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Martin Vickers (Cleethorpes) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
Creating an economy that works for all is a key priority of this Government. All regions are benefiting from the £12 billion local growth fund, and our industrial strategy will boost sustainable economic growth across the UK. Devolution deals are giving areas the tools they need to make the right economic decisions. We are supporting the northern powerhouse and the midlands engine, and we are investing more than £100 billion in infrastructure across the UK over the course of this Parliament.
Martin Vickers
I thank the Chancellor for his reply and am encouraged by it, but there has always been a feeling in northern Lincolnshire that we are somewhat peripheral from the northern powerhouse and that the focus has been too much on Leeds and Manchester. Could he reassure us that that is not the case? North East Lincolnshire Council has a number of innovative regeneration projects in process. Will he or one of his team agree to meet a delegation from north-east Lincolnshire in order to pursue them?
Mr Hammond
I reassure my hon. Friend that that is not the case. North-east Lincolnshire is very much a focus of the Government’s attention. We have agreed growth deals with the Humber local enterprise partnership worth more than £110 million, including support for a regeneration programme for the centre of Cleethorpes. I am sure that one of my ministerial team will be very happy to meet him and his council colleagues.
Rachel Reeves (Leeds West) (Lab)
The floods in Yorkshire, including in Leeds, last Boxing day caused devastation, and many businesses have still not reopened. What conversations is the Chancellor having with insurance companies, which have restricted cover, increased premiums and put up excesses, thereby not only risking creating ghost towns in many of our communities, but risking jobs, too?
Mr Hammond
That is a matter on which my right hon. Friend the Minister for the Cabinet Office leads, but I have a considerable understanding of the problem, as my own constituency was subject to serious flooding in 2013-14. I will talk to my right hon. Friend and make him aware of the hon. Lady’s concerns.
Anna Soubry (Broxtowe) (Con)
May I thank you, Mr Speaker, for allowing Nottingham to begin to take over Parliament today? My right hon. Friend the Chancellor knows of the great benefits of the queen of the east midlands, because he used to work in Nottingham, and he believes in the huge value of infrastructure projects. Is he minded, as he prepares his autumn statement, to bring forward HS2, making sure that the east midlands hub is in Toton in my constituency, and the electrification of the midlands main line, all of which will help the great city and county of Nottinghamshire?
Mr Hammond
Nottinghamshire is, indeed, a part of the country that I know well and have a great deal of affection for. The Government are completely seized of the need for infrastructure investment to support the productivity performance of our economy. My right hon. Friend the Transport Secretary will look at the priority to be afforded to different specific projects and will make statements in due course.
Chris Leslie (Nottingham East) (Lab/Co-op)
Given that the east and west midlands together could generate significant growth for our economy if they got the right road, rail and skills infrastructure, and given that today is Nottingham in Parliament day, will the Chancellor acknowledge that the autumn statement should bring forward those ambitions for the midlands engine?
Mr Hammond
The Government are committed to the midlands engine. The hon. Gentleman is absolutely right to say that the midlands conurbation overall has a weight of population and economic activity that allows it to be a rival to the hub of London and the south-east. As I said to my right hon. Friend the Member for Broxtowe (Anna Soubry), announcements about specific projects will be made in due course by the relevant Minister.
Kit Malthouse (North West Hampshire) (Con)
One of the most important ways in which the Chancellor could boost economic growth outside—and, indeed, in—London and the south-east is by energising small business. Will he consider reviewing the small enterprise investment scheme, in the hope of simplifying it and of thereby seeing a wall of private cash invested in starting and maintaining small businesses?
Mr Hammond
My hon. Friend is right. Ensuring the supply of funding to start-ups and smaller enterprises as they grow is a key to the future of our economy. I assure him that all schemes, taxes and other such structures will be reviewed in the run-up to the autumn statement, and I will let him know my conclusions on 23 November.
Mr Dennis Skinner (Bolsover) (Lab)
Is the Chancellor of the Exchequer aware that his predecessor introduced a scheme that was based on robbing Derbyshire County Council of £155 million in cuts and promising to give it less than 20% of that money back? No wonder the people in Bolsover marketplace do not call it the northern powerhouse; it is the northern poorhouse.
Mr Hammond
I know that my right hon. Friend the Secretary of State for Communities and Local Government will want to look at the allocation of funding to local authorities, including Derbyshire County Council. As the hon. Member for Bolsover (Mr Skinner) will know, there are many powerful advocates for Derbyshire on both sides of the House.
Mr Speaker
I wish the hon. Member for Solihull (Julian Knight) a speedy recovery. He may ask his question from his seat.
Julian Knight (Solihull) (Con)
Thank you, Mr Speaker. The Chancellor will be well aware that the west midlands has a trade surplus with China, thanks to Jaguar Land Rover in Solihull and wider manufacturing. On their visits to BRIC nations, previous Chancellors have been keen to trumpet business in the northern powerhouse. Will this Chancellor help the cogs of the midlands engine to turn by taking west midlands businesses with him on future visits?
Mr Hammond
Indeed I will. It is an important part of the role of a Chancellor to act as a champion for businesses in the north and the midlands, and to draw the attention of inward investors such as the Chinese and the Indians, who are already heavily invested in the west midlands, to the opportunities that exist in the UK beyond London and the south-east. Such opportunities are not always as obvious to foreign investors as those that exist in London.
Stewart Hosie (Dundee East) (SNP)
In order to boost growth outside London and the south-east, there should be a laser-like focus on manufacturing and its associated innovation research and development, but the UK’s record on R and D spending is lamentable compared with that of our international competitors. May I ask the Chancellor how he intends to remedy that? Will he take the opportunity of the autumn statement to reverse the decision to convert innovation funding from grants to loans?
Mr Hammond
We have supported £22 billion of R and D spending across the UK through the tax credit system. The hon. Gentleman is right; the UK’s productivity performance is weak compared with that of its principal competitors, and our investment in R and D is significantly less than that of many of our principal competitors. I promise him that we are acutely aware of that challenge, and I will address that challenge in the autumn statement on 23 November.
