some miles away. The isolation caused her to become depressed, which led to her taking her life. Tragically, that is not an isolated case. It is the reality of what can happen and is happening as a result of this unfair tax.
I have talked to the local authorities and housing agencies in my constituency, and I have heard about a number of situations that are causing great concern, not least to the tenants themselves. In one such case, a couple who are joint tenants of a two-bedroom house are under-occupying by one room and are thus affected by the bedroom tax, which reduces their housing benefit entitlement by 14%. They are on the transfer list and are eager to move to any one-bedroom property. They both have health issues and have lived in the same close-knit community all their lives. Staff at the council housing department have visited and have applied for discretionary housing payments to assist the tenants in the short term. The tenants are concerned about how they will pay the charge, because they are trying to repay rent arrears that have accrued on their account. They would like to stay in the same area, but, as I outlined earlier, the local authority have few one-bedroom properties in their areas of choice.
I recently spoke to staff at my local citizens advice bureau in Merthyr Tydfil who told me about the many people who come through their doors on a regular basis. People have nowhere else to turn. Such clients often have several other significant issues going on in their lives and, to add to that, they are now in rent arrears due to the bedroom tax. These people could lose their homes, leading to massive consequences. For those who are physically or mentally disabled, it could bring about even more severe issues, such as homelessness, suicidal thoughts, substance misuse or further debt. It just becomes a downward spiral.
In parts of my constituency, the demand for three-bedroom properties is not great. The local authority often advertises them for rent in the hope of getting tenants, yet people are being forced out of these properties and into smaller homes, creating more vacancies. I appreciate that that is not the case everywhere—certainly not in larger cities—but today we are considering the regional impact of the bedroom tax, and that is the reality in parts of my constituency. Of particular concern in my area is the view that the disability living allowance and personal independence payments should be disregarded when considering DHP applications. A recent court case resulted in a ruling of indirect discrimination when DLA or PIP is taken into account as income. It specifically quoted section 29(6) of the Equality Act 2010 and article 14 of European convention on human rights. The DWP’s discretionary housing payment guidance manual of February 2016 also refers to the court case. My local citizens advice bureau feels strongly that DLA and PIP should not be treated as income for DHP applications.
Another example involves a single tenant living alone. The tenant does not want to move, as he has lived in the property all his life and classes it as not only a council house, but a home. The property has three bedrooms and the tenant is affected by the spare room subsidy charge, which reduces his housing benefit by 25%. The tenant has to pay an additional £23 a week out of his welfare benefits to cover the charge, leaving him with £50 a week to buy food and pay for all other essentials, including utility bills. The tenant also has support needs, which are provided by his family, who live in the same area. Staff from the council have visited and applied for discretionary housing payments to assist the tenant in the short term. They also arranged for a food parcel to be delivered because the tenant was cutting back on food to pay the shortfall. The property was cold when the visit took place in late December because the tenant could not afford money for the prepayment meter. That is the reality of what is happening across our country.
Organisations such as Citizens Advice and others want to make a difference to their clients’ lives. There is a feeling that people are being penalised unfairly. With further reforms in the pipeline, many people’s ability to cope will become increasingly uncertain. I urge the Minister to take on board the real concerns about the bedroom tax policy and to recognise the hardship that this pernicious charge is causing. This charge—or tax; whatever you want to call it—is discredited, indefensible and should be abolished.
Ian Lavery (Wansbeck) (Lab)
It was not my intention to speak, but today’s debate really brought back to me the reality of the Government’s merciless attack on the most vulnerable people in our society. It must be said and reinforced that the attack is mainly on disabled people. Of the 600,000 who initially suffered as a result of bedroom tax, 400,000 were disabled. I wonder whether the Minister, who is shaking his head, can clarify or indicate whether those figures are correct. If he can, it will be the first time that anybody has ever challenged them. I am sure that he will want to comment.
The bedroom tax is about ideology. It is nothing else than an attack on those who can least afford it. I wish the room was full of Government Members listening to my hon. Friends’ contributions, but that is unfortunately not the case. The Minister should be ashamed of what the Government have done. Those affected are disabled people and people who are already in poverty. They are not living a life of luxury; they are on benefits. The policy is increasing child poverty and pushing more ordinary people into poverty. I will say it again: the Minister should be ashamed of himself and of the Government for continuing with the policy. A court judgment only a matter of weeks ago stated that the bedroom tax was illegal and unlawful, yet the Government still pursue the matter through the courts. The policy represents a concerted attack on communities. The slashing of benefits does not help people at all.
I am unsure whether the Minister has seen the video, which formed part of the Daily Mirror’s campaign, about a 47-year-old individual who used to live with his elderly mother and then his 49-year-old brother in a four-bedroom property that had been adapted for his cerebral palsy. The local authority paid £70,000 for the changes so that the man could wash in a walk-in shower, but the tenants fell foul of the bedroom tax, which they could not afford to pay. They ended up in a bungalow, where the man has to be bathed by his brother in an inflatable paddling pool in the sitting room. That is the sort of thing that the bedroom tax has reduced tens of thousands of people to. Treating disabled people like that is not something that a society such as ours should be proud of, but that is what the bedroom tax is about.
This debate is about what is happening regionally, and the situation in my constituency is pretty bleak. Even the Conservative MPs in my area have suggested that the bedroom tax is not working. Almost 40,000 people are affected by the deduction, and the £454,000 discretionary housing payment fund for 2015-16 has been totally used up and is no longer available, which is causing huge problems. In the past few months, 442,000 homes across the country have seen an increase in the bedroom tax from £14 two years ago to £15.27 this year. That is up more than 9% for people who can barely afford to put bread on the table—£66 more per year—and hitting those who are already suffering even harder than the Tory Government thought would be the case back when the bedroom tax was introduced. It is an absolute outrage that the tax was introduced in the first place.
As a politician, I sometimes wonder where that emanates from, where it comes from. Someone has sat down somewhere and thought, “Well, we could claim money back from people who are disabled”—people who most need the money and who need the finances even to live. We are not talking about a life of luxury, but simply existence. Someone has sat there and developed the spare bedroom policy, “Oh, we’ll charge disabled people. There are 600,000 people out there who are living in a house or a bungalow or a property where they might have an extra bedroom. Why don’t we tax them?” Where does that come from? It is ideology.
Before people suggest that the Government were unaware of the consequences, they should please bite their tongues, because it is the finest brains in this country that devise policies on behalf of whichever Government, and they have been to the finest universities. They understand absolutely who will suffer as a consequence of whatever they put in place. That is the reality. This is a pernicious tax, which is focused on those less well off in society, mainly disabled people, and those who cannot afford it. That is the reason why it was introduced in the first place.
The situation in my area is exactly the same as that described by my hon. Friends. We have people who are looking to move because they cannot afford to pay the bedroom tax, but not enough properties are available. We have people now in rent arrears who have never been in arrears in their life, because of the bedroom tax. One of the big housing companies in my area has had an increase of 42% in rent arrears. These are proud people who are suffering. They have always made their way, but the burden of the bedroom tax has meant that lots of them are now in arrears. Latterly, rent arrears in the sector have increased to somewhere in the region of 50%.
All in all it is not a great picture—it really is not. At times we have got to tell it as it is, not pussyfoot around and talk about looking at different ways of doing things. The bedroom tax needs to be scrapped. If the Minister has anything about him, he would agree with the court judgment and scrap it as soon as possible.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Ms Dorries. I had not expected to speak today, but I felt moved to do so because of the huge impact of the bedroom tax on my constituents. In Hoxton, on the Wenlock Barn estate alone, 74 households out of several hundred are affected.
We have heard from colleagues about the practical issues, so I will touch on some of those. Any policy that starts life with discretionary money provided by the Government as a workaround fund clearly does not stack up in the first place. The invidiousness of a discretionary housing payment when local government budgets are being slashed, and are expected to be slashed further in coming years, is an extra burden on the people affected. People speak to me about the bedroom tax with uncertainty and fear. Even if it does not affect them now, they worry that it will affect them in future.
In my constituency there is no housing stock to move to and no smaller homes that do not already have a huge waiting list. I have been elected in different roles for more than 20 years, and now is the worst time that I have ever seen for housing. My surgeries and those of my council colleagues are full of people desperate to find a home, but unable to afford one in the private rented sector in Hackney. Private rents are now unaffordable. In fact, in the private sector in my constituency, not a single three or four-bedroom property can be rented to meet the housing benefit cap. There is no alternative, and there is a huge waiting list for all social housing. The likelihood of being able to move to a smaller property in the same area, even through mutual exchange, is very slim.
While we are on the subject, will the Minister clarify an issue that came up in a Public Accounts Committee hearing a couple of years ago? Apparently, income from lodgers has no negative impact on universal credit and is completely disregarded. Will he clarify whether that is the case? On Wenlock Barn estate, were people minded or able to have a lodger—this might shock my colleagues from south Wales—they could charge £200 for a room on an estate so close to Old Street and the City of London. Having a lodger might be a solution for some of my constituents, but it is invidious for them to be able to do that because they are in Hoxton, close to Old Street and Silicon Roundabout—I suspect there is not the same opportunity for people in Swansea, Merthyr Tydfil or Cardiff. I am interested in the Minister responding on that point in particular.
As I said, the private sector provides no alternative, and even paying some social housing rents is impossible for many of my constituents on the minimum wage, even with the increases due in it. I remember a man who was a kitchen porter coming to one of my surgeries. He was not very skilled—we all want to see people more skilled up in their jobs, but let us face it and be honest, a kitchen porter will probably not have an employer who gives someone a significant amount of training and development opportunity. He was on the minimum wage and was asked by the Department for Work and Pensions to look for work in zones 5 and 6. That is not unreasonable, and he was certainly willing to work. His wife worked part time to help support the bringing up of their two young children. His extra journey time, however, meant difficulties with childcare times, and the extra cost of travel outside zone 2 to zones 5 or 6 was beyond him.
That grown man, who found dignity in work and wanted to find work again, was in tears in front of me in my surgery. He is only one example of the many others who have come to me hugely distressed. At the time he was not hit by the bedroom tax, which can be another worry for such people, but my point in mentioning him is to hammer home to the Minister that the Government need to see all their policies in the round. Many of my constituents have no financial resilience and do not have the opportunity to turn to friends and family for it, because their friends and family are in a similarly difficult position. They have nowhere to turn. They might be poor, but there is no poverty of ambition in my constituency. Many people want to do well, to get jobs and to improve their lot, but those sorts of things keep them down, hammering them into difficult roles.
People who get jobs in local supermarkets, for example, are often restricted to 15 or 16-hour contracts. A number of them have expressed the concern to me, which I have passed on to one of the Minister’s colleagues, that they can never increase their hours to full time, although more people are being recruited part time. Many were pleased, some in their first job, and excited to be able to say to their children, “I’m off to work now”—real pride, doing all the right things and doing all the things that Government want them to do and that we know work for people—but then they could not get the extra hours. That causes real problems for them, including paying their housing bills, which is certainly completely impossible in the private sector anyway.
I have practical examples to show how the bedroom tax is simply not working. One constituent who came to see me was temporarily unemployed. Her eldest son had left home, so her three-bedroom social rented property was deemed too large. Her landlord was an active manager in trying to get her to reduce the size of her property, persuading her to move to a nearby two-bedroom property with a different social landlord. She thought that that was the right thing to do to avoid the bedroom tax. What she had not really clocked until she started thinking about work again was that the rent for the two-bedroom property is higher than that for the three-bedroom property, which is not unusual in the sector. She has struggled to find work that can cover the rent. She does not want to be reliant on housing benefit, but she will be costing the taxpayer in housing benefit partly because she has moved house. Had she stayed in the other property, it would have been cheaper for the taxpayer and better for her.
Another constituent, a single mother, is ambitious to get into work and training and to improve herself, but is at the moment unemployed. She has 15-year-old and 10-year-old boys. Under the rules, they are deemed to share a bedroom, so her three-bedroom property is considered too large. What does she do? Does she wait six months for the 15-year-old to reach his 16th birthday and accrue the arrears, or does she try to downsize in that time?
Those are the choices—if we can call them that—that people are having to consider day in and day out. They are not good choices. I have worked and campaigned on housing for more than 20 years and one thing I am passionate about is that a stable, secure home is the absolute basis for getting on in life. Without that it is hard to concentrate on studies or securing a job and that causes stress and strain to the individual and family’s mental and physical health. I suspect that those of us in the Chamber do not have that worry. I know that I can go home to my flat and that it will not be ripped away from me. I am not reliant on anyone but me to ensure that I can keep my home, but that is not the case for so many of my constituents.
An additional factor in London is that many households are reluctant to move into properties that meet their needs. Over the years I have had an increasing number of overcrowded families, but increasingly people, even those in two-bedroom properties, do not seek to get a three-bedroom property. It is true that it is hard to get one, but they know that if they got such a property and a child leaves home or their circumstances change, the threat is that they will be hit by the bedroom tax and that fear stops people from looking to move into the right sized property. There is not a hope of doing that in the private sector and the risks in moving to a larger property in the social housing sector are also an issue.
The Minister must remember that fluctuating employment is a real concern. Many of my constituents are on zero-hours or short contracts and their work and pay fluctuate. Many of them are in arrears because while they have been working, they cannot be sure that every week they will get the hours they need to pay the rent. They are so delighted when they do get a job. I had one woman at a surgery on Monday who had got a good job, but she was still paying off a couple of thousand pounds of arrears from when she had uncertain employment.
That is the reality of people’s lives. If the Government are really keen to promote social mobility, they need to give people at that moment in their lives a leg up to help them fulfil their proper ambitions of wanting to work and support themselves, but instead the Government are pulling the rug out from under people’s feet. I hope the Minister has considered the bedroom tax’s value for money and practicality and that he has asked his officials to look at the cost to the Exchequer, let alone the human cost. My fear is that the bedroom tax is ideological, dog-whistle-based politics that appeals to certain people in parts of the country where it is a distant, remote and probably unheard-of policy, but I am stopped on the streets of my constituency by people who want to talk about it, both those directly affected and those whose children are at school with people affected by it or those who live next door to people affected by it. There is general concern overall.
The poorest and most vulnerable are being hit from all directions and those without the financial resilience to cope have nowhere to go. The despair and depression that comes through my surgery door is the worst it has ever been. I hope the Minister is really listening and that he will go back with the concerns of hon. Members, which were made in a measured way. This is about not just ideological party politics but people’s lives, futures and opportunities. If he believes in opportunity, he needs to have a radical relook at this invidious tax.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
It is a pleasure to serve under your chairmanship for the first time, Ms Dorries, and to sum up the debate for the Scottish National party. Let me congratulate the hon. Member for Cardiff Central (Jo Stevens) on both securing the debate and speaking so powerfully about the policy’s human cost and impact. I know that she has worked hard on that in her constituency.
Many pertinent points were made by the six Back Benchers who spoke in the debate. It has been referred to that no one from the Government Back Benches cared enough to come along and participate. That tells us everything about the Government’s priorities and how they look on this issue. For the record, nine Opposition Back Benchers have been present, but where are the Government Members? Why are they not taking this seriously? Where is their concern for the ordinary people up and down the country who have been affected?
The hon. Member for Cardiff Central talked about the legal costs of the appeal. The Government are quite happy to spend ridiculous sums of money defending an indefensible policy rather than doing the right thing. As she put it, it is money for lawyers rather than for the rent victims. She and others talked about problems with DHP. My hon. Friend the Member for Ayr, Carrick and Cumnock (Corri Wilson) made the point that that is not working, a theme that came across from numerous speakers, so the Government must take the opportunity given by the debate to reflect on what happened at the Court of Appeal and stop this nonsense.
My hon. Friend and others talked about the policy’s impact on the health and wellbeing of many people and, when we are talking about that, we are talking about people with disability. The most vulnerable in our society have been put under pressure. The hon. Member for Swansea East (Carolyn Harris) spoke movingly about the human cost to people in her constituency. We should listen to the stories of the people who have been affected so disgracefully. She said that it was both “discriminatory and punishing”, which is exactly the point. That is why the Government must listen.
We had a moving speech from the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones). Again, the point is that there is a lack of one and two-bedroom properties. Where in the name of heaven are people supposed to move to? If the Government in the rest of the UK had done what they should be doing and ensured a supply of affordable housing and social housing, perhaps that could have been addressed, but they certainly have not addressed that. We end up in a situation where so many people up and down the country—proud people, as was said—are in rent arrears. That is what the Government have done through their actions.
We heard from the hon. Member for Wansbeck (Ian Lavery) who talked powerfully about the attack on the vulnerable in our society. We keep hearing the same stories—we would have heard others if other Members were in the debate—about the impact that the policy has had in constituencies up and down the country. Lastly, we heard the story from London, because this is a story about the impact on not just Wales, the north of England and Scotland but urban centres such as London.
I hope that the debate presents an opportunity to focus on what is a mean-spirited piece of legislation, which has ultimately led to the Government’s defeat in the Court of Appeal. I say that it is mean-spirited, but it is worse than that. It is cruel. It seeks to demonise folk and those who are the most vulnerable in our society. That should shame us all, as the hon. Member for Wansbeck said, yet sadly it does not seem to shame this Conservative Government.
We can all reflect on the policy’s results, but perhaps there is a clue in its name: the spare room subsidy. Here is the nub of the problem. We in Scotland see social security as providing a safety net, accepting society’s obligation to look after the vulnerable among us, while we seek to deliver policies that are aspirational and deliver a road out of poverty. The Government take a very different view, with necessary support for the vulnerable seen as providing a subsidy. Who has ever heard the like? With that kind of approach, the problem is that the wrong decisions are made, just as has been done.
It is not about subsidy; it is about cutting the entitlement to benefits of people who desperately need them. What mentality sees a problem in that? It is little wonder that the Government are deaf to the cries about the impact of their policy on so many people. They should stop using such language as “spare room subsidy” and just come clean on what this is: a reduction in the incomes of some of the poorest in our society. That is all it is.
The Government want to fix the deficit and they are doing so by putting their hands in the pockets of the poor at the same time as doing a cosy, cut-price deal with the likes of Google. As we would say in Scotland, “It’s the same old Tories.” Thank heavens the Court of Appeal has intervened, but, for now at least, the Government still refuse to see sense. Even their own report, “Evaluation of Removal of the Spare Room Subsidy”, in December 2015 found that the tax is a failing policy, hitting the most disadvantaged in society. It found that 55% of tenants affected by the legislation were in arrears. Where is the sense in a policy that creates such outcomes? Why will they not accept that it is wrong? They have made a mistake, so reverse it today—do the right thing! The effect of the policy is to push folk into ever greater debt, with all the difficulties that that causes. To many of the rest of us that is no surprise. The bedroom tax is after all a direct assault on the incomes of the disabled, the poorest and the most vulnerable.
The Prime Minister said at his party conference that he wanted a war on poverty— fine words. However, what we actually have is a war on the poor. In Scotland we have an SNP Government committed to abolishing the bedroom tax; and when the powers are passed to us we will take that responsibility. In the meantime, the Scottish Government have been mitigating the effects of the bedroom tax. We have a Scottish Government on the side of ordinary folk and a Tory Westminster Government punishing the poor, ignoring the social consequences of their actions and turning a blind eye to the Court of Appeal.
One of the major flaws in the Government’s thinking was that those with spare bedrooms would move to smaller properties—a point that many have made in this debate. That would be a big enough challenge in any part of the UK, but in a large rural constituency such as mine it is almost impossible. What are people supposed to do? Are people in Skye who have an extra bedroom, for example, supposed to move elsewhere in the highlands, and uproot themselves from family and friends? We have been revisited by Tebbit and his “on your bike” philosophy. Caring compassionate Conservatives? Give us a break. It is little wonder that the Tories are so decisively rejected by the people of Scotland. Of course, at the root of the issue is the austerity agenda, but in their lemming-like rush to reduce the deficit they refuse to acknowledge the pain and suffering inflicted through actions such as the introduction of the bedroom tax. Tory ideology is a cover for them to do their worst, and never mind the consequences. To use a saying of the Thatcher period, “If it’s not hurting, it’s not working.” Well, what the Government are doing is not working, but it is certainly hurting. It is time to make a change.
We all want to restore the country’s finances and we all want to reduce the deficit, but the question is what path we take. There is no argument based on economic literacy that suggests there is a need to get to a fiscal surplus in the current Parliament. Yes, progress has to be made, and the SNP demonstrated that the UK Government could increase spending by £140 billion in this Parliament and still have the deficit fall to around 2% of national income. That would be a balanced, sensible approach, which would allow for the removal of the bedroom tax and a more meaningful house building programme, for example. The issue is leadership, or in this case a failure of leadership, from the Government.
The Court of Appeal said that the policy was discriminatory and unlawful. I urge the Government to accept that judgment: show leadership and for once, Minister, do the right thing.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is a pleasure to serve under your chairmanship today, Ms Dorries. I congratulate my hon. Friend the Member for Cardiff Central (Jo Stevens) and everyone who has participated in today’s debate. The speeches have been exceptional. As has already been mentioned, the lack of participation from the Government side is notable, and is hopefully a sign of embarrassment at a policy that is clearly not working.
The Government’s policy of reducing the amount of housing benefit payment to current social housing tenants who are deemed to have superfluous bedrooms—the bedroom tax as the Opposition call it—is deeply unfair, discriminatory and divisive. The fact that the policy was introduced for existing tenants who took out their tenancies based on the knowledge of how much they could afford, only to be told that their income was to be reduced, is unjust and unfair. Added to that, the Government’s inept handling of the housing market, with the lowest level of house building since the 1920s, means that there are not properties for people to move into. That just adds insult to the injury that people feel.
The latest figures for 2015 show that approximately 443,000 people are affected, with an average weekly income reduction of £15.27; that is more than £61 a month or £800 a year—up about 10% from what the Government originally estimated. As many people today have said, those figures are significant for families on low incomes. The bedroom tax is discriminatory because the Government failed to listen to claims that it would affect many older people, disabled people and their carers. As we have heard, two thirds of those affected are disabled, and more than 60,000 carers are also affected. It is also divisive, as it splits families and hits regions that have historically high levels of social housing. The effect in Wales is significant, as we have heard, but in England the National Federation of ALMOs found a distinct north-south divide in relation to the percentage of tenants affected. One year after the bedroom tax was introduced, 13% of tenants in the north were affected, compared with 7% in the south. I wonder if that is really what we call the northern powerhouse.
The Work and Pensions Committee investigated what was happening with housing benefit and raised concerns about the reduction in the number of households affected. At the time there were few data on what was happening. As the Select Committee said in its report, the reduction
“could be related to changes in household structure, moving house, entering work, or increasing hours”
and
“a result of claimants ceasing to claim because their entitlement was reduced to zero, or to such a low level…or because they were already in the process of moving.”
