House of Commons

Tuesday 5th July 2016 Commons Chamber

Tuesday 5 July 2016

The House met at half-past Eleven o’clock

Prayers

Tuesday 5th July 2016 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 5th July 2016 Commons Chamber

The Secretary of State was asked—

[Andrea Jenkyns (Morley and Outwood) (Con)]

1. What plans the Government have to lead the international response to the recommendations of the final report of the Review on Antimicrobial Resistance, published in May 2016.

[Maggie Throup (Erewash) (Con)]

16. What plans the Government have to lead the international response to the recommendations of the final report of the Review on Antimicrobial Resistance, published in May 2016.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

The O’Neill AMR review is galvanising global awareness, as I have seen for myself, and it is greatly to the Prime Minister’s credit that he showed the foresight to commission it. The UK continues to play a global leadership role on antimicrobial resistance. We co-sponsored the World Health Organisation’s 2015 global action plan on AMR, we created the Fleming fund to help poorer countries to tackle drug resistance, and we are now championing action, including taking forward the O’Neill review’s recommendations, through the United Nations, the G7, and the G20.

[Andrea Jenkyns]

I recently met biotech firm Matoke Holdings, which has developed a new technology—reactive oxygen technology. It has found that this technology forms the basis of a whole new generation of antibiotics that has been proven to combat multi-resistant bacteria, including MRSA. This is an incredibly exciting development. Will my hon. Friend and her team agree to meet Matoke Holdings to hear about the new technology and the pace at which it has developed? What are the Government doing to support research into new antibiotics?

[Jane Ellison]

My hon. Friend will be aware that a key focus of the O’Neill review was how to incentivise the development of new antimicrobials. It is scary to think that there has not been a new class of antibiotics for some decades now. The Government are funding an extensive AMR research programme. Matoke Holdings has been in contact with the Department, and we are in the process of arranging a meeting to discuss reactive oxygen technology in the coming weeks. My ministerial colleague the Under-Secretary of State for Life Sciences has indicated that he would also be happy to have such a meeting.

[Maggie Throup]

I recently hosted a parliamentary drop-in session to highlight the benefits of C-reactive protein testing as a way of reducing the number of antibiotics inappropriately prescribed in primary care. Will the Minister agree to look again at the case for rolling out CRP testing as standard across primary care as part of the Government’s strategy to tackle antimicrobial resistance?

[Jane Ellison]

My hon. Friend is right to champion these new technologies. In fact, the Department has already invested in research into CRP. We look forward to seeing what that brings and, in due course, to seeing how it might move forward. It is very much already on our radar.

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

There is an impending public health issue in this regard, not least with strains of gonorrhoea, for example, that are starting to show resistance to antibiotics. A number of doctors are incredibly concerned about this. What more can be done to incentivise research and development to ensure that this public health concern does not become a public health crisis?

[Jane Ellison]

The hon. Gentleman, who knows a great deal about these matters, is right. Incentivising discovery is absolutely at the heart of the O’Neill review. O’Neill has made a series of recommendations about unblocking the drugs pipeline, and we will respond to that in full. It is a critical issue. In the meantime, conservation of the antibiotics we have and sensible prescribing is critical to making sure that, as the hon. Gentleman says, drug-resistant strains of gonorrhoea, for example, do not take hold.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

This is an incredibly important issue on which I urge the Minister to communicate with the public more effectively, because inappropriate use of antibiotics could have severe effects. Some of the medical interventions that are reliant on antibiotics, whether gut surgery, joint replacements, caesarean sections or chemotherapies, could become too dangerous to perform if we do not get this right.

[Jane Ellison]

That is exactly right. Things we take for granted now could become risky procedures again. Globally, old diseases could make a comeback because of drug resistance—diseases such as TB which, around the world, people are winning the battle against. This is why it is so important to pay tribute to the Prime Minister’s foresight in commissioning the independent review and taking this issue global. The Government, along with the chief medical officer, are championing this at an international level, but, at the same time, we are not resting closer to home, where we are working with GPs and so on to deal with the prescribing issue. However, it is a big challenge and the hon. Gentleman is right to highlight it.

[David Tredinnick (Bosworth) (Con)]

Is my hon. Friend aware that there is strong evidence that herbal medicine can help treat conditions currently treated by antibiotics, but there is a desperate need for more research? Is she also aware that homeopathic medicine can do the same, particularly with upper respiratory tract infections, and that homeopathic treatments are now the second largest medical system in the world, according to the World Health Organisation?

[Jane Ellison]

The Government are always interested in anything that can be proven to be cost-effective and efficacious.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

Millions of people around the world are dying annually from resistant infections. In the light of that and the positive correlation between antibiotic resistance rates and antibiotic consumption, urgent action needs to be taken. What steps and cross-departmental work is the Minister taking to address the findings of the Review on Antimicrobial Resistance and to reduce the unnecessary use of antimicrobials in agriculture?

[Jane Ellison]

There is consensus on the importance of this issue. It is worth highlighting the work that the Government are doing internationally, through the creation of the Fleming fund, in which we are investing £265 million, to help poorer countries to tackle drug resistance and to make sure that we have proper monitoring systems in place. Without a baseline to understand where we are even starting from, it is very difficult. We will respond more fully to all the issues highlighted by the hon. Lady when we respond formally to the O’Neill review, but it goes without saying that we are trying to take this work forward internationally and we are working towards further meetings at the United Nations this autumn.

[Chris Green (Bolton West) (Con)]

2. What assessment his Department has made of the uptake of the Target antibiotics toolkit among NHS commissioners and GPs.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

Continuing with the same important theme, it is excellent to see Parliament taking such a close interest in antibiotic resistance. In England, 60% of clinical commissioning groups reported reviewing the Target toolkit, which has been designed to help GPs in particular, in a primary care survey in November 2014. A patient safety alert went to providers and commissioners in 2015, highlighting the importance of programmes such as Target. The House might be interested to know that the Target programme gives GPs help in understanding how to deal with the pressure from patients, because a lot of inappropriate antibiotic prescribing comes from the pressure from patients to walk away with an antibiotic script. Work is being done, but we know that we have more to do.

[Chris Green]

I thank the Minister for her reply. Disappointingly, the most recent data show Bolton to be one of the highest prescribers of antimicrobial agents in Greater Manchester, and it is in the highest quartile nationally. Although Bolton CCG has seen reductions in antibiotic prescribing following guidance given to GPs, when will the Target antibiotics toolkit be fully implemented across all CCGs in England?

[Jane Ellison]

Public Health England is doing a huge amount of work on this. There has been a very welcome drop in prescribing in the last year and that appears in the data available for this year. That gives us encouragement. Of course, 79% of antibiotic prescribing occurs outside hospital, so my hon. Friend is right to highlight general practices. I draw his attention to Public Health England’s Fingertips portal, which allows both providers and commissioners to assess how they are doing compared with other areas locally. That is allowing us to see where we have particular problems. It varies around the country and Public Health England is leading the action being taken in that regard.

[Chris Evans (Islwyn) (Lab/Co-op)]

The growth of antibiotic resistance is a massive problem worldwide, as the Minister knows. No new antibiotics have been classified for more than 25 years. This is a real problem, as antibiotic resistance increases. What are the Government doing to address the issue?

[Jane Ellison]

As I have said, it was our Prime Minister who commissioned the independent O’Neill review, showing astonishing foresight, and that review is now galvanising the discussion. I was at the World Health Assembly in Geneva in May, and the review was the talk of Geneva. Lord O’Neill presented it to many delegations from around the world and we now need to move forward. As well as working on human health, we are also looking to work with animal health organisations, as we take forward the very important recommendations on prescribing and the use of antibiotics as growth stimulators.

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

3. If he will make an assessment of the potential effect of the UK leaving the EU on the availability of NHS services for (a) EU nationals living, studying and working in the UK and (b) UK citizens abroad.

[The Secretary of State for Health (Mr Jeremy Hunt)]

Before I start, the House will want to mark an important milestone, which is that this year, alongside Arnold Schwarzenegger, Brian May, Camilla Parker Bowles and Meat Loaf, the NHS is 68 years old, and its birthday is, in fact, today. I know that we will all want to wish the NHS and all who work there a very happy birthday.

As long as the UK is subject to EU law, current arrangements remain in place. As we move to a new relationship with Europe, our guiding principle will be to get the best possible deal for British citizens who live and work in, and who visit, EU countries. An EU unit will be set up in the Cabinet Office and will report to the Cabinet, and my Department will feed into its work.

[Martyn Day]

I am aware that nothing will change for the next two years, but what is the Secretary of State’s proposal for reciprocity of access to healthcare within the EU, and does he envisage the £500 NHS immigration health surcharge applying to EU nationals already living in the UK?

[Mr Hunt]

The health surcharge that this Government have instituted for people on long-term visas to come and work and live in the UK is the right thing to do, because it is important that everyone makes a fair contribution to the cost of NHS services. In terms of future arrangements for EU nationals in the UK, that would obviously be subject to the negotiations that now happen, and a very important part of those negotiations will be access to the EU health systems for British citizens currently living in EU countries.

[Mr Philip Hollobone (Kettering) (Con)]

Will the Secretary of State tell the House how many EU nationals work in the national health service and how many EU nationals use the national health service? Is it not the case that the number of eastern Europeans, especially, coming to this country has simply overwhelmed GP practices and A&E centres up and down the country, and now we have got a chance to redress the balance?

[Mr Hunt]

Without wanting to reopen the debate that concluded on 23 June, the overwhelming view in the NHS is that we are very lucky to have the incredible support of 110,000 EU nationals working in the health and social care system. I want to put on record to this House what a fantastic job they do and how much we are all in their debt.

[Norman Lamb (North Norfolk) (LD)]

Very many of those 110,000 people are now acutely anxious about their future in this country, because of the despicable suggestion that they should be used as a bargaining pawn in negotiations with the EU. Will the Secretary of State ensure that the Government, as a matter of urgency, guarantee their future in this country doing their dedicated work in our NHS and care system?

[Mr Hunt]

I can reassure the right hon. Gentleman that we are incredibly aware of the brilliant work that EU nationals do, not just in the NHS but in the social care system, which he was responsible for, in care homes up and down the country. We recognise that, and I hope that he will be reassured by statements made by the Foreign Secretary and the Home Secretary yesterday that we want to find a way of allowing those people to stay in the UK for as long as they wish to. We recognise the incredibly valuable contribution that they make, and we are confident in the negotiations ahead that we will be able to secure the outcome that they and we all want.

[Heidi Alexander (Lewisham East) (Lab)]

The last time the Secretary of State and I had an exchange in this Chamber, I suggested to him that it might be the final time we would face each other over the Dispatch Box. Although I was clearly prescient, it has not quite turned out the way I thought it would.

Following the results of the referendum, will the Secretary of State say whether he still intends to introduce an NHS charges Bill as outlined in the Queen’s Speech? Does he agree that migrants give more to the NHS than they take, that their contribution should be welcomed and that our NHS simply could not survive without them?

[Mr Hunt]

I enjoyed our many exchanges in this House, and it is a loss on our side as well that they will not continue. I would like to welcome the hon. Lady’s successor to her post, and I hope that I will have a chance to do so again when she asks a question later.

I agree with the hon. Member for Lewisham East (Heidi Alexander). Migrants, or the people who work in the NHS who come from different countries, make an extraordinary contribution. It is fair to say that the NHS would fall over without the incredible work that they do. It is also true that the British people voted to control migration on 23 June, and we have to accept that verdict. In terms of the NHS and social care system, I did not hear, and I have not heard in my time as Health Secretary, enormous amounts of worry about the pressure of migration on NHS services, because on the whole migrants tend to be younger and fitter people. While accepting the verdict of the British people and what they said on 23 June, the important reassurance that we now need to give is to the many people from outside the UK who make a fantastic contribution to the running of our health and care system.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

The Secretary of State may be aware that in the wake of the Brexit vote NHS commissioning bosses have delayed funding for vital medicines and services because of the fall in the value of the pound. One affected patient is Abi Longfellow, the teenager who won her battle for a wonder drug thanks to a campaign by the Sunday People. Abi currently spends 11 hours a day on a dialysis machine and was due to start on a drug that would give her a fighting chance with a kidney transplant. We were all aware that the pound might fall post referendum, so will the Secretary of State explain why no contingency plans were put in place and what he will do to ensure that, despite the Brexit vote, patients like Abi receive the lifesaving treatments and medicines that they need?

[Mr Hunt]

First, I welcome the hon. Lady to her position. She is the third shadow Health Secretary I have faced in less than a year, and I am beginning to worry that it may be something personal. I wish her well; she knows the brief extremely well and has campaigned on it a great deal in her long parliamentary career. I will look into the case she brought up. I would not want anyone to be deprived of vital lifesaving drugs because of exchange rate fluctuations. The whole British economy, including the NHS, will have to deal with the economic shock that we may now face as a result of the Brexit vote. But now that the decision has been taken by the British people we must look for the opportunities for the UK and the NHS, and not simply worry about the uncertainties, although there will be lots of things we have to deal with.

[John Howell (Henley) (Con)]

4. What plans his Department has to increase capacity in general practice and primary care.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

6. What plans his Department has to increase capacity in general practice and primary care.

[David Warburton (Somerton and Frome) (Con)]

10. What plans his Department has to increase capacity in general practice and primary care.

[The Secretary of State for Health (Mr Jeremy Hunt)]

We will be investing an extra £2.4 billion a year in general practice by 2020-21, a 14% increase in real terms. The General Practice Forward View, published earlier this year, sets out a package of support for general practice to boost the workforce, drive efficiencies in workload and modernise primary care infrastructure and technology.

[John Howell]

General practitioners in Henley have recently written a letter to all their patients pointing out the difficulties they face in fulfilling their workload. Will the Secretary of State explain what the Government are doing about that and how what they are doing will help?

[Mr Hunt]

I am happy to do so. I recognise the picture that my hon. Friend paints—not just in Henley but across the country—of a huge increase in GPs’ workload, which they are finding extremely challenging. What have we done? We have almost 1,300 more GPs working and training in the NHS compared with 2010. We have said that by the end of this Parliament we will seek to make available an additional 10,000 primary and community care staff, including 5,000 doctors working in general practice and 1,000 physician associates. We recognise the problem and are doing something about it.

[Michael Tomlinson]

Given proposals for significant increases in housing across Dorset, my constituents are rightly concerned about access to services, including to GPs. Will the Secretary of State reassure me and my constituents that housing numbers will be taken into account when assessing provision and increasing capacity of general practice in Poole and Dorset?

[Mr Hunt]

I am happy to give my hon. Friend that assurance. NHS England looks at areas of new housing very carefully when deciding where to invest additional resources for new GP practices. I recognise those concerns. I was in Dorset at the weekend. It is a lovely place that many people retire to, and of course older people tend to use the NHS more, so it is very important that that is reflected in our investment patterns.

[David Warburton]

Having met GPs, health centre managers and patient groups in Frome, Wincanton and Somerton in my constituency, I know that GP recruitment is a serious problem in Somerset. What measures is the Department putting in place to address both that issue and the additional challenge of excessive agency costs, both of which are placing a considerable strain on rural health providers?

[Mr Hunt]

I am happy to do that—I visited a GP practice with my hon. Friend in the run-up to the last election, and I know the close interest that he takes in this issue. As I said, we are making huge efforts to recruit more GPs during this Parliament, and to do that we must increase the number of medical school graduates to 3,250 a year. We are making progress in that direction, and we have also introduced tough new rules on the use of agencies, including maximum hourly rates for agency doctors and nurses.

[Mr Dennis Skinner (Bolsover) (Lab)]

Will the Secretary of State do something about the Hardwick commissioning group in north Derbyshire? I met it a week last Friday to talk about dementia care, which he knows is due to change a little, according to the local authorities and so on. Will he tell the group that the mad idea to close Bolsover hospital, and the hospital in Bakewell in Derbyshire Dales, should be stopped? Will he tell Hardwick commissioning group that it has gone beyond its terms of reference, and that those hospitals should remain open?

[Mr Hunt]

I recognise the important role that community hospitals play in many of our constituencies, and that role will change as we get better at looking after people at home, which is what people want. We can all be proud of significant progress on dementia in recent years. Dementia diagnosis rates have risen by about 50%—indeed, we think we have the highest diagnosis rates in the world. However, it is not just about diagnosis; it is about what happens when someone receives that diagnosis, and the priority of this Parliament will be to ensure that we wrap around people the care that they need when they receive that diagnosis.

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

The Health Secretary has just promised 5,000 new GPs, and GP Forward View mentions recruiting 500 GPs from overseas. I understand that Lincolnshire GP leaders are looking to recruit GPs from Spain, Poland and Romania. As we have heard, EU nationals who live in the UK and work in the NHS are seen by the Home Secretary as bargaining chips, which has made them incredibly nervous about their status. How successful does the Health Secretary think that that GP recruitment will be?

[Mr Hunt]

This is a time when all sides of the House should be seeking to reassure many people from other countries who do a fantastic job in our NHS that we believe they will have a great future here. The Home Secretary has prioritised doctors, paramedics and nurses in the shortage occupation lists, and in all countries that have points-based systems—look at what happens in Australia or Canada—the needs of the health service and health care system are usually given very high priority.

[Keith Vaz (Leicester East) (Lab)]

Mr Speaker, let us note another milestone this year: your election yesterday as a freeman of the City of London. We look forward to you bringing your own flock of sheep to Westminster in future.

The Secretary of State will know that we are facing a diabetes crisis, and by 2025, 5 million people will have been diagnosed with diabetes. There are 32,000 pharmacies in the United Kingdom, with 13,000 community-based schemes. Given that 99% of the population live near a pharmacy, does the Secretary of State agree that more diabetes work should be given to pharmacies, to try to ease the burden and pressure on general practitioners?

[Mr Hunt]

There is a lot of potential in what the right hon. Gentleman says. The financial pressures on the NHS and general practice mean that this is the right moment to rethink the role of pharmacies, and consider whether we can be better at tapping into the incredible skills that pharmacists have as trained clinicians, which I do not think we make the most of. He is right to say that diabetes and childhood obesity is a big priority for the Government, and I hope we will be able to inform the House more about that soon.

[Imran Hussain (Bradford East) (Lab)]

5. How much funding he plans to make available for the proposed pharmacy access scheme.

[The Minister for Community and Social Care (Alistair Burt)]

We intend to announce details of the pharmacy access scheme, including funding, as part of a wider announcement on community pharmacy in 2016-17 and beyond.

[Imran Hussain]

Pharmacies play an important role in our community healthcare system. An accessible pharmacy is particularly important for those with mobility issues and for those from communities with a greater propensity to experience health inequalities. However, the planned changes to pharmacy funding risk closing the pharmacies that serve these groups. Will the Minister give me a direct assurance that the pharmacy access scheme will be properly organised and that no pharmacies serving those vulnerable groups will close because of changes in funding?

[Alistair Burt]

The hon. Gentleman is right to praise the role pharmacies play and right to identify that we must do all we can to ensure that those who are most vulnerable retain the excellent access they currently have. The national formula on access proposal will be used to identify those pharmacies that are most geographically important for patient access, taking into account isolation criteria based on travel times and distances, and population sizes and needs. Both deprivation and isolation will be covered in the access formula.

[Kevin Barron (Rother Valley) (Lab)]

Given that the access scheme could potentially alter the situation for community pharmacies, will the Minister consider more money than was originally proposed for community pharmacy budgets to stop any shock from the cuts we are expecting later this financial year?

[Alistair Burt]

There are no changes to the funding issues announced when the review of pharmacies started on 15 December. As my right hon. Friend the Secretary of State said, we are hoping to make an announcement on pharmacy when we can. I am aware that pharmacy is waiting for that.

[Will Quince (Colchester) (Con)]

7. What progress his Department has made on improving the safety of maternity care.

[The Secretary of State for Health (Mr Jeremy Hunt)]

Since 2010, we have invested £37 million in improving the physical environment of over 140 maternity units and purchasing equipment to improve safety. We now have 2,103 more midwives in the NHS and 6,400 more in training than in 2010.

[Will Quince]

Expectant parents in Colchester are among the first in the UK to have hypnobirthing courses—I recently attended one myself. What consideration has the Secretary of State given to the effectiveness of hypnobirthing in improving maternity safety?

[Mr Hunt]

A variety of pioneering techniques, which could make a huge difference to women’s experience of birth, are emerging. I am delighted that we are seeing lots of experimentation and innovation. I would particularly like to pay tribute to my hon. Friend’s trust, which is in special measures and has been through a very difficult period. The fact that it is still managing to do this kind of innovation is wholly to be commended.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Has the Secretary of State seen the Autism Commission report on barriers to healthcare for people with autism? In maternity care and all other care there are very severe barriers that, with the right will and the right action, we can overcome. Will he read the report and talk to me about it?

[Mr Hunt]

I am more than happy to do so. In fact, we have a copy of the report right here, which my Minister of State has handily given to me. When I was shadow Minister for disabled people, I had a lot of contact with parents of autistic children and with people on the autistic spectrum themselves. The hon. Gentleman makes a very important point.

[Peter Heaton-Jones (North Devon) (Con)]

The maternity unit at North Devon district hospital in Barnstaple in my constituency is one of the services being reviewed under the current Success Regime. Can the Secretary of State reassure me and my constituents that maternity care, and the safety thereof in what is a geographically huge region, will be the first priority under this review?

[Mr Hunt]

I can absolutely assure my hon. Friend on that. I know there are very big national and global events happening right now, but I want to tell the House that over the next month one of my big priorities will be to do something to improve our record on maternity safety. We have made huge progress in reducing stillbirth rates and so on, but maternity safety is still not as good as it should be and certainly not as good as in other countries in western Europe. This is an absolute priority and I hope to be able to inform the House more on this before recess.

[Alison Thewliss (Glasgow Central) (SNP)]

As the chair of the all-party group on infant feeding and inequalities, I welcome the new guidance issued by Public Health England, in conjunction with UNICEF Baby Friendly, on the commissioning of infant feeding services. I welcome in particular the recognition of raising infant feeding at the antenatal stage. Will the Secretary of State explain what resources the Department of Health is putting in to promote the guidance and increase breastfeeding at local levels?

[Mr Hunt]

We already commit huge resources to that, but we can do more. As I just said, we hope to announce something to the House before the break.

[Fiona Mactaggart (Slough) (Lab)]

8. How many staff working in the NHS have been recruited from other European countries in the last 12 months; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Health (Ben Gummer)]

There are no centrally held data on the countries from which NHS staff are recruited, but self-reported nationality data suggest that 15,723 non-UK European nationals joined the NHS in England and that 7,900 left, leaving a net increase of 7,800. As the Minister responsible for the NHS workforce, may I say that every single one of them is very welcome in, and provides an invaluable contribution to, our NHS?

[Fiona Mactaggart]

The problem is that the Immigration Minister’s waffle yesterday and Ministers’ warm words today are not giving confidence to these vital NHS employees. Has the Minister spoken to the Immigration Minister to request that he guarantee permanent residence to every EU national working in the NHS so that they can have the security that they—and we, their patients—need?

[Ben Gummer]

The Home Secretary is well aware of the enormous contribution that EU nationals make to the NHS. We all have a duty to undo the damage done during the referendum campaign and the poisonous atmosphere that exists in some parts of our communities and to thank personally—I will be doing so myself—EU nationals working in the NHS for their hard work and dedication so that they feel valued by each and every one of us.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

There has been a 27% surge in trainee applications to NHS Scotland because of the conflict around the junior doctors contract in England, and now doctors and academics from the EU are not taking up posts here because of the Brexit vote. With a one-in-four rota gap in many specialties, how does the Minister plan to sustain the current service, let alone extend it?

[Ben Gummer]

As much as I admire and like the hon. Lady, my opposite number on the Scottish National party Benches, I think that the behaviour of some of her colleagues in Scotland during the junior doctors dispute was not in the spirit of concord by which we try to establish relations with the devolved Administrations. I do not recognise the figures she quoted about junior doctors—I am glad that we have recruited well in this country during this difficult period—but I know that she will want to thank the British Medical Association for its work in bringing the dispute to an end. I hope that in the next few days we will come to a conclusion suitable for everyone.

[Dr Whitford]

I thank the Minister for that and for his welcome to EU nationals here, but with the Secretary of State merely repeating what the Immigration Minister said yesterday and given what the Home Secretary has said, does he not understand the urgent situation facing EU nationals working here? With more than 100,000 of them, do we not want to give them security of residency now to avoid haemorrhaging vital staff from the NHS?

[Ben Gummer]

The Home Secretary said she was confident we could get a deal ensuring that they could stay, but we need a new Prime Minister able to start the negotiations caused by the decision of the British people on 23 June. I say in my capacity as a Health Minister— the House has heard from other Members, including the Secretary of State—that we have full confidence in the EU nationals working in the NHS and wish to praise their contribution, which makes the NHS a better organisation.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

The head of the NHS, Simon Stevens, has strongly defended the role of immigrants in the NHS, saying that there has never been a time in its 68-year history when the NHS has not

“relied on committed employees from around the world”.

One of these employees was my own mother, who migrated from Jamaica to the UK in the 1950s to be a pupil nurse. Workers from the EU and other countries are the backbone not just of the NHS but of our social care system, which is facing many challenges. Does the Minister agree that we should be thanking these hard-working individuals for their service, not leaving them with questions about their status and job security?

[Ben Gummer]

I agree entirely with the hon. Lady that we should be thanking EU nationals working in the NHS and social care system. She herself is evidence of the enormous contribution of migrant labourers, not just in the first generation but in subsequent ones. We, as a nation and a House, should be grateful for it. This is a difficult time for many EU nationals in this country, and we should be thanking them not just for the numbers but for the special qualities they bring. In my constituency, the amazing Portuguese nurses in Ipswich hospital bring qualities and skills that some of our own nurses in our own country do not possess in our own hospitals.

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

9. What the cost to the public purse was in 2015-16 of providing interpreters for people using the NHS who did not speak English.

[The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)]

Until now, data on NHS foreign language translation and interpretation have not been gathered centrally, but I am delighted to say that, as a result of the representations of my hon. Friend and other colleagues, we have changed that, and NHS England is now conducting a major piece of work looking at both commissioning and provider organisations’ expenditure as part of a procurement review. It is worth saying that in view of the importance of effective communication in good diagnosis, informed consent, safeguarding and public health, it is in all our interests that all our patients understand what the doctors and clinicians are saying to them.

[David T. C. Davies]

I am grateful for that answer, but may I respectfully suggest to the Minister that if we are to have a serious discussion about the costs and the impacts of large-scale migration into the UK on the NHS, we must have access to figures on this cost and we should not have to wait months and months to get them? The figures must be out there somewhere.

[George Freeman]

My hon. Friend will find no more passionate champion of good data in the NHS than myself. He makes an important point about getting on with this, and I have already signalled to the team in NHS England that we will need to get a grip on this quickly, not least so that the new Administration implementing the Brexit decision will know the figures and have them to hand.

[Philip Davies (Shipley) (Con)]

I made a recent freedom of information request to my local hospitals to find out the cost of interpreters. Airedale hospital reported that last year the cost was almost £200,000 and I suspect that, when I receive an answer, it will be even higher at Bradford royal infirmary. This money could be better spent on patient care. Surely it is better for these patients, if they want to contribute to the British way of life, to be able to speak English themselves. What is the Minister’s Department doing with other Government Departments to make sure that people who live in this country can speak English so that money for the NHS goes to the purposes for which it was intended?

[George Freeman]

Let me gently and respectfully point out that those who work in the NHS and the leaders responsible for it have made it very clear how dependent it is on people who come to work here in the NHS from overseas. Under the terms of our own mandate and indeed our own laws, the NHS has a duty to make sure that it provides proper diagnosis and treatment for all our citizens. For public health and safety, it is in nobody’s interests for citizens of the UK not to be able to integrate, deal with and get proper diagnosis from the system. My hon. Friend’s wider points about the speaking of English are well made, but they are not relevant to this particular question.

[Kelly Tolhurst (Rochester and Strood) (Con)]

11. What steps his Department plans to take to improve local dispensing arrangements.

[The Minister for Community and Social Care (Alistair Burt)]

For improving local dispensing arrangements, patients need to receive their NHS prescribed medicines promptly, efficiently, conveniently and to high quality. NHS England is responsible for ensuring that there are adequate arrangements in place for the dispensing of medicines so that this happens across the country. We keep this under constant review.

[Kelly Tolhurst]

I have been contacted by a number of disabled constituents who have encountered difficulties receiving dispensed drugs from their local GPs because they fall outside geographical criteria as of last year, therefore adding a significant financial burden. Given instances where dispensing GPs have blocked the arrival of some local pharmacies in parts of my constituency, will the Minister give some consideration to how this discrepancy could be remedied?

[Alistair Burt]

I am sorry to hear about the difficulties of my hon. Friend’s constituents. There is a provision within the regulations to enable patients who have serious difficulty in getting to a pharmacy because of the distance involved or the lack of transport to receive dispensing services from a doctor. Doctors should certainly not be blocking the addition of local pharmacies. If my hon. Friend writes to me, I can look into the matter in greater detail.

[Jim Shannon (Strangford) (DUP)]

Taking into account the immeasurable value that community pharmacies provide for some of the most vulnerable people in sections of our society, does the Minister agree that, when it comes to Government budgets, these dispensing services should be included in any ring-fencing that goes on around front-line services?

[Alistair Burt]

The hon. Gentleman’s support for these services is well known and what he says is right. The regulations do protect the more vulnerable, but when I next look at them, I will make sure that they fulfil his requirements.

[Dr Rosena Allin-Khan (Tooting) (Lab)]

12. What assessment he has made of the potential effect of the proposed removal of NHS bursaries on the number of applications from mature students for nurse training places.

[The Parliamentary Under-Secretary of State for Health (Ben Gummer)]

Mature students represent a significant proportion of the nursing, midwifery and allied health professions’ workforce. Looking at what happened following the introduction of the maximum £9,000 per annum tuition fees in 2012, the latest UCAS data for last year show that full-time mature student numbers have now significantly exceeded previous levels.

[Dr Allin-Khan]

I am proud to have served on the front line of our national health service for the last 10 years, and to ask my first question on its 68th birthday.

St George’s hospital in my constituency is operating at a significant deficit, partly owing to expensive agency staff costs. Does the Minister agree that cutting NHS bursaries for nurses, midwives, radiographers and other allied health professionals will prevent the recruitment and retention of high-quality trained staff and make the problem worse?

[Ben Gummer]

I welcome the hon. Lady to her seat. She fought a courageous campaign, and it is good to see her in the Chamber. She brings expertise to the House, which is also very welcome.

I agree with the first part of the hon. Lady’s question—the deficit at her local hospital is indeed partly caused by the excessive costs of agency nurses, and we are trying to put a cap on those costs—but I am afraid I disagree with the second part. I believe that changes in nurse bursaries will enable us to get more nurses and healthcare professionals into the NHS. There has been a similar development in the rest of the higher education sector, and I want to replicate that success in the NHS so that we can provide it with the workers that it requires.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I, too, am delighted to welcome my hon. Friend the Member for Tooting (Dr Allin-Khan) to her seat. Her recent experience on the front line of the NHS will be of great value, and we in the Labour party pride ourselves on listening to NHS staff. Let me also put on record my thanks to my hon. Friend the Member for Lewisham East (Heidi Alexander) for the excellent job that she did as shadow Secretary of State.

I must challenge the Minister again about the impact of this policy on mature students. According to an answer given to me by his colleague the Minister for Universities and Science, in 2010-11 there were 740,000 enrolments in higher education among people aged 21 or over. Let me ask a simple question: in 2014-15, after tuition fees trebled, was the number of enrolments among mature students higher or lower?

[Ben Gummer]

I echo the hon. Gentleman’s remarks about the hon. Member for Lewisham East (Heidi Alexander). She gave the House admirable assistance in challenging the Government, and I regret her loss from the Opposition Front Bench.

The latest figure from UCAS, for 2015, shows that the number of mature student applications has risen since the introduction of £9,000 tuition fees, but the hon. Gentleman is right to identify that factor as a challenge in relation to our new plans. That is why we asked open questions during the consultation, and I hope that, now that it has closed, we shall be able to respond to those questions to ensure that we can give the best possible assistance to mature students who want to become nurses.

[Justin Madders]

According to the universities Minister, the number of mature students enrolling in universities has fallen by 22%. If that were repeated in the health sector, what is already a staffing crisis would become a catastrophe. The Minister has said that an extra 10,000 training places will be created during the current Parliament, but everything I have heard from the Government suggests that that figure was plucked out of thin air. What is the baseline figure for the Minister’s claim—10,000 more places compared to when?

[Ben Gummer]

There will be 10,000 additional places over the five years from when the policy was announced last year, and that will give NHS organisations throughout the country the assistance that will enable them to bring down their agency costs. It is only through such bold initiatives that we can reform the NHS for the betterment of patient care throughout the country.

[Margaret Greenwood (Wirral West) (Lab)]

13. What assessment his Department has made of the potential effect of measures to reduce the size of NHS deficits on NHS staff numbers.

[The Parliamentary Under-Secretary of State for Health (Ben Gummer)]

Trusts and foundation trusts are responsible for ensuring that their workforces are affordable, given the financial control totals that have been set for this financial year. We are clear about the fact that the first priority in the reduction of provider deficits will be to reduce unsustainable spending on high-cost temporary staff.

[Margaret Greenwood]

Five per cent. of NHS workers in England come from the European Union. What steps is the Minister taking to ensure that every effort is made to retain those skilled workers, and will he provide them with the confirmation of their permanent employment status that they so urgently need?

[Ben Gummer]

At the risk of repeating what the Secretary of State and I have said previously, we very much welcome the contribution of all EU nationals working in the NHS. It is for the process of the negotiations to establish the precise status of everyone, both EU nationals and British nationals working abroad. That was not my choice at the referendum, but the decision has been made by the British people. I hope that the hon. Lady will take comfort from what the Home Secretary has been clear about: that she hopes to be able to secure a deal so that we can retain EU nationals in this country.

[Mr David Burrowes (Enfield, Southgate) (Con)]

Can the Minister confirm that the challenge to NHS budgets will not compromise in any way the provision of sufficient consultants and middle-grade doctors to not only keep North Middlesex hospital open, but to provide sufficient care to patients and proper quality training to trainee doctors?

[Ben Gummer]

The problems at my hon. Friend’s hospital are a result of management issues and long-running troubles that the hospital has encountered. I hope we will be able to fix them in the short term and provide long-term solutions, which I will be briefing about in the days to come.

[Several hon. Members rose—]

[Mr Speaker]

Order. Progress has been rather slow today, but I want to accommodate one further inquiry. I call Karin Smyth.

[Karin Smyth (Bristol South) (Lab)]

14. What steps he is taking to ensure that forward budget planning in his Department is robust.

[The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)]

In the autumn statement and the Budget the Government fully funded NHS England’s five year forward view. We have committed to an extra £10 billion in-year by the end of this Parliament. Furthermore, we have frontloaded it, as we were asked to do by NHS England, with £6 billion extra by the end of 2016-17 with an extra £4 billion for technology funding.

[Karin Smyth]

I thank the Minister for his answer. Having published reports on seven areas of the Department’s work since January, members of the Public Accounts Committee, of whom I am one, were looking forward to the publication of the annual accounts with some anticipation. It is becoming clear that Brexit’s impact on staffing, procurement and medicines will be huge, so what is the Minister doing to assess and mitigate the risk to the 2016-17 budget and will this be made clear in this year’s published accounts?

[George Freeman]

May I first make it clear, as the Prime Minister has done, that nothing immediately changes? We are still full voting-right members of the European Union, and nobody in the system needs to worry about any immediate changes. The Government are putting together a plan for handling the negotiations that now need to be taken forward, and for my own part I as a Minister in the Department have convened a workforce to look at the issues around medicines access. There are three things we need to do: first, to reassure people that this country has a very strong life science and healthcare research system and economy; secondly, to make sure that we negotiate our new relationship with the EU in a way that works; and thirdly, to take advantage of the regulatory freedoms that we now have to make sure that this country is the very best country in the world in which to develop those innovations.

[Mr Speaker]

We are most grateful to the Minister for his thesis.

[William Wragg (Hazel Grove) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Health (Mr Jeremy Hunt)]

As we plan a new relationship with the EU, this Government will continue to ensure that the NHS is given the priority and stability it deserves. I have already sent a message of reassurance to all NHS staff, emphasising the vital role played by the 110,000 EU nationals working in our health and care system. To be able to allow them to continue making their outstanding contribution will be a key priority in our negotiations, and we are confident they will be able to remain in this country as long as they wish. Whatever other changes are happening at a national or international level, the commitment of the British people and this Government to our NHS and its brilliant staff remains unwavering.

[William Wragg]

A report published yesterday by the health journal Pulse showed that last year two thirds of young people referred by their GP for mental health services received no treatment, and moreover a third were not even assessed. I am a strong supporter of this Government’s commitment to improving mental health care, so what reassurance can the Secretary of State give today that results in child and adolescent mental health services will improve rapidly?

[Mr Hunt]

My hon. Friend is right to draw attention to that issue. We, too, are very proud of the progress we have made on mental health, with 1,400 more people accessing mental health services every day than six years ago, but there is a particular job to do with children and young people’s mental health, and we are putting £1.4 billion into that during the course of this Parliament—and there is a specific plan for the Manchester area, which I think will help my hon. Friend’s constituents.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It seems that almost every day there is another report about the deteriorating condition of NHS finances. Today we hear of a survey by the Healthcare Financial Management Association that said 67% of clinical commissioning group finance officers reported a high degree of risk in achieving their financial plan for the year, so does the Secretary of State now accept that the Government need to commit more funds to the NHS?

[Mr Hunt]

We have accepted that, which is why in our manifesto at the last election we were committed to putting £5.5 billion more into the NHS than was being promised by the hon. Gentleman’s party, but we have to live within the country’s financial envelope, because we know that without a strong economy we will not have a strong NHS. We will continue to make sure we get that balance right.

[Andrew Stephenson (Pendle) (Con)]

T5. In May, the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), gave me a very encouraging answer about improving the treatment and diagnosis of Lyme disease. Will she meet me and other concerned colleagues to discuss what more can be done to tackle that terrible condition?

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

I am pleased to report that the commissioning of the systematic reviews of the diagnosis and treatment of Lyme disease, which I mentioned at that time, is under way. We expect that work to start in the autumn, and the researchers will approach relevant stakeholders. Once that work is under way, I would be happy to organise a meeting for colleagues at which the experts leading it can brief them further.

[Patrick Grady (Glasgow North) (SNP)]

T3. Will the Secretary of State join me in welcoming the formation of the all-party parliamentary group on blood donation? Will he agree to take part in and perhaps give evidence to its inquiry into the criteria for blood donation, particularly those regarding men who have sex with men?

[Jane Ellison]

As Members will know, the Department has asked the Advisory Committee on the Safety of Blood, Tissues and Organs—SaBTO—to review the donor selection criteria for blood donation that relate to men who have sex with men. SaBTO has approved the remit, the terms of reference and the work streams, and it is cracking on. It has a second meeting coming up later this month. The chair of the working group has written to the chair of the all-party group, welcoming its inquiry and inviting it to contribute evidence during the autumn.

[Andrea Jenkyns (Morley and Outwood) (Con)]

T7. To expand on the question asked by the shadow Secretary of State, I too would like to raise the case of my constituent Abi Longfellow who suffers from dense deposit disease and is awaiting a decision by the NHS’s specialised commissioning body. She and her family have been subjected to frequent delays and miscommunications. I first met Health Ministers, NICE and NHS England a year ago to discuss Abi’s situation. What steps will the Government take to ensure that decisions on treatments such as this are taken in a timely fashion and that families are kept updated on the progress of those decisions?

[The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)]

My hon. Friend raises an important point. NHS England is currently unable to take final decisions on this year’s new treatments, including this particular drug, until the courts have decided whether pre-exposure prophylaxis HIV prevention should compete with other candidate drugs. She makes an important point about timeliness, and that is why I am leading an accelerated access review to speed up the way in which such decisions are taken.

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

T4. In March, the Scottish Government made a commitment to substantially increase the financial support for the victims of contaminated blood. Initially, that will have to be administered through the current system, but the Department of Health appears to be dragging its feet. Will the Secretary of State explain the cause of the hold-up and say how he plans to expedite these payments to people with life-threatening illnesses?

[Jane Ellison]

No one is dragging their feet and we are trying to get this matter sorted out. I have had a number of discussions with the Cabinet Secretary for Health and Sport, Shona Robison, most recently last Thursday. We are working together to facilitate the increased payments, using the current scheme administrator. We want the payments to be made as quickly as possible to people who were infected in Scotland and across the UK. Officials in the Department of Health and officials in Scotland are working closely together to expedite the matter.

[Sir Edward Leigh (Gainsborough) (Con)]

T8. Community hospitals such as John Coupland in Gainsborough are very popular, yet health authorities seem intent on centralising services. Will the Secretary of State today make clear his absolute commitment to supporting local community hospitals and giving them work, and state that there will be no closures without his personal authorisation?

[The Parliamentary Under-Secretary of State for Health (Ben Gummer)]

Community hospitals form an important part of the NHS landscape and are valued by local communities, many of which have contributed to them through their fundraising efforts. The Secretary of State has to abide by the decisions of the Independent Reconfiguration Panel and the advice of clinicians, but it is clear that community hospitals that evolve and modernise will have a place in the NHS in the future.

[Margaret Greenwood (Wirral West) (Lab)]

T6. The cancer drugs fund is due to be handed back to NICE later this month. In May, 15 leading UK cancer charities published an open letter detailing their concern that that would see patients missing out on clinically proven cancer drugs because the NICE system is outdated and no longer fit for purpose. Will the Secretary of State agree to carry out a wide-ranging review of NICE’s health technology appraisal process for cancer drugs to ensure that all cancer patients can access the drugs they need?

[George Freeman]

I am delighted to assure the hon. Lady that as part of the accelerated access review, we are considering how we can ensure that the £1 billion commitment to the cancer drugs fund is used to accelerate through the most effective treatments, and, through the new system that NHS England is putting in place, to make sure that patients get access to better drugs more quickly.

[Mr David Davis (Haltemprice and Howden) (Con)]

T9. The Royal Free London NHS Foundation Trust recently signed an agreement to share 1.6 million patient records with Google’s DeepMind subsidiary. The data include medical history, HIV status, past drug overdoses, abortions, and all pathology, radiology and visit records. It is claimed that the data are anonymised, which is impossible given the nature of the data, and no permission was obtained from patients. It is also claimed that the agreement was made under the Secretary of State’s guidelines. Will he tell the House what he is doing to protect the privacy of such information?

[Mr Jeremy Hunt]

I am very happy to do so. My right hon. Friend has campaigned long and hard, and rightly so, on such issues. The truth is that the guidelines under which the NHS operates for the sharing of patient-identifiable data are not as clear as they need to be. That is why I asked the Care Quality Commission to undertake an independent investigation into the quality of data protection by NHS organisations and Dame Fiona Caldicott to update her guidelines. I hope that we will have news on that soon and certainly before the summer recess, which will please my right hon. Friend.

[Nick Thomas-Symonds (Torfaen) (Lab)]

Happy 68th birthday to the NHS and thank you to its creator, Labour’s Aneurin Bevan.

According to research by the British Lung Foundation, the mortality rates for lung disease have not improved over the past 10 years. Will the Secretary of State take a lesson from the Welsh Government, which have put in place a specific strategy and delivery plan to tackle the issue?

[George Freeman]

The hon. Gentleman will know that the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), opened an exhibition on this topic yesterday and that the Chancellor recently put an extra £5 million into mesothelioma research. Through the National Institute for Health Research, the Government are committing to invest in that disease area. We are also committed to ensuring that we drive up both research and better treatment for such diseases.

[Dr Sarah Wollaston (Totnes) (Con)]

Prevention of ill health has to be given a higher priority if the NHS is to meet the challenges set out in the five year forward view. Central to that will of course be the childhood obesity strategy. Has the Secretary of State had any discussions with the Prime Minister about the strategy’s future? Is he in a position to take over the strategy should No. 10 become distracted?

[Mr Jeremy Hunt]

I welcome my hon. Friend’s close interest in ensuring that this important agenda does not get swept aside. I can assure her that we have had many discussions inside Government about what to do. There is a strong commitment to take it forward as soon as possible, and I hope that she will get some good news on that front before too long.

[Ms Margaret Ritchie (South Down) (SDLP)]

Will the Minister responsible for public heath confirm when a statement on contaminated blood will be made to the House, and in particular on the response to the consultation that closed in April?

[Jane Ellison]

I am not in a position to be specific about when we can make a statement, but I can give the hon. Lady and other interested Members the absolute assurance that we continue to look closely at the issue. We have read every single response that we have received. I was at a well-attended all-party group meeting on 25 May and gave people a sense of the direction of travel of our analysis. I hope to keep the House updated.

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

Will the Minister confirm how he plans to implement the General Practice Forward View? Will he also confirm that sustainability and transformation plans will be returned to for further development if they fail to deliver the investment in general practice mandated by the forward view?

[The Minister for Community and Social Care (Alistair Burt)]

Yes indeed, we are developing detailed plans to implement the 80-plus commitments set out in the General Practice Forward View, which has been widely welcomed. The development of GP practices will be incorporated into sustainable plans.

[Derek Twigg (Halton) (Lab)]

There is a shortage of GPs across the country, but certain areas, especially deprived areas such as Halton, have a high rate of sickness, in particular respiratory diseases and cancer. Is any action being taken to target those areas? Has the Minister had any discussions about that with NHS England?

[Alistair Burt]

Although there is a general shortage, to which my right hon. Friend referred when speaking about the work being done to recruit, retain and return GPs, bursaries are available in particularly difficult areas as incentives for people to go to such areas. NHS England concentrates on trying to ensure that under-doctored areas are properly resourced.

[Amanda Solloway (Derby North) (Con)]

The recently published Mental Health Taskforce report recommended that NHS England should by 2021 support at least 30,000 more women annually with specialist mental healthcare during the perinatal period. Will my right hon. Friend assure me that the Department will be working to reach that target?

[Alistair Burt]

I thank my hon. Friend for her question. Thanks to the Prime Minister’s excellent initiative in relation to perinatal mental health and the £390 million extra added to that, I can indeed confirm that work is already under way to increase the number of beds in the 15 existing perinatal mental health units. There are plans for three more in the south-west, the east of England and the north-west. This has been an important initiative, and perinatal mental health is very high up among my priorities and those of the NHS.

[Several hon. Members rose—]

[Mr Speaker]

Order. Despite the fact that we are late, I am keen to try to satisfy the inquisitorial appetite of colleagues, but can do so best if they are each now very brief.

[Emma Reynolds (Wolverhampton North East) (Lab)]

What is the Health Secretary doing to ensure that the NHS gets the £350 million a week that it was promised during the referendum campaign?

[Mr Jeremy Hunt]

I am a little stumped, because I was never really sure whether we would see that money. All I can say is that I am committed to successful negotiations with the EU, and I am delighted that a number of people who championed the Brexit vote have said that any extra funding should go to the NHS.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

As we celebrate the 68th birthday of the NHS—one of the Labour party’s proudest achievements—let us not forget the fact that there are thousands of people across our country with mental health conditions who continue to face stigma, discrimination and prejudice. Recent reports tell us that young people are waiting up to a decade to receive the appropriate treatment, and future plans for children and young people’s mental health are not up to scratch. Will the Minister please tell us how many more NHS birthdays will have to pass before real equality for mental health is secured?

[Alistair Burt]

How I miss the hon. Lady sitting on the Opposition Front Bench with her questions on mental health. I pay tribute to the exceptional work that she has done in this particular area. The £1.25 billion extra that is going into children and young persons’ mental health over the course of this Parliament—I along with other Members in the House have absolutely fought to make sure that it stays in the plans—will help. We have done more work than ever before in relation to combating stigma, but she is right to raise that, as it is essential that we do. It is also essential that the money that is provided centrally goes through clinical commissioning groups into mental health spending, and I am quite sure that she and I will make sure that happens.

[Alison McGovern (Wirral South) (Lab)]

The Secretary of State and others have sought to reassure us that nothing changes immediately with Brexit, but that is not right for the NHS. The impact on the economy is already clear, and that will have a knock-on effect on our health service. That is why I will meet local leaders in Wirral on Friday to try to formulate a Brexit plan for the NHS. Will the Secretary of State receive that plan and take all necessary steps to protect the health service in Wirral?

[Mr Jeremy Hunt]

Of course, and we will take every step necessary to protect the NHS throughout the country, because it remains our most important public service. I am sure that, economically, the period ahead will be difficult, but now that we have had the argument and the British people have made their decision, it is also important that we talk up the opportunities from the new relationships that we may have in the future, and the extra funding that those could generate for the NHS, and I certainly hope that that is what happens.

[Mr Speaker]

Last, I call Mhairi Black.

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

An elderly constituent of mine came to my surgery to explain that, sadly, her husband had passed away as a result of being infected with hepatitis C during the contaminated blood scandal. She has applied to the Skipton Fund four times, and has been turned down because her husband’s medical records have been destroyed since his death. Can the Minister offer any advice on how I can best move forward with this? I am also happy to meet her to give her more background information.

[Jane Ellison]

I think the latter suggestion might be the better one. I am happy to meet the hon. Lady and talk about the matter in more detail.

Point of Order

Tuesday 5th July 2016 Commons Chamber

12:38

[The Minister for Community and Social Care (Alistair Burt)]

On a point of order, Mr Speaker. As there is a slightly more relaxed atmosphere, I wonder whether the House will indulge me as I offer a broad thank you. Twenty-four years and one month ago, I answered my first oral questions as a junior Minister, and now I have just completed my last one. This is not a sudden post-Brexit resignation—it is not catching. A few weeks ago, I made it clear to the Secretary of State, the Prime Minister and the Chief Whip that, after the referendum, I would not seek a post in what I expected to be a reshuffled Government. In the event, I hope to carry on with my duties until September, but that was my last oral questions. Therefore, in taking the chance that most Ministers do not get because we never know when the end will come, I thank colleagues for their forbearance over many years in subjects as varied as child support, disability, and the Arab spring—and in the relentless pursuit of mental health data by the hon. Member for Liverpool, Wavertree (Luciana Berger). I am looking forward to taking part in more questions from another seat in the Chamber, and I wish all colleagues very well indeed.

[Valerie Vaz (Walsall South) (Lab)]

Further to that point of order, Mr Speaker—

[Mr Speaker]

I will come to the hon. Lady’s point of order, but first let me say that although that is a relatively unconventional way of expressing appreciation, the Minister of State was typically courteous in signalling in advance to me his wish to do so, and I simply want to say to the right hon. Gentleman—I think I can say it without fear of contradiction, and it was evident from the response to his point—that he is an extremely popular and respected Minister who commands widespread affection and loyalty in all parts of the House. We very much look forward to his continuing contributions, albeit in the future from the Back Benches. I thank him for what he said and the way in which he said it.

[Valerie Vaz]

Exactly on that point, Mr Speaker, may I, on behalf of everyone on the Opposition Benches, pay tribute to the right hon. Gentleman? He has been an absolutely fantastic Minister and he is a brilliant MP. Long may he continue.

[Mr Speaker]

That is extremely welcome and I thank the hon. Lady for what she has said.

Teachers Strike

Tuesday 5th July 2016 Commons Chamber

12:41

[Nic Dakin (Scunthorpe) (Lab)]

(Urgent Question): To ask the Secretary of State to make a statement on today’s teachers strike and its impact on children, parents and school communities.

Let me first declare my interest as a retired NUT member. Not only have we had the first junior doctors strike on this Government’s watch, but today we have failure in another public service, with a teachers strike. Sadly, this Government have relished attacking—

[Mr Speaker]

Order. I do not wish to disrupt the flow of the hon. Gentleman’s eloquence or the eloquence of his flow, but at this point all he needs to do is ask his urgent question. His more detailed supplementary will come after he has heard what the Minister has to say, in which I am sure he is extremely interested.

[The Minister for Schools (Mr Nick Gibb)]

There is absolutely no justification for this strike. The National Union of Teachers asked for talks, and we are having talks. Since May, the Department for Education has been engaged in a new programme of talks with the major teaching unions, including the NUT, focused on all the concerns raised during the strike. Even before then we were engaged in round-table discussions with the trade unions, and both the Secretary of State and I meet the trade union leaders regularly to discuss their concerns.

This strike is politically motivated and has nothing to do with raising standards in education. In the words of Deborah Lawson, the general secretary of the non-striking teacher union Voice, today’s strike is a

“futile and politically motivated gesture”.

Kevin Courtney, the acting general secretary of the NUT, made it clear in his letter to the Secretary of State on 28 June that the strike was about school funding and teacher pay and conditions, yet this year’s school budget is greater than in any previous year, at £40 billion—some £4 billion higher than 2011-12. At a time when other areas of public spending have been significantly reduced, the Government have shown our commitment to education by protecting school spending.

We want to work with the profession and with the teacher unions, and we have been doing that successfully in our joint endeavour to reduce unnecessary teacher workload. With 15,000 more teachers in the profession than in 2010, teaching remains one of the most popular and attractive professions in which to work. The industrial action by the NUT is pointless, but it is far from inconsequential. It disrupts children’s education, inconveniences parents, and damages the profession’s reputation in the eyes of the public, but our analysis shows that because of the dedication of the vast majority of teachers and headteachers, seven out of eight schools are refusing to close.

Our school workforce is and must remain a respected profession suitable for the 21st century, but this action is seeking to take the profession back in public perception to the tired and dated disputes of the 20th century. More importantly, this strike does not have a democratic mandate from a majority even of NUT members. It is based on a ballot for which the turnout was just 24.5%, representing less than 10% of the total teacher workforce.

Our ground-breaking education reforms are improving pupil outcomes, challenging low expectations and poor pupil behaviour in schools, and increasing the prestige of the teaching profession. This anachronistic and unnecessary strike is a march back into a past that nobody wants our schools to revisit.

[Nic Dakin]

Not only have we had the first junior doctors strike on this Government’s watch, but today we have failure in another public service with the teachers strike. Sadly, this Government have relished attacking education professionals, undermining them and describing them as “the blob”, instead of engaging with them and celebrating their role in driving up individual child and school performance. At a time when people have a right to look to Government for stability and security, a breakdown of trust among teachers and a strike of this nature is most unfortunate.

At the heart of this is concern felt by people on the frontline, be they teachers, head teachers or parents, about future school budgets. Everyone knows that despite the Secretary of State’s protestations, school budgets are going to fall in real terms, year on year, up to 2020. Head teachers know it, parents know it, and the Institute for Fiscal Studies has confirmed it. The only person who is shoving her head in the sand in total denial is the Secretary of State. That failure of Government has resulted in what we are witnessing today—massive disruption, classes cancelled and pupils sent home.

The Chancellor has made it clear that he is tearing up his fiscal rules. As my hon. Friend the Member for Manchester Central (Lucy Powell) asked yesterday, will the Government now commit to securing our children’s future by reversing the planned cut in funding and securing the necessary cash for our nation’s children? As I asked yesterday, will the Minister commit to publishing the Government’s response to the School Teachers Review Body by the end of this academic year so that head teachers can plan effectively?

It is clear that the Government have lost the plot. They have a problem with teachers—they cannot recruit or retain enough, and they have lost teachers’ confidence in large numbers. It is clear today that our children, who are our future, are paying the price of Tory education failure.

[Mr Gibb]

It is nice to hear from the shadow shadow Schools Minister on the fourth row of the Opposition Benches. The only people who are undermining the teaching profession are the leadership of the National Union of Teachers. I am disappointed that the hon. Gentleman is jumping on this dispute to make cheap political points, instead of joining the Government and condemning this unnecessary and pointless strike. Will he now say that he opposes this strike by the NUT, which is disrupting children’s education and inconveniencing parents?

Finally, just to respond to the hon. Gentleman’s point about the School Teachers Review Body report, we will publish the report, together with our response and a draft revised school teachers pay and conditions document, as soon as we have completed our consideration of it.

[Mark Pawsey (Rugby) (Con)]

Parents do not know why many teachers have gone on strike, and I am sure many of the teachers themselves do not understand why this strike is taking place. What parents do know is how difficult it is to make arrangements for childcare at short notice. Will the Minister pay tribute to the many teachers who are in work today, doing the right thing by their pupils?

[Mr Gibb]

My hon. Friend is right. These strikes not only damage children’s education, with every extra day of school missed damaging the outcomes for those children, but hugely inconvenience working parents, who have to make childcare arrangements or take a day off work in order to look after their children. So I share my hon. Friend’s comments, and I pay tribute to the vast majority of teachers and head teachers who are working today, resulting in seven out of eight schools refusing to close.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

As in the case of the junior doctors dispute, I am sure that the general public watching this debate will see through this Government’s mirage and their fascination with what they seem to think is the picture out there. Taking strike action is one of the most difficult decisions any teacher makes. No one takes that decision lightly, but teachers have said enough is enough. They are fed up with the cuts, which 70% of heads say are directly affecting educational standards. Will the Minister now accept that class sizes are increasing, pupils are getting less choice about the subjects they learn, jobs are going and children are getting less individual time with staff?

I find the Minister’s faith in the free market’s ability to decide teachers’ salaries touchingly naive, on a day when the pound has fallen to a 31-year low. Can he tell us whether there is any limit to how far he is prepared to see teachers’ salaries fall? Meanwhile, the Secretary of State has refused to say anything about what will happen to teachers’ pay and conditions in September, and we have still not heard anything about that from the Minister. We are less than a month from the end of term, so will he finally end the uncertainty and update the House on what teachers can expect?

Unfortunately, the Secretary of State seems to be spending more time on the Justice Secretary’s campaign for the Tory leadership than on her day job. Will the Minister now agree to get around the table and thrash out a better deal for the next generation, which is what every parent across the country wants? The working conditions of our teachers are the learning conditions of our children, and our children deserve the very best.

[Mr Gibb]

What the public are seeing is a Labour party that is equivocal about whether it agrees with strike action that is disrupting children’s education. The hon. Lady is not prepared to condemn strike action that is not only damaging children’s education but hugely inconveniencing working parents, who have to make alternative arrangements for looking after their children.

The hon. Lady talks about class sizes, but the average infant class size has remained at 27.4—unchanged from 2015. Indeed, of the 3,066 infant classes with 31 or more pupils, 80% have just 31 pupils, and that is because of the flexibility we have built in to allow one or two extra children—for example, twins—to have access to those schools. Will the hon. Lady condemn that policy?

I have said that we will publish the STRB report when consideration of it is complete. We will consult teachers and stakeholders about the future of the STRB and about the arrangements when all schools are academies. However, let me give the hon. Lady one final chance to say, on behalf of the Labour party, that it condemns this unnecessary and futile strike by the National Union of Teachers.

[Mr Philip Hollobone (Kettering) (Con)]

Working mums and dads in my constituency will today be hugely inconvenienced by this completely unnecessary strike action. Many of them work in the local NHS and in local public services and social services, and their patients and customers will be inconvenienced by their absence as part of a politically motivated strike that is, frankly, an embarrassment to many members of the NUT itself. Will my hon. Friend the Minister praise those teachers who have walked across picket lines today to teach children in our local schools? They are the shining example, not the NUT.

[Mr Gibb]

Yes, my hon. Friend is absolutely right. Nothing is more important than ensuring that young people get a good education—that they master the basics of reading and writing, get good GCSEs and are prepared for life in modern Britain. I do pay tribute to all those teachers who have gone into work today, despite the NUT’s action, which is based on a ballot of less than 25% of its members. We want to make sure that no child’s education is disrupted, and I pay tribute to the fact that seven out of eight schools have refused to close.

[Carol Monaghan (Glasgow North West) (SNP)]

This strike by teachers is significant. This group of people have gone into a vocational and caring profession. They are not driven by money, but they do seek to be recognised and valued for the job they do. The ongoing erosion of teachers’ pay and conditions and their increasing workload make their vocation hard to live out, particularly when they could earn more and have better terms and conditions working in the local supermarket. It is easy to say at the Dispatch Box that teachers are valued, but actions have to match the rhetoric. Yesterday in Education questions, I asked the Minister a question, and I repeat it today: what is he doing to ensure that teachers have a nationally guaranteed level of pay? How is he working with teachers to reduce their workload? How is he protecting their terms and conditions, such as maternity and sick pay?

[Mr Gibb]

Kevin Courtney, the acting general secretary of the NUT, has made it clear that the dispute is about pay and conditions. On workload, what is disappointing about the strike is that we have been working extremely closely and constructively with all the teacher unions to tackle unnecessary workload. As a consequence of our discussions, we have established three workload groups, staffed by highly experienced teachers and headteachers. We have looked at data management, planning and dialogic marking. Those groups have all reported, and we have accepted all their recommendations. That will have a genuine effect on the top three workload issues highlighted by the Secretary of State’s workload challenge, to which 44,000 teachers responded. On teachers’ pay and conditions, as we move into a situation where more and more schools become academies, we will consult with the profession about the future of the STRB process.

[Philip Davies (Shipley) (Con)]

If the shadow Secretary of State is right that strike action is always a big and difficult decision, is it not about time that strike action is not allowed when such a derisory proportion of members—in this case, 24%—vote for it, particularly given the huge disruption it causes to pupils’ education, to parents’ lives and to other teachers, who have to cover for those who are out on strike?

[Mr Gibb]

My hon. Friend is absolutely right. The Trade Union Act 2016 will ensure that industrial action in essential services gets the go-ahead only after a ballot of at least 50% of members. Bearing in mind that the turnout for this ballot was just 24.5%, this strike would not be legal if the new regulations had taken effect. We are consulting with stakeholders on the regulations, and the thresholds are likely to come into force later this year.

[Dawn Butler (Brent Central) (Lab)]

I received a message today from Nicola, a teacher—I am sure her class is not full of twins—who said that she is trying to work out how to fit next year’s class of 34 into a room with furniture for just 28 children, while also making leaving cards for four members of staff. What does the Minister have to say to Nicola?

[Mr Gibb]

What I would say is that the percentage of pupils in infant classes of more than 30 is 5.8%, which is down from 6.2% in January 2015. In the last five or six years, we have created 600,000 more school places. We have doubled the amount of capital going into creating new school places, compared with that spent by the previous Labour Government. Incidentally, they removed 200,000 primary school places, which is the problem we have had to tackle, and they did not plan for the increased birth rate.

[Alex Chalk (Cheltenham) (Con)]

Our teachers do a fantastic job, but does the Minister agree that there are ways to protest that do not involve damaging children’s education and inconveniencing parents? Does he agree that there has to be the strongest possible justification for such drastic action and that that threshold has not been met in this case?

[Mr Gibb]

My hon. Friend is absolutely right. Ministers in the Department are always open to having discussions with trade union leaders. We have one-to-one discussions, we attend the new programme of talks and we attend the roundtable talks. Officials also have regular talks with the trade unions. This is not a necessary strike, because those discussions are always taking place. This has more to do with the internal workings of the NUT than with the real pay and conditions of teachers in this country.

[Mr Dennis Skinner (Bolsover) (Lab)]

Has the Minister not got a cheek to be talking about 20,000-odd teachers deciding to strike for a moment or two, when he is part of a Government who are going to let only 120,000 people decide the Prime Minister, instead of having a general election? Does he agree with that?

[Mr Gibb]

The hon. Gentleman talks about 20,000 teachers, but there are 456,000 teachers in this country—the highest number in our history. He has been a Member of this House for a long time, and he knows that we live in a parliamentary democracy.

[Chris Elmore (Ogmore) (Lab/Co-op)]

This is an England-only strike. There are no strikes in Wales, Scotland or Northern Ireland, because their devolved Governments listen to and respect teachers. Standards have increased in Wales year on year, and the gap with England is closing. Where teachers are valued and listened to, that does not lead to strike action. The Minister should follow the lead of the devolved nations in supporting all teachers.

[Mr Gibb]

The problem with education in Wales is that standards are behind those in this country. In fact, yesterday we were asked what advice we could give to the Welsh Government about our academies programme, our reforms to the curriculum, and our reforms of GCSEs and A-levels, which are resulting in higher and improving standards in this country. The gap, I suspect, is widening.

[Jenny Chapman (Darlington) (Lab)]

As we now have a Chancellor talking about post-Brexit largesse, what do Ministers intend to do to ensure that the projected schools funding cuts are prevented?

[Mr Gibb]

We have protected school funding on a per-pupil basis. School funding is now at £40 billion—the highest it has ever been, and £4 billion more than in 2011-12. Because of the decisions that the Chancellor took in his Budgets, particularly the June 2010 Budget, we are not facing, and have not faced, the crisis facing countries such as Greece that had the same deficit as a percentage of the budget. We have not faced their crisis of closing schools, slashing salaries, and cutting numbers of teachers; we have maintained stability in our system. The average class size has remained stable in that period despite the fact that we have also created 600,000 more school places.

[John Pugh (Southport) (LD)]

There is a section of the Government that does not believe in experts, but, for the record, is the Minister really contradicting the Institute for Fiscal Studies, which predicts an 8% fall by 2020 in school budgets, in real terms?

[Mr Gibb]

We are aware that there are costs that schools have to face in the coming years, but we have protected school funding. If we look across Whitehall, we see the reduction in spending that we have had to secure to tackle the record public sector deficit that we inherited in 2010—£156 billion, or 11% of GDP. It is now down to less than 4% of GDP, thanks to those savings. We have issued significant guidance to schools about how they can manage their budgets and procure savings and efficiencies in the way they run their schools to meet these challenges.

[Toby Perkins (Chesterfield) (Lab)]

I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on ensuring that the Government are held to account on the failure in education policy, which is very important. The Minister should know, as he articulated, how real the demoralisation is of teachers in our schools. Have the Government made any assessment of the impact on our children’s education of how demoralised teachers are? Why do the Government not take serious steps to try to lift the morale of teachers rather than constantly denigrating them in this Chamber?

[Mr Gibb]

No one on the Government Benches is denigrating teachers. Teachers in this country are a much respected profession who are providing a very high, and improving, quality of education to young people. We have reformed the primary curriculum and the secondary curriculum, and we have reformed GCSEs, putting them on a par with the best qualifications in the world. The teaching profession has responded magnificently to those new challenges. Today we have published the key stage 2 results on a pupil basis, and we see that two thirds of pupils are now meeting the new expected standards in reading and 70% of pupils are meeting the new expected standards in mathematics. That is a tremendous achievement given the very significant rise in the expectations and rigour of the new primary curriculum.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Just to be clear, does the Minister accept the IFS’s prediction that school budgets will fall by over 8% up to 2020—yes or no?

[Mr Gibb]

School budgets have been protected. We are spending £40 billion, and we have said that per-pupil funding for schools is protected throughout this Parliament. Schools will face increased costs of salaries, pension contributions and national insurance, but we have provided advice to them about how they can meet those challenges to procure more efficiently and to make sure that their staffing arrangements provide the best education within their budgets. We have protected school funding throughout this Parliament.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Perhaps I need to declare an interest, as my sister is a teacher. With regard to why she would go on strike, it is not just about her terms and conditions—it is about the pupils to whom she believes she has a responsibility. The Minister has mentioned record budgets. Will he confirm or deny whether, in real terms, the budget has gone up per pupil?

[Mr Gibb]

It has gone up in real terms overall, as I have said, and £40 billion is the highest ever level of spending. We have had to take some very difficult public spending decisions over the past six years because of the mismanagement of the public finances by the Labour Government—a party and a Government whom the hon. Gentleman supported. As a consequence of taking those difficult decisions, we are not facing the challenges that other countries in Europe that have had similar levels of public sector deficit have had to face.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I think that our constituents would expect us to try to cool the temperature here. Those of us who have been around in education for some time know that previous Labour Governments have had their disagreements with the NUT. The fact of the matter is that there are a lot of unhappy teachers out there at the moment, and they do have some real concerns. This is an important statement. Indeed, what other statement could have got the whole ragtag and bobtail that remains of the Government Front Bench here at one time? This is a serious matter. Let us cool the temperature, talk to teachers, meet their concerns, and get them back to work.

[Mr Gibb]

I totally agree with the hon. Gentleman and former Chair of the Education Committee; he is right. We do talk to the teaching profession. We have regular discussions. The Secretary of State and I, and other Ministers, regularly visit schools up and down the country and talk to teachers. There is no question but that the reforms that have been put in place over the past five or six years have been very significant; we do not resile from stating that. It was important that we raised standards of reading and arithmetic in primary schools, that we reintroduced grammar into the primary curriculum, and that we revised and improved the curriculum in secondary education. We have to make sure that our young people are prepared for life in modern Britain and prepared to compete in an increasingly competitive global jobs market, and we are delivering on that. I am delighted by the way in which the profession has responded to those challenges.

[Julie Cooper (Burnley) (Lab)]

Does the Minister agree that teachers are the experts in education, and that when these professionals have genuine concerns that funding cuts are damaging the education of our children, it would be irresponsible of them not to make those concerns known to Government? If the teaching profession had the respect and the ear of this Government, they would not be in the position of having to take last-resort strike action to protect the education of our children.

[Mr Gibb]

No, I think that is an anachronistic approach to discussing important political issues. We have regular discussions with the teacher unions. We have all kinds of reference groups of representative teachers whom we meet regularly in the Department for Education. We are very aware of teachers’ concerns about the changing curriculum and worries about workload. We had a workload challenge to which 44,000 teachers responded. We take all these issues very seriously, and we respond to concerns. We do not want to go back to the 1980s and have strikes as a way of engaging in issues of concern. They are not necessary, and most teachers agree with that.

[Louise Haigh (Sheffield, Heeley) (Lab)]

The Minister can say all he likes about school budgets going up, but the facts on the ground paint a very different picture. One of the schools in my constituency has had to close down its summer school, which was deliberately targeted at helping deprived students to catch up before the beginning of the school year. Will he look at that example, and other examples that other hon. Members are sure to raise, to make sure that the funding cuts do not impact on deprived students, in particular?

[Mr Gibb]

Yes, of course I will look at any individual examples that the hon. Lady or any other hon. Member wants to bring my attention, and I will make sure that the school is receiving the best possible advice on how to manage its budget.

[Kate Green (Stretford and Urmston) (Lab)]

Schools in my constituency are affected by industrial action today, and governors have been clear with me and with parents that it is funding pressures, particularly in relation to children with special educational needs, that are forcing them to make redundancies to balance their budgets. Will the Minister guarantee that the needs of children with special needs are adequately funded?

[Mr Gibb]

We want to make sure that the education of those children in particular, and that of all vulnerable children, is protected. One of the reasons we introduced the pupil premium, which provides £2.5 billion a year, was to make sure that funding goes to the most vulnerable children in our school system. We are consulting on the national funding formula and on the high needs funding formula. That consultation has closed and we will respond to it shortly.

[Fiona Mactaggart (Slough) (Lab)]

My impression is that the Minister is prepared to hand out blame but not to accept it. He says that this action is damaging children’s education and disrupting parents, but his Government’s decision to impose on primary teachers of key stage 2 a new four-year curriculum that they had only two years to deliver led to a chaotic series of results, which were published today. The results have upset parents and they are much worse than the Secretary of State predicted. Does that not harm children’s education more than the antics of the NUT today?

[Mr Gibb]

No, it does not. The new curriculum is essential if we are to prepare young people for life in modern Britain and equip them to do well at secondary school. The previous levels did not ensure that children, including those reaching level 4 at the end of key stage 2, went on to get at least five good GCSEs. This curriculum is much more rigorous and it has been designed to be on a par with the best education jurisdictions in the world. Some 66% of pupils are already meeting the new expected standard in reading, while 70% are meeting it in maths and 72% in grammar, punctuation and spelling. I think that teachers have done a great job in preparing pupils for this new, more demanding curriculum.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

Brilliant former colleagues of mine have been brought to their knees by the unmanageable and exhaustive workloads introduced by this Government. Given that more teachers left the profession than joined it last year, does the Minister accept the link between teachers’ morale and the huge numbers leaving the profession?

[Mr Gibb]

Let me give the hon. Gentleman some facts: in 2015, 43,000 teachers left the profession—some due to retirement, while others went into other walks of life—but 45,000 entered it. Some 14,000 people returned to the profession, which is a higher number than the 11,000 in 2011. I do not recognise the picture painted by the hon. Gentleman. Whenever I visit universities and schools and make public statements, I talk up the profession, to encourage young graduates and sixth formers to think about a career in a very important and highly respected profession.

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

I do worry about the Minister’s arithmetic capabilities when he sets himself against the IFS, which has clearly said that school budgets will be cut by 8% in real terms by 2020. That is one side of the equation. The other side, as my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) has said, is teacher morale, which has been compounded by some of the changes to the curriculum and the additional workload. Why have Ministers set their face against the teaching profession in this way? Have they not today reaped what they have sown?

[Mr Gibb]

I accept that the changes implemented in the past five years have been radical. They have taken many years to prepare. The primary curriculum was published in 2013 and became law in September 2014, and the first assessment of it took place in May 2016. The first teaching of the English and maths GCSE reforms began in September 2015, after four or five years of preparation, and the first teaching of a number of other subjects will take place this September. I understand the work involved in preparing for a new specification and a new curriculum, but the changes are hugely important and they will have a dramatic impact on the standard of education in our state schools in the year ahead. That is a prize well worth delivering, and I hope that the hon. Gentleman will support higher academic standards in our state schools.

[Margaret Greenwood (Wirral West) (Lab)]

In encouraging people to go into teaching, what reassurance can the Minister give to those who want to teach art, drama and music that there will be departments that require their services in the years ahead?

[Mr Gibb]

There was a Westminster Hall debate on this issue yesterday, during which I set out the figures for art and design and for music. They show that the take-up and entry figures for those subjects have remained stable, notwithstanding the introduction of the EBacc combination of core academic subjects. It is important that more young people take those core academic subjects of maths, English, science, a humanity subject and a modern foreign language at GCSE. That is what happens in a number of high-performing jurisdictions around the world. We want our young people to be competent in a foreign language. That is why we set a target that 90% of pupils will be taking the EBacc combination by 2020, but that does not mean that there is no space or time in the school curriculum for those important creative arts subjects.

Bill Presented

Digital Economy Bill

Presentation and First Reading (Standing Order No. 57)

Secretary John Whittingdale, supported by the Prime Minister, Secretary Sajid Javid, Secretary Stephen Crabb, Secretary Greg Clark, Secretary Nicky Morgan, Secretary Amber Rudd, secretary Elizabeth Truss, Matthew Hancock, Mr David Gauke and Mr Edward Vaizey, presented a Bill to make provision about electronic communications infrastructure and services; to provide for restricting access to online pornography; to make provision about protection of intellectual property in connection with electronic communications; to make provision about data-sharing; to make provision about functions of OFCOM in relation to the BBC; to provide for determination by the BBC of age-related TV licence fee concessions; to make provision about the regulation of direct marketing; to make other provision about OFCOM and its functions; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 45) with explanatory notes (Bill 45-EN).

Business without Debate

Tuesday 5th July 2016 Commons Chamber

Supply and Appropriation (Main Estimates) Bill

Motion made, and Question put forthwith (Standing Order No, 56), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Question put forthwith, That the Bill be now read a Third time.

Question agreed to.

Bill accordingly read the Third time and passed.

Wales Bill

Tuesday 5th July 2016 Commons Chamber

[1st Allocated Day]

Considered in Committee

[Mrs Eleanor Laing in the Chair]

Clause 1

Permanence of the National Assembly for Wales and Welsh Government

13:17

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

I beg to move amendment 17, page 1, leave out lines 5 to 9 and insert—

“In section 1 of the Government of Wales Act 2006 (the Assembly), after subsection (1), insert—”.

The amendment changes the place in the Government of Wales Act 2006 in which the text inserted by Clause 1 appears. Rather than in section 92A, references to the permanence of the Assembly would appear in section 1 of the Government of Wales Act 2006.

[The First Deputy Chairman of Ways and Means (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

Amendment 8, page 1, leave out line 8 and insert “CONSTITUTIONAL ARRANGEMENTS FOR WALES”.

This amendment amends the title of the new Part 2A inserted by Clause 1 in consequence of the proposal in amendment 7 to require the review of the functioning of the justice system in Wales.

Amendment 18, page 1, line 10, leave out

“and the Welsh Government are”

and replace with “is”.

The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive.

Amendment 19, page 1, line 14, leave out “and the Welsh Government.”

The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive.

Amendment 20, page 1, line 16, leave out

“and the Welsh Government are”

and replace with “is”.

The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive.

Amendment 21, page 1, line 18, at end insert—

“( ) In section 45 of the Government of Wales Act 2006 (the Welsh Government), for the words in subsection (1) before paragraph (a) substitute—

(1) There is to be a Welsh Government or Llywodraeth Cymru.

(1A) The Welsh Government is a permanent part of the United Kingdom’s constitutional arrangements.

(1B) The purpose of subsection (1A) is, with due regard to the other provisions of this Act, to signify the commitment of the Parliament and Government of the United Kingdom to the Welsh Government.

(1C) In view of that commitment it is declared that the Welsh Government is not to be abolished except on the basis of a decision of the people of Wales voting in a referendum.

(1D) The members of the Welsh Government are—”.”

The amendment gives effect to separate provisions relating to the National Assembly for Wales, as the Legislature, and the Welsh Government, as the Executive. The amendment changes the place in the Government of Wales Act 2006 in which the text relating to the permanence of the Welsh Government would appear.

Amendment 22, page 1, line 18, at end insert—

“( ) In the Government of Wales Act 2006, after Part 2 (the Welsh Government) insert—”.

The amendment is required as a consequence of changing the location of the provision relating to the permanence of the Assembly.

Amendment 5, page 2, leave out lines 1 to 6 and insert—

“Part 2B

Separation of the Legal Jurisdiction of England and Wales

Introductory

92B New legal jurisdictions of England and of Wales

The legal jurisdiction of England and Wales becomes two separate legal jurisdictions, that of England and that of Wales.

Separation of the law

92C The law extending to England and Wales

(1) All of the law that extends to England and Wales—

(a) except in so far as it applies only in relation to Wales, is to extend to England, and

(b) except in so far as it applies only in relation to England, is to extend to Wales.

(2) In subsection (1) “law” includes—

(a) rules and principles of common law and equity,

(b) provision made by, or by an instrument made under, an Act of Parliament or an Act or Measure of the National Assembly for Wales, and

(c) provision made pursuant to the prerogative.

(3) Any provision of any enactment or instrument enacted or made, but not in force, when subsection (1) comes into force is to be treated for the purposes of that subsection as part of the law that extends to England and Wales (but this subsection does not affect provision made for its coming into force).

Separation of the Senior Courts

92D Separation of Senior Courts system

(1) The Senior Courts of England and Wales cease to exist (except for the purposes of section 6) and there are established in place of them—

(a) the Senior Courts of England, and

(b) the Senior Courts of Wales.

(2) The Senior Courts of England consist of—

(a) the Court of Appeal of England,

(b) the High Court of England, and

(c) the Crown Court of England, each having the same jurisdiction in England as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.

(3) The Senior Courts of Wales consist of—

(a) the Court of Appeal of Wales,

(b) the High Court of Wales, and

(c) the Crown Court of Wales, each having the same jurisdiction in Wales as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.