Stewart Hosie
I will take that as a veiled good news story at some point to come. In order to boost growth we need to take exports more seriously, including to the EU, given that our trade balance has gone into reverse over the past two years. To effect that, what efforts is the Chancellor making to rule out a hard Brexit, with visas, tariff barriers and an end to the customs union, all of which the Treasury says could lead to the loss of £66 billion of revenue, a reduction in GDP of around 7.5% and a threat, estimated conservatively, to half a million jobs?
Mr Hammond
I know that the SNP does not like a good news story, and I am sure that the hon. Gentleman will have been able, by 23 November, to think up a suitable response just in case there is such a story on that day.
On the wider issue of managing Britain’s exit from the European Union, the Prime Minister has been very clear. We understand the instructions that we have received from the British people, and within our obligation to deliver those we will seek to get the very best deal we can with the European Union that maximises the amount of trade in goods and services between our companies and the markets of the European Union, and between European companies and the UK market.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Financial services are one of the sectors most exposed to Brexit, but it is not just jobs in Canary Wharf and the square mile that are at risk; it is jobs throughout the UK, in Manchester, Leeds, Birmingham, Edinburgh and beyond. The messages that the Government have sent so far have been incoherent and counterproductive. Firms need assurance that they will get comparable access to the single market and the ability to retain EU nationals who work for them. Will the Chancellor help finally to put an end to his Government’s chaos today and make a promise to deliver both?
Mr Hammond
The hon. Gentleman is right to identify financial services as one of the areas that is particularly concerned about the way in which the exit from the European Union is managed, because the industry is particularly dependent on the passporting regime that is in place. He is also right to draw attention to the often overlooked fact that 75% of financial services jobs are outside London. This is an important UK-wide industry.
On the specific points that the hon. Gentleman makes, I have certainly sought to reassure financial services businesses that we will put their needs at the heart of our negotiation with the European Union. We understand their need for market access. We also understand their need to be able to engage the right skilled people. I have said on the record—I am happy to say this again today—that I do not believe that the concerns the British people have expressed about migration from the European Union relate to those with high skills and high pay. The problem that people are concerned about relates to those taking entry level jobs. I see no likelihood of our using powers to control migration into the UK to prevent companies from bringing highly skilled, highly paid workers here.
Patrick Grady (Glasgow North) (SNP)
Mr Virendra Sharma (Ealing, Southall) (Lab)
The Financial Secretary to the Treasury (Jane Ellison)
In negotiating double taxation treaties, the UK’s objective is to reach an agreement that allocates taxing rights on a basis that is acceptable to both countries.
Patrick Grady
Restrictive tax treaties inhibit the ability of developing countries to spend money on public services, such as schools and education. Research from ActionAid shows that, along with Italy, the UK has the highest number of such treaties. Is the Minister willing to work with the Department for International Development to change that?
Jane Ellison
I disagree with the hon. Gentleman. In fact, double taxation treaties help developing countries. They often remove uncertainty about the way in which businesses choose to make investments, and they open up the route to fairer and more open trade. The majority of the UK’s double taxation treaties are based on the OECD model double taxation convention, and we work very closely with countries to reach mutually acceptable treaties.
Jane Ellison
As I have said, there is a rolling programme of renegotiation to make sure that treaties reflect modern standards. More broadly, the UK has a very proud record on capacity building in this area. We lead international efforts to support developing countries in tax capacity building. One example is that DFID funds the Global Forum, the World Bank and the OECD to provide technical assistance to partner countries. We can be proud of that record.
Charlie Elphicke (Dover) (Con)
In negotiating double taxation regimes with developing and advanced nations, will the Minister look at transfer pricing in terms of establishment provisions so that we can broaden the tax base and stop the likes of Apple, Amazon and Google gaming our tax system?
Jane Ellison
The UK is committed to ensuring that UK companies pay a fair share of tax in the countries in which they operate. On all the wider aspects of international tax fairness, I reiterate that the UK has taken a very strong stance across the board on a number of issues. I am always happy to speak to my hon. Friend about this issue because he is very much an expert, and I would welcome his views on all such issues.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
The Government have taken steps to maintain a world-class business environment that helps UK manufacturers to thrive. That is why we have cut corporation tax from 28% to 20%— it will fall further, to 17%—and why we have supported £22 billion of research and development through tax credits for UK companies. This environment helps our manufacturers to grow as innovative, competitive companies.
Gordon Henderson
I welcome the Minister’s response, but what message is he sending to international manufacturing companies with operations in Britain about this country’s future international competitiveness as we leave the European Union?
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Manufacturing depends on long-term investment. What assessment has the Minister made of the impact of our potentially leaving the European Investment Bank, and what progress has there been in any discussions about us maintaining our stake?
Mr Steve Baker (Wycombe) (Con)
Does my right hon. Friend agree that reducing anti-competitive market distortions is both a great fiscal way to promote manufacturing and a way of ensuring our country is best placed for new trade deals?
Ms Margaret Ritchie (South Down) (SDLP)
Apart from lowering corporation tax what other steps will the Chancellor and his ministerial team take to incentivise manufacturing industry in Northern Ireland?
Mr Gauke
The freedom for Northern Ireland to set its corporation tax rate is an important measure in itself. We look forward to further progress on that. Of course, there will be an autumn statement next month in which the Government will set out their economic policy. I have mentioned corporation tax and R and D tax credits, which we have made more generous. Those measures will have helped manufacturing businesses in Northern Ireland and elsewhere.
Kevin Hollinrake (Thirsk and Malton) (Con)
I welcome the Government’s ongoing commitment to the northern powerhouse given the impact that that can have on manufacturing, in particular in my constituency, and the allocated funds for the A64 at Hopgrove. Does the Minister agree that such investments must seek maximum economic benefit? The current proposal from Highways England will simply kick an existing pinch point down the road if we do not see the dualling of that carriageway on the A64.