I must note the fact that that report was produced in 2014 and the Government have still not responded to it.
Professor Steve Wilcox indicated in his analysis that tenant moves prior to the introduction of the policy may have accounted for some of the reduction in the number of claims—in addition to the reclassification of bedrooms by landlords—but urged caution in interpreting the decline in relation to social sector tenants. However, the Government’s own evaluation which, as has been mentioned, was slipped out on the last day before the Christmas recess, gives an insight of the impact on people of the bedroom tax. It revealed that the majority of people originally affected by the bedroom tax were still affected nine months later. Of those still affected, only 5% had found work. Claimants were using savings, borrowing from family or friends or accruing debt to pay rent. The implication of accruing such debt is a downward spiral. It is impossible to overestimate the effect of having debt hanging round family’s necks. Three out of four families are having to cut back on essentials such as heating and food.
We have heard poignant constituency case studies in the debate, and I want to mention an example from a Barnardo’s project. A dad asked the staff for some nappies, and when the project worker attended the house to see how things were going she discovered that there were only biscuits and crisps in the cupboard and that the parents were missing meals to feed the children. They had not asked for help because they were too proud. That family’s example is a window into the reality of life for many people. We could see that situation replicated across the country.
The Government’s evaluation also reported that 55% of tenants were in arrears, contrasting with the National Housing Federation’s figure of 59%. The important thing is that the arrears of two thirds of them were attributed directly to the bedroom tax. It has been mentioned that for some people, in some local authority areas, discretionary housing payments have helped where there has been a shortfall between rent and housing benefit, but the clue is in the name—it is a discretionary payment, not an entitlement. It is certainly seen as something for the short term, within a wider context where local authorities face significant cuts. Seventy-five per cent. have not had support in the form of discretionary housing payments. Their availability is a postcode lottery.
The recent Court of Appeal judgment agreed that the bedroom tax was indeed discriminatory against a domestic violence victim and the family of a disabled teenager. It was ruled that, in the two cases, the Government’s policy amounted to unlawful discrimination. Although other Members have referred to them, I too want to mention Susan and Paul Rutherford, who argued that they needed a specially adapted spare room in their Pembrokeshire home to care for their disabled grandson Warren. Ms A, who is a single mother living in a three-bedroom council house fitted with a secure panic room to protect her from her violent ex-partner, also argued that that room was needed. We await the outcome of the Government’s appeal to the Supreme Court at the end of this month.
The discriminatory, unfair and divisive nature of the bedroom tax is why Labour has consistently called for it to be abolished. I hope the Minister will recognise that and comment on why the Government continue to pursue this policy, which, as we have heard, is not delivering what it is meant to. It is not making the savings that were anticipated and it is certainly not freeing up family accommodation.
The Government have tried to regenerate the economy on the backs of the poor and disabled. Their modus operandi is about division and blame. Instead of denigrating claimants and our social security system, we should be recognising the importance and value of that system. Like the NHS, our social security system is based on principles of inclusion, support and security for all, assuring us of our dignity and the basics of life, should any one of us become ill, disabled or fall on hard times. The Government need to remember that and stop their attacks on the poor and vulnerable.
The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)
It is a pleasure to serve under your chairmanship, Ms Dorries. I wish to pay tribute to the hon. Member for Cardiff Central (Jo Stevens), who made a passionate, informed and determined speech that was well received by her colleagues supporting her today. Some measured and well thought-out speeches have been made, and cases have been strongly put forward on behalf of each Member’s constituents. I have worked closely with the hon. Member for Swansea East (Carolyn Harris) on a number of measures, and we have been able to find a lot of common ground and ways to move forward in a number of Westminster Hall debates, but I am afraid I am a little way from her arguments on this issue. I will try my best to answer as many of the points made as I can.
Let us first look at the history of this. One of the main thrusts of the opposition to this policy is that it is ideological and was dreamed up by the finest brains of the Conservative-Lib Dem coalition. To be clear, it was the previous Labour Government who introduced this policy in the private sector. When challenged in the House in January 2004 on whether the policy would be introduced more widely than the private sector, the Minister then responsible said:
“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector to enable people in that sector to benefit from the choice and flexibility that the reforms can provide.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]
Debbie Abrahams
Does the Minister recognise the point I tried to make in my opening remarks about this being a retrospective tax? It applies to tenants already in existence. There was a very different application for private sector tenants. The policy applies to current, existing tenants who had already budgeted for what they could afford.
Justin Tomlinson
I will cover in detail some of those points, but I can tell the hon. Lady that a significant difference was that no additional discretionary housing payment was provided when the policy was implemented in the private sector. It was very much a case of, “Cross your fingers and hope for the best. You will not be getting any support.”
The legal case mentioned is ongoing, so I cannot dwell on it too much. The Court of Appeal previously said that discretionary housing payments were appropriate support. Crucially, it was not about the wider policy; it was about just these very specific categories. In that particular case, those people were in receipt of discretionary housing payments, but that is an ongoing legal dispute.
Jo Stevens
In relation to the receipt of discretionary housing payments, is it not the case that the Rutherfords had been denied DHP in the first instance?
Justin Tomlinson
My understanding is that that is right, but they then got the money on appeal. This comes down to whether we should have discretion in the powers of local authorities or an exhaustive list of those who should be exempted. My view is that if we try to set strict categories, we will not be able to ensure with 100% certainty that everyone will be covered, because people—particularly those with unique issues—do not neatly conform to tidy boxes. If an individual falls just below the line, they will miss out; that is a crucial point. If it is black and white, there will be winners and losers.
Discretionary housing payments allow for everybody’s individual circumstances to be considered and for a flexible multi-agency approach. For example, that approach could involve working with the police, social services and medical professionals. Underlying all those decisions is the public sector equality duty to ensure that the vulnerable in society are protected.
A number of speakers talked about support for the disabled, victims and those who are homeless. I will reel off some of the measures we have introduced to provide support in those areas: £400 million to deliver 8,000 specialist homes for the vulnerable, elderly and those with disabilities; a 79% increase, from £220 million to £394 million, in the disabled facilities grant, which helps about 40,000 people; £40 million for victims of domestic abuse, which triples the support previously in place, so that no one is turned away; £500 million to tackle homelessness since 2010; and £25 million a year to support disabled people living in significantly adapted accommodation.
Ian Blackford
I am grateful to the Minister for giving way; he is being generous with his time. What he is outlining is what the Government are having to put into place because the policy is quite simply wrong. How does he respond to the Court of Appeal saying that this policy is discriminatory and unlawful? Those are the words he must reflect on, and that is why he must do the right thing and scrap the policy.
Justin Tomlinson
I gently remind the hon. Gentleman that I have not yet finished my remarks, in which I will set out why I think trusting local authorities with discretion is far better than having an exhaustive list of exemptions. The people who would come up with that list may have the finest minds, but I am sure they would never cover all the people who should be covered. I do not wish to see people who should be protected being missed because of some sort of arbitrary winners and losers line. I will cover more of those points as I progress.
We must remember that it was the former Labour Government who first dreamed up this policy. The pretext for our introduction of this policy is that we had a quarter of a million households living in overcrowded accommodation and 1.7 million people on waiting lists in England alone. Members have talked about the casework they deal with as constituency MPs. I, too, have dealt with a number of similar cases, but I have also been into the properties of families in overcrowded accommodation who are every bit as angry as those whom Opposition Members have mentioned. Those people are in overcrowded accommodation while their neighbours have spare rooms in their family houses because their children have grown up and gone.
Justin Tomlinson
I will make some progress and then take more interventions.
Members ask whether this is a popular policy. I can tell them that it is a very popular policy with the people on waiting lists. Some 820,000 bedrooms in social housing were sitting empty while being paid for by the taxpayer. Those rooms were being looked at enviously by families in overcrowded accommodation.
Justin Tomlinson
I promise I will take more interventions, but let me make some other points first.
A small issue that will not generally have to trouble Opposition parties—that is the advantage of not being in government—is the financial aspect. Members asked whether this policy is saving money. It has saved about half a billion pounds a year, which is a significant amount of money.
Research has shown that social landlords are altering their allocation policies and are no longer putting single people into family-sized homes. In the first six months of the policy, around one third of developing landlords altered their build plans, and that figure is now up to 51%. There has been a reduction of more than 100,000 in the number of households seeing a reduction in their housing benefit award due to the policy since May 2013. There are a number of possible reasons for that. Landlords are not wrongly allocating single people to family homes. There are more one-bedroom properties—I will come on to the numbers on that—and there are people who have downsized. There are also more people either increasing their hours of work or finding work, and we are seeing around 200 people a week come off housing benefit as they are able to do that.
The evaluation report published last December showed that 20% of people affected by the policy had, as a result, looked to earn more through work. Some 63% of unemployed people affected said they were looking for work as a result of the policy, and 20% of people no longer affected said that that was because someone in their household had found work or increased their earnings. As I said, 200 people a week are coming off housing benefit completely.
We believe—I say this as someone who was a local councillor for 10 years—that local authorities remain best placed to ensure that discretionary housing payments are targeted at those most in need, based on local circumstances and working with a number of other agencies, so that there is a multi-pronged approach to providing support.
Since 2011, we have provided £560 million to local authorities and have already committed a further £870 million for the next five years. Since 2013-14, we have also allocated £5 million each year to help the 21 least densely populated areas across Great Britain, which addresses a point made by the hon. Member for Upper Bann (David Simpson). This additional funding aims to avoid any disproportionate impact on those affected by the removal of the spare room subsidy in remote and isolated communities.
Of the £150 million of discretionary housing payment funding that is being allocated to local authorities for 2016-17, £60 million is allocated by reference to the removal of the spare room subsidy. Local authorities are able to top up the Government’s contribution by an additional 150% in England and Wales, and there is no limit in Scotland.
The title of the debate on the Order Paper refers to regional effects, and there is clear evidence that regional areas are now adjusting to the removal of the spare room subsidy. Across all regions of England and Wales, the number of households subject to a reduction has fallen by between 14% and 26% since May 2013. In both the north-west and London, where the biggest change can be seen, there has been a 26% fall in the number of households subject to a reduction since May 2013. However, in Scotland, where discretionary housing payments have been used to buy out the policy, only an 8% reduction has been seen over the same period, and over the past year it has been the only region to see an increase in caseloads.
Ian Blackford
The Minister talks about Opposition Members opposing the measure. Actually, the Scottish National party is in government in Scotland and we are committed to getting rid of it, but at the same time, we are building more houses, because that is exactly what is required. The rate of social house building in Scotland is far in excess of what is happening in this country. This Government have a housing crisis, and that is what they should be addressing. What they should not be doing is punishing the poor. Why do they not do what Scotland is doing, and abolish this measure and make sure that enough social houses are built?
Justin Tomlinson
I thank the hon. Gentleman for that point, because it links nicely to the next part of my speech, which is about housing numbers. However, I gently remind him that Scotland is the only region that has seen an increase in caseloads this year. That is hardly a record of success. I urge him to think very carefully about that, because those are the people who are on the waiting list looking to get appropriate family homes, and the ones who support this policy.
On the supply of housing numbers, 700,000 new homes have been built in the past five years, including 270,000 affordable homes. Housing starts are at their highest annual level since 2007. More council housing has been built since 2010 than in the previous 13 years. The number of empty homes across England is at its lowest since records began and, crucially, we are broadening opportunities for people to access housing through schemes such as Help to Buy and the right to buy, along with a number of other measures.
Meg Hillier
The Minister made a point earlier about people being allocated oversized properties to start with. He has also talked about under-occupying by people whose children have left home. However, they are different from people whose life circumstances are fluctuating—their income has fluctuated; their children’s ages are changing. They are living in the home that they will want to continue to live in, and yet they have to go cap in hand to the council for these discretionary housing payments, which in my area are severely squeezed. Does the Minister not acknowledge that this policy really hits people at a point in their lives when they are trying to move out of that situation and get stability?
Justin Tomlinson
That was exactly the same thought process and debate that went on when the Labour Government introduced the policy in the private sector. They faced exactly the same challenges, and it was intended, had there been a general election win for Labour in 2010, for this to be done under that Labour Government. We have done it, but the difference is that when the Labour Government introduced the policy in the private sector, they did not give any additional discretionary housing payments. We are providing £870 million over the next five years and entrusting local authorities and local communities to shape and deliver what they feel is the appropriate support. In the hon. Lady’s constituency, it could be that the local authority wishes to support those with fluctuating conditions, or they may wish to target the money on other areas, but £870 million is being provided.
A number of points were raised, and I shall do my best to go through as many of those as I can. The hon. Lady asked about how income from lodgers would have an impact. Income from lodgers is fully disregarded in universal credit, so there is certainly an opportunity there. I accept that that is an easier way to generate additional income in certain parts of the country than in others.
The hon. Member for Cardiff Central raised an important point about payday loans. I am very proud to have served as part of an incredibly important cross-party campaign that delivered significant changes in the regulations protecting vulnerable consumers. In summary, we secured the delivery of financial education and support through parts of the national curriculum. All loans have to be displayed fully in cost rather than with complex annual percentage rates, which I discovered even Treasury Ministers could not calculate. Crucially, there has been the capping of costs, the ending of rip-off rates and relentless roll-overs, the freezing of debt and compulsory credit checking to protect vulnerable consumers who should never be lent the money in the first place, as well as signposting to external and, crucially, independent advice for those consumers. It was something that we all welcomed.
Debbie Abrahams
As good as all the initiatives that the Minister has outlined are, is not the point that this Government policy is requiring people to go to payday lenders to keep their heads above water and stay in their family home, regardless of the additional security that may have been introduced?
Justin Tomlinson
This is a Government policy continuing the initial good work of the former Labour Government to make sure that the 1.7 million people left on the housing waiting list, which is now down to 1.2 million in England—a significant reduction—
Justin Tomlinson
The hon. Lady can shake her head, but we cannot turn a blind eye and ignore the people who are angry that they are unable to access appropriate housing for their families, whereas others who have the benefit of a family home and whose circumstances have changed no longer have the same need as families who are in overcrowded accommodation.
The hon. Member for Wansbeck (Ian Lavery) discussed the impact on people receiving attendance allowance. They would be pensioners, and pensioners are exempt.
The hon. Member for Swansea East raised a point about discretionary housing payments not kicking in until a tenant has downsized. That is not correct: they can kick in from day one if the local authority feels that it wishes to support that individual. It is very much down to the discretion of local authorities.
The hon. Member for Cardiff Central raised a point about Cardiff’s discretionary housing payments being cut. The overall funding will be £870 million over the five years, but that reflects the level of caseload. In Cardiff’s case, as the numbers have fallen, the funding will follow accordingly.
The hon. Member for East Londonderry (Mr Campbell) raised a point about housing associations and their rent collection. The reports we have had back from housing associations are that rent collection is 99% on average, and 92% of housing association providers continue to report that, in terms of current levels of arrears in rent collection and voids, they are within or outperforming their business plans. Of those that are in rent arrears, over 50% already were prior to the introduction of the spare room subsidy, although again we will continue to work with housing association providers and local authorities to look at what further support might help to break that cycle.
A specific point was made about the impact relating to PIP and DLA. To quote the guidance:
“When deciding how to treat income from disability-related benefits such as Disability Living Allowance or the Personal Independence Payment, you should have regard to the decision of the High Court in R v. Sandwell MBC…In particular, you should consider each DHP claim on a case by case basis having regard to the purpose of those benefits and whether the money from those benefits has been committed to other liabilities associated with disability.”
In effect, therefore, that still remains part of the discretion.
In conclusion, the Government have taken action to protect the public purse and bring a spiralling housing benefit bill under control. The removal of the spare room subsidy has already saved over £1 billion since its introduction. We are protecting the most vulnerable by giving them access to direct housing payments if they need extra help to meet housing costs. The policy is encouraging people to enter work and increase their earnings and we are seeing better use of our housing stock. This is a welcome measure for those who are on the housing waiting list or in overcrowded accommodation.
Jo Stevens
I thank the Minister for his response and all my Opposition colleagues for their contributions to today’s debate. It is very disappointing that no Government Back Benchers were here to participate. Although I have listened to the Minister’s points, I do not recognise what he has said in the impact of the bedroom tax that I see every day in my constituency and which I am sure my hon. Friends do too. I ask him to take away the case studies, stories and points that we have made, and to review the policy again. It is iniquitous, unfair and discriminatory, and it really needs to go.
Question put and agreed to.
Resolved,
That this House has considered the regional effects of the under-occupancy penalty.
Canary Wharf Bombing: Compensation
(8 years, 9 months ago)
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Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I beg to move,
That this House has considered compensation for victims of the Canary Wharf bombing.
It is a pleasure to see you presiding over the debate, Ms Dorries. It is also very good to see the Minister, for whom I have the highest regard, in his place. I know that the Treasury, the Foreign Office and the Ministry of Justice have been passing or sharing responsibility for this issue among them. I am grateful that a Treasury Minister is here, because I think that this is a financial question. Some issues of compensation are an MOJ responsibility and some issues are a Foreign Office responsibility, but a number of the key questions that I want to ask relate to British financial policy, as I hope to make clear. I am grateful that the Treasury is represented here today to respond to the debate. To be honest, I do not really care which Department takes responsibility and responds. What the victims and I want to see is action.
Two weeks and 20 years ago today, the Canary Wharf bomb detonated. The bombing marked the end of a 17-month IRA ceasefire. It was recently the subject of an excellent BBC Four documentary, broadcast to commemorate the event, entitled “Executing the Peace”. The half-tonne bomb was left in a small lorry about 80 yards from South Quay station on the docklands light railway. It exploded at 19:02 GMT 90 minutes after coded warnings were telephoned to Dublin and Belfast media. Inam Bashir and John Jeffries died when the bomb went off outside their shop on 9 February 1996. Many more people were injured, a number seriously.
I have been trying for a number of years to assist the Docklands Victims Association to secure compensation for the victims who suffered, and are still suffering in many cases, and for the families of those who were killed. The Docklands Victims Association is not alone in seeking justice; many other victims are also trying to do so.
The starting point for all this seems easy enough. Semtex explosive was sold by the Czechs to the Libyan regime of Colonel Gaddafi. It then supplied that Semtex to various terrorist organisations, including the IRA. That Semtex killed and maimed people. But from there things get much less clear. To its credit, the Select Committee on Northern Ireland Affairs—I am pleased to see its Chair, the hon. Member for Tewkesbury (Mr Robertson), in his place—is engaged in an inquiry trying to get to the bottom of this. I cannot do justice, in my brief remarks, to the evidence that it has already heard or the conclusions and recommendations that it will deliver, but its report, I suspect, will not be kind to successive British Governments over the last almost 20 years. I simply wish to ask the Minister why UK citizens have not been compensated, unlike citizens in the United States, Germany and France who were also victims of Semtex supplied by Gaddafi.
One of the most powerful statements that I heard in the Northern Ireland Affairs Committee sessions was from Mr Jason McCue, representing victims in Northern Ireland. He said:
“Victims…are front-line troops in the war on terror...We have a duty of care to them, and yet we do not seem to value them in our society, like others do—like the French or the Americans do. We do not give them that value; we do not give them that respect. We do not see the humanity in them, and their strength in the war on terror. There is no stronger counter-terrorism measure than a victim standing up”.
The question for me and many colleagues—a number are in the Chamber today—is not whether the victims should be compensated but how. There are several possible ways, and all have been mentioned in the Northern Ireland Affairs Committee hearings, in which members are examining those ways and have suggested a number of parliamentary questions to tease out even more information on this very difficult issue.
Mr Nigel Dodds (Belfast North) (DUP)
I congratulate the hon. Gentleman on raising this very important issue again on behalf of his constituents. The Docklands Victims Association is doing tremendous work and working with victims elsewhere whose victimhood came about as a result of Semtex supplied by Gaddafi. I am sure that the hon. Gentleman will accept that Members from Northern Ireland fully support the campaign for compensation in this case, because it will mean compensation right across the board for many other victims as well. We fully support the case and wish him well.
Jim Fitzpatrick
I am grateful to the right hon. Gentleman for that expression of support. He, too, has campaigned strongly on this issue for many years. This is a more general case; it is not exclusively about the Docklands Victims Association. Obviously, those victims are in my constituency, but many others across the country are also involved, and what we want to see is justice for them all.
I was exploring the possible ways forward. The first way forward would have been for the British Government to join a class action with the US Government in their claim for compensation. I would like to quote Mr McCue again. He said in response to a question from the hon. Member for Ribble Valley (Mr Evans):
“There was no reason why the British Government could not have, first of all, petitioned for the British citizens to be in it. There is nothing in American law preventing them from espousing a claim, which is the technical term for it, with another state to bring compensation for a class action. The Americans could have done it.”
A Mr Jury, another witness at the Northern Ireland hearings who was also representing victims, said:
“Can I add to that that the Libya Claims Settlement Agreement is a court-accepted statement of liability towards the UK victims? Under US law, there has been an acceptance of liability, and under judicial international comity, the UK courts would accept that anyway.”
Therefore there is, or at least was, the possibility of an international legal route to compensation, but my main question to the Government is why is there not, or why can there not be, a UK domestic route?
There have been reports that the UK Government have frozen Gaddafi or Libyan assets in UK banks. I suspect that the Treasury was behind that, which is why I have targeted the question in this debate at Treasury Ministers. The amount of funds is not clear. Some commentators suggest £900 million; others suggest that it runs into billions of pounds. That raises a number of questions for the Minister, of which I gave his office notice last evening. I must congratulate the Minister’s private office, because it was still emailing me at half-past 8 last night to try to get to the bottom of some of this.
First, do such frozen accounts exist and, secondly, what are they worth if they do exist? More importantly, there are international legal precedents that enable frozen assets of a terrorist or dictator—in this case, Gaddafi—to be used to pay compensation to victims, so my third and most important question, to which I will return at the end of my remarks, is why do the UK Government not go down that route?
A third route is now apparently being explored. An article in The Daily Telegraph on 16 January quoted the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Bournemouth East (Mr Ellwood), who, to his credit, attended the memorial service in my constituency two weeks ago, on 9 February. He did not tell me that he was coming, but it was good to see him there anyway, and other parliamentary colleagues. The article stated:
“Tobias Ellwood, a Foreign Office minister, told The Telegraph that he had met new Prime Minister designate of Libya, Fayez el-Sarraj, and raised the case for compensation with him in person.”
The hon. Gentleman was quoted as saying:
“We will certainly make the case with the Libyan government in order to pursue this as best we can.
As soon as there is a government to work with I am planning to facilitate bringing the victims’ groups and the Libyan authorities together. It is for the Libyans themselves to say whether or not there would be a case for a request for compensation.”
There are, therefore, three possible ways to compensate victims: join a class action in the US, use interest from frozen assets in the UK or get the new Libyan Government to cough up.