(4) For the purposes of this Part—

(a) Her Majesty’s Court of Appeal in England is the court corresponding to the Court of Appeal of England and the Court of Appeal of Wales,

(b) Her Majesty’s High Court of Justice in England is the court corresponding to the High Court of England and the High Court of Wales, and

(c) the Crown Court constituted by section 4 of the Courts Act 1971 is the court corresponding to the Crown Court of England and the Crown Court of Wales.

(5) References in enactments or instruments to the Senior Courts of England and Wales have effect (as the context requires) as references to the Senior Courts of England or the Senior Courts of Wales, or both; and

(6) References in enactments or instruments to Her Majesty’s Court of Appeal in England, Her Majesty’s High Court of Justice in England or the Crown Court constituted by section 4 of the Courts Act 1971 (however expressed) have effect (as the context requires) as references to either or both of the courts to which they correspond.

92E The judiciary and court officers

(1) All of the judges and other officers of Her Majesty’s Court of Appeal in England or Her Majesty’s High Court of Justice in England become judges or officers of both of the courts to which that court corresponds.

(2) The persons by whom the jurisdiction of the Crown Court constituted by section 4 of the Courts Act 1971 is exercisable become the persons by whom the jurisdiction of both of the courts to which that court corresponds is exercisable; but (despite section 8(2) of the Senior Courts Act 1981)—

(a) a justice of the peace assigned to a local justice area in Wales may not by virtue of this subsection exercise the jurisdiction of the Crown Court of England, and

(b) a justice of the peace assigned to a local justice area in England may not by virtue of this subsection exercise the jurisdiction of the Crown Court of Wales.

92F Division of business between courts of England and courts of Wales

‘(1) The Senior Courts of England, the county courts for districts in England and the justices for local justice areas in England have jurisdiction over matters relating to England; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to England.

(2) The Senior Courts of Wales, the county courts for districts in Wales and the justices for local justice areas in Wales have jurisdiction over matters relating to Wales; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to Wales.

92G Transfer of current proceedings

(1) All proceedings, whether civil or criminal, pending in any of the Senior Courts of England and Wales (including proceedings in which a judgment or order has been given or made but not enforced) shall be transferred by that court to whichever of the courts to which that court corresponds appears appropriate.

(2) The transferred proceedings are to continue as if the case had originated in, and the previous proceedings had been taken in, that other court.”

This amendment replaces the Bill’s proposed recognition of Welsh law with provisions to separate the legal jurisdictions of England and of Wales, as drafted by the Welsh Government.

Amendment 9, page 2, line 1, after “law” insert

“and review of the justice system in Wales”.

This amendment amends the heading of Clause 1 in consequence of the proposal in amendment 7 to review the functioning of the justice system in Wales.

Amendment 7, page 2, line 3, at end insert—

“(2) The Lord Chancellor and the Welsh Ministers must keep the functioning of the justice system in relation to Wales under review with a view to its development and reform, including keeping under review the question of whether the single legal jurisdiction of England and Wales should be divided into a jurisdiction for Wales and a jurisdiction for England.

(3) In exercising their duty in subsection (2) the Lord Chancellor and the Welsh Ministers must have regard to—

(a) divergence in the law and its administration as between England and Wales,

(b) the need to treat the Welsh and English languages on the basis of equality, and

(c) any other circumstances in Wales affecting operation of the justice system.

(4) The Lord Chancellor and the Welsh Ministers may appoint a panel to advise them on the exercise of their functions in this section.

(5) The Lord Chancellor must make an annual report on the functioning of the justice system in relation to Wales to the Welsh Ministers.

(6) The Welsh Ministers must lay the report before the Assembly.

(7) The Lord Chancellor must lay the report before both Houses of Parliament.”

The provision in the Bill recognises the existence of a body of Welsh law made by the Assembly and the Welsh Ministers. The new subsections to be inserted after that provision by this amendment require the Secretary of State to keep the justice system as it applies in relation to Wales under review with a view to its development and reform, having regard in particular to divergence in the law as between England and Wales.

Amendment 10, page 2, leave out lines 4 to 6.

This amendment removes subsection (2) of the proposed new section 92B of the Government of Wales Act 2006 (recognition of Welsh law). Subsection (2) seeks to explain the purpose of subsection (1) of that section.

Clause 1 stand part.

Amendment 23, in clause 2, page 2, line 12, leave out “normally”.

This amendment removes the word “normally” from the recognition that the Parliament of the United Kingdom will not normally legislate on devolved matters without the consent of the National Assembly for Wales.

Amendment 3, page 2, line 12, leave out “legislate with regard” and insert “enact provisions relating”.

This amendment is a consequence of amendment 4, which defines the meaning of “devolved matters”.

Amendment 24, page 2, line 13, after “Assembly” insert—

“(a) there is an imminent risk of serious adverse impact on—

(i) the national security of the United Kingdom, or

(ii) public safety, public, animal or plant health or economic stability in any part of the United Kingdom,

(b) the legislation specifically addresses that risk,

(c) the imminence of the risk in relation to Wales makes it impractical to seek the consent of the Assembly,

(d) no Bill has been passed under section 110(1)(a) specifically to address the risk, and

(e) no subordinate legislation specifically to address the risk has been laid before the Assembly and has come into force.”

This amendment specifies the circumstances in which Parliament can legislate on devolved matters on behalf of the National Assembly for Wales without its consent.

Amendment 4,  page 2, line 13, at end insert—

“(7) For the purpose of subsection (6), a provision relates to a devolved matter if the provision—

(a) applies in relation to Wales and does not relate to a reserved matter.

(b) modifies the legislative competence of the Assembly, or

(c) confers a function on, or removes or modifies a function of, any member of the Welsh Government.”

This amendment defines the meaning of “devolved matters” for the purpose of the statutory recognition of the convention about Parliament legislating on devolved matters proposed by Clause 2.

Amendment 25, page 2, line 13, at end insert—

“(7) In this section, “devolved matters” means matters that—

(a) are within the legislative competence of the Assembly;

(b) modify the legislative competence of the Assembly;

(c) modify a function of the Assembly;

(d) modify a function of a member of the Welsh Government exercisable within devolved competence (and “within devolved competence” is to be read in accordance with section 58A).”

The amendment defines devolved matters for the purposes of Clause 2.

Clauses 2 and 4 stand part.

Amendment 26, in schedule 4, page 94, line 10, at end insert—

“National Assembly for Wales Commissioner for Standards.”

The amendment adds the National Assembly for Wales Commissioner for Standards to the list of Wales public authorities.

Amendment 27, page 94, line 10, at end insert—

“National Assembly for Wales Remuneration Board.”

The amendment adds the National Assembly for Wales Remuneration Board to the list of Wales public authorities.

Schedule 4 stand part.

[Liz Saville Roberts]

Diolch yn fawr, Dirprwy Lefarydd. Nineteen years have passed since the 1997 referendum to establish the Assembly. It is now clear that to have our own democratically elected Government and legislature is the settled will of the people of Wales. I note with disappointment and surprise the Secretary of State’s recent refusal of an invitation from the Chair of the Assembly’s Constitutional and Legislative Affairs Committee to give evidence on the Bill. I would argue that now, especially, is the time for co-operation and the sharing of knowledge.

Clause 1 is a very welcome addition to the Welsh devolution dispensation. Any clause to recognise the permanence of the institution is, of course, overdue. Amendments 17 to 22 are not controversial, and they deal with two technical issues. First, amendment 17 and amendment 22, which is consequential on amendment 17, change the place in the Government of Wales Act 2006 in which the text of clause 1 would appear. I know that the Presiding Officer in the Assembly, Elin Jones, has made this point, and I share her view that the declaration of the permanence of the Assembly should be given prominence in the Bill. Placing it in section 1 of the 2006 Act would achieve that.

Secondly, amendments 18 to 21 reflect the constitutional separation of the legislature, the National Assembly of Wales, and the Executive, the Welsh Government, by dealing with them in separate new provisions to be inserted into those parts of the Government of Wales Act 2006 that deal respectively with the Assembly and the Government. These are probing amendments and we do not intend to press them to a vote, but I hope that the Secretary of State will agree to accept these proposals and to table his own amendments at the next stage.

I do, however, intend to press amendment 5 to a Division. This amendment deals with what was perhaps the key focus of the prelegislative stage of the Bill and remains, in our view, the main reason that it fails to achieve what the Secretary of State has said he wanted to achieve: that is, to produce a lasting devolution settlement for Wales.

Since the original Government of Wales Act 1998, we have been forced to change the devolution dispensation four times. If enacted, this Bill will become the fifth dispensation. The perpetual modifications have been necessitated by sustained reluctance from successive UK Governments, both Labour and Tory, to legislate with the long term in mind. Although all of Wales’s devolution Acts were described as settlements to settle the debate for a generation, not one of them has achieved that aim. It is clear to me that this Bill will continue that trend, unless, of course, the Secretary of State changes course.

Many, if not most, of the criticisms of the Bill made by politicians, lawyers, civil society and academics alike have been of clauses or sections that have been justified as necessary by the Secretary of State in order to maintain the single unified legal system of England and Wales. The inclusion of clause 3—this will be discussed next week—and in particular its much debated necessity test is down to the fact that the Welsh legislature operates within a shared jurisdiction. The inclusion of clause 10, on justice impact tests, which have been subject to questioning and criticism since the publication of the latest Bill, is down to the fact that justice is a reserved matter—a reservation that is apparently necessary to safeguard the shared jurisdiction. These are among the contents of the Bill that are intended to prevent the Assembly from making any provisions that will impact on so-called public authorities. Again, these are in the Bill to protect the unified legal jurisdiction. As the Wales Governance Centre and University College London report stated:

“Complexity is piled on complexity...the potential for legal challenge casts a long shadow”.

I remind the House that Wales is unique in the world in having a primary law making legislature without a jurisdiction. Scotland has a wholly separate legal jurisdiction, and the Scottish settlement is simpler as a result. It avoids the complex and unnecessary exceptions and reservations. The relative stability of the Scottish devolution settlement, when compared with the turmoil in Wales, is stark. It is rare that Wales passes a law without the threat of legal challenge from somewhere.

If there were a practical need to maintain the unified legal system, it would be worth making these compromises elsewhere in the Bill and perhaps worth the legal battles. However, I have yet to hear a genuine, practical reason for doing so. The most frequently made argument against creating a separate Welsh jurisdiction is that it is unnecessary and costly, and that divergence between the law as it applies to Wales and the law as it applies to England is minimal. To those who make those arguments I say two things. First, to say that divergence is minimal is to continue the short-term approach of previous Governments and to ignore the fact that divergence will do nothing but increase as the Assembly continues its work and as the institution gains more maturity and responsibility.

[Mr Mark Williams (Ceredigion) (LD)]

Like the hon. Lady, I am a member of the Select Committee on Welsh Affairs, and I can back up, to a large extent, what she is saying. Was she as surprised as I was by the body of evidence that came from civil society, the legal profession and beyond during our Select Committee inquiry into the now redundant Wales Bill?

[Liz Saville Roberts]

I agree entirely with the hon. Gentleman. The sheer weight of that evidence underlines the fact that we struggled to find other points of view.

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

Amendment 5 is very well worded, if I may say so, because it was drafted, word for word, by the Labour Government in Cardiff. They wanted a separate legal jurisdiction for Wales, and they promised it as a major pledge before the Assembly election. What does my hon. Friend think it will say about the authority of Carwyn Jones among his colleagues here in London if the Labour party does not support that amendment today?

[Liz Saville Roberts]

I agree with my hon. Friend. I would expect there to be some concordance between both points of view, but that seems not to be the case.

[Paul Flynn (Newport West) (Lab)]

What the hon. Lady has said is entirely fair, but we must come to a practical conclusion. It is clear that the undertaking we gave as a party to support the line taken by Plaid Cymru still stands, but the practical problem is that the Government have firmly rejected it. In these circumstances, the sensible thing to do is to seek a compromise between the two positions, and that is what our amendment is designed to do.

[Liz Saville Roberts]

It is unfortunate to hear that argument in relation to standing up for Wales. On the one hand we have a Secretary of State who will not meet the Committee in the Assembly, and on the other hand we have a parliamentary Labour party that is not standing up for its colleagues in Wales.

But we move ahead. The second argument that I would use to those who argue against a separate Welsh jurisdiction is that, in many ways, the significance of divergence is beside the point. It is evident that these complex clauses and tests have to be included throughout the new Bill simply to accommodate the fact that Wales does not have a separate legal jurisdiction. Such clauses and tests, incidentally, have been described by distinguished legal experts, as I have mentioned, as

“a failure of comparative legal method”,

and according to the constitution unit they

“jar with basic constitutional principle”.

The inclusion of those clauses specifically because of the need to shore up the unified legal system is reason enough in itself, I would argue, to create a Welsh jurisdiction. To argue that it is unnecessary is to disregard completely the wealth of evidence that has emerged since the publication of the draft Bill last autumn. Stubbornly resisting that evidence will only lead to continued cases in the Supreme Court. I challenge anyone to justify making a Government accountable to a judge rather than to a legislature, but the Bill effectively enshrines such resort in law.

As our explanatory statement makes clear, amendment 5 was drafted by the Welsh Government, and it was included in annex C to the report by the constitution unit at UCL and the Wales Governance Centre earlier this year. I am, as I have mentioned, therefore very surprised to see the amendments tabled by Labour Members, which go against the views of their own party in Wales. I recognise that the official Opposition Front-Bench team has been through something of a reshuffle recently, and I am, incidentally, very pleased to hear that the hon. Member for Newport West (Paul Flynn) has finally been offered the job that he should have been given a long time ago. I take this opportunity to welcome him to his post.

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

There is a conciliatory note in what the hon. Lady says. In this great new world of conciliation, does she agree with her party leader in Cardiff, Leanne Wood, that what we need at this time is greater working together, even if it sometimes means in Cardiff greater working together between Plaid and Labour?

[Liz Saville Roberts]

I am sure we will work together when it is for the best for Wales, but I understand that that is not the case in Cardiff, and Plaid Cymru will, of course, be standing for the arguments that we believe in our hearts to be for the best for Wales.

To reiterate, I ask the shadow Secretary of State for Wales to support our amendment, which will implement what his colleagues in the Welsh Government have been calling for. We have had the prelegislative scrutiny, and the evidence is there. It is clear that we must act to create a new Welsh jurisdiction, and the amendments tabled by Labour would simply kick the issue into the long grass. As I have said, Plaid Cymru is far from alone in making this call. The evidence supports our position and the Labour-run Welsh Government have called for this step—the wording on the amendment paper is theirs.

13:30

I warmly welcome the inclusion of clause 2. It is essentially a Sewel convention for Wales, setting out that the UK Parliament will not normally legislate on devolved matters without the consent of the Assembly. I stress the word “normally” because it brings me to amendment 23, in my name and those of my hon. Friends, which would remove that word from the clause. Quite simply, we do not believe that it is necessary. The UK Parliament should not legislate on devolved matters full stop. Amendment 24 would add an exception to that rule, allowing the UK Government to pass such legislation if there were an imminent risk to national security and the legislation in question specifically addressed that risk. We believe that is a sensible and pragmatic way forward.

Amendments 3 and 4, tabled by the leader of the Welsh Liberal Democrats, the hon. Member for Ceredigion (Mr Williams), seek to achieve broadly the same ends as our amendment 25. Ours are probing amendments. It is for the Government to look at them ahead of the Bill’s remaining stages.

I reluctantly welcome clause 4, with its accompanying schedule 4. It is an improvement on the utterly unworkable clause in the draft Bill. I have already mentioned that preventing the Welsh Government from modifying the functions of public authorities is one of the many complexities included in the Bill as a result of a blind insistence on maintaining the unified legal jurisdiction. Although the clause goes some way to easing the complexity, in my view creating a separate jurisdiction would negate the need for any complexities. As it stands, we have tabled amendments 26 and 27 to the clause; they would add the National Assembly of Wales Commissioner for Standards and the National Assembly for Wales Remuneration Board to the list of so-called Wales public authorities. The amendments speak for themselves and should not be considered controversial.

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

I begin by genuinely welcoming the two new members of the Opposition Front-Bench team. One, the hon. Member for Swansea East (Carolyn Harris), I have not known for that long, but she has always shown her willingness to work in a non-partisan way when that is called for. The hon. Member for Newport West (Paul Flynn) and I go back many decades. Although we have never really agreed, I think it is wonderful that he has found his way on to the Front Bench. I suspect it will take me even longer than him to get there, but you never know. We might even see a nonagenarian on the Front Bench one of these days, and I will put myself up if I am still here.

I will address the thrust of the Plaid Cymru amendments—most importantly, amendment 21 and the general view that Plaid Cymru Members want to underline the absolute permanence of the National Assembly for Wales within the British constitution. I speak as someone who campaigned against the Welsh Assembly—I was one of the leaders of the campaign against it, back in 1997—and voted against it. Subsequently, there was a discussion among those of us in the no campaign about what we should do next. After all, the Assembly had gone through on a turnout of only 50%, with a majority of less than 1%. About 25%—just one in four—of the Welsh public had voted for a National Assembly of Wales. There were discussions about whether we should demand a rerun, or take to the streets and protest that such an enormous constitutional change was taking place with the support of just one in four of the population. We discussed all those things and the anger that we felt about the plan for the Assembly going ahead.

We decided in the end that we needed to show some humility. It was not a case of whether we were right or wrong but of listening to the will of the Welsh public. Subsequently there was a referendum a few years later, when I campaigned against further powers for the Welsh Assembly. I do not like to say that I was wrong—no politician ever does—but I accept fully that I was on the losing side and that, once again, the Welsh public had spoken and made clear their support for a Welsh Assembly. I therefore wish to say that, as someone who was probably more anti the Welsh Assembly than anyone else in this Chamber—well, I would have said that a few years ago but now I am not so sure—I totally and utterly accept that the Welsh Assembly is there, and there to stay.

Despite my constitutional misgivings about the Assembly, and the fact that I predicted at the time that it would always be seeking more powers every couple of years, I have always thought that were obvious advantages to having a body that could take some control over matters that affect the people coming to see us in our surgeries. People always want to talk about health services and the NHS, for example, and I have always thought it easier to get hold of a Minister in the Welsh Assembly than Ministers in Parliament, probably because they do not have quite as much to do. Members of the Welsh Assembly are generally able to be in their constituencies more often than Members of Parliament, for obvious logistical reasons. There were always some advantages to be had; my concern was that we had left the English question unanswered, although we are starting to address that now.

I want to make it clear that I believe that it would be constitutionally outrageous for any party to come along and try to get rid of the Welsh Assembly. I certainly would not support that. I do not for a second think it is realistic to hold another referendum on the principle of whether we have a Welsh Assembly. I was on the losing side of that argument. Whether I was right or wrong is immaterial; I fought that case, I lost, and the people of Wales have spoken.

[Chris Davies (Brecon and Radnorshire) (Con)]

I am delighted to hear my hon. Friend’s comments, and one always listens to every word he says. Does he regret that there was no mechanism in the first Wales Bill to allow another look at whether the Assembly should exist?

[David T. C. Davies]

There was no mechanism but there was a second referendum a few years later. I forget the percentages, but a much clearer level of support was expressed for the Welsh Assembly in that referendum. Realistically, now, by the time of the next election there will be people who have lived their entire lives with a Welsh Assembly. I do not think that it is a greatly loved institution, but it is not greatly hated, either. It is just accepted, as part of the furniture.

The only point I would make to the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) is this. Regardless of whether her amendment 21 gets the support of the Committee today, I think it is absolutely inconceivable that there will ever be any attempt to get rid of the Welsh Assembly. It is our duty to work with it and to remember what the Welsh public have said to us twice through referendums. I hope that we will all take the same view about all referendums in which the Welsh public have expressed their voice.

[Nick Thomas-Symonds (Torfaen) (Lab)]

I will speak in favour of amendments 9, 7 and 10. It is always a pleasure to follow my constituency neighbour, the hon. Member for Monmouth (David T. C. Davies). I welcome my hon. Friend the Member for Newport West (Paul Flynn) to the Front Bench. He follows in a fine tradition of octogenarians serving in the Labour Front-Bench team. The one who sprang to my mind was Lord Addison, who left the Attlee Government in 1951 at the age of 82. I am sure that in my hon. Friend we have a fine 21st century successor to Lord Addison. When I first came to this House, I thoroughly enjoyed reading my hon. Friend’s book “How to be an MP”; I look forward to the sequel, “How to be a Front Bencher”.

I will speak on the issue of a separate legal jurisdiction for Wales. The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) spoke about the wording of amendment 5. When the Wales Bill still contained the vast number of necessity tests that it did, there was a more powerful argument for a separate legal jurisdiction, but now that the necessity tests have been all but removed, save in two very specific circumstances, I do not think that any urgency for that remains. That allows us the chance to move forward far more pragmatically.

We have to be absolutely clear about the consequences of having a separate legal jurisdiction. I should say that prior to coming to this House I spent 11 years as a practising barrister in Cardiff and am still a door tenant, though non-practising, at Civitas Law. I have looked at situations where the permission of the court would be required to serve outside the jurisdiction—in other words, an additional barrier to access to justice would exist—if there was a separate legal jurisdiction. The list includes interim remedies, contracts, claims in tort, enforcement, claims about property within jurisdiction, trusts, claims by Her Majesty’s Revenue and Customs, claim for costs order in favour of, or against, third parties, admiralty claims, claims under various enactments, and claims for breach of confidence or misuse of private information. All those areas would require permission to serve outside the jurisdiction. That may have been rather a legal list, but let us think of its practical consequences. For example, let us suppose a constituent from Torfaen goes to Bristol and falls over. They will be put in a complicated legal position.

Health is also a cross-border issue. If someone who lives in Wales crosses the border for treatment, there will be complications in cases of medical negligence. When people from Wales drive to London on the M4 and if they have an accident on the other side of the Severn bridge, that will have suddenly taken place in a different jurisdiction. If someone buys a washing machine or some other product from England, consumer protection law will cause complications for someone in Wales who is seeking a remedy for a problem.

[Hywel Williams (Arfon) (PC)]

In his research, has the hon. Gentleman come across figures for how many cases are held in Wales compared with the number of cross-border cases?

[Nick Thomas-Symonds]

At the moment, anyone who issues a claim would have a choice about where to issue it. For example, when I practised in Cardiff, it was easy for me to issue something to my client in Bristol if I wanted to, so in a sense those statistics do not really add any meaning to my argument. Companies would have an element of uncertainty introduced to their business if they were to trade on a cross-border basis—the last thing I want is for Offa’s Dyke to become an additional barrier to access to justice.

[Jonathan Edwards]

The hon. Gentleman will be aware that Scotland and Northern Ireland have their own separate legal systems. Using his vast experience in that field, how does he think they should overcome those problems? I have been listening carefully to what he has been saying, and it seems as if he is fundamentally disagreeing with those on his Front Bench on this issue.

[Nick Thomas-Symonds]

I am not disagreeing with those on my Front Bench—I have made it clear that we are looking for a pragmatic way forward. For Scotland and Northern Ireland the history is very different, as I am sure the hon. Gentleman is aware. In Wales we can go back to the 1530s and the Tudors for the origins of the single legal jurisdiction, but the position is very different for Scotland and Northern Ireland.

Why do we now have the opportunity to consider a more pragmatic way forward? Amendment 7 makes it clear that there will be a review to consider the functioning of the system. The hon. Member for Dwyfor Meirionnydd made a point about having two legislatures within the single legal jurisdiction. That is unusual, but it does not mean that there cannot be a pragmatic way forward for the years ahead. Indeed, the amendment includes a proposal to always have regard to the divergence in the law. The Bill explicitly recognises the Welsh body of law, and there will be one because as the legislature goes forward, it will produce the case law to form that. There must be an annual report on the functioning of the justice system—something that I suggest all Members of the House should welcome.

[Liz Saville Roberts]

Does the hon. Gentleman agree that the current situation, whereby issues or disagreements about the status of legal proposals by the Welsh Assembly are resolved in the Supreme Court, is a satisfactory way for the legislature to proceed?

[Nick Thomas-Symonds]

Of course we would all like the Supreme Court to be used far less to resolve conflict between the Governments in Wales and in Westminster, but I am not sure that having a separate legal jurisdiction would have any real substantial short-term impact on that. The Bill is now far better and we have sought to improve it, but the clarity of the provisions—particularly removing all but two necessity tests—has made a great difference and I hope it will mean that there should be far less conflict in the Supreme Court.

13:45

On reports to what will be the Welsh Parliament, we must look more broadly at justice in Wales, and not exclusively in relation to the jurisdiction. Wales already has a High Court district registry in Cardiff, which no doubt could be developed, and the Court of Appeal often sits in Wales. We need a real open justice system in Wales that is not just stuck in Cardiff, Swansea, Caernarfon or wherever, but is willing to go out and sit in different buildings and genuinely bring justice closer to the people. The pragmatic way forward on jurisdiction is by far the best because we would not bring all those disadvantages into play, but we can also build on the opportunity in amendment 7 to consider the whole justice system in Wales and ensure that we truly have access to justice for all.

[Nia Griffith (Llanelli) (Lab)]

I rise to support amendment 7, to reaffirm my support for the Bill, and to thank the Secretary of State for bringing it forward so quickly. We would all like it to be enacted as soon as possible. I also thank him for recognising the growing body of Welsh law, and for his initiative to set up a body to consider that. Amendment 7 would confirm that body in writing in the Bill, meaning that a report on the state of affairs is made on a regular basis. As my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) so eloquently expressed, this is not a simple issue about which we can just have a yes or no discussion; it is a growing body of law and a number of complex issues arise. If that measure was included firmly in the Bill so that a report was made on a regular basis, we would have the opportunity to consider the direction things were going in and whether any changes were needed. The amendment states clearly that the report will consider

“whether the single legal jurisdiction of England and Wales should be divided into a jurisdiction for Wales and a jurisdiction for England.”

We want that practical, sensible solution included in the Bill so we can be certain that the review will continue to take place, and so that recommendations and reports come from that, which may or may not lead to a different view on things as that body of law grows. I reaffirm my support for the Bill, and I hope that amendment 7 will be included.

[Mr Mark Williams]

It is a privilege to serve under your chairmanship, Mrs Laing. I reiterate my support for the amendments on the permanence of the National Assembly. I think that they originate in the office of the Presiding Officer who co-represents the Ceredigion constituency, but regardless of our constituency interests, there is huge sympathy and empathy with the principle of permanence right across the Committee—perhaps there are one or two exceptions on the Government Benches.

Amendments 3 and 4 are probing amendments like those tabled by the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). I do not intend to divide the Committee on those amendments, but I wish to elicit from the Minister a little more detail that is currently not in the Bill. To avoid clashes between the two legislatures on devolved matters, this Parliament has hitherto adopted a self-denying ordinance, and would not normally legislate on devolved matters without the consent of the National Assembly.

I believe there is a consensus on the Opposition Benches, which is reflected by my amendment and amendments 24 and 25 tabled by Plaid Cymru, that the new provision does not provide a complete statement of the circumstances in which the Assembly’s consent is required in respect of parliamentary legislation. The Bill fails to mention the circumstances in which proposed legislation would modify the legislative competence of the Assembly itself. The amendments seek to clarify that. The requirement for consent in itself is not the issue. The Bill will at some point require the assent of the National Assembly for Wales, but in the interests of clarity and transparency the amendment sets out the circumstances when the Assembly’s consent should normally be required. I think it provides a tidier definition of devolved matters.

The meat of this grouping relates to a separate, although interestingly in this debate not a distinct, jurisdiction. I understand the principle behind Plaid Cymru’s amendments. We have heard about a separate jurisdiction and less about a distinct jurisdiction. The Government have gone as far in the Bill as to acknowledge and recognise a body of Welsh law. That is an important principle, but it is where we take that principle that concerns me. I am led in the direction of the Labour party’s amendment, which follows the stance established in the increasingly dated Silk report, which is something of a bible to Liberal Democrats. Silk, in that now slightly dusty report, talked about reviewing the case for devolving legislative responsibility for the court service—sentencing, legal aid, the Crown Prosecution Service and the judiciary—to the National Assembly. I think he would endorse the speech just made by the hon. Member for Torfaen (Nick Thomas-Symonds) and the case for a broader review of the legal system in Wales. Silk also talked about the need, in recommendation 34, for a “periodic report” by the UK Government, in consultation with the Welsh Government, to the UK Parliament and to the National Assembly on how access to justice is improving in Wales, and that there should be a regular dialogue between the Lord Chief Justice of England and Wales and Welsh Ministers on the administration of justice in Wales.

The groundwork has therefore already been done for the Labour party’s amendment. It requires the Secretary of State to keep under review the justice system as it applies in relation to Wales, with a view to reform. For some of us, the inevitable divergence of English and Welsh law being open to the possibility of reform is critically important. As a Liberal, there is still the question of timing. There is a very clear Plaid Cymru amendment. We have something that has been described as more pragmatic. Simplistically, we could say that it beefs up what Silk was talking about some time ago.

The Government have acknowledged that this is an issue by providing legal clarity on a Welsh body of law. They have also acknowledged it through the creation of a judicial working group. We talked on Second Reading about the principle of setting up the Government’s working group, which is welcome, but I do not believe it is sufficient to address the issues before us today. I am led to believe that the Welsh Assembly Government have not been invited to participate in its work.

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

rose—

[Mr Williams]

I will stand corrected if that is actually the case. I am seeking clarification and it looks like I am about to get it.

[Alun Cairns]

I can absolutely confirm that an invitation was sent to the Welsh Government some weeks ago. We have not yet received a response.

[Mr Williams]

I am grateful to the Minister for that update. That should create some food for thought at the other end of the M4, because co-operation and collaboration between both Administrations on these issues is vital.

I still have concerns about timetabling. On Second Reading, the hon. Member for Dwyfor Meirionnydd spoke about timetabling and about the working group concluding its work by September. That suggests this House—or the other place, as the Bill proceeds—would not have much of an opportunity to deliberate on its work, which is a concern. Does the working group have the opportunity to engage with civil society in the way the Welsh Affairs Committee did when it received evidence on distinct and separate jurisdictions? That is important.

I support the idea of the commission, which follows a suggested precedent that we need to review these matters. As I said on Second Reading, of all the issues in the Wales Bill we have been talking about, legal jurisdiction is the one that will not go away. It needs to be addressed and I am not sure that that can be done in one amendment today. It needs to be addressed in a substantive review. If it is not addressed in a substantive review, I fear that if some of us are lucky enough to be in this House in years to come, we will be returning to another Wales Bill to deal with it.

[Paul Flynn]

The hon. Member for Ceredigion (Mr Williams) ended on a sombre note. Wales Bills are not just for St David’s day, they are for life—possibly for eternity. We have seen the tortuous birth pangs of devolution in Wales go on and on. The Bills we passed were grudging Bills. This place is neurotically power-retentive. We allow little bit of power, we take it back and then we allow it little bit more. Part of the problem has been the divisions that have existed over the years and a lack of conviction on the need for a Welsh Assembly and Welsh Government. Happily, I believe those days are gone. All parties have a desire to provide good legislation that will give the Assembly and the Government in Wales more stability and more durability.

May I say what a delight it is for me to be in this position as a shadow spokesman on the Opposition Front Bench? It is an extraordinary thing, but these jobs are rather like London buses: you wait 26 years for one and then two come along together. I am delighted to be accompanied by my hon. Friend the Member for Swansea East (Carolyn Harris). I am also comforted by the presence of my hon. Friends the Members for Llanelli (Nia Griffith) and for Clwyd South (Susan Elan Jones), who are on a temporary respite which I am sure will last for days. But I have this job. It is not the best job I have ever had: it is a zero-contract job, a zero-pay job and a zero-hours job that could end at any moment.

We are all conscious that we are just a matter of weeks from the terrible murder of our colleague, Jo Cox, who said memorably in her maiden speech that

“we are far more united and have far more in common than that which divides us.”—[Official Report, 3 June 2015; Vol. 596, c. 675.]

That is what I intend to concentrate on. I agree very much with the points made by the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) and I certainly do not want any futile dispute. The Government have made it clear that they will not move on some of the main points that we and the Welsh Government are very much in favour of, so we take the position that the sensible thing is to try to find a third way or middle course.

I believe we are in a better position than we have ever been in. A book entitled “Dragons led by Poodles” on the first devolution referendum was published when there were deep divisions in my own party. We are happy today that, in particular after the example of the Welsh football team, we are dragons led by dragons. We have the great joy of seeing the brilliant success of our footballers—the best we have ever seen. We take great pride in that. It has done so much for Wales that everyone is Welsh now. I heard someone on the radio say they owned two Bryn Terfel records and did that entitle him to call himself Welsh? It is suddenly fashionable and desirable to be Welsh. The whole world wants to be Welsh and that will bring us tangible benefits.

[Jonathan Edwards]

I honestly mean it when I say that I warmly welcome the hon. Gentleman to his post. He is a man of great principle, and I am a great admirer of his. Because he is a man of great principle and because he says he supports the meaning and wording of amendment 5, should he not act on those principles and support Plaid Cymru in the Lobby later?

14:00

[Paul Flynn]

We will not be supporting amendment 5, because we think it gesture politics; unless the Government change their mind, it is not going to get through. We are suggesting a practical compromise that might well be accepted by the Government.

[Kevin Brennan (Cardiff West) (Lab)]

I also recommend my hon. Friend’s book “Dragons led by Poodles”, and thank him for what he said about me in it. [Hon. Members: “What did he say?”] Hon. Members can read it for themselves later, rather than have me read it into the record.

Despite what my hon. Friend said about the grudging nature of legislation around devolution, has not the organic way in which Welsh devolution has progressed built support for devolution from the very narrow victory in the referendum back in 1997? Might not imposing a separate legal jurisdiction at the outset of this journey in the creation of Welsh law place unnecessary costs on Welsh citizens having to seek permission to take a case in another jurisdiction, when that matter could be dealt with organically as the Welsh body of law develops in the years to come?

[Paul Flynn]

I agree entirely with my hon. Friend. In my book, which begins with a dramatis personae, I awarded Welsh politicians a number of pompoms for being poodle-ish or flames for being dragon-like. I think he emerged with no pompoms and five flames, which was the top award. His point is absolutely right.

During the pre-legislative scrutiny, it became clear that the question of the jurisdiction was a fundamental one that had to be addressed in the Bill. As the hon. Member for Dwyfor Meirionnyddp said, the Plaid Cymru amendment adopts the approach in the Welsh Government’s alternative Bill. That is fine—we agree with that—but we are proposing a compromise that would address the issue in a more consensual way. That is the spirit in which we approach consideration of the Bill. In response to the intervention from the Secretary of State, I must say that I welcome the concept of working with the Welsh Assembly. I know that the Constitutional and Legislative Affairs Committee of the Welsh Assembly will be meeting throughout August to consider the Bill under our former colleague Huw Irranca-Davies. I am sure that it will have a great deal to contribute, and I hope that its suggestions will meet with an open door.

There is common ground among legal and constitutional experts that the current arrangements are not sustainable. The challenges can only grow as the Welsh statute book develops further in the fifth Assembly term—“the Welsh statute book” has a nice ring to it. We have not yet risen to the heights of cyfraith Hywel Dda and the days in the 10th century when Wales led Europe with progressive legislation. There was a law that said if a starving person had gone to three villages without being fed, he or she was entitled to steal without risk of prosecution. They had wonderful rules on the rights of women that were far in advance of anywhere else and they had practically no capital punishment. Eight hundred years later, England had 220 crimes for which people could be punished with death, including stealing from a rabbit warren and cutting down a tree. So we are building on the shoulders of the giants of the 10th century and Hywel Dda. We are a long way from it, but this is another step towards that progress.

The joint jurisdiction was based on the premise that there was a common body of law across England and Wales with a single set of administrative arrangements. That premise worked for the centuries following the Acts of Union but is now out of date. In essence, that premise is inconsistent with legislative devolution; it is simply impossible to argue for retention of the joint jurisdiction when the criminal and private law in England and Wales will increasingly diverge as a result of Assembly legislation. The starting point is that there must be robust joint arrangements between the Lord Chancellor and the Welsh Ministers to work through the issues and identify solutions, and the UK Government’s proposed official working group might add some value. In his intervention, the Secretary of State said that an invitation had been sent to the Welsh Government. I do not know about that, but we would like to see that joint working. It is certainly the desire of the Welsh Government.

Our amendments would achieve three things. First, there would be a duty on the Lord Chancellor and Welsh Ministers to keep the operation of the justice system under review, including the jurisdiction question. Secondly, they would be able to appoint an expert panel to advise them, which could be an invaluable source of legal expertise to focus on the practical issues. Thirdly, the work would have to be transparent and sustained, with an annual report laid before the National Assembly and Parliament.

The Secretary of State, like his predecessor, wants the Bill to offer a lasting settlement, and so do we, but that will not happen unless they put forward a credible and serious process for reforming the joint jurisdiction. There is a major gap in the Bill as it stands. Amendment 7 is proposed as a constructive solution that deserves cross-party support and we hope to press it to a Division.

Clause 2 provides statutory underpinning for the Sewel convention. Under our constitution, both Parliament and the Assembly can legislate for Wales on devolved matters, so it is important that there be a clear understanding between the two legislatures as to which will be the principal legislature on these matters. The convention normally resolves that issue in favour of the Assembly. Amendments 23 and 24 address that issue further. The convention also requires that if Parliament proposes to amend the legislative competence of the Assembly, that too should require the Assembly’s formal consent.

To be fair to the UK Government, they have always acknowledged that the Bill will require the Assembly’s consent if it is to proceed to Royal Assent. This is a matter not of controversy but of common sense and consensus between the parties. This aspect of the convention, however, is only set out in rather obscure terms in a devolution guidance note for civil servants. As drafted, clause 2 makes no reference to this aspect of the convention at all, so it is an incomplete statement of the real position. Clarity would be appreciated.

Amendment 4 is designed to fill that gap. It would provide a comprehensive statement of the circumstances when Assembly consent is required for parliamentary legislation. In particular, it would make it clear in the Bill that Assembly consent is required when a parliamentary Bill proposes changes to the Assembly’s legislative competence. I note that amendment 25 is broadly to the same effect. This is an important element in the Welsh devolution settlement, so clarity is required; it should not depend on what is written in devolution guidance note. I urge the Government to accept these reasonable and constructive amendments.

[The Parliamentary Under-Secretary of State for Wales (Guto Bebb)]

I join hon. Members in welcoming the hon. Members for Newport West (Paul Flynn) and for Swansea East (Carolyn Harris) to their places on the Front Bench. I fear that I have followed the hon. Gentleman’s political career for more than 40 years, which makes me feel very old. When he was the candidate in Denbigh during the 1974 general election, my father was the election agent for Ieuan Wyn Jones, who stood for Plaid Cymru. The hon. Gentleman clearly made a huge impression on my father, who followed his career avidly, but I am surprised that as a resident of Llansannan he did not appreciate the beauty and importance of the agricultural community in the way that he perhaps should have. When my wife had a bookshop, we recommended “Dragons led by Poodles” to many of our customers. It was one of our bestsellers in the year in question, so he undoubtedly contributed to my coffers then.

On behalf of myself and the Secretary of State, may I also thank the hon. Members for Llanelli (Nia Griffith) and for Clwyd South (Susan Elan Jones) for their constructive engagement on the Bill prior to the change of guard on the Opposition Front Bench? The Bill has been brought forward in a measured way, and we have attempted at all times to have a constructive engagement with all Opposition parties. The constructive engagement we had with the hon. Members for Llanelli and for Clwyd South was particularly appreciated.

I need to go through the amendments in some detail to provide reassurance where necessary and to explain the Government’s position on them. Let me deal first with amendment 17, which was tabled by the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). This is clearly an attempt to change the place where new part 2A is inserted into the Government of Wales Act 2006. The new part inserted by clause 1 enshrines the permanence of the National Assembly for Wales and the Welsh Government and recognises the body of Welsh law. Amendment 8, which was tabled by the Opposition, would change the title of new part 2A, making it broader in scope. Amendments 17 and 8 are consequential amendments, so I shall explain the Government’s position on them when I speak to other amendments.

Amendments 18 to 22, tabled by the hon. Member for Dwyfor Meirionnydd, are designed to insert into the Government of Wales Act 2006 separate statements on the permanence of the National Assembly for Wales and of the Welsh Government. The amendments rightly recognise the importance of new part 2A in confirming without any doubt in law what is widely understood—that the National Assembly and the Welsh Government are a permanent part of the United Kingdom’s constitutional arrangements.

I pay tribute to my hon. Friend the Member for Monmouth (David T. C. Davies) and his work as Chairman of the Welsh Select Committee. I pay tribute, too, to his speech in which he highlighted the permanence of the Welsh Assembly in the UK’s constitutional arrangements. I accept his argument that a majority is a majority in a democratic vote. My mother-in-law argued on Sunday that we should try to avoid the result of the EU referendum, highlighting the fact that it was a very small majority on a very small turnout, whereupon I said to her that she was of the view that the 50.3% of the people of Wales who voted for the establishment of the Welsh Assembly should be respected. I stood by the democratic principle that a majority is a majority, but it was good to hear my hon. Friend the Member for Monmouth being so clear in his view that the Assembly is part and parcel of the UK’s constitutional arrangements.

It is fair to say that a great deal of consideration has been given to the content of this clause and its place in the 2006 Act, not only in the context of the draft Wales Bill, published last October, but in terms of the read-across from the Scotland Act 2016. As in the context of Scotland, I am keen to see this commitment expressed in a single clause to reflect the fact that the Assembly and the Welsh Government belong together as a part of the UK’s constitutional arrangements. I would, however, like to give further consideration to the most appropriate place to insert new section 92A in the Government of Wales Act 2006.

I shall deal next with amendments 5, 7, 9 and 10, which amend new clause 92B on the recognition of Welsh law. In its second report, published in March 2014, the Silk commission recommended that there

“should be further administrative devolution in the court system”,

and it specifically provided for devolution in respect of the various divisions of the High Court, which should sit in Wales on a regular basis to hear cases—other than highly specialist cases—that arise in Wales. The commission stated that a High Court office should be established in Wales to co-ordinate High Court sittings in Wales; that the divisions of the Court of Appeal should continue to sit in Wales on a regular basis to hear cases that arise in Wales; and that High Court and Court of Appeal judges should be allocated to sit in Wales only if they satisfy the Lord Chief Justice that they understand the distinct requirements of Wales.

I am pleased to be able to state clearly from the Dispatch Box that many of the recommendations relating to administrative devolution in fact reflect the current position in Wales: the senior courts already sit in Wales; the administration of Welsh courts is overseen by Her Majesty’s Courts and Tribunals Service Wales; and court sittings are co-ordinated locally.

14:15

As for the broader question on the case for devolving legislative responsibility, this was one of the key issues examined in the St David’s day process, taken forward by my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). Hon. Members will be aware that, as set out in the St David’s day agreement, there is no political consensus on devolving justice. It has been clear from the debates we have had—very good separate debates—that it is difficult to argue that there is consensus on this point. Accordingly, my party’s 2015 election manifesto gave a clear pledge to continue to reserve justice and policing in Wales.

The Labour party’s 2015 election manifesto pledged to take forward proposals from the Silk commission to extend the power of the people of Wales over matters such as elections, transport and energy—all dealt with in this Bill—but it did not propose devolving justice to Wales. Looking at the result of the 2015 general election, it is difficult to argue that there is a majority to move forward on that issue. The votes gathered by the Labour party and the party I represent in 2015 suggest that majority opinion in Wales is firmly behind the proposals in this Wales Bill.

[Jonathan Edwards]

There has, of course, been a material change in conditions, following the events of the last few weeks and the EU referendum. From our perspective, we just want to get the Bill on the statute book, so that we can move on to the next big debate about the future of our country. Is the Minister seriously saying from the Dispatch Box today, after the events of the last few weeks, with Scottish independence imminent in the next few years and with Irish unification never being closer since Lloyd George decided to split that country in two, that this Bill will hold Wales together for the next generation?

[Guto Bebb]

The hon. Gentleman is a passionate speaker and a strong advocate for his position. In a debate in Westminster Hall this morning, however, I warned of the dangers of creating history as we want to believe it to happen. I am not as yet convinced that there is enough evidence to suggest that Scotland is imminently about to leave the United Kingdom—[Interruption.] I am not convinced. There was a referendum two years ago that provided a fairly clear result. I think it would therefore be inappropriate to legislate on the basis of the wish list of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)—much as I enjoy that wish list and the passion with which it is articulated.

The Government are fully committed to maintaining the single legal jurisdiction of England and Wales. It has served Wales very well. It is also our firm view that it is the most effective, efficient and consistent way to deliver justice. The issues raised by the hon. Member for Torfaen (Nick Thomas-Symonds) highlighted some of the complexities that would be created if we moved away from that single jurisdiction at this point in time. The vast majority of law is not devolved, so there is no justification for a separate jurisdiction that would create significant upheaval and huge costs. It is worth highlighting that cost issues cannot be swept under the carpet. There would be a cost implication with very little benefit. I wonder whether Plaid Cymru Members have carried out a cost-benefit assessment to weigh up the benefits and the costs that would be incurred.

Amendment 5 envisages separate legal and court jurisdictions, administered by a common judiciary and court staff. It is designed to provide clarity, but I am not sure that it would. I think it would create more confusion, having the opposite effect—a point made by the hon. Member for Cardiff West (Kevin Brennan). The same people would be charged with administering two separate legal regimes where there is currently a commonality of law and procedure. This would have downstream consequences and it would impact on how the legal system works. It is difficult to justify such an impact on the basis of the current body of Welsh law.

We have heard the argument that the situation in Scotland and Northern Ireland is simpler because they have separate legal jurisdictions. I expected to hear that argument, but it ignores the historical reality that there has been—there always has been for that matter—a separate Scottish legal jurisdiction. I have engaged previously with the hon. Member for Carmarthen East and Dinefwr on the laws of Hywel Dda, who is rightly remembered for the legal system he put in place.

[David T. C. Davies]

Does the Minister also accept that Hywel Dda was very well known for the importance he placed on working with the English Government at the time, particularly with Edward the Elder and Athelstan? Is there not a great lesson for all of us here in terms of co-operation with the Welsh Assembly?

[Guto Bebb]

I appreciate that there are quite a few experts on Hywel Dda in this place. It is certainly the case that he took a co-operative approach. As I said previously in a debate with the hon. Member for Carmarthen East and Dinefwr, Hywel Dda was perhaps very good in some respects, but he allowed the murder of his brother-in-law for his own personal gain in the kingdom. So perhaps he was not perfect.

Let me return to the serious issue of the separate legal entity. I think that, for all the talk of Hywel Dda, it would be a mistake to ignore the historical context. We are where we are. We legislate not in terms of what we would like to see, but in terms of what is practical and what is right at this point in time, and I think that the Bill has struck the right balance in that respect.

We recognise the validity of some of the points that were raised during pre-legislative scrutiny. Wales has a distinctive legal identity. It has two legislatures, and a growing body of law made by the Assembly and Welsh Ministers. The Bill recognises that, and there is clearly a need to ensure that it does so in the context of maintaining the single jurisdiction of England and Wales. Our position is clear: we are recognising reality in the context of a system that currently works very well for Wales and the United Kingdom.

Amendments 7 and 9 call for the Lord Chancellor and Welsh Ministers to keep under review the functioning of the justice system in relation to Wales, including the question of whether the single legal jurisdiction should be separated into a jurisdiction for Wales and a jurisdiction for England. The case for that was argued by the hon. Members for Torfaen and for Newport West.

This is an important issue, and it should be considered carefully. The St David’s day process considered the position for and against devolving justice, and ultimately found no consensus in favour of implementing the Silk commission’s recommendation. As I have said, the Government firmly believe that the most effective, efficient and consistent way to administer justice is under a single legal jurisdiction.

Despite the devolution of powers to Wales, under this Bill and the Government of Wales Acts before it, and despite the increasing amount of legislation made by the Assembly, the vast majority of laws apply equally across England and Wales, and will continue to do so. The Government therefore pledged to continue to reserve justice and policing in their election manifesto, as I mentioned earlier. However, I agree with the principle that the functioning of the justice system must be kept under review, especially given the continuing divergence in law to which I have referred.

It is for that very reason that my right hon. Friends the Justice Secretary and the Secretary of State for Wales have established a working group to consider the administrative changes needed to meet the administrative and operational demands of diverging legislation in a Welsh context. The group will represent the key areas affected by the changing legislative Welsh landscape, and will consider a range of circumstances affecting the operation of justice in Wales. I can tell the hon. Member for Ceredigion (Mr Williams), who raised the point in his speech, that the Welsh Government have been invited to be represented on the group, but the invitation was issued to officials in that Government, so there should be no condemnation of any political forces—any Ministers—in the Assembly. We expect a positive response to the invitation.

[Mr Mark Williams]

Will the Minister clarify—I am sure that he is on the verge of doing so—the time frame for the joint working group? I understood that it would conclude its work in the autumn. The amendment proposes a real review over a lengthier period as the divergence between Welsh and English legislation becomes a reality.

[Guto Bebb]

It is currently envisaged that the group will report in the autumn, and, as things stand, that is its aim. I hope that that satisfies the hon. Gentleman, at least in terms of clarity.

It is important to understand what the group will and will not do. It will consider the administrative and operational implications of a shared but single legal jurisdiction, but it will not discuss broader constitutional questions such as whether there should be a separate jurisdiction. The Government’s view is clear: the single legal jurisdiction of England and Wales is the most effective, efficient and consistent way to deliver justice. I hope that provides the clarity for which Members have been asking.

Amendment 10 seeks to omit subsection (2) of the proposed new section 92B of the Government of Wales Act. Subsection (2) recognises that a body of Welsh law made by the Assembly and by Welsh Ministers forms part of the single legal jurisdiction of England and Wales, while giving due regard to the boundaries of competence set out in the Bill. It is important for the Assembly to have full and effective powers to enforce its legislation on devolved matters, and in order to achieve that, a growing body of distinct law will necessarily continue to be made by the Assembly and Welsh Ministers.

The Bill provides for that throughout. In particular, paragraphs 3 and 4 of new schedule 7B, which schedule 2 inserts into the Government of Wales Act and which the Committee will debate next week, make it clear that the Assembly may modify the private law for a devolved purpose, and that only certain core elements of the criminal law are outside its competence. Those elements are listed in paragraph 4 of the new schedule. The Assembly will, for example, be able to create and modify offences when they are for the purpose of enforcing devolved provisions.

Subsection (2) of new section 92B is intended to be helpful, explaining that the purpose of the provision is to recognise the ability of the Assembly and Welsh Ministers to make laws forming part of the unified legal system of England and Wales. The new section constitutes a declaratory statement, and does not bestow any further powers on the Assembly than are provided for elsewhere in the Bill. It is, however, important in that it enables the contribution made by the Assembly and Welsh Ministers to the law of England and Wales to be recognised for the first time, while having due regard to the other provisions in the Bill. Subsection (2) is required to clarify that the statement must be considered in the context of the rest of the Bill. Without it, there might be uncertainty about the meaning of subsection (1).

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

So that the public can understand the divergence that has, to a limited degree, taken place so far, will the Minister tell us what proportion of the current law he considers to be distinctly Welsh, as opposed to England and Wales law? May we, in future, be given a regular update on that distinction, so that ordinary people understand where the law is diverging?

[Guto Bebb]

That is a good question, because it highlights the importance of ensuring that people in Wales understand where law is made. The percentage of Welsh law is currently tiny by comparison with the overall impact of the law on those people, but I think we should keep an eye on the position.

Clause 1 sets the scene for the new model of Welsh devolution that is presented in the Bill. It inserts a new part 2A into the Government of Wales Act, ensuring that, for the first time, the permanence of the National Assembly for Wales and the Welsh Government is confirmed. It recognises both as a permanent element of the United Kingdom’s constitutional arrangements, and as part and parcel of our nation’s constitutional fabric, and reflects the importance of the National Assembly and the Welsh Government to political life in Wales.

The Silk commission recommended that it be recognised that the National Assembly for Wales is permanent for as long as that is the will of the majority of people in Wales. In the St David’s day agreement, the Government gave an undertaking to enshrine that commitment in legislation, which we are delivering in clause 1; we did the same for the Scottish Parliament and the Scottish Government in the Scotland Act 2016. I think it fair to say that most Members welcome that certainty.

New section 92A also provides that the Assembly and the Welsh Government are not to be abolished except on the basis of a decision by the people of Wales voting in a referendum. I hope that such a referendum will not be forthcoming, but I think it important to recognise that the decision on whether we have a Welsh Assembly and a Welsh Government is a decision for the people of Wales, to be made by them.

New section 92B underpins the commitment to permanence by recognising that there is a body of Welsh law made by the Assembly and Welsh Ministers that forms part of the law of England and Wales. It is important that we recognise that in statute—which we are doing for the first time—while also recognising the elements that are common to England and Wales. Clause 1 is a declaratory statement, but its recognition of the contribution made by the Assembly and Welsh Ministers to the law of England and Wales is important none the less. Meanwhile, the Justice in Wales working group of officials that I mentioned earlier will consider what changes are necessary to reflect the distinctiveness of Wales within the administrative arrangements for justice, and, as I have said, I expect a report in the autumn.

Amendment 23, tabled by the hon. Member for Dwyfor Meirionnydd, seeks to broaden the scope of the commitment given in relation to the convention about Parliament’s legislating on devolved matters by removing the word “normally”. The commitment in clause 2 that Parliament will not normally legislate with regard to devolved matters without the consent of the Assembly reflects the current convention on legislative consent. We gave a commitment to put that convention on a statutory footing in the St David’s day agreement, and that is what clause 2 does. The clause is also in line with the provision made in relation to the Scottish Parliament in the Scotland Act 2016. Since the convention was established, a legislative consent motion has always been sought before Parliament has passed legislation for Wales in relation to devolved matters. This is part of the normal working arrangements between the UK Government and the Welsh Government and we expect it to continue, but to remove “normally” from the clause would fundamentally change the convention. The “not normally” element of both the convention and clause is essential as it acknowledges parliamentary sovereignty and, within the clause, signals to the courts that this clause is not intended to be subject to adjudication.

14:30

Clause 2 implements a Silk commission recommendation and a St David’s day commitment. The Government have no plans to broaden that commitment.

Amendment 3 from the hon. Member for Ceredigion (Mr Williams), amendment 24 from the hon. Member for Dwyfor Meirionnydd, amendment 4 from the hon. Member for Ceredigion and amendment 25 from the hon. Member for Dwyfor Meirionnydd seek to define the conditions Parliament would have to satisfy to legislate without the consent of the Assembly. Amendment 24 would provide for an exception to the convention on legislative competence by setting out the circumstances in which Parliament could legislate with regard to devolved matters without the consent of the Assembly.

The convention deliberately does not define those circumstances. Parliament is sovereign, so both the Assembly and Parliament can legislate for devolved matters. Defining the instances in which Parliament can legislate for devolved areas would drive a coach and horses through this underpinning principle of devolution. We are talking about a measure that is devolving power, so that principle is important and needs to be retained.

There are occasions when it makes sense for Parliament to legislate in relation to matters devolved to the Assembly, and since the convention was established a legislative consent motion has always been sought before Parliament passes legislation for Wales in relation to devolved matters.

Amendments 3 and 4 seek to define the term “devolved matters” more specifically and more broadly than the current convention. That would, for example, also include Executive functions of Welsh Ministers, some of which are conferred in relation to reserved matters, so it could be problematic for those amendments to be supported. Under the current convention the UK Government will seek the Assembly’s consent when Parliament legislates on matters within the legislative competence of the Assembly. If parliamentary legislation seeks to amend a function of Welsh Ministers that is outside the legislative competence of the Assembly, the UK Government normally need only seek the consent of Welsh Ministers. The Silk commission made no recommendation to extend the convention in this regard. In view of the fact that the hon. Member for Ceredigion described the Silk commission as his bible, I think he should take note of that point.

Assembly Standing Orders already require Welsh Ministers to notify the Assembly in a written statement about provisions in parliamentary Bills that have a significant impact on Welsh Ministers’ functions. It is right that this is a matter for the Assembly and Welsh Ministers, and I see no reason to change the convention clause 2 enshrines.

In the St David’s day agreement we committed to placing the convention on legislative consent on a statutory footing in the same manner as we have done for the Sewel convention in the Scotland Act 2016. Clause 2 inserts section 107(6) into the Government of Wales Act 2006 to reflect in statute the political understanding that already exists. The practice of obtaining the consent of the Assembly is well-established: a legislative consent motion is always sought before Parliament passes legislation for Wales that we consider is within the Assembly’s legislative competence. This has long been part of the normal working arrangements between the UK and Welsh Government and I fully expect this to continue. We will of course be issuing updated guidance to UK Government Departments to reflect the reserved powers model well before the new model is implemented.

One of the key aims underpinning the Wales Bill is to deliver much needed clarity to the Welsh devolution settlement. The provisions in clause 4 are important in delivering that aim. The clause helps to draw a clear devolution boundary between what is reserved and what is devolved by defining clearly which public authorities are devolved and accountable to the Assembly and Welsh Ministers. Clause 4(1) inserts new section 157A into the Government of Wales Act 2006 to introduce devolved public authorities as “Wales public authorities”. All other public authorities are reserved authorities.

New section 157A(1) explains that Wales public authorities are those that meet conditions in new section 157A or those listed in new schedule 9A to the 2006 Act, inserted by schedule 4 to the Bill. The first condition in new section 157A(2) limits Wales public authorities to those bodies exercising functions only in relation to Wales. But there needs to be some flexibility in this rule because the Assembly can legislate in an ancillary way in relation to England, and can impose functions on devolved bodies in relation to England.

Subsection (3) makes it clear that such functions should be ignored in categorising a body as a Wales public authority. This flexibility ensures that devolved bodies—for instance, Natural Resources Wales—and regulation and inspection bodies for some devolved services can exercise some functions in England and still be Wales public authorities.

The second condition requires Wales public authorities to exercise functions that are not wholly or mainly reserved functions. Again this provides flexibility to ensure that devolved bodies with some reserved functions, like local authorities in Wales, can be Wales public authorities.

New section 157A(5) provides an order-making power to modify the list of Wales public authorities in new schedule 9A. An order is subject to scrutiny by both Houses of Parliament and the Assembly—which I think is a pretty good safeguard.

Clause 4 provides a clear separation between devolved and reserved bodies by defining the former as Wales public authorities and listing those authorities on the face of the Bill. It meets a key recommendation in the Welsh Affairs Committee’s pre-legislative scrutiny report.

Amendments 26 and 27 seek to expand the list of Wales public authorities in schedule 4 to the Bill to include the National Assembly for Wales Commissioner for Standards and the National Assembly for Wales Remuneration Board. The standards commissioner does important work as an independent authority appointed by the Assembly to safeguard standards and to address the public’s concerns. The Remuneration Board does similarly important work in ensuring that Assembly Members have the right resources to do their jobs properly. The provisions in clause 4, along with schedule 4, are intended clearly to define which public authorities are devolved and therefore which are reserved.

I understand that the Assembly’s Presiding Officer would like both these bodies included in the list of Wales public authorities for reasons of clarity. I would like to take some time to consider the categorisation of both bodies further and return to this matter on Report. That is not a rejection of the amendments, but we do need more time to consider the impact on the definition we have created in this measure. I hope that, in the spirit of that comment, the hon. Member for Dwyfor Meirionnydd will withdraw those amendments.

One of the Government’s key aims for this Bill is to deliver much needed clarity to the Welsh devolution settlement. Schedule 4 is important in delivering this aim, listing Wales public authorities to provide absolute clarity about those authorities that are accountable to the Assembly and Welsh Ministers. The Welsh Affairs Committee highlighted this as being needed in defining public authorities in this Bill, and I hope this revised Bill has delivered that clarity.

As the Government set out in our response to the Committee, we fully accept its conclusion that a list of reserved authorities would be long, and so the Bill includes a list of Wales public authorities that is far shorter and much easier to use, and which provides the clarity that was requested.

I therefore propose that clauses 1 to 4 and schedule 4 stand part of the Bill, and urge Opposition Members to withdraw their amendments.

[Liz Saville Roberts]

I am very grateful for the opportunity to close this debate, Sir Alan. I will restrict my comments to amendments 5 and 7 on jurisdiction, although I appreciate the comments the Under-Secretary made about the areas that he will reconsider. I intend to withdraw amendment 17 and to divide the Committee only on amendment 5.

In my opening speech, I referred to the arguments about divergence that are made against separate legal jurisdictions, but the overriding need to maintain a single legal jurisdiction leads to many of the complications and areas that cause a lack of clarity in the Bill.

Other issues were raised during the debate. The hon. Member for Torfaen (Nick Thomas-Symonds) made much of somewhat speculative cross-border cases. It is evident that Hadrian’s wall is no more a barrier to the functioning of law in the United Kingdom now than Offa’s Dyke would be in the future. It is effectively an argument for the right of Welsh lawyers to practise in Bristol, which is a very worthy cause but not what we are here to discuss.

[Nick Thomas-Symonds]

It was not so much speculation as experience that I was drawing upon. My point was not about lawyers, but about the uncertainty that would be created for my constituents and others by such cross-border cases if there were different jurisdictions.

[Liz Saville Roberts]

That very question is dealt with across the land border between Scotland and England. There is also a tradition in respect of Scotland and Northern Ireland.

I felt that Labour was almost clutching at straws to find ways to disagree with what Plaid Cymru was proposing. Indeed, our amendment 5 uses the very words proposed by the Labour Welsh Government.

I reiterate what the hon. Member for Ceredigion (Mr Williams) said: the issue of jurisdiction will not go away and we will continue discussing it in the future. It is an argument about gradualism that we have here today. We know that a separate body of Welsh law is developing, and as the Welsh Assembly matures, that body will grow. These questions cry out for an answer in the shorter term, rather than this piecemeal approach.

In closing, the historical realities of Northern Ireland and Scotland are indeed different from that of Wales, but we are making the historical reality of Wales today in this Committee and we should be proud of what we achieve. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 5, page 2, leave out lines 1 to 6 and insert—

“Part 2B

Separation of the Legal Jurisdiction of England and Wales

Introductory

92B New legal jurisdictions of England and of Wales

The legal jurisdiction of England and Wales becomes two separate legal jurisdictions, that of England and that of Wales.

Separation of the law

92C The law extending to England and Wales

(1) All of the law that extends to England and Wales—

(a) except in so far as it applies only in relation to Wales, is to extend to England, and

(b) except in so far as it applies only in relation to England, is to extend to Wales.

(2) In subsection (1) “law” includes—

(a) rules and principles of common law and equity,

(b) provision made by, or by an instrument made under, an Act of Parliament or an Act or Measure of the National Assembly for Wales, and

(c) provision made pursuant to the prerogative.

(3) Any provision of any enactment or instrument enacted or made, but not in force, when subsection (1) comes into force is to be treated for the purposes of that subsection as part of the law that extends to England and Wales (but this subsection does not affect provision made for its coming into force).

Separation of the Senior Courts

92D Separation of Senior Courts system

(1) The Senior Courts of England and Wales cease to exist (except for the purposes of section 6) and there are established in place of them—

(a) the Senior Courts of England, and

(b) the Senior Courts of Wales.

(2) The Senior Courts of England consist of—

(a) the Court of Appeal of England,

(b) the High Court of England, and

(c) the Crown Court of England, each having the same jurisdiction in England as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.

(3) The Senior Courts of Wales consist of—

(a) the Court of Appeal of Wales,

(b) the High Court of Wales, and

(c) the Crown Court of Wales, each having the same jurisdiction in Wales as is exercised by the corresponding court in England and Wales immediately before subsection (1) comes into force.

(4) For the purposes of this Part—

(a) Her Majesty’s Court of Appeal in England is the court corresponding to the Court of Appeal of England and the Court of Appeal of Wales,

(b) Her Majesty’s High Court of Justice in England is the court corresponding to the High Court of England and the High Court of Wales, and

(c) the Crown Court constituted by section 4 of the Courts Act 1971 is the court corresponding to the Crown Court of England and the Crown Court of Wales.

(5) References in enactments or instruments to the Senior Courts of England and Wales have effect (as the context requires) as references to the Senior Courts of England or the Senior Courts of Wales, or both; and

(6) References in enactments or instruments to Her Majesty’s Court of Appeal in England, Her Majesty’s High Court of Justice in England or the Crown Court constituted by section 4 of the Courts Act 1971 (however expressed) have effect (as the context requires) as references to either or both of the courts to which they correspond.

92E The judiciary and court officers

(1) All of the judges and other officers of Her Majesty’s Court of Appeal in England or Her Majesty’s High Court of Justice in England become judges or officers of both of the courts to which that court corresponds.

(2) The persons by whom the jurisdiction of the Crown Court constituted by section 4 of the Courts Act 1971 is exercisable become the persons by whom the jurisdiction of both of the courts to which that court corresponds is exercisable; but (despite section 8(2) of the Senior Courts Act 1981)—

(a) a justice of the peace assigned to a local justice area in Wales may not by virtue of this subsection exercise the jurisdiction of the Crown Court of England, and

(b) a justice of the peace assigned to a local justice area in England may not by virtue of this subsection exercise the jurisdiction of the Crown Court of Wales.

92F Division of business between courts of England and courts of Wales

(1) The Senior Courts of England, the county courts for districts in England and the justices for local justice areas in England have jurisdiction over matters relating to England; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to England.

(2) The Senior Courts of Wales, the county courts for districts in Wales and the justices for local justice areas in Wales have jurisdiction over matters relating to Wales; and (subject to the rules of private international law relating to the application of foreign law) the law that they are to apply is the law extending to Wales.

92G Transfer of current proceedings

(1) All proceedings, whether civil or criminal, pending in any of the Senior Courts of England and Wales (including proceedings in which a judgment or order has been given or made but not enforced) shall be transferred by that court to whichever of the courts to which that court corresponds appears appropriate.

(2) The transferred proceedings are to continue as if the case had originated in, and the previous proceedings had been taken in, that other court.”—(Liz Saville Roberts.)

This amendment replaces the Bill’s proposed recognition of Welsh law with provisions to separate the legal jurisdictions of England and of Wales, as drafted by the Welsh Government.

Question put, That the amendment be made.

14:41

Division 31

Ayes: 41

---

Scottish National Party: 35
Plaid Cymru: 3
Independent: 2
Social Democratic & Labour Party: 1

Noes: 270

---

Conservative: 266
Democratic Unionist Party: 2
Ulster Unionist Party: 1

Amendment proposed: 7, page 2, line 3, at end insert—

“(2) The Lord Chancellor and the Welsh Ministers must keep the functioning of the justice system in relation to Wales under review with a view to its development and reform, including keeping under review the question of whether the single legal jurisdiction of England and Wales should be divided into a jurisdiction for Wales and a jurisdiction for England.

(3) In exercising their duty in subsection (2) the Lord Chancellor and the Welsh Ministers must have regard to—

(a) divergence in the law and its administration as between England and Wales,

(b) the need to treat the Welsh and English languages on the basis of equality, and

(c) any other circumstances in Wales affecting operation of the justice system.

(4) The Lord Chancellor and the Welsh Ministers may appoint a panel to advise them on the exercise of their functions in this section.

(5) The Lord Chancellor must make an annual report on the functioning of the justice system in relation to Wales to the Welsh Ministers.

(6) The Welsh Ministers must lay the report before the Assembly.

(7) The Lord Chancellor must lay the report before both Houses of Parliament.”—(Paul Flynn.)

The provision in the Bill recognises the existence of a body of Welsh law made by the Assembly and the Welsh Ministers. The new subsections to be inserted after that provision by this amendment require the Secretary of State to keep the justice system as it applies in relation to Wales under review with a view to its development and reform, having regard in particular to divergence in the law as between England and Wales.

Question put, That the amendment be made.

14:54

Division 32

Ayes: 217

---

Labour: 166
Scottish National Party: 37
Liberal Democrat: 6
Independent: 3
Plaid Cymru: 3
Green Party: 1
Social Democratic & Labour Party: 1

Noes: 274

---

Conservative: 270
Democratic Unionist Party: 2
Ulster Unionist Party: 1

Clause 1 ordered to stand part of the Bill.

Clauses 2 and 4 ordered to stand part of the Bill.

Schedule 4 agreed to.

Clause 5

Power to make provision about elections

Question proposed, That the clause stand part of the Bill.

[The Temporary Chair (Sir Alan Meale)]

With this it will be convenient to discuss the following:

Amendment 28, in clause 6, page 7, line 2, leave out paragraph (b) and insert—

“(b) for ‘The Secretary of State may by order provide for the poll at an ordinary general election to be” substitute “The Presiding Officer may propose that the poll at an ordinary general election is.’”

The Bill as drafted transfers the power to vary the date of an ordinary general election from the Secretary of State to Welsh Ministers. The amendment transfers the power to the Presiding Officer of the National Assembly for Wales.

Amendment 29, page 7, line 2, at end insert—

“(7A) Leave out subsection (2) and insert—

(2) If the Presiding Officer makes a proposal under subsection (1), Her Majesty may by proclamation under the Welsh Seal—

(a) dissolve the Assembly,

(b) require the poll at the election to be held on the day proposed, and

(c) require the Assembly to meet within the period of fourteen days beginning immediately after the day of the poll.”

The amendment inserts provision for the arrangements for varying the date of an ordinary general election. The amendment also extends from seven to fourteen days the period within which the Assembly is required to meet following the day of a poll.

Amendment 30, page 7, line 2, at end insert—

“(7B) In subsection (4) for ‘An order under this section may’ substitute ‘If the Presiding Officer makes a proposal under subsection (1), the Welsh Ministers may by order’”.

The amendment replicates existing provisions in the Government of Wales Act 2006 with a modification resulting from the transfer of the power to vary the date of an ordinary general election to the Presiding Officer.

Amendment 31, page 7, line 6, at end insert—

“(10A) Section 5 of the Government of Wales Act 2006 (Extraordinary general elections) is amended as set out in paragraphs (a) to (d)—

(a) In subsection (1) for “Secretary of State” substitute ‘Presiding Officer’.

(b) In subsection (4) for “Secretary of State” substitute ‘Presiding Officer’.

(c) In subsection (4) for ‘Order in Council’ substitute ‘proclamation under the Welsh Seal’.

(d) In subsection (4) for ‘seven’ substitute ‘fourteen’”.

The amendment inserts a new provision transferring the power to propose the day of an extraordinary general election from the Secretary of State to the Presiding Officer. The amendment also extends from seven to fourteen days the period within which the Assembly is required to meet following the day of a poll.

Clauses 6 and 7 stand part.

[The Parliamentary Secretary, Cabinet Office (John Penrose)]

Clauses 5 to 7 deal with elections to the Assembly and local government elections in Wales. Clause 5 concerns the power to make provision about Welsh Assembly elections. It flows from the St David’s day agreement, which states that powers relating to elections to the National Assembly for Wales should be devolved. Essentially, the clause gives Welsh Ministers an order-making power to make provision about the conduct of Welsh Assembly elections. It also gives the Secretary of State, subject to the agreement of Welsh Ministers, the power to make regulations to combine the polls at Welsh Assembly elections with UK parliamentary elections and in theory—this will not matter much in future—with European parliamentary elections, too.

Clause 5 substitutes section 13 of the Government of Wales Act with a proposed new section 13. It broadly transfers to Welsh Ministers the power exercised by the Secretary of State to make provision by order about the conduct of Welsh Assembly elections. The new section provides that the powers of Welsh Ministers are aligned with the legislative competence of the Welsh Assembly. It also sets out the scope of the order-making power and makes it clear that it enables provision to be made on a number of matters, including the registration of electors and the limits of election expenses for individual candidates. It also allows Ministers to combine polls: when more than one poll is held on the same day, they will decide how the polls will be administered.

The clause also devolves matters relating to the allocation of regional members at an election, the process for challenging an election and what should happen if there is a vacancy in the Assembly. It also inserts a new section 13A into the 2006 Act that gives the Secretary of State the equivalent power to combine polls at Welsh Assembly elections with UK parliamentary elections and European parliamentary elections. For example, an extraordinary general election for the Assembly could be held on the same day as a general election for the UK Parliament. The exercise of this power by the Secretary of State will be subject to the agreement of Welsh Ministers and subject to the affirmative resolution procedure here in the UK Parliament.

Clause 6 concerns the timing of elections in Wales and implements the St David’s day agreement, which states that while conduct of Assembly elections and local government elections in Wales should be devolved, the Assembly should not be able to decide to hold its elections on the same day as general elections to the UK Parliament, the European Parliament or local government elections in Wales. This aspect of the administration and conduct of Assembly and local elections will therefore remain reserved to the UK Parliament.

By way of background, to date, each general election that has been held to the Assembly—there have been five in total—has been held in a different year from ordinary local elections in Wales. Further, the Wales Act 2014 amended section 3 of the Government of Wales Act 2006 so that ordinary general elections to the Assembly are now held every five years rather than every four. This, and the provision in the Fixed-terms Parliaments Act 2011, which it superseded, avoided the Assembly general election and the UK parliamentary general election clashing in 2015 and will avoid such a clash in 2020, as the next ordinary general election to the Assembly is now scheduled to be in 2021.

The next scheduled local elections in Wales are due to be held in 2017. The Local Authority Elections (Wales) Order 2014, made by Welsh Ministers, provided for the local government election date to be moved by one year in order to avoid a clash with this year’s Assembly election. The clause says that in the event of a clash, Welsh Ministers can make an order specifying the alternative day on which the poll of the ordinary Welsh Assembly general election shall be held. It also transfers the existing power of the Secretary of State to move the date of an Assembly ordinary general election by up to one month to Welsh Ministers, and that where this power is exercised, that new date cannot fall on the same date as a UK parliamentary general election or European parliamentary election.

The clause also includes provisions that prevent local government elections in Wales from being held on the same day as an Assembly general election. If there is a clash, Welsh Ministers can make an order specifying the alternative day for the local government election to held.

Clause 7 ensures co-operation between Welsh Ministers and UK Ministers over the online individual electoral registration digital service for Assembly elections and local government elections in Wales. The Assembly is free to decide on a franchise and a registration process for these elections, but as a practical matter, where the Welsh Government wants changes to the GB-wide Digital Service, they will need the approval of UK Government Ministers to do so.

[Stephen Doughty]

To clarify, if Assembly Ministers have the ability to change the provisions about the registration of electors and potentially to move to an automatic system of registration, which ensures that we have people registered, unlike the current system, how will that work with future UK parliamentary elections or other elections? Will they then be using the system that the Welsh Ministers have decided on or will there be a different register for those elections?

[John Penrose]

As the hon. Gentleman will be aware, we already run two very heavily overlapping but subtly different electoral registers for local council elections and parliamentary elections. There are different qualifications. For example, an EU national who currently lives in a British city might be eligible to vote in a local council election and not in a UK parliamentary election, so we have two heavily overlapping but not identical registers. The same applies to Scottish parliamentary elections to Holyrood. That will continue, and should the Cardiff Assembly decide that it wants to change things in some way it will have the competence to do so for the electoral roll for Cardiff Assembly elections, but it will not have the competence to change the registration process or scope for UK parliamentary elections as that is a reserved matter to be decided in this place. I hope that clarifies things for the hon. Gentleman.

15:15

[Stephen Doughty]

It helps to clarify things in one respect, but does the Minister not accept that there could end up being a very significant discrepancy in the numbers registered for an Assembly election versus a UK parliamentary election? The public do not understand these things in the context of the complexities of all the registers and lists; if they have registered to vote, they would expect to be able to vote in all elections. Given the huge discrepancy between registration for UK parliamentary elections and registration for the EU referendum—and given the fact that the Boundary Commission is not using the figures for the EU referendum—does he not accept that there might be a huge discrepancy in this regard too?

[John Penrose]

There has been a difference for many years between local election registers and parliamentary election registers. That is a very long-standing principle. We are not changing that. It would be possible, should the Welsh Assembly so decide, to make further changes and enfranchise other groups of people whom we would not necessarily want to enfranchise for UK parliamentary elections. At the moment, however, there is already a difference between the two electoral registers. There has been for a very long time. Nothing about this will change any of that, but in future it will be up to the Welsh Assembly to decide whether it wants to make further changes that might narrow or widen the existing long-standing differences.

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

The Minister seems to be saying that the Welsh Government should have the right to displace coincidental elections, but that they do not have to. He seems to be saying that under the rules a general election, an Assembly election and even a European election could occur on the same day. At the same time, he is saying that it would be delayed by only a month. In the last such episode, we saw political parties in Wales campaigning up to the Assembly elections and not really mentioning Europe, but then we had only six weeks to persuade Wales that it was better off in. That was not enough. Is a month long enough?

[John Penrose]

I fear that I was not clear enough. I am saying that there are explicit provisions in the Bill to prevent the elections the hon. Gentleman just mentioned from happening on the same day. It will not be possible to hold an Assembly general election, for example, on the same day as a UK parliamentary general election. That is explicitly prevented in the Bill and if some future accident of diary meant that the two things were to fall on the same day, we are talking about the powers for Welsh Ministers to move their date, should it be necessary, by up to a month, and about their having that power rather than the Secretary of State.

[Geraint Davies]

On the second point, one question would be whether a month is long enough. It would seem to me that it is not. Secondly, it seemed to me that the Minister said that there are powers to move the dates but that Welsh Ministers are not obliged or required to move them. Could not the Welsh Assembly Government choose to have the two elections on the same day under this provision?

[John Penrose]

I am not saying what the hon. Gentleman fears I am saying. I can reassure him on that. The power to move things by a month already exists. It just happens to be vested in the Secretary of State. All we are seeking to do here, as part of the St David’s day agreement and following the principles set out in it, is to devolve that power from the Secretary of State to Welsh Ministers. We are not seeking to change the power in one direction or another; we are just making sure that it is being exercised more locally in Cardiff rather in than Westminster. It continues to be legally the case that the Assembly elections and the UK parliamentary elections cannot happen on the same day, so it would only be a question of moving some of these elections around in that case—although there might be other reasons why one might want to—if at some point, many decades hence, an accident of the diary meant that the two happened to coincide. In order to comply with the constraint, they cannot happen on the same day and one would have to move, whereupon this power would apply.

I was talking about the online voter registration system and the way that that needs to be adjusted, if it is to be adjusted, by mutual consent. As I said, the Assembly is free to decide on the franchise and the registration process for Assembly elections, but as a practical matter, where the Welsh Government want changes to the Great Britain-wide Digital Service, they will need the approval of UK Ministers to do so. That is because the Digital Service is a series of interconnecting digital applications, including online voter registration, for people living in England, Wales and Scotland, as well as British citizens resident overseas. We all need to ensure that any changes to the franchise or registration process for Welsh Assembly and local government elections in Wales do not adversely impact on voters in other parts of the UK or abroad.

With these considerations in mind, the clause allows Welsh Ministers to make regulations concerning the Digital Service in relation to Assembly and local government elections in Wales with the agreement of a Minister of the Crown.

[Hywel Williams]

I apologise to the Committee for my voice today. My daughter Enlli came back from nursery the other day with a slight tickle, and that has led to world war three breaking out in my larynx, unfortunately.

My hon. Friends and I support the motion that clauses 5, 6 and 7 stand part of the Bill, preferably along with our amendments 28 to 31 to clause 6. These are probing amendments and I would be interested in hearing the Minister’s response.