Mr Speaker
That had an extremely tangential relationship with the matter of manufacturing industry, therefore meriting an extremely pithy response.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Last month, the Chancellor proudly dismissed his predecessor’s plans to cut corporation tax to 15%. This week, however, we hear of plans hatched by senior Government figures to cut corporation tax as low as 10% as part of a so-called Brexit nuclear option, despite the fact that both the British Chambers of Commerce and the Institute of Directors have stated that cutting corporation tax would not be at the top of their wishlist. Will the Minister put an end to his Government’s reign of chaos and confirm his long-term position on corporation tax, so that businesses have the stability they deserve?
Mr Gauke
I am not sure whether I would use the phrase “reign of chaos” if I was a Labour Front Bencher. Let me be very clear. The UK Government have rightly reduced corporation tax from 28% to 20%. We have legislated for it to go down to 17%. If there are any further announcements they will be at a fiscal event, whether an autumn statement or a Budget.
Rebecca Long Bailey
I am afraid that the Government chaos we have seen on corporation tax is sadly replicated on investment. The Chancellor promised to tear up his predecessor’s Budget and develop an industrial strategy, before denying he was planning a spending splurge. A recent Ipsos MORI poll showed that almost two thirds of Britons agree that the country is not doing enough to meet its infrastructure needs, and the Opposition agree. Will the Minister end his Government’s chaotic record on investment and confirm how much he plans to invest in infrastructure, on what, and where he will get the money from?
Mr Gauke
On the subject of corporation tax, I point out that it was not that many months ago that on one day the shadow Chancellor condemned the reduction to 17% while in Committee the Labour party voted for it. I will be clear that it is no good coming forward with incredible plans to spend £500 billion on infrastructure without any idea of how those plans will be paid for. The Chancellor will make a statement on 23 November on our policy on this issue. The Labour party really needs to change track if it is to have some credibility.
Craig Whittaker (Calder Valley) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
The £4.4 billion priority school building programme was established to rebuild or refurbish those school buildings in the very worst condition across the country. The programme’s second phase was announced in May 2014 and feasibility studies are now being carried out. In addition, we are allocating £4.2 billion across 2015 to 2018 to schools, local authorities, academy trusts and voluntary aided partnerships to maintain and improve their schools.
Craig Whittaker
I thank my right hon. Friend for his reply. For many years now, Todmorden High School in Calder Valley has been the top priority for a rebuild. It is currently taking a good chunk of maintenance money from other schools just to stay open. Will my right hon. Friend look at this carefully, so that we can finally give the pupils of Todmorden high school the school they deserve?
Mr Gauke
I understand my hon. Friend’s disappointment, and that of his constituents, that Todmorden was not successful in its application to the priority school building programme. We need to prioritise schools with blocks in the very worst condition. I understand that Todmorden’s buildings are now receiving some investment through the local authority, which will have competing priorities for capital resources, but I am sure my hon. Friend will continue to make the case for the school.
John Pugh (Southport) (LD)
Given the £180 million overrun on phase one, will the Government be tempted to backfill with second-rate private finance initiative buildings? What role will PFI have in the programme?
Mr Gauke
Let me address our record. We have spent £18 billion since 2010 on the school estate and we are committed to a further £23 billion so that pupils can be taught in facilities that are fit for the 21st century. We of course want to ensure that that is funded in the most appropriate, value for money and sustainable way.
Rehman Chishti (Gillingham and Rainham) (Con)
Sir David Amess (Southend West) (Con)
Karl MᶜCartney (Lincoln) (Con)
Kelly Tolhurst (Rochester and Strood) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
World-class infrastructure is central to raising our country’s productivity. About 3,000 infrastructure projects have been delivered across the UK since 2010, with another 600 projects worth over £480 billion in the pipeline. We are investing over £13 billion in transport across the north, with £5 billion in the midlands. Nationwide, we are making the largest investment in roads across the UK in a generation, and rail is experiencing a level of investment not seen since Victorian times.
Rehman Chishti
I thank the Chancellor for that answer. Will he ensure that the Lower Thames Crossing option C, preferred by the Highways Agency, is quickly taken forward? That will enhance the investment in Medway and the whole of the Thames Gateway area, facilitating house building, encouraging business growth and supporting existing infrastructure in the Kent area.
Mr Hammond
I commend my hon. Friend for the way he has campaigned on this issue. We recognise the importance of this crossing to supporting the economy on both sides of the Thames, particularly given the constrained capacity at Dartford. It will produce significant benefits locally, regionally and nationally. The Government will be making a decision on the location and route in due course.
Sir David Amess
Conservative-controlled Southend-on-Sea Borough Council was very disappointed that it was unsuccessful in its bid to the coastal communities fund. Will my right hon. Friend agree to meet me, the leader of the council John Lamb and others, so we may share with him why we need investment in infrastructure, particularly as Southend is the alternative city of culture next year?
Mr Hammond
My hon. Friend makes a good point. The Government recognise the ongoing growth potential of Southend. The Government’s substantial investment to date in Southend includes over £40 million through the South East local enterprise partnership growth deal and the 2014 city deal. The Government announced last year that the coastal communities fund would be extended over this Parliament. At least another £90 million of further funding is available to promote sustainable economic growth and jobs in the UK’s coastal communities. I strongly encourage Southend-on-Sea Borough Council to apply to this fund.
Karl MᶜCartney
Given my right hon. Friend’s welcome commitments on regional infrastructure and my plethora of conversations with his Cabinet colleagues, Ministers and the leader of Lincolnshire County Council over the past few days and years, will he now commit to working with us all to secure the funding for the dualling of the eastern bypass around my constituency of Lincoln, which will greatly support not only the further development of the city but the whole of Greater Lincolnshire?
Mr Hammond
I recognise my hon. Friend’s commitment to his preferred version of this project. Funding has been made available for the provision of the Lincoln eastern bypass, in the county council’s preferred version of single carriageway road. As my hon. Friend will know, the county council is not in favour of restarting the process from scratch and introducing further delays, so I am afraid I cannot give him any confidence that additional funding will be made available to adopt a dualling solution.