James Cartlidge (South Suffolk) (Con)
I thank the hon. Gentleman for initiating this debate, because it enables me to raise the case of Charles Arbuthnot, who is a constituent of mine in Holbrook and whose sister Jane, a 22-year-old WPC, was murdered in the Harrods bombing. I have had extensive correspondence with the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), and it seems to me that there is still not explicit acceptance that American citizens were compensated by the Libyan Government. Previously, there would be reference only to direct compensation, for example for the Lockerbie bombing, and not to compensation for those cases in which the Semtex was supplied.
Jim Fitzpatrick
I am grateful to the hon. Gentleman for that intervention. I know that this is one of the key issues that the Northern Ireland Affairs Committee is looking at, because evidence was given about the way the Americans secured compensation. That is why I am raising with the Treasury the question whether the frozen assets and the interest on them could be used to compensate the docklands victims, as well as the Harrods bomb victims and others from Northern Ireland. It is a key question.
The Canary Wharf bombing victims do not care which is best. All they want is to secure the justice that they have been denied for more than 20 years for them and for other victims. Victims are represented by other colleagues, a number of whom are here today. Just yesterday I had two emails about this. One was from the office of the hon. Member for Battersea (Jane Ellison) on behalf of Felicity Prazak, whose husband died on flight LN1103. The other email was from my hon. Friend the Member for Feltham and Heston (Seema Malhotra), who raised the case of Mina Jadeja, a victim of the Harrods bomb.
This is not, and has never been, about the money. However, media accounts of payouts for IRA members—for example, the reports on 30 January that £1.6 million was paid to a republican kidnap gang—can only add to and intensify the sense of injustice and frustration for the victims of the Gaddafi Semtex. Successive UK Governments have failed victims. I was a Minister in both the Tony Blair and Gordon Brown Administrations, and evidence to the Northern Ireland Affairs Committee suggests that the Blair Government were more interested in the glory of bringing Libya in from the cold, closing down its support for and sponsorship of international terrorism, opening up economic ties and securing UK business contracts.
Gavin Robinson (Belfast East) (DUP)
Does the hon. Gentleman share my profound disappointment in the evidence given to the Select Committee on Foreign Affairs on 11 December by former Prime Minister Tony Blair, who said that he did not pursue compensation because, clearly, compensation was available? There was a scheme in Northern Ireland, but the same provisions were not available for the hundreds of victims in mainland Great Britain.
Jim Fitzpatrick
The hon. Gentleman makes a powerful point, and I am sure that will be a focus of the report of the Northern Ireland Affairs Committee, of which he is a respected member. I am not able to develop the powerful point as much as I would like to, but I am sure that the Committee will do so in due course.
Mr Laurence Robertson (Tewkesbury) (Con)
I thank the hon. Gentleman for securing the debate. I was at the memorial service last week with him and a number of other people. On the Northern Ireland Affairs Committee, we find it frustrating that former Prime Ministers Blair and Brown seem reluctant to give evidence on this very point. If we have to go to America to speak to people there to find out the truth, we certainly will.
Jim Fitzpatrick
The Chair of the Northern Ireland Affairs Committee makes a powerful point that reinforces the concern I raised about the way the Blair Administration dealt with the situation. The Committee was also told that the Brown Government only became interested when the flak started flying over the Megrahi case, when he was being released back to Libya. The Foreign Office then set up the dedicated unit for victims, which, initially, was very enthusiastic, and the current Prime Minister, the right hon. Member for Witney (Mr Cameron), made some very positive statements about helping the victims when he was Leader of the Opposition. Notwithstanding all the reluctance, tokenism and lack of a conclusion, the victims just want results.
To return to the original question I asked a few minutes ago, I obtained this debate to ask a Minister from the Treasury whether there is a route, through frozen assets in the UK, to end the misery and delay. In my view, that is a Treasury question. If there is not a route, why not and when will the victims see justice? My final quote is from Mrs Hamida Bashir, whose son, Inam, was killed aged 29 at Canary Wharf. She wrote in correspondence:
“we do not require or will not accept any financial compensation for the loss of my Inam. However, due to the murder of Inam and John”—
John Jeffries—
“we do feel a tremendous moral obligation to support all those who have been left severely disabled. A victim such as Mr Zaoui Berezag who desperately needs your help as he is blind, paralysed, has the mental age of a small child and is an amputee. He is cared for by his wife Gemma within a modest council home in East London.”
What further eloquence do the Government need?
Danny Kinahan (South Antrim) (UUP)
I thank the hon. Gentleman for securing the debate. From the evidence received by the Northern Ireland Affairs Committee, it seems that we do not actually care about the victims. Does the hon. Gentleman agree that it is about time that we sat down and started looking at those who really need help?
Jim Fitzpatrick
I am grateful to the hon. Gentleman because his intervention brings me to my concluding comments. This is not a party political issue, as is demonstrated by the fact that members of various parties are here expressing concerns about the issue. We all want the Government to address the issue and to come up with a solution, which successive Governments have not done over the past 20 years. The question affects constituencies across the country, including in Northern Ireland, which I have not really mentioned. The victims have been waiting too long.
The Northern Ireland Affairs Committee will require a formal Government response to its report when it is published. Today, the Government have a chance to signal further commitment not only to the victims, who they have failed, but to the country, by acknowledging that the frontline troops fighting against terrorism are innocent civilians and by assuring us that when those civilians suffer at the hands of terrorists, their Government are ready to ensure that the sacrifice is acknowledged and the debt paid. So far, after 20 years, that sacrifice has not been acknowledged and the debt has not been paid. I look forward to the Minister’s response.
The Exchequer Secretary to the Treasury (Damian Hinds)
I am grateful for the opportunity to serve under your chairmanship, Ms Dorries. I thank the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) and commend him for securing this important debate on a subject that is of particular importance to his constituents and on which he has campaigned consistently. I also commend the hon. Members from four different political parties who are attending this debate.
The docklands bombing of February 1996 was an horrific event—a black day for London and the United Kingdom. I add my condolences to all those whose lives were affected by the terrible events that day. The horror will not be forgotten. Two people died and 39 were injured, some permanently. It was a breaking of the IRA ceasefire and a failure of humanity. The involvement and support of the Gaddafi regime in this and other events marks a low point even in Gaddafi’s reign of terror. It is right that those whose lives were affected by these senseless bombings seek redress and compensation, and we will do what we can to ensure they get it. I know how important this issue is to the hon. Gentleman and to other hon. Members who are here today.
The hon. Gentleman specifically asked about the Libyan assets frozen in the UK, and the potential use of those to compensate victims of Gaddafi-sponsored terrorism. To answer that, it is important to set out the background of how those assets came to be frozen in the UK, and to explain the limits on the use to which they can be put.
In 2011, the United Nations took action against those involved in, or complicit in, ordering, controlling or otherwise directing the commission of serious human rights abuses against persons in Libya. This included, among other measures, the imposition of an asset freeze against a number of individuals and entities, including Muammar Gaddafi and some members of his family. On 2 March 2011, the European Union implemented these asset-freezing measures through regulation 204/2011, which has direct effect in the UK. The UK Government have no additional domestic freezing measures under the Libyan sanctions regime.
The approximate aggregate value of funds frozen in the UK under the Libyan financial sanctions regime is just under £9.5 billion. It is very important, for the purposes in which the hon. Gentleman is interested, to recognize that the whole Libyan Government are not subject to sanctions. A small number of entities associated with the Libyan Government are subject to asset freezes. The names of those entities are published in the Treasury’s consolidated list of financial sanctions. They include the Libyan Investment Authority and the Libyan African Investment Portfolio, which are subject to partial asset freezes, which means they are free to deal with new funds generated after 16 September 2011. The Libyan Government additionally hold further unfrozen funds in the UK and elsewhere. Therefore, existing financial sanctions would not prevent the Libyan Government from agreeing compensation with victims and making payments to them from unfrozen funds.
Kate Hoey (Vauxhall) (Lab)
Given that it could be some time before there is a genuinely workable Libyan Government, why could this Parliament not—the Minister will tell me if this would not be legal—decide to unfreeze a certain proportion of those frozen assets so that we can sort out the issue of compensation to victims in the UK?
Damian Hinds
I will come to that. As for the financial sanctions that are in place, an asset freeze means that the assets of the individual or entity must be frozen where those assets are. The funds continue to belong to the individuals and entities listed under the sanctions regime and are not seized or held by the United Kingdom Government. The funds remain frozen in the bank account they were in at the time of designation and, for individuals and entities subject to a full asset freeze, interest may be credited to those accounts provided that the interest is also frozen. The sanctions prevent any person from dealing with those funds or making funds available to the individuals or entities listed under the sanctions regime without a licence from the competent authority—in the United Kingdom, as the hon. Gentleman rightly identified, the competent authority is Her Majesty’s Treasury.
Access to frozen funds can only be licensed in accordance with the grounds set out by the United Nations and the European Union, and there are seven licensing grounds applicable to this sanctions regime. To summarise, the grounds allow for payments in the following categories: first, for the basic needs of the designated person; secondly, for the legal fees of that person; thirdly, for fees for the routine maintenance of frozen assets; fourthly, for the extraordinary expenses of the designated person; fifthly, for the satisfaction of judicial or administrative orders enforceable in the EU; sixthly, for humanitarian purposes; and seventhly, for obligations arising under contracts prior to the imposition of sanctions.
To clarify further, a Treasury licence would not compel a payment to be made, but would simply provide that the payment would not be a breach of financial sanctions. It is clear that none of the licensing grounds would allow the Treasury to select a frozen account at will and require that funds be paid from it to a third party.
Damian Hinds
I am conscience of the time, so if all three hon. Members will allow me, I want to ensure that I get through what I need to say. If time allows, I will of course be happy to give way.
Although the entities designated under the Libyan financial sanctions are generally ultimately owned by the Libyan Government, they are entities in their own right and are governed by boards of directors who make decisions about the use of their assets. If the Libyan Government came to an agreement with victims to pay compensation, and came to an agreement with individuals or entities that their frozen funds should be used to pay that compensation, the Treasury would be in a position to consider such an application for a licence under the current framework. However, depending on the licensing ground that applies, approval for granting the licence would also need to be obtained from the United Nations.
Although I very much understand and share the concern of hon. Members for the victims of the docklands bombing and other Gaddafi-sponsored terrorism, I am afraid that the legal framework relating to financial sanctions is focused on preserving the funds for the benefit of the Libyan people and does not allow the UK Government to use them as we wish, no matter how worthy or how important to us and to all hon. Members a cause may be. Indeed, the UN Security Council has repeatedly made clear its determination that, when sanctions are lifted, frozen assets must be made available to, and for the benefit of, the people of Libya. The Security Council has held that position in a series of resolutions going back a number of years.
The hon. Member for Poplar and Limehouse asked about the 2008 US-Libya compensation settlement. In May 2008, it became clear that the US and Libya were proceeding on a bilateral agreement to settle outstanding claims. The then Government made representations to the US and Libyan authorities to include UK claimants on the list of recipients. Unfortunately that proved not to be possible, mainly because international and US law does not allow the US to espouse the claims of foreign nationals. Furthermore, the Libyans made it clear that they had answered questions about their support for the IRA in 1995 and that they considered the matter to be closed.
Important questions have also been raised about the similarities and differences between this case and the case of the Lockerbie bombing, in which victims were paid compensation. I stress that there are important differences between the two cases. First, the Lockerbie bombing was an act of terrorism directly committed by agents of the Libyan state, not indirectly through IRA terrorists with Libyan supply.
Damian Hinds
If my hon. Friend will forgive me, I will continue.
Secondly, in the case of Lockerbie, the Libyans approached the US Government tacitly acknowledging their guilt for the atrocity. Thirdly, Gaddafi wanted something in return from the United States, namely readmission to the international fold, from which his actions had excluded him. Finally, the Lockerbie claims were supported by a UN Security Council resolution. Above all—this is important—it is highly unlikely that a future Libyan Government would acknowledge themselves as guilty in the same way as Gaddafi, the individual. The Libyans see themselves as victims of Gaddafi, not the bearers of his legacy.
We believe that the best approach in these difficult cases is to support and facilitate contact between victims and the relevant Libyan authorities so that claims can ultimately be settled directly. Unfortunately, the current political and security situation in Libya makes it difficult for victims, their families and representatives to pursue their claims. The Foreign and Commonwealth Office already provides facilitation support to victims, their families, legal representatives and campaign groups where it has been requested and is appropriate. However, it is a long-standing decision for the Government not to espouse private claims, so we do not provide funding for victims’ campaigns. As the hon. Member for Poplar and Limehouse may be aware, there has recently been important progress towards the establishment of a new Libyan Government. The Presidency Council has announced a revised list of Government Ministers, and the next step is for the House of Representatives to endorse that list and the Government programme. We urge the House of Representatives to do that without delay.
The hon. Gentleman may also be interested to know that the Foreign and Commonwealth Office Minister with responsibility for the middle east, my hon. Friend the Member for Bournemouth East (Mr Ellwood), raised the issue of redress for UK victims when he met the Prime Minister-designate in November 2015. I assure the hon. Gentleman that the Minister will continue to raise that issue in our engagement with the new Libyan Government, and he will encourage the Libyan authorities to engage with UK victims, their families and representatives, including those seeking compensation, once stability returns and our embassy reopens. The Minister will also meet UK victims in March, and I know that he will also be happy to meet the hon. Gentleman to discuss the issue in greater detail, if the hon. Gentleman would like to do so.
There is going to be time, so I will happily give way to the hon. Member for Belfast East (Gavin Robinson).
Gavin Robinson
I thank the Minister for giving way, which I greatly appreciate. He has fairly outlined the restrictions associated with the asset-freezing sanctions. One issue with which the Northern Ireland Affairs Committee has wrestled is the representations made, at either EU or UN level, when the sanctions were imposed to advocate on behalf of victims, recognising that there were outstanding requests for compensation. I know he is not a Foreign Office Minister, so if he is unaware of the representations that were made, perhaps he could ask those questions and report back to the Chair of the Select Committee, the hon. Member for Tewkesbury (Mr Robertson), or to me.
Damian Hinds
I will have to write to the hon. Gentleman with the detail in answer to that question, but of course the sanctions regimes are not unique to the UK and are governed by international law and UN and EU conventions.
A great wrong was inflicted on innocent victims on that day in 1996, and a key part—
Damian Hinds
Will the hon. Member for Poplar and Limehouse be responding, Ms Dorries?
Nadine Dorries (in the Chair)
That is up to you, Minister. If Mr Fitzpatrick is going to wind up, you will have to stop very soon.
Damian Hinds
I want to make sure that the hon. Member for Poplar and Limehouse has brief time at the end.
A great wrong was inflicted on that day, and clearly part of the responsibility lies with the Libyan dictator, Gaddafi. At some stage, the Libyan people will want to come to terms with what was done in their name and consider the issue of reconciliation and compensation for victims, both Libyans and foreigners. When they do, we will have something to offer from our experience in Northern Ireland, and we will of course also push for the inclusion of Gaddafi’s UK victims in any compensation scheme.
Jim Fitzpatrick
I am grateful for this opportunity to wind up the debate. I am grateful to the Minister for his comments, and I am grateful for the attendance of a number of colleagues, including my former colleague from Thurrock, Andrew MacKinlay, who has been supporting the victims for many years. I am grateful to the Minister for supplying new information on the £9.5 billion in frozen assets—that figure was not previously clear to me. I hope that information is of assistance to the Northern Ireland Affairs Committee.
I did not expect today’s debate to provide a conclusion; I sought another little piece of the jigsaw to create a bigger picture and to help the Northern Ireland Affairs Committee to produce a report that will get the Government to a position where, hopefully, they can bring the matter to a satisfactory conclusion. The victims have been waiting too long, and it is time to bring the matter to a satisfactory conclusion. This debate has not concluded the matter, but I hope it is another step towards a conclusion.
Question put and agreed to.
Community Pharmacies
(8 years, 9 months ago)
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Derek Thomas (St Ives) (Con)
I beg to move,
That this House has considered community pharmacies.
It is a pleasure to serve under your chairmanship, Mr Streeter. In a letter to community pharmacies on 17 December, the Department of Health discussed the potential for far greater use of community pharmacies and pharmacists. The letter refers to the role of community pharmacists in preventive health, support for healthy living, support for self-care for minor ailments and long-term conditions and medication reviews in care homes, and as part of a more integrated local care model. That is exactly the right direction. As an MP representing a Cornish seat where every effort is being made to integrate health and social care, I see community pharmacists as essential players in a new national health service equipped to meet the demands placed on it by modern society.
Westminster Hall debates are rarely secured in order to praise the Government and celebrate all that is good. I would love to be able to do so, but—wait for it—in the same letter to which I just referred, the Department set out its plans to reduce its funding commitment to community pharmacists by £170 million. Therein lies the problem. We have a front-line NHS service that is valued and depended on and able to embrace new clinical responsibilities and meet the demands of an ageing population, but it is unsure about its future.
Tom Brake (Carshalton and Wallington) (LD)
Does the hon. Gentleman share my concern? As Members of Parliament, we all, I suspect, refer constituents to pharmacy services, because we know the impact that that has on reducing the pressure on the NHS. If we cannot refer them to smoking cessation services, cholesterol testing and blood pressure testing, the NHS and hospitals will have to pick up the burden.
Derek Thomas
I welcome that intervention. That is exactly the point that I hope to make, particularly for independent pharmacists in rural areas, where it is much more difficult to access acute services and GP practices.
Mr John Spellar (Warley) (Lab)
The hon. Gentleman ought to see that that is true across the whole country. In urban areas, people are finding it more and more difficult to get appointments with their GPs and are going to accident and emergency. The best way to relieve that pressure is to encourage more people to go to our well-resourced local community pharmacies, maybe even rather than chain pharmacies.
Derek Thomas
That is absolutely right. The community pharmacist is part of the solution, not part of the problem, in what we want to do for the NHS. I hope to make the point in my speech that we need to do all we can to support the development of community pharmacists rather than take away money that they need.
Andy Slaughter (Hammersmith) (Lab)
Urban and rural areas share those problems. It is because people will only wait for so long for GP appointments—my hospital has exceeded waiting times for more than a year—that there is pressure is on community pharmacists. They are stepping up to the plate. Does the hon. Gentleman agree that they are being let down by this cut, when they are trying to do their best?
Derek Thomas
I hope to make the point that we need clarity about how the money will be found, if it must be found. I believe that there are other ways to save money, particularly involving the use and waste of drugs.
Community pharmacists are unsure about their future and unclear what support they can expect from the Government. The letter sets out the £170 million reduction in support for community pharmacists and asks them to prepare for the cut, but gives little detail about where the money will be cut, who will lose and what services can no longer be funded.
Paula Sherriff (Dewsbury) (Lab)
Does the hon. Gentleman agree that local pharmacies are part of the fabric of local communities? That is particularly the case for independent pharmacies, which are embedded in communities and whose owners and staff often come from those communities. Perhaps the Minister can tell us what impact assessments have been undertaken in terms of health and economic and social wellbeing by individual constituency.
Derek Thomas
I welcome that intervention, but I am concerned that the hon. Lady might have read my speech, and I have not yet put it on my Facebook page. In my constituency, I have several community pharmacists, and I am not sure that I have too many. It is simply that my patch is large and includes areas of social deprivation, which has an inherent impact on health. A car journey from the north to the south of my constituency takes an hour. The journey from the most westerly point to the most southerly point takes an hour and nine minutes. In a rural area such as mine, community pharmacists provide invaluable access to the NHS and invaluable support to vulnerable people.
To follow on from the hon. Lady’s helpful intervention, over and above their obvious healthcare roles, I see community pharmacies’ input into society as comparable to that of post offices, police community support officers, libraries, local churches or chapels, local pubs, village shops and our postmen and women. They all play an important part in local communities. They are the glue that holds communities together, the people and organisations that know when things are not as they should be, and the people who look out for our elderly, the sick and the vulnerable. Although it is difficult to put a price on the work they do, without those people and institutions, society would be a poorer place and the added strain on public services would be significant. It is perverse that we judge reducing support for services such as community pharmacists to be a saving.
Nic Dakin (Scunthorpe) (Lab)
I congratulate the hon. Gentleman on securing this timely debate. It is a pleasure to serve under your chairmanship, Mr Streeter. The loss of pharmacists’ expertise and experience and their knowledge of the people who come in and out could be enormous if pharmacies such as the Whitworth family pharmacy in my constituency are forced to close as a result of this initiative.
Derek Thomas
I think we all share those concerns. I am pleased to have secured this debate, so as to give people an opportunity to share their experiences in their own constituencies.
Reform of community pharmacies is not something that we can afford to get wrong. Many of the community pharmacies in my constituency are independent businesses that have been established for decades. A wrong move by the Government now might make those community resources unviable. We all know that community pharmacists provide important services, including the safe dispensing of medicines. They are often the first port of call for people with minor ailments and health concerns, and are a key support for elderly and vulnerable patients in the community.
Alex Chalk (Cheltenham) (Con)
General practitioners in my constituency are under significant strain. Although no one is against sensible savings, does my hon. Friend agree that nothing should be done to undermine the excellent job done by community pharmacists in diverting patients from primary care, or to add to the burden on hard-pressed GPs?
Derek Thomas
That is absolutely superb—my next line is: “Community pharmacies have a vital role in giving advice and in diverting patients from GPs and emergency departments,” exactly as my hon. Friend said. In tourist areas such as Cornwall, they take their share of the extra demand during the height of the season. Most recently, my local community pharmacists administered flu jabs to increase uptake. Pharmacies regularly get prescriptions to patients out of hours when no alternative is otherwise available, and Cornwall has led the way, with ground-breaking work in enhanced services. That is an example of how community pharmacists are very much part of the solution to integrated community health provision.
Healthwatch Cornwall recently surveyed Cornish residents about access to community pharmacies. Some 69% of participants said that they regularly visit their pharmacy, and 74% of those felt comfortable talking to the pharmacist about their health, while 78% felt well informed by their pharmacists when taking new drugs and 93% said that the pharmacist was polite and helpful.
One constituent of mine, a retired doctor, Professor Dancy, wrote to me as follows:
“I am a warm supporter of Nigel, our local pharmacist, and proud to be so. He is always ready to help when I forget (as one does at the age of 95) to re-order a medicament, and when my doctor is unavailable, or just pushed for time, I do not hesitate to ask Nigel for advice, which I follow with a confidence that is always rewarded.”
Community pharmacists are highly trained and trusted healthcare professionals, qualified to masters level and beyond. Their knowledge base covers far more than just drugs, making them the ideal healthcare professionals to relieve pressure on GPs and other areas of the NHS. Equally importantly—perhaps even more importantly—community pharmacists are welcoming change and embracing new clinical opportunities.