As the Assembly has grown in competence, it is reasonable that the power over the timing of its own elections, as well as powers over the conduct of those elections and the registration of electors, should be devolved. Any ambitious democratic body would surely seek such powers. The amendments in this group, as Members on both sides of the Committee will be aware, were originally drafted and published by the office of the Presiding Officer of the National Assembly. In a letter dated 30 June, the Presiding Officer set out that the aim of this set of amendments is to

“deliver a constitutional settlement that is workable, clear and provides a firm foundation for the Assembly’s future.”

She noted in the same letter that these amendments were informed by evidence given during pre-legislative scrutiny of the previous draft Wales Bill to the then Assembly’s Constitutional and Legislative Affairs Committee, and were equally informed by the Assembly’s experience of working under the current settlement.

Amendments 28 to 31 would transfer the power to vary the date of an ordinary general election, as well as the power to fix the date of extraordinary Assembly elections, from the Secretary of State directly to the Presiding Officer of the National Assembly, rather than to Welsh Ministers. The amendments are underpinned by the principle that the Assembly should have powers over its own internal affairs.

It is worth pointing out, as the context, that the Fixed-term Parliaments Act 2011 set a precedent for moving decision making over the administration of elections away from the Government. Our amendments in this group, though probing, have this same underlying principle at their root—that is, that powers over determining the date of Assembly elections should be moved away from the Government. To our mind, this power should not be conferred on the Executive, so as to remove the possibility of any accusations of political interference. Were this change to be made by our amendments, it would add to the competence and responsibility of the legislature, which should surely be welcomed by all parties. It would also increase public confidence in the independent nature of election management in Wales.

As drafted, the Bill transfers the power to vary the date of an ordinary Assembly general election from the Secretary of State to Welsh Ministers. This is in contrast to the system operated in Scotland, whereby this power is bestowed on the Presiding Officer. Amendment 28 would put the Welsh Assembly’s arrangements on the same footing. Amendment 29 relates to conferring powers over varying the date of an ordinary general election. Although the Bill devolves powers over electoral arrangements, it does so in an unnecessarily impractical way.

[John Penrose]

Can the hon. Gentleman expand on his thinking about why those changes would be helpful? There are different approaches, as he will appreciate. Does he believe that there is anything unclear about the criteria that must be satisfied under the Fixed-term Parliaments Act as to whether a majority has been achieved in an Assembly or Parliament, or does he have other concerns about potential political game playing? Does he believe that the measure might put the Presiding Officer in a politically contentious position?

[Hywel Williams]

I have considered that, and it is my opinion and that of the Presiding Officer that it would not put her in that difficult position. These amendments are hers, after consideration. The point about parity and similarity with Scotland is persuasive, to our minds.

[Jonathan Edwards]

Is it not the case that under the Bill as drafted, the Welsh Government could act unilaterally if they so decided, whereas if the spirit of the amendments were accepted, adapted by the Government and incorporated in the Bill, the power would reside with the Presiding Officer, but only with the support of the legislature, which means that there would have to be cross-party support before she acted?

[Hywel Williams]

I take my hon. Friend’s point entirely. The four Assembly elections held so far have not produced a majority Government, so the consent of the Assembly collectively would be required in that situation. I am not casting any aspersions on the motives of Governments in Cardiff, London or anywhere else, but the amendment would remove any suspicion of political advantage being sought.

By adding a strict seven-day timeframe, during which period the Assembly must meet and elect a Presiding Officer, the Bill once again puts Wales on an unequal footing with Scotland. The Scottish Parliament is allowed 14 days to carry out this function. Given the history of the outcomes of elections to our Assembly, as I said a moment ago, and the obvious consequence that time has been required for the parties to discuss all manner of arrangements, seven days for this particular exercise seems unreasonable. That is why amendment 29 extends this period to 14 days for the Welsh Assembly.

Amendment 30 amends the Government of Wales Act 2006 so as to confer powers over varying the date of an ordinary general election to the Presiding Officer, as opposed to transferring this power directly to Welsh Ministers under the Bill as currently drafted. Finally, amendment 31 amends the 2006 Act so as to ensure that powers over proposing the date of an extraordinary general election are given to the Presiding Officer. The amendment once again extends the timeframe during which the Assembly is required to meet following an election to 14 days, thus establishing parity with Scotland.

These amendments are meant to probe and promote discussion. We do not intend to press them to a vote.

[John Penrose]

I thank the hon. Gentleman for laying out his case so clearly and so helpfully. He is right to point out that the provisions in the Bill seek to mimic the existing provisions to which his four amendments relate and to devolve the existing arrangements from the Secretary of State down to Welsh Ministers. However, he is also right to point out that this is not quite the same thing as has already happened in the parallel situation in Scotland, where the powers were devolved not to Scottish Ministers but to the Presiding Officer. We therefore already have in British constitutional arrangements two parallel but subtly different approaches.

The reason I asked my question of the hon. Gentleman is that there are competing views on this issue. I am not sure that either is necessarily automatically better or worse than the other, but there are different strengths and weaknesses, and different pros and cons, to both. Some people are concerned that devolving these powers to the Presiding Officer could put them in a politically contentious position. I do not think that that is the view of the Scottish Presiding Officer, the Welsh Presiding Officer or many politicians in the Welsh Assembly, but some people would certainly cleave to it—perhaps here, for example.

Equally, the question is whether the criteria that have to be satisfied for a fixed-term Parliament to be altered in length and for an early, extraordinary election to be called, are clear. For example, for this Parliament, the Fixed-term Parliaments Act says that we either have to have a Government who cannot command a majority and who, over two weeks, have failed to find one, or we have a two-thirds majority. Those are fairly clear criteria, so there is relatively little opportunity for political game-playing, either by Ministers or a Presiding Officer.

15:30

[Jonathan Edwards]

I am grateful to the Minister for the tone of his reply and for his clarification. Having read up on the potential implications of the Brexit situation, whereby the new Prime Minister may decide to call a snap election, I wonder whether it would be possible, under the terms of the Fixed-term Parliaments Act, for the new Prime Minister to call a vote of no confidence in him or herself, therefore triggering an election.

[John Penrose]

If the hon. Gentleman is not already in his party’s Whips Office, he probably should be, because that is a proper Whips Office wheeze. Were such a thing legally possible—I defer to others to decide whether it would be—I do not think it would pass the test of democratic credibility. Any Government who sought to precipitate their own downfall through that kind of mechanism—voting against themselves and saying they were not competent—would, as a practical matter, probably be judged quite harshly by voters in the polls. However, I appreciate that we are talking about theoretical circumstances, and we will have to leave that issue to the future to decide.

The point I was trying to make is that there are legitimate arguments on both sides, and both systems—one here, and one in Scotland—already persist quite happily side by side in British constitutional arrangements, and the question is now being raised in relation to the Welsh Assembly. I do not want to say that one system is inherently legitimate or illegitimate, or that one is necessarily better or worse than the other. It has to be a question of what is acceptable to local decision makers—in this case, Assembly Members and their officials in the Welsh Assembly.

We are therefore sympathetic to taking this issue away and thinking about it carefully. I thank the hon. Gentleman for raising it, and he makes a thought-provoking case. If he agrees, I would be happy to take his amendments away—I think he indicated they were probing amendments—to see whether we can take this issue forward or at least develop his ideas and thinking a little further.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clauses 6 and 7 ordered to stand part of the Bill.

Clause 8

Super-majority requirement for certain legislation

[Hywel Williams]

I beg to move amendment 32, page 10, line 3, leave out subsections (5) and (6).

The amendment removes the requirements on the face of the Bill for the National Assembly for Wales’ Standing Orders to include requirements for the publication of a statement in Welsh and English.

[Mr Speaker]

With this it will be convenient to discuss the following:

Clauses 8 to 11 stand part.

Amendment 33, in clause 12, page 12, line 24, at end insert—

“(a) for a sum paid out of the Welsh Consolidated Fund not to be applied for any purpose other than that for which it was charged or (as the case may be) paid out”.

The amendment sets out that Welsh legislation must provide that the Assembly has to authorise any drawing from the Consolidated Fund and that such funds can only be utilised for the purposes for which they were authorised.

Clauses 12 to 14 stand part.

Amendment 38, in clause 15, page 14, line 3, leave out “translation of references” and insert “consequential provision”.

The amendment replaces “translation of references” with “consequential provision”, to reflect the overall effect of Clause 15.

Amendment 39, page 14, line 5, at end insert—

“( ) Cynulliad Cenedlaethol Cymru,”.

The amendment clarifies that any references in legislation, instruments and documents to “Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.

Amendment 40, page 14, line 6, at end insert—

“( ) Comisiwn Cynulliad Cenedlaethol Cymru,”.

The amendment clarifies that any references in legislation, instruments and documents to “Comisiwn Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.

Amendment 41, page 14, line 7, at end insert—

“( ) Deddfau Cynulliad Cenedlaethol Cymru, or”.

The amendment clarifies that any references in legislation, instruments and documents to “Deddfau Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.

Amendment 42, page 14, line 11, after “to”, insert “Cynulliad Cenedlaethol Cymru,”.

The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to the “Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.

Amendment 43, page 14, line 12, after first “Wales,” insert “Comisiwn Cynulliad Cenedlaethol Cymru,”.

The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to the “Comisiwn Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.

Amendment 44, page 14, line 12, after “Commission,” insert “, Deddfau Cynulliad Cenedlaethol Cymru”.

The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to “Deddfau Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.

Amendment 45, page 14, line 17, after “name”, insert

“in Welsh or English (as the case may be).”

The amendment clarifies that the clause applies to any new names listed in the clause be they in English or Welsh.

Clauses 15 and 16 stand part.

Amendment 14, in clause 17, page 15, leave out lines 29 to 31.

This amendment and amendment 15 make provision for the definition of devolved competence in Clause 17 to be applied for the purpose of the amendments made to Clause 19 by amendment 13.

Amendment 15, page 15, line 35, at end insert—

“( ) In this section and section 58B ‘within devolved competence’ and ‘outside devolved competence’ are to be read in accordance with subsections (7) and (8); but for the purposes of section 58AB no account is to be taken of the requirement to consult the appropriate Minister in paragraph 11(2) of Schedule 7B.”

See the explanatory statement for amendment 14.

Clauses 17 and 18 stand part.

Amendment 13, in clause 19, page 17, line 27, at end insert—

“(2) After section 58A of that Act (inserted by section 17(1) of this Act) insert—

‘58B Transfer of functions within devolved competence

(1) Functions conferred on a Minister of the Crown by virtue of any pre-commencement enactment or pre-commencement prerogative instrument, so far as they are exercisable within devolved competence by a Minister of the Crown, are to be exercisable by the Welsh Ministers instead of a Minister of the Crown.

(2) Provision for a Minister of the Crown to exercise a function with the agreement of, or after consultation with, any other Minister of the Crown ceases to have effect in relation to the exercise of the function by a member of the Welsh Government by virtue of subsection (1).

(3) In this section “pre-commencement enactment” means—

(a) an Act passed before or in the same session as this Act and any other enactment made before the passing of this Act;

(b) an enactment made, before the commencement of this section, under such an Act or such other enactment; “pre-commencement prerogative instrument” means a prerogative instrument made before or during the session in which this Act was passed.’”

Clause 19 makes provision about transfer of Ministerial functions. The amendment provides for the transfer of all functions currently exercisable by Ministers of the Crown within devolved competence to the Welsh Ministers.

Clause 19 stand part.

That schedule 3 be the Third schedule to the Bill.

Amendment 16, in clause 20, page 18, line 8, at end insert—

“(ab) section 58B,”.

Clause 20 amends the power in section 58 of the Government of Wales Act 2006 to make provision by Order in Council for the transfer of functions to the Welsh Ministers to authorise provision to be made in respect of “previously transferred functions”. This amendment extends the definition of “previously transferred functions” to include functions transferred by the general transfer proposed by amendment 13.

Clauses 20 and 21 stand part.

New clause 2—Welsh thresholds for income tax—

“(1) Part 4A of the Government Wales Act 2006 is amended as follows.

(2) In section 116A(1)(a) (overview), after ‘of’ insert ‘and thresholds for’.

(3) After section 116D insert—

‘116DA Power to set Welsh thresholds for Welsh taxpayers

(1) The Assembly may by resolution (a “Welsh threshold resolution”) set one or more of the following—

(a) a Welsh threshold for the Welsh basic rate,

(b) a Welsh threshold for the Welsh higher rate,

(c) a Welsh threshold for the Welsh additional rate.

(2) A Welsh threshold resolution applies—

(a) for only one tax year, and

(b) for the whole of that year.

(3) A Welsh threshold resolution—

(a) must specify the tax year for which it applies,

(b) must be made before the start of that tax year, and

(c) must not be made more than 12 months before the start of that year.

(4) If a Welsh threshold resolution is cancelled before the start of the tax year for which it is to apply—

(a) the Income Tax Acts have effect for that year as if the resolution had never been made, and

(b) the resolution may be replaced by another Welsh threshold resolution.

(5) The standing orders must provide that only the First Minister or a Welsh Minister appointed under section 48 may move a motion for a Welsh threshold resolution.’”

This new clause would allow the National Assembly for Wales to determine the income thresholds at which income tax is payable by Welsh taxpayers.

New clause 3—Income tax receipts—

“(1) Section 120 (destination of receipts) of the Government of Wales Act 2006 is amended as follows.

(2) The Comptroller and Auditor General must certify for each tax year that Her Majesty’s Commissioners for Revenue and Customs have transferred the full amount of income tax paid by Welsh taxpayers in that tax year into the Welsh Consolidated Fund.”

This new clause would require the receipts from income tax paid by Welsh taxpayers to be paid into the Welsh Consolidated Fund.

[Hywel Williams]

I rise to speak to amendments 32, 33 and 38 to 45. My hon. Friends will seek to catch your eye later, Sir Alan, to speak on the aspects that concern them. I also wish to speak to clause 18 stand part.

Amendment 32 is a technical amendment. Clause 8 provides that Assembly legislation dealing with certain protected matters—the name of the Assembly, who is entitled to vote at Assembly elections, the voting system and so on—would require a super-majority of the Assembly. It requires the Presiding Officer to decide whether an Assembly Bill relates to a protected matter and to state that decision, and I do not disagree with any of that.

However, the clause then requires that that statement be in both English and Welsh and that the form of that statement be dealt with in the Assembly’s Standing Orders. While we agree that such statements should be made in both languages, amendment 32, which is in my name and those of my hon. Friends, would remove those two provisions. It does that for two reasons. First, including them is at odds with much of the rest of the Bill, which recognises the Assembly as a mature legislator and allows it to determine its own internal arrangements rather than what is required by Westminster. Secondly, both Welsh and English are official languages of the Assembly—as someone rather paradoxically put it, English is a Welsh language in that respect—and both must be treated equally. Therefore, providing that the Presiding Officer’s statement must be made in both languages is unnecessary—nugatory.

Amendment 33 seeks to amend clause 12, which inserts a new section into the Government of Wales Act 2006. This would replace the previous arrangements for financial controls and provide that Welsh legislation should make provision for the matters contained within that section, such as accounts to be prepared of their expenditure and receipts by the First Minister or other Ministers who draw sums from the Welsh consolidated fund. We believe that the new section should include basic safeguards in the form of minimum requirements that Welsh legislation should provide for, and that reflect good governance. Section 124 of the Government of Wales Act 2006 currently provides for authorisation by the Assembly. Amendment 33 proposes that funds should be issued from the Welsh Consolidated Fund only in accordance with legislation or authorisation by the Assembly, and can be utilised only for the purposes for which they were authorised. This simple addition to the Bill would improve accountability and responsibility, and it would reflect the provisions for Scotland—that is, section 65 of the Scotland Act 1998.

Amendments 38 to 45 are technical in nature. They amend clause 15, which provides that if the Assembly changes its name, then any reference in legislation, instruments and documents to the “National Assembly for Wales” is to be read as a reference to the new name. This saves having to change each reference to the “National Assembly for Wales”, of which there may be many thousands. However, the clause neglects the fact that Assembly Acts are prepared bilingually, and so references to the Assembly and the commission will be in Welsh and English. Moreover, it does not address the issue of legislation, instruments and documents that refer to “Cynulliad Cenedlaethol Cymru”. The amendment clarifies that any reference in legislation, instruments and documents to “Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name in Welsh.

The same issues arise with regard to any change in the names of the National Assembly for Wales Commission or Acts of the National Assembly for Wales, which are also addressed in the amendment. The heading of the section inserted into the Government of Wales Act 2006 by clause 15 refers to “translation of references”. The amendment would change that to “consequential provision”. That is more appropriate, given the overall effect of clause 15, and avoids confusion between legal translation—that is, consequential provisions—and linguistic translation of references. I look forward to the Minister’s response and hope that he might consider adopting some of these changes on Report.

I now turn briefly to clause 18 stand part. This clause shows the speed of political change. After nearly five years of discussions about Silk and powers for Wales, we are now providing that Wales Acts are relevant to the European Communities Act 1972, although the UK has just voted to leave the EU. Obviously, this provision should remain in the Bill. We are still in the EU, and unpicking EU legislation from our domestic legislation will take many years and will not be easy. There are questions as to how decisions will be taken about which EU legislation remains.

I hope that the UK Government, of whatever stripe, but particularly of a right-wing Conservative complexion, will not take it upon themselves to decide what is, or what is not, relevant to Wales. We have already heard the comments from one Conservative leadership contender at the weekend calling for a “strong Union”, and we suspect that we know what that actually means. We need to know where Wales stands and how these powers will be determined. So-called Henry VIII powers, lying either with the UK Government or with Whitehall bureaucrats, will not be democratically acceptable.

My party, Plaid Cymru, is the official Opposition in Wales and the second largest party after the elections two months ago. The balance of competences review did not consider Wales in particular depth, but, post-Brexit, we must consider the question of which powers should be in Wales’s hands and not those of Westminster. The vote in Wales to leave the EU was not a vote to centralise power in Westminster.

I draw the House’s attention to today’s Assembly debate on a motion standing in the name of our former colleague, Simon Thomas, which states that the Assembly

“believes that following the withdrawal of the UK from the EU, provisions should be made to ensure that all legislation giving effect to EU Directives or Regulations pertaining to areas such as environmental protection, workers' rights, food safety and agriculture are retained in UK and Welsh law unless they are actively repealed by the relevant Parliament.”

The debate will repay close reading.

Whether or not Vote Leave was in a position to make the promises it made, they must be honoured by the Westminster Government because they were the Brexit promises that people voted for. That means additional money for the NHS through the Barnett formula, as well as protecting funding for our farmers and regional and structural funds post-2020.

It is right for clause 18 to remain part of the Bill, as it will be relevant until any official departure from the European Union takes place. However, the clause, like so many others, shows how the Bill has already been overtaken by events and why Wales should have so much more power than it provides. The Bill is far from being a once-and-for-all settlement, and we give notice that we will return to this matter later in this Parliament.

[Glyn Davies (Montgomeryshire) (Con)]

Thank you, Sir Alan, for calling me to speak on this hugely important Bill. The work leading up to it has played a significant part in my time in politics.

I pay tribute to the shadow Secretary of State for Wales, the hon. Member for Newport West (Paul Flynn). I have a special reason for welcoming him to his position: of all the other Welsh Members of Parliament, I am probably the nearest to being an octogenarian, and his wonderful example gives me promise and ambition for the future. If he can do it, there is no reason why I cannot. I thank him for that, as well as for the great wit with which he has entertained me over many years.

The Bill is wide-ranging. Inevitably, opinions on it will differ and there will be an element of compromise. In his response to earlier amendments, the shadow Secretary of State said that we need to be pragmatic. We all have different opinions, including in my own party. We all, I think, want this Bill to go through, but we need to accept that we are going to have to compromise.

The big compromise that I have to make relates to the fact that the Bill transfers energy powers to the Welsh Government, the idea of which fills me with horror. I would find it difficult to support the Bill, except that the Welsh Government have, disgracefully, already taken unto themselves those powers through their local government responsibilities. That makes the Bill’s transfer of energy powers much less damaging to mid-Wales and much less of an attack on the people of mid-Wales than it would otherwise have been.

The intention behind the Bill is to provide a much more stable, long-lasting and permanent settlement for Wales and to provide clarity on it. I am not sure about the word “permanent”. I do not think it is wise to have a Wales Bill every five years, which is pretty much what we have been doing. This is not permanent: I think we will come back to developing devolution at a pace at which we can bring the people of Wales with us. Plaid Cymru Members spoke earlier about the judicial position. When the body of Welsh law is no longer tiny and grows to be substantial, we may have to revisit the issue in the future, and the same may be true of other issues that we have not entirely foreseen.

15:45

Today, I want to make specific reference to clause 16, because it is absolutely fundamental. It deals with the power to vary income tax levels in Wales, which is hugely important, providing financial accountability to the Welsh Government. Like the Chairman of the Welsh Affairs Committee, I was opposed to devolution but came to terms with it almost immediately, which is what we should do when there is a referendum. It was a very close result but, as I was driving home from the count, I accepted that we would have a Welsh Assembly, and I am in total support of it. Not only that, but I think that we should accept the decision of the people and make a success of it. We are doing our best to do that.

When I became a Member of the Welsh Assembly, I was asked to be the Conservative financial spokesman. Clearly, one came upon the annual budget debate. As I was preparing to speak in that debate in the Assembly, I thought to myself, “This isn’t a budget; what we are dealing with here is just a spending plan”. When I was chairman of the finance committee on Montgomeryshire District Council, the biggest meeting of the year, by a long way, was the meeting at which we set the rates. We set aside a whole day to debate whether or not to put a penny on the rate. Every budget I have ever seen has on one side what will be spent and on the other how it will be raised.

I know from talking to people at election time that that is what is on their minds. It engages people to know that, if money will be spent on something, it will be taken from them in some way to pay for it. That is what elections should be about—but not in Wales. In Wales, if the Government are spending money, generally on something that the people might approve of because it is popular, they say, “This is what we are doing, aren’t we great?” However, occasionally in politics we find that Governments have to support a law that is not so popular and is difficult to argue for in public because people are not altogether convinced. It is not acceptable just to say, “We can’t do that because we don’t have enough money from the Westminster Government”. The Government have to be financially accountable to people; that is what makes a parliament.

In this Bill, we intend to change the position and call the National Assembly for Wales the Welsh Parliament. I fully support that. However, if it is going to be called the Welsh Parliament, it has to have the powers and responsibilities, and particularly the financial accountability, that we would expect a Parliament to have. That is why that is so important in this Bill.

There is a division of opinion on this issue. Some of my colleagues do not agree with me, and we have had this debate previously. This is not an occasion on which I want to be political, but what I am about to say could be interpreted as being politically against the Labour party. It is not intended to be, but rather it is an attempt to demonstrate the position that we are in. A lot of people are opposed to granting the ability to vary income tax to the Welsh Government because they will always be led by Labour. I do not know why people are quite so pessimistic; the day will come when the Welsh Government will not be led by Labour. In fact, we are not so far from that day now. We had a Welsh Assembly election in which the total Labour vote was about 30% or 31%, and an EU referendum in which the advice of the First Minister, who was leading the campaign, was virtually ignored in Labour strongholds. It was not ignored by people who do not support Labour, but the very people who support Labour just dismissed the First Minister’s leadership of the campaign. The First Minister must wake up in the night thinking, “My position is looking a bit dodgy, a little weak. I’ve got 30% support and that may well have been halved in the EU referendum among Labour voters.”

I genuinely believe that we are on the verge of creating a proper democracy in Wales, one in which not everyone assumes that Labour will rule, but we have competition instead. People will be much more engaged and interested. My comments might be perceived as being against Labour, but they are not meant to be. I am saying that I am in favour of a genuine political debate whenever we have an election in Wales. I think we are not too far away from that.

One issue that has caused some controversy, on the Conservative Benches in particular, has been the need for a referendum on whether income tax powers should be devolved. I think we have had enough of referendums. As a general principle I am not in favour of them, and on this particular issue I do not think one is necessary. That has been my view for a long time. The referendum is suggested, and supported, as a blocking mechanism to make sure that the Welsh Government never become financially accountable. That is not the right way to go.

That is now the Government’s view—they have moved on from previous positions. The Silk commission’s recommendations may be the bible of the hon. Member for Ceredigion (Mr Williams), but the commission was wrong to recommend a referendum. It was a weak recommendation. The commission should simply have recommended that the only way to financial accountability is to allow income tax to be varied by the Welsh Government, so that they become responsible. A referendum has been proposed in the past but is not what we should do now.

The Bill is broad-ranging and hugely important. It is the next step forward in making the Welsh Assembly into a Parliament. It will settle the constitution for some years to come—I would not like to predict how long it will be until we are back here talking about another Wales Bill; I might be an octogenarian by then. The Bill is an important step forward and I very much hope that it passes through here and the other place unhindered.

[Susan Elan Jones]

I speak in support of amendment 11 on income tax powers. I am interested in much of the Bill, but during the past week, in the aftermath of the Brexit result, a thought has come to me. I am now absolutely determined that, like highly calorific chocolate, constitutional experts are to be valued, savoured and enjoyed, but not indulged in very frequently. I spent the referendum evening sitting around a table in a television studio in the company of a constitutional expert—I would argue that he is probably one of Wales’s finest. As we looked at the results coming in, many of them fairly miserable, the constitutional expert sprang to life and said, “Do you realise the impact of that on parts of the Wales Bill? Do you realise its impact on this and on that?” I sat there thinking that I was a little more interested about potential job losses at Airbus, what would happen to farms and all the rest of it.

Let us get back to the amendment. I have always supported a referendum on devolving income tax. Our amendment 11 would do something really practical. We argue that income tax powers should not be devolved to the Welsh Assembly until a full fiscal framework for Wales has been approved by both Houses of Parliament and the Welsh Assembly. That is an agenda of total respect.

I will tell the House why that is important. We all sit around discussing what it means to be Welsh, our patriotism and our different interpretations of it, often with the view that we have the one complete, absolute truth on the issue. But there is one thing that matters more and more, especially in the aftermath of the Brexit result. I can think of a million ways in which every single one of us in this Chamber could express our Welsh patriotism, but there is one way we can never do so: by supporting a deal under which ordinary Welsh people become poorer. That must be our litmus test, and that is why we must not only vote on this issue in both Chambers of this House, but we must also place it in the hands of our Welsh National Assembly.

I agree with part of what the hon. Member for Montgomeryshire (Glyn Davies) said, but it is a pity that he has an obsession about never wanting a Labour Government in Wales again. Last week the Secretary of State said some interesting and thoughtful things on television in the wake of the EU referendum.

[Glyn Davies]

Let me clarify my view on that. We should not be in a position where we never have a Labour Government in Wales from time to time, but I object to the idea that we should never have anything but a Labour Government, and the assumption that Wales must always have a Labour Government or be led by Labour. We need variation—let us have somebody else, and then Labour can come back.

[Susan Elan Jones]

It does not much matter what I or the hon. Gentleman think—it has far more to do with what the electorate in Wales think. In all seriousness, this is about how we get the best deal for people in Wales, and for those of us who have never had an ideological objection to the Assembly having tax-raising powers, what we are proposing is sensible, workable, and goes with the grain of the majority of opinion in the Assembly, in this House and across Wales. The hon. Gentleman will probably disagree with me, but he said something interesting about how the Welsh Assembly, which was elected in 1997 with a small majority, has turned into something that very few people in Wales would want to get rid of, and quite right too. I think that this change and incremental increase in devolution, and the support for further fiscal powers, is right and proper, and it is time that the House supported it.

[Liz Saville Roberts]

I rise to speak against clause 10 and the imposition of an obligation on the Assembly to undertake and publish justice impact assessments for Assembly Bills. Such assessments are intended to set out the potential impact of a Bill’s provisions on the justice system in England and Wales, and specifically on the Crown Prosecution Service, the Serious Fraud Office, courts and prisons. The obligation to undertake justice impact assessments—or justice impact tests—in Westminster Departments is voluntary in the sense that the UK Ministry of Justice provides guidance as a tool to help policy makers find the best way to achieve their policy aim. If the guidance approach is appropriate for Westminster, why should it be deemed acceptable to place an obligation on the Assembly by means of its own Standing Orders?

[Mr Mark Williams]

I share the hon. Lady’s concerns over clause 10. In many ways the Bill includes a welcome approach for the Assembly to regulate its own affairs, so does she agree that this measure is inconsistent with the rest of the Bill?

[Liz Saville Roberts]

It is also being imposed on the Assembly through its own Standing Orders. In that same spirit, surely the Standing Orders of the Assembly should be a matter for Assembly Members alone, especially bearing in mind that the Bill trumpets its credentials as the harbinger of a new model of reserved powers. No other legislature in the UK is denied the freedom to decide on its own legislative process and Standing Orders. There is nothing of the kind in Northern Ireland, Scotland or England, and nothing currently in Wales. No reciprocal arrangement is in place whereby UK Government Bills are required—voluntarily or otherwise— to assess what impact they will have on Assembly responsibilities in Wales. What impact, for example, will the building of the super-prison in Wrexham have on public service provision in the area, the national health service and transport?

16:00

As a matter of principle, this approach—I refer to the one of mutual consideration and respect—might be welcomed, but the arrangement proposed in clause 10 can be compared with Goliath ordering David to assess the impact of his slingshot while chucking boulders around at will. This requirement, coupled with the powers of the Secretary of State to veto Welsh legislation under Section 152 of the 2006 Act, causes me some concern.

Finally, I take this opportunity to refresh the memory of the Committee that, were Wales to be equipped with a separate legal jurisdiction, there would simply be no need to jump through the hoops implicit in justice impact assessments. Clause 10 once again reminds us that underpinning the Wales Bill is the need to prioritise the single unified legal system of England and Wales, hedging the Assembly’s legislators about with an excess of checks and balances, rather than empowering them. We oppose clause 10 and we will vote against it when the time comes.

[Stephen Doughty]

I wish to speak on clause 16 and the referendum on income tax powers. I preface my remarks by saying that I have always been an instinctive pro-devolutionist. I worked in the Assembly when it first began and I supported its establishment. I would go further than some aspects of the Bill in devolving powers and giving responsibilities to the Welsh Government. I support, as the First Minister has, a federal UK. I would like a constitutional convention and a written constitution that properly settles the duties and responsibilities of the respective Administrations across these islands. This is even more crucial in the aftermath of the EU referendum. I genuinely fear for the future of the UK at the moment. I have always considered myself a proud Welshman, but also proudly British and proudly European. I will continue to do so, but we have unleashed a whole series of very difficult questions in the aftermath of the vote that make our deliberations on the Bill all the more important.

[David T. C. Davies]

Does the hon. Gentleman agree that the citizens of Switzerland and Norway are Europeans and may be proud to be European? They are just as European as anyone else in Europe, and he would be just as European as a Norwegian or a Swiss person is after Brexit takes place.

[Stephen Doughty]

I am not going to be taken down that rabbit hole. I want to concentrate on the details of the Bill. I make my point because, despite having those views and pro-devolutionary instincts in supporting the most of the Bill—as I said, I am even willing to go further—I have also always believed in applying two tests to proposals put before us.

First, whatever is proposed must deliver better outcomes for the people of Wales. It is absolutely crucial that we look at this in the context of our unique history. Our history is not the same as that of Scotland, our legal history is not the same as that of Scotland, and the nature of our polity and development is not the same as that of Scotland. There are distinct and unique things about Wales that we should consider that do not apply to Scotland. We always have to ask: is this the right solution? I apply that particularly to issues such as policing, the justice system and criminal jurisdiction. I am not saying that they should not be looked at in the future, but I believe in a practical test of whether they will deliver better outcomes. It is not just about sticking a dragon on something and saying it will be done better; this has to be approached in a very cold and hard-headed way.

Secondly, I have always believed in the consent of the Welsh people when making major constitutional change. I support very much the intent of amendment 11, which I will support if it is pressed to a Division. We have considered the fiscal framework for Wales before moving forward with any devolution of income tax powers. There is a fundamental principle at stake here. Clause 16 would remove the requirement for a referendum. We have had two referendums in this country, one in Wales and one in Scotland. In Scotland, the question related to the devolution of income tax powers. It was the second question in the Scottish referendum of 1997 and it passed by 63.48%. The Scottish people were asked that question and voted for it separately from the question on whether there should be a Scottish Parliament. In Wales, we had a referendum on 3 March 2011 on a much lesser question, which was whether the Assembly should be able to make laws on the areas for which it already has responsibility. I did not think we needed that referendum at all. It was obvious that Wales should have had primary law making powers—it should have had them from the beginning. I always thought it absurd, sitting there in the early days of the Assembly discussing odd details of secondary legislation, that we did not have that primary law making power, so I am glad we have moved in that direction in terms of the Assembly’s core competences.

Whether or not people agree with devolving income tax powers, the question is a very fundamental one that changes the nature of the settlement for the Assembly and the Welsh Government. The question should be put to the Welsh people. I think it would pass in the current context, despite what some people say. Many in Wales would want to see it pass, and it should be put to them. It is a matter of precedent: we have had the two previous referendums, but we are not getting one on this question. I cannot understand why. We are not giving the Welsh people a voice. Whatever side people were on in the referendum campaign, it was crucial that the British had their say on such a fundamental decision.

I think that clause 16 is a mistake, but I will support our amendment 11, which goes fundamentally to the question of getting a fair fiscal settlement for Wales.

[Jonathan Edwards]

I rise primarily to speak to new clauses 2 and 3 in my name and those of my hon. Friends the Members for Arfon (Hywel Williams) and for Dwyfor Meirionnydd (Liz Saville Roberts). I intend to push them to a vote, with the leave of the Committee, but I understand that that will take place on the second day of the Committee, as opposed to today.

Amendment 32 is a technical amendment that should not be controversial. The Welsh language has thankfully gained official status in Wales. The National Assembly is a bilingual body and official statements must be made in both languages. There is, therefore, no need for the Bill to include such a provision. I support the principle of clause 8, which essentially means that before any changes can be made to the new constitutional powers devolved in the Bill, the support of two thirds of Assembly Members would be required. This would essentially require cross-party consensus to change the name of the Assembly, people’s entitlement to vote, the electoral system, constituency numbers and the number of elected representatives in the National Assembly.

I look forward to a swift consensus developing around renaming the National Assembly “the Senedd”, which would help to create clearer boundaries between the legislature and the Executive. Despite previous changes to the Welsh constitution, far too many people and commentators cannot distinguish between the work of the Executive, the Welsh Government, and the work of the legislature, the National Assembly. I also look forward to a consensus developing around votes for 16-year-olds. If an individual is old enough to start full-time employment or serve in the armed forces, they must have a say over who gets to form the Government. Extending the franchise to 16-year-olds during the Scottish referendum was a huge success, and we should aim to replicate it in Wales, not least because it would mean only eight more years before my daughter can vote for herself, as opposed to filling in my ballot paper—following strict instruction, I hasten to add.

[Stephen Doughty]

The hon. Gentleman and I disagree on many issues, but on this we are in firm agreement. I have heard from many constituents, particularly when visiting schools and colleges, that young people want the franchise extended to 16 and 17-year-olds. I spent a lot of time campaigning on the Scottish referendum, and it was clear to me that, if we engage younger people in the political process, not only can they take part fully in the debate but they can add to it. We should all support that.

[Jonathan Edwards]

I am grateful for that intervention. I think that we can move swiftly on this in Wales and build a consensus in the Assembly. It would be a very progressive move, as the hon. Gentleman has just outlined.

[Mr Mark Williams]

Did the hon. Gentleman also detect from polls in the last fortnight a healthy appetite among 16 and 17-year-olds for participation in the decision that we, as adults, were able to make and which they, as young people, should have been able to make?

[Jonathan Edwards]

That is another valid dimension. It was clear that the younger generations were very much in favour of remaining a part of the EU. The morning after the referendum, I was the guest speaker at the graduation service of Coleg Sir Gâr, the local further education college, and in particular the Gelli Aur campus, which specialises in agriculture courses. I started my speech by apologising to those generations of young people—mostly 16 and 17-year-olds—who had been unable to participate in the referendum but for whom the decision made on their behalf will arguably leave a far greater legacy.

[Albert Owen (Ynys Môn) (Lab)]

A consensus seems to be growing here on 16 and 17-year-olds having the vote. Rather than Wales mirroring some other parts of the United Kingdom, we should be radical in moving forward even further by talking about compulsory voting in Wales. Seventy four per cent. voted in a referendum, but if those others who felt disfranchised voted, the result might have been different. What we are talking about is radical Welsh politics.

[Jonathan Edwards]

I am grateful for that intervention, and what the hon. Gentleman says will be part of the debate as we go forward. I recently took part in a radio programme with the hon. Member for Cardiff Central (Jo Stevens), and we had a vibrant debate on this issue. My one concern about compulsory voting is that it moves voting from being a civic right to a civic responsibility, which is a very big change in attitude. I am not saying that I have closed my mind to it, and I acknowledge that the hon. Member for Cardiff Central made some persuasive arguments, but I shall reserve my judgment until the time comes.

[Jo Stevens (Cardiff Central) (Lab)]

Does not the hon. Gentleman agree that civic responsibility is a good thing per se? Rather like jury service, it is a means by which people can give something back to society. Compulsory voting, whereby someone votes for a party or just turns up and registers the fact that they have come to the polling station, is a responsibility that we should all have.

[Jonathan Edwards]

I appreciate that intervention, and the National Assembly has, of course, legislated on that basis through the organ donation Bill, whereby donating has become a civic responsibility for people in Wales as opposed to a voluntary responsibility in which people had a choice. All these things will be part of the mix when these powers are devolved. I believe our politics will be far healthier for that. Luckily, these issues will be determined by people further up the chain of command in my party than myself—by those who sit in our own sovereign Parliament in Cardiff.

I look forward to a consensus developing around the need for a proportional electoral system. If we are talking about compulsory voting, it has to go hand in hand with a change to a more proportional electoral system. We cannot allow one party to gain 50% of the seats on the basis of 30% of the votes, as we saw last May. That is bad for democracy and it is a hugely corrupting influence on our politics. There is a chance here for Labour Members to show that they are genuinely interested in the national interest as opposed to the interests of the Labour party. I shall hold my breath on that one, as Labour colleagues seem to be more interested in compulsory voting than having a proportional electoral system.

[Wayne David (Caerphilly) (Lab)]

Does the hon. Gentleman not accept that, in the interests of democracy and effective representation, a strong case can be made for maintaining the constituency link between a representative and his or her constituents?

[Jonathan Edwards]

I fear that we are getting into a debate about PR, and my party is strongly of the view that we need to go down that road. We will have to address these issues as we go along. The last election was a wake-up call where one party had 50% of the seats but only 30% of the votes.

[Albert Owen]

Speaking as someone who was involved in the first referendum, I know that this was a big issue. It was argued that the Assembly would be different and we would have a hybrid system, which was put in place to help the smaller parties such as the hon. Gentleman’s party. It is not the fault of the Welsh electorate that they do not vote for his party or do not like it. We have moved considerably from this place, which has a full first-past-the-post system, to a hybrid system. In north Wales, Labour topped the poll but did not get one Member.

[Jonathan Edwards]

I am grateful for that intervention. The people of Wales will listen to what politicians have said today, and they will make their own judgment. My personal view, for what it is worth, is that the number of seats that a party has within an electoral body should reflect the percentage of votes they receive during the election. We will see how things develop in Wales.

My hon. Friend the Member for Dwyfor Meirionnydd spoke at some length about clause 10. Needless to say, I agree with every word she says, and I will join her in the Lobby to vote against it later this evening.

Amendment 33, tabled by my hon. Friends, is designed to ensure that the legislature of Wales has to authorise the drawing of money from the Consolidated Fund and that such funds can be used only for the purposes for which they were authorised. This is straightforward, and I hope that the UK Government will accept it.

Under clause 14, the Secretary of State will no longer be statutorily bound to visit the National Assembly each year. This is a positive move, which equalises the relationship between the Westminster Parliament and the National Assembly. It might also save the embarrassment of some of the less active Members in the National Assembly. I seem to recall a story from the last Assembly in which the previous Secretary of State for Wales, the right hon. Member for Clwyd West (Mr Jones)—I am disappointed that he is not in his place, because I think he would have enjoyed this—had spoken more words than the previous Assembly Member for Islwyn.

Amendments 38 to 45 are technical, and I hope the UK Government will accept them. They deal with the naming of the legislature and the establishment of a legislatures commission in the event of a name change, and ensures that the provisions in clause 15 extend to both the English language and the Welsh language names.

16:15

I am afraid that amendment 11 leaves me in some anguish. On the face of it, in view of legitimate concerns over the debate about the fiscal framework that will need to accompany the devolution of income tax powers to Wales, there needs to be some sort of “safety trigger” advice enabling the National Assembly of Wales to protect itself should the Treasury decide to pull a fast one. The fact that Scotland has secured a favourable deal in relation to its fiscal framework is of little comfort when we are discussing the Welsh situation. Following the bitter experiences of the Barnett formula, there is a danger that Wales will once again be handed an inferior settlement, with huge potential costs to the Welsh taxpayer.

On Second Reading, I said that I wanted to see a Treasury statement of some sort before finally making up my mind about fiscal framework provisions in the Bill. I am pleased to see that a representative of the Treasury is present, and listening to the debate. In fact, however, the National Assembly does have such a “safety trigger” device. Political parties can, if they so choose, vote down the Bill during proceedings on the legislative consent motion, once it has been triggered by the Welsh Government.

It is clear that the Labour party in Wales is desperate to avoid fiscal responsibility. While I have to say—although the Financial Secretary is present—that I do not trust the Treasury as far as I can throw it to protect the interests of Wales, I should add, if the Shadow Secretary of State will forgive me, that neither have I much faith in the Labour party to put the interests of Wales first. It seems to me that amendment 11 is intended to ensure that Labour will be able to veto the devolution of income tax powers to Wales. I do not believe that a Government should be able to choose whether they should be fiscally responsible, and, with that in mind, I cannot and will not support the amendment.

I fully support clause 16. The principle of fiscal devolution has already been conceded with the devolution of minor taxes. I said on Second Reading that referendums should be held on issues involving a major constitutional change. Wales is on a journey towards a system whereby more of its tax receipts will be kept directly in Wales, as opposed to being collected by the Treasury and sent home. I welcome the change in approach, and hope to lubricate the process so that the vast majority of taxes are kept in Wales. In my opinion, the only major reserved tax should be national insurance, to cover the costs of social protection.

My hon. Friend the Member for Arfon (Hywel Williams) has already spoken about clause 18. I support amendment 13, tabled by members of the official Opposition, which transfers all functions currently exercisable by Ministers of the Crown in devolved areas to Welsh Ministers. Having read amendments 14 and 15, I am none the wiser about what they endeavour to achieve. Amendment 16 appears to back up amendment 13, which, as I have said, I support. We have no problems with clauses 20 and 21.

That brings me to new clauses 2 and 3. I begin my argument with a simple truism. Every single member of the Conservative and Labour parties in the House of Commons supported full income tax powers for Scotland during the passage of the Bill that became the Scotland Act 2016. I cannot understand the political reasoning for supporting the devolution of a major job creation lever to Scotland while denying it to Wales.

During discussion of the Bill, the Conservative party’s position was presented by the Secretary of State for Scotland, who said:

“The Scottish Parliament will see a huge increase in its financial accountability to the people of Scotland.

The major new powers of tax, welfare and other matters will give added weight and effectiveness to the powers it already possesses.

So significant are the changes to its powers, and so immense the potential for their use, the Scotland Bill will create, in effect, a new Scottish Parliament.

In tech-speak, you could say that this will be ‘Holyrood 2.0’.”

Labour Members were equally excitable. The former shadow Secretary of State for Scotland, the hon. Member for Edinburgh South (Ian Murray), said:

“When this Bill becomes law, it will present the Scottish Parliament with the opportunity to make Scotland the fairest nation on earth.”

I could have a lot of fun reading out quotes relating to the Scotland Bill, but this raises a serious question for my political opponents.

My new clause 3 would enable income tax receipts from Wales to be paid directly into the Wales Consolidated Fund. Effectively, there would be 100% devolution of income tax, as enjoyed by Scotland. If the Conservatives supported full income tax powers for Scotland to make the Scottish Parliament more accountable to the people of Scotland, why do they oppose the same powers for Wales? If Labour supported those powers because they would enable the Scottish Government to create the “fairest nation on earth”, why are they opposed to empowering their own Government in Wales with the same powers to achieve that laudable aim?

[Susan Elan Jones]

The hon. Gentleman is in full flight, but would he continue to support all those moves if the net result was to make Wales poorer?

[Jonathan Edwards]

In what sense would it make Wales poorer? I am more confused by the Labour position the more Labour Members intervene. The hypocrisy of Labour’s position does nothing to further the good name of politics. Most depressingly, it shows that both the Labour party and the Conservative party rejoice in treating the people of Wales as second-class citizens and Wales as a second-class nation.

[Wayne David]

Will the hon. Gentleman not accept the fundamental and basic point that unfortunately Wales is a far poorer country than Scotland and that the danger in what he is proposing is that he will make Wales poorer?

[Jonathan Edwards]

That is a damning indictment of the current situation. I have faith in my own people and my own country to be able to develop our own economy and create wealth. The big plus of devolving fiscal powers is that it would incentivise the Labour Government in Cardiff to stop spending money on their pet projects and start concentrating on increasing tax revenues to spend on public services. That is why I support the devolution of fiscal powers.

[Stephen Doughty]

I have great faith in the Welsh people as well, and I have a lot of faith in the Welsh Labour Government. However, does the hon. Gentleman not accept that even in the short to medium term Wales would be poorer? Wales is a net recipient of funding from the rest of the UK, and that helps benefit all the people in Wales. In the short term, we would lose out. Does he not accept that?

[Jonathan Edwards]

The powers as envisaged do not involve the complete block grant. The block grant—the total money available to Wales—will not change on day one. The only issue of contention is the fiscal framework; I have been making that point. The devolution of the fiscal power itself is not an issue in terms of making Wales poorer on day one.

There is also a technical reason why we should be fully devolving income tax powers. It is far more difficult to create a fair fiscal framework to accompany the partial devolution of income tax as opposed to full devolution. The result of this would be to enable future Welsh Governments to continue to avoid responsibility for their mistakes. In the interests of transparency, accountability and—critically—incentivisation, I hope even at this late stage that the UK Government will accept my new clause 3.

A key element of ensuring that the devolution of income tax is devolved successfully is the empowerment of the National Assembly to set income tax thresholds. New clause 2 aims to achieve this objective and I will press it to a vote on the second day of Committee, with the Chair’s permission. If we have time, I would also like to press new clause 3. We will discuss these new clauses on Monday.

New clause 2 is of vital importance as we embark on the journey of devolving income tax powers. The setting of thresholds is a key component of being able to use those powers based on domestic considerations. The Welsh economy in comparison to other parts of the UK is, regrettably, currently a lower-wage economy, a concern raised by Labour colleagues. New clause 2 would enable the National Assembly ultimately to determine the number of income tax thresholds and the levels at which they are set, including, critically, the basic rate. That freedom would enable the Finance Minister of the Welsh Government, whoever he or she may be, to set innovative income tax structures aimed at maximising revenues for the Welsh Exchequer to invest in Welsh public services, but also to encourage wealth creation and encourage investment.

It has been a consistent policy of the current Chancellor to increase personal allowances—in other words to increase the rate at which people begin paying income tax. Brexit may lead to a radical reversal of this policy in the coming months and years by the next Chancellor as revenues reduce. However, the key point is that as long as the ability to set personal allowances is reserved to London and Wales has a low-wage economy, decisions by Chancellors here could have a significant impact on the revenue available to invest in Welsh public services.

It really is all or nothing when it comes to the devolution of income tax and, as someone who supports making the Welsh Government fiscally responsible, I very much hope that the UK Government decide to support the former. Diolch yn fawr iawn.

[Nia Griffith]

I shall speak to several amendments, in particular amendment 11, which provides that income tax powers may not be devolved to the Welsh Assembly until a fiscal framework has been approved by both Houses of Parliament and the Welsh Assembly.

We have always said that a fiscal framework must ensure that Wales is not disadvantaged by taking on the devolution of some income tax powers. In the wake of the EU referendum result, it is all the more urgent that the Government develop a coherent and redistributory regional funding strategy not just for Wales, but for the whole of the UK.

The EU uses specific criteria for designating the areas that should receive structural funds by comparing the income of an area with the EU average. Areas in Wales such as the valleys and west Wales have benefited because they have a GDP that is less than 75% of the EU average, as has Cornwall, and many other areas have benefited because their GDP is between 75% and 90% of the EU average, including south Yorkshire and Merseyside. It is, broadly speaking, a needs-based system. As Members across the House will remember, Holtham recommended that funding for Wales should be based on a needs-based formula. However, a sophisticated formula would take time to develop.

It is simply unacceptable for Wales to accept the devolution of income tax without an order in both Houses and the consent of the Welsh Assembly, because those measures would give elected Members the chance to discuss the funding and the fiscal framework so that we do not see a cut to our funding and then get told to make up the rest by increasing income tax.

[Stephen Doughty]

I wholeheartedly agree with the point about the potential trap for Wales. Does my hon. Friend share my concern and that of many of my constituents about the uncertainty that is being created for projects such as the south Wales metro, which was due to be funded by the EU? We are not clear where that £150 million of funding will come from. If we do not have clarity on Wales’s fiscal framework and on whether we will be better off or not, projects like that will be in doubt.

[Nia Griffith]

I very much agree with my hon. Friend. It is even more serious than that because many jobs depend on EU funding. People might find that they no longer have the apprenticeship opportunities, training opportunities and many other things that are supported by the EU but that are not quite as obvious as the concrete structures.

It would be very difficult for the Welsh Government to make up a significant shortfall in the block grant. The block grant is some £15 billion per annum, whereas the total income tax raised in Wales amounts to some £4.9 billion. It would be very difficult to make up any percentage cut to that £15 billion, particularly if we wanted to protect the standard taxpayer. It is therefore vital that there is an opportunity for negotiation and for a vote and approval before any devolution of income tax.

People might think that I am very suspicious of the Conservative party and that I do not trust it an inch. [Hon. Members: “No!”] Well, I just think that we have to look at the facts. Look at what it has done with councils in England. It has told them that if they want to increase social care funding, they can raise it through council tax hikes. If anyone thinks that the UK Government run by the Conservative party are committed to fair funding or needs-based formulas and are free from partisan bias, I remind them that between 2012 and 2020 the average cut in spending power per household in Labour council areas in England is more than five times higher than the average cut in Tory local authority areas.

[Jenny Chapman (Darlington) (Lab)]

I regret to inform my hon. Friend that the situation is worse than she describes, because when special funding was identified for councils, 85% of it went to Conservative-held authorities.

[Nia Griffith]

My hon. Friend confirms my very worst fears. Instead of having needs-based funding, the average cut per household in a Tory area will be in the region £68 by the end of the Parliament, whereas in Labour council areas it will be more than £340. My fear is that the block grant will be cut and we will be told to make up the rest through income tax hikes in Wales. As Members are well aware, there has been no full assessment of the impact on Wales of different rates of tax on the different sides of a very porous border, so we really have no idea what will happen.

16:30

I will not repeat our many previous arguments about the importance of keeping the UK together and of having an income tax base right across the UK. All of us in the many regions of the UK contribute to the wealth that is generated in London through the companies that people work for in Wales and other parts of the UK. London therefore has an enormous tax take compared with other areas and is the only place that consistently provides a surplus, whereas other areas have to take from the pool. That is why we should not go down the route of complete separatism, as suggested by Plaid Cymru. Any tampering with income tax must be done with the consent of both Houses here and the Assembly to ensure proper negotiation and a proper agreement about funding for Wales, so that we are not left short of money.

[Byron Davies (Gower) (Con)]

Thank you, Mr Gray, for giving me the opportunity to speak about the Bill today. I am delighted to see my neighbour, the hon. Member for Swansea East (Carolyn Harris), on the Opposition Front Bench.

By and large, I am happy with the measures and the devolution of some further powers to the Welsh Assembly. To be perfectly frank, I have never been a devolutionist, but I accept where we are and we must make it work. I know that the Secretary of State for Wales, my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), and the Under-Secretary of State for Wales, my hon. Friend the Member for Aberconwy (Guto Bebb), will be doing everything that they can in the Wales Office to ensure that these further provisions are a success and contribute in a positive and constructive way to the Welsh economy and Welsh national life.

However, my concern about tax-raising powers is long standing, and it would be remiss of me if I did not raise on behalf of the people whom I represent in Gower the issue of a referendum on tax-raising powers. I am well aware and have no doubt that we have all seen enough of referendums to last a lifetime, but one on tax-raising powers for Wales would be slightly less contentious and would take place in a slightly better spirit.

The National Assembly for Wales, and devolution in Wales, has been on something of a journey over the past two decades. There have been mistakes, many potholes in the road and things that could have been done differently, but we have taken this course together and I am sure that everyone is committed to working to ensure that devolution works for the people of Wales. There is no doubt that Welsh national life has benefited from devolution, and it is important that people feel that our institutions are close to the decision-making process. There is still work to do on such issues, but things do not happen overnight at such a young institution. Speaking as a recent former Assembly Member, it is promising to have seen some progress and maturity in the Assembly as an institution since the last election.

I want to make it clear that when there has been a major decision that would greatly affect the devolution process, the people of Wales have been consulted every time. There have been close votes. Indeed, the one that created the National Assembly was on a knife edge, but the Assembly was created. The Welsh people then voted to give the Welsh Government law making powers. Now, the next stage of that process, and perhaps one of the most important, is to give the Welsh Government the power to levy taxes. It is argued that such powers are vital to economic growth, families’ security and the future prospects of the Welsh nation. If used well, tax-raising powers could create huge economic opportunities that drive our economy forward and increase the fortunes of our people, their children and things that they consider important to them. If they are used poorly, however, that could place a burden on family budgets, put encumbrances on small and medium-sized business, which are the lifeblood of the Welsh economy, and drive key companies and economic figures away from the burdens of a tax-laden Wales to Scotland, Ireland or England.

These powers are as crucial as any that have gone before, and if we are to be true to the Welsh people and to the devolutionary process that we have undertaken over the past two decades, it is only right and correct that we allow the Welsh people a voice on these powers. It is their democracy, their devolutionary process and their futures that are being decided, and some might quite rightly say that if they were worthy of being given the choice then, why not now?

The Under-Secretary has previously said that a referendum was not an absolute manifesto promise, but I contend that it was implied to the people of Wales and to my constituents that a referendum would be offered. I must admit that I am disappointed that it will not be on offer as I campaigned fiercely on the issue. However, after a great deal of soul searching, I will not vote against the Government on this. I hope that we can continue a dialogue on this issue and others to ensure that this Bill provides the very best outcome for our people in Wales.

[Albert Owen]

It is a pleasure to serve under your chairmanship once again, Mr Gray. Many points that I was going to make have already been raised by other Labour Members, especially by my hon. Friend the Member for Llanelli (Nia Griffith). None the less, I wish to discuss the idea of a referendum on income tax that was raised by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who is no longer in his place. The hon. Member for Gower (Byron Davies) talked about the Conservative manifesto, but I am more concerned with the fact that, under the Wales Act 2014, it is clear that if there were to be a referendum on the devolution of powers to raise income tax, it would be held before the powers could be transferred to the Assembly.

I said on Second Reading that I am a devolutionist. I have long argued that major constitutional changes should be made by referendums, and I supported that in 1997 and 2011. However, in recent weeks I have been persuaded by some of the arguments on whether we should hold referendums on this specific issue and a range of others, including on having a go at the Government of the day. I make that point seriously, because I am not convinced that this is the major constitutional change that it once was. The Assembly already has tax-raising powers, but we do need some safeguards, which is why I will support amendment 11.

I know that you will not allow me to digress too much, Mr Gray, but let me say that I used to support the single transferable vote for elections. In theory, it is great textbook stuff, but as someone who has campaigned regularly in the Republic of Ireland, I can say that the practical implication of that has put me off. I have also been put off referendums over the past few weeks. None the less, we do need to move forward on income tax, and amendment 11 is the right vehicle to help us do that. What it suggests is that both Houses of Parliament in London and the National Assembly for Wales in Cardiff Bay would make that decision. They would have a mature debate on income tax, in which we would look at the whole fiscal framework and the settlement that we have at present.

Like my hon. Friend the Member for Llanelli, I am worried that if we were to give the Assembly the power to raise income tax, this Government would say, “There you are. You now have the tools to do the job. Get on with it and start raising your own taxes”, while they cut the block grant and other fiscal measures. Our Welsh constituencies would end up poorer, which worries me considerably.

It would be fair and right to have safeguards, and it is what the people of Wales want. This Chamber of elected Members and the second Chamber should look at the matter in greater detail along with the National Assembly for Wales. It is right to have that consensus and some safeguards to ensure that the people of Wales are not worse off as a consequence of the measure.

We all know that the Barnett formula has a flaw, and we all argued that in the 2015 election—it was in all our manifestos. I have concerns because for every pound that is spent in the UK, Wales gets £1.15 in return. It gets more than England, but not as much as Northern Ireland or Scotland. In the future, if these income tax measures were given to the Welsh Assembly by a Government who were keen to get rid of them without having that proper debate in both Houses of Parliament and the Welsh Assembly, I would worry that the people whom we are here to represent would be in a worse position. I understand the theory, but it is the practice that worries me, and for that reason, I will support amendment 11.

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

With regret, I stand to oppose clause 16, which relates to the removal of the requirement for a referendum on the devolution of income tax or a proportion of it to the Welsh Assembly. I want to give my reasons for that. In Scotland there was a referendum before such a change took place. Also, the manifesto on which I stood for election—both the UK version and the Welsh version—reiterated the requirement for a referendum. When I and other members of the Select Committee on Welsh Affairs scrutinised the draft Wales Bill, it contained no such proposals. We must ask ourselves why at this stage we want to remove the requirement to have a referendum. In other words, why do we want to repeal this requirement that is in the Wales Act 2014? It is clear that the Welsh people would not vote in favour of the devolution of income tax, so this is an attempt to circumvent the will of the people, in my eyes.

Why do we wish to devolve income tax? Financial accountability has been talked about, but I believe that unless and until the Welsh Assembly Government levy the vast majority of taxes, they will continue to blame this place for not being in a position to provide them with limitless funding. Of course, any situation whereby they would levy most taxes would equate more or less to Welsh independence, which I feel the Welsh population do not favour.

If these powers are transferred, what will happen to the level of taxes? We are told by some that the powers would not be used, and if that is true then why would we wish to transfer them to Cardiff? Some, of course, fear that tax levels would be increased and, clearly, from my point of view, that would harm the Welsh economy. Some have suggested that tax could actually be reduced. That is highly unlikely, but if it ever occurred it would undoubtedly lead to calls from some nearby English regions for similar reductions. Any competitive advantages would be eliminated.

From a north Wales perspective, there are 50,000 cross-border commutes every day and 1 million people of working age live on either side of the border. This is a political border that does not reflect how people live their lives or how businesses operate, and there is already cross-border disparity in the standard of public services, which leads to much frustration. Why would we want to make the situation worse? I believe that differential tax rates could lead to confusion, further complication of an already complex tax system, additional associated costs, and consequences, intended or otherwise, for where people choose to live and work, whether that is in England or Wales.

We have just undergone the latest Assembly elections and, as in the past, disinterest and disengagement were evident, with votes cast primarily on the basis of politics in this place and with reference to the EU referendum, and I am afraid that sums up the level of enthusiasm for more Welsh devolution, at least in my area. It is clear that there is no call or mandate for additional powers and particularly not for tax-raising powers, and I see this as simply yet another step in the gradual break-up of the UK, which my residents do not want. Indeed, now that the prospect of partial income tax devolution has been raised, we are already seeing calls for further tax devolution. I feel strongly that this is an unnecessary and undesirable proposal and, with great regret, I will have no choice but to vote against the clause.

[Chris Davies]

Last week, I had the great pleasure of congratulating the hon. Member for Newport West (Paul Flynn) on regaining his seat on the Front Bench after a gap of 27 or 28 years. That was in a slightly different role to the one he has taken today, but I am delighted to see him there. I am also more than delighted to see the hon. Member for Swansea East (Carolyn Harris) sitting next to him. Many Members will not know that a certain television company did a programme—it should have been a series—about two MPs trying to get to Westminster. They were me, now the Member for Brecon and Radnorshire, and the hon. Lady. She was my leading lady and I was her leading man, and I am delighted to see that the star is now shining brightly on the Labour Front Bench. That, I am afraid, is where the pleasantries stop, and pleasantries they are, I say to the hon. Lady.

I, too, have reservations and concerns about clause 16. I made my objections clear on Second Reading just a few weeks ago, and here we are, too quickly for my liking, already at Committee stage. I have great concerns about a referendum on income tax. I stood on many a doorstep, on many a street, on many a farm throughout two and a half years of the election campaign, and as we got closer to the election, it was a clear manifesto commitment that we would deliver a referendum on this very important matter. I am deeply disappointed that the Government have decided to do away with that referendum. I have made these feelings clear to various members of the Government and I have made my views clear in this place. Sadly, the Government have decided to go on with the clause and I, too, will vote against it today.

16:45

Do the people of Wales want this clause? Do they want the possibility of the Assembly raising a proportion of their taxes? I have yet to hear one person mention that they would like the Welsh Assembly at Cardiff Bay to have this opportunity. During many hours, over many weeks, and what seem like many months I have, as a member of the Welsh Affairs Committee, heard specialists, lawyers and academics saying that it would be a very good idea, but I have not heard one constituent or one member of the public from Wales request that. It would be a great shame to go ahead with the clause today.

Scotland had the opportunity of a referendum; Wales does not. Bringing forward the clause is wrong and the timing is wrong. The Assembly has not yet, over 17 years, fully delivered on many matters for which it has responsibility. I could go on for hours about health, education and agriculture.

[Albert Owen]

I heard the hon. Gentleman speak on Second Reading and I am sure he is going to repeat a lot of what he said then about how he dislikes the Assembly, but before he does that, will he seriously consider Labour’s amendment 11, which suggests that we have a pause and that both Houses of Parliament and the Assembly debate this important issue, on which we are to represent our constituents? I respect the hon. Gentleman’s view. He has heard the reasons why I am moving away from demanding a referendum. Will he consider supporting that amendment?

[Chris Davies]

I may consider it, but at the moment I am thinking about going further, with deep regret, and looking to my first vote against the Government—my first rebellion, which is of great concern to me.

My position is not a criticism of the Welsh Assembly per se or of devolution. It is a criticism of the present incumbents down in Cardiff Bay. They have not delivered for us. Why on earth are we now looking to give them tax-raising powers? Sadly, I do not feel that they would be able to deliver that properly for the people of Wales. With great regret, I will not be able to support the Government’s proposal in this matter.

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

I apologise for the fact that I was not here at the beginning of the consideration of this group of amendments. Sadly, I was detained by another engagement.

Like my hon. Friends the Members for Vale of Clwyd (Dr Davies) and for Brecon and Radnorshire (Chris Davies), I have huge concerns about clause 16. I speak as the Secretary of State who took the Wales Bill 2014 through this House. Unlike my hon. Friend the Member for Vale of Clwyd, I was an enthusiast for tax-varying powers for the Welsh Assembly, because I thought that that would introduce a measure of accountability and potentially give the Assembly Government some incentive to introduce a more competitive tax regime in Wales. However, the Wales Act 2014 clearly states that such tax-varying powers should not be implemented until they are triggered by a positive vote in a referendum, and it is still right that such a referendum should be held; after all, tax-varying powers include the power to increase taxes.

If one expects the people of Wales potentially to pay more tax, it is only right that they should first be asked if that is what they want. That is what happened in Scotland in 1997, when the referendum had two separate questions, including one on taxation. Unlike hon. Members who have already spoken, I do not believe that it is beyond the bounds of possibility that the people of Wales would vote for tax-raising powers; after all, that is what the Scots did. However, imposing such a competence on the Welsh Assembly Government without giving the people of Wales the right to have their say in a referendum is utterly disrespectful of the people of Wales; after all, what was good enough for the Scots should be good enough for the Welsh.

I also share the concerns of my hon. Friend the Member for Vale of Clwyd. I stood in a general election only 14 months ago on a manifesto that made it entirely clear that there would be a referendum before tax-varying powers were triggered, and I do not believe that anything has changed 14 months later. If we make a manifesto pledge, we should adhere to it, so, like my hon. Friends, I will, sadly, be voting against the Government on clause 16. My right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), who is also a former Secretary of State, has asked me to indicate that she will do likewise. Sadly, she is not able to be here at the moment, but she too regards this as a point of principle. I urge my right hon. Friend the Secretary of State to reconsider. By pressing ahead, he is breaking faith with the electorate of Wales.

[Paul Flynn]

The opening words of the splendid book I referenced earlier are:

“Only the future is certain. The past is always changing.”

We have seen splendid examples today of people fictionalising the past. I am proud of the Welsh Assembly, and I am proud that it was a creation of the Labour party in this Parliament. In deciding on its form, it would have been possible for us to adopt a first-past-the-post principle, which would have given Labour a majority in perpetuity. However, for very honourable reasons, it was decided not to do that. We also feared creating what was described at the time as Glamorgan County Council on stilts. There are other examples of socialist and social democrat countries, such as the Nordic countries, which have had parties equivalent to Labour for many decades, and which have produced some of the finest social services and human rights policies in the world.

It is absolutely wrong and mean-spirited not to recognise that the Welsh Assembly, as set up, is probably the finest example of democracy in the British Isles. Many of us were unhappy about the number of UKIP Assembly Members in May, but they gained 13% of the vote and they got 13% of the seats, which is absolutely right. However, for two Parliaments, including the ones when we set up the Assembly, when we could have done anything we liked, 20% of the voters in Wales voted Conservative and did not have a single Conservative Member of this Parliament. Why do people not object to that?

We intend to divide the House on amendment 11. Clause 16 has obviously taken up a great deal of the House’s attention, but Wales is suffering from referendum revulsion, and so are other parts of the country. We have had enough. We have been having these all through my childhood, on whether we close the cinemas on a Sunday or close the pubs on a Sunday. We have overdosed on referendums.

Let us look at examples of public votes, such as the decisions taken by the public to call a boat “Boaty McBoatface”, and in the European referendum. The choice in the European referendum was between two sets of lies by each party. Both sides are embarrassed by what they said a few weeks ago, because it has not happened, after all the dire threats. We do not have £365 million for the health service and we do not have an emergency Budget; one could go on. I am afraid that the referendum on the alternative vote was even more disreputable, with two sets of outrageous lies put before the public. On Vauxhall bridge there was a sign saying, “If you vote for AV you’re in favour of taking protection away from our soldiers in Afghanistan and taking protection away from babies in hospitals”, suggesting that only that sort of person would vote for AV. It was nothing to do with the facts of the case. The propaganda in referendums has got to a level where the results are degraded and distorted. That certainly happened in the European referendum, and I think that faith in the process has gone.

In Wales, with each vote we have—it was a tiny minority the first time—there is momentum to build up trust in the Welsh Assembly. As the hon. Member for Montgomeryshire (Glyn Davies) argued very persuasively, it is not a real parliament unless it has its own tax-raising powers. That is a normal, essential development if we are to see the parliament of which we are so proud, on the soil of our own country for the first time for centuries, grow and take on its own decisions and responsibilities. Clause 16 provides for the removal of the requirement of a referendum on this.

We are grateful for the wisdom and generosity of the Government in how they have treated this Bill. It was a fairly ugly Bill to start with, but they have amended it and accepted all the various suggestions that were made to remove some of its less wise implications. It now has widespread support in the House from all parties and Government Members. Our problem now is that the removal of these powers also takes away the involvement of the Assembly in the process of deciding when they should be brought into force. Quite rightly, several of my hon. Friends have expressed anxieties about what would result from this, because we certainly do not want to legislate for a reduction in the amounts of money that the Welsh Assembly has.

The introduction of Welsh rates of income tax will represent a step change in devolution to Wales, replacing about £2 billion of the Welsh block grant with a more volatile revenue stream. It will therefore be essential that fair and robust new funding arrangements are established before this takes place. A new fiscal framework is required, agreed by the Welsh Government and the Treasury, which addresses each of the new factors that will affect the level of spend on devolved public services in Wales. That fiscal framework should not only cover the offsets made in return for devolved tax revenue but include a long-term commitment to the funding floor announced by the Chancellor in November. The UK Government’s Silk commission, to which we owe a great debt of gratitude, recommended that devolution

“of income tax powers…should be conditional upon resolving the issue of fair funding in a way that is agreed by both the Welsh and UK Governments.”

That is absolutely essential. There are fears that this might well be a Trojan horse that could be abused in the way that my hon. Friends have suggested. This issue remains unresolved beyond the next five years. Until the fiscal framework has been agreed, there must be no move to implement the Welsh rates of income tax. The UK Government have agreed a fair fiscal framework with the Scottish Government. It is appreciated that the model of the Welsh Senedd will develop along the lines of the Scottish Government, but it would be unacceptable for the fiscal framework proposed for Wales to have any less favourable terms than those agreed for Scotland. Amendment 11 addresses that issue by ensuring that the Assembly and both Houses of Parliament have clearly defined roles in ensuring that the conditions are right for income tax powers to be devolved to Wales. It cannot be right that the UK Government could commence powers over income tax in Wales without the approval of the Assembly. I urge the Government to consider those amendments seriously.

17:00

We believe that clause 10, which is a new addition to the Bill, is unnecessary and inappropriate. Justice impacts are only one part of a much wider process of assessing the impact of Bills. The measure is already provided for in the Assembly’s Standing Orders. The clause goes against the whole thrust of the Bill, which is to sweep away micromanagement of the Assembly and to give it full responsibility for its own procedures. If there are areas of Assembly scrutiny that need strengthening, that is a matter for the Assembly itself to determine. If aspects of Welsh Government planning for Bill implementation need strengthening, they should be addressed through an appropriate intergovernmental protocol.

The clause deals with practical matters that need not be addressed in statute. The key issue is to create a proper joint process for addressing the future of the jurisdiction, as proposed in our amendment to clause 1. The issue is a distraction from the main picture presented and it devalues the Bill.

We have also tabled amendments 14, 15, 13 and 16. Amendment 13 makes provision for the Executive competence of Welsh Ministers to be aligned with the legislative competence of the National Assembly—that is to say that Welsh Ministers should gain all relevant Executive functions in devolved areas. Given that the Government’s intention in producing the Bill was to provide clarity and coherence on the Welsh devolution settlement, it is difficult to understand why such a simple provision as the alignment of Executive and legislative competence has not been included.

The Government have made it clear that they believe that the reserved powers model of devolution is superior to the conferred powers model. That major improvement to the Bill is warmly welcome. It is a great about-turn by the Government and we are glad that they had the humility to accept the criticism they received—some of it was very cruel—about their ugly and hideous first version of the Bill. We are on common ground, but why does the Bill provide for reserved legislative competence while continuing to operate on the basis of the conferred powers model in respect of Executive powers for Welsh Ministers? The continued heavy reliance on transfer of function orders, with their itemised listing of the statutory powers available to Welsh Ministers, is a relic from the past and it should be swept away. We need now fully to accept the logic of the reserved powers model and align legislative and Executive competence in the way proposed by the simple and straightforward formula suggested by amendment 13. It is an amendment of rare literary merit and it should be accepted on that basis alone.

It has become clear that the Government have used the Scotland Act as a guide in developing this Bill, so it is difficult to understand why a fundamental principle of the Scottish devolution settlement is not being replicated in the Wales Bill. The Bill provides for the extension of the competence of the National Assembly in a number of areas. Surely, as the legislative powers of the Assembly expand, it is essential that closer alignment between the legislative and Executive responsibilities is achieved. That is what amendment 13 would achieve, and I urge the Government to accept it.

The further point I would like to make is on the question of borrowing. The current level of capital borrowing permitted to the Welsh Government, £500 million, is unreasonably low given their annual spend of about £14 billion. The Bill provides an opportunity to redress this imbalance by giving Welsh Ministers a more meaningful degree of borrowing power. Both the Holtham commission and the Silk commission recommended setting what amounts to a higher level of capital borrowing for the Welsh Government. The Scottish Government saw an increase in their borrowing capability as part of the recent Scotland Act, and now is the time to do the same for Wales. The new fiscal framework to be agreed by the Welsh Government and the UK Government will set out the terms for any future increase in capital borrowing. At the very least, however, the introduction of Welsh rates and income tax should be accompanied by a significant uplift in the borrowing season.

New clause 6 has been prepared to address this omission. It is a logical consequence of the partial devolution of income tax, which will produce a new revenue stream for the Welsh Government. Increasing the borrowing cap in this way would strengthen the range of financial tools available to the Welsh Government, allowing them to invest in Wales with vital infrastructure. I urge the Government to accept the amendments.

[Alun Cairns]

It is a pleasure to serve under your chairmanship in this important debate, Mr Gray.

In opening, I say that it is a pleasure to welcome the hon. Member for Newport West (Paul Flynn) to his place. He is the Member of Parliament for my parents-in-law, and an active constituency Member. We all know how active he is, usually on the Back Bench, but it is a pleasure to see him on the Front Bench. I extend a welcome to the hon. Member for Swansea East (Carolyn Harris)—I have some roots in Swansea, having been brought up in that part of the world. I also pay tribute to the hon. Members for Llanelli (Nia Griffith) and for Clwyd South (Susan Elan Jones), for the work that they have put into consistent scrutiny of the Bill in its early stages. I am grateful for the co-operation and support they gave me as we sought to bring about broad agreement on where the Bill stands. There is not agreement on everything, but I am grateful to all Members who have contributed for the broad consensus that has come forward.

Clauses 8 to 21 and the amendments related to them deal with changes to Assembly processes, the devolution of income tax powers, and the functions of Welsh Ministers. Clause 8 would insert a new section into the Government of Wales Act that determines what types of protected subject matter would, if contained in an Assembly Bill, require that that Bill be passed by a super-majority, which is two thirds of all Assembly Members. The protected subject matters in clause 8 include the name of the Assembly, those entitled to a vote in the Assembly elections, the system used in Assembly elections, the specification or number of Assembly constituencies and regions, and the number of Members returned for each constituency or region. These are in line with the protected subject matters included in the Scotland Act 2016, with two exceptions. The Bill provides that any change to the name of the National Assembly for Wales be subject to a super-majority requirement. The Bill also provides for the specification of constituencies, regions or equivalent electoral areas as protected subject matter. The super-majority requirement will ensure that there is broad support across the Assembly for those fundamental changes.

In the first instance, it would be for the Presiding Officer to determine and make a statement on whether or not an Assembly Bill relates to any of those protected subject matters. It is this part of the clause that amendment 32, tabled by Plaid Cymru, seeks to change. The amendment would remove the requirement for the Presiding Officer’s statement to be made in both the English language and the Welsh language. It would also remove the requirement for the Assembly’s Standing Orders to determine the form of the statement and the manner in which it is to be made.

It goes without saying that the Government are fully committed to the Welsh language. The Wales Office has two Ministers who speak Welsh, of which I am one, and a third Minister who is learning Welsh. It is good to see that the political tension around the Welsh language seems to be a relic of history, which is, I am sure we would all agree, a positive move. But the intention behind proposed new sections 11A(5) and 111A(6) of the Government of Wales Act 2006, as inserted by clause 8, is to ensure that the Welsh language is treated equally with English when the new super-majority processes are incorporated into the workings of the Assembly.

[Glyn Davies]

Does the Secretary of State agree that it is outrageous for those organisations supporting the Welsh language to assume that because we are leaving the European Union the support for the Welsh language will in some way be greatly diminished? The UK Government and Welsh Government have been huge supporters of the Welsh language, and there is no earthly reason why that should not continue in future.

[Alun Cairns]

My hon. Friend makes an extremely important point. A broad consensus has developed on the Welsh language over the past few decades, which is very different from what we might have seen before.

[Susan Elan Jones]

Does that mean we will have a fully bilingual Welsh Grand Committee? I am just hoping.

[Alun Cairns]

The hon. Lady knows that the Welsh Grand Committee is fully bilingual when it sits in Wales, but when it sits in this place its proceedings are in English, the language of the House.

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

rose—

[Alun Cairns]

I am not going to give way, because there are many technical amendments I need to cover and I want to make some progress.

I say to the hon. Member for Arfon (Hywel Williams), who moved amendment 32, that he has made a persuasive argument that the Assembly processes would ensure that Welsh is treated equally anyway, without adding a prescriptive provision to the Government of Wales Act. I would like to give the matter more thought but undertake to return to it on Report. I therefore hope that he will consider withdrawing the amendment.

[Hywel Williams]

I am grateful to the Secretary of State for that response and will listen to the rest of his speech with interest. I will withdraw the amendment. There is a progression in the normalisation of a language such as Welsh, from a point where it has to be specified to one where it is assumed, which is where we are in the National Assembly. That is an important point to make.

[Alun Cairns]

The hon. Gentleman makes an extremely important point that demonstrates the maturity of the debate and the acceptance of the language.

Clause 8 also provides for the Counsel General or the Attorney General to be able to refer the question of whether a provision of an Assembly Bill relates to a protected matter to the Supreme Court for a decision. The Counsel General or the Attorney General may make such a reference to the Supreme Court at any time during a period of four weeks from either the Assembly rejecting the Assembly Bill or its being passed.

There is precedent for a requirement for a super-majority on matters of constitutional importance. Under the Government of Wales Act 2006, the Assembly vote that triggered the 2011 referendum on Assembly powers required two thirds of Assembly Members to vote in favour. The Government believe that the safeguards in the Bill are sensible and command broad support across Wales.

Supplementing clause 8, clause 9 amends requirements for the Assembly Standing Orders on Assembly Bill proceedings, to reflect the new processes required as a result of a reference to the Supreme Court. The clause provides for Assembly Bills to be reconsidered by the Assembly in the event that the Supreme Court rules against the Presiding Officer’s decision on whether the Bill relates to a protected subject matter. That is in line with procedures put in place for the Scottish Parliament in the Scotland Act 2016, which has been passed by both Houses.

Clause 10 relates to justice impact assessments, on which there was considerable debate. The UK Government and Welsh Government have a number of well-established processes for assessing the impact of legislation on matters ranging from regulation to equalities. Indeed, on Second Reading I discussed the fact that Assembly Bills are assessed against their likely impact on the Welsh language and on equalities. It is also important to recognise that, through the Treasury and a range of other Departments, Her Majesty’s Government issue guidance and requirements relating to expectations of how public spending will be conducted and how public interests will be guarded. That is the principle under which the justice impact assessment should be considered, rather than how it has been interpreted by many.

Within the UK Government, Departments bringing legislation forward to this House are required to assess its likely impact on the justice system. The importance of that assessment is self-evident: for legislation to be effective it must be enforceable. It is vital that that enforcement process is ready and resourced sufficiently to cope with new demands placed upon it.

17:15

We recognise the need for Assembly legislation to make effective enforcement provision, and we are putting that beyond doubt in the Bill. Schedule 2 introduces new schedule 7B to the Government of Wales Act 2006, to make it clear that the Assembly may modify private law for a devolved purpose, and that only certain core elements of criminal law are outside its competence. The Assembly will be able to create and modify offences for the purpose of enforcing devolved provisions. It has the power to create civil or criminal sanctions against wrongdoing, defer decision making to the courts, or provide for appeals on a range of devolved matters—indeed, it does so already.