Kelly Tolhurst
I was pleased that in the last Budget statement, the previous Chancellor, my right hon. Friend the Member for Tatton (Mr Osborne), announced a new Thames Estuary 2050 Growth Commission to focus on delivering essential infrastructure development for this crucial region. Will my right hon. Friend assure me that this commission, which is led by Lord Heseltine, will continue to be supported?
Mr Hammond
Yes. I am glad that my hon. Friend has raised this point. The Thames Estuary 2050 Growth Commission has been asked to develop an ambitious plan for north Kent, south Essex and east London. I am grateful to Lord Heseltine and his fellow commissioners for leading this important work, and I look forward to receiving the interim report ahead of next year’s Budget, when I will respond to it.
Helen Goodman (Bishop Auckland) (Lab)
When the Chancellor came to the Treasury Select Committee last week, he was unsure whether analysis of the effects of leaving the European Union was being done by region. He has had a week to find out, so will he now give us an answer?
Mr Hammond
If the hon. Lady checks the video, she will find that I was not unsure. I was advising my civil service colleague that I understood that we were doing such regional analysis. We are carrying out regional analysis, which will help to inform the Prime Minister’s negotiating strategy.
Caroline Flint (Don Valley) (Lab)
Does the Chancellor agree that energy efficiency should be a priority for infrastructure development, both nationally and regionally? To that end, will he seriously consider earmarking the proceeds of the shale gas sovereign wealth fund for energy efficiency measures so that we can not only save on bills, but create jobs and encourage innovation?
Mr Hammond
I am not necessarily in favour of earmarking or hypothecation of funds for that specific purpose, but the right hon. Lady makes an important point. We have a serious challenge on this country’s energy capacity over the next 20 years, and we are going to have to invest eye-wateringly large sums of money—perhaps £100 billion—just to ensure that the lights stay on. Of course it makes sense to look at ways of reducing demand for energy through energy conservation measures alongside the demands for new energy generation plants.
Sammy Wilson (East Antrim) (DUP)
Last week, the Infrastructure Minister in the Northern Ireland Executive announced that a major infrastructure project in Belfast would be stopped because it was unlikely to be completed before we leave the EU so the funding would be lost. Has the Infrastructure Minister had any discussions with the Chancellor about this project, and will the right hon. Gentleman assure the Northern Ireland Executive that any funding gap for any project started before we leave the EU will be bridged by the Treasury?
Mr Hammond
I am not aware of the project to which the hon. Gentleman refers. As far as I am aware, the Northern Ireland Executive has not been in touch with the Treasury about it. We have, in fact, made two announcements. I announced that all projects signed in the normal course of business before the autumn statement would be guaranteed, irrespective of whether they continued to be funded by the EU after our exit. I subsequently made a further statement saying that after the autumn statement any new EU-funded projects would, provided they passed a UK value-for-money and strategic priorities test, get the same guarantee: however long they last, they will be funded by the UK Treasury once EU funding stops.
Peter Dowd (Bootle) (Lab)
This Government continue to be in chaos over their flagship so-called northern powerhouse. I live there, and I see it every day: they have no long-term industrial strategy. Meanwhile, notwithstanding what the Chancellor said earlier, regional economies are suffering from a lack of sustained investment in their infrastructure, and particularly transport infrastructure, by comparison with our major European partners—a problem now compounded by Brexit. What plans does the Chancellor have to end this uncertainty and finally bring about a rebalancing or an enhancement of regional transport infrastructure expenditure?
Mr Hammond
I urge the hon. Gentleman not to talk down the north and the significance of the northern powerhouse. The northern powerhouse is an important part of the Government’s strategy, and the new Prime Minister has made clear her commitment to it. The hon. Gentleman is, however, right to draw attention to the shortfall of infrastructure investment in the United Kingdom overall, by comparison with our principal competitors. That is an issue that we must address at national level. We must look for the best value for money—the projects that will make the greatest contribution to closing the productivity gap across the UK—and that is what we will do.
Mr Laurence Robertson (Tewkesbury) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
The Office for Budget Responsibility is responsible for forecasting contributions to the European Union. It will update its forecast in this year’s autumn statement, but the forecast for the UK’s gross contribution in 2017-18 was £12.6 billion at the time of the Budget.
Mr Robertson
Notwithstanding all the spending pledges that have been made today and recently, hospitals, schools, police and roads in my constituency certainly need a spending boost. Does the Minister agree that the sooner we leave the European Union, the sooner that money will be available to them?
Mr Gauke
The amount of any money saved will depend on the overall fiscal situation and the broader economic environment. Decisions on spending will be made in the round in autumn statements and Budgets, but while we remain members of the European Union, we must of course comply with the requirements to pay into it.
Emma Reynolds (Wolverhampton North East) (Lab)
May I press the Chief Secretary on this point? On the day of the referendum, I met an NHS worker who had voted to leave the European Union precisely because she thought that more money would be available for the NHS, thanks to the “£350 million a week” that was emblazoned on the Vote Leave bus. When we leave the European Union, will we get that money?
Mark Field (Cities of London and Westminster) (Con)
I appreciate that getting back some of our EU contribution was a factor in the decision to leave the European Union, but will my right hon. Friend confirm that the Government are, at least at this stage, open to the idea of making some contribution in the future if we are to secure some sort of access to the single market for financial services, or, indeed, making some contribution in relation to passporting and equivalence?
Mr Gauke
What is important is for the United Kingdom to secure the best possible deal in our negotiations with the European Union. I do not think that it makes sense to bind our hands and close down options at this point; nor do I think it right for us to provide a running commentary on the matter.
Geraint Davies (Swansea West) (Lab/Co-op)
Wales will continue to receive convergence funding while we are in the EU, but will the Treasury nevertheless honour the Prime Minister’s pledge to electrify the Great Western Railway line all the way to Swansea in order to make it part of the pan-European network and stimulate manufacturing and exports?
Edward Argar (Charnwood) (Con)
The Economic Secretary to the Treasury (Simon Kirby)
The Government are committed to helping the midlands to unleash its economic potential and make it a powerful engine for growth. We are backing skills and innovation. We are supporting the automotive and aerospace industries. We have made investments, and we are putting power in the hands of local people by devolving budgets from Whitehall to a new mayor for the midlands. I hope that it is in order, Mr Speaker, for me to mention our excellent candidate, Andy Street.