However, the proposed funding cut will not sustain the transition from a supply-based service to the more clinically focused service that the Government desire and our patients deserve. Cuts will discourage progress and can only result in small, independent and much-loved businesses failing, at the expense of patients, the public and the wider NHS.
Rachael Maskell (York Central) (Lab/Co-op)
In York, the local authority has made cuts to smoking cessation services, as well as NHS health checks, and the community pharmacists I have spoken to have said that they see their future role as filling some of those gaps. However, with further cuts to community pharmacy itself, where are people meant to go—back to queues in GP surgeries?
Derek Thomas
I thank the hon. Lady for that intervention. That is exactly why we are having this debate. I want the Government to examine the value of community pharmacists and to consider how they can do some of the work—in fact, a large part of the work—that would save money for NHS acute services.
I am well aware that there is a need to secure better value for money in areas of the NHS. Over the weekend, I met four community pharmacists and they all talked of the opportunities to make savings that they have identified. They are willing and able to see more patients. Pharmacists give free, over-the-counter advice to thousands of people every day, promoting self-care and diverting patients from GP and urgent care services. However, it is estimated that £2 billion-worth of GP consultations a year are still being taken by patients with symptoms that pharmacists could treat.
Pharmacists want to have a greater role in prescribing drugs, so as to reduce waste. Last year in Cornwall alone, £2 million-worth of unused drugs were returned to community pharmacists to be destroyed. Pharmacists are best placed to reduce this waste. They want to do more to support people with mental illnesses; they are keen to provide continued care of people with diabetes and other long-term conditions; and my local community pharmacists want to work with the Department of Health to improve services, engage in health and social care integration, reduce drug waste and improve access to records, in order to support the giving of prescriptions.
Peter Dowd (Bootle) (Lab)
On that point, does the hon. Gentleman agree that what is needed is a joint, co-ordinated approach to planning investment and implementing change, in partnership with national and community pharmacy bodies, rather than pushing things through at a great pace?
Derek Thomas
I thank the hon. Gentleman for that intervention. In my experience so far of looking at this subject, I have found that those in the pharmacist community do not feel that they have been properly consulted or engaged with. Pharmacists believe that they have many of the solutions that the Government wish to see.
Before I conclude, I will read one final letter that I received on Monday from a GP in my constituency. Dr Rebecca Osbourne writes:
“As you will no doubt be aware, General Practice is facing a crisis with too few GPs managing an ever-growing demand. Demand for appointments outstrips availability of doctors and allied surgery staff, and patient needs are increasingly complex with an ageing population with multi-morbidity.
A good Pharmacist helps to take some of the pressure off a local surgery—offering advice about self-limiting conditions, and prescribing over the counter medications for presentations that do not need to be taken as ‘on the day’ appointments with a GP; patients who are on complex medications can receive education and advice from their pharmacist regarding their regime, including the importance of compliance, which can further reduce the burden elsewhere in the system; vulnerable patients, whether elderly or experiencing mental ill-health, have an extra professional keeping watch over them, and a pharmacist may be better placed than a GP”—
it was a GP who wrote this—
“to see a trend developing or a change that requires further attention.”
Tom Brake
I do not know whether the hon. Gentleman is aware from the conversations he has had with pharmacists that they often do things that are outside the terms of their contract. A couple of examples were cited to me. First, a pharmacist was involved in spotting someone who was having a cardiac arrest in their pharmacy, and then in helping someone else who had fallen outside the pharmacy and damaged their face quite severely. If we lost pharmacists and their extra input, that would have a significant impact on patients in a way that has really not been explained so far.
Derek Thomas
I thank the right hon. Gentleman for that intervention. What I have learned from many patients and from the pharmacists themselves is that patients see pharmacists as the first port of call for health, so there is no doubt that there will be times when pharmacists are picking up things that otherwise would have to be picked up in A&E.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Does my hon. Friend agree that it is important not to confuse the role of pharmacists with the number of pharmacies? It is vital that we protect the pharmacists, who are very important in delivering in the national health service.
Derek Thomas
That is exactly right: it is pharmacists’ skills that we must be careful to maintain and develop.
I know that you have concerns about this matter as well, Mr Streeter, especially concerning the pharmacy in Modbury in your constituency, so I appreciate your support on this issue and the way you are chairing this wonderful Westminster Hall debate.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Gentleman on securing this debate. The letter that he read out hits a lot of the points. Removing the funding will make waiting lists longer, when GPs are already under pressure; in fact, we are losing hundreds of GPs every year, as they go to other countries. Pharmacies can see people at the point in time that they would usually see GPs; sometimes people have to wait two or three weeks to get an appointment with the GP. So this proposed cut seems to defeat the purpose of the planned change.
Derek Thomas
I am pleased that we are so supportive of the community pharmacists, and hopefully we will get a good result from this debate.
I have three straightforward questions and a personal plea to put to the Minister, if you will bear with me, Mr Speaker—[Interruption.] Sorry, Mr Gary Streeter. [Laughter.]
Derek Thomas
Have the Government made any impact assessment in relation to their position of reducing community pharmacy numbers and the impact that this change might have on the health, and economic and social wellbeing of people living in our area? What assessment have the Government made of the impact that such a reduction would have on the workload of GPs, those in A&E and those providing out-of-hours services, if patients cannot access their regular pharmacy and then visit these other services?
Caroline Ansell (Eastbourne) (Con)
I congratulate my hon. Friend on securing this timely debate on an important issue that could have far-reaching consequences, should the decision go through. Equally, I join him in urging the Minister to ensure that during the consultation—we understand that there is still to be consultation with patient groups—we will take, to echo a comment by a former Member, a constituency-by-constituency approach. I am sure that everybody will bring to the fore the particular characteristics of their own constituency. My constituency has the record number of octogenarians in the country and the fastest growing town in the south-east, and it routinely hosts tourism-driven events such as Airbourne, when 600,000 people come into the town. Pharmacies are a sometimes uncelebrated and unseen force that we rely on.
Derek Thomas
I thank my hon. Friend for her intervention and she is absolutely right to say that in a tourist area, where the population increases dramatically at times, we need to be careful that the core services are available for everyone who needs them.
My second question is: what assurances can the Government give to independent community pharmacists? The third question is: what consultation has been conducted with pharmacy patients, and what would their concerns be if community pharmacies were to close?
My personal plea to the Minister is please not to write pharmacies off until they have been given the resources to realise their full potential in society. I feel excited about the potential opportunity that exists for the NHS through the proper use of community pharmacists. While reforms to NHS services are essential and the way that community pharmacists are utilised needs to be reviewed, a blanket removal of funds to pharmacies will only hinder progress and limit this opportunity.
Several hon. Members rose—
Mr Gary Streeter (in the Chair)
Order. We have six colleagues trying to catch my eye and roughly 40 minutes. If they could show self-restraint and limit themselves to seven minutes each, that should see us through.
Kevin Barron (Rother Valley) (Lab)
I congratulate the hon. Member for St Ives (Derek Thomas) on securing this debate.
I am the chair of the all-party group on pharmacy in Parliament and I have been for more than five years. I have a keen interest in public health and lifestyle issues, and I have quite enjoyed chairing the group. After the letter of 17 December, the all-party group—three Members of this House and one from the other place—met the Minister, on 13 January. We had what I described afterwards as “straightforward talking” about the letter—a letter that posed more questions about the future of pharmacy than it gave answers. The Minister was straightforward, and he said that one issue was that, in October of this year—so just for the second half of the financial year—£170 million will be taken out of the community pharmacy budget. That leaves a number of questions to be answered, including that of what will happen in a full financial year.
The Government make great claims about putting an extra £8 billion into the national health service, but the truth is that that £170 million, which is part of the £22 billion of efficiency savings, is being taken out of the NHS, so it is hardly new money. It is not the £8 billion—that comes in a few years’ time. We are talking here about major cuts to vital services.
Since the publication of that letter, it has become clear that as many as 3,000 community pharmacies could close in England alone—a quarter of them. How would that happen? Would it be by stealth, which is suggested in the letter and in the consultation currently coming out of the Department, or is there some sort of plan? We have seen in the letter, and in others, that if there is a 10-minute walk between pharmacies, that might be looked into, but there seems to be no plan whatsoever.
What we have to accept—I put to this to the Minister in that meeting on 13 January—is that pharmacists do not work for the national health service, yet more than 90% of community pharmacies’ income comes from the NHS. The idea that we could change that mechanism and close community pharmacies is outrageous. The pharmacists may not work for the national health service, but their income depends massively on it—I wish it did not.
For many years I have been promoting lifestyle issues and the idea of pharmacists getting paid for doing things other than just turning scrips over, but that is how it works at the moment and there needs to be some serious talking. What happens if someone who has a 10-year lease on a property they took over to run the local pharmacy is forced out of business? All those questions remain unanswered, yet there is the threat of up to 3,000 pharmacies in England closing.
Rachael Maskell
I am following the argument that my right hon. Friend is putting forward. Does he agree that, instead of cutting services, we should be looking at opportunities for community pharmacies to extend healthcare further into their communities? It should be about investment at this time, particularly in prevention, which is all about saving money further down the line.
Kevin Barron
I agree with my hon. Friend. That is one of the reasons I took over as chair of the all-party group more than five years ago. I believe that our pharmaceutical services should be taking that route of travel.
It would help if the Government provided details of how they will ensure access to pharmacy services in remote or deprived communities. If the market will drive closures, there will be chaos, and something substantial needs to be in place.
Mr George Howarth (Knowsley) (Lab)
My right hon. Friend makes a powerful case. He mentioned the market. Does he agree that one difficulty that smaller independent pharmacies, such as John Davey in my constituency, have is that unlike the big chains they are unable to negotiate favourable deals on the drugs they dispense and, therefore, they are already at a disadvantage in market terms? Before the Government go any further with the programme they need to address that important issue.
Kevin Barron
I do not disagree with my right hon. Friend. I will not use the name of the company, but I can go into the store of one of the major chains, which is not in my constituency but not far away, and it takes me a minute to walk to the prescription counter, whereas in most of the pharmacies in my constituency I can get there in two or three seconds. We must recognise that, at constituency level, we are not comparing like with like.
Another thing is that key payments for pharmacies will be phased out, and there might be a drive towards a commoditised medicine supply service with an increased focus on warehouse dispensing and online services. Again, the possibility of added value in a local pharmacy regarding lifestyle issues potentially goes out of the window, and we really need to look at that. I have no direct experience, but I am told that they have that in the United States.
As well as dispensing medicines, community pharmacy teams help people to stay well and out of GP surgeries, to get the most benefit from their medicines and to manage their health conditions. The NHS spends £2 billion a year on GP consultations for conditions that pharmacy teams could treat. Community pharmacy can and should do more. A national community pharmacy minor ailments service could save the national health service some £1 billion a year. In some of the pharmacies in my constituency, there is already a minor ailments service. I understand that the Government recently changed their mind about developing such a service at a national level, and I would like to know why. Such a service makes great sense to me. It keeps pressure off not only GP surgeries but the local A&E.
In 2014-15, pharmacies delivered more than 3.17 million medicines use reviews, to increase people’s understanding and help them to take their medicines correctly. We get a lot more from our pharmacies than their just turning scrips over. Our communities and our constituencies need that, and if there are to be any changes, they should be carried out in a sensible and planned way, and not in the chaotic way of some of the suggestions of recent weeks.
Huw Merriman (Bexhill and Battle) (Con)
It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate my hon. Friend the Member for St Ives (Derek Thomas) on introducing this important debate.
Some 28% of my constituents, across our 200 square miles of East Sussex, are over the age of 65. Losing our pharmacies would affect all my constituents, but I am particularly concerned about the impact on the elderly and vulnerable. I spoke today with a pharmacist in the village of Ticehurst in my constituency, who told me about his concerns. First, he is concerned that the Government might cut 6% from his dispensing fees. Secondly, he is concerned that they might withdraw the £2,500 that all pharmacists are paid annually. Thirdly, he is concerned that the Government might impose a clawback, meaning that if a budget is overspent, pharmacists might be required to reimburse their fees. Fourthly, he is concerned that the pharmacy will have to cover the welcome introduction of the national living wage and the cost of new pension arrangements.
I understand that it is essential for the NHS to make savings—£22 billion over this term—and it therefore seems reasonable to expect the £2.8 billion pharmacy budget to contribute to that. The Government rightly point out that many of our pharmacies are situated in walking distance clusters, but I am concerned that the proposed funding changes, if not sensibly targeted, could affect not just pharmacies in clusters but the rural pharmacy that is miles from another one and more than just a dispensing chemist. Because a pharmacist knows his or her customers, he or she is able to advise them on solutions more cost-effectively than if they were to utilise the wider NHS, including GPs and A&E.
Mr Steve Baker (Wycombe) (Con)
In an unscientific Twitter survey, which I kicked off at the beginning of the debate, 62% of respondents say they would prefer to see a community pharmacist first. Does my hon. Friend agree that the Government should be clear when making their funding allocation about the extent to which people would prefer to make use of community pharmacists before they see GPs?
Huw Merriman
Much as I prefer to disagree with everything that is said on Twitter, I could not disagree with that particular scientific survey.
Julian Sturdy (York Outer) (Con)
My hon. Friend is making a powerful argument about rural pharmacies. A pharmacist in my constituency contacted me. He said that, if the proposed cuts go through, he will have to cut staff and the apprentices he is training, as well as reduce opening hours and stop the free services, such as the deliveries to housebound patients. The cuts would not just stop the important services that my constituents and many others get from rural pharmacies; it would also deeply impact on skills, and on skills going back into the services that we have to protect.
Huw Merriman
I very much agree with my hon. Friend’s point, and I can give another two reasons why pharmacists are so important. Like the post offices, our pharmacists also act as the eyes and ears for the welfare of certain vulnerable constituents. As a staple part of our village and town centres, pharmacies provide the footfall that allows our pubs, restaurants and shops to survive in an increasingly difficult environment.
I am not a deficit denier, and it would be hypocritical to be elected on the platform of balancing the Government books by 2020 and then to refuse to countenance savings in this area. It strikes me, however, that a better focus for efficiency is not the fees for dispensing, but the volume of drugs wasted by over-dispensing. For example, some drugs may be dispensed for a period of three months, only for the individual to change a course of treatment or stop treatment altogether. As soon as those drugs leave the pharmacy, they have to be used or destroyed. I wonder exactly how much money could be saved by dispensing for shorter periods of time.
Additionally, I find it extraordinary that pharmacists deliver NHS prescriptions free of charge to all who want that service. I understand why those who cannot collect their prescriptions should get them delivered, but to provide free delivery, effectively on the NHS, appears to be an area that is ripe for efficiency savings. I welcome the Government’s proposal for a pharmacy access scheme. That would provide more NHS funds to certain pharmacies based on factors such as location and the health needs of the population. To that end, I ask the Government to distinguish and make a special case for rural pharmacies and to focus their efficiencies on those pharmacies that are within closer proximity to each other. If difficult choices are to be made, let us ensure that our constituents can still access a pharmacy within their locality.
Stephen Pound (Ealing North) (Lab)
As ever, it is a pleasure to serve beneath your firm but benevolent eye, Mr Streeter. I congratulate the hon. Member for St Ives (Derek Thomas) on bringing this important, relevant and timely matter before us. It is similar to an Adjournment debate I secured in the previous Parliament, to which the right hon. Member for North Norfolk (Norman Lamb) responded, and to a question I put to the Minister the week before last on this very subject. In both cases, the response I received was one of warm words but few concrete proposals and little reassurance for the community pharmacies.
Like everyone else in this Chamber, I happen to believe that the Minister is a good and decent man, but I fear I can see the handcuffs of the Treasury holding him tight. I feel that he is beneath the terrifying thrall of the Treasury. The proposals are nothing to do with improving patient service. They are nothing other than a pathetic attempt to balance the books on the backs of one of the most productive, hard-working, positive and excellent groups of people in our society: the modern community pharmacist. Every day, they perform a miracle on the high street. They have changed from the old-fashioned world of the dispensing retail chemist to the modern world of preventive medicine. In fact, in many ways pharmacies are multi-speciality community providers. It will not have escaped your notice, Mr Streeter, that we have here Members representing the highlands and islands, the Isles of Scilly, the Isle of Wight, Southend-on-Sea, and Members from Armagh to Ealing. This issue is one that the whole nation is concerned about.
Mr George Howarth
I am sure it was an oversight by my hon. Friend that he did not include Knowsley in that long list. I hope that the high street pharmacies are not depending on miracles. I rather hope that they are dependent on science.
Stephen Pound
Not for the first time in my life, I have been corrected by my right hon. Friend. When I referred to a miracle on the high street, I was referring to the contrast between the traditional chemist that we have known in the past and the modern community pharmacist. To go into the modern community pharmacy is to see a treatment room or an interview room, to get a blood pressure test or travel advice or to get advice on smoking cessation, healthy eating or obesity. Those are all things that we would never have thought of before with a pharmacy. To my mind, that is miraculous, mostly because it has been organic and has not come about by Government diktat. As a great believer in state centralism, I find that quite shocking, but that is all the more reason for this area to be nurtured, supported and not threatened.
The point that greatly concerns me is that the proposals go against the grain of all current thinking—not just the Carter review and the “Five Year Forward View”, which is the NHS document that talks about an enhanced role for the community pharmacist—and against every single professional body. That is not just Pharmacy Voice and the royal colleges. Everyone seems to feel that the proposals are a retrogressive step that will not only make the situation worse, but that cannot be justified because the knock-on costs to overcrowded GPs, A&E departments and urgent care centres will ultimately end up costing us so much more.
This issue concerns me greatly. One cannot imagine a more different constituency from that of the hon. Member for St Ives than mine in west London. I represent a tightly knit urban community. People are close together and tightly packed, as opposed to the great rural beauty of the Isles of Scilly. We are, however, what is known as an under-doctored area, which is typical of the big cities. The typical GP in my constituency is a single-handed elderly practitioner, often operating out of a terraced house. That is changing, but as it is changing there is a period in which a great many of my constituents—many of them are transient constituents who are moving in and moving out, and cannot register with a GP nor wait two or three weeks to see a GP, and they queue up at the A&E department or the urgent care centre and cannot be treated—are asking, “Where can we go?” The answer is that they can go to a source of good, sound advice that is both responsive and preventive. They can go to a person who is qualified and skilled. In many cases in my part of the world, we have community pharmacies with two or three pharmacists who are experts in their area. We can even do minor injuries. There is no reason why we should not expand the community pharmacies.
There is much talk of the seven-day NHS, and the model exists before our eyes. The NHS can be a seven-day service in the community pharmacies and, I profoundly hope, everywhere else. The opening hours of the community pharmacies—they are sometimes found in hospitals and supermarkets—are a great model that we should be working to support. I know that the Minister’s heart is in the right place. I know that he wants to stand up and say, “I will resist the Treasury diktat and support the community pharmacists for the sake not just of all our constituents, but of future generations, too.” Community pharmacists deserve that, and they are certainly entitled to it.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
May I say what a pleasure it is to serve under your chairmanship, Mr Streeter. I have been involved in the whole business of pharmacies since 10 to 15 years ago, when I worked commercially on the campaign for resale price maintenance. Members may remember that the then Government were seeking to get rid of resale price maintenance on many prescription medicines. So I have been following the area closely.
I congratulate my hon. Friend the Member for St Ives (Derek Thomas) on securing the debate. Members should be aware that I am the Government’s pharmacy champion, as well as the vice-chairman of the all-party pharmacy group. The right hon. Member for Rother Valley (Kevin Barron) is the chairman.
Just before Christmas, the Government announced that they wanted to review community pharmacies, and I very much welcomed that. The Government’s consultation process on community pharmacies needs to ensure that health service money is targeted better on where it can deliver the best results. The consultation process has highlighted that there is an oversupply or clustering of pharmacies in specific locations. The other day, I was driving back to London from my constituency, and I noticed that there were three or four pharmacies within two or three minutes’ walk of each other. To my mind, that has to be looked at.
The issue is how we ensure that the changes to the funding mechanism ensure the desired results, namely, the reduction of clusters while ensuring that we do not damage key parts of the pharmacy network. Using funding to make the changes is potentially a blunt instrument, and it will impact on smaller volume pharmacies in rural areas in particular. They are a part of the network that is desperately needed. What mechanisms are envisaged to achieve those goals? I understand that some large pharmacy groups might be willing to give up the leases on some of their shops, but they want to know whether the Government will give them an assurance that the leases will not be handed over to another chain of pharmacies. Perhaps my right hon. Friend the Minister will explain what approach the Government will take to ensure that that does not happen.
Pharmacies, particularly community pharmacies, are undergoing unprecedented changes. They want to expand and to assist in meeting primary care demand, diverting activity from A&E to support more patients with self-care and in the prevention of ill health. Pharmacy is increasingly seen as a large part of the solution to the shortage of doctors and nurses in primary care. We are watching the spiralling demand for practices and community pharmacies, which are about delivering that patient care.
We need to support the innovation in roles to facilitate change in the infrastructure: information exchange, organisation, and working practices. Current investment in the innovation fund will probably not provide the level of investment needed, and access to transformation funds for this purpose seems unlikely. The change is needed to manage demand more effectively, but, unless supported, we place the system and the patients it serves at high risk. Can we therefore ensure that higher priority is given to ensuring that the changes are effectively supported?
Stephen Pound
On the subject of changes, and bearing in mind that the increase in prescribing is about 2.5% per annum, does the hon. Gentleman honestly believe that the Government’s proposal for a hub-and-spoke prescribing model, breaking the link between the patient and the pharmacist, represents value for money, or even sanity?
Oliver Colvile
There are two things. First, it is important that the consultation process reaches a conclusion. For us to try to premeditate on that would be unhelpful. Secondly, there are examples of where the Government have been able to make sure that money is better focused and better used. They can make budgets sweat quite well, and we should certainly take that into account.
I very much welcome the review, as I believe that community pharmacies should have a much wider role than simply dispensing prescriptions. They can take the pressure off hectic GP surgeries and our hard-pressed accident and emergency units. Such venues should provide alternative services such as help with mental health conditions, smoking cessation and suchlike. The Government need to ensure that pharmacies are the first point of contact when patients are looking for minor help, such as flu jabs. We also need to make sure that patients in our rural villages have access to pharmacies, although in urban conurbations, such as my Plymouth, Sutton and Devonport inner city constituency, there should not be a plethora of chemists just for the sake of having them. We need to make sure that patients’ safety is paramount when pharmacies are dispensing medicines.