The England and Wales justice system shoulders a significant portion of the burden of enforcement regimes. Impacts are felt across the justice system, including by the courts, the judiciary and lawyers—many of those points have been rehearsed in this debate and on Second Reading. I underline the need for proper consideration of any new legislation, so that the Ministry of Justice and the justice system can adjust their working practices to cope with those necessary changes.

Clause 11 makes a minor change to Assembly procedure to enable the Presiding Officer to submit Bills for Royal Assent. As the Silk commission recommended, and as we set out in the St David’s day agreement, we are aligning Royal Assent processes for the Assembly with those in Scotland. That means that in future the Presiding Officer, rather than the Clerk of the Assembly, will submit Bills for Royal Assent and deal with other related processes.

Clause 12 allows the National Assembly for Wales to design and put in place accounting and audit arrangements for devolved bodies. Taking on those responsibilities is a natural next step in the progress of devolution to the Assembly. Under the Scotland Acts, the Scottish Parliament has similar arrangements. The Government of Wales Act 2006 is extremely prescriptive about the budgeting process of the National Assembly for Wales, but the Government believe that such arrangements are outdated and no longer appropriate for a mature legislature. Clause 12 therefore allows the Assembly to legislate for comprehensive accountancy arrangements, including the preparation and publication of accounts, and the functions of the Auditor General for Wales. That replaces previous arrangements for financial controls in the 2006 Act. Given the significant powers now devolved to the Assembly, the Government believe that the time is right to update those arrangements.

Amendment 33 would add to clause 12, but I believe that it goes further than is necessary. Clause 12 concerns what the Assembly must legislate for to ensure that its practices fit with international best practice and what the people of Wales want. I do not believe that we should change that arrangement in the way proposed in the amendment. Under clause 12, the Assembly will have significant control over its own affairs, but it would not be in line with international best practice or arrangements in other devolved Administrations to give the Assembly the extra responsibility that amendment 33 would provide. Clause 12 already devolves significant responsibility to the Assembly, and amendment 33 is not the right way to do that.

Clause 13 relates to the composition of Assembly Committees, and clause 14 relates to the Secretary of State addressing the National Assembly for Wales, as I will be doing tomorrow with pleasure. However, those clauses are out of date and undermine the maturity of the Assembly, because it is not for this place to dictate the composition of Assembly Committees, or to say that the Secretary of State should have the right to address the Assembly once a year. I am therefore pleased that we are acting to remove those clauses.

Clause 15 makes consequential changes that arise from the Assembly changing its name in an Act. The Bill will empower the Assembly to manage its own affairs, including changing its name if it wishes. The Assembly will be able to change its name to the Welsh Parliament or the Welsh Senedd, or whatever it deems appropriate, and the clause will ensure that any change of name in law is reflected throughout the statute book.

Amendments 38 to 45, tabled by the hon. Members for Arfon, for Dwyfor Meirionnydd (Liz Saville Roberts) and for Carmarthen East and Dinefwr (Jonathan Edwards), seek to amend clause 15. The amendments would ensure that if the Assembly changes its name, any Welsh language references in the statute book to the National Assembly for Wales, the National Assembly for Wales Commission and other related bodies would reflect the change. The amendments seek to change these references across the statute book in the same way that the clause currently provides for changes to the Assembly’s name in the English language. Amendment 38 also seeks to change the title of the clause, presumably because references to translation could be misinterpreted in the context of the other amendments proposed.

As I have already said, the Government are fully committed to the Welsh language. It is our greatest inheritance as a nation and we have a responsibility to continue to develop it. On the face of it, the amendments would make sensible changes to the clause to ensure changes to the statute book, as a result of the Assembly changing its name, would be reflected elsewhere in legislation. I would like to reflect on the amendment, consult Opposition parties, and return to this subject on Report.

Clause 16 and amendment 11 dominated much of the debate. Clause 16 removes the need for a referendum before Welsh rates of income tax are introduced. Back in 2012, the Silk commission’s first report recommended a referendum before a Welsh rate of income tax could be implemented. The Government agreed to the recommendation and the Wales Act 2014 provided for a referendum if the Assembly voted, by a two-thirds majority, to trigger one.

The debate, however, has moved on substantially since that time. There is clearly a strong consensus that Welsh devolution has moved on since the 2014 Act and the Welsh Government should not have to call a referendum before assuming the power to raise, vary or even reduce a portion of income tax. The Welsh Government cannot carry on being akin to a large UK spending Department. That does not create a positive environment for political debate, with a healthy level of accountability. There is already a precedent for devolving tax-varying powers without the need for a referendum.

[Mr David Jones]

Will my right hon. Friend explain what extraordinary event has happened in the past 14 months to move devolution on to such a large extent?

[Alun Cairns]

I am grateful to my right hon. Friend for his intervention. I was about to go on to say that two important principles have been acknowledged. First, the Assembly is more mature. That is reflected in the legislation we are passing to enable the Assembly to reach out and respond further to Welsh needs.

Secondly, when my right hon. Friend was Secretary of State for Wales, he established the principle of devolving significant tax-varying powers without a referendum. In the 2014 Act, the devolution of stamp duty land tax and the aggregates levy, in addition to powers over council tax and the subsequent full devolution of business rates to Wales, account for a broad income of £2.5 billion. The Welsh rate of income tax, which we propose to devolve is—at about £2 billion—significantly less than that. This important principle has been accepted positively by the Welsh public and by civic society. That stands firm and is a backstop to clause 16.

[Mr David Jones]

Does my right hon. Friend not accept that the significant difference is that very many more people pay income tax than pay stamp duty land tax or landfill tax? Is that not the point, that it affects nearly everybody in Wales?

[Alun Cairns]

I remind my right hon. Friend that a similar number of people who pay income tax also pay council tax, and that many will be business owners who pay business rates.

Much reference has been made to the Welsh Conservative manifesto and I remind right hon. and hon. Members what it said. Our manifesto for Wales stated that a funding floor would be introduced in the expectation that the Welsh Government would hold a referendum. We have fulfilled our end of the bargain, having introduced a funding floor of 115%, as has been mentioned. That is the floor—if I may gently correct the hon. Member for Ynys Môn (Albert Owen)—and the spending level is currently higher. If the Welsh Government are not going to introduce a referendum—I do not think that any of us want one after the events of recent weeks—we will need to take steps, so I hope that the House will agree clause 16 as it stands.

Clauses 17 and 20 deal with the functions of Welsh Ministers and devolve important new powers to them. Clause 17 will insert new subsection 58A into the Government of Wales Act 2006, conferring common law-type powers on Welsh Ministers—the kinds of powers exercised by a natural person, such as the power to enter into contracts, make payments or set up companies. It is difficult to believe that Welsh Ministers do not already hold these powers, and it demonstrates how current legislation is out of date with modern thinking and concerns.

Clause 19 deals with the transfer of ministerial functions. The Bill provides for a clear separation between devolved and reserved powers, an important component in which is being clear about which so-called pre-commencement Minister of the Crown functions in devolved powers are to be exercised in the future. We intend to transfer to Welsh Ministers as many of these functions as we can. We will do so in a transfer of functions order made under section 58 of the Government of Wales Act and will bring forward a draft order during later stages of the Bill. Several other transfer of functions orders have been made under section 58 since the Assembly was established.

I turn now to amendment 11, tabled by Labour, which would place a requirement in the Bill for a so-called fiscal framework. I should underline that the precedent in Scotland was not for the inclusion of such a provision in legislation; instead, the UK and Scottish Governments negotiated an agreement. I would hope that a mature relationship has developed between the Welsh and UK Governments, and between the First Minister and me, in respect of how we conduct our affairs. Clearly, there is no way I want to see Wales in a detrimental position—that is the starting point of our negotiations—and I am optimistic that we can come to an agreement over the appropriate adjustments to the Welsh block. Holtham has made some recommendations that are a good starting point for those discussions. Few people believed we would ever get to the position of introducing a funding floor. I hope, therefore, that that funding floor of 115% might give people confidence.

I would like us to reach a position where the Welsh Government can grant a legislative consent motion. Under the model we followed in Scotland, a legislative consent motion came only after the fiscal framework was agreed. I would hope that, once we have reached an agreement on a fiscal framework and a Barnett adjustment, a legislative consent motion could then be used as proof and evidence. For that reason, the amendment proposed is unnecessary—appropriate structures are in place to allow for that mature discussion to take place.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

[Hywel Williams]

We have had a wide-ranging debate, including on issues not really to do with the lead amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clause 9 ordered to stand part of the Bill.

Clause 10

Introduction of Bills: justice impact assessment

Question put, That the clause stand part of the Bill.

17:29

Division 33

Ayes: 294

---

Conservative: 284
Democratic Unionist Party: 7
Scottish National Party: 1
Ulster Unionist Party: 1

Noes: 228

---

Labour: 183
Scottish National Party: 36
Independent: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Liberal Democrat: 1

Clause 10 ordered to stand part of the Bill.

Clauses 11 to 15 ordered to stand part of the Bill.

Clause 16

Welsh rates of income tax: removal of referendum requirement

Amendment proposed: 11, page 14, leave out lines 30 and 31 and insert—

“(a) for subsection (1) substitute—

(1) Before the commencement of sections 8 and 9, the Secretary of State must lay a statement (“a fiscal framework”) before each House of Parliament setting out the arrangements for calculating and making payments into the Welsh Consolidated Fund under section 118 of the Government of Wales Act 2006 following the commencement of those sections.

(1A) The Secretary of State must send a copy of the fiscal framework to the First Minister for Wales and the First Minister must lay it before the Assembly.”

(b) after subsection (2) insert—

“(2A) But an order may not be made under subsection (2) until a fiscal framework laid under this section has been approved by resolution of both Houses of Parliament and of the Assembly.”

(c) for the heading substitute “Fiscal framework and commencement of income tax provisions.””—(Paul Flynn.)

Clause 16(3)(a) omits subsection 14(1) of the Wales Act 2014, which applies the power of the Treasury to commence the income tax provisions of that Act by order where the majority of the voters in a referendum in Wales vote in favour of the income tax provisions coming into force. This amendment omits the provision but replaces it with provision for a fiscal framework to be prepared by the Secretary of State, which must be approved by the Assembly and each House of Parliament before the income tax provisions may be commenced by order made by the Treasury.

Question put, That the amendment be made.

17:44

Division 34

Ayes: 181

---

Labour: 179
Independent: 1

Noes: 285

---

Conservative: 278
Democratic Unionist Party: 6

Question put, That the clause stand part of the Bill.

17:58

Division 35

Ayes: 285

---

Conservative: 268
Liberal Democrat: 7
Democratic Unionist Party: 5
Plaid Cymru: 3
Ulster Unionist Party: 1

Noes: 7

---

Conservative: 6
Democratic Unionist Party: 1

Clause 16 ordered to stand part of the Bill.

Clauses 17 to 19 ordered to stand part of the Bill.

Schedule 3 agreed to.

Clauses 20 and 21 ordered to stand part of the Bill.

To report progress and ask leave to sit again.—(Charlie Elphicke.)

The Deputy Speaker resumed the Chair.

Progress reported; Committee to sit again tomorrow.

Business without Debate

Tuesday 5th July 2016 Commons Chamber

Delegated Legislation

Tuesday 5th July 2016 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Representation of the People

That the draft Electoral Registration Pilot Scheme (England) Order 2016, which was laid before this House on 26 May, be approved.—(Charlie Elphicke.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Rehabilitation of Offenders

That the draft Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (Amendment) (England and Wales) Order 2016, which was laid before this House on 26 May, be approved.—(Charlie Elphicke.)

Question agreed to.

EU Referendum: Race Hate Crime

Tuesday 5th July 2016 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Charlie Elphicke.)

18:12

[Yasmin Qureshi (Bolton South East) (Lab)]

I want to make it clear that this Adjournment debate is not about people who voted to leave. Many good people voted to leave, as they believed we will be better off out of the European Union. Today’s debate is about the rhetoric and images used by some in the leave campaign.

Growing up as the child of Pakistani immigrants in the 1970s, I frequently received abuse such as “Go back to your country” or “You smell of curry.” Often, the words I heard were, “Go back home.” The words stung because they implied that I did not truly belong in this country. Growing up, this taunt haunted many of my generation and others as well. Words such as “Paki” and signs on doors saying, “No blacks, no Irish, no dogs” still haunt many of us.

If we fast-forward to 2016, it feels like nothing has changed. I still receive abuse, and it is not just racially motivated. I have frequently been subjected to rape and death threats online—often I am told I should be sent to Saudi Arabia to be raped and lynched—but I will not be frightened off, despite the fact that I am one of those MPs who regularly hold drop-in surgeries in my constituency and I have no idea who will come to see me. These people will not prevent me from carrying on connecting with my constituents and giving them the best service I can.

[Karl Turner (Kingston upon Hull East) (Lab)]

I have been contacted by my constituent Leroy Vickers, who describes four very serious incidents of racially aggravated offences. He says that in the past two days he has witnessed a man on a bus telling a passenger, “Get off the bus, Paki”, witnessed racially aggravated abuse in a takeaway, and heard a man of Jamaican descent say that for the first time since he was about five or six he is hearing the N word used regularly. What does my hon. Friend say to that?

[Yasmin Qureshi]

That is also the experience of so many of the constituents and other people who have written to me. That is why I am very grateful that I managed to get this Adjournment debate.

We have had words such as, “Go home, Polish vermin”, posted through the letterboxes of Polish residents in Cambridgeshire; heard of young Muslim school girls being cornered and intimidated, with people saying, “Get out, we voted leave” and “I can even give you a suitcase”; and seen signs in Newcastle urging the Government, “Stop immigration and start repatriation”, with words such as “This is England, we are white, get out of my country”.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is making some strong, powerful and deeply disturbing points. Does she agree, though, that it is not just in the context of the referendum that we have seen hate crime increasing? I saw this horror in last year’s general election. In just one street in my constituency, somebody told me that that they would not vote Labour because all we did was support the N word, another person pointed to a black woman in the street and told her she should go home, another told me that gay people should be killed and sent to hell, there was a race hate attack in a fish and chip shop at the end of the road, and somebody said that we needed to stand up against the Jews. That was all in one street. Does she agree that this has been going on for some time? It has been a problem in the referendum, but it has been coming for a while.

[Yasmin Qureshi]

I absolutely agree. Later in my speech I will deal with fact that this has been going on for some time.

Since last week, I have been inundated with emails, tweets and messages detailing hundreds of horrific incidents that have taken place. I understand that since last Friday, True Vision, the Government website to combat hate crime, has recorded a fivefold increase in reports to the police from the public, with 331 incidents since the day the referendum was held. The weekly average used to be 63 reports. In my own region, Greater Manchester, there has been a 50% increase in the number of hate crimes reported in the past week. There has been a very famous incident on YouTube showing an American professor who was abused by people.

[Keith Vaz (Leicester East) (Lab)]

May I wish my hon. Friend a very happy birthday? She is obviously a very dedicated Member of this House to be spending this evening here with us discussing these events rather than celebrating her birthday.

May I also say how much I agree with what my hon. Friend has said? I have just received a letter from the Metropolitan Police Commissioner telling me that the number of hate crimes in London has gone up from 20 a day to 60—a huge increase. Does she agree that it is very important that there is consistency among all the police forces—in Lancashire, in the Met—in dealing with this problem?

[Yasmin Qureshi]

I absolutely agree. We need consistency throughout the country in how these cases are dealt with. I thank my right hon. Friend for remembering my birthday.

Many here will know or remember that on 15 February 1971 Enoch Powell stood up to speak at Carshalton and Barnstead Young Conservatives club in Surrey. It was three years since he had made his incendiary “rivers of blood” speech, and now he was returning to the subject of immigration. Mass immigration, Powell claimed, led to the native British seeing their towns

“changed, their native places turned into foreign lands, and themselves displaced as if by a systematic colonisation.”

Three members of the shadow Cabinet threatened to resign unless Mr Powell was sacked. Mr Heath dismissed him.

I, like many other Members, was horrified by the return of such language during the recent referendum. I felt revulsion—I am sure many others did too—on seeing the image of Mr Farage proudly unveiling his “breaking point” poster, featuring Syrian refugees, a week before the referendum. It was the visual equivalent of the “rivers of blood” speech. The poster shows a crowd flowing towards us—face after face, an apparently unending human tide. The nearest faces are in sharp focus, the furthest a blur of strangers. Even though they are human beings, they seem to be aliens.

Nigel Farage and the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) frequently made false claims that immigration, not austerity, is the reason that health, social care and schools are under pressure, fostering the myth that immigrants drain our resources rather than enhance them.

That is scaremongering in its most extreme and vile form. The leave campaign played on people’s genuine fears about poverty, unemployment and deprivation, especially in areas facing generational unemployment that have long been neglected for the past 20 to 30 years. Immigration is not the cause of social inequality, and such scaremongering does not and will not address the root causes of the problems faced by so many. It is successive Governments who have failed to deal with the issue of social and economic inequality. The gap between the rich and the poor is now even bigger, and five families in the United Kingdom own some 20% of the UK’s wealth. The issues that need to be addressed—such as eradicating poverty and providing equal opportunities—are not being tackled. Immigrants are accused of being the cause of all that and they are used as a natural target—that is what Vote Leave campaigners campaigned on.

[Jim Shannon (Strangford) (DUP)]

As one of the 17.4 million people who voted to leave, I totally and wholeheartedly condemn the attacks. Immigrants who come to my constituency of Strangford get employment and jobs, and they get married and buy houses. I acknowledge the valuable contribution they make. Whatever hate crimes have been carried out, they have not been carried out in my name or in those of the 17.4 million people who voted leave.

[Yasmin Qureshi]

I entirely agree with the hon. Gentleman. That is why I said when I started my speech that this is not about leaving or about people who voted to leave; as I said, many of them had very good reasons for doing so. I am talking about some of the people who led the campaign.

Mr Powell foresaw an unchecked inflow of black immigrants creating civil war. The UKIP poster told us absolutely the same thing about the people headed our way, it claimed, “across borderless Europe”. The tide of faces sums up exactly the same image as the swarms and rivers and hordes of otherness and racial difference that Powell spoke against in 1968 and that so many others—the National Front and the British National party among them—have tried to evoke over the years. I do not think that the creators of the UKIP poster would be insulted by that Enoch Powell comparison. They assume that we all share their unease with racial diversity. It was no wonder that the poster was reported to the police for inciting racial hatred.

The referendum was one of the ugliest political campaigns that I have witnessed in my life. Leave campaigners could have talked about the need for reform, the Transatlantic Trade and Investment Partnership, economic considerations and a whole host of other things. Instead, they chose to make the debate about the mythical “other”—the immigrant who is stealing our jobs and resources and taking our homes. They seemed to cry, “If only we could close the door, then Britain will be great again and all our problems will be gone.” I am afraid to say that the tone taken on immigration by some of the leave campaigners has made racism socially acceptable again.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

I congratulate my hon. Friend on securing this important debate and agree with all the points she has raised. I am sure she agrees with me that these actions against EU nationals, including the Polish people in my constituency who are having letters put through their letterboxes telling them to go home, are deeply deplorable and should be condemned.

[Yasmin Qureshi]

I absolutely condemn the vitriolic abuse that the Polish community has received over the years. I would add to that that a lot of European nationals in this country are now very concerned about their status and their citizenship rights. I will ask the Minister to ensure that the Government deal with this issue fairly urgently to bring reassurance to a lot of EU nationals living in the United Kingdom.

The hon. Member for Uxbridge and South Ruislip (Boris Johnson) claimed that Brexit would stop “uncontrolled immigration”, suggesting images of hordes of people rushing to our shores. During a televised EU debate, a member of the audience asked Mr Farage to explain how he would reduce racial tensions in the light of such rhetoric. Not only did he ignore her question, but later her Twitter timeline was filled with horrific abuse from his supporters. We must acknowledge that the abusers now feel more confident in making these claims because of Mr Farage’s frequent racist comments and claims that he can restore Britain’s place in the world.

[Stephen Doughty]

I thank my hon. Friend for giving way again; she is being incredibly generous. She made a point about Twitter. Does she agree that social media companies and internet providers have a great deal of responsibility here? It is not easy enough to report or deal with hate crime, of all sorts, and the internet is currently filled with abuse, whether it is anti-Semitic, anti-Muslim, anti-gay or anti-women. Many Members of this Chamber have experienced that abuse in recent days, from the left and from the right, and the companies that are involved need to take a much firmer hand.

[Yasmin Qureshi]

I absolutely agree. It is so difficult to make a complaint. I am one of those people who can relate, on a personal level, the amount of abuse that I have received. When I tried to contact the organisations concerned, I got nowhere. It is important that we think about how we can regulate that and ensure that social media companies deal with these issues responsibly and monitor the posts that are being put on their sites. It seems that most of them completely fail to do that.

There have been constant calls that we are claiming our country back. After the Brexit campaign won, the first comment from Mr Farage was, “We have got our country back”, suggesting that it had been under the control of somebody else. These are the types of irresponsible comments that feed into people not liking immigrants—the “other”. Sadly, some senior politicians who perhaps should know better did the same, including the Prime Minister, when he talked last year about the “swarm” of migrants in Europe, and they have failed, time and time again, to stop the spread of such anti-immigrant feeling.

[Catherine West (Hornsey and Wood Green) (Lab)]

It seems that confusion is being deliberately stoked on the definition of a refugee versus somebody exercising their right, or their former right, to freedom of movement across Europe, and other categories of non-European migration. In general, this leads to a sense that there is a lack of education about what migration actually is.

[Yasmin Qureshi]

I absolutely agree with that. Very disturbingly, one of the arguments used by some leave campaigners was that the refugees who are fleeing war-torn countries such as Syria will come here as terrorists, and that, if we were to leave the European Union, they would not be able to come and somehow we would become safe. That feeds into the “anti-other”, or anti-immigrant, sentiment, and that is irresponsible.

Sadly, as of now, not a single prominent leave campaigner has uttered any condemnation of the rise of racial hatred or, better still, called for unity to heal the deeply dangerous divisions that have been created. Does the Minister agree that we now need a cross-party coalition to make sure that future campaigns on such issues are conducted according to some sort of code of conduct that ensures that we never again allow our political language to become so irresponsible?

The media have not exactly played a good role in this, either. We must consider the media and journalists who portray such politicians as colourful eccentric characters, whose outrageous comments are seen for their entertainment value and as being honest. How many times have we heard, “This person is saying it how people are saying it, and is not pretending to be something else—he is giving honest views”? That serves to legitimise their point of view.

We have heard about famous journalists who have continued with that kind of behaviour. Politicians here in the United Kingdom and in the US who encourage what I call “othering” quickly become big box office hits, especially if they are able to talk, not just unchallenged but endorsed by journalists, in a way that suggests that all Muslims are rapists, or that immigrants are sucking the NHS dry or are stealing our jobs while living on benefits. Imagine the effect on someone in an economically or socially vulnerable situation who is told on a daily basis that they are in that plight because of these immigrants who have taken everything. It is not surprising that some of those people think that the immigrants are to blame. That is why I talked about the need to eradicate poverty and provide good jobs, decent housing, education, schools and hospitals. That is so important. Can we really be surprised at some of the rhetoric and the things people have been saying when that kind of thing is perpetuated by our media?

The free hand of the print and online media to distort facts and blame entire groups of people for the troubles of our country, with almost no fear of contradiction, plays an important part in the spread of hatred, and is worrying. Certain parts of the media are complicit in the rise of bigotry and the consequent discrimination. Here, I touch on what my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) referred to. It is not that suddenly one day everyone decided to become abusive. There has been a consistent level of immigrant bashing over a number of years. There was a time in this country when the Irish were bashed. Then it was the Afro-Caribbean community, then the Muslims. Now it seems like everyone is hated. That is very worrying.

This is a great country to live and work in. I am very passionate about my country, which is why I think it is so important that everyone, including all politicians across the United Kingdom get together and say, as the hon. Member for Strangford (Jim Shannon) did, “Not in our name.” This is not what we are as a country. We are a tolerant and liberal country. I have travelled and worked in other countries, and as far as I am concerned this is the best country to live in in the world. When I see this kind of thing happening, it really disheartens me. I know that others feel the same.

Let me give as an example some of the front-page scare stories from the Daily Express, the Daily Mail and The Sun. Recently, a Daily Mail cartoon compared immigrants to vermin and conflated them with gun-wielding terrorists. Who can forget the well-known shock tactic journalist who referred to desperate and scared refugees as “cockroaches”? It is amazing that the newspapers and journalists who make an enormous amount of money from those kinds of things are able to say them again and again and get away with it completely. In fact, the journalists are paid even more by the radio stations, television companies and media to carry on peddling their hate. When did journalists forget that with freedom of speech comes responsibility? Does the Minister agree that it is now more pressing than ever that we proceed with the next stage of the Leveson inquiry, so that the press act responsibly in their treatment of minorities? A free press is great—we want that, and we want the press to cover stories, responsibilities, wrongdoing and investigative journalism, and to tell us what is going on, but some sections of our media seem to have a completely different agenda of their own.

We have a proud tradition of welcoming people from around the world, and our diversity makes us stronger. We are grateful to all those who have chosen and continue to live and work in this nation. Members of the House must pledge to stand together and unite against hatred and intolerance in our communities. We will not, and should not have to tolerate hate crime again.

[Colleen Fletcher (Coventry North East) (Lab)]

My hon. Friend is making important points about the responsibilities of different agencies. The Minister may have heard about the incident in Coventry, where my constituent, the Coventry and Warwickshire radio presenter Trish Adudu, was racially abused in the street last week. Trish said that an individual shouted at her and another Coventry resident, and said vile things, including the N word, which I have never used and cannot bring myself to use even when describing this incident tonight. She was told: “Get out of here. Go back home. Haven’t you heard the result of the vote?” Trish was visibly distressed when she reiterated that on the radio and on TV. Does my hon. Friend—and hopefully the Minister—agree that there is no place for such sickening and deplorable behaviour? We must work together to put a stop to it, bringing in all those agencies and working cross-party. Robust action must be taken—

[Madam Deputy Speaker (Natascha Engel)]

Order. I have been very generous with the intervention, but that was very long. There is plenty of time and if the hon. Lady wanted to make a speech, she could have done so, but I think that was it.

[Yasmin Qureshi]

I entirely agree with my hon. Friend.

We have processes in place to report hate crime, and swift action can be taken, as was demonstrated by Greater Manchester Police following the incident of hate on a tram towards an American lecturer. Importantly, many who voted to leave the EU did so as a protest vote to voice concerns against the Government and austerity measures, and the vast majority do not endorse any racist rhetoric. Many who voted to leave felt that they were doing the right thing for the economy, and they fell for the lies being peddled as promises, such as £350 million a week for funding the NHS. However, Brexit has legitimised and normalised racism. We must ensure that all incidents are reported and prosecuted, and we must hold the media and leaders—including political leaders—to account when hatred is propagated. We must act against social inequality, and provide and protect jobs, wages, workers’ rights, good schools and hospitals. In essence, social and economic equality often leads people to view the “other” through the prism of dislike, hatred or suspicion. Only together can we work to tackle that problem, and ensure that future generations can hope for a safe future in this country and regard it as their home.

18:40

[Keith Vaz (Leicester East) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Bolton South East (Yasmin Qureshi). She is a passionate advocate on behalf of the downtrodden and all those whose rights need to be exercised in this country. She had a long career outside this House as an international barrister and she has shown a passionate commitment to the cause of justice in this House, serving on the Justice Committee, the Home Affairs Committee and now the Foreign Affairs Committee. She has reminded us all of the huge contribution that has been made by the migrant community to our country.

I have to declare an interest as a first generation migrant. I arrived here from Aden in Yemen at the age of nine. My hon. Friend the Member for Walsall South (Valerie Vaz) is also my sister and we do not normally sit together in this House. We try to sit apart. Some people mistake her for my daughter—nobody thinks I am her father, which is a good thing. We are sitting together in solidarity today, because we think this is a really important issue and my hon. Friend the Member for Bolton South East is right to raise it. We came to this country and we can remember the speech made in 1968 by Enoch Powell, which cast a shadow over a whole generation.

The good thing about this place is that when we have discussed race issues, no matter what happened in the referendum campaign and the words my hon. Friend quoted, there is an all-party consensus about the contribution of the migrant community and the diversity of Britain. As I said to the Prime Minister last week, he has constructed the most diverse Government in the history of the Conservative party, with more women and more ethnic minorities sitting in the Cabinet and the Government. Labour did the same thing when we were in office.

How do we translate the huge achievements of the migrant community and get everyone, including the media, to understand that they are a force for good? It means talking them up, but it also means that when the chips are down we defend them, support them and stand up for them. I was so pleased to hear what the hon. Member for Strangford (Jim Shannon) said. I have been to his constituency and I know his commitment to different communities. Northern Ireland has different issues, but he has always supported all his constituents equally, as we all do. How do we, as parliamentarians, translate that contribution and get that message across to the public? That is the problem we face.

The problem is very stark. As I said to my hon. Friend the Member for Bolton South East, today I received a letter from the Metropolitan Police Commissioner. The figures in that letter are shocking: an increase from 20 to 60 hate crime incidents every single day. The number of hate crime incidents between the day after the referendum, 24 June, and Tuesday 28 June was 232 in the Metropolitan police area alone. We do not know the figures for the rest of the country. A lot of people do not want to report these crimes: as with any crimes, including crimes against women, people do not want to report them. The figures represent the number of reported incidents only. I would imagine that the number of hate crime incidents is even greater.

[Catherine West]

Does my right hon. Friend agree that there is a real issue around reporting such crimes, in particular in schools? Young children do not really understand what it means when another child says, “You’ve got to go home now,” and how that can be reported and linked in with police officers within the school context.

[Keith Vaz]

My hon. Friend is absolutely right and as the former leader of a council she will know the importance of starting at a very young age. That is the impressionable age and that is where we need to begin the dialogue. That is where we need to show these positive images. We all represent constituencies with ethnic minority communities. It is important that that exposure happens at a very early stage.

The referendum polarised opinions. I, of course, voted for remain. I say of course, because under the previous Labour Government I was a Minister for Europe. There were many Ministers for Europe under the Governments of Tony Blair and Gordon Brown. One of my jobs, when I was appointed by Tony Blair, was to go to the eastern European countries and prepare them for enlargement. His first words to me were, “Get closer to them than the French and the Germans.” I did and I travelled a lot: I made 54 visits in two years. I went to eastern Europe, having never visited before, and it was a revelation. We should say in the House how pleased we are with the contribution that eastern European communities have made to our country. People are surprised to hear that the figure is 3 million. I do not think that one can tell, because these are the hardest-working communities, they contribute in each and every constituency, and they make the lives of our citizens better.

I was shocked to hear not just about the incidents recounted by hon. Members or about the crimes committed but about how social attitudes have changed because of the referendum. It has changed not just the political make-up of our country—with so many party leaders resigning within days of the referendum—but attitudes. That is why last Sunday, with my hon. Friend the Member for Ealing Central and Acton (Dr Huq), I went to Ealing Broadway—not Leicester but Ealing Broadway, Ealing being the centre of the Polish community in London—and sat through a Polish mass at the Church of Our Lady Mother of the Church. It was the first Polish mass I had been to since I was Minister for Europe and I went to a mass in Piekary Slaskie in Poland.

At the end of the mass, I was asked to address the congregation, and I reminded them of the great affection we all felt for the contribution made by the Polish and other communities that have come here as a result of enlargement. When I went outside, an elderly Polish gentleman came up to me and said, “I have to tell you what happened the day after the referendum. I go to an elderly persons’ lunch club. When I went in, I was told by the person who runs it that, because of the referendum vote, I was not allowed to have lunch with the other people.” If I had not heard this myself, I would not have believed it. I represent probably the most multi-racial constituency of anyone sitting here, and I have never heard such a thing from members of the British Asian community. Yet here was I, in the middle of Ealing, hearing this from an elderly Polish gentleman who had lived all his life in this country—Polish migration began at the time of the second world war.

What starts with a social attitude or a speech, whether at school—as mentioned by my hon. Friend the Member for Hornsey and Wood Green (Catherine West)—or among the general migrant community, ends up with a hate crime and violence. That is what we need to guard against.

[Amanda Solloway (Derby North) (Con)]

The right hon. Gentleman mentioned school. I heard a horrific story the other day from a headteacher about two seven-year-old boys who had always been best friends. On the Monday after the referendum, one of them said to the other, whose parents were Polish but who had been born here, “You’re going home. You won’t be in this country any more”. That cannot be right, surely.

[Keith Vaz]

The hon. Lady is absolutely right. It cannot be right for a seven-year-old to say such things, but it is because of prevailing attitudes either in the local area or, most probably, in the home of that child. That is exactly what my hon. Friend the Member for Bolton South East was saying, and that is why her debate, held so quickly after the referendum, is so important. It is not about whether someone voted to stay in or come out—it is the settled view of the British people that we should come out—but about the attitudes that remain, the speeches made and the quotes she gave. These points have to be regretted.

I am sorry that I missed yesterday’s urgent question from my right hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart). It is really important that the Government settle the issue of whether EU migrants can stay here. It is not an issue for the Conservative party’s leadership campaign—it cannot be talked about in hustings; it has to be told to the House. I believe that the Prime Minister is an honest, honourable, fair and diligent person, and I believe that if he came to that Dispatch Box tomorrow and was asked this question, he would come out with a settled view and tell us that they can stay—that they should not be, as we heard yesterday, bargaining counters. I am sure he would say that we will allow the 1.2 million Britons to stay in the EU and that we will keep the 3 million. Of course, the numbers will not stack up in any case. The need to clarify is what causes people to be concerned, which is why it is important that we clarify these matters as soon as possible.

[Stephen Doughty]

My right hon. Friend is making some strong points. Before he finishes, I want to agree with his point about Polish people in this country. I have Polish relatives, many of whom live in the constituency of my hon. Friend the Member for Bolton South East (Yasmin Qureshi). I am horrified at some of the abuse that has been directed at the Polish community. Given what I said before about the impact of social media and the internet as a common theme running through everything I have seen in the last few years—whether it be this type of hate crime, hate crime directed at LGBT people, extremism, radicalisation for terrorism or the sectarianism we saw in the Scottish referendum that was also played out online—what does my right hon. Friend feel that social media and internet companies need to do?

[Keith Vaz]

My hon. Friend is absolutely right that the responsibility on social media and internet companies is massive. I cannot understand why companies that make millions of pounds cannot have dedicated teams to take down this hate immediately. Why should it be left for people to block those who write these racist comments? We have to be sitting and looking at our iPhones every single minute of the day to know what people are saying about us. I block a lot of people: I have some friends, but also some enemies on the internet. The fact is that those companies should be doing this, and if they do not do it, Parliament should legislate.

Let me conclude. The Select Committee decided unanimously on Wednesday to have an inquiry into hate crimes and violence. We heard the words of the Minister last week at the Dispatch Box, and I welcome what she said. I also welcome her personal commitment to this issue. I have been in the House for 29 years, and I know the difference between a Minister who comes to the Dispatch Box and just says what is in the brief and a Minister who comes to it but believes passionately that something must be done. The Minister does believe in this issue passionately. She believes in zero tolerance for racism and anti-Semitism; she wants to put in place an action plan to which we can all adhere; she wants consistency. That is what we all want.

The Minister will find this House united in support of what the Government propose, because there can never be any doubt that we stand united in support of all the communities who have come to this country since we have been in the European Union and the diaspora community that has settled here for many years, including my hon. Friend the Member for Bolton South East, my hon. Friend the Member for Walsall South—my sister—and me. This is our country. I know this phrase has been used a lot, especially by Conservative leadership candidates, but I love this country, too, and I do not want anyone to say of us collectively that we tolerate racism, anti-Semitism or hate. We stand united to defeat them.

18:53

[The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)]

I congratulate the hon. Member for Bolton South East (Yasmin Qureshi) on securing today’s debate and I wish her a happy birthday. I hope she will have some remaining time this evening to enjoy it.

Hate crime of any kind, directed against any community, race or religion has absolutely no place in our society. I reiterate my message from last week: this Government are utterly committed to tackling hate crime, and we will provide extra funding to do so. We will also take steps to boost reporting of hate crime and support victims, issue new Crown Prosecution Service guidance to prosecutors on racially aggravated crime, provide a new fund for protective security measures at potentially vulnerable institutions and offer additional funding to community organisations so that they can tackle hate crime.

I do not propose to repeat the many points discussed last week. Instead, I shall reflect on the comments made today and answer the questions put to me. It is worth repeating, however, that the scenes and behaviour we have seen in recent days, including offensive graffiti and abuse hurled at people because they are members of ethnic minorities or because of their nationality, are despicable and shameful. The examples cited today across the House show that this is a real problem affecting our constituents up and down the country, including in my own constituency of Staffordshire, Moorlands. I know of comments and abuse that have been directed at Polish friends in my constituency —people who have lived and worked there, who have contributed to our communities, and whom we value and want to protect. We must stand together against such hate crime, and ensure that it is stamped out.

The right hon. Member for Leicester East (Keith Vaz) gave the House some statistics. Let me now give some statistics from True Vision, the police online reporting portal, and from the letter to which he referred. Between 23 and 29 June, 331 reports of hate incidents were made to True Vision. When compared to the weekly average of 63 reports in 2016, that shows a 525% increase. However, although those figures undoubtedly seem shocking, I urge people to be cautious about drawing conclusions from them, because they represent a snapshot of reports rather than definite statistics. We should bear in mind that the extensive media coverage of hate crime will have increased awareness of True Vision, and may have encouraged increased reporting—which we welcome. We should also bear in mind that some of the reports may relate to non-criminal hate incidents, and that some may be duplicated. As I have said, I urge caution because this is an early snapshot, but we nevertheless take it very seriously.

The right hon. Gentleman referred to figures included in a letter from the Metropolitan Police Commissioner, which showed that there had been 599 incidents of race hate crime between 24 June and 2 July in the Metropolitan police area. As he said, that is an average of 67 per day. However, it is worth noting that the average daily number before 24 June was 44 per day, and that the number of reports normally varies between 25 and 50 per day. We are seeing an increase in reporting of hate crime, which I greatly welcome, but when we have definitive figures, we will need to establish whether it is an underlying increase in prevalence or an increase in reporting. We need to know how the figures break down.

Much of the reporting of hate incidents has been through social media, including reports of xenophobic abuse of eastern Europeans in the United Kingdom, as well as attacks against members of the Muslim community. However, we have also seen messages of support and friendship on social media. The hon. Member for Bolton South East referred to an incident on a tram in Manchester. I am sure that the whole House will join me in commending those we have seen stand up for what is right, upholding the shared values that bring us together as a country.

When we debated this matter last week, the hon. Member for Belfast East (Gavin Robinson) asked us to ensure that the hate crime action plan did not include the words “tolerate” and “tolerance”, and he was right to do so. We cannot “tolerate” incidents such as these, because they are not acceptable. We cannot say, “You received 40 messages of hate on Twitter today, so if you receive 50 tomorrow that is worse, but if you receive only 30, that is OK.” We cannot tolerate any such crimes. We must make it clear that they will not be tolerated, that they need to be reported, and that the police must take them seriously.

The hon. Member for Cardiff South and Penarth (Stephen Doughty) made a couple of interventions about social media and online messages, and I agree with much of what he said. What is illegal offline is illegal online. We have seen some prosecutions for online hatred, but there is no doubt that more needs to be done. We have been talking to social media companies, and I am pleased to say that the European Commission and IT companies recently announced a code of conduct on illegal online hate speech. We must now work with those companies to ensure that hateful content online is removed and perpetrators are brought to justice, but we must also recognise the scale of the challenge. Facebook receives 4 billion posts a day—4 billion pieces of content are uploaded on to it each day, globally. The task is therefore very difficult. More responsibility must be taken by the social media companies, and I am pressing them on exactly that matter. However, we must also recognise that this is something that we must change in society as a whole.

The hon. Member for Bolton South East talked about hate speech in the media, and again there is no place for hate speech anywhere in society. Freedom of speech is a vital cornerstone of our society, but everybody must remember they have responsibilities not to spread hatred or fear. Anyone using freedom of speech as an excuse to break the law should face the full force of the law.

19:00

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Charlie Elphicke.)

[Karen Bradley]

The hon. Lady asked about Leveson, too, and I note all the points she makes. The press have a responsibility, but she will know there are still some outstanding cases, and we do need to complete them before we can move on.

The hon. Member for Cardiff South and Penarth talked about how this is not a new kind of incident, and probably all of us experienced this through the general election campaign. Some of my posters were defaced and I received the most vile abuse. I have young children. This is why I am not on Twitter any more—because, frankly, they do not need to have that coming into our kitchen on a Sunday morning over breakfast; it is just not necessary.

The point is that this is not new. I went to the launch of the latest Tell MAMA report last week. It shows a 326% increase in 2015—compared with 2014—in street-based anti-Muslim incidents reported directly to Tell MAMA, including verbal abuse in the street and women’s veils being pulled away, with 437 incidents reported to Tell MAMA. The report also finds that 45% of online hate crime perpetrators are supportive of the far right.

This brings me to the work we are doing on our counter-extremism strategy. There has been some confusion about its aims. It is important to set this in context. Extremism is the public supporting and promotion of ideology that can lead to crimes. Those crimes might be terrorist activity or violence against women and girls. The public promotion of FGM, while not in itself a crime, might lead to somebody carrying out FGM, a violent crime against women and girls that we simply do not tolerate. It can lead to division in society and hate crime. That is why the Government are working on that strategy with communities and others. We need to make sure as a society that we are clear about how we tackle those ideologies, be they far right, Islamist or promoting violence against women and girls. Those are the kinds of ideologies we cannot tolerate in this society and that is what we are working on in our counter-extremism strategy.

I want to reassure the House that there is currently no police intelligence to suggest any significant public order risks following the referendum result. There has been a variety of spontaneous demonstrations both in support of and against the referendum result. To date, those have caused only minor disruption and have remained largely peaceful. Police forces are remaining vigilant around any tensions and potential for disorder, and will plan accordingly.

The right hon. Member for Leicester East, Chair of the Home Affairs Committee, referred to the hate crime action plan. This is a follow-up to the hate crime action plan we had in the last Parliament, and we are making progress: we are seeing more reporting and investigating and prosecuting of hate crime, but there is still a lot more to do. That is why we will publish a new hate crime action plan, which will cover all forms of hate crime, including xenophobic attacks. It is a plan we developed across Government and with communities and society, including schools, to make sure that point is included and encouraged in schools from a very early age, so that it is clear that such behaviour is not acceptable.

The hon. Member for Bolton South East talked about working across Government. I am looking at the best way for us to come together to make this point. I look forward to working with her, the Select Committee and others to show a united front in this House and in the leadership of this House on this issue.

Citizens of other EU countries no doubt have concerns, but I reiterate the point that the Prime Minister made last week: we are a full member of the European Union today and we will continue to be a full member until two years after article 50 is invoked. During that period, there will be absolutely no change to the status of EU nationals.

[Keith Vaz]

The Minister has faithfully reported what the Prime Minister said, but three senior members of the Government who are contestants for the leadership of this country have decided to say that EU citizens can stay. Why does the Home Secretary not agree with them? This issue is not about the Conservative party leadership; it is about the rights of citizens in this country.

[Karen Bradley]

I understand the point the right hon. Gentleman makes, but he will be aware that the Home Secretary is the Home Secretary, whether she is a leadership contender or not.

The reality is that we have to get into a negotiation and to understand what the position is. We are all entering uncharted territory. This is the first time that any country has voted to leave the European Union. It is the first time that any country has been in this situation. We have to be clear about what the future looks like, and that involves grown-up negotiations not just for those EU nationals who are in this country, but for UK nationals who are overseas. I want to ensure that we get the very best deal for Britain, and that includes the EU nationals who are here and the UK nationals who are living in the European Union.

[Keith Vaz]

The point that my hon. Friend the Member for Bolton South East (Yasmin Qureshi), I and others are making is that it is this uncertainty that leads to prejudice; it is this uncertainty that leads to one seven-year-old boy saying to another, “You’ve got to leave.” That is why we need to be certain.

[Karen Bradley]

I disagree with the right hon. Gentleman. I do not think that is what leads to it. It is about a lack of understanding and we need to work very carefully to make it clear that such comments are not acceptable from a seven-year-old boy or anybody else.

We are in uncharted territory. We need to go into the negotiation clear-headed about how we will get the best deal for Britain. To suggest that that is using people as bargaining chips is irresponsible, because everything that we negotiate in the deal will have an impact on people—on people living in this country and on people living overseas. We need to get the very best deal for this country. We need to ensure that it is the best deal for trade and for our citizens, including EU citizens who are living in this country. I want to be clear that it will be a priority to get that status cleared up as soon as possible, so that we can all learn how to live in the new world of the United Kingdom being outside the European Union as soon as possible.

The Government are clear that hate crime of any kind must be taken very seriously indeed. Our country is thriving, liberal and modern precisely because of the rich co-existence of people of different backgrounds, faiths and ethnicities. That rich co-existence is something we must treasure and strive to protect. We must work together to protect that diversity, defeat hate crime and uphold the values that underpin the British way of life. We must ensure that all those who seek to spread hatred and division in our communities are dealt with robustly by the police and the courts.

Question put and agreed to.

19:09

House adjourned.

Ministerial Correction

Tuesday 5th July 2016 Ministerial Corrections

Tuesday 5 July 2016

Education

Tuesday 5th July 2016 Ministerial Corrections

Higher Education

The following is an extract from Oral Questions to the Secretary of State for Education on 28 June 2016.

[Peter Kyle (Hove) (Lab)]

The University of Sussex down in Brighton gets £9 million of funding from the European Union. The leave campaign was very clear that that funding would be replaced by British Government funding after Brexit. Will the Minister get to his feet and guarantee that that funding will continue? If not, will he bring his brother down to Brighton to explain directly to students why the door of education is going to be slammed in their faces?

[Joseph Johnson]

This Government, more than any other, understand the importance of science funding. That is why we have protected science spending until the end of the Parliament—a decade of real-terms protection. Our universities and institutes can continue today to apply for EU competitive funding streams under Horizon 2020, and I am sure they will continue to be successful in the future.

[Official Report, 28 June 2016, Vol. 612, c. 140.]

Letter of correction from Joseph Johnson.

An error has been identified in the response I gave to the hon. Member for Hove (Peter Kyle) during Oral Questions to the Secretary of State for Education.

The correct response should have been:

[Joseph Johnson]

This Government, more than any other, understand the importance of science funding. That is why we have protected science spending until the end of the Parliament—a decade of protection. Our universities and institutes can continue today to apply for EU competitive funding streams under Horizon 2020, and I am sure they will continue to be successful in the future.

Finance Bill (Third sitting)

Tuesday 5th July 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: Sir Roger Gale, † Mr George Howarth

† Argar, Edward (Charnwood) (Con)

† Atkins, Victoria (Louth and Horncastle) (Con)

Blackman, Kirsty (Aberdeen North) (SNP)

† Boswell, Philip (Coatbridge, Chryston and Bellshill) (SNP)

† Burns, Conor (Bournemouth West) (Con)

† Cadbury, Ruth (Brentford and Isleworth) (Lab)

† Cooper, Julie (Burnley) (Lab)

Donelan, Michelle (Chippenham) (Con)

† Dowd, Peter (Bootle) (Lab)

† Frazer, Lucy (South East Cambridgeshire) (Con)

† Gauke, Mr David (Financial Secretary to the Treasury)

† Hall, Luke (Thornbury and Yate) (Con)

† Hinds, Damian (Exchequer Secretary to the Treasury)

† Long Bailey, Rebecca (Salford and Eccles) (Lab)

† McGinn, Conor (St Helens North) (Lab)

† Mak, Mr Alan (Havant) (Con)

Marris, Rob (Wolverhampton South West) (Lab)

† Matheson, Christian (City of Chester) (Lab)

Merriman, Huw (Bexhill and Battle) (Con)

† Mullin, Roger (Kirkcaldy and Cowdenbeath) (SNP)

† Quin, Jeremy (Horsham) (Con)

Streeting, Wes (Ilford North) (Lab)

† Stride, Mel (Lord Commissioner of Her Majesty's Treasury)

Tolhurst, Kelly (Rochester and Strood) (Con)

Simon Patrick, Marek Kubala, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 5 July 2016

(Morning)

[Mr George Howarth in the Chair]

Finance Bill

(Except clauses 7 to 18, 41 to 44, 65 to 81, 129, 132 to 136 and 144 to 154 and schedules 2, 3, 11 to 14 and 18 to 22)

Clause 50

Tax relief for production of orchestral concerts

09:29

Question proposed, That the clause stand part of the Bill.

[The Chair]

Will this it will be convenient to discuss the following:

That schedule 8 be the Eighth schedule to the Bill.

Clause 51 stand part.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Who knows what adventures the Finance Bill will take us on today? Hopefully the sittings will be a little more sedate than last week’s.

I will first address clause 50 and schedule 8, and then move on to clause 51 relating to television and video games tax relief. Clause 50 brings in schedule 8, which introduces a new relief for orchestral concerts, provides for consequential amendments to other parts of taxes Acts as a result, and arranges for the commencement of the relief. First announced in the autumn of 2014, the new tax relief for orchestral production will allow qualifying companies engaged in the production of concerts to claim an additional deduction in computing their taxable profits and, where that additional deduction results in a loss, to surrender the losses for a payable tax credit. The additional deduction and the payable credit are calculated on the basis of European Economic Area core expenditure, up to a maximum of 80% of the total core expenditure by the qualifying company. The additional deduction is 100% of qualifying core expenditure, and the payable tax credit is 25% of losses surrendered.

The credit is based on the company’s qualifying expenditure on the production of a qualifying orchestral concert. The expenditure must be on activities directly involved in producing a concert, such as rehearsal costs. Qualifying expenditure will not include indirect costs, such as financing, marketing and accountancy and legal fees, and at least 25% of the qualifying expenditure must be on goods or services that are provided from within the EEA. Concerts that have among their main purposes the advertising of goods and services or the making of a recording, or that include a competition, will not qualify for relief.

The stated objective of the measure is to support the creative sector and sustainably promote British culture. I certainly back that approach, not least because the BBC Philharmonic orchestra is based in my constituency and continues to attract many like-minded orchestral organisations to my city. On the machinery of the calculations, however, as the deduction of credit is calculated on the basis of EEA core expenditure, what assessment has the Minister made of amendments that might need to be made to the clause as a result of Britain’s exit from the EU?

I am pleased that the Government took the time to consult on the measure, and I note that the summary of responses published in March 2015 indicates that the industry welcomed the introduction of the relief. I am also pleased that the Government took heed of the Opposition’s concerns about the initial proposal exempting brass bands from the relief, effectively introducing a brass band tax, and that the Government subsequently included brass bands in the relevant definition in March 2015. The draft Bill and a policy paper were published in December 2015, and the Government did not make any substantive changes after the technical consultation exercise, so I am confident that the legislation will do what it says on the tin.

The measure is expected to cost the Exchequer £5 million in the financial year 2016-17 and £10 million every financial year thereafter until 2019-20. The Opposition agree with the principle of supporting the UK’s creative industries and therefore support clause 50 and schedule 8, but we are concerned that we keep creating relief after relief. Why does this targeted measure take the form of a tax relief, rather than a grant? Also, the industry is concerned that the relief does not support commercial music production, which is supported in other countries. Will the Minister clarify today, or indeed in a written response after today, what support is in place for this important industry?

Finally, what modelling have the Government done to ensure that the legislation is rigorous enough to prevent use of the relief for avoidance purposes? I understand that there were some issues about film tax relief and avoidance, and I am also concerned that the wording in proposed new section 1217RL to the Corporation Tax Act 2009 may not be very robust, especially with reference to those tax avoidance arrangements that fall within the ambiguous term, “understanding”; I am sure that the Minister will agree that by their very nature those will not be contractual. Will he confirm whether he has given thought to additional resources that Her Majesty’s Revenue and Customs might need if it is adequately to investigate such scenarios?

Clause 51 simply makes minor, consequential amendments to the Taxation of Chargeable Gains Act 1992 and the Corporation Tax Act 2010, substituting the words “section 1218B” for “section 1218”. The Opposition support television and video games tax relief, as we introduced it. We see no issue with this technical clause.

[The Financial Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship again this morning, Mr Howarth. I welcome the hon. Member for Salford and Eccles to the Committee. She has taken on a substantial workload in the past few days. Having had experience of performing her role of holding the Government to account in the Finance Bill, I recognise how challenging it can be. I wish her luck in that; if I may say so, she has made an excellent start, raising important points about this group of clauses.

I will start with a few words about clauses 50 and 51 and schedule 8, and then I will respond to the hon. Lady’s questions. The Government have supported our world-leading creative and cultural sectors, which have entertained millions worldwide while attracting significant investment into the United Kingdom. Clause 50 and schedule 8 provide further support by introducing a new corporation tax relief for the production of orchestral concerts. The Government recognise the cultural value and artistic importance of Britain’s orchestras. The relief is intended to support them in continuing to perform for a range of audiences, and in contributing to British culture.

Clause 51 makes minor consequential amendments to the Taxation of Chargeable Gains Act 1992 and the Corporation Tax Act 2010 as a result of the introduction of video games tax relief in the Finance Bill 2013. The change is not expected to have an impact on businesses that claim the relief.

The UK is home to some exciting, world-famous orchestras. The relief introduced by clause 50 recognises their artistic importance and cultural value. Its objective is to support orchestras so that they can continue to perform for a wide range of audiences. To deliver that support, the Government are building on the success of existing creative sector tax reliefs available for the production of film, high-end television and children’s television, video games, animation and theatre. Those reliefs have shown how targeted support can make a real difference, not only by promoting economic activity, but by promoting British culture and the way that the UK is viewed internationally.

Clause 50 will introduce a new corporation tax relief and payable tax credit for the qualifying costs of producing an orchestral performance. It will support a wide variety of ensembles and performances, from chamber orchestras to large brass bands playing music ranging from jazz to blues. It will allow production companies to claim a payable tax credit worth up to 25% of the cost of developing an orchestral concert, with effect from 1 April this year.

In 2013, minor consequential amendments were made to the Corporation Tax Act 2010, as some sections were renumbered following the introduction of video games tax relief in the Finance Bill 2013. Clause 51 makes a further consequential amendment to the Act and the Taxation of Chargeable Gains Act 1992; it is not expected to have an impact on any business claiming that relief.

The Government are grateful for the constructive and positive engagement with the industry since the policy was announced, and during consultation in 2015. That has enabled us to understand better how the orchestra industry operates, and to design a relief that will work across the sector. The director of the Association of British Orchestras, Mark Pemberton, has commented that the relief

“will make a big difference to our members’ resilience in these challenging times, helping them to continue to offer the very best in British music-making to audiences both here in the UK and abroad.”

The hon. Lady asked whether there was a risk of the relief being abused. Effective anti-avoidance rules are critical to the long-term success and stability of orchestra tax relief. Rules similar to those applied to the creative industry reliefs aim to prevent artificial inflation of claims. In addition, there will be a general anti-avoidance rule based on the GAAR denying relief where there are any tax-avoidance arrangements relating to the production—and, of course, HMRC will monitor for abuse once the regime has been introduced. On HMRC resourcing, I point the Committee in the direction of the £800 million announced in last year’s summer Budget, which provided further investment in HMRC to deal with avoidance and evasion measures more generally.

I come back to the point the hon. Lady raised about film tax relief and how that was abused. It is true that an earlier design of film tax relief was brought in by the previous Labour Government and was abused. That relief was abandoned by that Government, and the replacement model has been much more successful. It has provided the support that the film industry needs and benefits from, and that has helped to ensure that we have a thriving film industry without anything like the risks of abuse we saw formerly. In the measures that we have taken, we have learned from the previous approach.

The hon. Lady referred to making use of an EEA definition, and understandably asked what the implications are of the vote to leave the European Union. It is too early to say exactly how that will work. We are not sure what relationship we will have with the European Union, other than that we will be leaving it. It is quite possible that EEA definitions and so on will remain relevant, but we currently remain members of the EU and are considering legislation that takes effect in April, so it is necessary to comply with the rules as they stand. If it is necessary to review definitions, that is something we will have to look at, but that will depend on the future renegotiation.

The hon. Lady expressed the concern that perhaps we have too many tax reliefs. As the Chancellor made clear in the House of Commons yesterday, there is a place for reliefs, but our general and main focus has been on lowering corporation tax rates, and that continues to be the case. There is scope for using tax reliefs to support investment in growth through the tax system, and that is why we provide a range of tax reliefs and allowances. The Government have restricted a number of tax reliefs and allowances; for example, we have introduced a cap on income tax reliefs, restricted relief for buy-to-let landlords and capped the amount of losses through which banks can reduce their tax, so we have taken action on reliefs where we feel that their use is disproportionate to the benefits for the wider economy.

On orchestras, the Government are committed to supporting the arts through both spending programmes and tax reliefs. The orchestra tax relief is intended to complement current funding. It is specifically aimed at supporting orchestras in continuing to produce high-quality music that is enjoyed by a range of audiences. In those circumstances, we think it is justifiable. I hope that the clause has the support of Members in all parts of the Committee.

Question put and agreed to.

Clause 50 accordingly ordered to stand part of the Bill.

Schedule 8 agreed to.

Clause 51 ordered to stand part of the Bill.

Clause 52

Banking companies: excluded entities

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clause 53 stand part.

[Rebecca Long Bailey]

Clauses 52 and 53 relate to the taxation of banking companies. Clause 52 amends the excluded entity test that forms part of the definition of a bank for tax purposes, and clause 53 makes provisions to restrict corporation tax loss relief.

Following the financial crash in 2008, specific taxes were imposed on the banking sector, and a definition of “banking companies” was required. The excluded entity test forms part of this definition. Clause 52 revises the legislation so that undertaking a second activity is possible, provided that the entity undertakes one of the specified regulated activities in the excluded entities test, and that the other activity, when considered by itself—that is, without taking into account the regulated activity that is specified in the excluded entities test—would not require the firm to be both an IFPRU 730K investment firm and a full-scope IFPRU firm as defined by reference to the Financial Conduct Authority handbook.

As the British Bankers Association has explained in far more articulate layman’s terms,

“Effectively there is a list of permitted activities which do not cause you to be treated as a bank and brought into the various bank-specific taxes, even if you meet all the other conditions. The change to the rules allows you to carry on more than one of those activities and still be excluded.”

This measure clarifies the rules and has been welcomed by industry. We therefore have no issue with agreeing the clause today. We also welcome clause 53, which, to quote the explanatory notes to the Bill,

“further restricts the proportion of a banking company’s annual taxable profit that can be offset by brought forward losses to 25%. The further restriction will apply to accounting periods beginning on or after 1 April 2016.”

At autumn statement 2014, it was announced that the amount of taxable profit that could be offset by banks’ historical carried-forward losses would be restricted to 50% from April 2015. However, this clause further restricts the proportion of a banking company’s annual taxable profit that can be offset by brought-forward losses from 50% to 25%. The restriction will remain subject to a £25 million allowance for building societies, and an exemption for losses incurred by new entrant banks. The Government estimate that this will generate over £2 billion in extra revenue between the current financial year and 2020-21. They also state that the measure should be revenue-neutral in the long run for any one bank, but the timing of the measure may well have negative implications for cash flow.

The British Bankers Association has indicated that further restricting bank losses from the financial crisis to 25% of profits rather than 50% primarily brings about a timing difference; it effectively accelerates payment of £2 billion in tax into this Parliament and out of the next one. Combined with the previous changes, it means £5 billion is being brought forward to this Parliament.

Can the Minister say why the Chancellor needed to accelerate this windfall in tax revenues? Was it part of his desperate attempts to ensure a budget surplus by 2020? I suspect it might have been. However, that argument is now redundant, given the recent suspension of that aim, and I am really glad that the Chancellor is finally listening to the experts and my hon. Friend the shadow Chancellor. Nevertheless, we welcome this new requirement on banking companies to increase their contribution to the Exchequer in the light of their role in causing the current economic situation.

I am glad that the Government are taking steps to address the casino banking sector. However, the policy should be seen in the wider context of the Government’s new settlement with financial services, as announced by the Chancellor, which includes the shift in emphasis from the bank levy to the banks’ tax surcharge as a result of lobbying by the sector, and watering down promised regulatory provisions in the Bank of England Act 2016.

In the 2016 Budget, the introduction of a general restriction on carried-forward losses was announced. That will come into effect on 1 April 2017, and the Opposition support it. In the meantime, we are more than happy to agree to the further restriction set out in clause 53.

09:45

[Mr Gauke]

I am grateful to the hon. Lady for her support for clauses 52 and 53, which will ensure that the exceptional tax treatment of banks’ crisis-related losses is maintained in the light of the wider changes to the UK loss relief regime announced in the Budget. They will also amend the definition of a bank used in tax legislation to ensure that bank-specific tax measures are targeted as intended.

Clause 52 will change the definition of an investment bank to ensure that legislation is appropriately targeted. We have been clear that banks should make a fair contribution to reflect the risks they pose to the UK economy, and we have taken several steps to ensure that they do make that contribution. The Chancellor introduced the bank levy—a tax on banks’ balance sheets—in 2011 and removed tax relief for banks’ compensation in relation to misconduct and mis-selling from July 2015. We restricted the amount of profit that banks can offset with historical corporation tax losses, and we introduced a new supplementary tax of 8% on banking sector profit from 1 January 2016.

Those policies, which are forecast to raise more than £28 billion between 2015 and 2021, rely on there being an appropriate definition in tax legislation of a bank. That definition is based broadly on the extent to which a company is regulated and the nature of the activities that it undertakes. Concerns have been raised that the existing definition has the potential to go further than intended and bring into scope companies that are not undertaking retail or investment banking activities. We seek to address that through clause 52, which will make a minor technical change that is expected to have a negligible cost to the Exchequer and will ensure that legislation is fair and appropriately targeted. The clause will ensure that banking taxes are targeted appropriately at banks and that legislation remains simple, certain and effective.

Clause 53 will reduce from 50% to 25% the amount of profit that banks can offset with historical losses for corporation tax purposes from 1 April 2016. When a company makes a loss for corporation tax purposes, it is able to offset that loss against the profit of a group member in the same year. If that is not possible, companies are able to carry forward their losses and offset them against future profits. Companies’ ability to carry forward losses is an important feature of the corporation tax system. It means that companies with volatile income streams are not subject to higher effective rates of tax on their long-term profits. In the 2014 autumn statement, the Chancellor announced that the proportion of taxable profit that could be offset by banks’ pre-April 2015 losses would be limited to 50% from 1 April 2015. That exceptional treatment recognised the significant losses that banks had carried forward from the financial crisis and the subsequent misconduct scandals, and the impact that those losses were having on banks’ corporation tax payments. It was forecast to increase corporation tax receipts by £2 billion between 2015 and 2020.

In the March 2016 Budget, fundamental reforms were announced to the treatment of carried-forward losses across all industry groups, to take effect from April 2017. First, there will be greater flexibility regarding the profits against which carried-forward losses can be offset. Secondly, the amount of profit that can be offset by carried-forward losses will be restricted to 50% from April 2017, subject to a £5 million allowance. Those reforms will create a more modern loss relief regime in the UK that is competitive with those in other G7 countries and better aligned with how businesses operate.

The changes made by clause 53 will maintain the exceptional treatment of banks’ historical losses by reducing from 50% to 25% the amount of profit that banks can offset with historical carried-forward losses from 1 April 2016. That will increase banks’ corporation tax payments by around £2 billion over the next five years. The existing reliefs for losses incurred by new entrant banks and building societies will be maintained; those will continue to be treated in the same way as losses in other industry groups.

On the hon. Lady’s question about timing, these measures, taken together, will raise about £5 billion in 2016-17 alone. It is important that the banking sector’s tax contribution is made when it is most needed during this period of fiscal consolidation. I take the point about the changed circumstances in the light of the vote to leave the European Union. It is also important that we make progress in reducing the deficit, and that we demonstrate that the Government are fiscally responsible. That is what we are doing. This measure is part of a plan to make progress to reduce our deficit further. Having given the Committee those points of information, I hope that these clauses can stand part of the Bill.

Question put and agreed to.

Clause 52 accordingly ordered to stand part of the Bill.

Clause 53 ordered to stand part of the Bill.

Clause 54

Reduction in rate of supplementary charge

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 55 to 59 stand part.

Clause 128 stand part.

New clause 3—Corporation tax treatment of the oil and gas industry—

‘The Chancellor of the Exchequer shall, within six months of the passing of this Act, commission a comprehensive review of the corporation tax rates and investment allowances applicable to companies producing oil and gas in the UK or on the UK continental shelf, and publish the report of the review.’

New clause 6—Oil and gas: decommissioning contracts—

‘(1) The Chancellor of the Exchequer shall commission a review of the ways in which the tax regime could be changed to increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure.

(2) In undertaking the review, the Chancellor shall consult the Department for Business, Innovation and Skills, the Oil and Gas Authority; Scottish Ministers; and any other stakeholders that the Chancellor thinks appropriate.

(3) The Chancellor shall report to Parliament on the results of his review within six months of the passing of this Act.’

[The Exchequer Secretary to the Treasury (Damian Hinds)]

It is a pleasure to serve under your chairmanship once again, Mr Howarth. These measures bring into statute a £1 billion package of fiscal reforms for the UK’s oil and gas sector. These changes will deliver the next stage of the Government’s reform plan for the oil and gas fiscal regime, and they will give much-needed support to an industry facing exceptionally challenging conditions. They will provide the right conditions in which to maximise the economic recovery of the UK’s oil and gas resources by lowering sector-specific tax rates, updating the current system of allowances and expanding the types of activity that can generate financial relief. The Government are making these changes to protect jobs, encourage investment in new projects and infrastructure, and safeguard the future of one of our most vital national assets.

I will provide hon. Members with some background to the changes. Almost 200 companies are currently in production in the UK oil and gas industry. They support 30,000 jobs directly and 250,000 in the wider supply chain. As hon. Members know, since 2014 the industry has experienced highly challenging conditions. Oil prices have fallen to less than half their 2014 value, putting thousands of jobs at risk. In the 2014 autumn statement, the Government set out our plan to reform the oil and gas fiscal regime in the publication “Driving investment”. That document recognised the need to reduce the future oil and gas tax burden in order to maximise economic recovery and keep the UK basin attractive to investors as it further matures. We delivered on that plan by reducing the rate of the supplementary charge and the petroleum revenue tax in 2015. As announced in the March 2016 Budget, we will lower both those rates further.

Between 2013 and 2015 the Government introduced the investment, onshore and cluster area allowances, which replaced the old suite of field allowances with a simplified and expanded relief system to generate greater investor certainty in the sector. The Government intend to include tariff income—income from third-party access to oil and gas infrastructure—in the scope of the investment and cluster area allowances. We will introduce secondary legislation later this year to facilitate that. Clauses 55 to 59 update the investment, onshore and cluster area allowances to align them with that piece of future legislation and ensure that the allowances are not generated twice.

The changes made by clause 54 will halve the rate of the supplementary charge from 20% to 10%. That will make the sector more attractive to future investors, thereby providing much-needed support for jobs and supply chain opportunities across the industry. As I said, clauses 55, 57 and 58 update the disqualifying conditions of the investment, onshore and cluster area allowances to prevent allowances being generated twice and to limit opportunities for avoidance. Clause 55 amends the investment allowance to update the conditions that disqualify expenditure incurred before a field is determined. This will protect the Exchequer and ensure the legislation works as intended.

Similarly, clause 57 updates the onshore allowance to introduce certain disqualifying conditions. This will provide parity with the other allowances available to the sector. Clauses 55 and 58 insert leasing into the disqualifying conditions for the investment and cluster area allowances. Together these three clauses will align the investment, cluster area and onshore allowances with future legislation while ensuring the allowance is not open to avoidance opportunities.

Clauses 56 and 59 amend the investment and cluster area allowances and introduce a power to expand the meaning of “relevant income”. The Government intend to enable tariff income to activate the investment in cluster area allowances and incentivise owners to maintain investment in the sector’s infrastructure, including key pipelines. These measures will encourage further investment in exploration and appraisal projects, which are the lifeblood of the industry.

Finally, clause 128 changes the petroleum revenue tax by reducing its rate from 35% to zero. Our commitment is effectively to abolish this tax by zero-rating it on a permanent basis. This change will simplify the tax regime for investors and level the playing field between investment opportunities in older oil fields and infrastructure and new developments across the North sea. Furthermore, clause 128 will update the Oil Taxation Act 1975 to reflect the new zero-rated nature of the petroleum revenue tax and amend the cap on interest carried on its repayments. The clause will work in tandem with clauses 54 to 59 to deliver the next stage of fiscal reforms to support the oil and gas sector.

New clause 3, tabled by the hon. Member for Kirkcaldy and Cowdenbeath, calls for the Government to review the taxes and allowances that apply to oil and gas-producing companies in the UK within six months of the Bill receiving Royal Assent. However, a further review into oil and gas taxes is not required because the Government already carried out a broad review of the fiscal regime in 2014. The outcome of that review, as I mentioned, was the publication “Driving investment”, which sets out our long-term plan to ensure that the fiscal regime continues to support the objective of maximising economic recovery while ensuring a fair return on those resources for the nation.

The principles in “Driving investment” recognise the need for the oil and gas tax burden to fall as the basin matures, and the need to factor wider commercial opportunities when making judgments about future fiscal policy. The March 2015 Budget delivered on many of the reforms set out in that plan by reducing the rate of both the supplementary charge and the petroleum revenue tax. The package announced in the March 2016 Budget delivers the next stage of our plan for reform.

The Government understand now, as we did in 2014, that certainty and stability are crucial to providing the right conditions for companies to continue investing in this vital industry. Another review could create further uncertainty for the industry and delay investment, particularly in the current environment. Therefore, given the volume and range of work that has been done in this area recently, an additional review is unnecessary, so I urge the hon. Gentleman not to press his new clause or, failing that, I urge Members to reject it.

New clause 6, which was also tabled by the hon. Member for Kirkcaldy and Cowdenbeath, calls for a review into how the tax regime could increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with decommissioning. Decommissioning in the UK continental shelf brings significant opportunities for UK business and we want to maximise those. The Government fully support the vision of Sir Ian Wood to establish the north-east of Scotland as

“a global centre of knowledge and excellence in offshore mature basin technology and decommissioning”.

That is why the Government support the creation of an oil and gas technology centre in Aberdeen as part of the Aberdeen city deal. It is also why the Oil and Gas Authority will soon be publishing a decommissioning plan for the continental shelf. This will be focused on enabling the £15 billion service sector in Aberdeen to become the centre of a new global market for decommissioning and will help UK firms to capitalise on the huge opportunities that will become available. It is of course important that we have a tax regime that supports that ambition, and the package being delivered in the Bill will ensure that the UK has one of the most competitive tax regimes in the world for oil and gas. In addition, the Government have cut the rate of corporation tax to 20%—the lowest in the G20—and we are committed to going further.

With a competitive tax system in place and the OGA’s focus on realising the opportunities of decommissioning, I firmly believe that UK businesses are in a strong position to benefit. Certainty and stability are vital, and I do not believe that these would be supported by a further review. I therefore urge the hon. Gentleman not to press new clause 6.

The changes brought about by these clauses will deliver the £1 billion package of fiscal reforms announced in the March 2016 Budget by cutting tax rates, encouraging investment in infrastructure and updating the oil and gas allowances. These measures will send a strong signal to the global investment community that the UK’s oil and gas sector is open for business and ready for investment.

10:00

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

It is a pleasure to serve under your chairmanship once again, Mr Howarth. As the Minister has spoken to both new clause 3 and new clause 6, I seek clarification that I may attend to both at the same time.

[The Chair]

Yes.

[Philip Boswell]

Thank you. In relation to new clause 3, the cut to the supplementary charge set out in clause 54 is of course welcome. It will assist in encouraging business investment, and I commend this initiative. However, the UK Government’s support for the oil and gas industry, as it pertains to the cut in the supplementary charge and in a more general sense, does not go far enough. The alterations made to the financing of the oil and gas sector fall significantly short of the fiscal and regulatory reforms necessary to ensuring a steady recovery in the ongoing North sea crisis. Despite the oil price continuing to rise—it is currently around $50 for Brent crude—instead of the extensive regulatory changes experienced over the past 15 years, stability and certainty are required to increase and retain investment as well as some incentivisation. I must admit to being further encouraged by the Minister’s statements in this respect.

However, the UK Government must consider all possibilities that could facilitate fresh investment in the oil and gas sector. These possibilities need not be restricted to fiscal support. For example, schemes such as Government guarantees ought to be explored. I would welcome such initiatives from the Minister. Has he considered further the following suggestions, made by the Scottish Government to the Chancellor in February 2016: removing fiscal barriers, specifically for exploration and enhanced oil recovery; implementing fiscal reforms to improve access to decommissioning tax relief and encourage late-life asset transfers—that would reduce costs and help prevent premature cessation of production, which is critical if marginal fields are to be garnered in future—and implementing additional non-fiscal support, such as Government loan guarantees, to sustain investment in the sector? I welcome his commitment to future legislation, especially in relation to cluster allowances, and look forward to its introduction. The industry has called for a comprehensive strategic review of tax rates and investment allowances. Based upon my own experience of working in the sector, I believe that this review would be beneficial, hence my support for new clause 3.

In relation to new clause 6, the UK continental shelf is one of the first large fields in the world to reach super-mature status. This poses both a challenge and an enormous amount of opportunity. While no reservoir on the planet has harvested more than 50% of its reserves, and most of the “sweet oil”—the high-quality, easy-to-reach oil found to date, which requires minimum processing—has gone from the sector, we need to look at improving recovery and the technology required to maximise output through enhanced oil recovery, in order to maximise profits from these fields, marginal or otherwise.

Decommissioning is a key part of the life cycle of UKCS assets. Some have now lasted for over three decades, which in many cases considerably exceeds their original design life. It is advances in technology and additional tie-backs—additional nearby fields that can be tied into the existing infrastructure—which would otherwise be unprofitable if they required a bespoke pipeline, that have made our oil and gas industry so successful.

Oil & Gas UK has estimated that between now and 2040 the total decommissioning spend in the North sea on offshore assets is set to rise by £46 billion. That represents a huge opportunity for domestic supply chains, not to mention extensive finds further west of Shetland and off the west coast of Scotland, which as yet have hardly been touched. The companies that operate on the UK continental shelf are respected all over the world, as it is there, in rough seas with heavy swells, that technology has advanced in conjunction with safety measures to ensure that the North sea, and Scotland in particular, are at the forefront of offshore construction and sub-sea technology, which is something I specialised in at BP, Shell and Premier Oil.

Given our well-deserved status in sub-sea technology and the maturity of some of our fields, there is a real opportunity to become world leaders in well plugging and decommissioning. The UK Government need to incentivise and support the oil and gas industry so that UKCS expertise can be further developed in the North sea and exported around the globe. That begins with ensuring that the oil and gas industry is working in a fiscal regime that is appropriate to the maturity of the field, which is what new clause 6 seeks to do. Although there are always new fields being discovered and technological advances rendering previously unprofitable reservoirs profitable, it is in the management of mature assets, via enhanced oil recovery and further tie-backs, that optimise power output and profitability, a strategy adopted by Statoil, our near neighbours, the Norwegian national oil and gas company, where every barrel counts. That has proved very successful and is a strategy we should copy.

The removal of fiscal and regulatory barriers is imperative to the advancement of an internationally competitive tax regime in the North sea, such as Norway’s incentive to remove taxation on exploration where the contractor or operator drills a duster. The Minister of State, Department of Energy and Climate Change, the hon. Member for South Northamptonshire (Andrea Leadsom), in response to a question from my hon. Friend the Member for Aberdeen South (Callum McCaig) in September 2015, committed to a proactive policy to encourage the development of a capable and competitive UK supply chain. That proactive approach needs to start sooner rather than later.

I welcome the Minister’s announcement on the oil and gas technology centre in Aberdeen, and on the decommissioning focus in Aberdeen and the offshore construction centre in the UK, but what steps have the Government taken to compensate oil and gas companies for exploration in the UKCS where a duster is drilled? For example, in Norway no tax is applied to such exploration. What tax incentives are in place, or are being considered, to encourage or subsidise decommissioning projects by UK companies, where new technologies, techniques or even tried and tested decommissioning methods are utilised on various types of assets?

In September 2015 Wood Mackenzie reported that low oil prices could render marginal fields economically unviable and lead to potential decommissioning of up to 140 fields within the next five years. I reiterate that Brent crude remains at around $50 a barrel. If prices continue to rise to the forecast $70 to $75 dollars a barrel after the summer, what tax incentives has the Minister put in place to identify and retain critical infrastructure across the UKCS?

With that in mind, new clause 6 calls for a review of the ways in which the tax regime could be changed to increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure, with the aim of ensuring that we take advantage of this momentous opportunity.

[Rebecca Long Bailey]

With permission, I will speak to clauses 54 and 128 together before moving on to the remaining clauses and new clauses.

As we have heard, clauses 54 and 128 reduce the rates of the supplementary charge levied on the ring-fenced profits of companies involved in oil and gas production and petroleum revenue tax respectively. Companies involved in the exploration for and production of oil and gas in the UK are charged ring fence corporation tax and a supplementary charge. RFCT is calculated in the same way as corporation tax but with the addition of a ring fence so that losses on the mainland cannot be offset against profits from continental shelf fields. It is important to note that the rates of RFCT differ from those of corporation tax, and that the main rate of RFCT is 30%. The supplementary charge is an additional charge on a company’s ring-fenced profits. Clause 54 would reduce the supplementary charge from 20% to 10% from 1 January 2016.

Petroleum revenue tax, which was introduced in 1975, is a tax on the profits from oil and gas production from fields approved before 16 March 1993. The Finance Act 1993 reduced the rate from 75% to 50%, and it was then reduced to 35% from 1 January 2016. Clause 128 reduces the rate to zero, effectively abolishing the tax, as the Chancellor explained in his Budget speech. These two measures, taken together, are expected to cost the Treasury just over £1 billion between this financial year and 2021. The Government expect the reduction in rates to increase the post-tax profits of affected companies. This will make investment in oil and gas projects on the UK continental shelf more attractive, which will lead to additional production of oil and gas.

According to the tax information and impact note, and as the Minister confirmed today, there are around 200 companies extracting oil and gas in the UK. The industry directly supports 30,000 jobs, with another 250,000 in the supply chain. The decrease in the supplementary charge and the petroleum revenue tax will have a positive impact on company post-tax profits and result in lower instalment payments being made. We have already welcomed this support for the UK’s oil and gas industry. The industry trade body, Oil & Gas UK, has broadly welcomed this reduction in the headline rate of tax paid on UK oil and gas production, from a rate of 50% to 67.5% to a rate of 40% across all fields.

However, it is important to note that Oil & Gas UK has stated that the reduction in tax will help only those companies that are actually making a profit. It estimates that fewer than half a dozen companies are paying corporation tax this year. Indeed, the 2016 Budget stated that the tax receipts for these companies in 2015-16 were zero. A reduction in those tax rates is therefore welcome, but it is a long-term benefit.