Edward Argar
Earlier this year, a Grant Thornton report suggested that the east midlands could contribute £53 billion to the UK economy by 2025, reflecting the central role that Leicestershire and the east midlands continue to play in driving the country’s growth. Does my hon. Friend agree, however, that if we are to sustain that record of success, it is vital for us to continue to deliver on investment in Leicestershire’s road, rail and broader infrastructure?
Mr Speaker
Order. May I remind colleagues of the merits of the blue pencil?
Simon Kirby
Good advice, Mr Speaker, as ever.
I thank my hon. Friend for his interest in the east midlands. I agree that improving transport between and within our major cities is vital to help them fulfil their productive potential. As the Chancellor has said, we are investing over £5 billion in transport infrastructure to put the midlands at the heart of a modern transport network.
Mr Philip Hollobone (Kettering) (Con)
May I press the case for the continued electrification of the midland main line and that there be no further delays to this excellent project?
Christina Rees (Neath) (Lab/Co-op)
The Financial Secretary to the Treasury (Jane Ellison)
If anyone feels their tax credits have been incorrectly withdrawn owing to errors by Concentrix, they should urgently contact Her Majesty’s Revenue and Customs, which will review all complaint cases and will, and indeed does, pay redress where appropriate.
Christina Rees
Labour welcomes the cancellation of the Concentrix contract and the fact that it will be administered in-house by HMRC staff. Will the Minister reassure the thousands of single parents and families, many in my Neath constituency, that their tax credits erroneously stopped by Concentrix will be reinstated immediately so their children can be kept safe and warm and not go unfed as winter approaches?
Jane Ellison
The hon. Lady is absolutely right to draw the House’s attention to the importance of prioritising vulnerable claimants. HMRC held a further drop-in for colleagues recently, on 19 October; it was attended by 15 Members, and a number of complaints and issues were raised, which we are on the way to resolving.
On restarting claims, the key is to get the right information. HMRC has taken back a vast number of cases, and I will say more about this tomorrow. The priority is to get the right information, to get claims started again as soon as the facts are established.
Helen Jones (Warrington North) (Lab)
When the Minister wrote to me after I asked a previous question, she said:
“Amounts to be paid to the supplier are reduced if actual performance fails to meet standards set in the contract.”
Does that include penalties for withdrawing tax credits when they should not have been withdrawn?
Jane Ellison
The terms of the contract between HMRC and Concentrix are obviously in the public domain, and it is right that when performance is not as per the contract there are associated deductions, but I will be in a position to give the House more information about the contract in tomorrow’s Opposition day debate.
Hannah Bardell (Livingston) (SNP)
A number of my constituents have been affected by this issue, not least a frontline police officer who had her benefits withdrawn, which meant her childcare could not be paid and she was potentially not going to be able to go to work. Luckily, my office intervened and we were able to get her benefits, but what is the Minister going to do to compensate people for upset and unjust treatment?
Jane Ellison
There are two points here. First, as I have said, if people feel their tax credits have been incorrectly withdrawn because of errors they should contact HMRC, which will review that and redress can be made. Secondly, customers can ask for mandatory reconsideration if they do not feel that their circumstances have been correctly identified. Sometimes that is because people do not send through the right information.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
The Chancellor of the Exchequer (Mr Philip Hammond)
The UK will leave the European Union and will introduce control of migration between Britain and the EU. Working with officials across Government, the Treasury continues to undertake a range of analyses to inform the UK’s position for the upcoming negotiations and we have made it clear, I am afraid, that we are not going to provide a running commentary, but we do want the best outcome for the UK and that means pursuing a bespoke arrangement that will allow our companies maximum access to the European market.
Shabana Mahmood
The Chancellor’s predecessor had many a failed target and plan, one of which was a target of £1 trillion in exports by 2020, a target that is nowhere near being reached even with full access to, and membership of, the single market. Meanwhile other countries such as Germany currently export more than we do to China and other growth markets. Does the Chancellor agree that the failure of the Government to improve the UK’s export performance has left us unable to take full advantage of opportunities outside the EU and more vulnerable to—
Mr Speaker
Order. I think the hon. Lady should leave a full version of her question in the Library of the House.
Mr Hammond
The Government can of course support and enable exporters, but we cannot do their job for them. It is for British exporters to make their businesses competitive and to go and sell their wares around the world, but we will do everything we can to support them in that endeavour.
Mr David Nuttall (Bury North) (Con)
Does my right hon. Friend agree that unless, bizarrely, the European Union were to impose trade sanctions on the UK, there would be absolutely nothing to prevent us from having access to the single market when we leave the EU?
Mr Hammond
My hon. Friend is right in the sense that every nation that is a member of the World Trade Organisation, as we are, has the right to access other members’ markets on WTO terms. However, WTO terms would be quite challenging for some of our industries. For example, in the automotive industry, WTO terms imply a 10% tariff on cars entering other markets.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Chancellor will know that West Yorkshire is the beating heart of the manufacturing economy in this country, but my manufacturing leaders, and the EEF, feel left out of the loop in relation to their future after Brexit. Can he reassure them, because they are very disturbed about the future?
Mr Hammond
I can certainly reassure the hon. Gentleman that manufacturing industry is very much in the forefront of our thinking as we approach these negotiations. I am sorry that I have not had a chance to go to West Yorkshire, but I have been engaging with businesses in all sectors of the economy, including many businesses from the north that have attended round-tables in Downing Street over the past few weeks to set out their concerns so that we can take them properly into account.
Mr Julian Brazier (Canterbury) (Con)
In welcoming my right hon. Friend’s robust stance on this matter, may I suggest that as there is a large balance of payments deficit with Europe, specifically in the automotive sector, it would be in the EU’s interest to strike a decent deal with us, as he intends to do?