Over the past five years I have consistently campaigned for the Government to decriminalise dispensing errors made by pharmacies. At present, GPs can only be struck off if they make a prescription error, whereas pharmacists can be sent to prison for exactly the same thing. We need a level playing field. Despite being the Government’s pharmacy champion, I am going to be slightly critical of the Government over this issue. We hoped that it would be sorted through secondary legislation before the general election. During a debate on the Access to Medical Treatments (Innovation) Bill, which was promoted by my hon. Friend the Member for Daventry (Chris Heaton-Harris), I questioned the Department of Health’s decision to delay the necessary legislation until after the devolved Assembly elections and the new Executives and Governments had had a chance to introduce their own legislation. This means it is unlikely to be introduced before the summer, so English pharmacists are now dependent on legislation being passed for other pharmacists. So much for fair devolution. When my right hon. Friend the Minister sums up, will he explain why English pharmacies have to wait until the Welsh, Scottish and Northern Irish Assemblies have passed the necessary legislation?
I understand that the Government are keen for pharmacies to be able to share summary care records to ensure that they are fully informed of patients’ medical history when giving medical advice. What progress is my right hon. Friend’s Department making?
Yesterday, I met the General Pharmaceutical Council, the pharmacy regulator since 2010. Various issues were raised by the GPC, especially the Pharmacy (Premises Standards, Information Obligations, etc.) Order 2016, which was in its Grand Committee stage in the House of Lords yesterday. I welcome this section 60 order, as it will bring much-needed transparency to the GPC’s reporting on inspections. There must be transparency. The section 60 would also allow the GPC to take proportionate action when pharmacies fail to meet essential standards. This is just one of the reasons why I support the section 60 order.
Pharmacy has the potential to play a huge part in community healthcare in Britain. However, we need to address the fundamental flaws in the system so that our communities are better served by pharmacy and our healthcare system is used responsibly.
Mr Mark Williams (Ceredigion) (LD)
I note the time, Mr Streeter, and your stipulation about when Front-Bench speeches will start. I thank the hon. Member for St Ives (Derek Thomas) for initiating this important debate. As I look around the Chamber today, I see that Members from Wales, Scotland and Northern Ireland are outnumbered, which is appropriate, given the letter that was sent and the cuts that pharmacists might endure. In Wales, the issue of health is almost entirely devolved, so much of what is being discussed today will be different in Wales from in England. However, the community pharmacy contractual framework is an England and Wales arrangement, so what happens in England could impact on Wales.
The hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) mentioned the issue of devolved Administrations and delays. Our understanding is that the consultation will conclude, the Minister will reflect, and an announcement will be made during the Assembly election campaign period. We will not have a health Minister in Wales if decisions made in Whitehall impact on the delivery of services in Wales. I think that it has something to do with the respect agenda and waiting for a health Minister to be in place.
Oliver Colvile
Does the hon. Gentleman recognise that if there were delays in Wales, Scotland or Northern Ireland, the English pharmacies would end up waiting behind that queue?
Mr Williams
The hon. Gentleman should address that question to the Minister. The timing represents an unfortunate mismatch, for which pharmacists in England might pay the price. The timetable is of the Government’s making, not mine, so the Minister needs to reflect on that.
I want to talk about two facets of this debate that have been touched on by the hon. Members for St Ives and for Bexhill and Battle (Huw Merriman): the issue of rurality and the impact of the cuts. The consultation document stated:
“40% of pharmacies are in clusters of 3 or more meaning that two-fifths of pharmacies are within 10 minutes walk of 2 or more other pharmacies”.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I am sure that the hon. Gentleman is going to make an excellent point about rural pharmacies, but there is another element in my constituency, where I met my local pharmacist, Mike Maguire of Marton Pharmacy. Two of our minor injury units have closed and there is a proposal to close another walk-in centre, after the last one was closed. The collateral impact of the withdrawal of those services reduces the ability of the average patient and customer to access services. There is not only the rural aspect but the specific need at the time.
Mr Williams
The hon. Gentleman is right. That has been the message of many contributions. The work of our community pharmacies complements the work of the national health service. When the hon. Gentleman’s constituency is hit in the way that it has been, that represents the proverbial nail in the coffin of decent community-based services for his constituents.
On the urban point, to reiterate the point made by the right hon. Member for Rother Valley (Kevin Barron), we are talking about well-established community businesses that impact on many people in the locality. Two or three businesses clustered in the same area doing a generally good job will have an impact on the local economy, but the rural point is fundamental. We have heard about the pressures on GPs and the difficulties in getting appointments. In my vast rural constituency of Ceredigion, we have a district general hospital in Aberystwyth: Bronglais hospital. We have a good many GPs throughout the county. We also have a network of very effective pharmacists, and it is a jigsaw that works in providing good services. There are 716 community pharmacies in Wales—in high streets, villages and towns—with 50,000 people visiting those facilities every single day, proving the efficiency of the much-maligned Welsh national health service and bridging the real difficulty that people have in visiting the closest hospital or a GP for something as routine as blood pressure or cholesterol checks. It is really important that the outcome of the debate is that we support community pharmacies. That is fundamental.
In Wales we have developed our services. I visited the pioneering pharmacy of Mr Richard Evans in the town of Llandysul 11 years ago. He was clearly of the view that we could develop services much more, to relieve pressure on the national health service, and he achieved that. In Wales pharmacies have offered NHS flu jabs for at-risk groups for the fourth winter running. Almost 20,000 people in Wales benefited from that last winter. After four years of that provision in Wales, the NHS in England introduced the same service for the first time. Community pharmacies in Wales can treat about 30% of the common ailments that people would normally go to a GP for. That is a huge saving for the national health service. Pharmacies also promote meaningful public health campaigns. I visited the pharmacy in Borth, where there is a campaign on Parkinson’s disease. The staff are doing a good job talking with victims of Parkinson’s disease about their medication, and promoting awareness in the community.
Finally, having praised what is being done in Wales, in a rural area, I want to seek an assurance from the Minister that if his consultation has an effect on the three levels of services in the framework, there will be meaningful consultation with Assembly Ministers in Cardiff, and that any negotiations on changes to the contract will involve Welsh Government officials at the negotiating table. This is one of the small areas where health is not devolved, and that is particularly relevant on the Welsh border; it requires the respect agenda, on anything that the Minister concludes.
Mr Gary Streeter (in the Chair)
As a reward for his patience, Mr Graham Jones has eight minutes.
Graham Jones (Hyndburn) (Lab)
I congratulate the hon. Member for St Ives (Derek Thomas) on securing the debate. It is somewhat of a rerun of the post offices debate mentioned earlier. Post offices provide a commercial service, but the key point is that they also provide a public service. My view is that the UK’s pharmacy network must be protected. They are vital because they are accessible and have good geographical coverage: 95% of the population can currently get to a pharmacy on foot within 20 minutes. For deprived populations, the elderly and young families whose car may be taken to work, such services that can be reached by walking are essential.
Local pharmacies provide advice and reassurance.
Graham Jones
No, I will not; I am sorry, but there is not enough time.
Pharmacies are also vital because they are beginning to be part of a better national health service, providing a first point of contact; 1.8 million people visit a pharmacy each day. They are an essential part of the pyramid of care that has been mentioned. Accident and emergency departments are stretched, and the solutions that will bring about better healthcare must start further upstream, with pharmacies. A pharmacist wrote to me:
“Pharmacies need to evolve and we have always engaged with the governments in the past to deliver the targets, and greater use of pharmacies must be made to reduce the hospital attendances in the AE”.
There are 36,000 patient visits to my local walk-in centre, which is a fraction of the number of visits to GPs. Yet A&E, the walk-in centre and GPs are all stretched. Local pharmacies are vital for access and as part of a model of healthcare delivery in the UK that relieves some of the current pressures and dispenses advice that puts prevention rather than cure at the heart of healthcare.
My local pharmacy in Baxenden is part of an innovative model of care: the healthy living pharmacy framework is a tiered commissioning framework, aimed at achieving consistent delivery of a broad range of high-quality services through community pharmacies to meet local health needs, improving the health and wellbeing of the local population, and helping to reduce health inequalities. What that means in plain English is that those pharmacies are the first point at which healthcare and health advice is delivered. That includes workforce and workplace development—developing a skilled team who can proactively support and promote behaviour change and improve health and wellbeing. Work done by the healthy living pharmacy initiative has shown that 70% of people who visit pharmacies do not regularly access other healthcare services. Those pharmacies are well placed to support the health and wellbeing of people in the community by, as has been mentioned, providing improved choice, and access to early interventions on such issues as optimal use of medicines, obesity, alcohol and smoking. That should improve outcomes in the short and long term, and have an impact on the cost of care in the future.
The Pharmaceutical Services Negotiating Committee evaluations of HLPs to date found that they
“demonstrate an increase in successful smoking quits, extensive delivery of alcohol brief interventions and advice, emergency contraception, targeted seasonal flu vaccinations, common ailments, NHS Health Checks, healthy diet, physical activity, healthy weight and pharmaceutical care services.”
The report also indicates that the HLP model is working in areas with different demography and geography. I cannot vouch for the PSNC evaluations, but I welcome the actions taken by my local pharmacy to be available to local people and offer better health advice.
Across Lancashire, pharmacists such as Linda Bracewell at Baxenden pharmacy are keen to see HLP rolled out across Lancashire. That requires support from the Government and the NHS. All pharmacies, including HLPs, are a vital part of the healthier Lancashire agenda. Yet today pharmacies are under threat from two directions. Those threats are the reductions in Government support—the 6.1% cut by the Department of Health in community pharmacy funding, which comes to a total reduction in funding of £170 million—and market forces. I want to move on to consider that other threat.
My right hon. Friend the Member for Rother Valley (Kevin Barron) mentioned changes in the market, such as the growth of warehouse pharmacies that seek profit—this is the Amazon model—at the expense of both the public service element and geographical access points. That is a cause for concern. Not everyone is online, or comfortable with such remote arrangements. There is no guarantee that such a method of providing pharmacy services has a role in a healthy living environment, or a better healthcare delivery system. Will it engage with hard-to-reach communities?
Over Christmas I was shown a letter by Linda Bracewell that was sent to a constituent by Pharmacy4U, a mail order pharmacist. Worryingly, it was passed off as an official letter. People would feel obliged to fill it in and send it off. It was personalised, and, crucially, it redirected customers with repeat prescriptions to Pharmacy4U. Worse, Pharmacy4U is just one of several emerging online mail order warehouse companies—box shifters. It was not clear that the letter was not official but a marketing ploy. It is a matter of great concern that the letter was part of a mass mailing, sent specifically to people with existing prescriptions. Their GP practice was named on the letter as though it came from that practice. That is a worry for pharmacies.
How did Pharmacy4U get access to patient practice details? Is it right that the letter I saw was allowed to look like an official document and a request for detail, when in fact it was simply permission to transfer existing prescriptions—a huge business for local pharmacies—to a warehouse pharmacy? Even more worrying was the fact that all the patients of GP practices with electronic data systems had been mailed, while patients of GP practices without such electronic patient systems had not been mailed. Does Pharmacy4U have business connections to the data company that provides GPs with electronic patient data systems, and the patients of those practices? The Minister should be aware that those issues are serious, and that such sharp business practices and models threaten existing pharmacies. The presence of warehouse pharmacies operating on an Amazon model is of concern to me and, I am sure, our constituents, because it erodes the public service element of the current pharmacy network—particularly the healthy living pharmacies.
In conclusion, does the Minister recognise the public service element of pharmacies? Does he want to preserve the current pharmacy network? Does he see pharmacies as having an increasing role in healthcare delivery? Does he think that there will be more or fewer pharmacies after his review is implemented?
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
It is a great pleasure to serve under your chairmanship, Mr Streeter. As this is a health debate, I hope you will not consider it inappropriate if I start by saying that my thoughts are very much with Pauline Cafferkey. Earlier today she was hospitalised in Glasgow for the third time after contracting the Ebola virus. She is being flown to London for treatment at the Royal Free hospital. I am sure that the whole House will join me in wishing her the very best.
The debate has been extraordinarily good, so I extend my thanks to the hon. Member for St Ives (Derek Thomas) for this timely initiative on his part. I had a standard speech prepared, but such has been the debate that I would like instead to reflect on the contributions we have heard so far. Some might be wondering why a Scot representing a Scottish constituency is here at all. At least some people present have emailed me to say, “Even though this debate is not about Scotland, we would very much appreciate hearing a Scottish voice.” What I bring to the debate is shared by everybody present: a concern to maintain community pharmacies because they are a vital part of all our communities.
When making his compelling case, the hon. Member for St Ives said that patients see pharmacists as the first port of call. They do indeed. My own wife, Barbara, has a condition known as post-polio syndrome, which means that she has to take a wide variety of medicines that often vary. It is essential for her that she is able to go along and talk to a pharmacist as her condition varies over time. If she always had to burden a GP when she needed such advice, that would put an unnecessary strain on local GP services.
Rebecca Harris
A lot of people who go to community pharmacies in my constituency such as Bharat Patel’s and Asif’s go there with problems that they would not wish to burden their GP with, but that are a burden to themselves, so it is a great relief for them to be able to talk things through with someone. Does the hon. Gentleman agree that sometimes people go to a pharmacist because they would be uncomfortable or embarrassed to go to their local, perhaps single-handed, GP? They might want to ask for alcohol advice or about something that they find embarrassing, or perhaps a young girl might want to ask for emergency contraceptive but not wish to see the receptionist, who is her mother’s friend whom she has known all her life.
Roger Mullin
I agree entirely with the hon. Lady’s point. Moving on a little, the right hon. Member for Rother Valley (Kevin Barron) described very clearly the long-term funding consequences of the Government’s proposals. As he indicated, they are planning to insert £8 billion more into the NHS while at the same time seeking to cut £170 million from pharmacies. The use of market forces to cull pharmacies does not really make any sense. The hon. Member for Bexhill and Battle (Huw Merriman) made a telling point that relates to the intervention that the hon. Member for Castle Point (Rebecca Harris) just made: he said that pharmacists can act as the eyes and ears of the vulnerable in our communities. That is the other side of the coin to the point she made about people who feel under stress or strain in their immediate circumstances very often seeing the pharmacist as their first port of call.
The hon. Member for Ealing North (Stephen Pound), in his typical style, with quiet presentation, pointed out that the proposals will affect every community, whether up in the highlands and islands or down in Ealing North. Indeed, he said that they will affect every community in terms of both the science and the magic that is involved. Everybody here is, I think, as one in our desire to develop pharmacies, yet, as he pointed out, the Treasury is seeking to put on the shackles for the sake of a £170 million saving. As I have previously spoken in Treasury debates, I made a note to point out that that saving would amount to less than half of what the Government could save if they simply closed the so-called Mayfair loophole. Pharmacists provide a service far beyond that supplied by many financial advisers in our society.
The hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) discussed the need to reduce clusters. When he was talking, I immediately thought of the hon. Member for Ealing North, who would no doubt advise him that perhaps we would do better by going back to some old-fashioned central planning to do things more coherently, rather than using market forces. If we use only market forces, the people who are going to be served least well are those in the large rural communities, whether in Wales or many parts of England. The hon. Member for Ceredigion (Mr Williams) made an excellent case about the importance of such far-flung rural communities and the critical services provided by community pharmacies.
Finally, I was very taken by one of the statistics cited by the hon. Member for Hyndburn (Graham Jones) early in his speech. I have to say I was not aware that 1.8 million people visit pharmacies each day, not merely for the dispensing of drugs but to see someone from whom they can get advice and in whom they can place their trust. Everybody who has contributed to the debate has pointed out that pharmacists supply a service to our communities that goes far beyond that provided by what we used to call in the old days the local chemist. They are highly qualified people who can provide a range of expertise. As the hon. Member for St Ives pointed out, many have masters degrees in specialist areas. In all honesty, in some areas of medicine they can provide advice that goes beyond the expertise of a GP. To lose that in any way, particularly in the most vulnerable communities, would be a sad loss indeed. I am very aware of wanting to leave some time for the hon. Gentleman to say a few words at the end, so I simply congratulate him again on an excellent debate.
Barbara Keeley (Worsley and Eccles South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for St Ives (Derek Thomas) on securing this important debate. I join the Scottish National party spokesperson, the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), in sending good wishes to Pauline Cafferkey, which I am sure we all wish to do. It is very disturbing to hear that she has become ill again.
In what has been a wide-ranging debate, we have had heard from Members about the importance of community pharmacies to their constituents. I thank my hon. Friend the Member for Ealing North (Stephen Pound) for not only giving us an impressive list of the additional services available from community pharmacies but, importantly, discussing the role that they can play in under-doctored areas, which is an issue in my constituency. We must of course consider rural areas, but urban areas can also be very short of services. In my constituency, we have lost walk-in centres and other forms of community support, such as active case-management pilots. It is a pity that such excellent services that keep people away from GPs and hospitals are being cut.
As we have heard again and again in the debate, community pharmacies provide an essential service in dispensing both medication and the essential information and advice that can prevent people from having to visit their GP for common health problems. On 17 December, the day the House rose for the Christmas recess, the Government announced a £170 million cut to community pharmacy services, with further cuts to follow. That initial 6% cut in the funding for community pharmacies will put significant financial pressure on many of them and will result in closures and job losses. Can the Minister assure us that the service offered to patients will not suffer due to the cuts? It is hard to see how there will not be a loss to patients. Will he comment on the additional pressures that will be placed back on the NHS as a result of that loss?
As my right hon. Friend the Member for Rother Valley (Kevin Barron) said, the Minister had a meeting with members of the all-party parliamentary group on pharmacy. I understand from the note of that meeting that he estimated that between 1,000 and 3,000 pharmacies, out of the overall total of 11,700, could close. He also recognised that smaller pharmacies are likely to be squeezed. Such a significant number of pharmacy closures will have a substantial impact on the way that the pharmacy sector operates. The sector called the cuts a “profoundly damaging move”, so it is important that the Minister updates us on the number of pharmacies at risk of closure. The Government failed to outline funding plans for subsequent years, raising concerns that there could be even deeper cuts later in this Parliament. Will the Minister tell us what further cuts are planned?
Despite the cuts, the Government say they want
“greater use of community pharmacy and pharmacists: in prevention of ill health; support for healthy living; support for self-care for minor ailments and long term conditions; medication reviews in care homes; and as part of more integrated local care models.”
As with everything else to do with care, a letter from the Department for Health suggests that the reforms can be carried out by integrating community pharmacies into a range of primary care settings. Integration is fine in itself, but it will not be achieved through funding such as the pharmacy integration fund, which is set at £20 million and will rise to £100 million by year five. I understand that the majority of the funding will focus on providing pharmacy services at GP practices, but that overlooks the wider role that community pharmacies play, which hon. Members have talked about in the debate.
My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) passed me a note about the Windmill Pharmacy in his constituency. In a couple of hours on Saturday, its pharmacists dressed an elderly man’s superficial wound, gave advice on a fungal infection, advised on vaccines and malaria tablets for people travelling abroad, counted and sorted the tablets for many patients with multiple conditions, gave an antibiotic eye drop for a child with an infected eye, gave repeat blood pressure tablets to a patient whose GP was away, and, of course, had their technicians set up the dosette boxes for patients, including those with dementia, who rely on that service. All those services are freely provided in pharmacies. That is an excellent example from my hon. Friend’s constituency. How does the Minister expect community pharmacies to improve their services and continue to do all of those things when they face a significant decrease in funding and are simultaneously being asked to provide greater support to GP practices, care homes and accident and emergency units?
It has been suggested that we should facilitate hub-and-spoke arrangements, but there are real concerns about that system. My right hon. Friend the Member for Rother Valley said:
“Warehouse dispensing, or ‘hub and spoke’, raises questions around safety, quality and access. The supply of prescription medicines cannot be treated like buying clothes and DVDs. High quality, safe dispensing depends on the opportunity for a face-to-face discussion between the pharmacist and the patient. I don’t see how that can be done in a warehouse.”
I share those worries, which were expressed very well by my hon. Friend the Member for Hyndburn (Graham Jones), who asked some important questions about warehouse chemists’ practices and the data security implications of what they do. Most importantly, the Government must tell us how they will ensure that the essential face-to-face contact between pharmacists and patients is maintained.
Pharmacy Voice outlined the negative consequences of the cuts to community pharmacy services. It is concerned that the funding cuts will increase the risks to patient safety and will decrease patient access to medicines and vital support. The cuts risk job losses and will diminish community assets and the long-term potential of community pharmacies. Pharmacy Voice also warned that the cuts are likely to undermine existing health improvement plans and recent initiatives to integrate and develop community pharmacy services. We heard about some wonderful examples of integration and new ways of working in this debate, but all of that will be dashed.
Sue Sharpe, the chief executive of the Pharmaceutical Services Negotiating Committee, said that the plans
“can only impair pharmacies’ contribution to keeping people well and out of GP and urgent care settings.”
The Government are, in her words,
“proposing to drive ahead to radically change the market with a real paucity of knowledge essential for good decision making.”
We want decisions to be based on better information than we have heard about here.
In my constituency, I have been in contact with the chair of the Salford and Trafford local pharmaceutical committee, Varun Jairath, who is a board member of Community Pharmacy Greater Manchester. He believes that patient safety and welfare are at risk from the planned funding cuts, which means that the community pharmacy network will have to reduce staffing levels and the services it offers for free, such as the home delivery of medication, which has been referred to again and again. I went with a delivery driver from a local pharmacy to hand out information to carers in homes who receive medication. Vital extra things such as that can be done, but only with the existing service levels.
The additional services provided by community pharmacies are at risk from the funding cuts. The minor ailments scheme, which was piloted in Eccles in my constituency, was shown to free up capacity and cash for other areas of primary care by allowing GPs to focus on the more complex patients. That service can continue at £3 per consultation only if community pharmacies continue to be funded at current levels. Such services, which improve quality and save cash, are under threat due to the proposed cuts.
As a number of right hon. and hon. Members said, one of the most worrying effects of the cuts is the potential reduction in rural pharmacy services. Access to pharmacy services should not be reduced for people who live in areas with widely dispersed populations. I ask the Minister—he has been asked this question already—what his assessment is of the impact that the funding cuts will have on rural pharmacies.
To reduce pressure on NHS services, the Government have repeatedly suggested that people should visit their local pharmacy for advice and the extra services we have talked about in the debate. Putting extra pressure on GPs through these funding cuts to community pharmacies is risky. GPs have warned that their workload is becoming unmanageable, which is likely to have an impact on patient safety. In a recent survey of about 3,000 GPs, 55% said that the quality of the service they provide has deteriorated in the past year, and 70% said they feel that their workload is unmanageable some or all of the time. I spoke to a local GP in my constituency recently in a practice whose list size had just been increased by 15%. The GPs at that practice cannot cope with that increase plus any extra that they gain from the losses that have been outlined in the debate.