Frankly, I think that more needs to be done in the short term. Stakeholders have said that they are more concerned about the lack of exploration activity. Only one well was drilled in the first quarter of 2016, so more has to be done to stimulate exploration. Can the Minister confirm whether any plans are in the pipeline—excuse the pun, but we have to get our fun somewhere in the Finance Bill—to stimulate exploration on the UK continental shelf in the short term?

I have also heard concerns from the industry about the late-life asset market. As we have heard today from Scottish Members, decommissioning is a normal part of a production cycle, but it is very expensive. I am aware that a tax relief is available, but it depends on a company’s tax history. If new companies buy older fields, they cannot access the relief, thus blocking late-life asset trade. Essentially, assets are not being sold on as they should be. The policy paper on the 2016 Budget states that the Government are open to exploring

“whether decommissioning tax relief could better encourage transfers of late-life assets”,

if “significant progress” on reducing the cost of decommissioning has been made. I worry that that is rather vague. I would therefore welcome clarification from the Minister on exactly what “significant progress” means.

Clauses 55 to 59 make minor changes to the investment allowance, cluster area allowance and onshore allowance. These three allowances provide relief by reducing the amount of ring-fenced profits on which the supplementary charge is due. Investment and cluster area allowances are given at a rate of 62.5%, and onshore allowance at 75%. Clauses 55 and 58 update the conditions that disqualify expenditure from generating investment allowance and cluster area allowance respectively. They expand the conditions following the extension of the allowance to include some leasing expenditure by secondary legislation not yet enacted. As we have heard from the Minister, this is to ensure that there are no gaps in the legislation that would permit these allowances to be generated twice. This will have effect for expenditure incurred on or after 16 March 2016.

The clauses are technical measures with which I have no issue whatever. However, stakeholders have expressed frustration that it has taken so long to lay before Parliament the regulations extending the allowances. According to Oil & Gas UK, the consultation on the draft statutory instrument concluded in January, and since then things have gone quiet. Could the Minister take this opportunity to confirm exactly when the draft SI will be laid before Parliament?

10:14

Clauses 56 and 59 give the Government power to extend the meaning of “relevant income” in relation to both investment allowance and cluster area allowance. The Government intend to allow tariff income to activate the allowances. When these allowances were introduced, they could be activated only by production of income from an oilfield. The allowance did not work well if the investment was in a pipeline that the company owned, but that transported another company’s oil and gas, which generated tariff income. In that case, no production income was generated, so the allowance was not activated.

The Government originally intended to include tariff income, but it was not included in the original legislation because of the complexities of identifying and apportioning capital expenditure to infrastructure owners and users. Having taken steps, the Government now intend to allow tariff income to activate the allowance, in order to encourage investment in infrastructure. The clauses give the Government power, through secondary legislation, to expand the meaning of “relevant income” to include tariff income. We are wholly supportive of that extension. Will the Minister assure me that the introduction of secondary legislation to expand the allowances to include leasing expenditure will not be delayed while the Government draft the SI to include tariff income in “relevant income”? Time is of the essence when it comes to supporting investment in the UK continental shelf. The industry simply cannot wait for the legislation to be published while the Government get their act together.

Clause 57 relates to onshore allowances, which reduce the amount of ring-fenced profits subject to the supplementary charge to the equivalent of 75% of capital expenditure on onshore oil and gas fields. When it was introduced, there were no disqualifying conditions and a few loopholes were identified, including the ability to generate the allowance twice on an asset. The clause amends the onshore allowance to mirror disqualifying conditions for the cluster area allowance, essentially tightening up the legislation.

The Opposition had some concerns about the onshore allowance when it was introduced in the Finance Act 2014, and we pressed our amendment to a vote. That amendment called for a review examining the impact on onshore oil and gas exploration and field developments in the next 10 years, and the differential impact on individual shale fields, among other things. We are pleased that the Government are introducing disqualifying conditions to provide parity with other allowances, but are still concerned that the allowance provides an incentive for fracking. Why is this allowance more generous than those for investment in cluster areas? Will the Minister also confirm when the advice from the Committee on Climate Change on how fracking will affect the UK’s ability to meet our climate change targets will be published? We will support clause 57, but I hope the Minister will address my concerns.

New clauses 3 and 6 were tabled by the hon. Member for Kirkcaldy and Cowdenbeath. New clause 3, as we have heard, calls for a comprehensive review of the corporation tax rate and the investment allowances applicable to oil and gas companies. New clause 6 calls for a review of how the tax regime could be changed to increase the competitiveness of UK-registered companies bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure. As I mentioned earlier, the sector has identified significant issues with the late-life asset market. We support the Scottish National party in its calls for a review of decommissioning contracts. Legislation surrounding the UK oil and gas tax regime has been remarkably piecemeal, and a review of the whole regime would not be unhelpful. We support all the clauses in this group. I look forward to the Minister’s response.

[Damian Hinds]

It is a pleasure to respond to the pertinent questions put by the Opposition and SNP Front Benchers. They both asked about exploration, which is the lifeblood of the industry’s future. We had a choice: introduce a complex system of reliefs and incentives relating to exploration, or have a simple, straightforward tax cut across the board. We chose the latter. Reducing the tax payable on the economic activity lowers the hurdle point for investments, improves the net present value of projects, and means that more will take place. It is cutting the headline rates of tax, rather than anything else, that provides a clear incentive to invest in the continental shelf. The Government have also twice provided £20 million for seismic surveying to help kick-start those processes.

Allowances came up a number of times. Over the past few years, the Government have been simplifying that system. Allowances mean that projects that are economic, but not commercial at the higher rates of tax, can go ahead. That is good for the Exchequer, as it brings in more income, and good for the companies concerned. The hon. Member for Salford and Eccles, who speaks for the Opposition, asked when the Government would finalise the secondary legislation expanding the definition of qualifying expenditure for the investment cluster area allowances. Draft legislation was published at the end of last year and the technical consultation ended in January. HMRC has been analysing the responses to that and liaising with the Treasury and the OGA to ensure that the legislation works as intended. We plan to lay the new regulation before the House after the summer recess. It will apply to all qualifying expenditure incurred after 8 October 2015.

The hon. Lady also asked about the power to extend the definition of relevant income and the timing. The Treasury will consult with industry shortly, and will ask it to provide information and evidence to inform the design of the inclusion of tariff income in the investment cluster area allowances. It is a complex area, with a range of commercial arrangements that we need to understand if we are to ensure that infrastructure owners and users can benefit from the allowances. The power has been drafted in such a way as to ensure that the inclusion of tariff income can have a retrospective effect. That measure will not delay the introduction of the extension to qualifying expenditure.

The hon. Member for Coatbridge, Chryston and Bellshill rightly asked about the crucial opportunity area of decommissioning. Decommissioning across the shelf is expected to become a multibillion-pound industry, and there are significant export opportunities as other basins around the world become more mature. Decommissioning costs here could be more than £40 billion. As I said earlier, the Government support Sir Ian Wood’s vision of establishing north-east Scotland as a real centre of excellence. That is why we support the creation of an oil and gas technology centre in Aberdeen as part of its city deal. As the hon. Gentleman will know, the OGA will soon publish its United Kingdom continental shelf decommissioning plan.

The hon. Gentleman and the hon. Member for Salford and Eccles asked about late-life assets and asset transfers. We are in constant discussion with the OGA and industry to understand what impediments there may be to value-creating deals going ahead, and we retain an absolutely open mind on that. The hon. Gentleman also asked about Government guarantees. Again, that is something on which the Government have an open mind, in recognition of the importance of the sector. The Government are willing to consider proposals for using the UK guarantee scheme for infrastructure where that could help to secure new investment in assets of strategic importance to maximise economic recovery. Any proposals would need to meet the scheme’s criteria, including those relating to commerciality and financial credibility.

The Government have recognised the exceptionally challenging conditions that the industry faces, and in response announced a £1 billion package of fiscal reforms in the March 2016 Budget, which built on the extensive package from the previous year. The package includes halving the rate of the supplementary charge, permanently zero-rating the petroleum revenue tax, and extending the scope of key allowances to incorporate leasing and to encourage investment across the North sea. The Government have also committed £20 million of funding to a second round of seismic surveys to encourage development in under-explored areas.

Despite the extremely challenging conditions, this remains a sector of opportunity for Scotland and the UK; it is estimated that somewhere between 11 billion and 21 billion barrels of oil and oil equivalents are still to be had. More than £11 billion was invested in the sector last year. I am constantly encouraged by the positive attitude of the industry, and all the work that it is doing to get its cost base down and continue to look for new opportunities. I assure you, Mr Howarth, and all hon. Members, of the Government’s absolute commitment to the very positive tripartite approach between the industry, the Oil and Gas Authority, which is really more than a regulator, and the Government, who include the Scotland Office, the Department of Energy and Climate Change and the Treasury.

[Christian Matheson (City of Chester) (Lab)]

There is no doubt that the UK offshore oil and gas sector has a world lead, provides huge revenue and technical expertise to the UK, and needs to be protected, but my hon. Friend the Member for Salford and Eccles raised the spectre of onshore fracking. Can the Minister give reassurance that our efforts to support the offshore oil and gas industry will not be used as a back-door way of giving tax breaks to onshore fracking?

[Damian Hinds]

Mr Howarth, you would not want me to stray on to topics that are not strictly in the scope of the Finance Bill. The Government believe that there is significant potential for unconventional oil and gas—for fracking—and I think that we owe it to future generations, to ourselves and to British industry to make sure that we discover what opportunities are there. Exactly how the regime develops, in fiscal terms, is to be determined, but we know that there will be an absolutely robust safety regime. In the initial phase, the important thing is to find out on how big a scale that opportunity may be.

I had reached the conclusion of my remarks, having reiterated the very firm commitment across Government to supporting this industry. This is a bold package of support in the Budget. We know of no other country in the world that has responded on quite such a scale to the extremely challenging conditions presented by the world oil price. I commend the clause to the Committee.

Question put and agreed to.

Clause 54 accordingly ordered to stand part of the Bill.

Clauses 55 to 59 ordered to stand part of the Bill.

[The Chair]

I remind the Committee that I will put the question on clause 128—and new clauses 3 and 6, if required—without further debate when we reach them.

Clause 60

Profits from the exploitation of patents etc

[Mr Gauke]

I beg to move amendment 50, in clause 60, page 94, line 16, at end insert

“, or

‘(b) the company elects to be treated as a new entrant for the purposes of this Part.’”

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 51 to 115 and 136.

Clause stand part.

Government amendments 116 to 121.

That schedule 9 be the Ninth schedule to the Bill.

[Mr Gauke]

Clause 60 and schedule 9 make changes to ensure that the UK’s patent box operates in line with a newly agreed international framework resulting from the base erosion and profit shifting action plan. The Forum on Harmful Tax Practices—the international group leading work on action 5—focused on harmonising the level of substantive activity required for access to preferential intellectual property regimes such as the patent box. This was linked to the BEPS action plan’s overall aim of aligning taxation with economic substance. The framework applies to all patent and innovation box-type regimes that apply preferential tax treatment to IP income in OECD, G20 and EU countries. It ensures that preferential tax treatment cannot be offered for as little as simply registering ownership of IP in a jurisdiction offering such a regime. While the UK’s patent box includes adequate safeguards to address these concerns, this framework will ensure that robust standards apply internationally.

The new framework also takes a slightly different approach from the UK patent box, so amendments to the current regime are required. In particular, the international framework links the availability of a lower tax rate offered by a preferential IP regime to the proportion of the development expenditure on the IP that the claimant taxpayer incurred, directly or through a third-party subcontractor. This means that if, for example, a claimant taxpayer directly incurred only half of the expenditure on a patent, with the other half of the expenditure being on acquisition, IP, or outsourcing to a related party, only half the profit derived from that patent will benefit from a lower tax rate.

10:30

The patent box was introduced in the Finance Act 2012 following extensive consultation. Once fully phased in, it gives an effective corporation tax rate of 10% on trading profits earned from patents and other similar types of intellectual property. To qualify under current rules, the claimant taxpayer needs either to have had significant involvement in the development of the IP or to actively manage the IP in the UK. That will not change. The patent box provides an incentive for companies to develop, retain and commercialise new and existing patents in the UK. That in turn incentivises companies to bring to the UK high-value jobs and investment associated with the development, manufacturer and exploitation of patents.

The changes made by clause 60 will bring the UK patent box in line with the new international framework. The main change is the introduction of the research and development fraction, which provides the link between the IP profit and the R and D undertaken on that IP, implementing the key principle of the international framework. The fraction is defined as the ratio of the company’s direct R and D spend on the IP plus any third-party subcontracting to total spend, which adds in the cost of acquiring the IP and related party subcontracting.

The figures in the ratio are cumulative, building up over time to reflect the development history of the IP asset. The result can be increased by up to 30% when the ratio is less than 1, although the final value cannot exceed 1. The final value is then applied to the relevant IP profits to give the amount of profit that can benefit from the lower patent box tax rate. The qualifying profit will be the same or less than the amount under the current patent box rules. If in exceptional circumstances the ratio is not a true reflection of the claimant’s value-creating activities, the company may be able to increase it accordingly to take such circumstances into account. The new rules apply from July 2016.

As the UK already has a patent box, transitional provisions are needed for companies already claiming for existing IP. To allow claimant taxpayers to ensure that they can comply with the requirements of the new patent box, a five-year transitional period begins on 30 June 2016, after which only those taxpayers who would qualify to elect into the patent box for periods prior to that date will be allowed to claim under the current rules. A claimant taxpayer will be able to continue to apply the current patent box rules for existing IP if it qualifies for the transitional period and there are no major changes to its position during that period. An existing IP broadly means patents applied for before 1 July 2016.

If a company has income from a product that relies on existing IP and patents applied for on or after that date, it will continue to be treated according to the current patent box rules, as long as the core technology of that product is protected by patents applied for before 1 July 2016. If that is not the case, the profit from the product will transition to the new rules linked to the proportion of patents that do not qualify as existing IP over total patents. The transitional period will end five years later on 30 June 2021, after which only the new form of the patent box will be available.

The transitional arrangements will not be available where IP has been acquired directly or indirectly from a country without a preferential IP regime after 1 January 2016, and that acquisition was undertaken with a tax avoidance motive. That safeguards the transitional provisions from an abuse whereby a company would aim to acquire IP simply to access the five-year period. That safeguard is part of the international framework and so applies to all preferential IP regimes, including the UK patent box.

Those affected by the changes are UK companies that hold and exploit patents or patent-like rights and that claim relief under the current patent box. We expect that these changes will restrict the overall amount that can be claimed through the patent box, reducing cost to the Exchequer. That reduction is expected to be £120 million over the next five years.

The Government amendments to clause 60 introduce features that ensure that the benefit of the patent box is protected for claimant taxpayers and respond to specific issues raised by interested parties during formal consultation. If some of these amendments were not introduced, a number of interested parties would see their claims significantly reduced under the new patent box rules. The new rules could also potentially be open to manipulation and abuse. These amendments do not cover provisions addressing the issue of how the revised rules will apply in the context of more complex, collaborative R and D arrangements, such as cost share agreements. It is the Government’s intention to include such provisions in Finance Bill 2017, to provide an opportunity for consultation with interested parties.

Amendment 50 allows taxpayers to forgo the right to use the transitional provisions, should they prefer to opt straight into the new patent box. Amendments 51 to 56, 60 to 63, 69 to 70, 78 to 79 and 88 to 112 give companies greater flexibility to track IP income and R and D expenditure at product or product family level, by removing the requirement that a product must contain more than one IP asset. We have created rules to account for the implementation of the international framework, which, incidentally, has a double impact on a taxpayer’s patent box claims where an acquisition of IP involves staged payments made to the seller, allowing for sharing in the success of further development. We are also extending the definition of an acquisition of IP to cover expenditure on such an acquisition from which the relevant qualifying IP is derived, evolved or enhanced. These features are introduced by amendments 57, 66, 77, 80 and 81, and 121.

Amendments 58 and 59, 64, 67, 82 to 84 and 116 to 120 introduce simplification rules for taxpayers with smaller claims, so that they are not discouraged from claiming the patent box. Amendment 65 addresses the fact that legislation does not currently exclude finance income from the overall income that can benefit from the patent box; the measures would otherwise result in unintentional widening of the patent box.

Amendments 68, 73 and 74 ensure that any relevant R and D expenditure incurred by a foreign branch of a UK claimant company that has opted out of UK taxation under foreign branch exemption rules is treated as related party subcontract expenditure of the UK company for the purposes of calculating the R and D fraction. Under the Bill, only 65% of subcontracted R and D costs are used in the R and D fraction. Amendments 71, 72, 75 and 76 remove the treatment on subcontracted R and D costs, so that the entire amount is counted towards qualifying expenditure amounts.

The safeguard in the transitional provisions requires a determination as to whether an IP asset has been acquired from a country with or without a preferential IP regime in place. Amendments 85 to 87 clarify that the power to designate foreign tax regimes operates properly when it is used after Royal Assent. Amendment 113 widens the existing anti-avoidance provisions to take into account potential abuses of the changing rules. Finally, amendments 114 and 115 ensure that where one company takes over a trade from another, the transferee will be able to step into the shoes of the transferrer, inheriting both the IP and the expenditure history on that IP.

Let me briefly anticipate and respond to amendment 136, which would require the Chancellor of the Exchequer to publish

“within six months of the passing of this Act”

a report on the patent box, giving an

“assessment of the value for money…and…efficacy of, the Patent Box.”

This amendment is not needed and would fall short of the plans the Government already have in place. Due to the time periods allowed for electing into the patent box and the impact of the transitional provisions, a one-time publication would not give a substantive picture of how the patent box is operating, or take into account the revisions to the regime. That is why we are proposing to publish annual statistics on the patent box, rather than a one-time publication. The Government intend to make the first publication in September this year and annually thereafter.

To conclude, the changes made by clause 60 will ensure that the patent box complies with the new internationally agreed framework, while the amendments ensure that the benefit of the patent box is protected for claimant taxpayers. I therefore commend clause 60, schedule 9 and amendments 50 to121.

[Rebecca Long Bailey]

Clause 60 and schedule 9 make substantial changes to the patent box, which provides for a reduced rate of corporation tax on profits from patents and similar intellectual property. The changes in this clause ensure compliance with the new international framework developed by the OECD for preferential IP regimes as part of the base erosion and profit shifting project.

The changes mean that the amount of profit for an IP asset that qualifies for the reduced 10% rate of corporation tax available through the UK patent box will depend on the proportion of the asset’s development expenditure incurred by the company. According to the explanatory notes to the Bill, the amended rules will require profit for the purpose of the patent box to be calculated at the level of an IP asset—for example, the patent, product, or product family relying on an IP asset or assets. The profit will be adjusted to reflect the proportion of the development activity on the asset, product, or product category undertaken by the company.

As the Minister confirmed, the measure will have effect for new entrant companies to the patent box on or after 1 July 2016, and also for some IP assets acquired on or after 2 January 2016. The new rules are being phased in, which is welcome; the current patent box rules will apply to some companies and IP throughout a transitional period lasting until 2021. The new rules will apply to all companies and IP after 2021.

By way of background, in December 2009 the Labour Government announced that they would consult on introducing a patent box—a reduced rate of corporation tax applied to income from patents—from April 2013 at a possible annual cost of £1.3 billion. The coalition Government took up our proposals for a patent box in a wider review of corporate taxation launched in November 2010. The consultation document argued that a tax relief would be most effective if it focused on patents, and that it would be proportionate to charge corporation tax at just 10% on profits made from them.

The coalition Government confirmed their plans in the 2011 Budget, and published a further consultation document in June. Draft legislation for the Finance Bill 2012 was published in December, including provisions for the patent box. In Budget 2012, the Government confirmed the introduction of the patent box, which would be phased in over five years from 1 April 2013. They estimated that its cost would rise from £350 million in 2013-14 to £910 million by 2016-17.

The Opposition welcomed the introduction of the relief, while moving an amendment to require the Government to report on

“other opportunities to introduce targeted support for business”.

This tax reform was clearly strongly supported by business at the time, but was not uncontroversial. Concerns were raised by several European countries, as well as the European Commission, that reform might represent harmful tax competition, encouraging companies to shift the ownership of patents created in other countries to the UK.

In late 2013, the EU code of conduct group raised concerns about the UK patent box, leading to press speculation that the Government might have to substantively amend the new relief. In November 2014, the Government announced that the UK had agreed with Germany that preferential intellectual property regimes—of which the UK patent box is one—should not encourage harmful tax competition and, as a result, certain changes would be made to the UK regime from June 2016. Subsequently, in October 2015, HMRC launched a consultation on amending the patent box regime to take account of these concerns. In December 2015, draft legislation to give effect to this change was published along with an impact note on the measure.

The 2016 Budget specifically confirmed that

“The government will modify the operation of the Patent Box to comply with a new set of international rules created by the OECD, making the lower tax rate dependent on, and proportional to, the extent of research and development expenditure incurred by the company claiming the relief. This will come into effect on 1 July 2016.”

10:45

According to the commentary in the Tax Journal,

“Whilst the majority of the provisions are consistent with the draft clauses released in December 2015, there were a number of important changes and previously omitted items included in the Bill.”

Those include flexibility for the grandfathering of products that contain both pre-1 July IP qualifying rights and post- 30 June IP qualifying rights, and a provision allowing for an increase in the R and D fraction in exceptional circumstances. Perhaps the Minister could take this opportunity to confirm what would constitute exceptional circumstances.

The Tax Journal goes on to say:

“The default length of the ‘relevant period’ for tracking and tracing R&D expenditure to the IP has been extended from 15 years to 20 years. In addition, a new provision has been introduced within the relevant period rules to provide clarification on the timing of expenditure for tracking and tracing purposes. Whilst this rule looks to align the timing of expenditure with the time at which it becomes deductible for corporation tax purposes, it should also act as an anti-forestalling measure. Unfortunately, despite representations, it seems that a company is only able to track and trace R&D expenditure at product family level (rather than as individual IP rights) where the product contains more than one item of IP. This remains a significant issue for some taxpayers.”

Could the Minister confirm why that is the case?

My hon. Friends and I have tabled amendment 136 because we have heard from stakeholders that the efficacy of the patent box may be somewhat undermined as a result of the changes to ensure that we comply with the OECD recommendations. We support the principle of the patent box—indeed, we brought it in—but we also think that it needs to be reviewed in the light of these changes to make sure that it is the best mechanism to achieve its desired aim of incentivising patents based in the UK. Furthermore, the necessity for clause 60 and schedule 9 is somewhat in question, given the country’s decision to leave the EU; I made a similar point about earlier clauses. Has the Minister considered the implications of the vote on the patent box? We are happy to accept Government amendments 50 to 121, which were tabled after consultation with stakeholders.

To conclude, we are very supportive of the patent box, but we have concerns about its efficacy, given all these changes. I hope that the Minister can address some of the concerns I have raised, but I will not push amendment 136 to a vote.

[Mr Gauke]

I thank the hon. Lady for her broad support for the patent box. What we sought to do with the patent box—both when it was introduced and now—is ensure that we have incentives in our tax system to encourage internationally mobile activity. This is about bringing jobs and investment to the United Kingdom. It is not about artificial profit shifting. On the Government’s wider approach to the international tax system, we believe that there should be close alignment between economic activity, the profits that relate to that, and where those profits are taxed. That is why the UK has taken a leading role in the OECD’s base erosion and profit shifting process. Of course, any process like BEPS requires compromise, but the direction in which we believe the international tax system should go—towards closer alignment—is the one that BEPS has pursued, and we are pleased with the outcomes.

The changes to the patent box reflect a degree of compromise, but in essence, thanks to the patent box, the UK continues to offer an attractive place in which intellectual property may be developed. That is something that we wish to continue. I have to pick up on three of the points made by the hon. Member for Salford and Eccles. In the context of the EU, I will make a similar point to one I made earlier: we are still in the EU and a negotiation has yet to be undertaken to know where we stand exactly. There is also a wider point: when addressing the challenges of the international tax system, much of the legislation would apply whether we were in the EU or not, because the OECD BEPS process applies to all OECD countries. I do not think that anyone is proposing a referendum on whether we should leave the OECD—it is not one that I would welcome. In these circumstances, we expect to comply with the OECD standard, and that is very much our approach.

The hon. Lady also made a couple of technical points, the first of which was about what constitutes exceptional circumstances. For example, IP might have been purchased but turned out to be worth less, so that its contribution to the fraction is out of line with the cost. Obviously I cannot be exhaustive, but I hope that example is helpful in illustrating the types of things we are talking about. She also asked about tracking and tracing at an individual product level, and why that is not the approach we have taken. Companies will be able to track and trace at IP product level, so I hope that she is reassured, but I will write to her with further information.

Amendment 50 agreed to.

Amendments made: 51, in clause 60, page 94, line 38, leave out “either”.

Amendment 52, in clause 60, page 94, line 43, leave out “multi-IP” and insert “IP”.

Amendment 53, in clause 60, page 94, line 43, at end insert

“, or

(c) a sub-stream consisting of income properly attributable to a particular kind of IP process (a “process sub-stream”)”.

Amendment 54, in clause 60, page 95, line 1, leave out from “See” to second “and” and insert

“subsection (5) for the meaning of “IP item” and “IP process””.

Amendment 55, in clause 60, page 95, line 2, before “further” insert

“see subsections (5A) and (6) for”.

Amendment 56, in clause 60, page 95, line 2, at end insert “and process sub-streams”.

Amendment 57, in clause 60, page 95, line 12, at end insert—

“But see section 357BIA (which provides that certain amounts allocated to a relevant IP income sub-stream at Step 3 are not to be deducted from the sub-stream at this Step).”

Amendment 58, in clause 60, page 95, leave out lines 13 to 17.

Amendment 59, in clause 60, page 95, line 19, leave out from beginning to “deduct” in line 20.

Amendment 60, in clause 60, page 95, leave out lines 40 to 47 and insert—

“(5) In this section—

“IP item” means—

(a) an item in respect of which a qualifying IP right held by the company has been granted, or

(b) an item which incorporates one or more items within paragraph (a);

“IP process” means—

(a) a process in respect of which a qualifying IP right held by the company has been granted, or

(b) a process which incorporates one or more processes within paragraph (a).

(5A) For the purposes of this section two or more IP items, or two or more IP processes, may be treated as being of a particular kind if they are intended to be, or are capable of being, used for the same or substantially the same purposes.”

Amendment 61, in clause 60, page 95, line 48, leave out

“which is properly attributable to a multi-IP item”.

Amendment 62, in clause 60, page 95, line 49, after “sub-stream” insert “or process sub-stream”.

Amendment 63, in clause 60, page 96, line 5, at end insert—

‘( ) Any reference in this section to a qualifying IP right held by the company includes a reference to a qualifying IP right in respect of which the company holds an exclusive licence.”

Amendment 64, in clause 60, page 98, line 2, leave out “357A” and insert “357A(1)”.

Amendment 65, in clause 60, page 98, line 21, after first “income” insert “, finance income”.

Amendment 66, in clause 60, page 100, line 41, at end insert—

“357BIA Certain amounts not to be deducted from sub-streams at Step 4 of section 357BF

(1) This section applies where a company enters into an arrangement with a person under which—

(a) the person assigns to the company a qualifying IP right or grants or transfers to the company an exclusive licence in respect of a qualifying IP right, and

(b) the company makes to the person an income-related payment.

(2) A payment is an “income-related payment” for the purposes of subsection (1) if—

(a) the obligation to make the payment arises under the arrangement by reason of the amount of income the company has accrued which is properly attributable to the right or licence, or

(b) the amount of the payment is determined under the arrangement by reference to the amount of income the company has accrued which is so attributable.

(3) If the amount of the income-related payment is allocated to a relevant IP income sub-stream at Step 3 of section 357BF(2), the amount is not to be deducted from the sub-stream at Step 4 of section 357BF(2) unless the payment will not affect the R&D fraction for the sub-stream.”

Amendment 67, in clause 60, page 104, line 6, leave out from beginning to end of line 31 on page 105.

Amendment 68, in clause 60, page 108, line 13, at end insert—

“(3A) If an election made by the company under section 18A of CTA 2009 (election for exemption for profits or losses of company’s foreign permanent establishments) applies to the relevant period, expenditure incurred by the company during the period which meets conditions A and B—

(a) is not “qualifying expenditure on relevant R&D undertaken in-house”, but

(b) is “qualifying expenditure on relevant R&D sub-contracted to connected persons”,

so far as it is expenditure brought into account in calculating a relevant profits amount, or a relevant losses amount, aggregated at section 18A(4)(a) or (b) of CTA 2009 in calculating the company’s foreign permanent establishments amount for the period.”

Amendment 69, in clause 60, page 108, line 22, leave out

“incorporated in a multi-IP item”

and insert

“—

(i) to which income in the sub-stream is attributable, or

(ii) which is incorporated in an item”.

Amendment 70, in clause 60, page 108, line 23, at end insert

“, or

(c) in a case where the sub-stream is a process sub-stream, relates to a qualifying IP right granted in respect of any process—

(i) to which income in the sub-stream is attributable, or

(ii) which is incorporated in a process to which income in the sub-stream is attributable.”

Amendment 71, in clause 60, page 109, line 8, leave out “65% of any” and insert “the”.

Amendment 72, in clause 60, page 109, leave out lines 10 to 15 and insert

“in making payments within subsection (2).

(2) A payment is within this subsection if—

(a) it is made to a person in respect of relevant research and development contracted out by the company to the person, and

(b) the company and the person are not connected (within the meaning given by section 1122).”

Amendment 73, in clause 60, page 109, line 15, at end insert—

“(3) If an election made by the company under section 18A of CTA 2009 (election for exemption for profits or losses of company’s foreign permanent establishments) applies to the relevant period, expenditure incurred by the company during the period in making payments within subsection (2)—

(a) is not “qualifying expenditure on relevant R&D sub-contracted to unconnected persons”, but

(b) is “qualifying expenditure on relevant R&D sub-contracted to connected persons”,

so far as it is expenditure brought into account in calculating a relevant profits amount, or a relevant losses amount, aggregated at section 18A(4)(a) or (b) of CTA 2009 in calculating the company’s foreign permanent establishments amount for the period.”

Amendment 74, in clause 60, page 109, line 23, after “means” insert “the total of—

(a) any expenditure which is “qualifying expenditure on relevant R&D sub-contracted to connected persons” as a result of section 357BMB(3A) or 357BMC(3) (certain expenditure attributed to company’s foreign permanent establishments), and

(b) ”.

Amendment 75, in clause 60, page 109, line 23, leave out “65% of any” and insert “the”.

Amendment 76, in clause 60, page 109, leave out lines 25 to 30 and insert

“in making payments within subsection (2).

‘(2) A payment is within this subsection if—

(a) it is made to a person in respect of relevant research and development contracted out by the company to the person, and

(b) the company and the person are connected (within the meaning given by section 1122).”

Amendment 77, in clause 60, page 109, line 39, leave out from “company” to end of line 41 and insert

“in making during the relevant period payments within any of subsections (1A), (1B) and (1C).

(1A) A payment is within this subsection if it is made to a person in respect of the assignment by that person to the company of a relevant qualifying IP right.

(1B) A payment is within this subsection if it is made to a person in respect of the grant or transfer by that person to the company of an exclusive licence in respect of a relevant qualifying IP right.

(1C) A payment is within this subsection if—

(a) it is made to a person in respect of the disclosure by that person to the company of any item or process, and

(b) the company applies for and is granted a relevant qualifying IP right in respect of that item or process (or any item or process derived from it).

(1D) Where the company has incurred expenditure in making a series of payments to a person in respect of a single assignment, grant, transfer or disclosure, each of the payments in the series is to be treated for the purposes of this section as having been made on the date on which the first payment in the series was made.”

Amendment 78, in clause 60, page 110, line 2, leave out

“incorporated in a multi-IP item” and insert “—

(i) to which income in the sub-stream is attributable, or

(ii) which is incorporated in an item”.

Amendment 79, in clause 60, page 110, line 4, at end insert

“, or

(c) in a case where the sub-stream is a process sub-stream, a qualifying IP right granted in respect of a process—

(i) to which income in the sub-stream is attributable, or

(ii) which is incorporated in a process to which income in the sub-stream is attributable.”

Amendment 80, in clause 60, page 110, line 22, leave out “357BME” and insert “357BMD”.

Amendment 81, in clause 60, page 111, leave out from beginning of line 8 to “, and” in line 11 and insert

“in each of subsections (1A), (1B) and (1C) the word “relevant” were omitted”.

Amendment 82, in clause 60, page 112, line 25, leave out “357A” and insert “357A(1)”.

Amendment 83, in clause 60, page 112, line 46, at end insert—

“Small claims treatment

357BNA Small claims treatment

(1) This section applies where—

(a) a company carries on only one trade during an accounting period,

(b) section 357BF applies for the purposes of determining the relevant IP profits of the trade for the accounting period, and

(c) the qualifying residual profit of the trade for the accounting period does not exceed whichever is the greater of—

(i) £1,000,000, and

(ii) the relevant maximum for the accounting period.

(2) The company may make any of the following elections for the accounting period—

(a) a notional royalty election (see section 357BNB),

(b) a small claims figure election (see section 357BNC), and

(c) a global streaming election (see section 357BND).

This is subject to subsections (3) and (4).

(3) The company may not make a notional royalty election, a small claims figure election or a global streaming election for the accounting period if—

(a) the qualifying residual profit of the trade for the accounting period exceeds £1,000,000,

(b) section 357BF applied for the purposes of determining the relevant IP profits of the trade for any previous accounting period beginning within the relevant 4-year period, and

(c) the company did not make a notional royalty election, a small claims figure election or (as the case may be) a global streaming election for that previous accounting period.

(4) The company may not make a small claims figure election for the accounting period if—

(a) the qualifying residual profit of the trade for the accounting period exceeds £1,000,000,

(b) section 357C or 357DA applied for the purposes of determining the relevant IP profits of the trade for any previous accounting period beginning within the relevant 4-year period, and

(c) the company did not make an election under section 357CL for small claims treatment for that previous accounting period.

(5) In subsections (3) and (4) “the relevant 4-year period” means the period of 4 years ending with the beginning of the accounting period mentioned in subsection (1)(a).

(6) For the purposes of this section, the “qualifying residual profit” of a trade of a company for an accounting period is the amount which (assuming the company did not make an election under this section) would be equal to the aggregate of the relevant IP income sub-streams established at Step 2 in section 357BF(2) in determining the relevant IP profits of the trade for the accounting period, following the deductions from those sub-streams required by Step 4 in section 357BF(2) (ignoring the amount of any sub-stream which is not greater than nil following those deductions).

(7) For the purposes of this section, the “relevant maximum” for an accounting period of a company is—

(a) in a case where no company is a related 51% group company of the company in the accounting period, £3,000,000;

(b) in a case where one or more companies are related 51% group companies of the company in the accounting period, the amount given by the formula—



where N is the number of those related 51% group companies in relation to which an election under section 357A(1) has effect for the accounting period.

(8) For an accounting period of less than 12 months, the relevant maximum is proportionally reduced.

357BNB Notional royalty election

(1) Subsection (2) applies where a company has made a notional royalty election for an accounting period under section 357BNA(2)(a).

(2) In its application for the purposes of determining the relevant IP profits of the trade of the company for the accounting period, section 357BHA (notional royalty) has effect as if—

(a) in subsection (2) for “the appropriate percentage” there were substituted “75%”, and

(b) subsections (3) to (6) were omitted.”

357BNC Small claims figure election

(1) Subsection (2) applies where a company has made a small claims figure election for an accounting period under section 357BNA(2)(b).

(2) In its application for the purposes of determining the relevant IP profits of the trade of the company for the accounting period, section 357BF(2) (steps for calculating relevant IP profits) has effect as if in Step 6—

(a) for “marketing assets return figure” there was substituted “small claims figure”, and

(b) for “(see section 357BL)” there was substituted “(see section 357BNC(3))”.

(3) Subsections (4) to (9) apply for the purpose of calculating the small claims figure for a relevant IP income sub-stream established at Step 2 in section 357BF(2) in determining the relevant IP profits of a trade of a company for an accounting period.

(4) If 75% of the qualifying residual profit of the trade for the accounting period is lower than the small claims threshold, the small claims figure for the sub-stream is 25% of the amount of the sub-stream following Step 4 in section 357BF(2).

(5) If 75% of the qualifying residual profit of the trade for the accounting period is higher than the small claims threshold, the small claims figure for the sub-stream is the amount given by—



where—

A is the amount of the sub-stream following the deductions required by Step 4 in section 357BF(2),

QRP is the qualifying residual profit of the trade of the company for the accounting period, and

SCT is the small claims threshold.

(6) If no company is a related 51% group company of the company in the accounting period, the small claims threshold is £1,000,000.

(7) If one or more companies are related 51% group companies of the company in the accounting period, the small claims threshold is—



where N is the number of those related 51% group companies in relation to which an election under section 357A(1) has effect for the accounting period.

(8) For an accounting period of less than 12 months, the small claims threshold is proportionately reduced.

(9) Subsection (6) of section 357BNA (meaning of “qualifying residual profit”) applies for the purposes of subsection (4) and (5) of this section.

357BND Global streaming election

(1) Subsection (2) applies where a company has made a global streaming election for an accounting period under section 357BNA(2)(c).

(2) In its application for the purpose of determining the relevant IP profits of the trade of the company for the accounting period, this Chapter has effect with the following modifications.

(3) In subsection (2) of section 357BF (relevant IP profits)—

(a) omit Step 2,

(b) in Step 3 for “each of the relevant IP income sub-streams” substitute “the relevant IP income stream”,

(c) in Step 4—

(i) in the words before paragraph (a), for “each” substitute “the”,

(ii) for “sub-stream”, in each place it occurs, substitute “stream”,

(d) in Step 6—

(i) at the beginning insert “If the relevant IP income stream is greater than nil following Step 4,”,

(ii) for the words from “each” to “Step 4” substitute “the stream”,

(iii) for “sub-stream”, in the second place it occurs, substitute “stream”,

(e) in Step 7—

(i) for “each relevant IP income sub-stream” substitute “the relevant IP income stream”,

(ii) for “sub-stream”, in the second place it occurs, substitute “stream”,

(f) omit Step 8, and

(g) in Step 9 for “given by Step 8” substitute “of the relevant IP income stream following Step 7”.

(4) In subsection (3) of that section for “given by” substitute “of the relevant IP income stream following the Steps in”.

(5) In subsection (4) of that section for “given by” substitute “of the relevant IP income stream following the Steps in”.

(6) Omit subsections (5), (5A) and (6) of that section.

(7) In section 357BIA(3) (certain amounts not to be deducted from sub-streams at Step 4 of section 357BF)—

(a) for “a relevant IP income sub-stream” substitute “the relevant IP income stream”;

(b) for “sub-stream”, in the second and third places it occurs, substitute “stream”.

(8) In section 357BJ (routine return figure)—

(a) for “sub-stream”, in each place it occurs, substitute “stream”, and

(b) in subsection (1) for “Step 2” substitute “Step 1”.

(9) In section 357BL (marketing asset return figure) for “sub-stream”, in each place it occurs, substitute “stream”.

(10) In section 357BLA (notional marketing royalty)—

(a) for “sub-stream”, in each place it occurs, substitute “stream”, and

(b) in subsection (1) for “Step 2” substitute “Step 1”.

(11) In section 357BLB (actual marketing royalty) for “sub-stream”, in each place it occurs, substitute “stream”.

(12) In section 357BM (R&D fraction: introduction)—

(a) for “sub-stream” (in each place it occurs) substitute “stream”, and

(b) in subsection (1) for “Step 2” substitute “Step 1”.

(13) In section 357BMA(1) (R&D fraction) for “sub-stream” substitute “stream”.

(14) In section 357BMB(4) (qualifying expenditure on relevant R&D undertaken in-house) for the words after “1138)” substitute “which relates to a qualifying IP right to which income in the stream is attributable”.

(15) In section 357BME(2) (qualifying expenditure on acquisition of relevant qualifying IP rights) for the words from “means” to the end substitute “means a qualifying IP right to which income in the stream is attributable”.

(16) In section 357BMG (cases where the company is a new entrant with insufficient information about pre-enactment expenditure) for “sub-stream”, in each place it occurs, substitute “stream”.

(17) In section 357BMH (R&D fraction: increase for exceptional circumstances) for “sub-stream”, in each place it occurs, substitute “stream”.

(18) In section 357BNC (small claims figure election)—

(a) for “sub-stream”, in each place it occurs, substitute “stream”;

(b) in subsection (3) for “Step 2” substitute “Step 1”.”

Amendment 84, in clause 60, page 113, line 17, at end insert—

“( ) Where section 357BF applies by reason of this section for the purposes of determining the relevant IP profits of a trade of a company for an accounting period, the company may not make a global streaming election for the accounting period under section 357BNA(2)(c).”

Amendment 85, in clause 60, page 113, leave out lines 34 to 44 and insert—

“(a) the company and the person who assigned the right or granted the licence were connected at the time of the assignment or grant,

(b) the main purpose, or one of the main purposes, of the assignment of the right or the grant of the licence was the avoidance of a foreign tax,

(c) the person who assigned the right or granted the licence was not within the charge to corporation tax at the time of the assignment or grant, and

(d) the person who assigned the right or granted the licence was not liable at the time of the assignment or grant to a foreign tax which is designated for the purposes of this section by regulations made by the Treasury.”

Amendment 86, in clause 60, page 114, line 1, leave out “(9)(b)” and insert “(8)(d)”.

Amendment 87, in clause 60, page 114, line 4, at end insert—

“( ) Regulations may not be made under subsection (8)(d) after 31 December 2016.”

Amendment 88, in clause 60, page 114, line 21, leave out “(b)” and insert “(c)”.

Amendment 89, in clause 60, page 114, line 24, leave out

“and each product sub-stream”

and insert

“, each product sub-stream and each process sub-stream”.

Amendment 90, in clause 60, page 114, line 32, leave out

“and product sub-streams”

and insert

“, each of the product sub-streams and each of the process sub-streams”.

Amendment 91, in clause 60, page 114, line 42, leave out “a multi-IP item” and insert

“an IP item or IP process”.

Amendment 92, in clause 60, page 114, line 44, after “sub-stream” insert “or process sub-stream”.

Amendment 93, in clause 60, page 114, line 45, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 94, in clause 60, page 115, line 1, after “item” insert “or process”.

Amendment 95, in clause 60, page 115, line 4, after “item” insert “or process”.

Amendment 96, in clause 60, page 115, line 8, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 97, in clause 60, page 115, line 9, leave out “item or items” and insert “items or processes”.

Amendment 98, in clause 60, page 115, line 11, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 99, in clause 60, page 115, line 13, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 100, in clause 60, page 115, line 17, after “sub-stream” insert “or process sub-stream”.

Amendment 101, in clause 60, page 115, line 18, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 102, in clause 60, page 115, line 20, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 103, in clause 60, page 115, line 24, after “sub-stream” insert “or process sub-stream”.

Amendment 104, in clause 60, page 115, line 26, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 105, in clause 60, page 115, line 27, after “sub-stream” insert “or process sub-stream”.

Amendment 106, in clause 60, page 115, line 27, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 107, in clause 60, page 115, line 29, after “items” insert “or processes”.

Amendment 108, in clause 60, page 115, line 31, leave out “a multi-IP” and insert

“an IP item or IP process”.

Amendment 109, in clause 60, page 115, line 35, after “items” insert “or processes”

Amendment 110, in clause 60, page 115, line 35, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 111, in clause 60, page 115, line 38, after “items” insert “or processes”.

Amendment 112, in clause 60, page 115, line 38, leave out “multi-IP item” and insert

“IP item or IP process”.

Amendment 113, in clause 60, page 115, line 40, at end insert—

“( ) In section 357FB (tax advantage schemes)—

(a) in subsection (2)(b) (list of ways by which deductions can be inflated)—

(i) omit “or” at the end of sub-paragraph (ii), and

(ii) after sub-paragraph (iii) insert “, or

(iv) an R&D fraction (see subsection (4A)) being greater than it would be but for the scheme.”, and

(b) after subsection (4) insert—

“(4A) The reference in subsection (2)(b)(iv) to an R&D fraction is a reference to such a fraction as is mentioned at Step 7 of section 357BF(2).””

Amendment 114, in clause 60, page 115, line 40, at end insert—

“( ) After section 357GC insert—

“Transferred trades

357GCA Application of this Part in relation to transferred trades

(1) Where—

(a) a company (“the transferor”) ceases to carry on a trade which involves the exploitation of a qualifying IP right (“the relevant qualifying IP right”),

(b) the transferor assigns the relevant qualifying IP right, or grants or transfers an exclusive licence in respect of it, to another company (“the transferee”), and

(c) the transferee begins to carry on the trade,

the following provisions apply in determining under this Part the relevant IP profits of the trade carried on by the transferee.

(2) The transferee is to be treated as not being a new entrant if—

(a) an election under section 357A(1) has effect in relation to the transferor on the date of the assignment, grant or transfer mentioned in subsection (1)(b) (“the transfer date”), and

(b) the first accounting period of the transferor for which that election had effect began before 1 July 2016.

(3) The relevant qualifying IP right is to be treated as being an old qualifying IP right in relation to the transferee if by reason of section 357BP it is an old qualifying IP right in relation to the transferor.

(4) Expenditure incurred prior to the transfer date by the transferor which is attributable to relevant research and development undertaken by the transferor is to be treated for the purposes of section 357BMB as if it is expenditure incurred by the transferee which is attributable to relevant research and development undertaken by the transferee.

(5) Expenditure incurred prior to the transfer date by the transferor in making a payment to a person in respect of relevant research and development contracted out by the transferor to that person is to be treated for the purposes of sections 357BMC and 357BMD as if it is expenditure incurred by the transferee in making a payment to that person in respect of relevant research and development contracted out by the transferee to that person.

(6) Expenditure incurred prior to the transfer date by the transferor in making a payment in connection with the relevant qualifying IP right which is within subsection (1A), (1B) or (1C) of section 357BME is to be treated for the purposes of that section as if it is expenditure incurred by the transferee in making a payment in connection with that right which is within one of those subsections.

(7) Expenditure incurred by the transferee in making a payment to the transferor in respect of the assignment, grant or transfer mentioned in subsection (1)(b) is to be ignored for the purposes of section 357BME.

(8) In this section—

“trade” includes part of a trade, and

“relevant research and development” means research and development which relates to the relevant qualifying IP right.

(9) For the purposes of this section research and development “relates” to the relevant qualifying IP right if—

(a) it creates, or contributes to the creation of the invention,

(b) it is undertaken for the purpose of developing the invention,

(c) it is undertaken for the purpose of developing ways in which the invention may be used or applied, or

(d) it is undertaken for the purpose of developing any item or process incorporating the invention.””

Amendment 115, in clause 60, page 116, line 9, for “357A” substitute “357A(1)”.—(Mr Gauke.)

Clause 60, as amended, ordered to stand part of the Bill.

Schedule 9

Profits from the exploitation of patents etc: consequential

Amendments made: 116, in schedule 9, page 330, line 30, at end insert—

“1A In section 357B (meaning of “qualifying company”), in subsection (3)(b)(ii), for “section 357A” substitute “section 357A(1)”.”

Amendment 117, in schedule 9, page 331, line 20, at end insert—

“( ) In subsection (6), in paragraph (a)(ii) of the definition of “relevant accounting period”, for “section 357A” substitute “section 357A(1)”.”

Amendment 118, in schedule 9, page 331, line 24, leave out paragraph 9 and insert—

“9 (1) Section 357CL (companies eligible to elect for small claims treatment) is amended as follows.

(2) In subsection (1) for “elect” substitute “make an election under this section”.

(3) In subsection (6) for “section 357A” substitute “section 357A(1)”.”

Amendment 119, in schedule 9, page 332, line 16, at end insert—

“13A In section 357EB (allocation of set-off amount within a group) in subsection (3)(a) for “section 357A” substitute “section 357A(1)”.

13B In section 357ED (company ceasing to carry on trade etc) in subsection (2)(c) for “section 357A” substitute “section 357A(1)”.”

Amendment 120, in schedule 9, page 332, line 18, at end insert—

“14A In section 357FB (tax advantage schemes) in subsection (4)(b) for “section 357A” substitute “section 357A(1)”.

14B (1) Section 357G (making an election under section 357A) is amended as follows.

(2) In the heading, for “section 357A” substitute “section 357A(1) or (11)(b)”.

(3) In subsection (1) for “section 357A” substitute “section 357A(1) or (11)(b)”.

14C (1) Section 357GA (revocation of election made under section 357A) is amended as follows.

(2) In the heading, for “section 357A” substitute “section 357A(1)”.

(3) In subsection (1) for “section 357A” substitute “section 357A(1)”.

(4) In subsection (5) for “section 357A” substitute “section 357A(1)”.”

Amendment 121, in schedule 9, page 332, line 28, at end insert—

“16A In section 357GE (other interpretation), in subsection (1), at the appropriate place insert—

“payment” includes payment in money’s worth,”.”— (Mr Gauke.)

Schedule 9, as amended, agreed to.

Clause 61

Power to make regulations about the taxation of securitisation companies

Question proposed, That the clause stand part of the Bill.

[Rebecca Long Bailey]

I want to say a few words about the clause; although it might not seem exciting at first glance, it really is, so listen carefully to what I am about to say.

Three principal themes underpin the Labour party’s approach to the provisions in clauses 61 and 64, which we will come to later—in particular, those relating to the taxation of financial products. First, we need to ensure that, when the UK leaves the EU, its arrangements for regulating taxation and financial activity serve the country best and protect it from abusive practices such as tax avoidance and financial crime. Those arrangements must demonstrate the highest levels of transparency and probity.

Secondly, we need to ensure that the infrastructure supporting the UK economy accords with international standards on taxation and regulation, including the relevant OECD and International Accounting Standards Board models, which are applicable to this Bill. Finally, we need to secure Britain’s place in the world by ensuring that it maintains the highest international standards.

The Bill’s proposals on the taxation of financial instruments may appear on the surface to be merely technical, but they raise a number of significant questions about the organisation of our economy and infrastructure in the near future. Clause 61 appears to be a simple extension of the corporation tax treatment of securitisation companies to the taxes Acts generally. However, in 2008 the non-existent regulation of securitisation structures amplified a medium-sized storm in the US real estate market, and it became a fully-fledged banking crisis. I would like to ask the Minister how closely HMRC and the Treasury have considered the risks that the provision will be used for tax avoidance purposes.

Experience suggests that, if we alter the basis on which tax is levied, financial institutions will attempt to create derivative products that generate losses for tax purposes on, before and after the transition between the two tax codes, as we saw in the case of Inland Revenue Commissioners v. Scottish Provident Institution 2003 and many other cases in Hudson’s “The Law on Financial Derivatives”.

Just in the reported cases, there are several examples of financial institutions using slippery derivative products, for want of a better phrase, to avoid tax liability, such as Prudential plc v. Revenue and Customs Commissioners 2008. In that case, Chancellor Morritt held that banks should not be entitled to dictate the tax consequences of their transactions by attributing particular descriptions to them. That sort of tax avoidance, using changes in the tax treatment of products, has been criticised by Professor Alastair Hudson as

“a veritable industry in off-the-peg tax avoidance schemes”

in his book “The Law on Financial Derivatives”. Has the Minister considered the misdescriptions that might be possible under this provision?

To return to the particulars of clause 61, securitisation structures operate by transferring assets—whether subprime mortgages, credit card receivables or similar cash flows—into off balance sheet special purpose vehicles. Ordinarily, the profits, or cash flows, received from those assets pass through the special purpose vehicle to the investors who have acquired bonds in the special purpose vehicle. Usually, the residual amounts—the focus of clause 61—that are left in the special purpose vehicle are small, compared with the sums paid to the investors. However, as with all such artificial financial structures, it is possible to manipulate those amounts.

If the residual amounts held by special purpose vehicles are to be saved from withholding tax, as clause 61 proposes, and are to be treated in a different manner for tax purposes—although the provision does not make plain exactly what the different tax treatment will be—that makes it possible for the payment flows through a special purpose vehicle to be raised artificially so that larger sums could benefit from this different tax treatment.

Will the Minister confirm what is stopping an unscrupulous financial institution involved in the off-the-peg industry of tax avoidance derivatives from passing large sums—otherwise subject to withholding tax as payments of interest, for example—through special purpose vehicles? Have the Government considered in detail how such cash flows should be treated to prevent artificial or abusive tax avoidance?

Furthermore, securitisation products, in the form of collateralised debt obligations, use complex derivatives as part of their structure—namely, credit default swaps. The purpose of credit default swaps has always been to permit two things: first, speculation on the creditworthiness of companies and Governments issuing bonds; and secondly, a form of artificial insurance. A feature of credit default swaps and all other credit derivatives is that they are flexible tools—so flexible, in fact, that they are ideal for manipulating tax statutes for tax avoidance purposes.

Professor Alastair Hudson has described the inherent flexibility of financial derivatives in his book “The Law on Financial Derivatives”, which I recommend to the Minister for his summer holidays. Professor Hudson states that

“different legal structures and different pricing structures can generate different commercial and structural results out of substantially similar subject matter”.

As he shows, it is possible for options contracts to be reorganised as swaps, and vice versa, so the possibilities for tax avoidance are endless. Consequently, it would be simple for financial institutions to repackage their payment obligations to achieve whatever characteristics are most helpful for tax purposes. I fear that clause 61 is really only the tip of the iceberg. There is a serious general point behind the specificity of my concerns about the clause.

11:00

As we debate the Bill, the country finds itself in new territory. In theory, without the strictures of EU legislation, it will be open to us to create our own regulations to govern derivatives as well as the rest of the financial markets. There are many critics of the way in which the EU has chosen to regulate derivatives for the first time. For example, the use of private businesses as central clearing counterparties and trade repositories, which gather information about transactions that have been conducted, has created a new set of risks concerned with the solvency and performance of those private businesses. What if they go insolvent themselves during a future financial crisis? As private businesses, they will necessarily invest their own money, and it is perfectly possible that in the midst of a crisis they will fail to liquidate their investments in time to meet their obligations to their members. In such a situation, it will be the taxpayer—again—who will have to bail out the markets.

Moves are being made in the US Congress to dismantle many of the Dodd-Frank Act protections surrounding derivatives. The UK finds itself at a crossroads. We either ensure that our financial markets are properly regulated, for the protection of the financial institutions themselves as well as the country at large, or we run the risk of the City of London—alongside the first-class business currently conducted there—becoming the drain through which the world launders its dirty transactions.

Although clause 61 appears to be mainly technical, it conceals some important issues. In that spirit, I ask what work the Treasury and HMRC have done in proposing this change. The proper regulation of securitisation products and all derivatives will be an important issue in the establishment of the new British economy. In a paper published on 16 March 2016, HMRC makes explicit reference to the international accounting standards that were created in 2005 in relation to securitisation companies and suggests that this change in the taxation of securitisation

“is not expected to have any significant macroeconomic impacts.”

Those accounting standards were created by the International Accounting Standards Board after careful consultation with experts around the world, but all those minds together failed to anticipate the financial crisis that we experienced in 2008. That is a clear lesson for us all about the unintended consequences that can flow from too little care being expended on such reforms. I hope that the Minister can alleviate the concerns that I have raised in relation to clause 61.

[The Chair]

It may help all Committee members if I point out that if you want to take part in the debate—and everyone is encouraged to take part in the debate—it is usually a good idea to signify that by some means: a nod, a smile or even, more obviously, by rising to your feet. Otherwise, I am as much in the dark as everyone else.

[Mr Gauke]

Clause 61 will make a simple technical change to widen the scope of the power to make regulations about the taxation of securitisation companies included in the Corporation Tax Act 2010. It will enable the Government to make changes in regulations to remove uncertainty over the tax treatment of what are referred to as residual payments in the securitisation sector. That uncertainty generates a large number of requests to HMRC for clearances, which creates an administrative burden on both businesses and HMRC. Making the tax position clear will improve the customer experience. It has been welcomed by the securitisation sector and will improve the UK’s competitiveness as a financial centre.

Securitisation companies are a particular type of financial entity in which financial assets such as loans are transferred to a special purpose vehicle as security for debt issued to investors in the capital markets. Securitisation is an important way of getting more credit or liquidity flowing into the economy and of keeping down the costs of UK businesses’ borrowing and finance. The securitisation regime has worked well since its introduction, but the current rules have been in place since 2006. They need updating, to reflect recent changes to accounting standards and market developments.

One area of uncertainty that has grown as the securitisation sector has developed over recent years involves residual payments. Residual payments arise because securitisation companies typically contain more financial assets than are likely to be required in order to repay investors, meet transactions costs and retain a small profit. That excess protects against possible poor performance of the assets and allows the securitisation company to obtain an attractive credit rating. The uncertainty that arises is that residual payments may, in limited circumstances, be treated as annual payments for tax purposes and therefore be subject to withholding tax under the Income Tax Act 2007. Whether or not residual payments are treated as annual payments will depend on the facts of each case.

Uncertainty over the withholding tax rules affects the ability of law firms to issue a legal opinion on which ratings agencies can base the credit rating of the securitisation. That has a negative impact on the competitiveness of the UK securitisation sector. Currently, the uncertainty is addressed by companies writing to HMRC to seek clearance that residual payments will not be annual payments and so can be paid without withholding tax. That is an administrative burden for businesses. We would like to clarify the position by removing the potential withholding obligation in regulations, but the existing power is not wide enough to do so.

The changes made by the clause will amend the existing power to make regulations concerning the application of the Corporation Tax Acts to securitisation companies. The clause will extend the power to cover the wider taxes Acts, including the income tax Acts. That will permit changes to be made in regulations to ensure that the requirement to deduct income tax from annual payments will, as intended, not apply to residual payments made by securitisation companies. It will have a negligible cost to the Exchequer. Updated regulations under the amended power will be developed in consultation with interested parties.

The hon. Member for Salford and Eccles raised the role of securitisation in the financial crisis, which we could have spent plenty of time debating. However, while there were significant problems and faults in the US securitisation market, the UK and EU securitisation markets remained relatively robust. The global regulatory framework for securitisation has been completely overhauled since the crisis, including through increased capital requirements, reform of the oversight of credit ratings agencies and improved transparency rules.

The clause will not mean that securitisation companies pay less tax or face less scrutiny from HMRC. There is no statutory definition determining whether a payment is an annual payment. That must be decided based on characteristics established in case law. HMRC’s view is that the overwhelming majority of residual payments will never be annual payments. The change will clarify the position by placing the tax treatment on a statutory footing, removing uncertainty for taxpayers. There is no policy change here.

In terms of what is to stop large sums from being artificially passed through these vehicles, the notes have to be issued wholly or mainly to external investors. The SPVs are conduits and do not retain the profits. On how we treat such cash flows to prevent avoidance, under the payment rules an SPV is taxed on a small retained profit that has to be paid out to investors within 18 months.

This simple change to primary legislation has been welcomed by the industry. It will allow changes to be made in regulations to make the tax rules applying to securitisation companies work as intended. It will also make it easier for UK businesses to raise finance through securitisations, making those businesses and the UK securitisation sector more competitive. It will remove uncertainty over the appropriate tax treatment and need for businesses to consult HMRC on this issue before entering into securitisation transactions and it will ensure that the tax treatment of residual payments will be treated consistently. I therefore hope that the clause will stand part of the Bill.

Question put and agreed to.

Clause 61 accordingly ordered to stand part of the Bill.

Clause 62

Hybrid and other mismatches

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss that schedule 10 be the Tenth schedule to the Bill.

[Rebecca Long Bailey]

The same general points that I made about clause 61 broadly apply to this clause. The United Kingdom finds itself occupying a new place in the world and the provisions in the clause relate to the difficult business of double tax treaties. Such treaties currently need to be negotiated on a bilateral basis with countries that are outside large trading blocs such as the EU. They are therefore a model for the sort of issues that will be vital for the UK outside the EU.

There are model double tax treaties created by the OECD, which will guide our work. A future Labour Government would be outward looking in forging alliances of the sort possible under the OECD umbrella to create viable tax regulation and financial regulation internationally. However, there are some contexts in which the provisions in schedule 10, which the clause introduces, appear to be a little vague. For example, proposed new section 259BD(8) prevents a company from being “under taxed”, by identifying the highest rate at which tax is charged and asking whether that is lower than the company’s full marginal rate of tax should have been.

That is to be done by taking into account, on a “just and reasonable basis”, any credit for underlying tax. The reference to just and reasonable appears somewhat vague when contrasted with, for example, provisions governing international accounting standards in earlier clauses. As a survivor of the legal world, will the Minister confirm what “just and reasonable” is intended to mean and how HMRC will use that broad measuring stick in practice? Does he think that is a sufficiently clear mechanism for identifying whether sufficient tax has been paid, or do the Government simply seek to grant HMRC as much slack as they can?

[Mr Gauke]

Clause 62 and schedule 10 make changes to tackle multinationals that avoid UK corporation tax through cross-border business structures known as hybrid mismatch arrangements. We are building on the new rules announced at autumn statement 2014 and extending them, not least so that they also cover overseas branches, leading the way on implementing international best practice in this area.

The changes will neutralise the tax effect of hybrid mismatch arrangements and effect the recommendations of action 2 of the G20-OECD base erosion and profit-shifting project. In addition, they will neutralise the tax effect of hybrid mismatch arrangements involving permanent establishments. That means that the measure will tackle aggressive tax planning where, within a multinational group, either one party gets a tax deduction for a payment while the other party does not have a taxable receipt or there is more than one tax deduction for the same expense. The aim is to eliminate the unfair tax advantages that arise from the use of hybrid entities, hybrid instruments, dual resident companies and permanent establishments. That will encourage businesses to adopt less complicated cross-border investment structures.

In 2013 the OECD and the G20 countries adopted a 15-point action plan to address base erosion and profit shifting. BEPS refers to tax-planning strategies that exploit gaps and mismatches in the tax rules of different countries to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity but where the tax rates are low, resulting in little or no overall corporate tax being paid. The BEPS action plan is aimed at ensuring that profits are taxed where the economic activities generating the profits are performed, and where value is created.

11:15

Clause 62 and schedule 10 implement the recommendations on neutralising the effects of hybrid mismatch arrangements. The rules are designed to ensure that multinationals can no longer derive tax benefit from mismatch arrangements using hybrid entities, hybrid financial instruments or dual resident companies.

Clause 62 and schedule 10 also include rules to tackle hybrid mismatch arrangements that involve permanent establishments. Permanent establishments of companies are often used as an alternative to hybrid entities in tax planning arrangements, as they provide for similar mismatch opportunities. The clause covers such arrangements to ensure that groups cannot simply sidestep the OECD recommendations by using permanent establishments. Failing to tackle such permanent establishment arrangements would present an obvious opportunity for further avoidance, which would undermine the measure’s policy objective.

The Government announced their intention to introduce domestic legislation in October 2014. They consulted at autumn statement 2014 and later published draft legislation for technical consultation in December 2015. As a result, clause 62 and schedule 10 have been informed by consideration of responses to the consultation, by further engagement with interested parties, and by publication of the final OECD report.

The changes made by clause 62 and schedule 10 will address hybrid mismatch arrangements by changing the tax treatment of either the payment or the receipt, depending on circumstances. The rules are designed to work whether both countries affected by a cross-border arrangement, or just one of them, have introduced the OECD rules. The changes will affect large multinational groups with UK parent or subsidiary companies that are involved in transactions that result in a mismatch in tax treatment in the UK, or between the UK and another jurisdiction. The rules will take effect from 1 January 2017. In taking the action, and particularly in providing for the rules to cover permanent establishments, the UK will not only fully implement the agreed OECD recommendations; it will go beyond them. That will bring in more than £900 million over the next five years.

The hon. Member for Salford and Eccles raised a point about the definition of the expression “just and reasonable”. There is no definition; it takes account of the facts and circumstances of specific cases and does not give advantage to the tax Administration. It is a well used expression, which is understandably used in the circumstances in question.

The Government are stopping multinationals avoiding paying their fair share of UK tax through the use of cross-border business structures. We are building on the rules that we announced at autumn statement 2014 and extending them so that they also cover overseas branches, leading the way on implementing international best practice in the area.

Question put and agreed to.

Clause 62 accordingly ordered to stand part of the Bill.

Schedule 10 agreed to.

Clause 63

Insurance companies carrying on long-term business

Question proposed, That the clause stand part of the Bill.

[Rebecca Long Bailey]

I will be brief. The provision raises some seemingly technical questions on the taxation of loan relationships and derivatives—concepts that are closely linked in tax law. As with the other clauses, it requires deeper thought as the UK prepares to leave the EU. What precise changes, which HMRC has presumably observed in the financial markets, have prompted the reforms proposed in clause 63?

The role of insurance companies, particularly naive participants such as AIG before 2008, in derivatives markets must give us all pause for thought when considering how to regulate and tax them in the future. Those enormous insurance companies are involved in vital financial services for our citizens as well as extraordinarily complex financial instruments, such as credit default swaps. We must therefore be concerned that the reforms to the treatment of insurance companies are considered necessary. Will the Minister confirm what work the Treasury has done on assessing the future treatment of derivatives and similar markets and their impact on the UK economy? It is important for the future health of the UK economy that careful analysis of those markets is conducted as we prepare to leave the EU.

[Mr Gauke]

Clause 63 makes changes to ensure that corporation tax rules applying to insurance companies carrying on long-term business produce the appropriate policy results. A new regime for the taxation of life insurance companies was introduced in the Finance Act 2012 and was widely welcomed. However, putting that into practice has uncovered some specific issues that must be resolved for the regime to operate smoothly and effectively. HMRC has worked with industry to identify those issues, which relate to three main areas: intangible fixed assets, deemed income and trading losses.

Clause 63 will make minor technical changes to that legislation to ensure that it operates as intended. The cost to the Exchequer is negligible. For intangible fixed assets, clause 63 will allow debits to be set against the income for the accounting period in which they are incurred. That will bring the rules into line with those for companies that are not life insurers. For deemed income, clause 63 will prevent unused interest expenses from being set against the minimum profits charge in any circumstances. That will mean that any such charge is always fully taxed. For trading losses, clause 63 will mean that their use is no longer restricted to a company’s net position on its derivative contracts in the same period, which will bring stability into that calculation. The changes are relatively minor in nature and will have a small impact on insurers’ profits. However, they are important as they will ensure that the legislation delivers the intended policy objectives.

As I said, the Finance Act 2012 introduced a fundamental rewrite of life insurance company taxation. Such major reforms are always likely to necessitate some minor adjustments when put into practice and HMRC has worked with the industry to identify a handful of issues where the legislation does not work as intended. The changes will simply ensure the legislation operates as initially intended, which is why we are making them. Of course, all these matters are kept under review. Again, the hon. Lady raises the point about EU membership and so on. I am not sure I have much to add to what I previously said on that matter. I hope that the clause stands part of the Bill.

Question put and agreed to.

Clause 63 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mel Stride.)

11:24

Adjourned till this day at Two o’clock.

Finance Bill (Fourth sitting)

Tuesday 5th July 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: Sir Roger Gale, † Mr George Howarth

† Argar, Edward (Charnwood) (Con)

† Atkins, Victoria (Louth and Horncastle) (Con)

† Blackman, Kirsty (Aberdeen North) (SNP)

† Boswell, Philip (Coatbridge, Chryston and Bellshill) (SNP)

† Burns, Conor (Bournemouth West) (Con)

† Cadbury, Ruth (Brentford and Isleworth) (Lab)

† Cooper, Julie (Burnley) (Lab)

Donelan, Michelle (Chippenham) (Con)

† Dowd, Peter (Bootle) (Lab)

† Frazer, Lucy (South East Cambridgeshire) (Con)

† Gauke, Mr David (Financial Secretary to the Treasury)

† Hall, Luke (Thornbury and Yate) (Con)

† Hinds, Damian (Exchequer Secretary to the Treasury)

† Long Bailey, Rebecca (Salford and Eccles) (Lab)

† McGinn, Conor (St Helens North) (Lab)

McDonnell, John (Hayes and Harlington) (Lab)

† Mak, Mr Alan (Havant) (Con)

† Matheson, Christian (City of Chester) (Lab)

† Merriman, Huw (Bexhill and Battle) (Con)

† Mullin, Roger (Kirkcaldy and Cowdenbeath) (SNP)

† Quin, Jeremy (Horsham) (Con)

Streeting, Wes (Ilford North) (Lab)

† Stride, Mel (Lord Commissioner of Her Majesty's Treasury)

Tolhurst, Kelly (Rochester and Strood) (Con)

Matthew Hamlyn, Marek Kubala, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 5 July 2016

(Afternoon)

[Mr George Howarth in the Chair]

Finance Bill

(Except clauses 7 to 18, 41 to 44, 65 to 81, 129, 132 to 136 and 144 to 154 and schedules 2, 3, 11 to 14 and 18 to 22)

Clause 64

Taking over payment obligations as lessee of plant or machinery

14:00

Question proposed, That the clause stand part of the Bill.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

I covered most of the points relating to this clause when discussing previous clauses. I am concerned that it is another example of complex arrangements being created for the purpose of, among other things, avoiding liability to pay corporation tax. Will the Minister confirm what specific activity has prompted these proposals?

[The Financial Secretary to the Treasury (Mr David Gauke)]

It is a pleasure to welcome you back to the Chair, Mr Howarth. Let me say a word or two about the clause in response to the hon. Lady’s question.

Clause 64 makes changes to prevent tax avoidance by ensuring that tax is chargeable upon any consideration received in return for agreeing to take over tax-deductible lease payments. Leasing of plant and machinery plays an important role in UK business by providing a means of access to assets for use in commercial activities. There may be a number of different reasons for choosing to lease plant and machinery—for example, where the assets are required for only a relatively short period, where a lease meets the requirements of the business’s cash flows, where the business does not have the funds to buy the asset outright or where the asset is of a type typically leased rather than bought.

The person who leases plant and machinery—the lessee—for use in their business is entitled to tax deductions for the rents payable under the lease. Her Majesty’s Revenue and Customs has become aware of arrangements relating to the transfer of a lessee position in an existing lease. In those arrangements, the existing lessee transfers its right to use the leased plant or machinery, together with the obligation to make the lease payments, to another person. The new lessee will use the plant or machinery in its business and claim tax deductions for the lease rental payments.

However, the arrangements for transfer also involve the new lessee or a connected person receiving a consideration in return for the new lessee agreeing to take over from the existing lessee. That is done in such a way that there is no charge for tax on that consideration. The new lessee is able to get tax deductions for rental payments, some or all of which are funded by the non-taxable consideration received. That is an unfair outcome, and in a number of examples seen by HMRC it is clearly part of a tax avoidance scheme.

It is right that where a person meets tax-deductible payments not from their own resources but out of an otherwise non-taxable consideration received for agreeing to take over those payments, that consideration should be taxed in full. The changes made by the clause will ensure that where a person takes over a lessee under an existing lease, obtains tax deductions for payments under that lease and, in return, receives a consideration, such consideration is chargeable for tax as income.

The changes proposed will ensure a fair outcome for tax purposes for such arrangements. No longer will it be possible for tax-deductible lease payments to be funded by untaxed considerations received for the transfer of responsibility to make those payments. The expected yield to the Exchequer over the scorecard period from the changes is £120 million. I therefore hope the clause will stand part of the Bill as a way of preventing businesses from gaining an unwarranted tax advantage.

Question put and agreed to.

Clause 64 accordingly ordered to stand part of the Bill.

Clause 82

Inheritance tax: increased nil-rate band

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 13 to 19.

That schedule 15 be the Fifteenth schedule to the Bill.

[Mr Gauke]

Clause 82 and schedule 15 ensure that the residence nil-rate band for inheritance tax will continue to be available when an individual downsizes or ceases to own a home. The clause builds on the provisions in the Finance Act 2015, which introduced a new residence nil-rate band, by creating an effective inheritance tax threshold of up to £1 million for many married couples and civil partners by the end of the Parliament, making it easier for most families to pass on the family home to their children and grandchildren without the burden of inheritance tax.

The combined effect of this package will almost halve the number of estates expected to face an inheritance tax bill in future. The Office for Budget Responsibility now forecasts that 33,000 estates will be liable for inheritance tax in 2020-21. As a result of this package, 26,000 estates will be taken out of inheritance tax altogether and 18,000 will pay less.

We recognise that people’s circumstances change as they get older and that they may want to downsize or may have to sell their property. We do not want the residence nil-rate band to act as a disincentive for people thinking about making such changes. That is why we announced in the summer Budget that anyone who downsizes or ceases to own a home on or after 8 July 2015 will still be able to benefit from the new residence allowance. Clause 82 and schedule 15 allow an estate to qualify for all or part of the residence nil-rate band that would otherwise be lost as a result of the downsizing move or disposal of the residence.

The extra residence nil-rate band or downsizing edition will only be available for one former residence that the deceased lived in. Where more than one property might qualify, executors of an estate will be able to nominate which former residence should qualify. The approach reduces complexity and ensures flexibility in the system.

The Government have tabled seven amendments to schedule 15 to ensure that the legislation works as intended in certain situations that are not currently covered by the downsizing provisions. Amendment 15 caters for situations in which an individual had more than one interest in a former residence, to ensure that they are not disadvantaged compared with those who owned the entire former residence outright. Amendment 16 clarifies the meaning of disposal in situations where an individual gave away a former residence but continued to live in it. Amendment 19 ensures that where an estate is held in a trust for the benefit of a person during their lifetime, a disposal of that former residence by the trustees would also qualify for the residence nil-rate band.

Amendments 13, 14, 17 and 18 make minor consequential changes to take into account the other amendments. Clause 82 and schedule 15 will help to deliver the Government’s commitment to take the ordinary family home out of inheritance tax by ensuring that people are not disadvantaged if they move into smaller homes or into care. That commitment was made in our manifesto and I am pleased to deliver it fully with this clause.

[Rebecca Long Bailey]

As we have heard from the Minister, clause 82 and schedule 15 provide that the inheritance tax transferrable main residence nil-rate band will apply to an estate even when somebody downsizes. As the Tax Journal’s commentary on the Bill concisely explains, schedule 15 in particular contains provisions to ensure that

“estates will continue to benefit from the new residence nil rate band even where individuals have downsized or sold their property, subject to certain conditions. The residence nil-rate band is an additional transferable nil rate band which is available for transfers of residential property to direct descendants on death. The additional relief will be available from 6 April 2017 and the relief for downsizing or disposals will apply for deaths after that date where the disposal occurred on or after 8 July 2015.”

My hon. Friend the Member for Hayes and Harlington and I tabled amendments to leave out clause 82 and schedule 15 today—we will therefore oppose the clause—although they were not selected for debate.

The Government’s objective seems to be that

“individuals may wish to downsize to a smaller and often less valuable property later in life. Others may have to sell their home for a variety of reasons, for example, because they need to go into residential care. This may mean that they would lose some, or all, of the benefit of the available RNRB. However, the government intends that the new RNRB should not be introduced in such a way as to disincentivise an individual from downsizing or selling their property.”

If we go back a couple of steps, at summer Budget 2015 the Government announced that there would be an additional nil-rate band for transfers on death of the main resident to a direct descendant set at £100,000 and subject to a taper for an estate with a net value of more than £2 million. The band will be withdrawn by £1 for every £2 over the threshold. During the passage of the Finance Act 2015, which introduced the additional nil-rate band, the Opposition spokesperson, my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), stated:

“We have been clear that we believe that the focus of tax cuts should be on helping working people on middle and low incomes and on tackling tax avoidance…the Treasury has admitted that 90% of households will not benefit from the Government’s inheritance tax policy, so we should be clear about the part of society we are talking about.”

She went on:

“The priority for the Government, we believe, should be helping the majority of families and first-time buyers struggling to get a home of their own. That is why Labour voted against the Government’s inheritance tax proposals in the July Budget debate. The Treasury estimates that the changes to inheritance tax will cost the Exchequer £940 million by 2020-21—nearly £1 billion.”––[Official Report, Finance Public Bill Committee, 17 September 2015; c. 56.]

I echo those comments in the light of the measure today. We simply do not believe that expanding the conditions in which inheritance tax is not payable should be a priority for the Government. As my hon. Friend said at that time, this measure will cost nearly £1 billion by 2020-21. That is a vast amount of money that could be better spent supporting those on middle and low incomes who are struggling to get by.

As with so many measures in the Bill, the Government are prioritising the wrong people, with tax giveaways for the wealthy, such as this measure, and cuts to capital gains tax, at a time when they were considering taking billions away from working people through cuts to tax credits and disability payments. Not only do we disagree with the principle of this tax giveaway; we are also concerned that the legislation is badly drafted. A similar outcome could be achieved through a simpler mechanism. The Chartered Institute of Taxation has said:

“It appears to us that the legislation in Schedule 15 as currently drafted is deficient in one particular respect in that no provision has been made for downsizing when the home is held as a trust interest (for example, and especially, an Immediate Post-Death Interest (“IPDI”)). The typical scenario would be that the home (solely owned by husband) was left on a life interest basis to his widow, with remainder over to his children. The widow goes into care and the trustees wish to sell the property. An IPDI is becoming increasingly common to safeguard the interests of children from a first marriage when their parent enters into a second.”

Will the Minister clarify what will happen in that instance?

I will touch briefly on Government amendments 13 to 19, which according to the Minister’s helpful letter of 30 June make a number of technical amendments to ensure that the legislation operates as intended in a limited number of specific circumstances that are not currently covered by the downsizing provisions. I am glad that the Government are taking steps to improve the legislation, but I cannot see how the amendments address the concerns outlined by the Chartered Institute of Taxation.

The Opposition do not feel that these measures, which expand the number of situations in which inheritance tax is not due, are a priority, given the apparent funding constraints we often hear about from the Government. We will therefore oppose clause 82 and schedule 15.

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

It is a pleasure to serve under your chairmanship yet again, Mr Howarth. I congratulate the hon. Lady on the clear case she has made. We shall also oppose this measure.

I have one question for the Minister. He mentioned that 26,000 would be taken out of the tax altogether and 18,000 would pay less because of this change. Will he clarify how many of those are in Scotland and the north of England, compared with some of the richer parts of the country? I think that would be informative. Secondly, this is the wrong initiative at the wrong time, and it is targeted at the wrong people. That is why we will oppose it.

14:15

[Mr Gauke]

I am disappointed that this clause and the approach that the Government are taking do not have cross-party support, but I am sure that my hon. Friends on the Government side will support the measures.

The first point I have to make in response to the criticism of the clause is that, of course, the Government were elected and one of our manifesto pledges was to take forward measures to take the family home out of inheritance tax. We also have to bear it in mind that not doing anything on inheritance tax is not a neutral option, because the consequence of leaving inheritance tax alone is that, in a period in which property prices increase, more and more households and estates fall within inheritance tax and inheritance tax receipts will go up. It is worth pointing out that inheritance tax receipts in cash terms will continue to be higher under this Government than at any time since the introduction of inheritance tax in 1986, including the period of the last Labour Government between 1997 and 2010, when receipts peaked at £3.8 billion in 2007-08. Let us remember that.