Mr Hammond
Our intention is to get the very best deal we can with our neighbours in the European Union to allow access for our companies to trade their goods and services into the EU. However, I would just caution my hon. Friend: to look at the economic arguments alone is to miss an important point. There is a political debate going on here in Europe, and European politicians are very conscious of the impact of Britain’s departure on their political project. I do not think we can be certain that economics alone will dictate the course of this negotiation.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Chancellor of the Exchequer (Mr Philip Hammond)
The Government have provided a guarantee for all European structural and investment fund projects signed before the autumn statement. We have also provided a guarantee for all ESIF projects signed after the autumn statement and before the UK’s departure from the European Union, provided that they pass the value-for-money test and are in line with domestic strategic priorities.
Luciana Berger
I have listened closely to the Chancellor’s previous answers about regional distribution of investment. The latest figures show that only a quarter of national infrastructure projects are in either the north-west or the north-east of England, with just one of the top-funded 25 projects in that area. With further damaging cuts to public sector net investment due in the remainder of this Parliament, when will the Government address this inequality, match their rhetoric with action and start properly funding the northern powerhouse?
Mr Hammond
I make three points to the hon. Lady. First, we will have an autumn statement in just over four weeks’ time, and I will be able to set out more of our forward plans at that time. Secondly, I am not sure off the top of my head what the population proportion of the UK is in the north-west and north-east regions, but if the figures that she has quoted are correct, I am not so sure that a quarter of infrastructure investment represents disproportionate underfunding. I would need to check that. Thirdly, the very large investment in Crossrail, a strategically important national project, has had the effect of skewing infrastructure investment towards London over the past few years.
James Heappey (Wells) (Con)
The Economic Secretary to the Treasury (Simon Kirby)
I thank my hon. Friend for his interest in both these important topics. The National Infrastructure Commission has estimated the benefits of a smart energy system to be between £3 billion and £8 billion a year by 2030.
James Heappey
I am grateful to the Minister for his response and am pleased that he agrees with the advantages of a smart energy system. Ahead of the autumn statement, will the Minister look at the role that the Treasury might play in digitising our energy system by accelerating the deployment of storage technologies, demand-side response and the upgrade of our distribution networks so that we can achieve the productivity gains he expects?
Simon Kirby
The Treasury will continue to work with the Department for Business, Energy and Industrial Strategy to drive forward a smart energy system. The Government have committed to implementing the National Infrastructure Commission’s recommendations in full.
Steve Double (St Austell and Newquay) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
My principal responsibility is to ensure the stability and prosperity of the economy. In the current circumstances, that requires a combination of near-term measures to respond to the shock that the economy has received and longer-term measures to manage the structural adjustment as the UK transitions out of the EU and to address the UK’s long-term productivity challenge.
Steve Double
Today is my 30th wedding anniversary, so will the Chancellor join me in wishing the long-suffering Mrs Double a happy anniversary? Does he agree that the marriage tax allowance is a demonstration of this Government’s support for marriage? However, take-up has been low, so ahead of the autumn statement is the Chancellor considering increasing the allowance? If he is not, may I encourage him to do so?
Mr Hammond
I certainly join in wishing my hon. Friend and his wife a very happy 30th anniversary. Taking my queue from last week, I probably will not suggest how Mrs Double might commemorate the event.
My hon. Friend is quite right to highlight the value of marriage in society. I hope that I can reassure him that the Government remain firmly committed to supporting this important institution through the marriage allowance. Eligible couples could benefit by up to £432 this year, and we have just passed the landmark of 1 million families who have made successful applications. I agree with my hon. Friend that take-up of the marriage allowance is not high enough, but HMRC will launch a new campaign early next month to increase awareness and take-up.
John McDonnell (Hayes and Harlington) (Lab)
Bringing the Chancellor back to Brexit and the role of his Department—happy anniversary, by the way, to the hon. Member for St Austell and Newquay (Steve Double)—before the referendum, as the hon. Member for Dundee East (Stewart Hosie) said, the Treasury published a paper warning that the impact on Government receipts of leaving the single market would be a loss of up to £66 billion. Last week, Tom Scholar, the permanent secretary to the Treasury, told the Treasury Committee that the figures were “not directly applicable”. The Chancellor then questioned his own Department’s calculations by referring to mitigating factors that were not taken into account. There is fumbling chaos about Brexit not just in the Cabinet, but in the Treasury as well. Will the Chancellor clarify his Department’s exact calculation of the outlook for public finances if access to the single market is not achieved?
Mr Hammond
The right hon. Gentleman can characterise it however he likes, but the simple fact is that all economic modelling must make assumptions. The model that the Treasury produced in April assumed no policy response by Government—we know that there has been a monetary response in the form of the monetary expansion delivered by the Bank of England on 2 August—and that an article 50 notice would be served immediately after the referendum, which we know was not the case.
As for the ongoing work, the right hon. Gentleman will have to wait until 23 November when the Office for Budget Responsibility will publish its forecast.
John McDonnell
No figure is attached to anything that the Chancellor has said, which again confirms the chaos in Cabinet and in his Department. Can I ask the Chancellor to pass on my thanks to the officials who helpfully published on the Treasury’s website a document labelled
“Public Sector Finances Briefing – Official: Sensitive for internal use only”?
The document at least gives us some reliable information in that it confirms that the Government are failing to meet predictions on tax receipts and deficit reduction. It also reveals that that data are based on
“activity from before the referendum so any post referendum downturn will exacerbate this.”
Does that not prove once and for all that far from fixing the roof while the sun shone, this country was scandalously economically ill-prepared and politically totally unprepared for the Brexit decision?
Mr Hammond
Just so that the right hon. Gentleman is absolutely clear, it is quite wrong to suggest that my Department does not have any figures—it does, but I am just not giving them to him.
As for the document that the right hon. Gentleman spent such a lot of time yesterday rather unsuccessfully trying to tout around the media, it was published by mistake, but all the figures in the document have already been published elsewhere. All of them are in the public domain.