We recognise the need to integrate pharmacy services better with the rest of primary care, but introducing cuts on this scale to community pharmacy services will not improve primary care outcomes. It will do the opposite. I fear that pharmacies will struggle to provide safe, good-quality services to patients. In proposing the cuts, the Government failed to recognise the value of community pharmacies and to put patients at the heart of their plans for pharmacy services. Patients will bear the brunt of these inappropriate cuts to an essential community service. A joint co-ordinated approach to planning and investment is needed across primary care to ensure that the pharmacy sector can play the important role it could fulfil, and, as I know from all the contacts I have had, wants to fulfil, and ensure that patients get the most out of both the NHS and pharmacies.
The Minister for Community and Social Care (Alistair Burt)
As others have said, it is a great pleasure to serve under your chairmanship, Mr Streeter. Thank you for chairing this debate. I also thank my hon. Friend the Member for St Ives (Derek Thomas) for bringing this debate to Westminster Hall and giving colleagues the opportunity to make such a range of comments. They all have a good knowledge of things in their areas, and some have more specialised knowledge. We heard from the right hon. Member for Rother Valley (Kevin Barron), my hon. Friend the Member for Bexhill and Battle (Huw Merriman), the hon. Member for Ealing North (Stephen Pound), my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile), the hon. Member for Ceredigion (Mr Williams), the hon. Member for Hyndburn (Graham Jones) and, not least, the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), in whose constituency I have spent many happy hours—my father was born in Auchterderran, so I know the area very well. Although the hon. Gentleman is from Scotland, his contribution was welcome, and he made some pertinent points.
Before I make some prepared remarks, I want to put some things on the record. I would be foolish if I did not understand the widespread interest in this debate. I would also be naive if I believed that this is the last time we will discuss this issue. Many questions were asked, so this will run for a while. Let me set out the background before I make my prepared remarks.
First, we are having this debate at a relatively early stage of the negotiations between the Government and the Pharmaceutical Services Negotiating Committee, which is handling matters on behalf of the pharmacy profession. Many of the questions and issues raised by colleagues on both sides are at the heart of those discussions. What sort of services will there be? Where is pharmacy going? How exactly will the reduction in finance be handled and distributed? Not all the answers are available at this stage because a proper negotiation process is being undertaken. Understandably, colleagues will look at the most adverse potential consequences to make a point when representing their constituents. I understand that, and the points have been perfectly fair. We are at that point in the process. We think we know what the worst may be, but we do not know the outcome or what changes there will be for the better.
Secondly, on finance, we are all realists here. We would love to work in a world where the status quo is not changed except for improvements, where the only issue with money is where more can be spent and where change, if there is to be any, takes forever to bring in. Life is not like that. The Government’s spending commitment for the national health service—an extra £10 billion a year by 2020—has to start being found early. It is not only about extra money, but about the efficiencies that the NHS chief executive identified, which are to be found across the board and could partly come from the pharmacy sector’s £2.8 billion of funding, which the Government propose to reduce. It may be an appropriate place. Again, we often approach such matters with the view that no possible reduction could ever improve services anywhere. That is not true, as we know from the experience of successive Governments.
The third bit of the background is where we are in relation to where pharmacy is going. The Royal Pharmaceutical Society’s November 2013 report, “Now or never: shaping pharmacy for the future”, states that the traditional model of community pharmacy needs to change due to
“economic austerity…a crowded market of local pharmacies, increasing use of…automated technology to undertake dispensing, and the use of online and e-prescribing”.
The Nuffield Trust’s report, “Now more than ever: Why pharmacy needs to act”, states:
“Community pharmacy is subject to a particularly complex set of commissioning arrangements, which appear to support the status quo and inhibit innovation at scale.”
We would love to be in a situation where, as the hon. Member for Ealing North described, everything is absolutely great and every pharmacy offers all the services and delivers them marvellously, but that is not necessarily the case. Accordingly, change is sometimes inspired by necessity and can be for the better. That is part of the background to where we are.
Graham Jones
The Minister makes the point that, to pay for the £10 billion increase in NHS funding, funds are being shifted from other sources, including the £2.8 billion spent on pharmacies. However, the principle should not be to shift funding from primary care to secondary care. Our fundamental principle should be to shift—if we have to—money from secondary care to primary care, which is preventive and will cut costs in the long term.
Alistair Burt
The hon. Gentleman makes a fair point, and that is indeed being done in the NHS, but we are looking at where efficiencies can be made and at what different parts of the health sector can contribute. In doing so, we can see what changes are inspired in the service provided to patients.
To emphasise where we are with pharmacy, there are 11,674 pharmacies in England, which has risen from 9,758 in 2003—a 20% increase—while 99% of the population can get to a pharmacy within 20 minutes by car and 96% by walking or using public transport. The average pharmacy receives £220,000 a year in NHS funding. On clusters, which my hon. Friend the Member for Plymouth, Sutton and Devonport mentioned, the Government contend that money can perhaps be saved in one place and used elsewhere for the delivery of new services. That is the reality of life. It would be great if new money was always coming from somewhere, but bearing in mind that the Government are dealing with an Opposition who could not commit to the extra £8 billion that the NHS was looking for, we have to make the changes that others were not prepared to make and still deliver services.
Let me move on to where we are going. Everyone in this room, Government Members included, recognises the quality of the best pharmacy services around the country. We are familiar with the valued role that community pharmacy plays in our lives and those of our constituents. I am grateful to my hon. Friend the Member for St Ives for giving me the opportunity to put on public record the high esteem that we hold them in and to set out our plans for the future.
I am a firm believer that the community pharmacy sector already plays a vital role in the NHS. I have seen at first hand quite recently the fantastic work that some community pharmacies are doing across a wide range of health services that can be accessed without appointment. Many people rely on them to provide advice on the prevention of ill health, support for healthy living, support for self-care for minor ailments and long-term conditions, and medication reviews. There is also real potential for us to make far greater use of community pharmacy and pharmacists in England. For example, I am due to speak at an event tomorrow that is looking at the role that pharmacy can play in the commissioning of person-centred care for vulnerable groups.
Our vision is to bring pharmacy into the heart of the NHS. We want to see a high quality community pharmacy service that is properly integrated into primary care and public health in line with the “Five Year Forward View”. I cannot answer all the questions that the hon. Member for Worsley and Eccles South (Barbara Keeley) asked, but she did at least mention the integration fund for the first time in the debate.
Barbara Keeley
There is a difficulty, in that funding for integration should recognise that the extra work needs to be done. The point of today’s debate has been about the Government using blunt instruments, such as a 6% cut in funding, reducing the number of pharmacies in clusters, changing dispensing charges, and the warehouse pharmacy that my hon. Friends mentioned. It is the use of those blunt instruments, not the working with the sector, that is the fault.
Alistair Burt
That working with the sector is ongoing. That is what the negotiations with the Pharmaceutical Services Negotiating Committee are all about. I take the hon. Lady’s point, but those discussions are under way. We are consulting with a wide range of groups, not just the PSNC, including patients and patient bodies.
As part of what we are doing for the future of pharmacy, we want pharmacists and their teams to practise in a range of primary care settings to ensure better use of medicines and better patient outcomes and to contribute to delivering our goal of truly seven-day health and care services. As part of that, I want to work with NHS England to promote local commissioning of community pharmacy within the health community, so that we can ensure the best use of this valuable resource. That is why we are consulting on how best to introduce a pharmacy integration fund to help to transform the way pharmacists and community pharmacy will operate in the NHS of the future. By 2020-21, we will have invested £300 million in the fund.
While it is understandable that the focus of most colleagues’ comments today was access to existing services, little was said about where pharmacy might be going and what new opportunities there will be. That is part of the overall development that we are hoping to achieve, which will include the work not only of the access fund, but of the integration fund.
Colleagues asked several questions about access. I want to provide some reassurance. We recognise that some of the Government’s proposals have caused concern, and that will take some time to distil as the negotiations are worked through. We are committed to maintaining access to pharmacies and pharmacy services. We are consulting on the introduction of a pharmacy access scheme, which will provide more NHS funds to certain pharmacies compared with others, considering factors such as location and the health needs of the local population, both of which were raised today. Qualifying pharmacies will be required to make fewer efficiencies than the rest of the sector. We certainly recognise that rural pharmacies will need to be considered in that, and we want to ensure that location matters in areas of sparsity. That work is ongoing.
In conclusion, the process has some way to run. I simply put it to colleagues that, in relation to good community services on the high street, there is more for modern pharmacy to do. Looking at the proposals of the past, we hope that the profession shares the Government’s determination to move pharmacy into a new future, and I am convinced that the future will be good.
Mr Gary Streeter (in the Chair)
Derek Thomas has 40 seconds in which to respond coherently.
Derek Thomas
Thank you, Mr Streeter, and I thank Members for their contributions, which have been really helpful. I thank my right hon. Friend the Minister for seeking to tackle the many issues that have been raised. We all agree that the NHS is a fantastic institution. Community pharmacists hold some of the keys to improving patient care in the community and reducing pressure on GPs and other NHS services. I hope that the debate has gone some way to empower pharmacists to offer the solutions that the Government are seeking in order to secure a modern-day NHS, but this is all about the best care for patients, which we all agree is what really matters.
Motion lapsed (Standing Order No. 10(6)).
[Mr Philip Hollobone in the Chair]
Mr Philip Hollobone (in the Chair)
Will those who are not staying for the next debate please leave quickly and quietly? We now come to a very important subject to be addressed by the Member for the sunniest place in the United Kingdom, Caroline Ansell.
Military Training: Mental Health Resilience
(8 years, 9 months ago)
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Caroline Ansell (Eastbourne) (Con)
I beg to move,
That this House has considered opportunities for mental health resilience in military training.
All of us in this place realise the debt we owe to our armed forces personnel and to their families for the sacrifices they make to keep us safe. It has to be acknowledged that unless we, too, have seen active service, faced danger and death, witnessed carnage and experienced loss we cannot fully appreciate or understand the impact and the price that some pay.
I had second-hand experience of such sacrifice when working in a boarding school. I was in loco parentis to 25 teenage girls whose fathers were serving in Bosnia. I saw something of the impact of protracted periods of lives lived apart and of relationships stretched. I saw something of the fear and anxiety of children for their father, and the loneliness and challenge for the parent left behind. Boarding school often provided the continuity that families need and, for the overwhelming majority, service life is one of purpose, identity and fulfilment, with men and women going on to lead successful lives thereafter. For the estimated one in five who bear the unseen scars, however, every opportunity to build resilience or mental toughness needs to be recognised.
The Ministry of Defence recognises mental illness, including post-traumatic stress disorder, as a serious disabling condition, but—importantly—as one that can be treated. My question today is, can it be prevented? In the US Battlemind programme, mental resilience training has been dubbed “armour for your mind”. Can we put mental health resilience on the same footing as physical fitness or, indeed, physical armour?
David Simpson (Upper Bann) (DUP)
This is an important debate and I am sure that the hon. Lady agrees with the importance of having full implementation of the military covenant throughout the whole of the United Kingdom. I am sure she shares my frustration that in Northern Ireland we cannot achieve that. The points she is making are very important.
Caroline Ansell
I absolutely subscribe to the hon. Gentleman’s passionate support for the military covenant. I will say more about that later.
The new and growing recognition for mental health and veterans’ care on returning home is very welcome, and I pay tribute to the work of charities, of hon. and gallant and hon. Members and of the Government for their unswerving commitment to the military covenant. We are living amid a sea change in our understanding and recognition of mental health issues as we strive for parity of esteem between physical and mental health in our NHS. Times are changing.
Our commemorations of the centenary of the first world war remind us of a different time, when mental health issues bore a stigma and the social view was that wounds that could not be seen could not really be there. Veterans did not seek help and many could not even speak of their experience. Henry Allingham, God rest his soul, was an Eastbourne resident and a supercentenarian. He only started to share his story at the age of 105, but between his 110th and 111th birthdays he is reported to have made more than 60 public appearances. I met him the once.
“It’s good to talk”—the time-honoured role of the padre reflects that and initiatives such as the armed forces’ mental health first aid programme recognise it. After operational deployment, decompression is another hugely valuable opportunity to safeguard resilience. Furthermore, the stress and resilience training centre within the Defence Academy at Shrivenham runs a course called “START Taking Control”. Perhaps the Minister will elaborate on whether such training, which was designed for postgraduate and leadership roles, might soon be extended to initial training.
Mrs Flick Drummond (Portsmouth South) (Con)
My hon. Friend is making an excellent speech on a subject that is incredibly important, in particular to someone who has a close relative serving in the armed forces. Alcohol misuse is one of the most frequently reported mental health problems for deployed UK troops. It is the only mental disorder to have increased in prevalence. Comparison of alcohol misuse in the same age and gender group shows that armed forces personnel are more likely to misuse alcohol than the rest of the population. Does she agree that the dangers of alcohol misuse must be incorporated into any training to improve the resilience of personnel?
Caroline Ansell
I acknowledge the great wisdom of what my hon. Friend says. It has been recognised for some time that alcohol abuse has too long been part of a work-hard, play-hard culture. Alcohol has also evidently been used to some extent to cope with the inevitable strains of conflict and combat. It is worth noting that young soldiers between the ages of 18 and 24 are three times more likely than their civilian counterparts to be consuming harmful levels of alcohol. The problem is a serious cultural issue that we must consider, in particular in connection with mental health.
Along with the many good things that the Government are doing to support mental health—I have touched on only some of those—I urge us not to overlook the most effective support system of all, which is the family. The UK Government implemented an operational mental health needs evaluation for those serving in the field during operations in Iraq and Afghanistan. Despite obvious operational difficulties in ensuring a full rate of participation, evaluation of a statistically significant 15% of all serving personnel in Iraq and 16% in Afghanistan greatly aided our understanding of the mental health challenges faced by our servicemen and women. The fact that 99% of those asked to participate did so suggests to me that the military has been successful in breaking down barriers to the point that armed forces personnel want to share their experiences, albeit anonymously.
The results of the survey, as broken down in The British Journal of Psychiatry, also showed the prevalence of the most common mental health disorders, with an incidence rate of about 20%. That, too, is significant. The results were used to match the correlations between family stress and the development of mental health disorders, further underlining how vital it is for us to support military families.
The past 15 years have been a time of strain for many armed forces personnel, given the extended interventions in Iraq and Afghanistan. We know that the mental scars of conflict can emerge many years after people are relieved of active duty. Many trigger points can be completely unrelated events that take place in the home, far from the field of battle. Problems at home such as financial trouble, relationship breakdown or even child-related stress can all trigger mental health issues. It is therefore imperative that we equip our soldiers and, crucially, their families with all the mental resilience skills necessary to hurdle the challenges of military life and beyond. Family is the best support system, as soldiers themselves testify. How we promote and protect the military family will be defining for mental health outcomes.
Mental health is likely to be a ticking time bomb. According to Combat Stress, the veterans’ mental health charity, 13 years is the average length of time between service discharge and a veteran seeking help. Next month marks the 13th anniversary of the US-led invasion of Iraq, so the demand for mental health services for veterans is likely to increase in the short term. Combat Stress has already seen a 28% increase on 2013-14 in the number of veterans seeking assistance in 2014-15.
I am pleased that we are making it easier for our armed forces personnel to get the support that they need and to come forward in the first place, although a report this week suggests that a significant number of them—perhaps up to 40%—are still not seeking such support. Is there a case for more training, particularly in initial training? The received wisdom is still that prevention is better than cure. Do we need to offer more specific training and dedicate time to building mental resilience, just as we push physical speed, strength and stamina? Does that need to be universally rolled out and not hostage to self-awareness, self-selection or self-referral?
I am a patron to the Military Preparation College. As I shake those graduates’ hands and see them walking off into the sunset, I need to know that we are doing everything in our power to mitigate what is certain occupational hazard, looking overseas for best practice, looking at initial training and training at every stage of military service and beyond. We are looking to change culture by lifting up mental health awareness and we will need to have that as a focus for the foreseeable future.
The Parliamentary Under-Secretary of State for Defence (Mark Lancaster)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I remind the House of my interest as a serving member of the Army Reserve. I start by congratulating my hon. Friend the Member for Eastbourne (Caroline Ansell) on securing the debate to discuss mental health resilience in military training.
The Government are committed to maintaining and improving the mental health of members of our armed forces. According to research, the armed forces generally show similar rates of common mental health disorders to the civilian population. Deployment on operations does not in itself appear to be a factor in mental health problems overall, although exposure to combat is associated with an increased risk of more serious conditions such as post-traumatic stress disorder.
We are extremely grateful to our armed forces for the work that they do. It is our duty in return to provide care and treatment for them if they become ill. Evidence shows that most mental health disorders can be successfully treated and we have a range of trained medical personnel and facilities to do that, but it is clearly much better to provide our people with the knowledge, training and support that will enable them to build up both their physical and mental resilience before they deploy on operations.
It is important to look at health and wellbeing together, because overall they involve both the mind and the body. Mental wellbeing is very much enhanced by feelings of self-esteem and people having belief in their ability to do the things that they want to do. Good relationships—confidence in leaders and trust in friends and colleagues—are also vital. Good mental health does not mean never experiencing difficult feelings or situations, but it does mean having the strength and resilience to cope when things become difficult.
To that extent, building resilience is one of the principles that underlies all our training programmes, which are designed to be robust, challenging and realistic enough to prepare our people to carry out their operational roles effectively and efficiently, under inspirational and caring leadership. The Defence Academy is a world leader in the provision of military training. It has its own stress and resilience training centre, which is responsible for managing stress and resilience training and educational requirements within the armed forces. Its aim is to build psychological resilience in defence personnel and ensure that compatible training is delivered across the three services.
The stress and residence training centre has developed an all-inclusive stress and resilience training package called “START taking control”. Its purpose is to assist students in gaining the knowledge and practical skills to manage everyday experiences of mild to moderate stress and build psychological reliance to prepare them better to meet the physical, emotional and psychological challenges in defence.
In addition to the stresses encountered in everyday life, service personnel are often required to undertake extremely hazardous duties, which potentially expose them to traumatic and life-threatening situations, risking both physical and psychological damage. Psychological resilience is considered to be an essential component of military fitness. Personnel are taught how to spot potential indicators of a problem both in themselves and in their colleagues such as changed behaviour patterns, isolation and increased use of alcohol.
In particular, concerted efforts are being made to de-stigmatise the issues around mental health and to promote awareness of the professional care and support available. Stigma is one of the biggest obstacles facing those with a mental illness. It prevents many people from seeking help, which results in a worsening of the symptoms to a point where significant damage can be caused to their health, wellbeing and relationships. In many ways, the stigma associated with mental illness can be more disabling than the condition itself. The Army has been running a major campaign called “Don’t bottle it up”, which aims to break down stigma and encourage personnel to seek help earlier as well as signposting the support and treatment available.
A specially designed project known as mental health first aid has been developed for the armed forces community, which provides the basis for increased mental health resilience among serving personnel and their families. It trains individuals to recognise the signs of problems and offer non-judgmental listening as well as offering help in accessing professional assistance. By making all personnel aware of the services available and by making clear to them that no stigma will be attached to them owing to their illness, we hope to encourage them to seek help as soon as they feel that they might have a problem. That will enable us to provide rapid diagnosis followed by appropriate and effective treatment.
One programme that has proved to be successful, both in the operational environment and back in the UK, is TRiM, which stands for trauma risk management. It is a method of peer-group assessment, mentoring and support for use in the aftermath of traumatic events. Trained TRiM practitioners are usually non-medical staff who are given the skills to enable them to identify those who might have been affected by traumatic events. That enables people’s comrades and leaders to provide them with appropriate support and refer them for specialist help if necessary. A key element of TRiM is that it aims to reduce the stigma associated with mental health problems and its roll-out across the services has certainly made people more aware of the importance of nurturing the mental wellbeing of those on deployment.
Personnel returning from operations normally go through a process known as decompression. Indeed, I experienced it on my return from Afghanistan. It consists of a short period—usually a couple of days—between leaving the operational theatre and return to the UK in which personnel can begin to unwind mentally and physically and talk to their colleagues and superiors about their experiences. That can give them an opportunity to discuss any issues of concern about their mental health and those of their colleagues, which can be followed up as appropriate. People are also provided with a stress brief, which aims to highlight normal reactions to traumatic events and give some strategies to help with readjustment. They are also given advice about risk-taking behaviours and the homecoming experience in general.
To sum up, the overall aim of those training, educational and support packages is to ensure that our personnel are ready both mentally and physically to carry out their duties, however potentially hazardous and traumatic they may be. Our personnel can be confident that any concerns will be treated seriously and sensitively and that a high quality of medical treatment will be provided if required.
My hon. Friend mentioned the importance of the family and the support we should offer service families so that they in turn can support service personnel. She may be aware that, over the next two years, we will allocate £4 million of covenant funding to support families in stress, which is a major step forward. Equally, she will be aware that, at the end of last year, we launched our family strategy, which is specifically designed to begin to address some of the concerns that families face, while they are spouses of serving personnel, in an effort to support them so that they in turn can support members of our armed forces.
I congratulate my hon. Friend again on securing the debate. We are proud of the work that we have done to date, but we are equally mindful that much more work needs to be done in the future. I assure her and hon. Members across the House that this subject is at the forefront of my mind.
Question put and agreed to.
Motability Car Scheme
(8 years, 9 months ago)
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Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship for the first time, Mr Hollobone. I am glad to be able to bring this motion forward and to have secured the debate, but—
Mr Philip Hollobone (in the Chair)
Order. Would the hon. Gentleman be kind enough to move the motion and then do his speech?
Alan Brown
Apologies. I beg to move,
That this House has considered the Motability car scheme.
I am glad to bring the motion before the House today, but in truth it would be much better if this topic did not require consideration at all. The origins of this stem back to the previous Parliament and the change from the disability living allowance to the personal independence payment in April 2013. At the time, some of the changes were dressed up as fairness and giving people more control, but there is no doubt that there were concerns that DLA self-assessment, the automatic qualification process and, sometimes, the fact that there was no follow-up could possibly be abused.
That was the thought process that definitely drove the Tory ideology, and that has overshadowed how best to manage the system to help people with disabilities. Throw in a projected £2.5 billion saving and the fact that an estimated 600,000 fewer people would end up on PIP compared with DLA and we can see that this was just another assault on the disadvantaged. For me, the key change in assessing enhanced mobility was the reduction in the distance of the walking assessment from 50 metres down to 20 metres. Imagine it: somebody can go into an assessment centre and sit down and possibly be at risk of already meeting the walking test.
The enhanced rate is critical. The Motability scheme allows those receiving the highest rate of DLA or PIP to lease a suitable adapted vehicle, powered wheelchair or mobility scooter, in return for their weekly award. The Motability scheme is particularly important for enabling disabled people to be independent and to manage their condition. It allows users to participate in social activities and do the things that many of us take for granted, such as being able to continue to care for their children.