Regarding the impact of not doing anything, do remember that relatively modest properties have increased in value. In 2015, the average house price in London was £552,000 and in the south-east it was £375,000. That means that relatively modest households were potentially finding themselves with an inheritance tax bill, which had not previously been the case under Governments of different colours.

Some technical points were made by Opposition Members. I was asked whether the downsizing rules will apply when the former house was held in a trust. Amendment 19 caters for such situations. The measure will apply only where the former home was held in a type of trust that was set up for the benefit of a person during their lifetime and that person had a right to the trust assets. It does not apply to former homes held in discretionary trusts because they would not qualify for the residence nil-rate band in those circumstances.

I was asked whether the estate would qualify for the allowance if the home is left in trust for a spouse and on their death passes to the children. The answer to that is no. If the home is transferred on death to a life interest trust to the benefit of the surviving spouse, the deceased’s estate will not qualify for the residence nil-rate band because the home is not inherited by a direct descendant at that time. However, the unused portion of the residence nil-rate band can be transferred to the surviving spouse’s estate to be used on their death. If the home subsequently passes to a direct descendant on the death of the surviving spouse or life tenant, their estate will be eligible for the residence nil-rate band.

In terms of exact numbers for the United Kingdom, I do not have those numbers; I will have to write to the hon. Member for Kirkcaldy and Cowdenbeath. However, it is the case that there are beneficiaries of this policy throughout the United Kingdom.

[Kirsty Blackman (Aberdeen North) (SNP)]

We are not denying that there will be people who will benefit from not paying tax or from paying less tax, but in places in Scotland you can get a castle for £1 million—albeit a small castle—and that is in no way, shape or form a family home, and it should not be classed as such.

[Mr Gauke]

I come back to what I was saying earlier, namely, that doing nothing will mean that many properties, often relatively modest properties, will fall within the inheritance tax bands. Doing nothing will mean that a tax that I think most people in this country would support, on the basis that it is designed for the very wealthy, would apply to people who would not necessarily have had high incomes in their lifetimes. That creates a sense of unfairness. There are certainly parts of Edinburgh where relatively modest properties are of such a value as to create concerns about inheritance tax.

[Christian Matheson (City of Chester) (Lab)]

If the Minister is concerned about rising property prices and an overheating housing market driving more people into inheritance tax bands, perhaps he should do something about the housing market—rather than fiddling around with the tax bands—for example, by building more houses for rent and cooling the housing market in that way.

[Mr Gauke]

I very much support the idea that we need to build more homes. As a Government, we have done so. We are a Government who have changed many of the planning rules. We are a Government who announced a substantial housing package in the autumn statement. This Government are doing much to improve house building in this country. Indeed, the number of building starts last year was high, which is encouraging.

To conclude, the measures before us are a sensible further step to meeting our objective of taking the family home out of inheritance tax. They will also ensure that there is no impediment to people downsizing, creating difficulties in the housing market. I hope, notwithstanding the objections from the Opposition, that clause 82 and schedule 15 will stand part of the Bill.

Question put, That the clause stand part of the Bill.

Division 2

Ayes: 11

---

Conservative: 11

Noes: 9

---

Labour: 6
Scottish National Party: 3

Clause 82 ordered to stand part of the Bill.

Schedule 15

Inheritance tax: increased nil-rate band

Amendments made: 13, page 440, line 45, leave out “section 8H(4A) to (4F)” and insert “sections 8H(4A) to (4F) and 8HA”.

Amendment 14, page 441, line 39, leave out “section 8H(4A) to (4F)” and insert “sections 8H(4A) to (4F) and 8HA”.

Amendment 15, page 445, leave out lines 26 to 37 and insert—

‘(4B) Where—

(a) the person—

(i) disposes of a residential property interest in the nominated dwelling-house at a post-occupation time, or

(ii) disposes of two or more residential property interests in the nominated dwelling-house at the same post-occupation time or at post-occupation times on the same day, and

(b) the person does not otherwise dispose of residential property interests in the nominated dwelling-house at post-occupation times,

the interest disposed of is, or the interests disposed of are, a qualifying former residential interest in relation to the person.

(4C) Where—

(a) the person disposes of residential property interests in the nominated dwelling-house at post-occupation times on two or more days, and

(b) the person’s personal representatives nominate one (and only one) of those days,

the interest or interests disposed of at post-occupation times on the nominated day is or are a qualifying former residential interest in relation to the person.”

Amendment 16, page 445, line 37, at end insert—

‘( ) For the purposes of subsections (4A) to (4C)—

(a) a person is to be treated as not disposing of a residential property interest in a dwelling-house where the person disposes of an interest in the dwelling-house by way of gift and the interest is, in relation to the gift and the donor, property subject to a reservation within the meaning of section 102 of the Finance Act 1986 (gifts with reservation), and

(b) a person is to be treated as disposing of a residential property interest in a dwelling-house if the person is treated as making a potentially exempt transfer of the interest as a result of the operation of section 102(4) of that Act (property ceasing to be subject to a reservation).”

Amendment 17, page 445, line 43, after “be” insert “, or be included in,”.

Amendment 18, page 446, line 3, at end insert

“, and

(c) before the person dies.”

Amendment 19, page 446, line 6, at end insert—

“8HA “Qualifying former residential interest”: interests in possession

(1) This section applies for the purposes of determining whether certain interests may be, or be included in, a qualifying former residential interest in relation to a person (see section 8H(4A) to (4C)).

(2) This section applies where—

(a) a person (“P”) is beneficially entitled to an interest in possession in settled property, and

(b) the settled property consists of, or includes, an interest in a dwelling-house.

(3) Subsection (4) applies where—

(a) the trustees of the settlement dispose of the interest in the dwelling-house to a person other than P,

(b) P’s interest in possession in the settled property subsists immediately before the disposal, and

(c) P’s interest in possession—

(i) falls within subsection (7) throughout the period beginning with P becoming beneficially entitled to it and ending with the disposal, or

(ii) falls within subsection (8).

(4) The disposal is to be treated as a disposal by P of the interest in the dwelling-house to which P is beneficially entitled as a result of the operation of section 49(1).

(5) Subsection (6) applies where—

(a) P disposes of the interest in possession in the settled property, or P’s interest in possession in the settled property comes to an end in P’s lifetime,

(b) the interest in the dwelling-house is, or is part of, the settled property immediately before the time when that happens, and

(c) P’s interest in possession—

(i) falls within subsection (7) throughout the period beginning with P becoming beneficially entitled to it and ending with the time mentioned in paragraph (b), or

(ii) falls within subsection (8).

(6) The disposal, or (as the case may be) the coming to an end of P’s interest in possession, is to be treated as a disposal by P of the interest in the dwelling-house to which h P is beneficially entitled as a result of the operation of section 49(1).

(7) An interest in possession falls within this subsection if—

(a) P became beneficially entitled to it before 22 March 2006 and section 71A does not apply to the settled property; or

(b) P becomes beneficially entitled to it on or after 22 March 2006 and the interest is—

(i) an immediate post-death interest,

(ii) a disabled person’s interest, or

(iii) a transitional serial interest.

(8) An interest in possession falls within this subsection if P becomes beneficially entitled to it on or after 22 March 2006 and it falls within section 5(1B).”—(Mr Gauke.)

Schedule 15, as amended, agreed to.

Clause 83

Inheritance tax: pension drawdown funds

Question proposed, That the clause stand part of the Bill.

[Rebecca Long Bailey]

The Minister will be pleased to hear that I do not have many comments on this clause, which provides that inheritance tax will not be charged if a person leaves unused funds in a pension drawdown fund when they die. In April 2015, the Government introduced changes to pension tax rules allowing people to access their pension funds flexibly from the age of 55. That flexibility, and an increase in drawdown arrangements, means that the inheritance tax charge will potentially apply to more people. The changes, which the Opposition supported at the time, meant that pensioners could access as much of their pension pots as they wanted, without having to buy an annuity. That meant, however, that if people became entitled to the funds but did not actually draw on them before death, the money would be subject to inheritance tax at the usual rate. According to the explanatory notes, that was not the original policy intention, so the clause has been introduced to correct things. The Opposition supported the changes to pension tax rules so will not be opposing the clause.

[Mr Gauke]

As we have heard, clause 83 makes changes to ensure that when an individual dies, unused funds in a drawdown pension are not treated as part of their estate for inheritance tax purposes. Without the clause, a small number of pensions would be liable for inheritance tax in some circumstances, which was not our intention.

As the Committee will be aware, funds that remain in a pension scheme do not traditionally form part of a deceased’s estate and are generally exempt from inheritance tax. Nevertheless, under the current tax rules, in a small number of circumstances undrawn pension funds are unintentionally caught. For example, if an individual has designated funds for pension drawdown and then passes away without having drawn down all those funds, an inheritance tax charge may arise.

The Government introduced changes to the pensions tax rules from April 2015 that allowed more people to flexibly access their pension funds from age 55. That flexibility means that the inheritance tax charge might apply to more people who pass away leaving undrawn funds in their pension scheme. It was not intended that an IHT charge should arise in such circumstances; the clause ensures that it will not do so. It changes the existing rules so that an inheritance tax charge will not arise when a person has unused funds remaining in their drawdown pension when they die.

The changes will be backdated and will apply for deaths on or after 6 April 2011, so that they include any charges that could arise from the time when the general rule ceased to apply. The minor changes made by the clause will help to maintain the integrity and consistency of the pensions system while supporting those who have worked hard and saved responsibly throughout their lives. I commend the clause to the Committee.

Question put and agreed to.

Clause 83 accordingly ordered to stand part of the Bill.

Clause 84

Inheritance tax: victims of persecution during Second World War era

Question proposed, That the clause stand part of the Bill.

[Kirsty Blackman]

I am pleased that this clause has been included in the Bill. It seems to be a sensible measure, and I am pleased to note that there will be the ability to tidy up afterwards if anything else needs mopping up. The Scottish National party welcomes the clause.

[Mr Gauke]

I thank the hon. Lady for her support. I would expect such a measure to have the support of the whole Committee. As the Prime Minister said on National Holocaust Day,

“whatever our faith, whatever our creed, whatever our politics”

it is right that the whole country should stand together to remember the

“darkest hour of human history.”

To that end, the Government have committed to building a national memorial in London to show the importance that Britain places on preserving the memory of the holocaust.

The clause provides further reassurance and certainty to holocaust victims by placing on a statutory footing their right not to pay inheritance tax on the compensation they receive as a result of their persecution. I am proud that the Government have extended the inheritance tax exemption even further to include a one-off compensation payment for the victims who endured such an unimaginable trauma in their childhood. I am delighted that the clause has cross-party support.

Question put and agreed to.

Clause 84 accordingly ordered to stand part of the Bill.

Clause 85

Inheritance tax: gifts for national purposes etc

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 122 to 126.

Clause 86 stand part.

[Mr Gauke]

Clauses 85 and 86 make a number of changes to ensure that certain tax reliefs available for objects of national heritage continue to be appropriately targeted and that those objects remain accessible for the nation to enjoy. The first change, clause 85, ensures that legislation keeps pace with the way museums are structured. Clause 86 will regulate the interaction of estate duty and inheritance tax for many objects of national, historic and cultural value and will enable HMRC to take appropriate action in the event of such an object being lost.

14:29

It might be helpful if I explain briefly how the current exemption works for museums and galleries. To encourage gifts and bequests to public collections, those gifts and bequests are currently exempt from inheritance and capital gains tax if they are accepted by the receiving public institution. In addition, existing rules allow private owners to sell their heritage chattels to public institutions in the UK rather than on the open market, where there is a real risk that the chattel will go abroad. The acquiring UK institution maintains and preserves the chattel and displays it for the ongoing benefit of the UK public. In 2015-16, heritage property with a total value of more than £33 million was sold tax free to such bodies. Without that support, magnificent items such as the Wolsey Angels, which were recently acquired by the Victoria and Albert Museum, would have been lost to the nation.

The criteria for deciding whether a museum or gallery is eligible for the reliefs have changed little since the introduction of inheritance tax in 1984. However, recent changes in the way local authorities administer their cultural services have caused many museums and galleries to fall outside the advantageous tax provisions currently provided by the legislation. That has happened at a time when those advantages are needed to encourage individuals to donate or sell to such bodies in order for their collections to grow for the public’s enjoyment. Devolving a museum from direct local authority control allows it more independence in pursuit of preserving and displaying its collection, freeing the museum from the wider corporate and political issues. However, without changes to the legislation, sales of assets to those entities that would previously have qualified for relief will no longer qualify. It is therefore essential to ensure that the legislation is updated to reflect the way the sector operates.

Clause 85 amends schedule 3 to the Inheritance Tax Act 1984 to include collections that have in the past been maintained by local authorities but now operate under, for example, independent charitable trust status. The clause will also transfer from HMRC to the Treasury the power to approve other national institutions. That change is being made to reflect the fact that the Treasury is directly accountable to Parliament and has responsibility for allocating the culture budget to the Department for Culture, Media and Sport.

I will turn now to clause 86. Inheritance tax was introduced in 1984 and replaced capital transfer tax, which in turn had replaced estate duty in 1975. The current inheritance tax legislation provides a conditional exemption where an item is of pre-eminent quality. The exemption is available for either inheritance tax or capital gains tax and allows the charge to be deferred, provided that certain conditions are met. If any of the conditions are breached or the asset is sold, tax becomes payable. The exemption applies to lifetime transfers and gifts and exists to prevent certain assets that are considered to be of national importance from being sold off and potentially leaving the country.

HMRC has been aware of a growing number of cases in which conditional exemption from an IHT charge is sought solely in order to substitute a lower rate of IHT for a higher rate of duty. That practice allows individuals to benefit from a lower rate of tax, at 40%, under the inheritance tax regime, rather than the estate duty, which would have been up to 80%. It therefore seems that in some circumstances the current legislation is used merely as a tax planning tool and not to ensure the preservation of objects of national heritage importance. In addition, there is currently no legislation in place in a majority of cases to allow HMRC to raise a charge when the owner of an estate-duty-exempt object loses or misplaces it as a result of their negligent actions. I am sure that all members of the Committee will agree that such practices should no longer continue and the Government need to take action now.

Clause 86 amends existing legislation on estate duty to stop individuals from using the provisions to pay inheritance tax at a lower rate than estate duty would be payable. That will ensure that the exemption is used as intended: to preserve objects of national heritage rather than as a tax-planning tool. The change will also bring legislation in line with provisions for lifetime transfers, where HMRC can elect for either an inheritance tax or estate duty charge. The second change will bring in a charge on objects that were exempted from estate duty but have subsequently been lost. The definition of loss will include theft and destruction by fire, although HMRC will have the discretion not to impose a charge when such a loss is not attributable to the negligence of the owner.

I turn now to the five amendments that the Government have tabled to clause 86. They are being made in response to comments we received following publication of the Finance Bill in 2016 and will ensure that the legislation works as intended. Amendment 122 clarifies that when an item is lost, HMRC will raise only a single charge for duty on the loss of the item, rather than a dual charge for the loss and breach of the conditions under which the item was originally exempt from duty.

Amendment 123 provides that clause 86 will apply to objects granted exemptions under the terms of the Finance Act 1975. That is necessary because the subsequent Finance Act 1976 failed to bring a discrete subset of material granted conditional exemption between March 1975 and April 1976 within the auspices of the new Act. If the legislation is not amended, such objects will be treated inconsistently with those exempted under the post-Finance Act 1976 regime. There are no good reasons to treat these exempted objects differently.

Amendment 124 ensures that in identifying the last death on which an object was passed, any death on or after 6 April 1976 is to be disregarded. That will ensure that the appropriate rate of estate duty is used. Amendments 125 and 126 make minor consequential changes to take into account the other amendments.

It goes without saying that the value of our culture and heritage to society is immeasurable. The changes that I have outlined will mean that our museums and galleries can continue to benefit from tax exemptions that will allow them to purchase more works of art for the enjoyment of the British public. The changes will also provide much needed consistency in the way that conditionally exempt objects are treated. I therefore hope that the clauses can stand part of the Bill.

[Rebecca Long Bailey]

The Minister has given us an articulate and detailed summary of how the clauses work in practice, so I will not go over too much of that again. I briefly note that the provisions make technical changes to the tax treatment of gifts or sales of property to public museums and galleries and objects of national scientific, historic or artistic interest respectively.

Clause 85 makes technical changes to support the exemption from inheritance tax of gifts or sales of property to public museums and galleries. It is necessary, as the Minister said, because recent changes in local authorities have led museum collections to be placed in charitable trusts. Those trusts do not presently fall within schedule 3 to the Inheritance Tax Act 1984, which describes the bodies that attract inheritance tax and capital gains tax relief. The clause simply rectifies that and moves the power to designate schedule 3 bodies from HMRC to HM Treasury. We have no issue with this technical clause, but I am interested to know what the justification was for moving the power to add bodies to schedule 3 from HMRC to HM Treasury. As a general question, what assessment was made in the long term of the efficacy of local authorities in managing museums and galleries? The Minister might want to refer that question to another Department and get back to me in writing.

Clause 86 puts a stop to using existing law to pay inheritance tax at a lower rate than estate duty. Estate duty was replaced in 1975 by capital transfer tax, which was replaced by inheritance tax in 1984. However, legacy estate duty legislative provisions still remain in force in relation to exemptions given pre-March 1975. Estate duty can be levied at up to 80%, whereas inheritance tax is currently at 40%. The clause stops individuals using a gap in legislation to claim conditional exemption solely to facilitate a later sale of 40% instead of up to 80%.

There is also provision for HMRC to be able to raise a charge when the owner loses an estate duty exempt object. That leads me nicely on to Government amendments 122 to 126, which make technical changes to ensure that the legislation operates as intended. Amendment 122 clarifies the rules around HMRC’s ability to raise a charge for duty on the loss of an item, so that it will raise only a single charge rather than a dual one. Amendments 123 and 124 ensure that the legislation works in specific circumstances, as intended, and amendments 125 and 126 simply make minor consequential changes. We are more than happy to support these clauses and Government amendments.

Question put and agreed to.

Clause 85 accordingly ordered to stand part of the Bill.

Clause 86

Estate duty: objects of national, scientific, historic or artistic interest

Amendments made: 122, in clause 86, page 143, line 6, after “as if”, insert

“—

(a) after subsection (3) there were inserted—

“(3A) But where the value of any objects is chargeable with estate duty under subsection (2A) of the said section forty (loss of objects), no estate duty shall be chargeable under this section on that value.”; and

(b) ” .

Amendment 123, in clause 86, page 144, line 2, at end insert—

‘(5A) In section 35 of IHTA 1984 (conditional exemption on death before 7th April 1976), in subsection (2), for paragraphs (a) and (b) substitute—

“(a) tax shall be chargeable under section 32 or 32A (as the case may be), or

(b) tax shall be chargeable under Schedule 5,

as the Board may elect.””

Amendment 124, in clause 86, page 144, line 9, at end insert

“, and

(b) in sub-paragraph (4), after “40(2)” insert “or (2A)”.”

Amendment 125, in clause 86, page 144, line 10, leave out “Subsection (6) has” and insert “Subsections (5A) and (6) have”.

Amendment 126, in clause 86, page 144, line 11, after “referred to in”, insert “section 35(2) of or”— (Mr Gauke.)

Clause 86, as amended, ordered to stand part of the Bill.

Clause 87

Apprenticeship levy

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 22 to 24.

Clauses 88 and 89 stand part.

Government amendments 25 and 26.

Clause 90 stand part.

Government amendment 27.

Clauses 91 to 108 stand part.

Government amendment 28.

Clauses 109 and 110 stand part.

New clause 2—Review of the Apprenticeship Levy—

‘The provisions of this Act relating to the Apprenticeship Levy shall not come into force until the Chancellor of the Exchequer has laid before Parliament a report on how the levy will be implemented, including but not limited to information on how equitable treatment of the different parts of the UK will be assured in its implementation.’

[Mr Gauke]

I hope hon. Members will forgive me if I go through the various clauses and amendments. I hope they will take some consolation from the fact that this group will advance us some way down the amendment paper—I get the feeling that is the most popular thing I have said for some time.

14:42

Sitting suspended for Divisions in the House.

15:06

On resuming—

[Mr Gauke]

I was just warning the Committee that I had quite a bit to say on this group, and I am afraid we can no longer put back the moment when I have to say it.

The Government believe in apprenticeships because they are one of the most powerful motors of social mobility and productivity growth. There has been a rapid decline in the amount and quality of training undertaken by employers over the past 20 years. We must reverse that trend of under-investment in training, and that is what the apprenticeship levy seeks to achieve. The apprenticeship levy will be paid by larger employers across all sectors to fund the step change needed to improve the quality of apprenticeships and achieve 3 million starts by 2020. My remarks will cover clauses 87 to 110. I appreciate that they may be quite lengthy, but I hope that hon. Members will bear with me.

Clauses 87 to 89 cover the basic provisions. Clause 87 provides that the commissioners of Her Majesty’s Revenue and Customs will be

“responsible for the collection and management of apprenticeship levy.”

Clause 88 sets out the conditions under which the apprenticeship levy will be charged. Where an employer has a pay bill for a tax year, the levy will be charged at a rate of 0.5% of the total pay bill. Employers will have a £15,000 annual levy allowance, which means that in practice only employers with an annual pay bill that exceeds £3 million will pay the levy. However, as hon. Members will be aware, the Government’s amendments to allow companies and charities to share the levy allowance within a group, which I will turn to later, make consequential amendments to clause 88 that allow the annual levy allowance to be less than £15,000 where a group of companies or charities decides to split the allowance across the group.

Clause 89 sets out which earnings will make up an employer’s pay bill for the purposes of the apprenticeship levy. Pay bill comprises earnings that are subject to secondary class 1 national insurance contributions—NICs—including earnings below the NICs secondary threshold. That effectively means that pay bill is comprised of the gross cash earnings of all employees and will exclude any employer-provided benefits. Clauses 88 and 89 provide that the person liable to pay the apprenticeship levy is the secondary contributor; that is, the person who incurs the secondary class 1 NICs liability on an individual’s earnings.

Clauses 90 and 91 provide rules for connected companies and connected charities respectively. The rules will determine whether two or more companies or charities are considered to be connected for the purposes of the apprenticeship levy at the start of each tax year. The rules will prevent connected companies from claiming multiple levy allowances. The Finance Bill, as introduced, provides that, where companies or charities are deemed to be connected with one another, only one company or charity in the group will be entitled to the annual levy allowance. However, the Government have tabled amendments to allow connected companies and connected charities to share the allowance within their group as they choose. I will outline the effects of the amendments after addressing the remaining clauses.

The rules for determining whether companies are connected for the purposes of the apprenticeship levy will be the same as the rules set out in part 1 of schedule 1 to the National Insurance Contributions Act 2014 for determining whether companies are connected for the purposes of the employment allowance—the employment allowance allows employers to reduce their total national insurance liability by up to £3,000 a year. The connection rules for the apprenticeship levy have been adapted from provisions in existing tax legislation. The employment allowance connected companies rules are similar to the associated companies rules in sections 25 and 27 to 30 of the Corporation Tax Act 2010.

The meaning of “connected charities” for the purposes of the apprenticeship levy allowance is set out in clauses 107 and 108. The rules for determining whether charities are connected will be the same as the rules set out in part 2 of schedule 1 to the NICs Act. The employment allowance connected charities rules are similar to the connected charities provisions in section 5 of the Small Charitable Donations Act 2012. The advantage of following the employment allowance rules is that where companies and charities know that they are connected for the purposes of the employment allowance, they will also know that they are connected for the purposes of the apprenticeship levy.

The anti-avoidance provisions for the levy are addressed by clauses 92 and 93. Clause 92 sets out that where an employer stands to gain a tax advantage as a result of avoidance arrangements relating to the levy allowance, it will not be entitled to the allowance for the tax year in question. That includes any attempt to bring forward or delay an employee’s earnings to alter the tax year in which those earnings are paid. The term “avoidance arrangements” is given a wide meaning and includes any arrangements where the main purpose, or one of the main purposes, is to secure a benefit in relation to liability for the levy.

Clause 93 extends the existing anti-avoidance legislation applying to PAYE and NICs so that it can be applied to the apprenticeship levy. That includes HMRC’s rules on the disclosure of tax-avoidance schemes, the general anti-abuse rule, HMRC’s system of accelerated payments in relation to avoidance schemes and HMRC’s rules on the formation of tax avoidance schemes.

Clauses 94 to 99 relate to the administration of the apprenticeship levy. Clause 94 gives HMRC powers to provide, through regulations, for the assessment, payment, collection and recovery of the levy. Employers will be required to pay the levy with their PAYE and class 1 NICs, which will allow us to apply the £15,000 levy allowance on a monthly and cumulative basis. Applying the allowance on such a basis will ensure an even flow of payments into employers’ digital apprenticeship accounts, which levy-paying employers will be able to use to pay for training and assessment of apprenticeships, thereby enabling them to start employing apprentices. The clause also provides the power to make regulations to provide for reporting the levy and making returns as part of HMRC’s real-time information system.

There are also regulation-making powers to prescribe how HMRC may make assessments where employers have failed to make an apprenticeship levy return or where there is an underpayment. Regulations may also provide for the repayment of the apprenticeship levy in circumstances where the levy is paid in error or where there needs to be repayment or remission of interest. The clause also provides that regulations may set out the appeal process for any matters arising under the assessment, payment and collection regulations.

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In keeping with the collection and recovery of the levy, clause 95 gives HMRC the power, through regulations, to provide for the transfer of the apprenticeship levy liability to others if the employer liable for paying the levy does not do so and the funds are irrecoverable. The power will enable regulations to allow treatment of apprenticeship levy debt to be in line with the treatment of debt relating to income tax and national insurance.

Clause 96 provides the power to make regulations for the apprenticeship levy, which mirror those for PAYE and NICs, for supplying information to HMRC from relevant service providers, such as payroll administrators.

Clause 97 sets out the time limits for assessment to be made on an employer’s apprenticeship levy payments, and provides that no assessment may be made on an employer’s apprenticeship levy payments more than four years after the end of the tax year in question. There are, however, two exceptions to that rule. The limit can be extended to six years when the loss of payment has been brought about through the carelessness of the employer. The limit can be extended to 20 years when the employer has deliberately arranged that. Again, the intention is to align the apprenticeship levy position with that of PAYE as far as possible.

It is important to protect the earnings of individuals so that employers do not pass the direct costs of the levy on to employees. Clause 98 addresses that, meaning that it will not be possible for employers to make deductions from the earnings of their employees or seek to recover some or all of the levy’s cost through the earnings of their employees.

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

Although the Scottish National party supports clause 98, we feel that its definition is a little loose. We have concerns that it might not prohibit employers from recouping the cost of the apprenticeship levy as intended. The lowering of salaries for any new positions advertised is an example. Does the Minister agree?

[Mr Gauke]

Clause 98 goes as far as is practical. It seeks to address the matter. No doubt the hon. Gentleman will raise that point during the debate, and I will be happy to respond with further details, but we believe that clause 98 strikes the right balance.

Clause 99 makes provision for HMRC to recover underpayment of the apprenticeship levy. HMRC will be able to recover unpaid apprenticeship levy from employers and may undertake court proceedings to facilitate that. That will work in the same way that it does for income tax under the relevant section of the Taxes Management Act 1970.

Moving on to the information and penalties clauses, clause 100 gives HMRC the power to prescribe in regulations which records need to be retained by employers in connection with the apprenticeship levy. Clause 101 extends HMRC’s information and inspection powers under schedule 36 of the Finance Act 2008 to the apprenticeship levy. Clause 102 gives HMRC permission to charge penalties for errors on returns, late payments and failures to return payments in relation to the apprenticeship levy. The intention is to ensure, as far as possible, that the apprenticeship levy position is aligned with that of PAYE and NICs. Clause 103 sets out that an employer may appeal against an HMRC assessment of the apprenticeship levy or other amounts. It specifies the notice period and process for dealing with such appeals, which follows part 5 of the Taxes Management Act 1970.

The final group of clauses deals with more general matters. Clause 104 applies HMRC’s information and inspection powers for tax agents who engage in dishonest conduct to the apprenticeship levy, as set out under schedule 38 to the Finance Act 2012. Clause 105 amend the Provisional Collection of Taxes Act 1968 to facilitate future changes to the apprenticeship levy. Clause 106 sets out that:

“This Part binds the Crown.”

Clauses 107 and 108, which relate to clause 91, respectively set out the rules for determining whether two or more charities are connected. Those rules are the same as those set out for the employment allowance, so they will be familiar to employers. Clause 109 defines expressions used in relation to the apprenticeship levy.

Finally, clause 110 sets out the process for making regulations relating to the apprenticeship levy. Regulations will be by statutory instrument and subject to the negative procedure in the House of Commons, with the exception of the Treasury commencement order to bring into force penalties for errors in relation to the levy.

I now turn to the apprenticeship levy amendments. Amendments 22 to 25 and amendment 27 all concern the rules relating to connected companies and charities and the levy allowance of £15,000. As I mentioned earlier when outlining clauses 88, 90 and 91, the Government have tabled amendments to enable groups of connected companies or charities to share the £15,000 levy allowance. The original proposal was that, if a group of companies or charities were connected, any one of them could apply the allowance. That followed the approach of the employment allowance, which has worked well. However, in response to representations, we have considered the matter further and have concluded that that would lead to a significant increase in the employer population subject to the levy, which was never the intention.

The amendments to clauses 90 and 91 and the consequential amendment to clause 88 will, therefore, allow a group of connected employers to decide what proportion of the levy allowance each of them will apply. The group must decide the allowance split at the beginning of the tax year and it will be fixed for that year unless a correction is necessary because the total amount of the levy allowance exceeds £15,000. Connected employers must notify HMRC of the amount of allowance to be applied for their PAYE schemes, and where that does not occur, or where the total notified does not equal £15,000, the amendments allow for the levy allowance to be determined by HMRC if the employer fails to take corrective action. Employers and their representatives have welcomed our decision to bring forward the amendments and I hope that Committee members will join in supporting the change.

Amendments 26 and 28 are technical amendments that seek to clarify the definition of “company” in clauses 90 and 109 to avoid any uncertainty and to ensure that the provisions are clear. I will also address new clause 2, tabled by SNP Members. The new clause seeks to delay the implementation of the apprenticeship levy until a report has been laid before Parliament on how different parts of the UK are equitably treated when the levy is eventually implemented.

I acknowledge that it is in everyone’s interest to ensure that the levy works for employers wherever they may operate. However, SNP Members will be pleased to know that we have already published employer guidance, which explains how the levy will work for employers right across the UK. Publishing another report will not, therefore, reveal new information to help employers, and delaying implementation of the levy would be unfair on employers who have been working hard to prepare for it as well as on potential apprentices who will benefit. I am sure that Members on both sides of the Committee will agree that the vocational skills system urgently needs investment and it is only fair that employers play their part if they want better-quality apprenticeships, which I believe they do. I also believe that they will engage with the levy to make it work for them.

The clauses on the apprenticeship levy will enable the Government to deliver their objective of increasing the quality and quantity of apprenticeships and to meet their target to deliver 3 million apprenticeship starts by 2020.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

The Minister mentioned the quality of the apprenticeship scheme and I want to put down a marker that some employers, such as Brompton Bikes, which employs many people in my constituency—it was, until a few weeks ago, based there—have to pay into the levy, by the looks of it, because of the size of their operation, but are not able to benefit from the national apprenticeship scheme for the key subsection of their young staff who will be skilled braziers. That is because brazing is a specialist skill and there are too few people doing it for there to be national accreditation. However, brazing is an essential part of building Brompton bikes and giving them the quality they have. Such employers have to pay the levy without getting the benefit for at least half of their eligible workforce. They have to fund that training themselves, on top of the levy. Will the Minister take that point back to his Department?

[Mr Gauke]

I am grateful to the hon. Lady for raising that issue. Our discussions this afternoon are focused on the raising of expenditure, and the Department for Business, Innovation and Skills is leading on how that money can be spent. However, it is perfectly reasonable for her to make that point. I encourage businesses to engage with BIS on how the apprenticeship levy can be spent to ensure that it goes to the right places and creates a more highly skilled workforce. The Minister for Skills, my hon. Friend the Member for Grantham and Stamford (Nick Boles), is engaging with businesses in many sectors up and down the country to ensure that we have the right set of rules in place. I hope that hon. Members will recognise that the Government amendments are sensible revisions, and that they will accept that the SNP amendment is not needed, as we have already published detailed guidance on how the levy will operate for employers across the UK.

I want to reiterate the importance of investing in apprenticeships, which are a powerful tool for enabling social mobility and driving productivity growth. They equip people with the skills they need to compete in the labour market, and enable employers to grow their businesses. The apprenticeship levy will put employers in control and give them an even greater say in the quality, value for money and relevance of the training that their apprentices receive.

[Roger Mullin]

I rise to speak to new clause 2. I commend the Minister for mentioning the importance of productivity and of generating much more investment. I am sure everyone in the Committee agrees wholeheartedly. However, the problem of productivity relates to particular strata of apprenticeships—for example, higher-skilled apprentices are needed. Fundamental questions are being asked in the different jurisdictions of the UK about how best to address that. Although one levy system is being imposed in the UK, different forms of apprenticeships are being created. There is some anxiety among employers and different Government agencies about whether the Government should be moving at this pace before these matters are clarified.

This is a probing new clause. I simply ask the Minister to address a few short questions to assist our further thinking. First, in the designing of the levy system, was account taken of the fact that different apprenticeship systems operate with different funding levels in different parts of the United Kingdom?

Secondly, we know that some of the systems and administrative arrangements that are being put in place vary considerably from one part of the UK to another. To what extent does the Minister accept that the levy may be top-sliced to fund some of those systems? For example, as he is aware, the digital voucher system that is planned for England will not operate in Scotland. Is it to be funded separately, or will the funding come out of the levy costs?

Thirdly, who has to pay this levy? It makes a lot of sense, and the Minister talked eloquently about businesses, but it is not merely traditional businesses that are expected to pay the levy. In Scotland, further education colleges are the biggest provider of the education that supports the apprenticeship system. On the latest calculation, they will collectively have to pay approximately £1.9 million for the apprenticeship levy, when we expect them to be the main providers of education training. I would like to hear the Government explain why colleges and some large training providers are expected to pay the levy. Will that not dilute their resources for investment in quality apprenticeships?

With those questions, I would like to hear some of the Government’s further reasoning. I think that there is a case, which has been made to us by many employers and agencies, for the Government to take their time and be careful about implementing the levy.

[Philip Boswell]

I fully support the comments of my hon. Friend the Member for Kirkcaldy and Cowdenbeath. I rise to speak to a different issue relating to the clause. I have concerns about the apprenticeship levy and its application and implementation in the devolved Administrations. Skills policy is devolved, so the design and implementation of the apprenticeship programme in Scotland are devolved to Holyrood. Such programmes are also devolved to the Welsh and Northern Irish Assemblies.

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The UK Government stated previously that £500 million will be allocated to the devolved Administrations from the receipts related to the apprenticeship levy. I understand that there have been discussions between the UK and Scottish Governments about how much money will be allocated to Scotland from those receipts, through Barnett consequentials. Nevertheless, I am concerned that if the Bill goes through as drafted, the Scottish Government will not get back what Scottish businesses pay into the levy, which will not be the case in England.

Just last week I received an answer to written question 41015, in which I asked what assessment had been made of how much Scottish businesses would pay under the apprenticeship levy. The Government responded:

“Regional level estimates of those likely to pay the Apprenticeship Levy are not available.”

That answer is insufficient. Prior to implementation of the apprenticeship levy, will the Minister consult on determining how much businesses in devolved regions will pay under the levy? Furthermore, the Scottish Government’s Employability Minister, Jamie Hepburn, stated that the UK Government’s apprenticeship levy

“undermines our uniquely Scottish approach”

to modern apprenticeships. Given that skills policy is devolved, does the Minister intend to do further work with the Scottish Government to ensure that the implementation of the levy does not impede the Scottish approach to apprenticeships? I commend new clause 2 to the Committee.

[Kirsty Blackman]

I understand that guidance on the apprenticeship levy has been released. The information I was able to find online said that further guidance on things such as provisional bands would be released in June 2016, but I cannot find any. Perhaps it is just that I have been unable to find it, but it would be useful if that guidance was provided.

I draw attention to the issue with employee-owned companies. I was approached by such a company that pays its employees their share of the profits through PAYE, so that share of the profits will be subject to the apprenticeship levy. Had the company been set up to pay dividends to shareholders, it would not have to pay the levy. The staff there have come to me with a specific issue that is unique to them, because they would not have to pay the levy if their company was structured differently. Will the Minister comment on such employee-owned companies?

[Rebecca Long Bailey]

As we have heard, this substantial group of clauses introduces the apprenticeship levy that was announced in the summer Budget and autumn statement in 2015. I shall address my remarks to clauses 87 to 110 as a group, touching on new clause 2, tabled by the hon. Member for Kirkcaldy and Cowdenbeath, and Government amendments 22 to 28.

The apprenticeship levy was announced in 2015 and will come into force in April 2017 as part of the Government’s commitment to reaching 3 million apprenticeships by 2020. The levy will be charged on large employers with annual pay bills in excess of £3 million. According to the HMRC policy paper, that means that less than 2% of employers will pay the levy. It will be charged at 0.5% of an employer’s pay bill through PAYE. Each employer will receive one annual allowance of £15,000 to offset against its levy payment. Employers operating multiple payrolls will be able to claim only one allowance. As we have heard, levy funds will be retained as electronic vouchers in a digital apprenticeship service account. The employer can spend these vouchers on training and end-point assessment from accredited apprenticeship providers, but not on associated costs such as administration of apprenticeships, pay or allowances.

According to the Government’s costings, the levy is expected to raise £2.7 billion in its first financial year, rising to just over £3 billion by 2020-21. HMRC’s policy paper states specifically:

“It is expected that the levy will support productivity growth through the increase in training. It may have a near-term impact in reducing earnings growth, although by supporting increased productivity, it is expected that the levy will lead to increased profitability for businesses, and increased wages over the long-term.”

The paper also assesses the impact on business, stating:

“For employers paying the levy, the measure is expected to have some impact on administration costs and the impact will vary by employer, depending on the size of their pay bill. The policy intention is that they will calculate and pay the levy on a monthly basis. HM Revenue and Customs (HMRC) will engage with employers to discuss and assess the impacts on them.”

Opposition Members are certainly happy to support the introduction of the apprenticeship levy, but we have some concerns that we would like the Minister to provide some reassurances on.

Business representatives have broadly welcomed the levy as a commitment to delivering increased apprenticeship places. However, they have widely expressed concern at the short timeframe for implementation, the lack of guidance to date ahead of the introduction and the limitations that the proposals place on expenditure. Indeed, the Confederation of British Industry has called for a “realistic lead-in time” and for

“taking the time to get this right”,

while EEF, the Manufacturers Organisation, has specifically called for a delay to the levy’s introduction full stop.

In addition, the high target of 3 million apprenticeship starters by 2020 has caused concern that there could be a race to the bottom in terms of the quality of apprenticeships. Mark Beatson, chief economist at the Chartered Institute of Personnel and Development, has said:

“We’d argue that the three million target should not be sacrosanct, and that quantity should not trump quality.”

Can the Minister therefore outline what regulatory framework or safeguards are in place to ensure that the quality of apprenticeships is up to scratch?

The Charity Finance Group is particularly concerned that the charitable sector does not have highly developed human resources departments or accredited apprenticeship training schemes. The sector remains reliant on volunteers whose expenses cannot be remunerated via the apprenticeship levy. The CFG is also concerned that significant charity resources are tied up in public sector contracts or that charitable donors will seek confirmation that their donations will fund a charity’s specific cause.

Indeed, public sector employers themselves have expressed concern that, first, the levy is being introduced at a time of severe funding cuts and, secondly, that it is accompanied by a new requirement in the sector to ensure that 2.3% of workers are apprentices. The Local Government Association has urged that local authorities be exempted from payment but given authority to oversee administration of levy funds locally. Can the Minister confirm that the Government have considered that approach?

There may be scope for local authorities to co-ordinate. For instance, councils could take up a commissioning role in the Digital Apprenticeship Service, or unallocated levy funding could be reallocated to contributing areas and commissioned locally rather than being retained centrally.

Another issue that I would like the Minister to shine some light on today is agency workers and large recruitment agencies. In particular, the largest recruitment agencies have expressed concern to me that they will be liable to make large levy payments for placing employees in other companies, including for periods that would not qualify for a quality apprenticeship—over 12 months.

The Recruitment and Employment Confederation has raised concerns that large recruitment agencies will have to pay the levy on their pay bill when they place employees in temporary employment in different workplaces, so that those employees are paid by the agency but not working for it. Indeed, the TUC has expressed concern that agency contracts may be used by employers to lower their PAYE bill and reduce their levy requirement. Opposition Members are really concerned about that, so can the Minister say what steps are in place to ensure that it does not happen?

Finally, I have some concerns about how the levy will work under a devolved Administration, and I think that the hon. Member for Kirkcaldy and Cowdenbeath shares those concerns, as do his colleagues. That is reflected in new clause 2, where they have requested a review addressing how equitable treatment of the different parts of the UK will be assured in its implementation. Throughout their submissions they have asked some very pertinent questions, and I look forward to hearing the Minister’s responses to them.

The levy will be UK-wide, so employers operating across the devolved nations will pay their contribution based on all their UK employees, irrespective of where they live or work. However, the vouchers that levy-paying employers will be allocated—they can spend them on apprenticeship training—will be based only on the portion of the levy that they pay on the pay bill for their English employees. Funds available for training in devolved Administrations are provided through the block grant, and allocation will be decided upon by the Administration.

There appears to be very little guidance on how the apprenticeship levy will work in the devolved Administrations, so I would be grateful if the Minister could provide more detail today. For example, will the funds levied from a company’s UK operations based in devolved nations be identifiable in the grants made to devolved Administrations? We will support new clause 2 if it is pushed to a vote today.

I turn now to Government amendments 22 to 28, which relate to clauses 88, 90, 91 and 109. Clause 90, as drafted, states that where there is an aggregate pay bill of a group of connected companies that will qualify to pay the apprenticeship levy and each would be entitled to a levy allowance, only one will in fact be entitled to the allowance. The connected companies must nominate which company will qualify. Similarly, clause 91 sets out that at the beginning of the tax year, where two or more qualified charities are connected with one another, only one will be entitled to the levy allowance to be offset against the apprenticeship levy.

Government amendments to those two clauses allow companies and charities that are connected for the purposes of the apprenticeship levy to share their annual levy allowance of £15,000 between them, instead of only one company or charity being entitled to the allowance. There is also a consequential amendment to clause 88, which, according to the Minister’s letter,

“allows for the levy allowance not being the full £15,000, if a group of connected employers choose to split it under sections 90 or 91.”

The Government have stated that these changes are in response to representations they have received, and the Opposition are also aware of concerns from stakeholders about the legislation as currently drafted. We therefore fully support these amendments.

Amendments 26 and 28 are technical amendments that clarify that the definition of a company in clause 90 applies to the whole of part 6 of the Bill relating to the apprenticeship levy. Again, we are happy to support these Government amendments.

In conclusion, the Opposition have long called for Government action to drive growth in productivity. That is the underlying problem that the Chancellor has failed to deal with time and again. Supporting apprenticeships is certainly an important factor in doing so, and we are therefore supportive of these measures in the Bill. However, we have some serious concerns about the machinery of the specific clauses, as I have outlined, and I hope that the Minister can address them in his response.

[Mr Gauke]

Let me see if I can address the points that have been raised in the debate. It has been argued that business organisations are calling for a delay in implementation. We recognise that employers have concerns about the development and planned implementation of the levy, but we urgently need to address the skills shortage in our economy and improve the quality of vocational training, which employers are calling for. We are holding regular working groups with various employers and employer groups in order to keep them updated on progress and the timing of announcements, and we will shortly be publishing draft funding rates and rules to provide further information to help them plan for the introduction of the levy. The hon. Member for Aberdeen North is not wrong: there is still further information that needs to be published. That information will be published shortly.

Our focus is on ensuring that the levy works for businesses of all sizes as they adapt and seize opportunities in the coming months. In April we set out how the operational model for the apprenticeship levy and the new digital apprenticeship service will work, and how the funding of apprenticeship training will change. We continue to work with employers to design the apprenticeship levy around their needs, and we will publish further details of the draft rates and rules shortly.

Picking up on the point raised by the hon. Member for Brentford and Isleworth about Brompton Bikes and the particular concern about niche areas such as braziers, a key part of reform to apprenticeships is the trailblazer programme, which invites employers to create their own standards. It needs 10 employers, but in exceptional cases the Department for Business, Innovation and Skills is happy to accept smaller, more niche specialisms, such as braziers. I encourage all employers in such circumstances to enter into dialogue with BIS.

15:45

Points have been made about the devolution aspects and how the measures will work in Scotland in particular. Skills policy is of course devolved, and it is right that the devolved nations should get their fair share of the levy. For that reason, it is fair that the UK Government should allocate only the levy paid in respect of employees in England. We know that some employers have cross-border operations and training activity. We are working with the devolved Administrations to make the measures work while ensuring that they continue to have complete flexibility in how they support employers through training and by taking on apprentices.

We are committed to doing all we can to make the system work for employers wherever they are in the UK. As part of that, the Government are helping employers across the UK by abolishing employers’ NICs for apprentices under the age of 25, making it about £1,000 cheaper to employ an apprentice under 25 on a salary of £16,000. We are also abolishing employer NICs for employees under the age of 21. We will continue to work with the devolved authorities on this matter.

On the point raised by the hon. Member for Kirkcaldy and Cowdenbeath about the application to FE establishments, there will be no carve-outs from the levy. It is a charge across all employees in all sectors—public, private and charitable. We have tried to be as fair as possible in coming to a decision. Given the number and range of apprenticeship standards and frameworks, there is no reason why employers across all sectors should not be able to take advantage of the funds that they pay in levy and take on apprentices. We ask employers to think about opportunities or develop a new apprenticeship standard to meet their needs.

Similar arguments apply to charities. It is sometimes argued that charities are not well placed to use the levy funds that they may have to pay. Of course, any charities with annual pay bills greater than £3 million will have to pay the levy. Like any other employer, charities can use the levy payment to fund apprenticeships. The Government strongly encourage the charity sector to engage with the levy and consider where it might benefit from apprenticeships or be able to turn in-house training into a formal apprenticeship scheme. A range of apprenticeships are available in areas such as business administration, finance and legal work. If there are currently no apprenticeships available in occupations in which employers would like to employ apprentices, employers should consider applying to develop apprenticeship standards for those occupations.

The hon. Member for Aberdeen North raised the issue of bonus payments and the fact that they will incur the apprenticeship levy. We wanted to ensure that the levy would be as simple and fair as possible for employers. The Government have therefore decided to use the existing definition of “earnings” used for employer NICs, which includes bonus payments. This avoids adding unnecessary complexity to the system, as there is already a suitable definition with which employers are already familiar. This point was repeatedly made to us when consulting on the design of the levy last summer. We recognise the significant contribution that employee ownerships make to the economy, which is why we introduced tax reliefs around employee ownership trusts.

[Kirsty Blackman]

A number of people have got in touch on this point. I would appreciate it if the Government could keep it in mind going forward, and consider making changes. Employee ownership is really important, and going forward we will have more and more employee-owned companies. I do not want people to be discouraged from taking that route because they will have to structure their pay bills differently as a result of the apprenticeship levy.

[Mr Gauke]

I note the point the hon. Lady makes. The difficulty is that carving out bonuses that are distributed to employees of owner-managed businesses from the definition of earnings would increase the incentive to remunerate employees via bonuses rather than regular salary. That could create adverse incentives, and would also have a damaging impact on public finances. I understand why the hon. Lady raises this point, but I hope that she appreciates why we have not gone down that particular route.

On the point made by the hon. Member for Salford and Eccles about employment agencies, the apprenticeship levy will be payable by employers who pay earnings subject to class 1 secondary NICs. Where an employment agency supplies labour to a client and is the NICs secondary contributor for those workers, the agency will, like any other employer, be liable to pay the apprenticeship levy, provided that its annual pay bill is in excess of £3 million.

Apprenticeships are now the cornerstone of the skills system and provide opportunities for all sectors and all levels. Everyone stands to benefit from the better-skilled workforce that the apprenticeship levy will help to deliver. It is right that everyone plays their part and contributes to that. There is no reason why an agency could not take advantage of the drawdown from its levy account, if it satisfied the relevant criteria. We are introducing a number of flexibilities in funding for apprenticeships, such as the ability to use funding for equivalent and lower-level apprenticeships where the training is materially different from the learner’s existing qualification or leads to training in a new profession.

On the point raised by the hon. Member for Kirkcaldy and Cowdenbeath about top-slicing for England-only programmes, let me reassure him that we will not top-slice levy accounts to fund administration costs. To answer his question about what regulatory framework will ensure appropriate quality, the levy is just part of the Government’s reforms designed to improve the quality of apprenticeships. We are creating a new institute for apprenticeships to monitor quality standards, and employer-led trailblazer groups, which I touched upon a moment ago, and which allow employers to design new training standards. There are also funding rules; they require 20% off-the-job training and that apprenticeships must last one year. The Ofsted inspection regime applies to English training providers in order to guarantee quality, and there is the levy itself, which fosters employee ownership.

On the devolved authority funding mechanism, we are committed to doing all we can to make the system work for employers, wherever they are in the UK. I am pleased to see that the Scottish Government will shortly consult on how the apprenticeship levy could enhance productivity and growth in Scotland, and I would encourage other devolved nations to do the same. It will not be possible to identify individual employer contributions in the block grant; I wanted to provide that point of clarity. On the wider issue of productivity, the Government remain committed to improving productivity by increasing the quantity and quality of apprenticeships. The apprenticeship levy will enable us to do that. That is why I am pleased that we have these clauses in front of us, and I hope that they will have the support of the Committee.

Question put and agreed to.

Clause 87 accordingly ordered to stand part of the Bill.

Clause 88

charge to apprenticeship levy

Amendments made: 22, in clause 88, page 144, line 32, leave out

“any of sections 90 to”

and insert “section”.

Amendment 23, in clause 88, page 144, line 33, leave out “of £15,000”.

Amendment 24, in clause 88, page 144, line 33, at end insert—

‘( ) The amount of the levy allowance is £15,000 (except where section 90 or 91 provides otherwise).”—(Mr Gauke.)

Clause 88, as amended, ordered to stand part of the Bill.

Clause 89 ordered to stand part of the Bill.

Clause 90

connected companies

Amendments made: 25, in clause 90, page 145, line 33, leave out subsections (1) to (3) and insert—

‘(1) Two or more companies which are not charities form a “company unit” for a tax year (and are the “members” of that unit) if—

(a) they are connected with one another at the beginning of the tax year, and

(b) each of them is entitled to a levy allowance for the tax year.

(2) The members of a company unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (3A)).

But see subsections (3C) and (3H).

(3) A member’s levy allowance for a tax year may be zero (but not a negative amount).

(3A) The total amount of the levy allowances to which the members of a company unit are entitled for a tax year must equal £15,000.

(3B) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (3A)).

(3C) If subsection (3E) applies—

(a) HMRC must determine in accordance with subsection (3D) what amount of levy allowance each of the relevant members (see subsection (3E)(a)) of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.

(3D) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (3E)(a)) by—



where T is the total of the amounts of levy allowance set out in the relevant returns.

The result is, in each case, the amount of the levy allowance to which the relevant member in question is entitled for the tax year (but amounts may be rounded up or down where appropriate provided that subsection (3A) is complied with).

(3E) This subsection applies if—

(a) HMRC is aware—

(i) that two or more members of a company unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (3F), and

(ii) that those returns, together, imply that the total mentioned in subsection (3A) is greater than £15,000,

(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (3C), and

(c) the remedial action specified in the notice has not been taken within the period specified in the notice.

(3F) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.

(3G) If any member of the company unit mentioned in subsection (3E)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.

(3H) If subsection (3J) applies—

(a) HMRC must determine in accordance with subsection (3I) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.

(3I) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—



where N is the number of the members of the company unit for the tax year.

Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (3A) is complied with.

(3J) This subsection applies if—

(a) the total amount paid by the members of a company unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,

(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (3A) is to be used by the members of the unit for the tax year,

(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (3H), and

(d) the remedial action specified in the notice has not been taken within the period specified in the notice.

(3K) Subsection (3A) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (3J)(a).

(3L) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a company unit may alter a determination made under subsection (2) (despite subsection (3B)).

(3M) In this section “apprenticeship levy return” means a return under regulations under section 94(4).”

Amendment 26, in clause 90, page 146, line 1, leave out “section” and insert “Part”—(Mr Gauke.)

Clause 90, as amended, ordered to stand part of the Bill.

Clause 91

connected charities

Amendment made: 27, in clause 91, page 146, line 5, leave out subsections (1) to (3) and insert—

‘(1) Two or more charities form a “charities unit” for a tax year (and are the “members” of that unit) if—

(a) they are connected with one another at the beginning of the tax year, and

(b) each of them is entitled to a levy allowance for the tax year.

(2) The members of a charities unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (3A)).

But see subsections (3C) and (3H).

(3) A member’s levy allowance for a tax year may be zero (but not a negative amount).

(3A) The total amount of the levy allowances to which the members of a charities unit are entitled for a tax year must equal £15,000.

(3B) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (3A)).

(3C) If subsection (3E) applies—

(a) HMRC must determine in accordance with subsection (3D) what amount of levy allowance each of the relevant members (see subsection (3E)(a)) of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.

(3D) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (3E)(a)) by—



where T is the total of the amounts of levy allowance set out in the relevant returns.

The result is, in each case, the amount of the levy allowance to which the relevant member in question is entitled for the tax year (but amounts may be rounded up or down where appropriate provided that subsection (3A) is complied with).

(3E) This subsection applies if—

(a) HMRC is aware—

(i) that two or more members of a charities unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (3F), and

(ii) that those returns, together, imply that the total mentioned in subsection (3A) is greater than £15,000,

(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (3C), and

(c) the remedial action specified in the notice has not been taken within the period specified in the notice.

(3F) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.

(3G) If any member of the charities unit mentioned in subsection (3E)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.

(3H) If subsection (3J) applies—

(a) HMRC must determine in accordance with subsection (3I) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and

(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.

(3I) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—



where N is the number of the members of the charities unit for the tax year.

Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (3A) is complied with.

(3J) This subsection applies if—

(a) the total amount paid by the members of a charities unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,

(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (3A) is to be used by the members of the unit for the tax year,

(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (3H), and

(d) the remedial action specified in the notice has not been taken within the period specified in the notice.

(3K) Subsection (3A) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (3J)(a).

(3L) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a charities unit may alter a determination made under subsection (2) (despite subsection (3B)).

(3M) In this section “apprenticeship levy return” means a return under regulations under section 94(4).”—(Mr Gauke.)

Clause 91, as amended, ordered to stand part of the Bill.

Clauses 92 to 108 ordered to stand part of the Bill.

Clause 109

general interpretation

Amendment made: 28, in clause 109, page 155, line 35, at end insert—

““company” has the meaning given by section90(5);” —(Mr Gauke.)

Clause 109, as amended, ordered to stand part of the Bill.

Clause 110 ordered to stand part of the Bill.

[The Chair]

I remind the Committee that we will decide the question on new clause 2, if that is required, without further debate, when we reach it later on.

Ordered, That further consideration be now adjourned. —(Mel Stride.)

15:58

Adjourned till Thursday 7 July at half-past Eleven o’clock.

Written evidence reported to the House

FB 01 Association of Taxation Technicians (clause 24)

FB 02 Association of Taxation Technicians (clause 32)

FB 03 Association of Taxation Technicians (clause 35)

FB 04 Low Incomes Tax Reform Group of the Chartered Institute of Taxation (clauses 87 to 110)

FB 05 Low Incomes Tax Reform Group of the Chartered Institute of Taxation (clause 155 and schedule 23)

FB 06 Electronic Money Association (calause 164)

FB 07 Chartered Institute of Taxation (clause 62)

FB 08 Chartered Institute of Taxation (clauses 87 to 110)

FB 09 Chartered Institute of Taxation (clause 117)

FB 10 Chartered Institute of Taxation (clauses 172 to 177)

Westminster Hall

Tuesday 5th July 2016 Westminster Hall

Tuesday 5 July 2016

[Graham Stringer in the Chair]

Employment for People with Disabilities

Tuesday 5th July 2016 Westminster Hall

09:30

[Derek Thomas (St Ives) (Con)]

I beg to move,

That this House has considered employment for people with disabilities.

It is a pleasure to serve under your chairmanship, Mr Stringer. I am delighted to lead this debate, not least because at the moment every Conservative MP seems to want to know me because they want my vote this afternoon, so I have 90 minutes clear of any of that kind of distraction. Much more important, I am delighted to lead this debate because supporting people who have disabilities to live full lives and to enjoy meaningful employment is something I have been concerned with for over two decades.

I know that this Government recognise the need to remove barriers that prevent people with disabilities from enjoying good access to jobs. They also recognise that little attention has been paid by Governments of all parties to this issue over decades, and as a result there is a significant gap between the employment rate of disabled people and that of the rest of the population. We all accept that if the same proportion of disabled people had been in work as non-disabled people at the time of the last general election, in 2015, an extra 2.268 million disabled people would have been in employment.

I welcome the Government’s Disability Confident campaign, which aims to challenge attitudes towards disability; increase understanding; remove barriers to employment for disabled people and those with long-term health conditions; and ensure that disabled people have the opportunity to fulfil their potential and realise their aspirations. I do not wish to steal the Minister’s thunder by stating what the Government are doing and how they intend to halve the disability employment gap by 2020, but it is good news that an extra 120,000 people who have disabilities are now in work compared with a year ago. We are certainly going in the right direction, but I believe that much more needs to be done to ensure that people who have disabilities are enabled to secure meaningful employment.

This morning I will argue that the Government’s Work and Health programme, which focuses on those with disabilities and health conditions, is the tool needed to crack the problem, and I will demonstrate that the Government’s work is made easier by the many organisations that are well placed today to remove the barriers in the way of those whom those groups support. I am keen to ensure that every extra penny spent to reduce inequalities in employment opportunities is well spent and delivers for those who need it. I will concentrate on the need, particularly today, to focus our resources on those who have learning disabilities and to ensure that money is used wisely and effectively to enable them to live full lives and be active in the communities they love so much.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

The hon. Gentleman may not be aware that I chair the commission on autism. We launched a report yesterday on the barriers to health for people with autism, and we are going to move on to barriers to employment. Does he agree that autism is a disability that is rarely recognised, and that if we got more people with autism into work we would save billions of pounds for the Treasury?

[Derek Thomas]

I completely agree. In a moment, I will talk about my background in working with people with all sorts of learning disability, including autism, and the amazing contribution they can make to our local communities and to the workplace. I thank the hon. Gentleman for his intervention.

Supporting people towards independence and meaningful employment is something I have taken an interest in for years. Many of us will have stories about our mothers-in-law. I met my mother-in-law to be long before I met my wife. I met her in the mid-1990s, when I worked as a youth and community worker in Penzance, which is the main town in my constituency. She set up a charity called Choughs Training Project and spent her days supporting people with learning disabilities to learn skills, work in the charity and become active in the community. I was so impressed with the charity’s work that I became its chairman.

One of our most rewarding achievements was to relocate the charity and set up a training café in the heart of the newly built Wharfside shopping centre in Penzance. Over the years, Choughs Training Project—which still exists and is now called Manna’s Diner—has helped large numbers of local people to gain confidence, learn everyday life skills and work within the catering and hospitality sector. I was hooked to that work and went on to manage the Mustard Seed charity in Helston for eight years. During that period, we set up microbusinesses within the charity, and my staff and volunteers supported people with learning disabilities including autism, helping them to grow in confidence and experience and to develop skills that enabled them become more independent. We also helped to chip away at some of the perceptions that can exist in our society of people who have learning disabilities.

Each day, the people we supported made and delivered an amazing range of sandwiches and cakes for local businesses and retail outlets, not only providing a valuable service in the town but engaging in local society, breaking down many of the barriers and bridging the gaps between people with learning disabilities and those who live and work in the town. Every week, we went down to a local National Trust walled garden where we grew fruit and veg in our allotment. Using our own produce and buying direct from local farmers, we boxed up and delivered fresh produce to local homes. What made that work so interesting was that people with learning disabilities were helping local producers to sell more of their produce and were also going into people’s homes. I met many people—particularly older people—who did not meet people from one week to the next. Having someone come into their home who was able to communicate freely, had good social skills and was willing to talk about everyday life was a bright part of their week.

For a time, we ran three community cafés, two of which were in local children’s centres. Again, that brought together different groups in society, helping them to understand the richness and wealth of the local community. In both Penzance and Helston, which is also in my constituency, those projects continue their good work, and many such small but significant initiatives still operate. My experience is that people who have learning disabilities are keen to work and welcome opportunities to learn new skills and play their part in modern society.

[Mr Sheerman]

I have to say, the hon. Gentleman’s speech is so refreshing that I wish he had stood as leader of his party. I could not have voted for him, but I could have campaigned for him. Is it not a fact that many people on the autism scale find it very difficult to be diagnosed and their condition recognised, and to get access to care? Even children in care with a learning disability can have a 20-month wait for therapeutic care.

[Derek Thomas]

I agree. Right next door to where I ran Mustard Seed was a small office for Spectrum, which does amazing work supporting families of people with autism. The hon. Gentleman is absolutely right. There are so many elements of this—not just whether a person can work or would like to work, but their whole wellbeing and how we give them full lives, so that they are in a position to contribute in the way they want to. You are absolutely right, and I appreciate that intervention.

Since being elected as an MP, I have taken a particular interest in this field. There is no point in being an MP unless you can do something about the challenges you identify growing up and taking part in local society, so there would be no point in my coming here if I did not attempt to address some of the challenges I found in my professional work previously. I have been doing some very good work, and I recently discovered the positive work of Cornwall People First, which supports people to speak up for themselves and to live full lives. I have watched that charity at work: rather than doing things for our most vulnerable citizens, it stands alongside them and enables them to rise to the challenge, whatever it may be. The great tragedy is that the charity’s funding from Cornwall Council is being reduced from £120,000, which is really nothing at all out of the council’s budget, to £70,000, which means it is able to do about half of what it was doing this time last year at a time when we want people with learning disabilities and other disabilities to be supported and helped much more.

I have got to know the work of Rebuild South West, which is a unique community interest company run by ex-military personnel who work to restore lives while rebuilding properties. It has been working with people who have all sorts of challenges, including disabilities and mental health conditions. It is particularly refreshing that in my constituency, which has 1,030 empty homes—not second homes or holiday homes, but abandoned homes—and people who desperately need family homes, Rebuild South West is working with owners to bring the homes back into use and using vulnerable people who need support to gain skills and to work with others they can identify with. That amazing work is largely without the help of the council and the state.

[Helen Whately (Faversham and Mid Kent) (Con)]

It is fabulous to hear about my hon. Friend’s experience. Does he agree that many people with mental health problems are looking for work and want to be in work, and that we must give them more support because it is good for them to be in work and good for everyone around them?

[Derek Thomas]

My hon. Friend is absolutely right and I welcome her intervention. The mistake in the rhetoric of how we challenge welfare is that it is about saving money, but it is not. It is often about trying to provide people with full lives so that they feel confident and able to contribute and have satisfying work. My hon. Friend is right to mention that. I want to concentrate on learning difficulties because they present particular challenges and I believe I have identified how to resolve them. Anything we can do to help people to grow in confidence and to manage their health issues by supporting them to feel that they have something to offer is good for everyone. Thank you very much for that.

I have recently had the great and amazing privilege of meeting the people behind Helston and the Lizard Works. I used to work in Helston. The Lizard is a lovely part of Cornwall and a tourist area, but it had the highest number of people not in education, employment or training of any rural part of the country. I take a particular interest in the challenges facing people, particularly the young, on the Lizard and how they access work. Helston and the Lizard Works is unique. Many people believe the challenge is too great and that we should accept that some people will never be able to work, but Helston and the Lizard Works does not believe this and through a unique back-to-work business and community-based project in my constituency it has shown that with the correct support people can overcome enormous obstacles and take control of their own future.

It is important to make the point that being jobless is not just an individual’s problem. It is a business and community issue that can have a business and community solution. Helston and Lizard Works has engaged with local businesses and encouraged them to give their time to inspire and support jobseekers. It has run community projects to allow jobseekers the chance to get involved in their local community. It set out to help 40 people into work—I have explained how challenging Helston and the Lizard are geographically—and ended up achieving this for 104 people, which in a rural area such as west Cornwall is remarkable. It has helped many other people besides.

I selfishly mention these projects and examples in my constituency because each one and many more like them throughout the country have three things in common. They are brilliant in what they do, they are well placed to develop this work further and to help the Government to achieve their target for getting for helping people into employment, and they are all strapped for cash. I am arguing that as the Government develop their Green Paper, they should recognise that such groups are well placed to support people as they prepare for work and find work and when they are in work. If we get this right, we can transform the lives of many people, and I am excited about the opportunities ahead.

As I prepared for this debate, I thought back to some of the barriers I encountered when supporting people with learning disabilities. I will touch on them briefly simply to emphasise the contribution that many community groups already on the ground can make and that they are ready to act. The transition from school to work for people with learning disabilities has particular challenges. The hon. Member for Huddersfield (Mr Sheerman) referred to this, and it is also true for people with autism. Community-based organisations could be funded to work with schools and colleges to identify suitable work placements and apprenticeship opportunities, and to support youngsters in this transition period.

[Richard Graham (Gloucester) (Con)]

Hearing about my hon. Friend’s experience of bringing people with disabilities into the workplace is incredibly valuable to us all. In the Works and Pensions Committee yesterday, one of the ideas I floated over some of the people from whom we were taking evidence was that to encourage more young people into apprenticeships we should incentivise small and medium-sized businesses as we did some years ago for people without disabilities. Does he agree that allowing SMEs to have up to two apprentices with disabilities without having to pay national insurance would help to incentivise them to take on apprentices with disabilities?

[Derek Thomas]

I certainly think that such initiatives are important in breaking the deadlock when employers are not absolutely sure that they can provide those opportunities. I am looking at how to make that possible in my office. I understand that support and grants for apprenticeships continue to the age of 25 for people with disabilities. It is important to recognise that advantage, but we should do more.

[Mr Sheerman]

The hon. Gentleman is being generous in giving way. The reputation of further education in Cornwall is brilliant—everyone says it is the exemplar. Do you work in partnership with Cornwall College of further education? Is the hon. Gentleman picking up one of the problems we are picking up that some schools that become academies are filtering out people with special educational needs and autism because they think they will pull down their performance in league tables?

[Graham Stringer (in the Chair)]

I remind hon. Members that “you” refers to me and that they should use normal parliamentary protocols.

[Derek Thomas]

Thank you Mr Stringer. I also made that mistake.

I work with FE colleges in Cornwall and other groups such as Mencap, Leonard Cheshire Disability and others. I am talking to all of them and have been since being elected to Parliament to see how we can bridge some of the gaps. I share the concern about academies. League tables, albeit not necessarily the intentions behind them and incentives they put in place, present a problem to schools across the board in terms of how they maintain a high position in league tables and continue to attract children. We must look at the incentives that may marginalise and exclude people. I accept that is important.

It is obvious that different people have different hopes and aspirations. That is equally true of people with learning disabilities and, or autism. Community-based organisations can help to develop a creative and flexible approach to employment and occupation to achieve optimum positive outcomes. That is particularly true of how we work with employers to find opportunities to provide spaces and places for people.

[Mr Robin Walker (Worcester) (Con)]

My hon. Friend is making an important speech, and I apologise for missing the first few minutes of it. One option for community organisations working with employers is to set up their own enterprises. ASPIE in my constituency set up Wits End Wizardry, a web design company that was designed to employ people with autism. Does he agree that when community organisations have expertise in dealing with a particular condition, they can bring real value to designing the workspace and supporting employment for people with conditions such as autism?

[Derek Thomas]

I agree. Such organisations can also encourage progression and create bespoke opportunities for people with a learning disability. I completely accept that. As the Government put new money into this—the £60 million and the £100 million a year—I hope it will go down to organisations that really understand the opportunities and challenges and their local communities. That is hugely important.

I have found that families of vulnerable people are understandably anxious about how their loved ones would cope in the world of work. We have already heard about the challenges and lack of support as they go through school. It is understandable, then, that as their children go towards that transition, parents will be equally anxious. The organisations with which I am familiar are not seen as part of the system and they have the trust of the families they support. That helps to overcome a real barrier to meaningful employment for those who can otherwise find themselves on seemingly endless day placements and college courses. I have met people with learning disabilities who have done every course available to them and continue to go round and round. That is not giving them full lives.

[Neil Gray (Airdrie and Shotts) (SNP)]

The hon. Gentleman is making a very good speech. The case he is outlining is making an even stronger case for the Government to make early publication of the Green Paper a priority, so that some of these issues can be ironed out and a proper, concrete process can be put in place. Does he agree?

[Derek Thomas]

Actually, until today I had been wanting to hurry on the process of the Green Paper, but having achieved this Westminster Hall debate, which I had been seeking for some time, I am glad that we have not had the Green Paper yet, because I am hoping that everything I am suggesting and the other suggestions made today will be included in it. I will be looking to see exactly how my local community organisations will benefit from this morning’s debate in the Green Paper.

[Richard Graham]

One issue that the Green Paper will have to tackle is how the Work and Health programme will use what resources it has most effectively. The Work Choice programme has been incredibly successful, but we suspect that there will not be enough money for that programme to be available to everyone, with any disability, so there are some quite difficult choices to be made. Do we focus on the people closest to the workplace or on those with the most severe disabilities, or do we try to do a mixture of both? Does my hon. Friend agree that the way we use things such as Work Choice, which has been so successful, will be key to success after the paper has been written and the policy is implemented?

[Derek Thomas]

I do agree. We need to understand that every penny we spend effectively and successfully now is a penny saved that can be used to support the next individual. My hon. Friend is absolutely right. How do we prioritise? Who should we work with most? Do we just go for quick wins or do we go for the greatest challenge? We must recognise the contribution that people will make to the economy and society if we get this right, as well as the savings to the state. At the moment, so much of what we are spending, almost to maintain the status quo, is not money well spent.

I found that, although willing, employers would be nervous about whether a candidate had the skills and support network needed to work in often busy workplaces. Community-based organisations can build trust with business owners and have the connections to help to equip prospective employees with the skills and confidence they need.

I want to mention a couple of things that need to be taken seriously as we look at the Green Paper. We hear often in the Chamber now about constituents who have written to us to raise a particular issue. The chairman of Cornwall People First, who has a learning disability, asked me to raise the following issue in this debate. At the moment, he has a free bus pass for use after 9.30 am. If he wants to get employment or to access training, that bus pass needs to serve him at a time when people are actually going to work. It would be brilliant if we could talk to local authorities and change that, so that bus passes are free to use when they are actually useful to the people who need them and have a right to them.

Also, we talk a lot about the role of jobcentres, but one of the jobcentres in my constituency, in Penzance, is in a huge granite building that is completely uninviting, and often when I walk past there is a security guard standing at the door. In Helston, there is a large, glass-plated shopfront, and again, by the door stands a security guard. For someone who is vulnerable and feels they are being pressured to take part in a system, that is a barrier in itself. We need to look at how we can improve that.

In recent decades, people with disabilities have made huge progress in the workplace and more are now in work than ever before. However, despite wanting to work and often having the right skills and experience, many people still face significant barriers to accessing employment. I have focused on people with learning disabilities, but that is true for all people who have a disability. As the Green Paper on disability employment is progressed, I would ask that significant consideration and support be given to these small but effective community organisations. They are ready and primed to address the barriers to employment that exist for people with disabilities.

I am a huge fan of Cheshire homes and have enjoyed my visits to the home in Marazion in my constituency. I want to conclude by reading Leonard Cheshire Disability’s statement of belief, which serves as a reminder of why we are taking part in this debate today:

“We believe that disabled people should have the freedom to live their lives the way they choose—with the opportunity and support to live independently, to contribute economically and to participate fully in society.”

[Graham Stringer (in the Chair)]

I intend to call the Scottish National party spokesperson at 10.30 am and obviously the debate finishes at 11, so there is approximately 35 minutes left and there are five Back-Bench speakers. The arithmetic is straightforward.

09:56

[Ms Margaret Ritchie (South Down) (SDLP)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for St Ives (Derek Thomas) on securing this debate on such an important issue. It is about the barriers to employment for many people in our society who are disabled, and I hope that I can bring to it a perspective from Northern Ireland.

We are dealing with people who were born with disabilities and those who were diagnosed later—reference has already been made to people with autism and with special needs. There should be no barriers in society, whether in work or in other spheres of life, for people who are disabled and are seeking to improve their lives, the lives of their families and the contribution that they can make.

Equality and protection of equal rights is vital throughout the UK. Discrimination against those with disabilities in the workplace is rightly forbidden by law. Those who were born with or who develop a disability are entitled to the same amount of respect and the same opportunities as all of us in this Chamber have. Anti-discrimination legislation is a key component in the promotion of employment for those with disabilities and their protection in the workplace, yet it is not sufficient on its own and efforts must be made to influence the work culture. In any discussion about the current Human Rights Act 1998, it is important that the provisions on people who have disabilities in the workplace are not diminished or diluted in any way. It is important that those well-held protections are copper-fastened, secured and sustained.

People with disabilities are not a homogenous group, and employers and colleagues must realise their obligation to accommodate different people’s specific needs. Negative attitudes to disability, both physical and mental, and stigma must be challenged. Employment can not only make an important contribution to the lives of disabled people but demonstrate that they, too, make a significant contribution to our economy and society. They have much to offer and they bring a different perspective, often derived from their disability and their experience due to their disability.

Many people with a disability develop it in adulthood. I support programmes that enable people to develop new skills when they are diagnosed with a disability and forced to retrain. It is important that they are allowed and enabled to do that if it is what they want. However, the Government—I say this advisedly—must learn that a disabled person cannot be sanctioned into work. The current system, and particularly the welfare system, sometimes punishes people with disabilities who struggle to find suitable work. We have seen examples of that throughout our constituencies and particularly in Northern Ireland. It can punish people who may never be able to do the type of paid work—or give the time that is needed—that employers currently value.

This Government, and the previous coalition Government, have hijacked disability rights group language about independence in order to cut the rights of disabled people. Cutting the work-related activity component of employment and support allowance—ESA—would not have supported people with disabilities into work. There is some evidence base for that. Like other Members, yesterday I received a briefing from Parkinson’s UK that clearly states:

“The cut to financial support for those in the ESA work related activity…from April 2017 will push people with Parkinson’s even further from the workplace,”—

when we want to encourage them to stay in or enter the workplace, and can—

“cause unnecessary stress which will make their condition worse and harm their financial situation which may already be precarious.”

The key, here, is recognising the need to challenge attitudes to disabled people in the workplace and to support them if they are able to work. To pile financial pressure on them is counterproductive and cruel. The focus and concentration for Government, and agencies as well, must be to challenge discrimination, as the hon. Member for St Ives highlighted in his very thoughtful contribution. We must make the workplace more equal and we must promote awareness of the support mechanisms that are available. There must be fair treatment in back-to-work schemes for people who may have already been in the workplace and find themselves disabled as a result of an accident but want to contribute to society and make their own lives better. There must be recognition and support for people who cannot work because of their disabilities, but who wish to do so and wish to make that contribution. I look forward to the response from the Minister on this very important issue.

10:02

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak on this matter, Mr Stringer. May I commend the hon. Member for St Ives (Derek Thomas) for, as he always does, setting the scene on these issues? It is a pleasure to make a contribution and, like the hon. Member for South Down (Ms Ritchie), I will give some comments, direction and focus on Northern Ireland. The issue, clearly, is work itself and how we address that.

Despite the great services that exist and the Access to Work scheme, the proportion of people with a learning disability in paid employment has remained stubbornly low. That is a fact we cannot ignore and is what this debate is all about. The Government have previously referred to £330 million, which would be spent over the next five years on a tailored peer support offer for disabled people out of work and targeted at work in the ESA or the work-related activity group. That is, of course, welcome, but it should be remembered that the recent Welfare Reform and Work Act 2016 cut ESA for this group by £30 a week—other Members have referred to that—saving the Government £640 million and ultimately greatly offsetting the supposed £330 million investment. I am sure that the Minister will give the Government’s side of that, but those are the figures as I see them. The proportion of learning-disabled people known to social services in paid employment fell from 7% in 2012-13 to 6.8% in 2013-14. According to Mencap UK, which represents people with learning difficulties, that proportion appears immune to economic factors. These are clearly issues to be dealt with.

I would like to make some comment, as others have —other hon. Members will probably mention this as well—on those who have served King and country in uniform, and their families. In Northern Ireland we have had some 30 years of troubles; we have a large number of veterans who have mental and emotional issues. I feel that there needs to be more focus on them and their families.

Mencap also says that the fall in numbers of learning-disabled people in employment happened despite the fact that the majority of people with a learning disability can and want to work. There is an eagerness to work, and we should encourage it. The figures are stark if we compare them with the national employment rate of 76% and an overall disability employment rate of just below 50%. The Government pledged to halve the disability employment gap. Indeed, the pledge was in the Conservative party’s manifesto, and we recognise and welcome it. It is good to see a commitment to it, but that commitment must be met with results. That is how we measure any legislative change or commitment—by the results.

Mencap supports the 1.4 million people with a learning disability in the UK and their families. They directly support over 10,000 people with learning disabilities to live their lives the way they want and, importantly, to live independently. Many good initiatives are happening across the whole of the United Kingdom. I commend one in my constituency—Daisies Café at the Ards hospital—for the truly excellent and extraordinary work and commitment it gives to those who have emotional and physical disabilities. I know that the café works in the constituency of South Down as well, and across the whole of Northern Ireland.

Fewer than two in 10 people with a learning disability are in employment. Mencap estimates that almost eight in 10 people with a learning disability could work if given the right support; however, that support is often not available or those giving it often do not understand learning disabilities. The estimate of fewer than two in 10 in work is Mencap’s estimate, and the Government’s figures are even lower: the figure for those in work known to social services is 6.8%. Of course, this is just one of many stakeholders and one of many conditions affected in this area, but it is a pertinent example and an indication of a very worrying trend.

Although welcome moves have been made to realise that commitment, the facts show that we need to lift our game and do more. The Government need to monitor the disability employment gap, identify the factors that are still preventing it from closing and preventing disabled people from getting into work, and take action on those factors. These are things that the Government can and should do. Every day, every MP will have interactions with those with disabilities. I believe that we are elected to this House to act on behalf of those who need support more, and to help those who cannot help themselves.

Department for Work and Pensions data show that between 2011 and 2015 the number of jobcentres employing a full-time adviser to help disabled people fell by more than 60% from 226 to 90, with reductions in every recorded year. We cannot ignore that issue. We need to know what steps the Government have taken to address the fall in the number of jobcentre advisers, and how we can best help those who are disabled when they come looking for help. I know that the Minister is very responsive—I mean that honestly and sincerely—to the questions that we put to him, and I am sure that he will come back with the steps that the Government intend to take. That reduction surely contradicts the Government’s commitment to reduce the disability employment gap, and that cut in services needs to be closely monitored to ensure that it is not having an adverse effect on efforts to reduce disability unemployment.