Suella Fernandes (Fareham) (Con)
The Financial Secretary to the Treasury (Jane Ellison)
I think that all Treasury Ministers would be delighted to congratulate Aqua Cooling on the innovation award it has won. As has been said, the Government have committed to supporting research and development in British businesses, providing one of the most generous R and D tax credit schemes in the world to UK small business. I am delighted to say that it was claimed by more than 18,000 small and medium-sized enterprises in 2014-15.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Mr Philip Hammond
I am sorry to be boring, but all these issues will be addressed at the time of the autumn statement, when we will have the latest fiscal projections from the OBR.
Stuart Andrew (Pudsey) (Con)
Mr Hammond
As my hon. Friend and the House will know, an announcement has been made that the airports committee this morning decided to move ahead with the north-west runway at Heathrow, and my right hon. Friend the Transport Secretary will be making a statement to the House very shortly. My hon. Friend is absolutely right to say that regional connectivity is vital. Regional slots at Heathrow have been squeezed out by the pressure on the runways there, and we will ensure, as a part of this package, that regional slots are protected in the future.
Stephen Timms (East Ham) (Lab)
Tens of thousands of UK jobs depend on euro-denominated clearing in the UK. Will the Chancellor tell us how important he regards its still being permissible in the UK after we leave the European Union?
Mr Hammond
The right hon. Gentleman has put his finger on an important issue. As he will know, the European Central Bank has already had one go at trying to prevent euro-denominated clearing from taking place in the UK, and it is no doubt a very iconic issue for many of our European partners. It is an important part of the overall financial structure in London and it is not easily separated from the other activities that operate in London, but in terms of the jobs and value attached to it, it is a relatively small part of the total.
Sir Desmond Swayne (New Forest West) (Con)
Mr Hammond
Following the announcement at Budget 2016, UK Asset Resolution Limited has launched a programme of sales of the Bradford & Bingley mortgage assets that it holds. That will be designed to raise sufficient proceeds to repay the £15.65 billion debt to the Financial Services Compensation Scheme and, in turn, the corresponding loan from the Treasury. It is expected, subject to market conditions and ensuring value for money, that this programme of sales will have been concluded in full by the end of 2017-18.
Stewart Malcolm McDonald (Glasgow South) (SNP)
The Government gave £5 million in funding for the refurbishment of the Burrell collection in my constituency, with the money coming from cash collected from the LIBOR scandal. Will the Chancellor consider a similar funding scheme for Holmwood house in my constituency, given that it is the bicentenary of the architect’s birth next year and it needs some TLC?
Mr Hammond
I am glad that at this stage of the process before the autumn statement, I am able to say that all submissions will be carefully considered, and if the hon. Gentleman would care to let me have something in writing, I will happily look at it.
Nigel Huddleston (Mid Worcestershire) (Con)
Jane Ellison
The Government are reviewing the potential options to support regional airports, following the discussion paper that was published last year, and of course we will set out full details of our response in due course. We received 53 responses to the consultation. They were good, constructive, valuable responses and we are looking carefully at them.
Derek Twigg (Halton) (Lab)
What is the Chancellor’s assessment of the effect of inflationary pressures on the prices of goods and food over the next 12 months?
Mr Philip Hammond
Clearly, the decline in the value of sterling will have an inflationary impact. How quickly that passes through into the UK economy is a subject of modelling by all economists who carry out these types of analyses. The Bank of England will very shortly be publishing its next inflation report, and that should give an indication of the forward trajectory.
Mr Philip Hollobone (Kettering) (Con)
Mr Hammond
I am grateful to my hon. Friend, as he has asked me a very important question. He knows that the operation of monetary policy in the UK is independent of Government. Monetary policy, including measures such as quantitative easing, has been highly effective in supporting the economy. Because of the fiscal implications of an indemnity for the Bank, packages have to be formally agreed by the Chancellor. Although I cannot prejudge any hypothetical request, no request for quantitative easing has ever been refused, and I see no reason why circumstances would be different in future.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
The latest reports on the dash for cash in RBS’s Global Restructuring Group show even more misconduct by this bank. Given that we own a majority of RBS shares, does the Chancellor not believe that the UK Government have an obligation to the people of this country to conduct a robust investigation into the allegations of misconduct?
The Economic Secretary to the Treasury (Simon Kirby)
The Financial Conduct Authority is looking at this important issue, and we will wait on its view.
Mr Speaker
Michael Fabricant—not here. That is unprecedented in the history of my being in the Chair. I have never known the hon. Gentleman not to be here, but, fortunately, Mr Philip Davies is here.
Philip Davies (Shipley) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
No UK taxpayers’ money has been used in the EU’s lending to other member states. Only in the event of default would the UK be asked to pay its share.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
What impact has the Secretary of State made of his predecessor’s austerity economics on the nation’s prosperity and would he like to apologise for that divisive and discredited ideology?
Mr Philip Hammond
I assume that the hon. Lady means what assessment I have made. Since 2010, we have brought this country back from the very brink. We have borrowing down from more than 10% of GDP to around 4% with more to deliver. We have created 2.7 million new jobs, making this economy the fastest growing in the G7 for the past three years, and the fastest job creator in the developed world. That is a record of which we can be proud.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
George Kerevan (East Lothian) (SNP)
In light of the upcoming report of the RBS’s Global Restructuring Group and given that past systems of redress for small businesses have been ad hoc and have failed, will the Chancellor meet the all-party group for fair business banking to see whether we can involve a permanent and effective system of redress?
Simon Kirby
The hon. Gentleman makes a fair point, but we should wait until we receive the FCA report before we proceed.
Robert Jenrick (Newark) (Con)
Mr Speaker, you will have seen the latest Office for National Statistics survey that found that Newark is the happiest place in mainland Britain. However, what is testing the people of Newark is the appalling state of their local roads. Will the Chancellor do another favour for Newark, and in his autumn statement bring forward the new Newark northern bypass?
Mr Philip Hammond
As a former resident of my hon. Friend’s constituency, I am delighted to acknowledge that it is the happiest place in Britain. Certainly some of my happiest times and memories are of living there. As I said earlier, we are currently in the process of receiving submissions from hon. Members across the House, and I would be very happy to receive a written submission from my hon. Friend.