If we look back at the history, the Motability scheme was founded in 1977. It started out with a single car and has grown into a scheme that operates on a completely UK-wide basis, with nearly 650,000 users at present, which includes 15,000 using electric scooters and wheelchairs. It is a massively respected scheme, it is a charitable body and it has been praised by the National Audit Office for providing good value for money.
The Motability scheme plays a vital role for many disabled people across the country. Restricting access to Motability vehicles for those who have relied on them will undoubtedly increase the isolation that many disabled people feel.
Mr Mark Williams (Ceredigion) (LD)
I congratulate the hon. Gentleman on securing this very important debate. As he develops his speech, will he reflect on the particularly bad impact that the loss of Motability vehicles has had on people living in rural areas, to the extent that when constituents are waiting for an appeal to a tribunal decision, they cannot get to the meetings because there is no alternative transport? There is no public transport and they do not have a vehicle any more.
Alan Brown
That is a fine intervention, and I agree with the point the hon. Gentleman makes. I was not going to focus particularly on rural issues, but he is absolutely right. I live in a rural area and I know that, particularly in England and Wales, the cuts to public transport and dial-a-bus services have compounded the problem of people being unable to manage when they lose their Motability vehicle, so I agree wholeheartedly with that sentiment.
Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)
I congratulate my hon. Friend on securing the debate. My constituent, Claire Ross, is 15 years old. She lives in a rural area and has a brain tumour, meaning that she becomes tired easily. Her Motability vehicle was used to take her to school and to hospital appointments. A recent reassessment removed the component from Claire and now the vehicle sits, unable to be used, at her parents’ house. Does my hon. Friend share my concern for Claire now that the Motability component has been taken away from her, and does he agree that it is shameful of the Government not to respond to my numerous representations on her behalf?
Alan Brown
I wholeheartedly agree, and I find it incredible that nobody has responded following my hon. Friend’s inquiries. I think most hon. Members here will have very similar examples from their constituencies, which highlights how unfair the measures are. I will come back to that, which is something the Government really need to take stock of. They should be working tirelessly to support the independence and inclusion of disabled people, using all means possible through Government channels.
An example of the concerns we have heard is highlighted in a briefing paper from Muscular Dystrophy UK. Trailblazers, which comes under the umbrella of that organisation, is a group of young disabled campaigners aiming to tackle the social issues affecting young disabled people, such as their access to higher education, employment, and social and leisure opportunities. These are young people who fully understand the difficulties they face in life. They are campaigning to raise awareness of this issue and to support others. They also know the possible consequences of the new PIP assessment.
One trailblazer commented:
“I suffer from muscular dystrophy and I am still able to walk, although it is difficult. I frequently push myself to live my life as much as I can, despite fatigue and anxiety that comes with it. I am absolutely terrified that one day, be it tomorrow or in a year, I will receive the letter that tells me I need to be reassessed for PIP. As someone who can stand and does not ‘look’ disabled at times, I believe I will have no chance of retaining my car.”
They added:
“If I don’t have my car, I simply would not go out.”
This is a young person who knows how independent they have become since being able to access a car through the Motability scheme. Imagine being aware of the life transformation that they went through and the absolute dread of being forced to return to the pre-car state.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I thank my hon. Friend for giving way and for bringing this extremely important debate to the Chamber today. Does he agree that, given the impact on people’s mental health, including depression and anxiety—at some points, due to social exclusion—as well as the fact that people feel very isolated and the possible risk of suicide, we are at risk of creating an increased call on the NHS through co-morbid mental health problems, as well as physical disability in this case?
Alan Brown
I recognise my hon. Friend’s expertise and agree with her point, which touches on what I was saying. In some cases, it is not even about the stress of losing the Motability vehicle; it is about the stress and panic about getting to that stage, so we are talking about an ongoing mental condition.
Siobhain McDonagh (Mitcham and Morden) (Lab)
On the point about increased cost, I would like to make the Chamber aware of my constituent, Lorna George. She lost her higher rate mobility component of DLA when she transferred to PIP and, as a result, lost her vehicle. Because she is in full-time employment, she was entitled to the Access to Work scheme, which meant that she received £150 a week from the public purse to get to and from work, as a result of losing her DLA mobility component of £54 a week. How is that saving anybody money?
Alan Brown
That was another fine intervention. These examples are what make it real for everybody, and I will touch on what I think is the madness of the financials later.
To be clear, we have heard some personal examples, but the statistics back up the concerns that I highlighted from the young person with muscular dystrophy. To date, of the 31,200 people on the Motability scheme via the higher rate DLA who have subsequently been reassessed for PIP, some 14,000 have lost the higher PIP mobility rate and, therefore, their car as well.
Going back to the stress and trauma of losing a car, we are lucky that Motability takes its duties seriously and goes above and beyond to support people in that position. It supports them with financial assistance—for example, through a transitional lump sum that might aid in the purchase of a car. Motability also provides advice packs for customers and advises on insurance, maintenance, adaptation services and even local transport options. We should be clear that Motability should not be filling in these gaps for people who are effectively left stranded.
It is no wonder that 91% of those who left the scheme were satisfied with the support that they had received from Motability. I commend the organisation, but that does not mask the fact that we are still only at the early stages of the PIP reassessment, with the reality that nearly one in two people lose their higher mobility access. I put this to the Minister: are we really to believe that almost half the people on enhanced DLA either exaggerated or fabricated their conditions to access Motability or, at best, suddenly no longer need that support?
In Scotland, 70,000 people are using the Motability scheme, so, using statistical analysis, we know that up to 31,500 people could lose out—I accept that some people beyond working age will not be reassessed. If we take that down to the level of my constituency, 1,500 people are using the Motability scheme at present, so up to 670 people are possibly at risk.
I will give the example of one of my constituents. Lynne Paton has written to me to say:
“I am due a new car in July. I haven’t been assessed for 2 years. I have the higher rate at present and I have”
had it
“since my 2 strokes. I have been in the hospital 3 times lately with chest infections. I am now struggling to get up and down my stairs because of the difficulties trying to get a breath. I am now using my electric Scooter again because I now can’t walk very far because of my breathing. The car we have just now was picked because the scooter can go in the car. I don’t know if I will get assessed again in the near future but if we were to lose the car I wouldn’t be able to get out and about. Also John is due to retire so our income will drop and we won’t be able to buy a new car suitable…I hope you can fight for people like me who need their cars. I know you will do your best for disabled people”.
That should be a clear case. If Lynne goes to be reassessed, there should not be a problem, but we all know that there are problems. She could go through a wee bout of better health and suddenly be deemed not to meet the requirements for the higher mobility rate. I should also say that I know Lynne as a fantastic community volunteer, who understandably has had to scale back recently, but with what she has put into the community over the years, there is no way she should have this worry hanging over her head. I dread having to go back to her and say, “You know what? I raised this in a debate at Westminster, but as usual the Government didn’t listen.”
I have already touched on the fact that this is not about giving disabled people greater flexibility and control over their budgets and lifestyle choices; it is part of the austerity agenda. The original suggested saving of £2.5 billion by 2018 confirms that, but it is also worth noting that the Government were willing to give assessment contracts worth some half a billion pounds to be able to get those savings. That is not value for money, and by the way, it can be no coincidence that the previous Minister for the disabled was one of the few Tories who lost their seat last year.
When it comes to the overall PIP strategy, the money has been so well spent and the strategy so well managed that the timescales have been a disaster, with the High Court ruling in June 2015 that the delays were unacceptable and unlawful. At the same time, the Office for Budget Responsibility noted that
“costings associated with structural changes to the welfare system…are subject to even greater uncertainty.”
It highlighted that its previous “Welfare trends report” had
“noted that our latest forecasts suggested higher than expected success rates for new claims to PIP across the forecast, which had in effect reduced the savings originally expected for this reform”.
It is not achieving the savings that were anticipated and, worryingly, with 45% of people who have been reassessed losing access to the Motability scheme, we have to wonder what the real purpose of the original target was. Let us consider the irony of the Tories’ manifesto pledge to halve the disability employment gap and support disabled people. Perhaps it is just me, but I simply cannot connect the dots. How does the Conservative party strip the freedom that a Motability vehicle brings to a disabled person from them and still aim to break down the barriers to work?
The Multiple Sclerosis Society, for example, has said that the Motability scheme can have positive impacts in terms of employment for users and their families. It claims that use of a Motability vehicle has enabled many of its members to gain employment, enabling disabled people to have a much more rounded, independent life. The recent Mencap review, “Halving The Gap?”, proved that the Tory policies are driving disabled people away from work rather than into work. That is why access to Motability vehicles is so important.
On a more positive note, the disability charity Scope undertook a report to assess the economic impact of getting more disabled people into employment, which was published in April 2015. It found that the impact on the economy of a rise in the disability employment rate would be significant. Indeed, a 10 percentage point rise would result in a £12 billion gain for the Exchequer by 2030. When we hear Tories in the main Chamber announcing that unemployment in their constituency is down by 50%, we should compare and contrast those statistics with the benefits of small increases in the employment rate for disabled adults. My hon. Friend the Member for Banff and Buchan (Dr Whiteford) has written to the Secretary of State for Work and Pensions to express concern that a lack of access to the Motability scheme will prevent disabled people from getting to work. It is clear that the Government should focus on that, rather than on savings.
Not content with one failure, the Government also have a proposal to cut the employment and support allowance work-related activity group payment, taking £30 of benefit a week from those in need and taking sick people even further away from getting back into work.
We in the Scottish National party are committed to supporting disabled people, which means opposing the regressive and punitive measures deployed by the Tories, not just for those eligible for DLA or PIP, but for the disabled people who rely on ESA and have been subjected to the unfair and failing work capability assessments. The SNP in Scotland are doing all we can, within the resources and powers that we have, to help disabled people, who are disproportionately affected by welfare reform. New powers over disability benefits in the Scotland Bill will provide opportunities to develop different policies for Scotland. In the Scottish Government, the Cabinet Secretary for Social Justice, Communities and Pensioners’ Rights, Alex Neil, wants policies that are
“fairer and ensure people are treated with dignity and respect.”
We must remember that this comes against the backdrop of the UK trying to cut the Scottish budget through the fiscal framework agreement and the fact that, due to the Tory austerity agenda and ideological cuts, the Scottish Government are currently spending £104 million to mitigate the worst aspects of welfare reform.
It is my contention that the Government should think again. All of us here, as lawmakers, owe it to those we represent to protect the most disadvantaged. The SNP has already demonstrated our commitment in that regard and will do so again with new powers over disability benefits, but I repeat: I urge the UK Government to think again.
Several hon. Members rose—
Mr Philip Hollobone (in the Chair)
Order. The debate finishes at 5.30 pm. I will start to call the Front Benchers at eight minutes past 5, with five minutes for the SNP, five minutes for Labour, 10 minutes for the Minister and two minutes for Alan Brown to sum up at the end. There are six hon. Members standing. We have just less than 20 minutes. I am a bear of little brain, but I reckon that is three and a half minutes each, so I will impose that time limit, starting with Ben Howlett.
Ben Howlett (Bath) (Con)
Thank you, Mr Hollobone. I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing this debate on a subject that I care about a great deal. I should declare an interest, in that my mother has benefited from a Motability vehicle for more than 10 years.
I want to make it clear that I agree with the Government about ensuring that everyone who needs a Motability vehicle should have access to one. However, for decades, the system has not been reformed and it must be changed in a fair and cost-effective way if we are to ensure its future effectiveness. To ensure that the most vulnerable receive the support that they need, those who no longer have a medical condition need to be told that reform must occur to ensure the future viability of the system. That is only fair to people such as my mother who really depend on the Motability scheme.
Before I move on to my substantive points about improvements to data sharing between the Department of Health, the Department for Work and Pensions and the NHS, I would like to seek assurances from my hon. Friend the Minister that the high volume of appeals that are currently being seen are constantly being reviewed. Although I understand that new systems take a while to embed, as we know from what happened when the previous Labour Government introduced the Atos system to handle work capability assessments, these things should be constantly reviewed.
Ever since I began to work alongside the NHS eight years ago, the UK has had a significant problem with data. Although I freely admit that it is not the most interesting subject in the world, it certainly is the most important when it comes to producing evidence-based policy. While I sadly do not have time to discuss the problems with evidence-based data collection and information governance, I want to focus for the last couple of minutes on the need for improved data sharing. All too often constituents come to my surgeries and ask why it is so complicated in today’s digital age to ensure that patient information is shared with the Department for Work and Pensions.
Ben Howlett
I will not give way because I have very limited time.
Sharing information would make a huge difference to all disabled people as well as people on the Motability scheme. It would save so much time and money if there were one joined-up system to enable a GP to identify a disability and to refer that person directly to a DWP contact in a joined-up and efficient way. Currently, it takes two sets of paperwork and a vast amount of time and communication, which can only be described as lacklustre at best. I completely back the Government in getting this sorted.
For too long, the most vulnerable have been let down. If there were a joined-up system, the GP could notify the DWP quite effectively if someone was no longer in need of a Motability vehicle. The efficiency savings that would be made could be driven into increasing support for those who desperately need it and would also help disabled people feel that the process is much more joined up when they probably need as smooth a process as possible to get through those tough experiences.
How can the Government achieve this? The Government have to identify weaknesses in the law that prevent data sharing between the Department of Health and the Department for Work and Pensions. As the Government look to produce a Green Paper on the impact of welfare on health and wellbeing, it is important for the DWP to formalise discussions with the Department of Health and consider the benefits of direct and indirect data sharing. Although I appreciate the sensitivities around data protection, charities are screaming out for changes and we should be doing everything that we can to help facilitate that.
I specifically ask for the Minister to work with his counterpart in the Department of Health to look into the Health and Social Care Act 2012 to understand why there is a problem with data sharing. Under that Act, the law allows personal data to be shared between those offering care directly to patients, but it protects patients’ confidentiality when data about them are used for other purposes. While I agree that these secondary uses of data are essential if we are to run a safe, efficient and equitable health service, we should consider new legislation that will further enable swift and effective data sharing between the NHS and the DWP.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing this important debate.
I want to tell hon. Members about Lisa, who I recently met in my constituency. After a stroke left Lisa paralysed on one side of her body, she was thrown a lifeline and received a Motability car. For the past 10 years, the specialist car has helped keep her independent and active, meaning that she was able to remain motivated, to fulfil her ambitions and to go to university to study graphic design. Now, after a decade of working hard to maintain her freedom despite the hand she was dealt and the severity of her condition, her car has been torn away from her by the Government. Why did the Government sever her vital lifeline? Because Lisa was two points short under the new disability benefit rules, which are seeing disability living allowance replaced by the personal independence payment. Although she was awarded the enhanced rate of the care component of PIP, she was awarded only the standard rate of the mobility component. When I visited her, Lisa had trouble even walking to the kitchen to make a cup of tea.
We have heard anecdotally in the media, as well as in this Chamber, about other vulnerable people denied the enhanced rate of the mobility component under PIP—those affected by spina bifida, those who have had a leg amputated and those who struggle to walk a few metres. Whether those cases are the exception or the rule, it is unacceptable. If such people are not qualifying, it has to be accepted that either there is a problem with the criteria for the enhanced rate of the mobility component or the assessments are not being carried out appropriately.
Lisa’s mother described how it took almost eight hours to fill in the 40-page benefit claim, only to be told that Lisa was two points short. Lisa told me that she does not feel physically able or safe to use the bus. Despite having a decent support network and people who care about her, she worries that now she will be trapped at home.
The Government keep telling us that it is possible to appeal if one disagrees with their assessment. Well, I would appreciate some information from the Minister about the proportion of those appeals that are successful. I fear that for those undergoing that process, the appeals will all too often seem to be little more than kangaroo courts. Furthermore, the length of the appeals process is such that too many disabled people are forced to return their vehicles before the outcome of their appeal.
The Minister has assured us that the appeals process
“enables disputes to be addressed more quickly”—[Official Report, 2 November 2015; Vol. 601, c. 712.]
However, in answer to a written question recently, he stated:
“The Department does not routinely collect information on the numbers of people who have had to return a Motability vehicle nor on whether they were successful on appeal.”
It appears that the Government really do not know about the impact of their policies, so let me tell them a little bit about what we know. In March last year, Motability told us that more than 100 disabled people every week are losing their Motability vehicles. We have now heard that, of those previously on the higher rate of DLA who have so far been reassessed for PIP, almost half—almost 14,000 people so far—have lost their car. Motability has estimated that if three out of every eight of their customers lose their eligibility for a Motability vehicle, the number forced to hand them back could reach 135,000. That estimate looks accurate, if not a little low. Figures show that 45% of those reassessed so far did not secure the enhanced rate of the mobility component under PIP.
It is fair to conclude that we are facing a hidden crisis. For Lisa and for all others across the country like her, I hope that the Minister will—to use a well-known, worn phrase—pause the policy and think again.
Patricia Gibson (North Ayrshire and Arran) (SNP)
It is a pleasure to serve under your chairmanship, Mr Hollobone.
Everybody in this room knows that the removal of the Motability vehicles will cause huge difficulties and distress for those who currently benefit from this scheme. With PIP replacing DLA, we know that the eligibility criteria will increase. It is estimated that the Government expect to save £2 billion. How much will this really cost? It will cost the taxpayer more than it will ever save. What will it cost in social isolation? There is a clear correlation between social isolation and loneliness and poor health. Even the Prime Minister has recognised that. What cost in terms of social justice? DWP figures suggest that the number who will lose out could be in the region of 428,000 people. Are we really to assume that all of those people do not really face challenges with their mobility?
Those currently in receipt of the higher rate mobility component of DLA face real and pressing challenges to their mobility every single day. Are these the people the Government wish to remove support from and on whose backs the Government wish to balance the books? We have all heard that those with disabilities must be given all the support they need to access the jobs market. I participated in a debate on that issue in this very room. How will removing the Motability vehicle scheme from those who rely upon it help people to access the jobs market more readily and easily?
Disabled members of our community who are able to work want to do so. Again, even the Prime Minister has recognised that. However, they must be supported into employment. Research has shown that a rise in the employment of disabled people would give significant economic benefit to the whole UK, but this is not just an economic argument and nor should it be. It is an argument, ultimately, about social justice. If we do not address the barriers to employment that exist for disabled people—and they do exist and are very real—we are simply turning our back on whole swathes of people in our communities, the contributions they can make, the skills they have, and the fulfilment that work can offer them.
Many disabled people already work and changing the criteria for the Motability scheme could actually lock disabled people currently in work out of the jobs market. Furthermore, it could slam the door of the jobs market in the face of those who currently qualify for the scheme and are actively looking for work. This cannot be the outcome the Government seek. Surely they must be alive to those dangers?
With PIP replacing DLA, eligibility will change, with the reduction of employment and support allowance by £30 a week for those in the work-related activity group. We now also have the widely discredited work capability assessments. There is a danger that this Government are rapidly showing themselves to be no friend of those who need support due to illness or disability. I urge the Minister to stand up for people who are disabled and to reflect not on how much money it will save the taxpayers, but on how much it will ultimately cost.
Joan Ryan (Enfield North) (Lab)
I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing the debate. I am here today to raise the issue of my constituent Cathy Walsh, though her case is representative of many others. She suffers from severe generalised dystonia, a condition that results in uncontrolled spasms, affecting her limbs and speech. She has been disabled since birth and has tremendous difficulty moving unaided. With a seriously disabling disability, she has been on disability living allowance for 23 years. On Friday 18 December, Ms Walsh was notified that her application for the advanced-rate mobility component of PIP had been turned down, and she was distraught—her car, which had been invaluable in allowing her to lead an independent life, would be taken from her. That life-changing decision was based on one assessment conducted over an hour. It took the Atos consultant longer to write the report than it took to undertake the assessment. Ms Walsh’s neurological consultant has
“strong reservations about the value of this assessment.”
I agree. Atos said that Ms Walsh was able to walk between 50 and 200 metres, but her consultant has
“no idea how ATOS’ assessment could have been made, it is clearly incorrect… At best she can walk up to 20 metres and on a bad day significantly less.”
On those terms, it is obvious that Ms Walsh has a very strong case to qualify for the higher-rate mobility allowance. Instead, she has had to go down the extremely stressful route of a mandatory reconsideration and an appeal to a tribunal, which is making her condition worse. Her independence has been severely curtailed, at least until the tribunal decision is known, which could be months away.
Ms Walsh will have to rely on others even to help her cash the £2,000 transitional support cheque from Motability, as she cannot get to the bank on her own. That raises another issue: why cannot this money be transferred directly into her account? Even when the £2,000 has been deposited, Ms Walsh will be in a state of financial limbo. If she wins her appeal but decides to keep the money, she would not be able to return to the Motability scheme for six months.
Let us assume that Ms Walsh wins her case and wants to return to the scheme as quickly as possible, which she is keen to do. She would then have to return most of the £2,000. I do not disagree with that in principle. However, if the tribunal drags on for several months, Ms Walsh will inevitably need to use some, if not all, of the transitional payment to pay for other forms of assistance and transport. She would then be in debt while having to go through the process of reapplying for the scheme when her car should never have been taken from her in the first place. The Government say that what we have now is a “fairer assessment process.” Well, it does not feel fair to Ms Walsh. She is deeply distressed. I do not think it is fair; her friends do not think it is fair; and, more to the point, her consultant, who understands her condition as well as anyone, thinks it is very unfair. If her treatment is typical of the way in which thousands of other cases have been dealt with, the process has not been fair to them, either. The Government must be willing to conduct a thorough review of the process, which is not fit for purpose in its current state. I look forward to hearing how the Minister intends to resolve these issues.
Corri Wilson (Ayr, Carrick and Cumnock) (SNP)
I thank my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) for securing this important debate. I represent the neighbouring constituency of Ayr, Carrick and Cumnock, which is not only a beautiful part of the world but is populated by many inspiring and talented people, such as Kayleigh Haggo.
Kayleigh is an exceptional young lady who, through hard work and dedication, has achieved much for someone only 17 years of age. She holds 13 world records and four national age group records and has a real chance of representing Britain in Tokyo in 2020. She was a Commonwealth games baton bearer in 2014, and she won three gold medals at the European Paralympic youth games.
Members are probably wondering what that has to do with today’s topic. Well, Kayleigh has a form of cerebral palsy that affects her balance and motor skills, and she is largely wheelchair-bound, which makes her achievements all the more incredible. Although she is still at school, she keeps up a strict training regime that is only possible because of the mobility car—driven by her mum—that she receives as part of her disability living allowance. The car has allowed her to become one of the country’s most promising young disabled athletes, and it is only through her tough training that she is able to walk as far as 20 metres.