I will give an example from Northern Ireland, because it is always good to give examples of what the devolved regions are doing so that we can ensure that we have the best practice here in the mother of all Parliaments. We have an additional scheme to help reduce the disability employment gap. As well as the Access to Work scheme, which is a devolved responsibility, there is Workable (NI), which is delivered by a range of providers contracted by the Department for Employment and Learning. My party colleague Simon Hamilton is the Minister for that, along with the Department of Enterprise, Trade and Investment. These organisations have extensive experience of meeting the vocational needs of people with disabilities, and using them is a great way of advancing social enterprise and supporting that sector.

Workable (NI) is a two-year programme that helps people out of tough economic situations, gives them support and hope and properly prepares them for employment. It tailors support to individuals to meet their specific needs. The provision can include support such as a job coach to assist the disabled worker and their colleagues to adapt to the needs of a particular job, developmental costs for the employer and extra training, including disability awareness training. Those are all vital factors for any and all disabled people who want to work. With the fresh start agreement and the streamlining of Stormont Departments in Northern Ireland, I will be sure to keep an eye on progress and bring any positive developments back to this House, so that the best policies being implemented across the United Kingdom are known and taken into consideration here at Westminster.

In conclusion, let us exchange the good points and good practice that we have in every region of the United Kingdom. Lessons can clearly be learned from the approach in Northern Ireland, and we can develop additional strategies here in the mainland to help the Government make good on their commitment to halve the disability employment gap.

10:09

[Natalie McGarry (Glasgow East) (Ind)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for St Ives (Derek Thomas) on securing this very important debate and on the manner in which he started the debate, which has continued with other Members. This issue is of supreme importance to Members right across political parties, right across the divide, and we have to work constructively together to address it. It is particularly important to me in Glasgow East, which has a higher than average rate of disability—disabilities that have transpired throughout life, not just birth impairments.

As I have said before in the House, ours is a disabling society. Some are born with impairments whereas some acquire them, and those can be visible and invisible. From time to time, we all get a glimpse of the invisible agency of a society that is organised for the convenience of non-disabled persons. Ours is a society that adds to disabilities; we must endeavour to change it, and employment is at the heart of that challenge.

Today in the UK, the disability employment gap stands at 33%. Of course, the Government have pledged to cut the disability employment gap in half—to put 1.2 million people living with disabilities into work. I thoroughly applaud that target but feel, as many hon. Members across the House may feel, that the Government sadly do not appear to be doing enough to make that aim a reality.

For example, in a speech in August 2015, the former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), criticised employers for the persistence of the disability employment gap. There is criticism due in that respect but, less than two months later, it was reported that the Department for Work and Pensions had cut the number of specialist disability employment advisers in jobcentres by over 60% between 2011 and 2015. Instead, the UK Government wish to replace those specialists with general, non-specialist “work coaches”.

In jobcentres in my constituency, where there are higher levels of disability, that one-size-fits-all approach has stripped services and advice to the bone. In a constituency such as mine, where unemployment is almost double the national average and competition in a flat jobs market is fierce, people with disabilities are not on an even playing field. Competition for jobs without education for employers in how to support people with disabilities in finding work further economically disadvantages people and deprives the job market of their unique talents and skills.

Charities have said that cutting specialist advisers from jobcentres will undermine the UK Government’s goal of halving the disability employment gap. Will the Minister address those concerns and tell us what assessment the Government have undertaken to ascertain the impact that the changes will have on recipients of the benefit?

The UK’s rhetoric of supporting disabled people does not necessarily reconcile with the reality of the closure of Remploy factories. In 2013, the Government closed nine Remploy factories, with hundreds of disabled people losing their jobs across the UK and Scotland, including in Leven, Cowdenbeath, Clydebank, Stirling, Dundee and Springburn, which is in the neighbouring constituency to mine.

A constituent of mine who worked for 25-plus years as a seamstress has since been put into work experience jobs and inappropriate and short-term employment. She has now been shoehorned bluntly into the care sector, which is completely inappropriate work for her. When the Government made the decision to close the Remploy factories, they pledged an £8 million package to help those who had lost their jobs to transition to mainstream employment. However, figures reported in 2015 show that, of the 1,507 Remploy workers who lost their jobs, 733 had still not secured employment. Will the Minister update the House on the Government’s progress on helping Remploy workers to secure mainstream employment? Is he satisfied with that progress?

Stereotypes and stigma still persist in contemporary society. ACAS found that for 42% of disabled people seeking work, the biggest barrier to getting hired was misconceptions about what they could do. Indeed, Geoffrey Wright, a former Remploy worker, described his experience of this. He said:

“I was looking for a job and now I’m not. They take one look at you, you hand them your CV and they never call.”

Last week I visited a wonderful school in my constituency, Cardinal Winning Secondary School, which educates children with a range of additional support needs or spectrum disorders. They learn valuable life skills and skills that will enable some of the pupils to achieve employment when they leave school. The nurturing environment of the school can be contrasted with the fears of some parents that their children will not be given the support when leaving education to continue to fulfil their potential—in employment, the voluntary sector or other areas.

An ageing population, coupled with an increasing pension age, will mean that more people are available and willing to work. People with disabilities have many valuable assets that we are missing out on by failing to break down barriers. The economy loses, society loses and people with disabilities lose. We must rise to the challenge together. It is an opportunity not only for our economy to be more diverse and our society to be more enabling but to break down barriers and to smash stigma and stereotypes—together, across the House, we must rise to that challenge.

10:15

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Member for St Ives (Derek Thomas) on securing this debate. Many of us are reminded every day in our constituencies of the lack of services for disabled people, especially when young people leave full-time education. Today, as we focus on employment for disabled people, we must look at the shortage of careers advice available, which in itself leads to low numbers of registered disabled people engaged in paid employment.

Like other hon. Members, I appreciate all the excellent efforts of various Government Departments, outside organisations and, most of all, carers and volunteers, but there is still a vast gap when meeting the needs of disabled people and getting them into employment. The Equality Act 2010 has gone a long way in protecting the rights of disabled people. Included in the Act is the provision that employers must make “reasonable adjustments” to avoid a disabled person being put at a disadvantage compared with a non-disabled person in the workforce, but we cannot ignore the fact that that there are over 6.9 million disabled people of working age, which represents 19% of the working population. Of that, 1.3 million disabled people in the UK are available and want to work. Only half of disabled people of working age are in work compared with 80% of non-disabled people.

What we are seeing is a very clear difference in the employment statistics for disabled persons and non-disabled persons. I do not want to appear to be having a go at businesses but those figures suggest that non-disabled people are being favoured for jobs. Why is that happening? Is it because of the level of training required, the lack of qualifications, poor social skills or apprehensive employers? I believe it to be a cocktail that includes all those factors. That is why Government need to increase the accessibility of jobs for disabled people.

[Mr Robin Walker]

The hon. Gentleman is making some excellent points. One thing that has changed and improved in many ways is assistive technology, particularly for people with conditions such as blindness or deafness. Does he agree that disseminating information about the assistive technologies that are available and making sure that businesses are aware of them and how easy they are to use is an important part of this?

[David Simpson]

Yes, the hon. Gentleman makes a very good point. The need to promote awareness of the technologies and what is available to help companies to take on people with additional needs is a valid point.

There are two special schools in my constituency. We fundraise every year for them and try to help them to get young people into employment. Principals, staff, parents and pupils are trying to provide an excellent level of care. The detailed attention that each child receives to ensure that they are developing to their full potential is exceptional. Schools are doing their best to get the best out of young people who have additional needs, but once the child reaches the age of 19—I am referring on this point to Northern Ireland—and is due to leave full-time education, support diminishes. The Department of Health in Northern Ireland recently have set IQ tests for young people. If they reach a score of 70 or above they are deemed ineligible for specific services provided through the Department. This is simply devastating for young people and for their families as they struggle to fulfil the needs of their sons and daughters. The principals of the special needs schools have expressed to me their utter frustration at how quickly all the great work carried out in their schools is being lost as the correct level of support is not available for young people. The reality is that so many of those young people could be out working and adding to the economy, but they cannot get over the initial application phase because the support services are just not there.

I recently visited a social enterprise in my constituency that is providing excellent support, skills and qualifications. Sadly, it is under constant threat of closure due to lack of funding. Its staff train young people in essential social skills that not only equip them for the world of work, but boost their inner confidence. The social enterprise focuses on preparing young people for adult life, encouraging them to reach their goals and giving them invaluable skills. I am currently working closely with a local supported employment organisation, Ulster Supported Employment Ltd, on how we can do more after people turn 19. USEL goes some way in addressing the setbacks faced by disabled people, but we should go further in supporting such organisations and social enterprise initiatives.

Parents have said that there is no flexibility of benefits for their sons and daughters who are heading into work. That has created a significant reluctance for young people to come off benefits and start working. The challenges in their new job may not be something that they can sustain, and if they have given up their entitlements they may have to wait a number of weeks, or even months, before they can claim benefits again; indeed, they may not even receive them at all.

All Members of this House are trying to be proactive in their constituencies. In Upper Bann, I am planning a jobs fair for disabled people in the autumn. I have spoken to the local council, further education colleges, the special needs schools and a number of other organisations in my area, and all are keen to come on board. During the summer recess, we will try to get businesses interested, and see whether we can help people with additional needs and disabilities to fulfil their ambitions in life.

10:19

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to speak with you in the Chair, Mr Stringer. I thank the hon. Member for St Ives (Derek Thomas) for securing the debate.

I recently spoke in the Chamber during the debate on the disability employment gap. In that speech, I welcomed the announcement by the Secretary of State for Work and Pensions of the Green Paper on health and work. I welcomed it on the basis that it would involve a genuine consultation process, that the Government would genuinely listen to stakeholders and that there would be genuine investment in the resulting service. The Green Paper cannot be a conduit for further cuts. It must be boldly resourced if the Government are to get close to their employment gap target. I made clear that this should have been done before the cut to employment and support allowance for those in the work-related activity group and before the cut to universal credit work allowance.

The mistakes of the past cannot, sadly, be undone, but we must do all we can to amend them. Above all else, that requires the publication of a properly-resourced Green Paper to a cast iron, copper-bottomed, concrete timetable. The delays and changes are well known: the White Paper became the Green Paper; the Secretary of State changed from the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) to the right hon. Member for Preseli Pembrokeshire (Stephen Crabb); and the proposed publication date of

“well before the summer break”—[Official Report, 14 March 2016; Vol. 607, c. 633.]

became “later this year.” The Secretary of State is currently seeking employment elsewhere, and depending on who the eventual winner of the Conservative leadership contest wishes to surround themselves with, his position may be filled by another candidate anyway. Given that, it is imperative that a clear deadline and concrete timetable are announced as soon as possible. The Government should then abide by that schedule regardless of any future changes in ministerial personnel.

Given some of the ideas that have been floated today, in spite of some of the comments made by the hon. Member for St Ives I hope that he will be an ally in the Scottish National party’s call for an early and immovable timetable for the publication of the Green Paper. The fallout of Brexit and the Conservative party’s internal squabbles may be grabbing the headlines, but hon. Members and Ministers must never forget that such issues, which affect the day-to-day lives of thousands of our constituents, should always be our main priority. Nothing can justify the matter being pushed even further into the long grass. Government must go on.

[Richard Graham]

This debate has been a good example of a non-partisan, non-party political discussion of issues of crucial importance to many of our constituents. The hon. Gentleman disappoints me by going down the track of what might or might not happen in the leadership of the Conservative party. That has no relevance to the debate. It is not about having a precise timetable, to the day and hour, for the publication of a Green Paper. It is about good, long-term solutions for people with disabilities, and I would be grateful if the hon. Gentleman endorsed that.

[Neil Gray]

I am merely pointing out the fact that, at a time when there are delays to the publication of the Green Paper, the Conservative leadership battle cannot be allowed to get in the way. That is not being partisan or party political. It is merely pointing out the facts. It has been delayed. Why has it been delayed? Why are further delays happening?

The Secretary of State has spoken many times about his wish for a social security system that is focused on people rather than statistics. I therefore used my speech in the Chamber to highlight examples from constituents and my own nephew about problems that the current system has caused for them. Those examples highlighted issues including people in employment not receiving adequate support to claim the benefits to which they are entitled, such as the personal independence payment, which can help to support the additional costs of daily living and access to employment. Disabled people who are not yet ready for employment are being forced to attend the jobcentre due to the flawed ESA assessment system, and this has a knock-on effect on jobcentre staff, who are therefore unable to focus their attention fully on individuals who are capable of looking for work and who need support.

I hope that the Secretary of State took on board the issues that those stories raised and that the Green Paper will outline steps to address those matters. It is important, however, not to forget about statistics completely. For example, 14,000 people have lost access to mobility vehicles as a result of the replacement of disability living allowance with PIP. That causes obvious problems for those trying to seek or maintain employment.

Parkinson’s UK’s statistical research shows that more than 17,000 people between the ages of 20 and 64 are living with Parkinson’s across the UK. Those individuals have an average working life of 3.4 to 4.9 years after diagnosis, and a mean retirement age of 55.8 years compared with the then UK average of 62 years. As the hon. Member for South Down (Ms Ritchie) said, financial support is critical to those people and the cuts are harming opportunities. Those statistics and many others like them that relate to individuals living with other diseases and disabilities highlight the challenges and opportunities that a disability presents to a person’s employment.

Parkinson’s UK notes that people with the condition have experiences that mirror the general trend of people with disabilities in that they are less likely to be in employment and more likely to experience unfair treatment at work than someone without a disability. That highlights the double focus that any employment and disability legislation must address: how to increase opportunities for disabled people who are out of work while ensuring that those in employment have all the support available to remain and progress in their roles.

In the 2015 spending review, it was announced that the Work programme and Work Choice would be replaced in 2017 by a new Work and Health programme. Although the scheme will be targeted at a reduced number of participants, Leonard Cheshire Disability highlighted that payments will be spread more thinly as annual expenditure for the scheme will be £130 million by 2020 —an 80% reduction on the current combined expenditure on the Work programme and Work Choice. Time does not allow further discussion of all recommendations made by Leonard Cheshire Disability, but I recommend its briefing paper to all hon. Members.

Back when we were waiting on the White Paper, the spending review and the autumn statement 2015 promised it would contain

“reforms to improve support for people with health conditions and disabilities, including exploring the roles of employers, to further reduce the disability employment gap and promote integration across health and employment.”

I hope that the Green Paper—when it appears—will contain those aims alongside proposals of how best to achieve them. The Government have already lost valuable time on making progress in disability employment by withdrawing their commitment to publish a White Paper and by delaying the publication of the Green Paper, with no date yet agreed.

It is our responsibility to work towards the day when every person is equally valued. In doing so we will ensure that disabled people have the freedom to live their lives as they choose and to participate fully in society, and our society as a whole will be immensely better off for it. I therefore hope that the Minister will heed these words and ensure that that becomes a reality as soon as possible.

10:30

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I commend the hon. Member for St Ives (Derek Thomas) and the other hon. Members who have spoken in today’s debate. Between Cornwall, Northern Ireland and Scotland, the Celtic fringes have been well represented this morning. I just wonder where everyone else is.

We debated this subject in the main Chamber a few weeks ago, and many of the issues raised in that debate have been rehearsed today. I note the hon. Gentleman’s special interest in the lives of learning disabled adults, which I am sure we all share, but it is important that we have had a broader debate today. The hon. Members for South Down (Ms Ritchie) and for Glasgow East (Natalie McGarry) made helpful distinctions between the different challenges faced by those with lifelong disabilities and those with acquired disabilities. My hon. Friend the Member for Airdrie and Shotts (Neil Gray) and others set out the wider context of disabled people’s lives.

I still have deep-seated concerns about the difficulties that disabled people face in accessing the labour market and staying in work, especially those with more severe and fluctuating conditions. I have pointed out many times the flaws in the current system and how they combine to make circumstances extremely challenging for those who have to overcome barriers to employment because of disability or health conditions. Those flaws include the shortcomings of the work capability assessment; the failures of the Work programme; the devastating impact of the new sanctions regime on people who are found potentially fit for work or work-related activity but who cannot comply with the conditions attached to their ESA or jobseeker’s allowance; support being cut in people’s transition from DLA to PIP; and people’s income being reduced by cuts to ESA and work allowances.

Life has got a whole lot harder for many disabled people over the past few years. The support for many of those who are in work has been reduced, and those who are looking for work or taking part in work-related activity have been put under enormous pressure to comply with unrealistic conditions. Those who are not fit for work have too often felt themselves to be scapegoated or demonised as shirkers and malingerers and subjected to repeated and counterproductive assessments of their fitness to work. Too many disabled people, both in work and out of work, have experienced a lack of respect and understanding in their encounters with the state and have felt their dignity undermined.

Austerity has taken a very heavy toll on disabled people, yet there has not been much gain for all that pain. The rate of disabled people’s employment has been stuck for quite some time. I have previously been very critical of the assumption at the heart of Government that the support offered to sick and disabled people through social security creates, to quote the Chancellor, “perverse incentives” to keep them out of the workforce. There is no evidence that slashing the incomes of sick and disabled people helps them to find work. Quite the reverse: austerity has compromised the health and wellbeing not only of sick and disabled people but of the family members who support and look after them. Taking away the entitlement to a Motability car from thousands of people makes it significantly harder for them to sustain employment or to get into work. It reduces their options and increases their dependency on family members. Raising the bar on entitlement to support means that carers of those who lose benefits also lose their support but still have to provide the care for free.

I have met too many constituents with long-term health conditions who have fallen through the safety net of social security. Despite having worked and contributed for decades prior to the breakdown of their health, they have dropped out of the system altogether. Frankly, I am sick of referring people for church food parcels who should be getting better support from statutory agencies. There is recognition on both sides of the House that the UK needs to take a very different approach. The Government promised us a White Paper in the spring; then it was summer; then it was a Green Paper, and now the prospect has since been batted even further into the long grass. Yes, let us take time to reflect and to get this right, but we still need a timescale. I sincerely hope that the Minister will set that out today—this is a great opportunity to do so.

The consultation period ahead of the Green Paper gives the Government an opportunity to get disabled people around the table, along with organisations that represent their interests. There is a lot of expertise out there, and valuable perspectives on what does and does not work. For instance, Disability Agenda Scotland points out that the Work Choice programme has been far more effective in delivering results—sustained employment—than the Work programme and provides more intensive and extensive support for participants. A third of those taking part in the Work Choice programme delivered by the employability service of the Scottish Association for Mental Health find sustained employment, which is significantly more than for any other approach of which I am aware. Advisers have limited case loads and spend much more time with each person and with employers, and they also help people to apply for Access to Work funding.

In contrast, most of the emphasis in current programmes is on helping to prepare and equip unemployed disabled people for the workplace. If we want to secure a step change, the real trick is to prepare and equip employers not just to take on more disabled staff but to retain staff who become disabled or develop long-term health problems. Access to Work can play a crucial role in aligning the needs of businesses with employment programme outcomes, but it can also help businesses to adapt when a valued employee develops a condition that makes it harder for them to do their job. I wholly accept that certain jobs and certain conditions may be incompatible, but there are many, many occupations that can be sustained with the right adaptations.

This cannot just be about changing employers’ attitudes. Let us acknowledge that the take-up of schemes such as Disability Confident has been fairly low. We have seen some degree of cultural change in recent years in terms of flexible working, which has probably been driven more by labour market requirements than by concerns about disabled people’s employment rights. We should also remember that flexibilities have cut both ways, with a sharp rise in zero-hours contracts and more insecure and unpredictable working patterns. The hon. Member for South Down, echoed by the hon. Member for Upper Bann (David Simpson), made a good point about legal and human rights protections for disabled people, and those issues need to be part of our debate—they are perhaps more contextually important now than they have been for some time in the wake of the events of the past couple of weeks.

In general, large public sector and voluntary organisations have been much more successful than smaller employers in employing disabled people, perhaps because they are more likely to have professional human resources or occupational health staff in situ. It might also be easier for larger organisations to cover unplanned absences. The challenges of taking on someone with, for example, a fluctuating condition are likely to be far more acute for a small business or in certain manufacturing processes. Encouraging cultural change will not cut it if there are no resources to back that up. We need to make it much easier and more affordable for employers to do more to support their disabled staff and to keep them in work.

Small and medium-sized businesses in particular need cost-effective ways of managing and mitigating what they see as the risks of taking on staff with a chequered work history. Most jobs in the UK are with small and medium-sized enterprises, which will therefore provide most of the opportunities for disabled staff. The potential win-win for employees and businesses will be huge if those hurdles can be overcome, but there is a need to build confidence by improving concrete support for employers in the event that, say, someone with a fluctuating condition has a relapse or goes through a spell where they cannot work at full capacity. If employers do not have some means of insulating themselves from such unpredictable situations, we are unlikely to make much headway in reducing the employment gap for disabled people.

The last time we debated these issues, I referred to the Resolution Foundation’s recent report on the retention deficit in employment. The report makes lots of practical suggestions for policy change, such as keeping a person’s job open for up to a year after the start of their sickness absence. The model is similar to maternity leave. It would help people to stay in work and it could also be of huge benefit to people who are recovering from illness and who are expected to make a full recovery, but it will only work if, say, we reimburse the statutory sick pay costs of firms that support their employees to make a successful return to work. I hope the Government are seriously considering those recommendations.

The Resolution Foundation also recommends making early referrals to support for people who find that they are unlikely to be able to return to their previous job, which will be a growing demographic challenge. We should not wait until someone becomes long-term unemployed before making targeted and individualised interventions. For those forced to leave work, the loss of personal confidence and social contact often pushes them further away from the labour market. I therefore hope that the Government take all that work on board.

In the absence of a Green Paper, disabled stakeholders, disability groups, community organisations, carers, employers and, indeed, MPs are all scrabbling about in the dark. The process needs to be transparent and inclusive, and I hope the Minister will get it properly under way and set out a timetable as soon as is feasible.

10:39

[Margaret Greenwood (Wirral West) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for St Ives (Derek Thomas) on securing this important debate. I find it interesting to hear about the practical projects in rural west Cornwall with which he has been involved. I also note his comments about how those projects have always found themselves strapped for cash. It is an enduring issue.

This has been a worthwhile debate. The hon. Member for South Down (Ms Ritchie) pointed out that anti-discrimination legislation, while a vital component, is insufficient on its own, and that we must always challenge negative attitudes to people with disabilities. The hon. Member for Strangford (Jim Shannon) reminded the Minister to consider the impact of the cut of £30 a week to the employment and support allowance work-related activity group. The hon. Member for Glasgow East (Natalie McGarry) rightly mentioned the closure of nine Remploy factories in 2013. She asked the Minister to update us on progress in providing support for former Remploy employees and pointed out that 733 of the 1,700 people who lost their jobs have still not secured employment. The hon. Member for Airdrie and Shotts (Neil Gray) rightly called for a clear timetable for the publication of the Minister’s Green Paper.

There are approximately 12 million people living with a disability, impairment or limiting long-term illness in the UK, of whom 5.7 million are of working age. Although 4 million people with disabilities are already working, another 1.3 million are fit for work and want to work, but are currently unemployed. However, as we have heard, the gap in the employment rate between disabled and non-disabled people has grown under this Government to 34%, a 4% increase since they came into office. The vast majority of disabled people—90%—used to work. This is a waste of their skills, talents and experience.

As study upon study has shown, the Government’s pledge to halve the disability employment gap rings hollow. It is estimated that, at the current rate, it will take until 2030 to do so. The shelved White Paper, with the promise of a strategy defining support for disabled people, is yet another broken promise, so I join others in their request to Minister today: will he tell us definitively when he will produce his Green Paper?

This debate comes down to whether the Government believe in the principles underpinning the UN convention on the rights of persons with disabilities, to which we are signatories. Fundamentally, they are that disabled people should be able to participate fully in all aspects of society, including work, and to access the same opportunities as everyone else, including opportunities to use their talents and skills to the best of their ability. No one should feel they are unable to reach their best potential or that their hopes and dreams do not matter. Do the Government support the principles and articles of the UN convention? If so, when will they publish their response to the UN committee’s report investigating the UK’s breaches of the convention?

What is the Government’s planned negotiating position in relation to disabled people with regards to the exit of the EU? What EU legislation tackling disability discrimination and enhancing accessibility for disabled people will we retain? For example, will we retain the 2000 employment equality framework directive prohibiting disability discrimination, which dramatically strengthens UK disability employment law?

The Government set the tone for culture and society, and this Government have made their views abundantly clear through their swingeing cuts to social security support for disabled people, including the recent ESA WRAG cut of £1,500 a year, and an overhaul of the work capability assessment process, which has managed to be both dehumanising and ineffective and has been associated with profound mental health effects, including suicides. The Government’s sanctions policy, targeting the most vulnerable, has brought people to the brink—sadly, people have died under it—and the personal independence payment debacle is making it harder for disabled people to stay in work. There is also the closure of the independent living fund. I could go on, but I will not, due to the shortage of time.

This is happening across all Departments. In the Department for Business, Innovation and Skills, the Department for Transport, the Department for Education, the Ministry of Justice and the Department for Culture, Media and Sport, disabled people are being marginalised. Given that 12 out of 14 economic analyses forecast an economic downturn over at least the next year, will the Minister ensure that public spending for disabled people will not be hit yet again? I would like a clear response on that point.

The UN Committee on Economic, Social and Cultural Rights published its report last week on this Government’s austerity agenda, and the recommendations were damning. On unemployment for disabled people, the committee recommended that the Government

“review its employment policies to address the root causes for unemployment and include in its action plan time-bound goals with a specific focus on groups disproportionately affected by unemployment, such as…persons with disabilities”.

The committee also recommended that the Government review their austerity policies and programmes introduced since 2010 and

“conduct a comprehensive assessment of the cumulative impact of these measures on the enjoyment of economic, social and cultural rights by disadvantaged and marginalised individuals and groups, in particular women, children and persons with disabilities”.

On social security, the committee recommended that the Government

“reverse the cuts in social security benefits introduced by the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016”.

Will the Minister commit to implementing the UN’s recommendations on issues highlighted by Labour Members for many years now, address the disability employment gap effectively, produce a cumulative impact assessment and reverse the measures in the 2012 and 2016 Acts that have had a devastating effect on many disabled people?

What needs to happen? Addressing those issues, including the disability employment gap, needs political will. If 90% of disability is acquired, why are we doing so little to help employers to retain skilled and experienced employees who may become poorly or disabled? We need practical measures to support disabled people at work, enabling them to thrive and protecting them from leaving the labour market prematurely. Some disability charities have recommended more flexible leave arrangements, as well as extending Access to Work. Even if the Government do finally increase Access to Work from the 37,000 or so who were helped last year, it will still be available only to a tiny proportion of the 1.3 million disabled people who are fit for work. In the current economic climate, what assurances has the Minister had from his colleagues that Access to Work funds will be increased?

The Disability Confident scheme needs to be rebooted. The latest revelations that only 40 mainstream private sector employers across the UK have been involved since its inception three years ago show that the scheme is, to put it mildly, clearly inadequate. What measures are in place to monitor its efficacy? For those employers who work hard to recruit and retain disabled employees, how does the scheme apply to their procurement policies and supply chains?

Of course, more needs to be done to help disabled people back into work. As we have argued for over a year, the WCA must be replaced with a more holistic, whole-person assessment. The current system to assess eligibility for social security support is not fit for purpose and should be completely overhauled. However, such changes would also need to be reflected in new departmental and Jobcentre Plus key performance indicators that do not focus just on getting people “off flow” as a successful outcome. Given that so many of those people also have PIP assessments, we should also consider how to bring the two together.

Instead of the increasingly punitive sanctions system, more appropriate support is needed. It is also essential to maintain and increase specialist disability employment advisers in jobcentres, as several hon. Members have said. The current figure of fewer than one such adviser to 600 disabled people will not contribute to halving the disability employment gap. I would also like to see advisers’ role extended to working with businesses.

Current commissioning and payments for the Work programme and other welfare to work programmes need rethinking as well. We must improve specialist support, looking at what works. Although Work Choice has better outcomes than other programmes, it may not be the only solution. The individual placement and support scheme for people with mental health conditions is another example.

As we have said before, greater integration is also needed between Departments: not just between the Department for Work and Pensions and the national health service, but between the Department for Business, Innovation and Skills and those bodies responsible for economic development. For example, if someone with a musculoskeletal issue or a mental health condition needs to take time off work, they need appropriate early intervention to help them back to work. We need to understand the bottlenecks in the local system that might affect that. We also need to reflect on the drive for flexible labour markets and what it means for supporting people with long-term or fluctuating conditions back into work—or, most probably, out of work, then back into work and so on.

There are clear geographical variations in the disability employment gap, but also in the strength of local economies and the availability and type of jobs, as the hon. Member for Glasgow East made clear in her intervention. It is well established that the prevalence and geographical pattern of sick and disabled people reflects the industrial heritage of our country. Contrary to the Government’s “shirkers and scroungers” narrative, incapacity benefit and ESA are recognised as good population health indicators.

It is also clear that local economic conditions—whether the economy is thriving or not—will determine how readily sick and disabled people will be able to return to work. Again, geographical analysis shows that people with equivalent conditions in the economically buoyant London and the south-east are more likely to be in work than those in Northern Ireland, Scotland, the north-east, the north-west or Wales.

It is more than 70 years since legislation was first introduced to prohibit employment-related discrimination against disabled people. Sadly, we are still fighting to address such discrimination and the inequality in employment still faced by disabled people. Changing attitudes and behaviour needs cultural change. We in the Labour party will always promote that change and work to improve the lives of people with disabilities.

10:49

[The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I pay tribute to my hon. Friend the Member for St Ives (Derek Thomas), not only for his 20 years of experience, but for his powerful and well respected speech today. I met with him previously to learn at first hand of his experiences and knowledge in this area, and I was incredibly impressed in that meeting. I want to make it clear that as we work towards the Green Paper, and then the White Paper, he has to be very much at the heart of that, drawing on his vast experience, and also the experience of his very popular mother-in-law.

I pay tribute to Manna’s Diner, to the Mustard Seed charity, to Cornwall People First—just to reassure the gentleman who was concerned about using the bus before 9.30 am, that is an example of where Access to Work could help, so it is worth looking at that—to Rebuild South West, to Helston and the Lizard Works and to Cheshire Homes. I trust I have remembered all the organisations my hon. Friend mentioned, and I put on record my thanks for all the great work they have done. He summed up his own speech perfectly with the three phrases about brilliant organisations. We need to empower those organisations to ensure they are at the heart of helping disabled people to find work, and they are well placed to help because they have the local knowledge, connections and goodwill, which are absolutely integral, and are familiar with the challenge of accessing cash.

I will whistle through some of the questions asked by other Members and then set out what the Government aim to do. I thank all the speakers in this proactive and positive debate; if I miss anything raised today, I will be happy to meet any individual MP face to face, as I have already done with a number of colleagues. The hon. Members for South Down (Ms Ritchie) and for Strangford (Jim Shannon) highlighted the importance of employers recognising changing circumstances and opportunities. They also touched on funding, which was picked up by many other speakers. The Government are increasing funding to support people with disabilities and long-term health conditions every single year of this Parliament, right through to 2020. We are currently spending £3 billion a year more than when we came into office. The hon. Member for Strangford highlighted the importance of Mencap, which is at the heart of the work we do; its policy team is very proactive.

The hon. Member for Glasgow East (Natalie McGarry) and others mentioned disability advisers. The situation is now being changed: we are rapidly re-recruiting and are looking to get to 500 disability advisers.

I thank the hon. Member for Upper Bann (David Simpson) for committing to hold a reverse jobs fair. More than 50 MPs across the parties have signed up for that—I had one in my own constituency. I will return to that shortly.

[Mr Robin Walker]

The Minister and I have discussed reverse jobs fairs before, and I want to give him some feedback from my reverse jobs fair in Worcester. When I opened the new Waitrose in Worcester the other day, I was introduced to one of its partners, who was completely deaf and who was hired as a result of that Disability Confident initiative.

[Justin Tomlinson]

I thank my hon. Friend, who is one of the most proactive MPs in supporting our initiatives. He is a real credit to his constituency.

I understand the point made by the hon. Member for Airdrie and Shotts (Neil Gray) about the Green Paper; I will come back to that later. He and others raised the issue of Motability cars; we have increased the number of people accessing the Motability scheme by 22,000. I reassure him that Parkinson’s UK, who I met again yesterday, and Leonard Cheshire are two major stakeholders who are very much involved in the work we are doing.

The hon. Member for Banff and Buchan (Dr Whiteford) mentioned the Resolution Foundation report. I attended and spoke at the launch, and the foundation has asked some important questions and has made its own suggestions and recommendations, which can be considered in the Green Paper.

I congratulate the hon. Member for Wirral West (Margaret Greenwood) on stepping up to be my shadow today. As I said, we are increasing funding. The work capability assessment is not perfect. It was introduced by the Labour Government, who made tweaks to it themselves. The coalition Government made tweaks and we have tried to make tweaks. We all accept that it has to change; that is a given, and we will look at that in the Green Paper. It is important to remember that the personal independence payment is not work-related—it is separate. It is ESA that is work-related. On the change from the disability living allowance to PIP, only 16.5% of claimants accessed the highest rate of benefit under the DLA; under PIP the figure is 22.5%. As a benefit, the PIP is far better at accessing the most vulnerable in society and providing them with adequate support.

Access to Work helped 37,000 people last year. I understand that, as an absolute number, that is a relatively small percentage, but we must remember that not everybody on Access to Work has a lifetime award—sometimes it is a one-off adjustment or an occasional adjustment—so the scheme actually helps far more than that. We have had confirmation of an increase in funding for an additional 25,000 places, and we are actively doing all we can to let small and medium-sized businesses in particular, which are responsible for 45% of jobs, know about the scheme. I will come to Disability Confident, and I have already covered the disability advisers.

The Government are committed to halving the disability employment gap. That was announced personally by the Prime Minister, which gives me some extra bargaining tools when I talk to other Departments, to the public sector and to the private sector. Disability Confident is an important part of that. Some 690 organisations have now signed up; we are making changes to the scheme, with greater asks of larger employers in particular, and are recruiting more than 100 organisations a month now, so it is beginning to accelerate quickly.

My hon. Friend the Member for St Ives made the very powerful point that employers are nervous and we need to build trust. That is absolutely right. Disability Confident is part of that process, with signposting and sharing best practice, along with reverse jobs fairs, which I am encouraging all MPs to get involved in, particularly those who are most critical of the Government. They can do their bit to be proactive and host their own reverse jobs fairs. The way it works is that I got 22 local organisations in my constituency—the sorts that my hon. Friend the Member for St Ives highlighted in his examples—into a room. Working with local media, I got more than 70 small and medium-sized businesses that were looking to recruit people to come into that room and say, “These are the skill gaps that we’ve got.” We introduced them to those organisations and lots of job outcomes came from that.

Building on that, we decided to carry out a pilot of small employer officers, who literally doorstepped local employers and, over a cup of tea, discussed the huge hidden talent that could be matched to those employers’ skills gaps. Those pilots have been really successful, and I am pushing hard for them to be rolled out nationally, as part of the summer Budget funding. Working with the disability advisers in the jobcentre and all the support organisations, whether national providers or local charities, we can get the busy small and medium-sized businesses that are lacking confidence and knowledge of the talent that is out there, and hook them together.

That is crucial, because I have seen so many disabled people who are playing by the rules, engaging with the Work programme, the Work Choice programme or the different charities, and doing their bit to find work. Without opportunities at the end of that, they will continue to loop round the system, getting ever less confident and ever further away from the jobs market. Everything we do has to be underlined by matching that up to employers. I am really excited by what a difference that can make, and I have seen from working with employers how tangible that difference can be.

Learning disabilities were at the heart of the speech made by my hon. Friend the Member for St Ives. Those with a learning disability have a 6% chance of having a meaningful and sustainable career. As a group, they are the furthest away from the jobs market. All Governments of all political persuasions have tried and have tweaked, but have not budged that figure.

I recently visited Foxes Academy near Bridgwater, which had set up an old hotel. In their town, the opportunities are in hotels, restaurants and care homes, so those are the skills they provide for their young adults—the equivalent of sixth form—as well as teaching skills for independent living. In their third year, students go and have a supported year in industry, after which 80% of them remain in work, of which 45.6% are in paid work. Even the conservative figure of 45.6% is so much better than 6%.

I challenge officials in the Department for Business, Innovation and Skills to say “The Government are committed to 3 million more apprenticeships. Why are we not doing more to open them up, particularly to those with learning disabilities?” We set up a taskforce, which has now concluded, and we will shortly be announcing its recommendations. If we can open up access to those 3 million places, that will make a huge difference.

The Green Paper is a priority for the Government. It is well supported by stakeholders, who understand that, as my hon. Friend the Member for St Ives set out so clearly, when we use their experience and knowledge, we can make real and good decisions. But it cannot be rushed; we have to do it as and when we get all the right questions answered and the right information. It will come this year and will be done in the right and proper manner with the full support of the stakeholders who I regularly engage with.

We will continue to work with the jobcentre network to upskill. Universal credit will give individuals the opportunity, for the first time, to have a named coach who will support them both in getting into work and once they are in work. I am proud of our record: 360,000 more disabled people in work in the last two years. It is right that local best practice should be integral to that.

[Margaret Greenwood]

Will the Minister give way?

[Justin Tomlinson]

I need to conclude, to allow my hon. Friend the Member for St Ives time for his final remarks.

10:59

[Derek Thomas]

I am grateful to the hon. Members who have contributed to this valuable debate, and to the many organisations, including Scope, Leonard Cheshire and Cornwall People First, that have helped to inform it. Breaking down the barriers to employment for people who live with disabilities is a very real and important challenge. I would not have requested this debate if I thought I was wasting my time, other Members’ time or, indeed, your time, Mr Stringer. I am here because I am confident that the Minister understands the urgency and the importance of the issue and the opportunities presented if we get this right.

I want to live in a society that refuses to accept the barriers that currently exist for so many. I believe in equal opportunities for all. We are promised a richer economy and a richer society if we deliver for our most vulnerable people. Finally, I would like to say that I will be holding my own reverse jobs fair in October.

Motion lapsed (Standing Order No. 10(6)).

Gwynfor Evans and Welsh Politics

Tuesday 5th July 2016 Westminster Hall

11:00

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

I beg to move,

That this House has considered the commemoration of the contribution of Gwynfor Evans to Welsh politics.

Diolch yn fawr iawn, Mr Stringer. It is an absolute pleasure to serve under your chairmanship and to introduce this debate in honour of the late, great Gwynfor Evans. Before I start in earnest, I thank Lord Dafydd Wigley for sharing his 2012 lecture on the life and work of Gwynfor. I am also indebted to Gwynfor’s former chief of staff, Peter Hughes Griffiths, for his invaluable input. As one of his parliamentary successors, it is an enormous honour for me to pay tribute to him in this House for his achievements and contribution.

Gwynfor was the greatest Welshman of the 20th century. I never had the privilege of meeting him, which is one of the greatest regrets of my life. I travelled to his funeral in Aberystwyth with my predecessor, Adam Price, a matter of days before the 2005 Westminster election. We do not do state funerals in Wales yet, but that day was most certainly an unofficial one. The town ground to a standstill as people travelled from all parts of our country and beyond to pay their respects.

In his lecture, Dafydd Wigley answered his own question on why Gwynfor was so important to Wales and our nation. At the funeral, he said in his tribute:

“If Gwynfor had not believed with such passion, exhibited such an unwavering commitment, such an incredible perseverance, then Wales would not be what it is today. It was he who created the aspiration within us”.

That is why Gwynfor is seen as the father of modern Wales. Without him, we would not have our own Senedd, our own Government, or a clear demand among our fellow citizens for greater autonomy. It is a fitting tribute that the latest YouGov poll last night put Welsh support for independence within the EU at 35%.

Without Gwynfor, we would not have our own dedicated Welsh language channel. Perhaps more importantly, we would not have our clear sense of Welsh nationhood—that common bond displayed so wonderfully over recent weeks at the Euro 2016 championship in France. Without him, we would not be discussing yet another Wales Bill later today. Of course, his influence goes far beyond our country. Arguably, without him Scotland would not be on the verge of independence—an inevitability hastened by the events of 23 June.

The brilliant Wales football manager Chris Coleman said after the famous 3-1 victory over Belgium in the quarter final of the Euro 2016 championship last Friday:

“Don’t be afraid to have dreams. Don’t be afraid to fail”.

He was not referring to Gwynfor when he said those words, but they sum up the impact that the great man had on the thinking of the generations of Welsh nationalists who followed him.

The stimulus for this debate was, of course, Gwynfor’s incredible victory in the Carmarthen parliamentary by-election in 1966, exactly 50 years ago. Perhaps one of the most iconic photographs in Welsh political history is the one of Gwynfor, perched on the balcony of the guildhall in Carmarthen, addressing the thousands upon thousands of people who had converged on the town that summer evening on 14 July 1966.

At the time of the by-election, Plaid Cymru was in a very bad position. We had contested 23 Welsh constituencies in the 1966 general election and lost deposits in every seat but two. There were real divisions within the national movement about the way forward following the election, and about the despair felt at the powerlessness of the people of Wales to stop the drowning of our valleys for English exploitation once Tryweryn had been opened.

The party, in a Brexit state of financial despair, was only able to fight the by-election following the generosity of that other great political leader of Carmarthenshire, D. J. Williams, who sold his family home, Penrhiw in Rhydcymerau. In a result that changed history, Gwynfor won 39% of the vote and secured a majority of 2,000. It was an earthquake that shook Welsh and UK politics to its core. It blew apart the myth that Plaid Cymru could never win a parliamentary election. It inspired generations to fight for the cause of Wales and, thankfully, secured the principle that the national movement could achieve its political objectives via constitutional means.

[Mike Weir (Angus) (SNP)]

I join in the tribute to Gwynfor, who I met once when he was campaigning for S4C. The Carmarthen by-election laid the ground for the fantastic by-election in Hamilton the following year, when Winnie Ewing won for the Scottish National party and started the rise of our party. We pay great tribute to Gwynfor and to the history of both our parties.

[Jonathan Edwards]

I am grateful for that intervention, which shows the very close links between Plaid Cymru and the SNP. I shall be referring to the Hamilton by-election shortly.

Gwynfor’s victory was no fluke. In March 1967, Vic Davies won 39.9% of the vote in the Rhondda and cut the Labour majority to just 2,000. In 1968, the polymath Professor Phil Williams won more than 40% of the vote in Caerphilly, losing by only 1,800 votes, with a swing of 29%. The Prime Minister, Harold Wilson, was in a state of panic about the national upsurge in Wales and Scotland, where the SNP’s Winnie Ewing had won the Hamilton by-election in November 1967, so he set up a royal commission. The resulting report by the Kilbrandon commission was published in 1973 and recommended legislative Parliaments for Scotland and Wales.

For Plaid Cymru, Gwynfor’s victory led to representation in this House over the past 50 years by politicians of incredible calibre. Gwynfor was followed by Dafydd Wigley and Dafydd Elis-Thomas in 1974; Ieuan Wyn Jones in 1987; Cynog Dafis and Elfyn Llwyd in 1992; Simon Thomas in a by-election in 2000; and my direct predecessor, Adam Price, and Plaid Cymru’s current parliamentary leader, my hon. Friend the Member for Arfon (Hywel Williams), in 2001. I was elected in 2010, and my talented hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts) was elected in 2015. I genuinely stand on the shoulders of giants—politicians whose names will be celebrated in Welsh history for eternity. Without Gwynfor, though, it is highly unlikely that any of the aforementioned individuals would have graced this place and made their own vital contributions in developing our nation.

In this House, Gwynfor made his mark on a plethora of political subjects. His deep commitment on issues such as nuclear disarmament, industrial democracy, social co-operation and international concord allowed him to make a significant impact on Westminster politics. Men of conviction often face ridicule from their detractors. As they say, “First they ignore you, then they fight you, then they agree with you”. That was certainly the case for Gwynfor, who faced personal hostility unworthy of this House. However, much like other great political leaders across the world, from Ghandi to Mandela, at the time of his death there was a general recognition across the political spectrum that his contribution transcended partisan lines.

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

Does my hon. Friend agree that it is a credit to Gwynfor Evans’ vision of nation building that the poll to which he referred earlier shows that Plaid Cymru’s support is at its highest ever level?

[Jonathan Edwards]

I am grateful for my hon. Friend’s intervention. I definitely believe that we would not be where we are without Gwynfor’s contribution. Even if they did not agree with him, everybody accepted that he based his politics on principle, and that everything he did was aimed at creating a better Wales.

Gwynfor was born in 1912 in the Barry. He was brought up in a deeply Christian family, and his religious non-conformism was very important to him. Despite the huge political pressures on him, Gwynfor continued to teach Sunday school at his local chapel in Llangadog after moving to Carmarthenshire. While I was doing research for this speech, I learned of Gwynfor’s great love of cricket. He represented the Welsh schools team during the 1930 season. Since being elected, I have campaigned for a Welsh national side. Considering the fact that in the past decade our great nation has reached a rugby world cup semi-final and won three grand slams, and that tomorrow our football team will play for a place in the Euro 2016 final—I am wearing a Welsh national football tie in their honour—it is about time we had a national cricket team.

Gwynfor awakened to the cause of Wales while at Aberystwyth University. It must be contagious, as both myself and my hon. Friend the Member for Dwyfor Meirionnydd were fortunate enough to study there, as was the Under-Secretary of State for Wales—I am delighted to see him in his place and that he will be responding to the debate. I am informed that the piece of literature that sealed the proverbial deal was the masterpiece “The Economics of Welsh Self-Government”, by my political hero D. J. Davies. D. J. had written his booklet in 1931, and by 1934 Gwynfor was a fully paid up member of Plaid Cymru. As Gwynfor’s biographer, the BBC journalist Rhys Evans, said, that changed Welsh history:

“It was Gwynfor who created the national movement…Gwynfor was also the founder of the Parliament for Wales campaign…There is now a lasting memorial to that organisation in Cardiff Bay—it is the Assembly, the unmistakable symbol, for better or worse, of the desire of the people of Wales to live as a democratic nation.”

In 1937, Gwynfor became a member of the party’s national executive committee and by 1943 he was vice-president. Then, at the Llangollen conference of 1945, just five days before the atomic bomb exploded over Hiroshima, he was elected as president of Plaid Cymru, aged just 32. He would remain the party’s leading political figure for the next 36 years.

Despite his burning nationalism, it is important to remember that Gwynfor was a great internationalist. He was also a committed pacifist, so I am sure that he would have been proud that I am probably the only living person on Earth who has entered the Pentagon and proclaimed, in a meeting with the top military brass, that I am a member of an anti-war party. I am sure Gwynfor would have enjoyed my mischievous intentions.

For Gwynfor, his pacifism was arguably even more important than his nationalism, and he campaigned vigorously against the Vietnam war. His economics strongly supported economic units that are larger than nations, which I suppose is a lesson for Brexiters. He believed that a free market is a device that safeguards the individuality of nations. He strongly supported a British single market and I suspect that if he were alive today he would be doing everything he could to secure tariff-free access to the European single market.

It is not called “the national struggle” for nothing, and Gwynfor’s career is living proof of that. He had to overcome several bitter electoral losses. In his darkest moments, he would walk from his home in Talar Wen, near Llangadog, and climb the slopes of the Garn Goch. Like many of my fellow citizens, I find that our beautiful landscape is a source of endless inspiration and therapy. The love for our land and our people is the basis of our politics. It is fitting, therefore, that Gwynfor’s memorial is suitably located on that barren mountain, which overlooks the beautiful Tywi valley.

However, there is no doubt that for Gwynfor the biggest political blow was the devastating loss of the 1979 referendum. With a Government majority of only three, Plaid Cymru and Scottish National party MPs skilfully forced the concession of national referendums in their respective countries. While Scotland voted yes, only to be denied their own parliament by a clause that required a threshold of 40% of the electorate voting for change, Wales voted overwhelmingly against even a meagre form of self-government.

Dafydd Wigley wrote that Gwynfor wanted to accept that the Labour Government were sincere in their promise that they supported devolution, despite the proposed model being far weaker than the model recommended by the Kilbrandon Commission, as it had no legislative or taxation functions. However, Labour allowed its MPs based in Wales to campaign for a no vote. In the end, 79.74% of people voted against self-government, and there is no doubt that Gwynfor took the loss personally. He felt completely betrayed by Labour, which had allowed its MPs to work with the Tories against their own party. Soon after, the Labour Government lost a vote of no confidence and a general election was held, which the Tories, under Margaret Thatcher, won by a landslide. Gwynfor, after the morale-sapping defeat of the referendum, lost Carmarthen. He would never hold elected office again and there were genuine concerns about his health.

Gwynfor was offered a peerage, but he turned it down flatly, telling the party’s new Westminster Leader, Dafydd Wigley, that there was only one Lord and that he did not abide in a palace on the banks of the Thames. A lesser man would have been crushed mentally and physically by the twin political blows of 1979. However, Gwynfor was about to embark on arguably his most famous battle.

The new Conservative Government had pledged during the election in 1979 to create a new Welsh language television channel. Gwynfor viewed such a channel as a vital step to help secure Welsh as a living language in the modern world. In his epic autobiography, “For the Sake of Wales – The Memoirs of Gwynfor Evans”, he recounts the battle for S4C in great detail. On 12 September 1979 in Cambridge, the new Home Secretary, William Whitelaw, announced in a surprise statement that the new Government would not honour their pledge to set up a new Welsh language channel.

Gwynfor suspected that the decision of the Home Secretary was a case of the Westminster establishment taking advantage of the desperation in the national movement. The response in Wales to the decision was uproar. Getting both main Westminster parties to agree to a Welsh TV channel had been one of the great successes of the Welsh national movement in the 1970s, which was won only after heavy terms of imprisonment had been imposed on many patriots. For the language campaigners of Cymdeithas Yr aith, the TV channel was a priority if Welsh had any hope of surviving as a living language.

Gwynfor saw the decision as a direct attempt to break the spirit of the Welsh people once and for all. In his memoirs, he quotes the bard T Gwynn Jones:

“Ysbryd Gwlad! Os badog lu

Cas Iwyth fu’n ceisio’i lethu

Iddo trwy hyn ni ddaw tranc

Heb ddiwedd y bydd ieuanc.”

That roughly translates as:

“A country’s spirit! If treacherous and vicious throng ‘have tried to quench it, it will never be overcome by this, but will remain endlessly young.”

Gwynfor therefore viewed the decision as a direct challenge to the existence of the Welsh nation. Considering the crushing personal blows that he had just received, it says everything about the stature of the man that he had the clarity of thought to motivate himself once more. With patriots across the country—including some of the greats of the nation, such as Cynog Dafis, Meredyth Evans, Ned Thomas and Pennar Davies—up in arms and even taking direct action against TV transmitters, Gwynfor committed himself to one last action for his country.

Dafydd Wigley has recounted how he and Gwynfor were returning in a car from a St David’s day dinner in Llanberis in 1980 when Gwynfor said, out of the blue, that he would not be with Dafydd the following year as it was his intention to fast until death over the betrayal of the new Government. Gwynfor did not expect the Thatcher Government to back down; he expected to die. However, it was a sacrifice he was willing to make, because his primary aim was to motivate the Welsh nation to believe once again in their country and face down the challenge of the British establishment.

Gwynfor decided that he would make his statement in May and, following the advice of his son-in-law, the great language campaigner Ffred Ffransis, he decided to give the Government five months’ warning before beginning the hunger strike in his study in Talar Wen. He would begin his fast to death on 5 October 1980, but before then he embarked on a national tour. The response of the Welsh establishment was hostile to say the least, but Gwynfor galvanised the national movement.

Media coverage extended far beyond the borders of Wales; The Sunday Times even carried a sympathetic article in the language of heaven itself. TV crews from Canada and Germany turned up at Talar Wen. Articles appeared in the main newspaper of Catalonia, in Scandinavia and in The New York Times. The campaign gained momentum, leading many people to plead with Gwynfor that he could achieve far more if he called off his threat to fast. However, his mind was set; he felt that he could achieve far more for Wales by dying than by living, and that that was the appropriate action to take.

Peter Hughes Griffiths and the party’s chief executive, Dafydd Williams, helped Gwynfor to arrange 22 meetings between 6 September and the beginning of the fast. About 2,000 people turned up to the launch of the series of talks at Sophia Gardens in Cardiff, the home of Welsh cricket. The following night, Gwynfor was in Glasgow, where over a thousand people attended the meeting at the McLellan Galleries. At the same time, the great and the good of Wales, including the Archbishop of Wales, Gwilym O Williams, Sir Goronwy Daniel, Michael Foot and Cledwyn Hughes, held meetings with Government Ministers and implored them to reconsider. However, Gwynfor received feedback that the Government had no intention of making a U-turn.

The speaking tour continued and, as Gwynfor wrote in his memoirs, there were signs that Welsh nationalism was on the verge of becoming an overwhelming force. He wrote that it is a simple truism that that is the only thing that Westminster fears in Wales, and it fears it greatly. I personally live for the day when the people of Wales grasp this simple reality, as the people of Scotland have.

On Wednesday 17 September, the Government yielded and Margaret Thatcher would perform her first and possibly her only U-turn as Prime Minister. However, Gwynfor’s first reaction was disappointment, not elation. He thought that a few more weeks of campaigning would have shifted the tectonic plates in Wales for ever.

The meeting that night was scheduled for Crymych, and when Gwynfor announced his intention to withdraw his threat of going on hunger strike, the 800-strong crowd erupted in emotion. It was his greatest political victory and to make the point somebody mischievously painted on the banks of the Embankment, opposite this House, “Gwynfor 1 - Thatcher 0”. We will settle for that score tomorrow night, Mr Stringer.

A half-hour debate of this nature could never do justice to the contribution of Gwynfor Evans. If I had a full day of debate, I could talk about Gwynfor the Christian, Gwynfor the internationalist, Gwynfor the pacifist, Gwynfor and Europe, and Gwynfor the historian. He was also a prolific writer, publishing well over a million words. If the opportunity to speak about Gwynfor arises again in future, I am confident that I would comfortably beat the record four-hour speech that William Gladstone made in this House when he delivered his 1853 Budget.

Following the events of the last few weeks, I have given some thought in preparing this speech to how Gwynfor would have reacted if he was alive today. It would not be right of me to presume to know the thinking of a far superior intellect than mine, but based on his writings I think we can safely assume that he would now be advancing the need for our country to position ourselves economically within a tariff-free single market as an imperative; that politically Wales must have the freedom to choose its own future; and that when the UK ceases to exist following Scottish independence, as I foresee, that will be a material change in condition, and our nation will again need to have a debate and a vote about where our future lies.

Gwynfor’s place in history is secure. He was chosen by readers of Wales on Sunday and the weekly Welsh-language publication Y Cymro as a millennium icon, ahead of Lloyd George and Aneurin Bevan, and even ahead of Owain Glyndwr. Glyndwr was ranked the seventh most prominent global figure of the past millennia by The Sunday Times, which gives an indication of the esteem in which Gwynfor is held within Wales, and across the world.

Gwynfor Evans died at his home in Pencarreg on the morning of Thursday 21 April 2005, at the age of 92. His biographer, Rhys Evans, says:

“Gwynfor wanted to return to Garn Goch, to the soil, the land of Wales where his politics had taken root. Nevertheless, as his ashes blow in the wind, his legacy survives.”

As I said earlier, my great friend Dafydd Wigley offered incredible help in composing this speech. When I asked him to summarise Gwynfor’s political contribution to our country—and I will finish with this as I could not put it better myself—he replied:

“Gwynfor Evans was Wales’ greatest 20th century patriot. Without his dedication and unswerving determination, Wales wouldn’t today have the degree of national autonomy we enjoy and neither would the Welsh language have secured its official status. Future generations will look back to the 1966 by-election as a turning point in our history and salute the good people of Carmarthenshire for making it happen.”

Diolch yn fawr iawn.

11:19

[The Parliamentary Under-Secretary of State for Wales (Guto Bebb)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) on his speech, which was very passionate, as I would have expected. It was slightly OTT at times, not in relation to Gwynfor Evans but in his comments about the way in which politics is moving in Wales. It is early days to measure the impact of the EU referendum on Wales, but I certainly join in with the mood of the Chamber in highlighting Gwynfor Evans’s contribution of to the life of Wales over the past century and his continuing influence on the way in which Welsh life and politics are developing. It is a sad reflection on that contribution that Carmarthen voted to leave the European Union, which must have been a great disappointment to the hon. Member for Carmarthen East and Dinefwr—it certainly was to me.

[Jonathan Edwards]

In our sampling, Carmarthen East and Dinefwr voted conclusively for remain. It was Llanelli that let us down, so it is the Labour party’s fault.

[Guto Bebb]

I am more than happy to accept that straw poll evidence, but it is important to say that Gwynfor was associated with Carmarthenshire and with Wales, and there is no denying that in both contexts the result was a disappointment.

This is a great opportunity to join in the tributes to the life of Gwynfor Evans, 50 years after the political earthquake of the 1966 by-election. As the hon. Gentleman clearly stated, the party of which Gwynfor Evans became the first MP was not performing particularly well in the 1960s; there was a question mark over its future, so the 1966 result was transformational. Indeed, it contributed to the development of the Scottish National party, with the 1967 Hamilton by-election. Subsequently, even though the 1970 general election saw Gwynfor Evans lose his seat, before regaining it in 1974, there was an SNP victory in Western Isles. As a result, there has been SNP or Plaid Cymru representation in this place since 1966, which, I would argue, has contributed to the gaiety of the Chamber.

As has been mentioned, it is fair to say that Gwynfor Evans was a great writer, although whether he was a great historian remains to be seen. My grandfather was considered to be a historian and he knew Gwynfor Evans very well. I am glad that, unlike the hon. Gentleman, I met Gwynfor Evans on more than one occasion. I was at a victorious rally in Porthmadog back in 1980 when Gwynfor Evans was carrying on with his tour in relation to the S4C issue, obviously after the U-turn. I think Gwynfor took a leaf out of my grandfather’s book regarding history. My grandfather used to say that history was about saying good things about good people and I think that Gwynfor Evans’s view of history was to say good things about Wales, regardless of the evidence, but that is no bad thing. The purpose of his writing was to inform but also to persuade, and that is something we can forgive in an activist historian. I would argue that there is a place for such a historian.

If ever there was a political career that tried to replicate that of Robert the Bruce, Gwynfor’s was it. Time and again he failed, and time and again he carried on regardless. He stood unsuccessfully in Meirionnydd on at least two occasions, if not three, but there was never a situation in which he acknowledged defeat. The way in which Gwynfor took on adversity and carried on campaigning for what he believed in is a lesson for anyone involved in politics, and it clearly shows that political success is not necessarily measured in election success. I think I am right in saying that Gwynfor won only two elections in his entire career, but his contribution is much greater than that of many other Welsh MPs who won many more.

It is important to highlight Gwynfor’s political career, but the influence of that career relates not to the fact that he was elected to this place but to the way in which he fought for the Welsh language and culture, and the way in which he put those issues on the agenda. Early in his career, Gwynfor argued for the need for official recognition of the Welsh language. That came to pass. We had the Welsh Language Act 1967, which was rather weak but a step in the right direction, and I am proud to be a member of the party that delivered the Welsh Language Act 1993. I would go as far as to say that perhaps that Act was more carefully considered than the Welsh Language (Wales) Measure 2011, which was passed by the Welsh Assembly, but that would be a controversial statement at this point in time, and would go against the nature of the debate.

It is fairly clear that without the victory that Gwynfor Evans secured in 1966, the 1967 Act and the 1993 Act would not have been passed. The contribution of the two Acts was to normalise the concept of the Welsh language as part and parcel of everyone’s daily life. It is important to realise that before the Acts were passed, it was perfectly conceivable for children to be raised speaking Welsh at home and knowing that they lived in Aberteifi, yet to see a sign saying “Cardigan” when they were driven in and out of the town. The difference that 50 years has made is that everyone in Wales is now aware, when they drive into Wales, that Wales is a bilingual country. Back in 1966, when Gwynfor won that by-election that was certainly not the case, and we should acknowledge his contribution to the Welsh language. Clearly, there is still work to be done, but there is no doubt that the work that was started with such passion by Gwynfor Evans should be continued.

It should also be highlighted that Gwynfor Evans’s commitment was not just to the Welsh language as a stand-alone issue but to Welsh culture as well. I think I am right in saying that he chaired more national Eisteddfod days than any other politician and probably more than any other figure in the 20th century. His commitment was total: he was a Welshman through and through and he lived and breathed the language. We should also acknowledge the contribution that his family have subsequently made. Gwynfor was not someone who spoke in public about the need for the Welsh language and Welsh culture and then did nothing at home; he also delivered, ensuring that his family followed in his footsteps.

A few other issues are worth touching upon. S4C was undoubtedly the pinnacle of Gwynfor Evans’ career. S4C has been a political hot potato since I came into this place in 2010, and I hope I have contributed to protecting the funding of the fourth channel. It is genuinely superb to have been able to follow the Welsh football team all the way to the semi-finals of the European championship, and to do that with Welsh commentators. I pay tribute to players such as Aaron Ramsey who have been happy to tweet in Welsh during the tournament. The fact that we have Welsh coverage and Welsh pundits, such as Malcolm Allen—a credit to Wales, who could challenge the Icelandic commentator—is entirely due to the contribution made by Gwynfor Evans. It is crucial, therefore, that we maintain the support for and the funding of S4C because of its contribution not just to the culture of Wales but to its economy.

I am pleased to have been able to respond to the debate in the manner that I think would have been expected. The debate is a tribute to an important parliamentarian, but also to a politician who made much more of an impact outside the Chambers of this place than within them. I was not aware of the comment Gwynfor Evans made when he was offered a peerage—that there was only one Lord and that he did not reside on the bank of the Thames—and I leave hon. Members with this controversial comment: it is interesting that two of Gwynfor’s successors as party leader did not share that view.

Question put and agreed to.

11:30

Sitting adjourned.

Energy Network Charges

Tuesday 5th July 2016 Westminster Hall

[Mrs Anne Main in the Chair]

14:29

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I beg to move,

That this House has considered regional differences in energy network charges.

It is a pleasure to serve under your chairmanship, Mrs Main, in this debate about the sharp regional differences in energy network charges that penalise consumers and businesses in certain parts of the United Kingdom. This Government like to talk about being a one nation Government. If the Minister believes that to be the case, I ask her to reflect on why consumers in the highlands and islands have to pay a premium for their electricity. I acknowledge that the previous Labour Government introduced a hydro benefit replacement scheme in 2005 to partially take account of higher distribution costs and that that support is being continued. The Minister, who I look forward to hearing from later, said late last year:

“It is not right that people face higher electricity costs just because of where they live”.

I agree with the hon. Lady, and it was a pretty fundamental statement that she made.

This debate is not just about the highlands and islands; there are 14 regional markets throughout the United Kingdom, with different levels of network charges. Nor is it about price competition. It is about a regulated charge varying from region to region through a price control framework. The reality is that a person living in the highlands and islands will pay for the privilege of doing so, courtesy of the UK Government. Electricity distribution charges for the north of Scotland are an eye-watering 84% higher than the distribution charges for London. One nation? Whose nation? It is not mine, or that of my hon. Friends here today. Westminster calls the tune; highlanders and islanders pay the price.

We pay a high price for transmission charges, and we also have a high rate of energy consumption. The highlands and islands are noted for windy and wet conditions. It is not unusual for folk in the highlands to have their heating on all year round.

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

My hon. Friend is making a good point about the travails of people living in the highlands and islands and the fact that they face additional charges and costs. Does he agree that many of those consumers are off the grid and rely on Calor gas or oil for their heating? Ofgem should regulate such things, as well as the normal transmissions.

[Ian Blackford]

I am grateful to my hon. Friend for making that very valid point, which was raised in a recent Ofgem report. Perhaps the Minister will reflect on what we can do to give support to those on off-grid connections.

A recent study by Ofgem noted that households in the north of Scotland that use electricity for heating would benefit from a cost reduction of about £60 a year if there was a universal network charge. That would have a significant impact on the budget of someone on a low income or a pensioner.

Not only are we faced with high transmission charges, but many consumers in the highlands and islands suffer from a lack of choice in energy provision. As my hon. Friend just mentioned, many households cannot access grid connections for gas, among other things, and have to rely on other sources of fuel. It is often a choice between electricity and domestic heating oil. With such limitations, the last thing we need is price discrimination—that is what it is—being foisted on us by a Westminster Government. Where people live should not result in them being penalised through paying higher network charges. Where is the one nation that the Government speak of? It should be about equity and fairness, but that does not exist today.

We have heard a lot since the European referendum about those who are left behind. We often hear that it is a priority for this Government to tackle fuel poverty, but fuel poverty is exacerbated by having higher network charges in the highlands and islands. I will focus on fuel poverty because there is a clear link between higher prices resulting from network charges and fuel poverty.

I am grateful to Changeworks, which has estimated the percentage of households in fuel poverty in the highlands region. It bands each locality in the highlands into groups. On its calculations, no district in my constituency has less than 47.9% of households in fuel poverty; indeed, in a number of districts fuel poverty is evident in at least 73.5% of households. I look across from my constituency to Na h-Eileanan an Iar, where fuel poverty affects 71% of households. That should shame every single Member of this House and every Government Member. Why should we accept that such a percentage of households in a wealthy country such as this should be in fuel poverty? It should be a priority for the Government to tackle the issue and eradicate such high levels of fuel poverty.

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I am listening carefully to the hon. Gentleman, but he surely must accept that while the UK Government are doing all they can to support Scotland, this is a devolved issue, so the Scottish Government are responsible for tackling fuel poverty in Scotland? He will be aware that only last week, the Scottish Government stated that their 2016 eradication target would not be met. I am very happy to talk about what the UK Government are doing, but I am not comfortable with him blaming it all on the United Kingdom. It is a devolved matter.

[Ian Blackford]

I hope that people in Scotland have listened to what the Minister just said. It was quite astonishing: blaming the Scottish Government for fuel poverty that is visited on households in Scotland as a direct response to things that are the responsibility of this Government and to the failure so far to deal with the matters we are discussing today, such as network charges. I have outlined to the Minister that people in the highlands and islands are paying 84% more for connection charges than people in London. That clearly demonstrates that it is the responsibility of the UK Government. How dare the Government turn around and blame the Scottish Government! The situation has arisen because of austerity and failure to take opportunities, and the responsibility for that lies fairly and squarely in the hands of Westminster.

[Barry Gardiner (Brent North) (Lab)]

The hon. Gentleman is making a very passionate case. I agree that Ofgem in its October 2015 report found that electricity distribution charges are higher than average in the north of Scotland, but in contrast it found that electricity and gas transmission charges are higher in the south of England and lower in Scotland, and that gas distribution charges are higher in London and the south of England and lower in Scotland. Does he accept that there is a real issue with regional variation, but it is not unitary that Scotland is always disadvantaged by that variation?

[Ian Blackford]

I thank the hon. Gentleman for his comments, and I accept what he says to a degree: there are differences in gas transmission charges in other parts of the UK that are not fair. What is at the heart of the matter is that there should be fairness and a universal market. Why should people in Scotland pay more for their electricity than people in London, and why should people in London pay higher prices for gas? It is not right. We live in a unitary state; the transmission charges should be the same throughout the country. Focusing specifically on gas, my constituents in the main do not have access to a gas network. We are discriminated against because we are not on the mains.

Let me return to the issue of fuel poverty and heating costs. A recent report by Highlands and Islands Enterprise said that because of heating costs and other factors:

“The budgets that households need to achieve a minimum acceptable living standard in remote rural Scotland are typically 10-40 per cent higher than elsewhere in the UK.”

The highlands and islands of Scotland experience the harshest climatic conditions in the UK and record levels of fuel poverty. There is far greater area-wide dependence on the use of electricity for heating as well as lighting, but the standard unit price charged is 2p per kWh more than many other parts of the UK and 6p more than various economy tariffs that are on offer. Two pence might not sound like much, but it is a price premium of 15%. That is what the UK Government have done to consumers in Scotland. Let us hear no more about the Scottish Government and their responsibilities, because the responsibility for this lies fairly, squarely and solely in the hands of the Minister. She could do something about it this afternoon, if she had the guts.

That is the price set by the UK Government to live in the highlands and islands. On top of that, there is far greater reliance in off-gas areas on domestic heating oil and solid fuel, which pushes up household heating costs further still. As a result, average domestic energy bills in off-gas areas are around £1,000 more per annum than the £1,369 UK average—that is £1,000 more in the highlands and islands.

Figures from Lochalsh and Skye energy advice service in my constituency suggest that average annual heating bills in Skye and Lochalsh are £2,218. It is little wonder that there are so many people in my constituency in fuel poverty. For those whose primary fuel for heating is heating oil, the annual bill is as high as £2,519. To cap it all, customers on prepayment electricity meters—often the least well-off—not only have to pay additional standing charges, but discover that their notional right to change to a cheaper electricity supplier has become impractical.

The Government must accept that having 14 regional markets in the UK, with consumers in the highlands paying that 2p premium, is detrimental to the interests of the people in the highlands and islands. We must have a universal UK market.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

Does my hon. Friend agree that the United Kingdom Government’s policy is strangely based on a horizontal line drawn through London? The Indian Queens power station in Cornwall has been subsidised to the tune of £5.80 per unit of electricity generating capacity, while until its closure this March Scotland’s Longannet power station charged £17.50 per unit of electricity generating capacity. That is a £23.95 difference per unit of electricity capacity—

[Mrs Anne Main (in the Chair)]

Order. May I ask that interventions are brief? There is plenty of opportunity for Members to speak if they wish. The intervention is becoming a speech.

[Martin Docherty-Hughes]

I was just about to bring my intervention to a very firm conclusion, Mrs Main. Does my hon. Friend agree that the price discrimination is about not just consumers, but Scotland’s utilities as well?

[Ian Blackford]

My hon. Friend makes a valuable point. We know that producers in Scotland have been discriminated against and the comparison between Longannet and Cornwall provides a clear explanation of that.

14:42

Sitting suspended for Divisions in the House.

15:00

On resuming—

[Ian Blackford]

To recap on what I said at the beginning, we are talking about fairness and ensuring that people are treated in the same way throughout the United Kingdom. I quoted a statement made by the Minister at Christmas time last year:

“It is not right that people face higher electricity costs just because of where they live”.

I commend her for that statement, and I urge her, when she gets up to speak this afternoon, to tell us that she will take the necessary action to make sure that is brought into reality. We do not have a universal service today; we must do so. Why are highlanders and islanders being penalised? Fuel poverty: delivered to Scotland from Westminster. The Government have a responsibility, and the power, to do something about that.

I have submitted a number of questions to the Minister about the continued existence of 14 regional electricity markets in the United Kingdom. Here is one response:

“Electricity distribution network charges vary by region and reflect the costs of running the network in that area and the number of consumers that those costs are spread over. Moving away from this ‘cost-reflective’ approach would weaken the local accountability of the network operator in ensuring expenditure is fully justified, in turn weakening downward pressures on network costs overall.

In addition, a national price for electricity distribution would mean lower network charges in some areas, but increases in others.”

Where is the evidence for a detrimental impact on overall network costs? That is simply a red herring. As for the comment about lower costs for some and higher costs for others, the whole argument is about fairness. Somebody living in Skye should face the same network costs as somebody living in Southend. Anything else flies in the face of the statement by the Minister that people should not pay higher costs because of where they live. Let us make her statement a reality today, because those warm words from the Minister are meaningless unless we take action on a universal market. She talks about increases in some areas as a result of a universal market, but that is fairness—we all pay the same network costs. I prod the Minister to live up to her words: to take action today and to be seen as delivering fairness throughout the United Kingdom.

In Scotland, in our independence referendum, we were told that we were “Better Together”—

[Jim Shannon (Strangford) (DUP)]

So you are.

[Ian Blackford]

I have immense admiration for the hon. Gentleman, as he knows, but where is the “Better Together” in this? As I have already said, consumers in the highlands are paying 84% more for their transmission charges than someone living in London. Better together for whom? Not for us.

While I am on the topic, we were also told that our European future was secure if we remained in the UK—Scotland in Europe, and part of a wider European energy market. Well, we know where we stand now. The Minister wants to take us out of Europe with the rest of the UK. If she secures her ambition to become Prime Minister, I hope that she recognises the sovereignty of the Scottish people, who voted to remain in Europe.

[Mrs Anne Main (in the Chair)]

Order. Will the hon. Gentleman stick to his debate about the regional differences in the energy network, rather than European differences?

[Ian Blackford]

I respect the Chair, but I am trying to do this in the context of the European energy market—

[Mrs Anne Main (in the Chair)]

And I am trying to keep you to the debate.

[Ian Blackford]

France has a universal market for transmission charges. I would prefer a national transmission market, as there is in France, to the unequal system that we have in the UK. Why do we not do as France does and treat consumers equitably? We can learn from Europe, and at the same time we should remain part of it and not be dragged out. If the UK Government will not do that, perhaps we need—to paraphrase others—to take back control ourselves.

Research by the national charity Turn2us graphically shows the kind of challenges that those in fuel poverty are facing. One in two low-income households is struggling to afford energy costs, despite being in work. Among the hardest hit are people with disabilities, with more than two in three reporting their struggles, and families, with almost two in three working parents unable to meet these costs. Worryingly, of those households that are struggling with energy costs, nearly half have done so for more than a year. The knock-on effect is severe, with a third forced to skip meals and more than a fifth experiencing stress and other mental health problems. Here are some of the comments made to Turn2us:

“The bills are killing me, sometimes I have to contemplate paying all the rent or heating my home.”

“There are many pensioners like myself who don’t qualify for any help but still have to decide whether to eat or heat.”

“We have stress, debt, arguments and a low mood at home.”

“Starve or freeze? Either way you get ill and can’t work, eat or pay any bills.”

“No lights, only candles, only hoover once a week, only use washing machine once a week, no heating, meals that cook”

slowly.

In Scotland I am proud that our Scottish Government have used their powers to intervene to mitigate some of the effects of rising energy costs. It has been the failure of Westminster and the regulator to properly protect consumers that has led to a marked deterioration in the level of fuel poverty. Transmission charges are an important factor in the high levels of fuel poverty. The Scottish Government are committed to tackling fuel poverty head-on and ensuring that everyone in Scotland lives in a warm home that is affordable to heat, but the measures we are taking in Scotland are undermined by the austerity measures of the Westminster Government. That is why the responsibility for fuel poverty lies wholly, solely and squarely at the feet of Westminster and not at the Scottish Government’s, as the Minister implied earlier.

[Drew Hendry]

It is important that the root causes of fuel poverty are taken into account. Some 4.5 million people across the UK suffer from fuel poverty, and the cost of transmission grid charges in Scotland add to the cost for highlands and islands consumers. Does my hon. Friend agree that it is about time the issue of ducking responsibility for fuel poverty was taken squarely on the chin by the Minister?

[Ian Blackford]

Again, I am grateful to my hon. Friend for intervening to make a very important point. Today, in this debate, the Minister could bring this matter to a conclusion. She could follow through on the warm words that she used at Christmastime, when she said that no one should be penalised. If she believes that, I implore her to do the right thing. Let us have a universal market—a transmission market that treats everybody fairly in Northern Ireland, in Scotland and in England. Why do we still charge people based on the location they live in? It is wrong and needs to be dealt with.

When we talk about fuel poverty, there is not just a moral and ethical impact but a cost to society in increased health costs as a consequence of the mental health issues that arise; or in children being sent to school in less than ideal circumstances as a consequence of family pressures, adding to the difficulties of our young people flourishing to the extent that they should and making closing the attainment gap increasingly burdensome. That is the social cost of fuel poverty and it is an issue for which the Government in Westminster have to accept responsibility. Ending the discrimination of higher distribution charges would be a good start. I hope the Minister will respond in an appropriate manner this afternoon.

15:14

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate, Mrs Main. I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing it. It is always a pleasure to follow him. I look upon him as a friend in this House, as I do all my SNP colleagues, who are sitting on my right-hand side. We might have some differences about what is best for the United Kingdom of Great Britain and Northern Ireland, but I believe we are better together. They perhaps have a slightly different opinion; none the less, it does not mean that we cannot be friends in this House, and that is the important thing.

According to a study by the Northern Ireland Chamber of Commerce and business advisers BDO, almost a third of businesses in Northern Ireland believe that high energy prices are to blame for deterring investment. What the hon. Gentleman outlined in his presentation is something that I would like to mirror when it comes to Northern Ireland’s energy prices and so on.

May I also say that it is a pleasure to see the shadow Minister in his place? It is especially pleasing to see the Minister in her place. I look forward to hearing her response, which I am quite confident will be very positive and encouraging. It is always a pleasure to see her here in the House.

The regional disparity creates real challenges for the business community in Northern Ireland, at a time when those in the business community are seeking to expand and succeed and when their success is essential to rebalancing the Province’s economy and ultimately ensuring our economic success as a region. We are fortunate to have lots of jobs being created and we want that to continue. We believe we can continue that outside the European Union. I know there might be a difference of opinion among some of the Members present, but I believe Brexit will give us a great opportunity to expand and create more opportunities and move forward. A key issue for that to happen is the energy price.

The success of the United Kingdom of Great Britain and Northern Ireland depends on the success of all our regions. Although Northern Ireland is a starkly different place today from what it was a couple of decades ago, it is clear that there is much more work to do, especially in encouraging and facilitating economic development, particularly in the private sector. We have made giant leaps forward and done great things in Northern Ireland, with the Department of Enterprise, Trade and Investment creating numerous jobs—supported, let us be fair, by the Westminster Government. The Conservative party has had a strong economic policy to create jobs, and by and large we have seen the benefit of that in all our constituencies across the United Kingdom of Great Britain and Northern Ireland.

The Northern Ireland Chamber of Commerce study to which I have referred also found that just under two thirds of Ulster firms cited power and heating as among their most costly overheads. The hon. Member for Ross, Skye and Lochaber touched upon fuel poverty at the end of his speech. It is a massive issue for my constituents; in fact, it is a massive issue for constituents throughout Northern Ireland. Some 35% of people in Northern Ireland are subject to fuel poverty. We have the highest number of people in fuel poverty in the whole of the United Kingdom, so it is a massive issue for those who own or rent their houses and for those just trying to get by.

The Northern Ireland Executive continue to play a key role in addressing the issue by maintaining and improving local infrastructure. No doubt the devolution of corporation tax will allow for local business needs and circumstances in the Province to be taken into account. There has been talk in the past few days about the Chancellor reducing corporation tax in the United Kingdom. If he reduces it to a level that we would like to see in Northern Ireland, the opportunities will be greater for us. If it was reduced more, we could automatically take all the jobs that are coming in and all the potential growth could come our way. However, more often than not it is the regulatory framework that seems to create the issues. Literally all the major job losses in the Province that are down to big firms exiting or scaling back operations have been attributed directly or indirectly to high energy costs. I will give some examples.

Bombardier is one of the Province’s biggest employers. It is a business operating in the Province that has become a source of pride for us, owing to its world-renowned reputation. Bombardier has centres for manufacturing in my constituency, and many of my constituents in Strangford travel to east Belfast to get employment as well. Bombardier cited the costs when explaining why jobs had to be moved out of the Province in order to maintain competitiveness.

Michelin and JTI Gallaher are two more examples of large firms that have been good to the Province, especially in the constituency of my hon. Friend the Member for North Antrim (Ian Paisley). Michelin attributed redundancies directly to the high energy costs that business operators in the Province face. Similarly, they proved an issue for JTI Gallaher as well. We have lost them both and the impact has been great, especially in one constituency. It is not just the jobs that are lost; it is the impact that the money and wages going out of those constituencies has on the economy, which affects everything. The Northern Ireland Department for the Economy has taken steps to try to fill the gap. One way of doing that is to help with energy costs.

Northern Ireland stands out from the rest of the United Kingdom when it comes to the recruitment of part-time staff. That is another indicator of the challenges that manufacturing faces. Views about cash flow are too often the most negative in the United Kingdom. Those are some of the things that we face back home. The issue cannot be remedied just through the intervention of the responsible Minister in the Northern Ireland Executive. They can play their part, but only with co-operation, support and help from Westminster. There is no single policy that can remedy the difficulties faced by large energy users in Northern Ireland, of which there are about 20. There is a need for a long-term strategic objective of delivering competitive energy policies; but in the meantime the regulator can make the difference. The key issue preventing the change that is needed at the moment is that if large energy users were to benefit from being asked to pay less, the cost could, under the current framework, be passed on to households and small and medium-sized enterprises. Therefore, the statutory remit of the regulator would have to be expanded significantly to include that area. I would ask the Minister to respond to that point.

In the Republic of Ireland, it is not the wholesale prices that make the difference; it is the allocation of network costs, which disproportionately favour large users in a comparison between the Republic of Ireland and Northern Ireland. In Northern Ireland, the LEUs would like similar treatment. Should the Minister in Ireland want to follow that methodology, the decision would need to be politically acceptable. Given the trade-off that could ensue between SMEs, households and LEUs, such a move could prove contentious. A way forward palatable to everyone would need to be worked out to keep as many stakeholders as possible happy. There are some balancing tricks to be done, as well as some advance strategic work.

The Chancellor often talks about a northern powerhouse, and refers to economic engines and the like. He is right to recognise regional disparities in business activity and inward investment, but I hope that the worrying news coming out of Northern Ireland about the harm that energy costs are doing to our ability to attract investment will put us on the map for Ministers in Westminster, who can be part of spreading the wealth more evenly in the nation.

As everyone present for the debate knows, I am a true believer in the United Kingdom of Great Britain and Northern Ireland. I believe in it with a passion. I believe that we are better together. Those are my heartfelt thoughts, but we also need to spread the wealth across the whole of the United Kingdom, and see that we get some of it on the fringes of Northern Ireland and on the fringes of Scotland, about which the hon. Member for Ross, Skye and Lochaber made his comments very clearly. The extra power and influence here at Westminster would be of great benefit if Ministers and those with an interest would lend a hand to the Minister in Northern Ireland, as he inevitably comes to deal with an issue that is, unfortunately, very complex.

It is a pleasure to take part in the debate. I am grateful for the opportunity to speak, and I look forward to the speeches of the shadow Minister and, in particular, the Minister.

15:23

[Callum McCaig (Aberdeen South) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Main.

My hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) has said most of what is required and he said it in his usual passionate way. It is right that he should feel passionate about this, because there is a clear sense of injustice—one that, as he rightly pointed out, the Minister has acknowledged in the past. To quote her again for the record:

“It is not right that people face higher electricity costs just because of where they live”.

We have heard that that applies not just to the north of Scotland but to Northern Ireland and other regions of the UK. Nobody is asking for special treatment. We are asking for a level playing field, and I do not understand how that cannot be justified. Perhaps it is possible to hide behind what Ofgem has said, but this is a Government who purport to be a one nation Government. How can you be a one nation Government when, just because you live in a different part of the country, you have to pay more for your electricity? That cannot follow from the Government’s rhetoric.

The Ofgem report states:

“There does not appear to be any clear justification for a national charge in terms of the regional concentration of vulnerability. Distribution regions represent large areas and the socio-demographics of the population in each region tend towards the Great Britain average.”

The justification is fairness. Just because you may have average distributions of poverty and wealth in the north of Scotland and the south of Scotland—which, to be fair, is highly debatable—does not mean that if you are rich or poor in the north of Scotland, you should pay more than anyone in the south of Scotland. If you are disadvantaged in the north of Scotland, it is no consolation to you that you are part of a national average and you fit neatly into a demographic box, so that Ofgem can dismiss your legitimate concerns about additional costs plunging you further into fuel poverty.

[Drew Hendry]

On the point about additional costs, there are many off-grid users in the highlands and islands, for whom costs are 100% more than they are for on-grid consumers. That adds to the problem.

[Mrs Anne Main (in the Chair)]

Order. Mr McCaig, may I ask you to speak through the Chair? You are using the word “you” rather a lot, and of course I have nothing to do with it.

[Callum McCaig]

My apologies, Mrs Main.

The issue, as I say, is one of fairness. My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) has highlighted the additional impacts that come from the rural nature of large parts of the highlands and islands and the north of Scotland in general. The Government must take those into account. It is easy to hide behind Ofgem, but the Government must act, and there is a clear and pressing need to do so. As has been mentioned, the charge in the highlands and islands, based on per unit usage, is 84% higher than in London. It is colder in the highlands and islands, so people have to use more electricity. Also, for large periods of the year it is darker, because of the more northerly latitude. The costs of heating and lighting a home are greater the further north people live. That is not taken into account. Also, a far higher proportion of people in the north of Scotland use electricity to heat their homes. That comes at an extra, punitive cost to them. That cannot be acceptable and the Minister needs to explain it.

The Minister, perhaps inadvisedly, intervened on my hon. Friend the Member for Ross, Skye and Lochaber to talk about the fuel poverty record of the Scottish Government. There is more work that they need to do, and they have acknowledged that. Contrary to what is happening here, fuel poverty and, indeed, energy efficiency are national infrastructure priorities for the Scottish Government. There will be record levels of investment. If a comparison is made between the investment record in Scotland and that of the other nations of the United Kingdom, it is highly favourable.

Let us break down fuel poverty and look at where responsibility really lies. Electricity distribution and network charges rest with the Government. The regulation of the market, in terms of the energy companies, rests with the Government. Looking at the fuel side of the issue, it is clear that the responsibility lies with the Government. As to the poverty side of things, it is even clearer that the responsibility is the Government’s. They control the economy, set taxation and, perhaps most importantly, set the parameters of the welfare state, which they have undermined time and again, plunging more people into fuel poverty. On the face of things, the term “fuel poverty” may be devolved to the Scottish Government, but the actual responsibility—the actual levers to effect real change—rest with this Government and largely with the Minister and her Department.

It may be fine and well to engage in back and forth as we regularly do in this place, but we need to see where responsibility really lies. If the Minister really wants the Scottish Government to have that responsibility, I can tell her that we will happily take the powers out of her hands, and I promise her that we will use them more effectively than her Department has in ensuring that the people of our country do not live in cold, dark houses or have to choose, as my hon. Friend the Member for Ross, Skye and Lochaber said, between heating and eating. That is not acceptable in the 21st century. If we are one nation and there are simple things that can be done to address fuel poverty, it behoves this Government to do them.

Another theme that has run through the debate—one that was mentioned by my hon. Friend and the hon. Member for Strangford (Jim Shannon)—is the economic and social impacts that fuel poverty has on our society. Fuel costs are adding cost for and holding back our businesses and social services. There is an opportunity cost. I disagree with the hon. Gentleman about redistributing wealth. This is not actually about redistributing wealth; it is about keeping wealth where it is generated and ensuring that people do not have to pay too much of their own wealth and that it is not sucked out of their economies. It is about keeping the wealth where it is generated and allowing it to be put back into communities in Northern Ireland or in the north of Scotland. That is not redistribution; that is just fairness, which is utterly absent from this regime.

We are not necessarily asking the Minister to agree with the Scottish National party or even the Democratic Unionist party on this issue. We are asking her to agree with herself and with her own Government’s one nation rhetoric. If she cannot do that, perhaps she can explain to us why.

15:31

[Barry Gardiner (Brent North) (Lab)]

Diolch yn fawr, Mrs Main. Yn yr wythnos lle mae Cymru wedi gwneud Prydain mor falch, ni ddylir y ddadl atal dathlu athrylith y bobol Gymraeg, yn enwedig os fyddent yn mynd ymlaen i guro’r Ffrancwyr neu’r Almaenwyr yn y ffeinal.

[Mrs Anne Main (in the Chair)]

Order. For the benefit of everyone else here—

[Barry Gardiner]

Mrs Main, I took the precaution of speaking to the Clerk beforehand, and found out that it was in order to speak in Welsh, Norman French or English. Given that this is a regional debate, I thought it was only right to speak in Welsh at the beginning, but she did advise me that a translation was always required, which I will of course be very happy to provide to both you and Hansard. I said: “Thank you very much, Mrs Main. In a week when Wales has done the whole UK proud, no debate should fail to celebrate the genius of the Welsh people, especially if they go on to beat the French or the Germans in the final.”

Ofgem concluded last year that from a regulatory perspective, there

“does not appear to be any clear justification”

for national network charges

“in terms of the regional concentration of vulnerability.”

However, as we shift towards cleaner energy to deliver our legal climate targets—an issue on which the Minister has nailed her own colours to the mast—we must also overhaul the management of our energy networks to become smarter and more flexible.

The Energy and Climate Change Committee remarked last month:

“Networks are transforming. We recognise that this presents challenges for the Government, but it has been slow to present a clear, holistic plan for the evolution networks need”.

That Committee’s June report, “Low carbon network infrastructure”, concluded that networks

“are at the heart of the UK’s low carbon ambition”,

yet network charges

“form an increasing proportion of consumer bills.”

The Committee called out

“outdated and inflexible regulation and governance”

as potential obstacles to making our energy network fit for the 21st century. Remarking that network connection costs “remain geographically skewed,” the Committee called for Ofgem to

“assess the costs and benefits of levelling connection costs across Great Britain”

and Northern Ireland in order for the Government to consider whether geographical disparities can continue to be justified.

Ofgem also found last year that it is

“legally possible to introduce national network charges but the change from the current approach would need to be justified against various criteria in European law, particularly on cost reflectivity.”

Although I am mindful, Mrs Main, of your admonishment of the hon. Member for Ross, Skye and Lochaber (Ian Blackford) for straying into the whole debate around Brexit, it seems appropriate, given that that is the legal situation, to ask whether the Government have sought new advice on this issue in light of the vote to leave the European Union.

The “Low carbon network infrastructure” report also recommended:

“DECC should investigate the disadvantage UK generators may consequently face against other European generators as Great Britain becomes more interconnected, and the impact this may have on development of domestic renewable generation.”

Given the vote to leave the EU, I also ask the Minister to provide greater clarity on the future of the UK’s electricity interconnection with the continent.

It is also worth noting that transmission tariffs for generators are higher in Great Britain than in the rest of the EU. The UK is one of only three EU member states with locational transmission tariffs. The Minister recently wrote to the Energy and Climate Change Committee, stating that

“one of the main drivers for transmission costs is the need for new network investment to accommodate renewable generation in areas such as Scotland.”

I therefore ask a further question: how much is being invested in upgrading our networks to be able to carry clean energy? Is that spending based on projections that include meeting our 2020 clean energy target?

The debate is also important in highlighting the systemic problem of the lack of transparency in an energy market that is failing the overwhelming majority of customers. The Government’s response to the Ofgem inquiry, in answer to a written question by the hon. Member for Christchurch (Mr Chope), was to reassert their objective to keep

“overall costs down for bill payers across Great Britain.”

I note that they did not say Northern Ireland. The hon. Member for Strangford (Jim Shannon) is no longer in his place, so I will add “and Northern Ireland,” because I trust that that is what the Department meant.

Network charges on a typical dual fuel consumer bill have risen by approximately 30% in the past four years, according to British Gas—we need some sort of explanation for that from the Minister—and seven out of 10 customers are currently being overcharged for their energy. As a result, millions of households cannot afford their energy bills, as the hon. Members for Ross, Skye and Lochaber, for Strangford and for Aberdeen South (Callum McCaig) said, yet Ministers are still letting the energy companies off the hook and failing to ensure that the drop in wholesale energy prices is passed through to bill payers.

The Energy and Climate Change Committee reported on energy network charges in February 2015 and recommended that the Government and Ofgem should

“publish an evidence-based analysis of the advantages and disadvantages of introducing national tariffs for transmission and distribution network charges.”

Following that recommendation, Ofgem published its report, but it found principally that electricity distribution charges are indeed higher than average in the north of Scotland, exactly as the hon. Member for Ross, Skye and Lochaber said, but also in Merseyside, north Wales and the south-west of England. The charges are of course lower in London and eastern England. In contrast, electricity and gas transmission charges are higher in the south of England and lower in Scotland, and gas distribution charges are higher in London and the south of England and lower in Scotland and north-east England. Although this debate has largely been presented—I speak as a Scot here—in terms of the injustice that an English Parliament is doing to Scotland, the reality is very different.

[Ian Blackford]

Will the hon. Gentleman give way?

[Barry Gardiner]

I will, but I will make a little progress first. Ofgem concluded that there

“does not appear to be any clear justification”

for national network charges

“in terms of the regional concentration of vulnerability.”

That is exactly what the hon. Gentleman and I would wish to see: that evening out across the piece. So for a household with typical electricity and gas consumption there would be an increase or decrease to the network charge element of a bill, but it would be of less than £20 a year in most distribution network areas. There would be more significant changes in three electricity distribution regions, and they are: south-west England, would be down by £38; Merseyside and north Wales would be down by £26; and east Midlands would be up by £27.

Ofgem found mixed results on bills from a switch to national network charges, which would result in approximately 16 million households facing higher bills, while about 11 million would see reduced bills under such an approach. In most cases, the increase or decrease would be small—of that £20 a year margin. In Scotland, 1.8 million households would face higher bills and only 700,000 households would see reductions. It is harder to estimate the numbers for England and Wales separately because the distribution networks that serve Welsh households also operate across the border in England.

The hon. Member for Ross, Skye and Lochaber tended to speak in percentages. Of course, when one speaks in percentages, things can sound really disproportionate. Why should someone pay 80% or 100% more in distribution costs in one part of the UK than in another? That is absolutely right, and the argument for fairness he made is correct. However, when speaking in percentages, one sometimes blurs the fact that the actual amounts are relatively small. Even households in the north of Scotland who use electricity for heating would benefit from maximum reductions of about £60 a year. That is just over £1 a week. Of course that should happen, but he should acknowledge the scale of the problem we are dealing with.

[Ian Blackford]

I think in my speech I referred to the price difference between the highlands and other parts of the UK as being 2p per kWh, so I gave both the percentages and the actual cash amounts. To someone in the highlands, £60 is actually quite a significant amount. Does the hon. Gentleman agree that this is about equity, fairness and creating in effect a universal service obligation? Will the Labour party join with us in calling for fairness, or will it let highlanders down and walk away?

[Barry Gardiner]

I absolutely agree with the hon. Gentleman that it is a question of fairness. I agree that there should be a unitary basis on which this is calculated, and indeed I think the Minister is on record as having made statements that indicate that she agrees. As I have mentioned, there are issues relating to the way in which we are permitted to do that under European law that may now be freed up. They need to be investigated and, if we can do that, we should.

I simply wanted to put in perspective what I felt was the over-ebullience of the hon. Gentleman when he spoke. In the grand scheme of things, these are small injustices, not great ones, and they apply more widely throughout the regions of the United Kingdom than just in Scotland.

[Drew Hendry]

rose—

[Callum McCaig]

rose—

[Barry Gardiner]

I am happy to give way to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry).

[Drew Hendry]

I am grateful to the hon. Gentleman for giving way and for getting my constituency correct. You talk about—

[Barry Gardiner]

He!

[Drew Hendry]

I will not use the word “you”. He talks about this being a small amount, but when you are faced with the costs of paying for off-grid fuel—oil and gas—the additional costs because you live in a sparse area and low wages in a low-wage economy, this is a devastating cocktail. Do you not agree that it is not as unimportant as you are making out?

[Mrs Anne Main (in the Chair)]

Order. I am not making out anything, but I shall call Barry Gardiner, who may answer on his own behalf.

[Barry Gardiner]

I agree that many factors come together to push people into fuel poverty and into poverty. They have been ably outlined by the hon. Gentleman and his colleagues. The point I am making is that here we have something that affects not just one part of the United Kingdom but many parts of England and Wales, as the Ofgem report clearly shows.

[Callum McCaig]

Will the hon. Gentleman give way?

[Barry Gardiner]

I felt that the debate had been unbalanced in how the facts were presented, which implied that this was an injustice being done by the Westminster Government to poor Scotland.

[Mrs Anne Main (in the Chair)]

Order. May I point out that I shall be calling the Minister at 4 o’clock? Mr Gardiner, I accept that you may wish to take interventions, but I say that just in case the new timings have eluded people.

[Barry Gardiner]

Mrs Main, I am mindful of your ruling. I simply wanted to say I accept that there is an issue of justice and fairness, but wider effects are being felt all around the UK. If we keep this issue in that context rather than trying to make it about “us” and “them” and simple victimisation, we will have a much better opportunity to resolve the problems that do exist.

[Callum McCaig]

rose—

[Ian Blackford]

rose—

[Barry Gardiner]

I will finally take the intervention of the hon. Member for Aberdeen South.

[Callum McCaig]

I accept the point that they may be relatively small figures for individuals—they may be generally quite important to them for the reasons outlined—but, to use the hon. Gentleman’s own figures and multiply the £60 benefit by 700,000 people, this is not quite back-of-a-fag-packet but that is £42 million being needlessly taken out of the economy of the north of Scotland. That would make a transformational impact if it were reversed, and that is the point being made.

[Barry Gardiner]

If it were true, but the hon. Gentleman should know that it is not. If he does the arithmetic correctly, he will see that those 700,000 were of the £20 maximum variation, not £60. He will also recognise that more than double that figure—1.8 million—in Scotland would face higher bills. He really needs to try to see this issue not through the lens of victimisation but through the lens of reality. With that, I conclude.

15:48

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

This is an incredibly important debate, and I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing it. Over the last year we have had numerous debates in Bill Committees and elsewhere about the vital importance of addressing fuel poverty. On that, we are absolutely as one.

I also agree with the hon. Member for Brent North (Barry Gardiner) that it is not that those outside of Scotland are doing fine and those in Scotland are being somehow penalised by the Westminster Government. While I do not think that any of the hon. Gentlemen from the Scottish National party would say that is the case, that is the impression they are giving. As the hon. Member for Brent North made clear, fuel poverty affects the whole of the United Kingdom, including Northern Ireland, which has a different distribution and transmission network. This is an issue for all of us and we need to address it as a United Kingdom, taking account of the interests of all our citizens.

[Ian Blackford]

In presenting this debate, I have tried to argue for fairness across the UK. I reflected on the fact that we have 14 regional markets, which I believe to be unfair, because that penalises people based on where they live. I argued about the specific circumstances of the highlands, but specifically I am asking the Minister to deal with that by creating a universal market throughout the United Kingdom so that everyone is treated in the same way. That is the correct manner for this House. It is not about dividing people; it is about recognising fairness and equity.

[Andrea Leadsom]

I will certainly address those issues; I wanted to make it very clear up front how important they are.

The costs of distributing and transmitting energy vary by location. Those differences are reflected in the charges paid by generators and consumers in a particular geographic area. The idea behind that cost-reflective approach is that it helps to drive down costs for all consumers, and it is proving successful. For example, Ofgem estimates that network costs are 17% lower in 2014 than before privatisation, while system reliability remains above 99%. However, it is right that the Government should consider action if one region has markedly different network charging levels from any other. It is also true that network charging mechanisms could never provide an efficient or effective way of providing targeted support to specific groups of vulnerable consumers within a region. I will explain some of the actions we are taking on both counts to ensure consumers right across Great Britain are receiving a fair deal.

The particular challenges of electricity supply in the north of Scotland relate primarily to the relatively large and sparsely populated terrain, meaning that it inevitably costs more to distribute electricity there than elsewhere. I reassure all hon. Members that the UK Government remain committed to ensuring that consumers in the north of Scotland do not bear an unreasonable burden of those electricity distribution costs. The response we published yesterday to our consultation on electricity distribution costs in the north of Scotland confirmed we will continue the hydro benefit replacement scheme at its current level. That scheme helps to protect electricity consumers in the north of Scotland by providing £58 million of assistance to the area, which is worth an average of £41 to each household in the region and is funded by charges on all licensed suppliers across Great Britain.

In addition, our response confirms that the Government remain committed to GB-wide funding for a Shetland cross-subsidy. That will protect consumers in the north of Scotland from the costs of replacing the ageing Lerwick power station in around 2020 and will be delivered through the hydro benefit replacement scheme. The full details will be confirmed once the replacement of Lerwick power station is known. That will have the effect of reducing costs for all consumers in the north of Scotland from the end of the decade.

The Government certainly note the calls, not least from SNP Members, for a move to a single national network charge, but we continue to believe that the priority must be minimising overall network costs for consumers across GB. As I mentioned, network charges vary regionally to reflect the costs of running the network in a specific area and the number of consumers those costs are spread across. Such a significant move away from the important principle of cost-reflective charging would be unhelpful as it risks weakening the pressure on each network company to keep overall costs down for its local stakeholders, which could lead to an overall increase in costs.

[Ian Blackford]

Will the hon. Lady give way?

[Andrea Leadsom]

I will in a minute. It is also important to note, as the shadow Minister pointed out, that a move towards a single national network charge would produce winners and losers. All hon. Members will be aware that in October 2015, Ofgem published a detailed analysis of regional differences in transmission and distribution network charges. It found that, for Scotland specifically, 1.8 million households would face higher bills through a national network charge while 700,000 would see reductions. For Great Britain as a whole, 16 million households would face higher bills while around 11 million would see reduced bills. Ofgem concluded that there is no compelling case, from a regulatory perspective, to move to a national network charge. However, we will of course continue to consider any new evidence that is presented on the matter.

[Ian Blackford]

I am grateful to the hon. Lady for giving way; she has been very generous with her time. Does she appreciate that we have a universal market for the delivery of telephone and broadband and we all pay the same price, regardless of where we live? We pay the same price for a postage stamp. We are still not addressing the fundamental point: people are paying higher prices for transmission of electricity simply because of where they live. We are generating higher levels of fuel poverty as a direct result of that.

On the whole argument about winners and losers, this is about fairness. The Minister talks about being “one nation”; we should be talking about delivering fairness to everybody and not discriminating against people, which is exactly what this Government are doing.

[Mrs Anne Main (in the Chair)]

Order. Before I call the Minister, I say to the hon. Gentleman: please, respect the Chair. Interventions are meant to be short and they are becoming incredibly long. Standing and talking through the Chair is incredibly disrespectful.

[Ian Blackford]

It is disrespectful how my country has been treated by this Government.

[Andrea Leadsom]

Thank you, Mrs Main.

As with other aspects of our network charging regime, Great Britain’s transmission charging regime is governed by the principle that the user pays. In other words, the costs of operating and maintaining the system are met by those who benefit from it: generators and demand customers. That ensures the economically efficient use of the transmission network and limits the overall cost to consumers across the country. I say to the hon. Member for Ross, Skye and Lochaber that it is not a postal system; it is a transmission system. He makes the case that there is one cost for a postage stamp. In a transmission system, the clear case has been made that locational pricing is needed to keep costs down for all, as that makes it more efficient for everybody. Otherwise, if I can simply add costs to the system in the knowledge that those will be socialised right across Great Britain, I will not face those competitive pressures to keep costs down.

[Ian Blackford]

indicated dissent.

[Andrea Leadsom]

I see the hon. Gentleman rolling his eyes but he must look at the evidence. He must also bear in mind that, in Scotland alone, there would be 1.8 million people whose bills would go up as a result of the measure he proposes.

The higher transmission charges for generators in certain areas of the country reflect the costs they impose on the transmission network in transporting electricity to demand centres. Conversely, demand customers in generation exporting areas pay lower transmission charges. The hon. Gentleman will be interested to note that that means Scottish generators pay higher transmission charges than their counterparts further south and nearer the centres of demand, but Scottish consumers face significantly lower transmission charges.

The hon. Gentleman rightly points out that fuel poverty is a big subject for both the UK Government and the Scottish Parliament, and is a devolved matter. This Government are fully committed to tackling fuel poverty, and it is clear that we must look beyond network charging mechanisms to do so. We absolutely want to be there right alongside the Scottish Government in dealing with fuel poverty, and I will run through some of the actions we are taking to tackle that issue.

Last week we published our proposals to reform the energy company obligation. We proposed to increase the support for low income and vulnerable households from £310 million to £450 million per annum. Scotland certainly receives more than her fair share of ECO measures with 40 measures per 1,000 households, compared with 28 measures per 1,000 households in England. There is clear evidence that through our fuel poverty measures we are seeking to support Scottish households in fuel poverty.

We also support low income households through the warm home discount. We have worked with both the Scottish and Welsh Governments on how those policies could be amended to tackle the root causes of fuel poverty in all UK nations. The devolved nature of fuel poverty action allows different nations to take measures appropriate to them, and each nation has policies tailored to address fuel poverty at the local level. We will work with the Scottish Government to set up a process and methodology for evaluating the impact of schemes implemented in Scotland—on their own and in conjunction with schemes implemented in England and Wales—on the GB energy market and any relevant UK commitments and obligations.

We are determined to help households facing the highest energy costs, including those that are off the mains gas grid, which are much more likely to face higher energy costs and more than twice as likely to be in fuel poverty as households connected to mains gas. Last year, we announced £25 million in funding through the central heating fund, which is designed specifically to help support non-gas fuel-poor homes by funding the installation of complete central heating systems.

Strong competition among suppliers is a key way to keep prices down, drive innovation and improve customer service. We have seen an unprecedented number of new companies enter the market over the last couple of years. There are now more than 40 companies competing to supply households in Great Britain. In 2010, there were just seven small suppliers and the big six.

[Mr Philip Hollobone in the Chair]

We have worked with industry to cut the time it takes to switch supplier from five weeks to a maximum of 21 days, and we are working with Ofgem to move to reliable next-day switching. The number of customers switching supplier continues to rise with 2 million energy accounts switched just between January and March this year—25% more than in the same period last year. As we know, on average consumers can save hundreds of pounds on a dual-fuel bill by switching, which is incredibly important for keeping their costs down.

We are taking a range of different actions and have seen some improvements through lower energy network costs and lower energy bills, but it is clear that this area requires continued attention. I thank all hon. Members who have participated in this valuable debate.

16:01

[Ian Blackford]

It is a pleasure to see you in the Chair, Mr Hollobone. I have to say that I am disappointed by the Minister’s response to our appeal for fairness, which at the end of the day is what we are talking about. The Government talk about being a one nation Government. Surely to God, in such a situation people should be treated in the same way, irrespective of what part of the United Kingdom they live in. The reality is that those living in the highlands and islands are having to pay a surcharge to live in that area. What a disgrace that the Government are treating them in such a way.

Perhaps I should not be surprised. I was in my constituency yesterday, attending a meeting of the Scottish Affairs Committee, of which there are four Tory members. Not one of them came to Skye yesterday to listen to what local people were saying about the demographics and population of the highlands. That is the contempt this Government have shown for the people in the highlands, and it has been well and truly demonstrated this afternoon in this Chamber.

Question put and agreed to.

Resolved,

That this House has considered regional differences in energy network charges.

[Mr Philip Hollobone (in the Chair)]

Would those who are not staying for the next debate please be kind enough to leave quickly and quietly? We now move on to the important subject of the provision of services for asylum seekers in Glasgow.

Asylum Seekers: Glasgow

Tuesday 5th July 2016 Westminster Hall

16:03

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

I beg to move,

That this House has considered the provision of services for asylum seekers in Glasgow.

It is a pleasure, as always, to serve under your chairmanship, Mr Hollobone. May I thank the Minister for being here to listen to this debate and for taking time to consider this matter? We met to talk about these issues when extraordinary revelations were published in The Times and by BBC Scotland on the treatment of asylum seekers in Glasgow. Since that meeting, more extraordinary revelations have been published by the Sunday Herald newspaper, showing that persistent problems are leading to perverse outcomes.

This debate is very timely. Persistent issues remain in the delivery of housing, which is the lifeline public service for a group of people—women, men and children— who are seeking protection and who, by definition, need more than most the stability that a home should bring. The asylum process is difficult enough without problems of poor housing and treatment to contend with too.

The revelations published recently in the Sunday Herald include the story of an Iraqi woman with health problems and her young child being placed in a dirty second-floor flat for months, despite a doctor’s letter and instructions not to carry her child upstairs. She also claimed that drug addicts were frequenting the shared close. Another asylum seeker said that, despite reporting to the police four times racial harassment against herself and her baby outside her flat, she and her toddler had not been moved. Serco said that a housing officer had visited and was taking the complaint very seriously and monitoring the situation. I do not believe that to be acceptable.

One asylum seeker raised alleged aggressive and intimidating behaviour by the Orchard and Shipman staff who evicted him late last month—an allegation that was reported to Police Scotland. Agencies have also reported pregnant women and families facing eviction. In the past few weeks, up to 20 single men have been bussed from Glasgow to London and Manchester at short notice, with a total of 44 expected to be relocated within a month. Twenty families will then be moved to Glasgow. Another asylum seeker case brought to my attention is that of a constituent who is a single mother of three young children living on the third floor of a tenement building where she is unable to lock her windows.

Organisations representing asylum seekers continue to have concerns. Mike Dailly, principal solicitor and director of the Govan Law Centre, has said:

“There are also repeated cases of overcrowding and severe disrepair. This organisation is largely unaccountable despite receiving significant public funds to protect some of the most vulnerable in our society.”

Shafiq Mohammed, a former Orchard and Shipman employee turned volunteer for the Asylum Seeker Housing Project—ASH—said:

“I would describe some of the properties that we’ve come across as slums. In essence, asylum seekers are living in the poorest-quality accommodation in the city.”

Others have reported insect-infested couches; dirty carpets, walls, bathrooms and kitchens; and common stairwells where people regularly urinated. Two women said that their children had developed skin infections.

Too often we have found that the housing provided through the Home Office’s outsourced commercial contract to Serco, which is then subcontracted to Orchard and Shipman, provides not stability but, sadly, aggravation and harm to those who should be treated with dignity and given housing that is safe and secure. Indeed, the Scottish Refugee Council report of September 2014 shows that what was exposed this year has roots in 2012. There has been a transition from the more locally-rooted and therefore accountable, flexible and efficient model of providing housing for those seeking protection to what we must remember is an experiment in terms of asylum accommodation—a thoroughly market-based approach to the provision of such a vital public service. There is something rather valuable in having devolved, local oversight and delivery of housing for asylum seekers in terms of weaving them into joined-up services, democratic oversight and accountability, the flexibility to, for instance, flip accommodation at the point of positive decision to enable continuity of housing for the refugee and in terms of community cohesion.

Outsourcing may well suit the UK Government, as it allows them to outsource not only service delivery but a fair degree of accountability. Many of us have lost count of how many carefully drafted freedom of information requests and parliamentary questions have not been answered, on the sometimes dubious grounds of disproportionate costs or commercial confidentiality. I trust that the Home Affairs Select Committee will look at that issue; I am pleased to see its Chair, the right hon. Member for Leicester East (Keith Vaz), in his place. It may well also suit the UK Government to have their contractors on the front page of media exposés rather than Ministers. The reality is that taking such hits for future contracts could, in the long term, be worth it.

Let me return to the present issues in Glasgow. The Sunday Herald article spoke to a system that is increasingly chaotic. Symptoms of that chaos include the one and a half years that Glasgow, alone in the UK, did not have an initial accommodation facility where everyone could access the new services upon being newly dispersed to the city. In practice, that has meant that not all get their orientation briefings or health screenings done, with delays in accessing financial assistance.

[Keith Vaz (Leicester East) (Lab)]

I congratulate the hon. Gentleman on securing this important debate. I have visited some houses in Glasgow at the invitation of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald). As the hon. Member for Glasgow South West (Chris Stephens) knows, the Home Affairs Committee is conducting an inquiry into this matter.

Does the hon. Gentleman agree that one issue that should be explored is the dispersal arrangements? The dispersal map of asylum seekers shows that they are concentrated in certain urban areas, but the whole country should take a fair share of asylum seekers.

[Chris Stephens]

I thank the right hon. Gentleman for his intervention. He is right that we must look at dispersal. It is to Glasgow’s credit that the city council decided 16 years ago to tell the UK Government that it was happy to take asylum seekers. We in Glasgow are proud of that approach, but the dispersal issue needs to be looked at.

As the Sunday Herald article detailed, there is persistently high use of hotels and hostel-like accommodation for asylum seekers across the board. We know that the numbers in such accommodation quadrupled between November 2015, when the figure was over 100, and May 2016, when it was over 400. This trend shows no sign of weakening. People are being lost in the system and not getting the safe and secure housing that this approach is ostensibly there to ensure.

We appreciate that priority is being given to taking newly dispersed families out of hotels and hostels as soon as possible, but we have been aware of cases over the past few months of families being stuck in such accommodation for six or seven weeks, with the consequence that they feel isolated and unable to put down roots and their children are not entitled to enter school. These specific issues are underscored by persistent reports of people being placed in unsuitable and often overcrowded accommodation and being shunted around Glasgow at short notice and between Manchester and London with insufficient regard to their wellbeing and needs, as the Sunday Herald piece suggested. With an increase in numbers, the system is struggling to cope.

The Scottish Refugee Council and other agencies, such as the British Red Cross, Govan Law Centre and many others, are finding that too often a crude housing-led approach prevails and the needs of individuals and families are a second or third consideration. What action has the Minister taken since the Sunday Herald article was published? What steps has he taken to ensure that these problems do not persist? Will he tell us what actions or penalties are in place for breaches of contract and poor performance by contractors? Can he remind us what penalties or mechanisms are in place that would result in a contractor being removed from provision of these services?

I want to touch on gender and asylum support. One persistent casualty of the housing-led approach is the visibility of women seeking protection. As the Scottish Refugee Council has articulated many times, the asylum support regime effectively silences women. In a recent written answer, the Minister stated that he had no plans to generate or publish asylum support statistics by gender. We think that is an unacceptable omission, which amounts to the UK Government stating that gender is an irrelevant or insufficiently important part of identity to merit analysis or publication in asylum support policy. In my experience of representing constituents, I believe that is a crucial factor.

Just on the asylum accommodation issue, many agencies and groups have documented that women have, inter alia, felt very unsafe in shared flats with no locks, including on bedroom doors, and that housing officers have entered the accommodation unbidden. There is a lack of women-only initial accommodation, and it is unclear what competence and training operational and management staff have in gender and preventing violence against women. Will the Minister reconsider implementing a gendered review of asylum support? Will he publish different statistics for women asylum seekers? Will he look into how women have been treated, particularly in respect of privacy issues?

There is no list of registered social landlords, but there is an issue relating to whether accommodation meets the regulations under the Housing (Scotland) Act 2010. We assume that Orchard and Shipman is not registered under the housing regulations and is therefore not a registered social landlord. That leaves the question of who, under the 2010 Act, has general consent to provide housing services. The regulation of asylum seeker housing seems to be non-existent. I wrote to the Scottish Housing Regulator, who could not tell me who was a registered social landlord under the current Act.

Does the Minister have a list of registered social landlords in Glasgow who provide asylum accommodation? Does the Home Office ensure that social landlords provide housing quality that meets the regulations of the 2010 Act, or does it have a different standard? What expectations does the Minister have to ensure that any accommodation provided by Orchard and Shipman meets the standards of the Act?

COMPASS—commercial and operational managers procuring asylum support services—contracts are priced by UK Ministers at such a low level that only large private-sector companies with no footprint or interest in areas of asylum dispersal can afford to bid for them. It is now clear that the Home Office has three current contractors over a barrel and are keen to extend them into 2017-19. I am aware that one contractor has already asked to extend a contract to 2018. Orchard and Shipman has reported that its Glasgow subsidiary is deriving profit from its asylum seeker contracts and many of us have an issue with that. Serco Group announced to the London stock exchange in February 2016 that central Government justice and immigration contracts were marked out as priorities, both globally and in the UK.

We believe that a different approach would benefit local statutory bodies and communities, and those in the accommodation. The Home Office should seriously consider at least a substantial revision of the outsourcing approach to the provision of housing. The Home Affairs Committee’s asylum accommodation inquiry is one place where I hope that that argument will be taken on. However, it will not be effective if the Home Office decides, inappropriately, to extend the COMPASS contracts to 2019 before the Committee reports and its recommendations are considered. I hope that the Minister will confirm that there will be no extension of contracts until then.

There is clear evidence in our great city of Glasgow of asylum seekers and EU nationals being in fear of their future following the Brexit vote 10 days ago. We are dealing with our fellow human beings, who are fleeing oppression and persecution. Many of them are women fleeing sexual violence. Many, like us, had professions and careers, but are now seeking sanctuary and safety. We have a duty of care to our fellow human beings, and we must treat them a lot better than we do. I hope we can treat asylum seekers as we ourselves would like to be treated if we were in their situation. I look forward to the Minister’s response.

[Mr Philip Hollobone (in the Chair)]

Because of the Divisions, and because the previous debate finished, technically, 22 minutes early, the Minister has until 4.53 pm, although he does not have to use all that time.

16:09

[The Minister for Immigration (James Brokenshire)]

It is a pleasure to serve under your chairmanship, Mr Hollobone.

I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing the debate. I have met him to discuss specific concerns, and the invitation to do so again remains open to him. If he has received specific complaints or concerns from his constituents, or from charities or non-governmental organisations operating in Glasgow about standards of accommodation or related services, I certainly extend my offer for him to contact me and to raise any matters directly, as I have indicated.

I again underline my willingness to continue discussion and dialogue outside the debate this afternoon. If issues are being brought to his attention directly, I want to know whether individual cases are being raised in relation to property standards or otherwise, so that we can ensure that they are dealt with effectively and promptly, not just in terms of the contracting arrangements we have with Serco, but equally to enable asylum seekers using accommodation in Glasgow to be reassured about the seriousness that we attach to complaints when they are made.

May I make a general point about intimidation or hatred towards anyone as a consequence of their background, faith, colour or creed? I take a very uncompromising approach to that: it is utterly unacceptable. We are working with the police here and with Police Scotland to ensure that we have a clear understanding of incidents that may occur. Equally, we want to give a strong reassurance about the approach that this Government take, working with the devolved Administrations and in particular the Scottish Government, who have the devolved responsibility in relation to crime. All right hon. and hon. Members present in the debate would want to give the very strong response that, whatever our feelings about the result of the referendum, that does not provide any excuse, any succour or any opportunity at all to sow division or hatred in the United Kingdom or the countries that make up the UK. We all stand united in confronting and combating any of that, wherever it may occur.

[Chris Stephens]

I thank the Minister for those comments; I agree with him wholeheartedly. Is it the Government’s intention to meet organisations such as the Ethnic Minorities Law Centre in Glasgow, which represents EU nationals and asylum seekers? They are reporting to me, as a Glasgow MP, the fear that asylum seekers and EU nationals have. Given the message the Minister is sending, it would be very useful if the Government wrote to such organisations or met them. I hope he will consider that.

[James Brokenshire]

If the hon. Gentleman has details of groups or organisations that are making those representations to him, I will certainly be pleased to follow up on that. There are regular visits to Scotland by representatives of UK Visas and Immigration, which has the lead responsibility on these issues. I had officials there last week in relation to a number of these issues. However, if the hon. Gentleman is picking up specific concerns and if there are groups that he thinks there would be a shared value and benefit in meeting in order to understand those concerns and to telegraph the clear message that I hope I have given in this debate, I will of course be very willing and happy to follow up on that. I am grateful to him for his intervention in that regard.

I underline the fact that the UK has a proud history of operating an asylum system that looks after individuals seeking refuge from persecution and we are committed to providing safe and secure accommodation while asylum cases are considered. I am very grateful to the city of Glasgow for its participation in the asylum seeker dispersal scheme and for the support it has provided over many years to asylum seekers.

I welcome this debate. There have been a number of debates on issues relating to support for asylum seekers. As I have already said, I certainly want to continue the dialogue and ensure that we are getting feedback from colleagues as well as from non-governmental organisations and others that take an interest and are engaged in these matters.

For those asylum seekers who do not have independent means of support, the Government provide access to support services in accordance with the obligations of the 1951 United Nations convention relating to the status of refugees—the Geneva convention. The COMPASS contracts provide asylum seekers who claim to be destitute with full-board accommodation, in so-called initial accommodation, while their means are assessed, and then with accommodation throughout the United Kingdom—dispersed accommodation—and a small weekly allowance of £36.95 per person per week for food and other essential expenses while their asylum application is considered.

Our existing policy is aimed at ensuring an equitable distribution of asylum seekers and refugees across the country, so that no individual local authority bears a disproportionate share of the burden.

[Keith Vaz]

rose—

[James Brokenshire]

I will of course give way, but let me just finish this point. Historically, Glasgow has been the only local authority area in Scotland to take part in asylum seeker dispersal. However, we are working with COSLA—the Convention of Scottish local authorities—and local authorities in Scotland to encourage other areas to participate. Similarly, my officials are meeting and working with local authorities across the United Kingdom to broaden the number of areas in which supported asylum seekers will be accommodated. I now give way to the Chair of the Home Affairs Committee.

[Keith Vaz]

As the hon. Member for Glasgow South West (Chris Stephens) said, Glasgow is taking a very large proportion of the asylum seekers—I think it was top of the list for the entire United Kingdom that the Select Committee published in our last report. The Minister’s own local authority and other local authorities in the south of England are just not doing enough. I know that he is encouraging them, but why can they not do more to relieve the pressure on local authorities such as Glasgow?

[James Brokenshire]

As the right hon. Gentleman knows—he has questioned me on this issue in the Home Affairs Committee previously—we have a voluntary arrangement for dispersal in respect of asylum seekers. Yes, we are taking steps to encourage more local authorities to contribute and provide that support. It is important to see this in the context of both the really positive support that many local councils across the United Kingdom are providing for the Syrian vulnerable person resettlement scheme and the pressures on some local authorities in respect of asylum-seeking children. The right hon. Gentleman will also be aware of the separate dispersal arrangements that we announced last week in relation to that. Therefore, different councils are contributing in a number of different ways. It is important to recognise the different ways in which many local councils are providing support for refugees and asylum seekers, whether they be adults or children, with the different challenges that each group presents. It is important that we provide appropriate support for them.

In Scotland currently, the only dispersal area is Glasgow. The hon. Member for Glasgow South West recognises that, and we have had discussions about it previously. A meeting took place in February with other local authorities in Scotland to seek their consent to widen the dispersal of asylum seekers beyond Glasgow. Follow-up meetings have explored these issues further, but I certainly encourage the hon. Gentleman to continue to work with the Home Office and the Scottish Government to ensure that we are working together to encourage more local authorities in Scotland to recognise the need to extend that beyond Glasgow.

I pay tribute to the work that many local authorities are already doing in providing support for Syrians arriving under the vulnerable person resettlement scheme. In some ways, that is unlocking many more local authorities, which recognise the contribution they can make and the role they can play. That is a conversation that I am very keen to continue, to ensure that we are indeed looking at the particular concentrations in Glasgow and seeing how we can work together to extend dispersal into other parts of Scotland.

Accommodation standards were the core part of the hon. Gentleman’s contribution. The Home Office is working with its contractors to ensure that all the accommodation provided to asylum seekers is safe, habitable and fit for purpose and that asylum seekers are treated with dignity and respect, taking account of their vulnerability. We are also ensuring that the system is effective and efficient and provides value for money for the taxpayer. I am of course concerned about any allegations of substandard accommodation or misconduct or mistreatment of asylum seekers by our staff or the staff of any contractors. Such allegations are taken extremely seriously and investigated thoroughly.

The suppliers’ housing inspectors are required to visit each property at least once a month and when asylum seekers first arrive at, or depart from, a property. The Home Office also inspects properties and will inspect one third of the properties in the Scotland and Northern Ireland contract area over the course of this financial year. Where Home Office inspections find that accommodation does not conform to the required standards, contractors are provided strict time limits to remedy the defects.

I can assure the hon. Gentleman that the Home Office can, and does, impose penalties on any provider who fails to meet the terms of their contractual agreement. Between April 2015 and April 2016, four service credits were applied for accommodation standard issues in Glasgow. In those cases, the required improvements were made but not within the prescribed timescales; therefore service credits were applied.

The Home Office has improved its inspection regime over recent months not only to ensure that the accommodation standards are being complied with, but to ensure that asylum seekers have opportunities to raise any concerns they have or report any complaints that our providers have not resolved to their satisfaction. This was a core part of the review that we undertook to ensure that we were getting full feedback from service users and therefore not simply relying on providers to provide that feedback, and also to engage with NGOs and charities. That is something that I remain committed to doing to ensure that we get that further, full feedback.

[Chris Stephens]

I thank the Minister for giving way; he has been most generous and we may well get to 4.53 pm. In relation to inspections, one of the big concerns is that asylum seekers are unable to lock their own accommodation and have privacy issues. That is a key concern, so will the Minister look at that and also ensure that inspections are done in such a way that asylum seekers are not left frightened of seeing someone with a uniform, which will mean something different to them from what it would to us?

[James Brokenshire]

I am very happy to look into the issue that the hon. Gentleman has highlighted. If there are concerns about security, assurance or safety, those are of course the sorts of issues that I would want to know are being investigated, so that those in receipt of accommodation have confidence in their surroundings. Equally, I will certainly reflect upon his point about the manner in which investigations and inspections are conducted.

One of the points I was concerned to ensure we reflected upon properly was the manner in which inspections are conducted, so that service users can be confident that they can report problems to those who are inspecting without fearing some comeback to themselves and so that there is no barrier to that taking place. That is why I made the point about talking to NGOs and charities. Sometimes service users do not have that confidence, for whatever reason—whether that be from past experiences of contact with authority figures in their own countries that they have fled from—but if there are issues and they feel confident to be able to report them, we can get the appropriate feedback to understand whether issues are emerging. On that point, it is important to stress that the Home Office has established an advisory board with key NGO stakeholders to better capture the views and concerns of the asylum seekers we accommodate.

The hon. Gentleman raised the point about hotels as well. Under the COMPASS contracts, providers are able to use contingency accommodation to cope with high levels of demand. Again, I have made it clear to providers that this is only ever acceptable in exceptional circumstances and asylum seekers must be moved to appropriate longer-term accommodation as soon as possible. If there has been that accommodation in hotels in Scotland, it is possible that the movements he described may be to move asylum seekers to longer-term, more dispersed accommodation, which is obviously something I would want to see, in terms of overall stability for them. We have been working with the providers on that and have seen recent improvements.

[Chris Stephens]

Will the Minister look specifically at the issue in relation to women asylum seekers? I am thinking about asylum seekers who are unable to get what is known as an HC2 form for healthcare and getting access to a GP. This is a real issue for women asylum seekers, particularly those coming into the country fleeing sexual violence, for example. I would be obliged if the Minister looked specifically at that issue.

[James Brokenshire]

If there are some further specifics, I would be grateful if the hon. Gentleman wrote to me or provided the details. I was aware that towards the end of 2015 there were some temporary issues with attendance at NHS appointments, following the closure of the initial accommodation block and an increase in the number of service users. My understanding was that these issues had been addressed and all asylum seekers are triaged by the NHS for health screening when they arrive, but if there are emerging issues or if there is a specific point about the form that he highlighted, I would be very pleased to look into that for him.

[Keith Vaz]

I am grateful to the Minister for giving way a second time; he is always generous in these debates in taking interventions. Taking him back to his point about hotels, of course they sometimes have to be used in emergency situations. Does he agree that it is preferable in those circumstances that the entire establishment, or a wing of the establishment, is used, rather than parts of an establishment? There is evidence that it causes an enormous amount of resentment on the part of the normal paying customers in a hotel when asylum seekers are present. Indeed, the asylum seekers themselves feel disadvantaged, because they are getting different meals to those who are normal hotel-goers. This should be exceptional, but there is a crisis in asylum accommodation and it does have to be dealt with.

[James Brokenshire]

I am grateful for the right hon. Gentleman’s intervention. There are examples where we have sole-use hotels, as well as examples where rooms have been taken as part of the continuing use of the hotel. My focus is on seeing those numbers come down and moving to a position where there is not a need for reliance on hotel accommodation, and is therefore on looking at that overall capacity issue. That also comes back to his point about widening and looking for new areas to establish dispersed accommodation and working with providers to find ways to get further access. A significant amount of work has been taking place on that over the course of this year, and there is continued work engaged on that.

Where there is a need, at times, for hotel accommodation to be used, whether that be shared-use or not, it is important that providers do that in a respectful way, ensuring that no issues of stigma are attached. I am obviously familiar with the discussions that the right hon. Gentleman and I have had on other things relating to issues of stigma. Again, I take a firm view on ensuring that we do all we can to prevent any of those matters from arising. That is a clear point that we have underlined to our service providers on the approach they take. I suppose what I would say to him is that I recognise the points he makes about sensitivity and the appropriate use of accommodation. We take that into careful consideration and we make those points to the providers.

The hon. Member for Glasgow South West also highlighted the potential extension of the COMPASS contracts. Officials are continuing to carefully consider the extension of existing contracts in accordance with their terms. The timing of any decision to extend the COMPASS contracts is subject to ongoing commercially sensitive discussions with providers. In deciding whether to extend the contracts, the Home Office will take a number of things into account, including the performance of the contracts and the value for money they offer to the taxpayer.

The Government are committed to doing everything necessary to protect the rights of asylum seekers and provide them with the safe and secure accommodation they deserve. Any complaints relating to the standard of accommodation will be investigated promptly and necessary remedial action will be taken. In closing, I reiterate my thanks to Glasgow for the proud role it has played in welcoming and supporting asylum seekers over many years.

Question put and agreed to.

Resolved,

That this House has considered the provision of services for asylum seekers in Glasgow.

Dormant Betting Accounts

Tuesday 5th July 2016 Westminster Hall

16:40

[Mr Philip Hollobone (in the Chair)]

In the third part of our Scottish National party afternoon, we now move on to the important subject of dormant betting accounts. I call Ronnie Cowan to move the motion.

[Ronnie Cowan (Inverclyde) (SNP)]

I beg to move,

That this House has considered dormant betting accounts.

It is a pleasure to serve under your chairmanship, Mr Hollobone, and I am grateful for the opportunity to lead this Westminster Hall debate. Members here today will know that problem gambling continues to blight too many communities across the United Kingdom. Like alcohol or drug addiction, gambling has the terrible power of being able to destroy a person’s life and inflict financial and emotional misery on victims and their families.

In recent years, there has been greater recognition of gambling-related harm and the damage that it can cause. Despite the greater awareness and increased funding for support services, it has been suggested that there are still around 450,000 problem gamblers in the UK. The sheer scale of the problem makes it clear that the UK Government have a responsibility to do more. I have devoted much of my time as a parliamentarian to pursuing this issue. I believe that the money contained in dormant betting accounts could, and should, be used as an additional source of revenue for organisations to assist people with gambling-related harm.

[Julian Knight (Solihull) (Con)]

I congratulate the hon. Gentleman on securing this important debate and I share his concern about the devastating impact of gambling addiction, but does he recognise that the gambling industry has started to take some measures in that respect, such as the “When the Fun Stops, Stop” campaign, which is very high profile? Betting is a private transaction between an individual and a bookmaker and we must be very careful about setting a precedent for the state confiscating private property, even in such a worthy cause.

[Ronnie Cowan]

I have no issue with what the hon. Gentleman is saying. I agree that “When the Fun Stops, Stop” is a very strong campaign led by the gambling organisations, and they should take credit for that. I am not here to lambast gambling as a concept; what we are looking at is problem gambling and facilitating a trigger that I believe we can use to help people who find themselves in that unfortunate situation.

[Dr Paul Monaghan (Caithness, Sutherland and Easter Ross) (SNP)]

Does my hon. Friend agree that gambling and debt are often symptomatic of economic and social decline and that the creative use of dormant bank accounts could benefit and bring some relief to such communities ?

[Ronnie Cowan]

I absolutely agree with my hon. Friend and colleague, and hopefully I shall shine some light on that later in my speech.

Why do dormant betting accounts exist? When I was a boy in the ’60s, I used to enjoy watching the racing on the television with my Uncle Charlie. We would spread out the pages of the newspapers in front of us and gamble. We would watch the racing, pick our horses and calculate how much to bet. Spread betting taught me more about checks and balances than my economics teacher ever did. Because Charlie was a regular gambler, he had an account with the local bookies. From the comfort of his living room he phoned the bookie and placed his bets. Charlie would drop into the bookies during the week and pay his debts or pick up his winnings. The bookie knew Charlie, and the books were balanced weekly.

As technology has advanced, so has our ability to access gambling, which we can do from our phones or tablets at any time of the day. We also now live in a more disposable world. People once worked their entire lives at the same company, lived in the same street all their married lives, banked with the same bank and went to the same place on holiday every year. Now it is easier to change, and we are encouraged to change and move and to take up new offers.

Betting companies tirelessly promote free bets and other generous offers to encourage new customers to sign up. It is not unusual for people to have half a dozen or more accounts with different companies to take advantage of those offers. People can only remember so many user names, passwords and accounts, and eventually, they lose interest or forget about an account that may only have a few pounds in it. Over the passage of time, the accounts become dormant, but do we know how many accounts there are and do we know how much money they contain? The answer to both of those questions is no.

In preparation for the 2010 Department for Culture, Media and Sport report, companies were approached to give a financial breakdown of the amount of money involved in dormant or similar accounts. A majority refused, either on the grounds of commercial confidence or because they claimed to be unable to produce the figures. Betfair provided data about the size and scale of dormant betting accounts, but on a confidential basis. Under the current arrangements, dormant betting accounts are simply reverted to the company profit line after a specified amount of time.

[Julian Knight]

Will the hon. Gentleman clarify what he defines as dormant betting accounts? For exactly how long does he think there has to be no activity on the account for it to qualify as dormant?

[Ronnie Cowan]

I shall certainly go on to do that because it is an area of some concern. There is no definition of that as yet and I think there should be.

Companies have different definitions of “dormant”. For instance, Gala Coral define it as 400 days of no activity whereas Ladbrokes define it as 12 months. The report commissioned in 2010 for the Department for Culture, Media and Sport proposed that when a betting account became dormant, 25% should be added to the company profit and 75% should be transferred to good causes. The report also concluded that if a voluntary scheme could not be established with betting companies, legislation should be enacted requiring them to contribute 75% of the unclaimed amount. Dormancy in this instance was defined as 18 months of no activity and the money was only taken once all efforts had been made to contact a customer regarding their account.

In April this year, I wrote to Ladbrokes, Gala Coral, Paddy Power, William Hill and Betfred regarding their policy towards dormant betting accounts and problem gambling. Unfortunately, Betfred and Paddy Power did not respond to my letter. William Hill, Gala Coral and Ladbrokes gave me the courtesy of a response, but all strongly rebuked my statement that the issue of gambling is one that blights a number of communities and households.

The response from Ladbrokes was perhaps the most insightful for people wishing to learn how gambling companies view their own services. It said that

“rather than a blight on local communities and individuals as you suggested in your letter, I strongly believe that our shops are a real part of their local areas. Many of our colleagues know their customers by name and face and our shops often provide a social outlet for customers to meet other people, over a cup of tea or coffee, whilst having a flutter on their sport of choice.”

Betting companies may paint a rosy picture of gambling as a harmless pastime, but that is a misconception. The reality is that the proliferation of betting shops on our high streets is seen by my constituents as an unwanted symptom of economic and social decline.

Online betting accounts are also part of the problem, making it easier than ever for problem gamblers to become bankrupt, fall behind on their mortgage payments or experience divorce or family troubles because of addiction. Is that the experience of most gamblers? No, it is not. Do the majority of punters bet responsibly? Of course they do. The experience of the problem gambler—that is who we are seeking to help—and the wide-reaching ramifications of their actions far outweigh the experiences of the majority of punters who visit the bookies for a cup of tea and a £2 bet. For example, I am aware of one problem gambler who stole almost £850,000 to fund his addiction. The Gambling Commission concluded that Gala Coral had failed in its duty to prevent money laundering and problem gambling and added that the company’s safeguards against both were inadequate. Gala Coral agreed to pay back £850,000 to the victims of the crime and to pay £30,000 to the commission for the cost of the investigation.

Some will say that enough has already been done to tackle problem gambling and that adding money from dormant betting accounts is not necessary. They will highlight the financial contribution that betting companies already make to organisations that assist with gambling addictions. Figures released by the Gambling Commission show us why we should be sceptical of those who say that enough is already being done. Last year, British gamblers lost £12.6 billion and losses have risen every year since April 2011. Online betting accounted for a third of the total losses. In 2014-15, the charity GamCare reported an 18% increase in calls from problem gamblers and a 39% rise in clients receiving treatment.

We can conclude without hesitation that betting companies have no interest in voluntarily signing up to a dormant betting account scheme such as that envisaged in the 2010 Government report. Their view has been unambiguously stated through their unwillingness to outline how much money is in dormant accounts and their hesitation in engaging with me on the subject.

In conclusion, I hope that the Minister takes away three points from my contribution. First, the UK still has significant and worrying levels of problem gambling. Secondly, betting companies have no interest in voluntarily signing up to a scheme as proposed in Don Foster’s 2010 report. Thirdly, only the UK Government have the power to ensure that good causes benefit from the potential funding locked in dormant betting accounts. The UK Government have a duty of care and the time for paying lip service is over. It is time for the UK Government to act on the recommendations laid out in the 2010 report, and in turn help the many individuals and families who have been affected by gambling-related harm.

[Mr Philip Hollobone (in the Chair)]

Because of the injury time carried over from the previous debate, this debate can, in theory, go on until 5.53 pm. The recommended limits for the Front-Bench spokespeople are five minutes for the Scottish National party, five minutes for Her Majesty’s Opposition and 10 minutes for the Minister, but obviously we have a lot of time to play with.

16:51

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Inverclyde (Ronnie Cowan) on securing this important debate, and I declare an interest as somebody who spent seven years of her life working in high street betting shops.

The potential negative effects that gambling behaviour can have on those who develop an addiction is an issue that does, and should, cause great concern.

[Julian Knight]

I understand the concerns about problem gambling, and I think we all share those concerns. However, for a moment, we ought to consider the fact that the gaming industry creates thousands of jobs, and 70% of the population take part in some form of gambling during the year without any poor side effects. Gambling is not always a negative story.

[Patricia Gibson]

I take on board the point that the hon. Gentleman makes so well. He encourages me to jump forward to something that I was going to say later, which is that, although most people gamble responsibly, we have to recognise that in some cases gambling causes huge problems and distress not just to families but to communities. The proposal to use dormant betting accounts to help deal with the damage that gambling often causes for too many people has something of a beautiful synchronicity to it. I take nothing away from the fact that gambling, for most people, is an enjoyable pastime. One thing does not necessarily preclude the other. We can recognise the benefits and the negative consequences of gambling.

The problems caused by gambling should make us pause for thought from a public health and policy perspective. Indeed, the prevalence and ease of access to gambling should give us all cause for concern, even those of us who do not have a particular problem with gambling. Gambling behaviour is increasingly a subject of public health and policy interest, and there is widespread recognition that some people who engage in gambling activity can experience harm. I think we can all agree that the deregulation of gambling in 2005, allowing online gaming companies to advertise on UK media, gave rise to potentially worse problem gambling while, at the same time, offering greater leisure opportunities for those who enjoy gambling in a healthy spirit.

The online gambling industry is worth nearly £2 billion a year in the UK, which shows that it makes a significant contribution to our economy, but we must not let that blind us to the difficulties that it throws up and that we have to deal with. There is plainly a need for more education and support, and the matter of dormant betting accounts has already been visited in this place.

There are a number of reasons why dormant betting accounts arise. It might be that the account holder has died or has decided no longer to engage in gambling at all. Given the current competitiveness in the market, customers may regularly transfer their credit between betting accounts held with different companies, meaning that old accounts can easily be forgotten.

In the event that a betting account falls into a dormant state, betting companies will try to contact the customer to make them aware of it. However, companies will often use the dormant account as a way to coax customers back with promises of free bets. In the event that the customer does not reactivate their account, the money left in the dormant account reverts to the company’s profit line after a period of time through an accountancy procedure. For the information of the hon. Member for Chester on the definition of a dormant account—

[Julian Knight]

I think the hon. Lady meant me when she said the hon. Member for Chester.

[Patricia Gibson]

Sorry, is that wrong?

[Julian Knight]

It’s Solihull.

[Patricia Gibson]

My apologies.

[Julian Knight]

No, that is very perceptive as I was actually born in Chester.

[Patricia Gibson]

That must have been what I was thinking of. I apologise to the hon. Gentleman for changing his constituency without consulting him.

For the information of the hon. Member for Solihull (Julian Knight), the definition of a dormant account may vary depending on who is asked. If we were to move the matter forward, that is an argument we could have. Would an account be dormant after, for example, 12 months or 18 months? There is a debate to be had about that. Today, that is beside the point because we are talking about the principle of dormant accounts, not ones that have simply been unattended for a few months.

[Craig Mackinlay (South Thanet) (Con)]

Has the hon. Lady gathered any evidence as to exactly what steps the betting companies take to locate the person who holds the dormant account? It is often the case that people deposit from their credit or debit card, and can withdraw money at will. Betting companies hold people’s debit and credit card numbers. In the hon. Lady’s estimation, would it help if funds were just returned automatically after a certain amount of time, if that card is still live? Might that obviate some problems we are discussing?

[Patricia Gibson]

It might obviate some of the problems but, as the hon. Gentleman will be aware, debit and credit cards also fall into disuse. I own credit cards that I have not used for months or years and that I probably could not use now. Cards get changed and personal identification numbers get updated, so I am not sure that that would be a permanent way forward. The problem is that, when betting companies make contact with people who have dormant accounts, it is very often a lever to encourage them to gamble more. I am not sure that that is helpful.

The way forward is to use the funds from accounts that have fallen dormant to do some good for those who have difficulties with gambling. To be quite honest, I cannot see what is controversial about that. Hon. Members might throw up all sorts of issues such as privacy and the intrusion of the state but, in the long term, we are talking about doing something for the greater good.

[Julian Knight]

The key point is whether the amount of money required to administer such a measure would swallow up virtually all the money that is brought back from the dormancy arrangement. There are no definable figures, so a good starting point would be to pressurise betting companies to find out exactly how much money is in dormant accounts. We would then know exactly what good that money could do.

[Patricia Gibson]

The hon. Gentleman makes an interesting point; he talked earlier about the voluntary participation of the betting industry. To establish the exact sums involved—which I believe are significant, although I could be wrong—we really need the betting industry on board. Companies are quite reluctant to go down this road, for reasons that I am sure they could explain well enough themselves. The proposal has some merit, but how much money are we talking about? Let us have that conversation. Why would anybody be afraid or reluctant to have that conversation? I leave that thought hanging in the air for the hon. Gentleman to mull over at his leisure.

I have no doubt that the sums held in dormant accounts may be surprisingly large. Why do I say that? For the National Lottery, which allows 180 days for people to claim their prize money, unclaimed winnings, although not the same as dormant accounts, amounted to 1.5% of sales in 2008-09. That is not a high proportion, but it amounted to £78.2 million, a sum that any charity or group of charities would be delighted to have. We are talking about significant sums of money that could do much to mitigate the harm, damage and distress that gambling addictions all too often cause. We are not talking about a hill of beans; we are talking about quite a windfall—pardon the pun—for gambling charities. In 2009-10, unclaimed pool betting dividends on UK horse races totalled £944,000. Again, such dividends are not the same as dormant accounts, but the figure indicates the kinds of forgotten sums that could be put to better use rather than sitting in some account or being used on somebody’s profit line.

Of course, as with any proposed change, we will have naysayers, not least in the gambling industry, telling us that it cannot be done. They will say, “This is the intrusion of the state. Where is people’s privacy? Where are people’s rights? We cannot ensure that the money will minimise gambling-related harm.” Why not? What is the obstacle here? I know the gambling industry is an obstacle, but surely policy cannot be made due to pressure from companies with a vested interest in the status quo. Whenever someone makes a proposal on any aspect of public life, there are always a hundred reasons to say no, but in this place surely we can look to the greater good and find enough reasons to say yes.

We are not starting from scratch. A way forward can be found by implementing the findings of previous reports, as mentioned by my hon. Friend the Member for Inverclyde, in the form of a voluntary scheme for high street betting shops, while requiring online and remote gambling operators to have their accounts annually audited to identify accounts that have been unused for, say, 18 months—the amount of time is up for debate. As a starting point, the operators could then provide 75% of the money in those accounts for good causes. What could possibly be wrong with that? Using money left in dormant accounts to help fund organisations working to minimise gambling-related harm would have a beautiful synchronicity that I find quite compelling, and I can honestly see no downside. All that is required is political will.

[Mr Philip Hollobone (in the Chair)]

Ronnie Cowan gets two minutes at the end to try to sum up the debate, which I am sure he is looking forward to. I am looking forward to the next speech from the hon. Member for Luton North. What a great day it is to see such a stalwart of the Back Benches propelled on to the Front Bench of Her Majesty’s Opposition.

17:03

[Kelvin Hopkins (Luton North) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Hollobone. I will try to live up to your flattery—it may have been a compliment, but I feel flattered.

I congratulate the hon. Member for Inverclyde (Ronnie Cowan) on securing this debate. I want to call him my hon. Friend, because he is a friend. Although he is not a party political friend, we are both members of the Select Committee on Public Administration and Constitutional Affairs and we have spent many happy hours discussing matters on that Committee. The hon. Member for North Ayrshire and Arran (Patricia Gibson) made another excellent speech. I agree with both speeches in their entirety, but I will share a few thoughts of my own.

The hon. Member for Inverclyde is seeking effective Government action to address dormant betting accounts, which is a matter of great seriousness. He has, not for the first time, raised the issue of problem gambling—compulsive or addictive gambling—about which I, too, have been concerned for many years. I sympathise with his view. I am, of course, old enough to remember the first betting shops opening in the 1960s; later in that decade the first UK inland casino, Caesars Palace, opened in my Luton North constituency. There has since been progressive relaxation of regulations governing gambling establishments, the use of fruit machines in places of entertainment, and so on.

The last Labour Government were pressed by the gambling industry to allow the opening of many mega casinos across the country, which I and many others in my party opposed, and the proposal was largely seen off by the House of Lords. But that Government made the installation of fixed odds betting terminals possible. I think I was the first person to use the term “crack cocaine of gambling” in the Chamber to describe FOBTs, although I did not coin the phrase.

I occasionally gambled moderately in my youth. I bet a shilling each way on a horse or two, which shows how old I am. One of my dearest friends, sadly now deceased, wisely observed that gambling is a pleasure for which he usually had to pay. We would do rather better if we all had that attitude. However, that sensible attitude is not given to all gamblers. The opportunities and temptations to gamble dangerously have increased over the decades, and gambling addiction is now an enormous social problem. We need Government action and legislation to reduce harmful gambling, and I do not accept the spurious notion that freedom means that the state should not involve itself in such matters. The state has a duty to help protect us from danger, as with alcohol and other things.

[Julian Knight]

Will the hon. Gentleman enlighten us as to what other prohibitions he would like to see introduced?

[Kelvin Hopkins]

I will address some of them later, but I will not be specific. I have only been in my job for a few days, and I have yet to be fully briefed on where my party stands on this matter, so I have to be careful—I suspect that I would go further than my party might like—but I hope to persuade my party to pursue proper action. I will not specify that action today but, so long as I am in this job, I will seek to persuade my party.

The notion of freedom is overplayed. We were the last country to make wearing a seatbelt compulsory in cars and, of course, a lot of people died because they did not wear their seatbelt. We all started wearing seatbelts after it became compulsory, and hundreds of lives have since been saved every year. That is just one of many examples where the state intervenes to protect us from ourselves and to make us more sensible than we would otherwise be. Most of us are sensible, but some people are not and require a little encouragement from the law.

Fixed odds betting terminals are, of course, responsible for much of the most problematic gambling in our communities. As gambling has been progressively relaxed, we have seen the problems increase. FOBTs continue to cause immense damage to people’s lives, destroying families and driving some of our poorest people into penury and massive debt.

Today, we are discussing what should be done with the considerable sums left in dormant betting accounts and suggesting practical ways of using those sums for beneficial social purposes. One suggestion is to find appropriate ways of using the moneys to help support problem gamblers, and detoxing is one way in which they could be helped. There should be a suitable public agency—here we go, perhaps my left-wing views are coming out now—or public fund to which these moneys could be transferred with appropriate safeguards. If all dormant betting accounts were required by law to be declared and specified in the accounts of gambling companies each year, we would know how much those accounts were worth. We could then decide what to do with them. The sums might be very small, and it might not be worth doing anything with them because the administration would be too expensive, but like the hon. Members for Inverclyde and for North Ayrshire and Arran, I suspect that the sums will be considerable—they will be in the many millions and possibly even billions.

The 2010 Department for Culture, Media and Sport report by the former right hon. Member for Bath, Don Foster, who has now been elevated to the other place, suggested that new bodies should not be created. Although I applaud his good work, I beg to differ. A publicly accountable body that operates transparently could provide a useful and secure home for such dormant account funds. Former ownership could be registered with all necessary and available details so that if the moneys were ever claimed, they could be returned to the rightful owners, but many owners will have forgotten or lost the money, or died or whatever. Considerable sums could be collected and used for beneficial public purposes. Support for sporting activities, especially for the young, would be another obvious use. No one would lose, and claims by rightful former account owners would be honoured.

[Julian Knight]

The hon. Gentleman says that no one would lose, but surely if money is taken away from companies, the employees and the shareholders lose?

[Kelvin Hopkins]

Well, yes, profits might be dented a bit, but I doubt that employees would lose, especially if they were properly represented by trade unions, as many of them are. I am frequently lobbied by members of my own union about their jobs in local casinos. It is possible that profits might be affected by the interest earned on such accounts, but the money could be used for good social ends rather than being wasted through lost opportunity costs.

Legislation would be required, of course, to facilitate such a system and require bookmakers and others to release the funds, but I see no downside for the public in what I suggest. I hope that these thoughts take hold at least within my own party, and hopefully with the Minister too, who I know is socially concerned. I hope that she, like me and the Scottish National party Members, is concerned about the damage caused to many ordinary people by dangerous gambling. I do not wish to say any more. Perhaps in another debate I might branch out rather further into my interventionist approach to policies to make people’s lives better and safer.

[Mr Philip Hollobone (in the Chair)]

We look forward to that. Meanwhile, in this debate, we can in theory go on until 5.53 pm, but we do not have to.

17:11

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Tracey Crouch)]

On day two after returning from maternity leave, I already have the honour and pleasure of serving under your chairmanship, Mr Hollobone. I place on record my thanks to my colleague and right hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett) for covering my portfolio for the past five months. I also take this opportunity to congratulate the hon. Member for Luton North (Kelvin Hopkins) on his appointment. We have worked together on many issues, not least due to our shared interest in alcohol addiction. This is an opportunity for him to use his freedom to make policy while nobody is looking. Go for it!

I congratulate the hon. Member for Inverclyde (Ronnie Cowan) on securing this debate. I am grateful for the opportunity to discuss dormant betting accounts and the incredibly important issue of research, education and treatment for gambling-related harm. I thank the other hon. Members who have participated in this debate for their informed and helpful contributions.

Gambling is a legitimate leisure activity enjoyed by many people, but I am absolutely clear that we must do all that we can to protect vulnerable people from gambling-related harm. Hon. Members may well be aware that I am extremely passionate about this issue and have championed it for many years. I will touch on that in more detail in a bit, but first I will concentrate on dormant accounts and unclaimed winnings, which is worthy of consideration in some detail.

“Dormant accounts” tends to refer to online or telephone accounts in which a customer has deposited funds and which have then seen no activity for a set period. That time period, as others have said, varies between operators and can be anything from a few months to more than two years. If the account remains dormant beyond that period, many operators will absorb the funds into their profit line.

The previous Government commissioned an independent report to investigate whether unclaimed winnings or money in dormant accounts could be put to good use. The report was undertaken by Lord Foster of Bath, and acknowledged a number of practical, technical and legal issues that would need to be considered in order to take forward any proposals in the area. One of the report’s key findings was the lack of information about how much cash was lying dormant in such accounts. Further work would need to be explored, either in voluntary discussions with the operators or by introducing a new licence condition via the Gambling Commission, although I heard what the hon. Member for Inverclyde said about his own approach to getting some of that information from the operators.

In my view, any additional money for the treatment of gambling harm must be a good thing. Therefore, I see the potential benefits of directing funds that have been left dormant for a set period of time towards education on gambling-related harm, research into it, treatment and prevention. Members may be aware of the Dormant Bank and Building Society Accounts Act 2008, which allows the Government to direct money left untouched in bank and building society accounts for more than 15 years to good causes.

In March this year, a new independent commission on dormant assets was established to support Government, to identify additional pools of unclaimed assets and to work with industry to encourage the voluntary contribution of those assets to good causes. The commission will report and make recommendations to Government on the feasibility of expanding the dormant assets scheme before the end of the year, and it is considering unclaimed gambling winnings as part of its asset scoping work. Relevant sector organisations, including the Gambling Commission, have provided submissions to the call for evidence. Officials from my Department are in contact with colleagues at the Cabinet Office, and I will stress to them the need to work closely together, to see what progress can be made as part of the forthcoming recommendations on the feasibility of expanding the dormant assets scheme.

I have taken a close interest in gambling addiction for some time. By all accounts, it is the silent addiction—the one that gets the least interest and funding, especially compared with drugs and alcohol. Sadly, there is often a link between gambling addiction and other addictions that might not always be identified. Therefore, as the secondary harm, gambling addiction might well go unnoticed until it is too late. Research indicates that the vast majority of those who gamble do so without problems and overall rates of problem gambling remain low, at less than 1% of the total adult population, yet I am sure that we are all acutely aware of the devastation that gambling addiction can cause. The NHS website estimates that there are nearly 600,000 problem gamblers in Great Britain. I was struck by GamCare’s estimate that for each problem gambler, there may be 10 to 15 other people whose lives are adversely affected by their activities.

The health implications of problem gambling are such that there is a clear overlap with public health policy and practice, especially on mental health issues and substance misuse. I have spoken with my ministerial colleagues in the Department of Health, and officials from that Department and mine have met to discuss the issue. My officials continue to take this work forward.

Returning to funding for gambling-related harm, it would be remiss of me not to highlight that the gambling industry contributed more than £7 million to the Responsible Gambling Trust to fund research, education and treatment for gambling-related harm last year. Under their current licence requirements, all gambling operators must make an annual financial contribution to one or more organisations that perform research, education and treatment. The vast majority choose to contribute to the RGT, the leading charity in the UK committed to minimising gambling-related harm, which aims to prevent people from getting into problems with gambling and ensure that those who do develop problems receive fast and effective treatment and support.

The RGT’s funding priorities are guided by the national strategy advised by the Responsible Gambling Strategy Board and endorsed by the Gambling Commission. I was heartened to see in the national responsible gambling strategy that the gambling industry is now committing significant resources to harm minimisation, over and above its voluntary contributions to the RGT.

[Kelvin Hopkins]

The Minister mentioned the staggering figure of 600,000 problem gamblers. That requires more than rehab and treatment; it requires measures to prevent people from getting into that situation in the first place.

[Tracey Crouch]

I agree completely. I know people who have lost everything in their lives to gambling. We must ensure that we work across Government not just to tackle harm but to prevent people from getting into such situations in the first place. The one thing that I know about gambling is that it is pretty indiscriminate in terms of who becomes addicted, much like addictions to alcohol or drugs. When we talk about vulnerable people, and especially when we talk about gambling in general, we often think about deprived communities—I see it in my own community in Chatham—but the truth is that people from any walk of life can become addicted to gambling and lose absolutely everything as a consequence. That is why we have to do much more on prevention and treatment of gambling.

To return to what we are doing in research, education and treatment, it is clear from the strategy that gambling-related harm is a complex area—I know that at first hand from speaking to people in my constituency, from knowing individuals and from reading the letters I have received as Minister responsible for gambling policy. I therefore welcome the work undertaken by the RGSB in the national responsible gambling strategy published in April. For the first time, the strategy was put out for public consultation and subsequently agreed by all those who have implementation responsibilities. It will help the industry, the Gambling Commission and the Government to focus our responses, and indeed our resources. The areas that the strategy will support include setting research priorities and determining best practice in preventive measures, effective treatment and targeted interventions aimed at reducing gambling-related harm. The RGSB is now working with the RGT to estimate the costs of the activities identified in the strategy, and the Government will work very closely with the Gambling Commission and the RGSB on its implications.

The hon. Member for North Ayrshire and Arran (Patricia Gibson) made the point that this is a debate about principle, and she is right. Let me be clear: I am sympathetic to the principle. There are practical issues that need to be discussed, but my view is that every extra pound put into preventing or treating gambling harm is a good thing. I thank the hon. Member for Inverclyde again for securing this debate and other Members for their valuable and informed contributions. I take problem gambling seriously and am deeply committed to ensuring that the gambling industry makes appropriate contributions to these important areas, including funding programmes of research, prevention and treatment of gambling-related harm. It is clear that Members who have spoken so passionately on this issue today and in other debates share that aim.

17:21

[Ronnie Cowan]

I believe we are heading to a vote, so I shall be extremely brief. I welcome the Minister back from maternity leave; I hope the transition is not too difficult for her. I thank the hon. Member for Luton North (Kelvin Hopkins) for his kind words—keep the faith, comrade, despite your new lofty position! I also thank my comrades the hon. Members for North Ayrshire and Arran (Patricia Gibson) and for Caithness, Sutherland and Easter Ross (Dr Monaghan) and those Opposition and Government Members who were here earlier.

I am not lambasting all gambling. The issue is problem gambling, and we have to address it in some way, shape or form. The funds are potentially there to be partitioned off and used responsibly. BetVictor is based in Gibraltar and many other betting companies are based abroad. They have the technology, and their first option must always be to trace the owners of the money. If they cannot do that, let us see what we can do with it in a positive fashion.

I believe I heard words of progress from the Minister. My one reservation is that the Department for Culture, Media and Sport’s report, which was written by the then Liberal Democrat MP Don Foster, was published in 2010 and we do not seem to have moved any further since then. I hope we are now starting to move in the right direction.

Question put and agreed to.

Resolved,

That this House has considered dormant betting accounts.

17:23

Sitting adjourned.

Written Statement

Tuesday 5th July 2016 Written Statements

Tuesday 5 July 2016

Intelligence and Security Committee: Annual Report

Tuesday 5th July 2016 Written Statements

[The Prime Minister (Mr David Cameron)]

The Intelligence and Security Committee of Parliament (ISC) has today laid before Parliament its annual report for 2015-16. I am grateful to the ISC for its report and for the work that has gone into it.

[HCWS58]