Last July, Kayleigh was moved from disability living allowance on to PIP and was informed that she was no longer considered disabled enough. Without her mobility allowance, she would not be able to benefit from her participation in sport. It took a 10,000-signature petition and intense media interest before the Department for Work and Pensions was forced to reverse its decision on Kayleigh’s entitlement to a mobility car. Yes, she can walk 20 metres, but she cannot walk 50 metres. Yes, she has the mental capacity to plan and follow a journey, but she does not have the physical capacity to undertake that journey—she is physically unable to navigate public transport. The withdrawal of her mobility car would have seen Kayleigh’s Paralympic dreams in tatters. It would also have destroyed her dreams of going to university and her hopes of a meaningful career. Where is the benefit to the state of withdrawing that support and leaving people such as Kayleigh confined to their homes, with resultant impacts on their health, their employment prospects and their ability to contribute to the community?
From the outset, the Government made it clear that the aim of PIP was to make savings. Of those previously on higher-rate DLA, more than 30,000 have been reassessed for PIP, and of those 50% have kept their car. PIP should ensure a level of independence for disabled people, and Kayleigh is just one example of many constituents who have contacted me after having their mobility car removed and their independence shattered. I am proud to represent people such as Kayleigh, and the Government should be ashamed of what they are doing to people just like her.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I thank the hon. Member for Kilmarnock and Loudoun (Alan Brown) for securing this debate and for giving me the opportunity to have a quick “round the office” look at some of the anomalies affecting people as they transfer to PIP and its higher-rate mobility component.
I have already spoken about Ms George, who was in work and lost her higher-rate mobility payment only now to receive £150 a week from the Access to Work programme—tripling the amount of money paid to help her mobility, yet causing greater problems for her 13-year-old daughter, who is her main carer and now has to do even more tasks for her mother.
Looking at Ms George’s case for this debate allowed me to follow on to the case of Mr Abrahams, who is also in full-time employment. He suffers from spina bifida and cannot walk more than 20 yards. He had a specially adapted car with hand controls, which is about to be removed on Tuesday, so it would be great if the Minister could help us while Mr Abrahams’ appeal is being considered, as he lost his mandatory reconsideration. We are going to get him to apply to the Access to Work programme, so he will probably cost the Government a lot more money than if he had just retained his higher-rate mobility payment.
Patrina Ross suffered a stroke in 2014 and was awarded the lower-rate care component and higher-rate mobility component of DLA. When she was reassessed for PIP, the rates were swapped, so she got higher-rate care and lower-rate mobility. Her car was taken away, but she was paid £25 a week more. She does not want more money; she wants the adapted car.
Daisy Tadros was shifted from DLA to PIP without being informed. The first she knew of the transfer was when she got a letter from Motability saying that her car was going to be taken away. There had been no assessment of her case, yet there is a date for the removal of her car. We discovered that the Atos database does not work with the DWP database, so when Motability was trying to find out the status of Ms Tadros’ claim for PIP, the DWP could not tell Motability her status because the DWP does not have a system that works with Atos’s system. The only way the DWP, Motability and Atos could talk to one another was through the involvement of Ross in my office. He spoke to each of them so that they could co-ordinate and consult each other. The hon. Member for Bath (Ben Howlett) spoke about swapping information and access to information, which is clearly a problem within the system. The Minister might find that lots of people who are entitled to PIP but who are not getting it because of administrative error will have their car taken away without their ever getting as far as Atos or a decision.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) for securing this important debate. Time does not allow me to reflect on all the speeches, but I thank everyone who has spoken so passionately about the casework they have come across showing that people have been disadvantaged by the changes. I hope the Minister has listened and will respond to what has been said this afternoon.
Restricting access to mobility vehicles will increase the institutionalisation and isolation of disabled people, when we should be focusing on promoting their integration and inclusion in communities. The Scottish National party is extremely concerned that taking transport away from disabled people will make it extremely difficult for them to travel to and from work. The Government have pledged to halve disability unemployment, but their policies for disabled people fundamentally fly in the face of that aim. The Motability scheme provided independence for disabled people and helped them to live as normal a life as possible. As has been said, almost 14,000 disabled people’s specialist cars have already been taken away from them following reassessment. According to Motability’s 2014-15 annual report, 70,000 people in Scotland use the service. If the current level of loss continues, 31,500 people in Scotland will no longer be able to access this vital scheme, which should shame us all.
We know that we are facing these challenges because of the Tory obsession with reforming welfare. People are losing their Motability vehicles because the eligibility criteria in PIP assessments are different from the eligibility criteria for DLA, as many hon. Members have said. The Government should listen to those who have pointed out the consequences of the changes. For example, the MS Society has condemned them, stating that the Motability scheme plays a vital role for many people with multiple sclerosis. They conducted a survey of MS sufferers and found that the Motability scheme was particularly important to sufferers, enabling them to manage their condition and live more independently, which is something that we should all support. It also helped users participate in family and social activities.
Let us look at a typical case of someone who is being reassessed. Mrs C has been in receipt of DLA since 2014, after being hospitalised for five months, and she still has serious health problems. She got her Motability car in October 2014. As DLA is being phased out, she was asked to claim PIP instead. She did so, and received a decision letter dated 1 January 2016, which told her that her entitlement to DLA would end on 26 January. It also told her that, although she qualified for the daily living component at the enhanced rate, she scored only eight points for the mobility component, four less than the number required for the enhanced rate. Because her award does not include the enhanced rate mobility component, she will no longer be eligible for a Motability car. The letter told her that she had until 1 February to ask for a reconsideration of the decision.
She submitted a letter asking for reconsideration on 20 January, and on following up, she was told that it could take up to nine weeks—until 21 March—for a decision to be made. She had been told that she needed to return the car by 16 February: that is, nearly five weeks before she was likely to know the result of the reconsideration. Mrs C did not know how she was supposed to bridge that five-week gap and was unable to make any proper plans to meet her transport needs beyond 16 February. Should she buy a wee cheap car for just a few weeks? Did she need to find the money to replace her Motability car? Can the rules be changed so that Motability vehicles remain with the claimant pending their appeal? That would be the right thing for the Government to do.
The SNP in Scotland is doing all that we can to help disabled people, who are disproportionately affected by welfare reform. New powers over disability benefits in the Scotland Bill will provide opportunities to develop different policies for Scotland that are fairer and ensure that people are treated with the dignity and respect that are lacking from this Government.
Angela Rayner (Ashton-under-Lyne) (Lab)
It is a pleasure to speak under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing this important debate, and I welcome to his place the Under-Secretary of State for Disabled People. We have heard passionate speeches from many Members here about the devastating impact of the changes to mobility criteria on the lives of many people who are already struggling with everyday tasks. I thank all hon. Members for their contributions to this debate.
The purpose of Motability is to help those who would otherwise be unable to afford full mobility. As many hon. Members have outlined, the recent change from the disability living allowance to the personal independence payment for people of working age has had various damaging effects on those with disabilities.
Peter Dowd
Is my hon. Friend aware of any action taken by the Government to ensure that the most vulnerable people with disabilities are protected from being isolated in their communities if they lose their eligibility for mobility service under the changes from DLA to PIP? I do not know of any, and neither do many disability organisations, including Muscular Dystrophy UK.
Angela Rayner
Many Members have also raised that concern. I hope that the Minister will respond to it when he sums up.
Many speakers in this debate have given examples involving their constituents and told us of the devastating impact on their needs and self-esteem. Significant numbers of people who currently benefit from the higher rate DLA mobility component will fail to qualify for the enhanced rate mobility component in PIP. That is a deliberate outcome; it is what the Government said up front that they wanted to do. They wanted to cut those benefits. It is not based on need; it is based on making cuts and financial savings.
Many people have had the adapted vehicles that are vital to their lives and livelihoods withdrawn as a result. I thank the hon. Member for Bath (Ben Howlett) for raising the need for joined-up services, and my hon. Friend the Member for Cambridge (Daniel Zeichner), who told us the story of Lisa’s experience and the impact of the cuts on her life. The hon. Member for North Ayrshire and Arran (Patricia Gibson) spoke passionately about the responsibilities of society and community, and the cuts to the work-related activity group of employment and support allowance.
My right hon. Friend the Member for Enfield North (Joan Ryan) spoke of her concerns about the quality of the PIP assessment and the conflict with medical experts who know the person’s needs. It is simply not fit for purpose. The hon. Member for Ayr, Carrick and Cumnock (Corri Wilson) discussed Kayleigh’s experience and how only 50% of people get to keep the car after being assessed for PIP, and my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) discussed the devastating impact of the removal of the cars before an appeal has been heard.
The reality is that £24 billion in support will be removed from nearly 4 million disabled people by 2018. The policy will hinder disabled people, not help them. It is about removing support, not providing it, for people to live and work independently. The Extra Costs Commission has shown that disabled people face an average of £550 in extra living costs a month as a result of their disability, which is the main reason why disabled people are twice as likely to live in poverty as non-disabled people. PIP is meant to help with those extra costs. The Government’s determination to maintain such a flawed rule is a direct assault on independent living for many, and it greatly hinders opportunities for those with disabilities to contribute to society.
Any one of us is likely at some time to be affected by disability, either directly or in caring for a disabled friend or relative. I know; my son is registered disabled. I urge the Government to rethink this policy.
The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I pay tribute to the hon. Member for Kilmarnock and Loudoun (Alan Brown); he is clearly passionate about this important subject and gave a well thought-out and well delivered speech. I also pay tribute to all the other Members who contributed, particularly those who raised concerns on behalf of their constituents, showing that they will always champion the people they represent.
I will pick up on a few of the questions raised before going into my speech, which will cover the rest of them. There are a few points that are slightly away from the subject of Motability. First, we are committed to halving the disability employment gap. We all welcome the fact that, in the last 12 months, 152,000 more disabled people were in work, and the number is 292,000 over the last two years. There is still a long way to go, but we are making considerable progress in that area.
Numerous speakers mentioned a 50-metre rule becoming a 20-metre rule. There never was a 50-metre rule. It is not that if someone can walk 20 metres and 1 cm, they get no benefit, but if they can walk only 19 metres, then they get the full benefit; it is about moving safely to an acceptable standard repeatedly and in a reasonable time period. The rule is a bit of an urban myth, and I wanted to flag that up.
Justin Tomlinson
I will make some progress, and then we will see how much time is left.
On the wider issue of the money that we spend on disability support, we are increasing it year on year, all the way to 2020, compared with 2010. It is about £50 billion a year. We are also spending 14.6% more on supporting disabled people and people with long-term health conditions than those out of work for more than two years who are trying to find work.
The hon. Member for Mitcham and Morden (Siobhain McDonagh) mentioned a specific case involving three Departments. I have never heard of that before, which suggests that it is an isolated case. We will talk further on that and try to get to the bottom of it. Also, the hon. Member for North Ayrshire and Arran (Patricia Gibson) said that a decision was reversed on the back of a petition. That had no bearing on the reversal. I will discuss how the appeals process works later, but a petition would have no bearing on it. A decision is either right or it is wrong, and it will go through appeal. Individuals do not need to secure a petition. They may feel that it is an important part of their campaign, but it does not influence how things are done.
Motability is a fantastic scheme that was founded in 1977, following the introduction of mobility allowance in 1976. The scheme was founded by Lord Sterling, who I have had the great pleasure of meeting on a number of occasions, and the late Lord Goodman, with cross-party support that still continues today. Before Motability, there was the invalid carriage, which was a small, blue, motorised trike. It had a poor safety record and was unable to carry passengers, so it was of no use for the most severely disabled, who needed carers to drive them, or for those with children. As well as being unsociable, it was—frankly—awful-looking.
Today the Motability scheme helps about 600,000 people and they can choose from 2,600 vehicles. It comes as a “worry-free” package, with insurance and repairs included, and its average cost is more than 40% less than that of the equivalent commercial lease. I have had the pleasure of handing the keys to a Motability vehicle to one of my constituents, so, like many Members who have spoken today, I have seen what a difference the scheme makes to people’s everyday lives.
Most Motability users qualify through enhanced-rate personal independence payment mobility or higher-rate disability living allowance. A small number of people qualify through the armed forces independence payment and the war pensioners’ mobility supplement schemes, which are run by the Ministry of Defence.
DLA was inconsistent, subjective and out of step with the needs of a 21st century welfare system. The reality was that more than 70% of people on DLA had received a lifetime award, yet the conditions of one in three people on DLA significantly changed every year. Because people were on lifetime awards, time and time again those people who might not have been on the highest rate and whose conditions had worsened were not being reassessed, and so were missing out on benefits. It is no surprise that under PIP the percentage of those people who qualify for the highest rate of benefit is about 22.5%, whereas under DLA the figure was only 16%. Therefore, it is wrong to try to convey the impression that DLA was the utopian benefit; there was widespread support for its reform.
There are still things that need to be done and those things are part of our ongoing work. PIP is designed to determine awards consistently and objectively, with most people having a face-to-face consultation with an independent health professional to help them to build their case. Members should remember that the assessors are not awarding benefit; that is done by us in the Department and we set the rules and the levels of benefit. The assessors are there to help people to build their cases. So, rather than being presented under DLA with a complex 50-page self-assessment form, which many people could not do justice to, PIP is there. I have sat through PIP assessments and I have seen how the assessors help to support people, particularly when individuals have a mental health condition or a learning disability and therefore need to be guided through the process, to ensure that their case is as strong as possible.
The Government are committed to delivering PIP in a safe and secure way. Full roll-out of PIP started in July in a controlled way, allowing us to test and improve the service before scaling it up. From October, and in line with previously published plans, we began the full national roll-out of PIP. I look at the statistics twice a week. We control PIP and it has been in a settled state for about nine months now, which is widely reflected among all the stakeholder groups that I engage with. That process and the claimant journey will continue to improve. We continue to work with stakeholder groups and claimants, looking at ways to improve communication and the process. Nevertheless, it is widely recognised that the process is now in a settled state. Claims are now taking an average of 11 weeks from start to finish, which is much quicker than we anticipated when we produced PIP. As of October 2015, 611,000 are receiving PIP and new applicants to Motability are now split 50:50 between PIP and DLA.
The hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) talked about mental health. Unlike DLA, PIP considers the impact of someone’s condition on them and not just what condition they have, and it treats all impairment types equally. So, 21% of PIP claimants with a mental health condition get an enhanced rate of mobility, compared with just 10% of such DLA claimants, and 68% of PIP claimants with a mental health condition get enhanced-rate daily living, compared with just 22% of such DLA claimants. That is an example of how the improved assessment process is getting people to the right level of benefit—the level they should be receiving. We considered mental health at every stage of the design process, and that awareness has been built in to the activities that are examined.
A number of hon. Members have highlighted individual cases. Without all the evidence, it would be inappropriate for me to comment on a specific case. However, it is important to point something out. Many people have talked about a figure of 14,000 people; actually, there are now 24,000 more people using the Motability scheme than there were at the start of 2013, when we began introducing PIP. So, there are many, many more winners now, which is an important point to remember.
If people in individual cases, like those set out today, believe that an assessment is wrong, they have the option of a mandatory reconsideration, which looks at evidence afresh and allows for a late submission of evidence—
Justin Tomlinson
I am just tight on time, but if I can give way, I will. If people are still unsatisfied, they can go to an independent appeal that is separate from our Department. Those who lose an appeal, which is a relatively small proportion of the total number of claimants, have had that opportunity to present their case.
My hon. Friend the Member for Bath (Ben Howlett) made a brilliant point when he said that in a utopian world, and former Governments have tried this, as a Department we would have all the relevant information at our fingertips. However, the “supercomputer” did not quite work, which is a shame as it could have helped hugely. A lot of the appeals that are won are not won because we made the wrong decision. We made the right decision on the evidence that was presented. However, when we send out the letter explaining why an applicant has not been unsuccessful and has not received what they believe they are entitled to, it sets out why. A lot of people then go, “Oh, actually, while I submitted my GP’s”—
Justin Tomlinson
I will be tight for time, but I will do my best. Very quickly.
Ian Blackford
Given the fact that in many cases people are going through the appeal process, would it not be right for them to retain the ownership of their vehicle until the appeal process is finished, rather than losing the vehicle, particularly if they live in a rural area where losing a vehicle puts them at a massive disadvantage?
Justin Tomlinson
I understand that point, but it is a long-standing principle that benefits are not paid pending an appeal. A negative decision means that there is no entitlement to benefits, so we would not normally pay benefits unless the decision is overturned on appeal. That is true of all Governments for all time, which is a point that the hon. Gentleman himself has made. Again, with devolution there will be opportunities to do things differently. However, as it stands, that is how things are.
Generally, decisions are overturned on appeal because additional evidence is presented. We will continue to do all we can to make it as easy as possible for people to get hold of that information, because it makes a significant difference.
For those people who are no longer entitled to Motability, there is a transitional support package, and discussions conducted by staff in my Department before I became a Minister meant that the Department was able to secure a £175 million package for transitional support. That gives significant help to DLA claimants who leave the Motability scheme. They can keep their car for seven weeks; they are allowed to buy their own vehicle; and most of them will receive up to £2,000 in benefits, which is normally enough to buy a used car. Motability helps to pay to adapt new non-scheme cars and it provides advice on matters such as car insurance. That support is paid for by donations from Motability Operations, to make things as smooth as possible.
A number of Members have powerfully raised important points. We keep a very close eye on the Motability scheme, but the overriding factor is that PIP is being delivered in a controlled and measured manner, and we are making sure that we deliver it to the most vulnerable people in society. As I have said, we see a much higher number of applicants securing the highest rate of benefit under PIP compared with the number who secured it under DLA.
Alan Brown
Thank you, Mr Hollobone, for calling me to speak again.
I started out by saying that it would be ideal if this debate did not need to happen. Unfortunately, it needs to happen and the convincing testimonies from all around Westminster Hall today show us that we have a long way to go.
There have been some excellent contributions. I thought that the Minister gave an excellent response, and was very genuine. However, his response still seemed to ignore the fact that the system is wrong; it is not working, and he must reflect on that. I believe that he is much more genuine than his predecessor was, but, as I say, the testimonies given here today prove that the system is not working.
The Minister also said there were more winners than losers. Again, when we consider the testimonies that we have heard, it does not feel like that at all. I go back to the 20 metres/50 metres argument. I accept that there is not an absolute rule, but I will quote the Library briefing paper on the Motability scheme:
“Under the final PIP Regulations, individuals who do not need a wheelchair only qualify for the enhanced rate mobility component if they can only move short distances of no more than 20 metres, rather than 50 metres as in the previous draft.”
I am reading that from the Library briefing paper. It is possible that the Library is wrong, but can the Minister confirm that? And if the 20-metre distance is not part of the guidance, even though there might be a repeat test, can he ensure that every assessment centre in this country knows that and does not use it to remove enhanced mobility from people?
I finish with those remarks and I thank all hon. Members for their contributions.
Question put and agreed to.
Resolved,
That this House has considered the Motability car scheme.
Written Statements
(8 years, 9 months ago)
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Single Departmental Plans
(8 years, 9 months ago)
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The Chancellor of the Duchy of Lancaster (Mr Oliver Letwin)
On 19 February, 17 Government Departments published their single departmental plans. All plans can now be accessed on departmental gov.uk pages, as well as on: https://www.gov.uk/government/collections/single- departmental-plans-for-2015-to-2020.
The plans set out how Departments will deliver the Government’s programme for this Parliament. They include each Department’s priority objectives, the key programmes and policies that will deliver these, together with a number of performance indicators. They also set out the common efficiency measures that Departments will be undertaking in order to deliver the Government’s commitments in full within the resources available.
Single departmental plans are owned by Departments and have been designed by Cabinet Office and HM Treasury working in partnership.
Statistical information published in the plans will be updated as new data becomes available.
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ECOFIN; 12 February 2016
(8 years, 9 months ago)
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The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council was held in Brussels on 12 February 2016. Ministers discussed the following items:
Anti-tax avoidance package
The Commission presented its proposals for tackling corporate tax avoidance, including implementing the UK Government’s country by country reporting template for multinationals. This was followed by an exchange of views. The UK intervened to welcome the package and to urge EU Ministers to go further, including seeking a multilateral agreement on making details of the tax paid by companies publicly available on a country by country basis.
Current legislative proposals
The presidency updated the Council on the state of play of financial services dossiers.
Implementation of the banking union
The Commission provided a brief update on several dossiers linked to the banking union: the single resolution fund, the bank recovery and resolution directive and the deposit guarantee scheme directive.
Fight against the financing of terrorism
The Commission presented its action plan to reinforce the European framework in the fight against the financing of terrorism. Following an exchange of views, the Council adopted conclusions on the new measures.
Preparation of the G20 meeting in Shanghai on 25-27 February 2016
The Council adopted the EU’s terms of reference ahead of the G20 meeting of Finance Ministers and central bank governors in Shanghai.
Discharge to be given to the Commission in respect of the implementation of the budget for 2014
On the basis of a report from the Court of Auditors, the Council voted on the discharge to be given to the Commission in respect of the implementation of the EU’s general budget for the financial year 2014. The UK voted against, alongside Sweden and the Netherlands.
Budget guidelines for 2017
Council conclusions were adopted on the EU budget guidelines for 2017. These will inform the Commission of high-level priorities in preparation of the draft budget.
High-level group on own resources
Mario Monti, the chair of the high-level group on own resources, provided a state of play update on the EU’s financing system, followed by a short exchange of views.
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International Monetary Fund: UK Subscription
(8 years, 9 months ago)
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The Financial Secretary to the Treasury (Mr David Gauke)
On 23 February, the UK will increase its quota subscription to the IMF by 9,416.6 million special drawing rights (SDRs), equivalent to £9,270.2 million using exchange rates on 22 February 2016. This raises the UK’s total quota subscription from 10,738.5 million SDRs to 20,155.1 million SDRs.
On 20 January 2016, a sufficiency of IMF members notified the IMF of the completion of relevant legislative procedures to implement resolution 66-2 of the Board of Governors of the IMF (DEP2011-0977), thereby bringing increases to IMF members’ quota subscriptions envisaged by that resolution into effect. Parliamentary approval in the UK for implementation of resolution 66-2 was secured via the International Monetary Fund (Increase in Subscription) Order 2011, which came into force on 19 July 2011.
On the same day as the UK increases its quota subscription, two temporary loan facilities with the IMF will change. These facilities act as a second line of defence behind quotas. The UK’s commitment to the new arrangements to borrow will roll back by 9,178.2 million SDRs—equivalent to £9,035.5 million—and a bilateral loan commitment of the same value will become effective.
Worldwide quota increases form part of a wider reform package which makes the IMF stronger and more legitimate. It is vital at this time that we have an IMF equipped to strengthen the resilience of the global economy against risks and spillovers.
An SDR is the unit of account used by the IMF. Its value is calculated daily as a weighted average of the US dollar, euro, yen and pound sterling.
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