Kate Green (Stretford and Urmston) (Lab)
As the Chancellor is considering investment in roads in his autumn statement, will he look sympathetically at the need for investment to support the substantial Carrington development in my constituency, both in the M60-M62 network and in the relief road that will be necessary to support journeys in and out of the Carrington area?
Mr Hammond
I do not know the project that the hon. Lady talks about. I assume that it is a housing development, and we are certainly interested in the way in which infrastructure investment can not only deliver in its own right, but enable much-needed housing development. If she would like to let me have a written submission, I would be happy to look at it.
Several hon. Members rose—
Alex Chalk (Cheltenham) (Con)
Does the Chancellor support Cheltenham’s Cyber Innovation Centre, and does he agree that spending on our world-class defence and security assets, such as GCHQ, can play a vital role in nurturing the high-tech civilian jobs of tomorrow?
Mr Hammond
Yes. I was privileged as Foreign Secretary for two years to have oversight of GCHQ, which is truly a world-class facility, and using that facility not only to ensure Britain’s security but to create a cutting-edge business sector is an entirely sensible thing to do. I welcome the success of the Cheltenham Cyber Innovation Centre.
Implementation of the 1995 and 2011 Pensions Acts
(7 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
I am delighted to have this opportunity to present this petition to the House. It calls for fair transitional arrangements for 1950s-born women who are affected by changes—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Mr Boswell is speaking and other people should not be making a noise in the Chamber while he is doing so. If Members wish to leave, they should do so swiftly and quietly.
Philip Boswell
Thank you, Madam Deputy Speaker.
Women born in the 1950s who are affected by changes to the state pension age are surely bearing an unfair burden. When the Pensions Act 2011 was debated, Ministers promised transitional arrangements to ease the burden, but those arrangements have not materialised, leaving women in my constituency—Coatbridge, Chryston and Bellshill—and many others facing hardship. I thank all those who have signed the petition and those in similar terms presented by other hon. Members. I also thank the Journal Office for its work in this respect.
The petition states:
The petition of residents of constituency of Coatbridge, Chryston and Bellshill,
Declares that as a result of the way in which the 1995 Pensions Act and the 2011 Pensions Act were implemented, women born in the 1950s (on or after 6 April 1951) have unfairly borne the burden of the increase to the State Pension Age; further that hundreds of thousands of women have had significant changes imposed upon them with little or no personal notice; further that implementation took place faster than promised; further that this gave no time to make alternative pension plans; and further that retirement plans have been shattered with devastating consequences.
The petitioners therefore request that the House of Commons urges the Government to make fair transitional arrangements for all women born in the 1950s (on or after 6 April 1951) who have unfairly borne the burden of the increase to the State Pension Age.
And the petitioners remain, etc.
[P001965]
Private Members’ Bills
(7 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Charles Walker (Broxbourne) (Con)
(Urgent Question): To ask the Leader of the House of Commons if he will make a statement on the Government’s response to the Procedure Committee’s second report of this Session on Private Members’ Bills and if he will provide time for that report to be debated.
The Leader of the House of Commons (Mr David Lidington)
The Procedure Committee published its report last Tuesday, 18 October. In my evidence to the Committee last Wednesday, 19 October, I said that the Government were considering the report and intended to respond in detail within the normal two-month timeframe. I am happy to confirm that commitment to the House today.
Mr Walker
I thank the Leader of the House for his answer. Too often on Fridays, when we have private Members’ Bills, this House bleeds. It bleeds credibility and it bleeds standing. The Government are well aware of that fact. The Procedure Committee has been trying for the past three years to bring its concerns to the attention of the House and to gain Government support for some of our modest recommendations to restore some credibility and some faith in the process.
Our recommendations—the Committee’s recommendations —would not necessarily mean that what happened this past Friday would not happen again, but they would demonstrate to the public that we in this place, Back Benchers, take legislation seriously and we take Back-Bench legislation seriously. The truth is that, without the will on behalf of the Government to change Fridays, we will still have too many days when we leave this place downcast and somewhat ashamed at the proceedings that have gone on before us.
We have a listening and concerned Leader of the House. I hope that he will receive our recommendations in a positive way and accept some small part of them, particularly that part that would allow the Backbench Business Committee to assign up to the first four private Members’ Bill slots to Members. That would encourage serious legislators in this place to invest time and energy, working with one another for a year or more, to come up with a legislative proposition that, if it did not command the support of the House, would at least demand the attention of the House when it was brought before it.
Mr Lidington
My hon. Friend has provided a succinct summary of some of the key recommendations of his Committee’s report. He has campaigned strongly and honourably for procedural changes to try to enhance the status of Friday debates on private Members’ Bills. I gave him an undertaking in an evidence session with his Committee last week that the Government would look seriously at his Committee’s most recent report. Clearly, we will need both to consider his recommendations and to have collective discussion in the Government before publishing our response, but that we will do.
Valerie Vaz (Walsall South) (Lab)
I thank the hon. Member for Broxbourne (Mr Walker) for his urgent question. I well remember as a new Member coming in here on a Friday when there was a debate on a private Member’s Bill on daylight saving and Members took so long to talk it out that it was dark by the time we left the Chamber.
One of the recommendations is that the Backbench Business Committee should decide which Bills are worthy of going forward. May I ask the Leader of the House whether the Committee will be expanded on a cross-party basis? It currently has two members from the Opposition, five from the Government party and one from the Scottish National party. The smaller parties are not represented at all.
Does it not appear that the Government would be in control of which Bills are picked? Therefore, will the Committee’s terms of reference and the objectives have to change? Will the Leader of the House have to provide extra time for these Bills, or will they eat into other House business that is currently protected such as Opposition days and Backbench Business debates? When the Bills are picked by the Committee, will they become part of days devoted to Backbench Business debates? If the Government say that they support a Bill, rather than talk it out as the Under-Secretary of State for Justice, the hon. Member for East Surrey (Mr Gyimah), did last Friday, can they not set up a Bill Committee to go through the clauses and amend the measure, just as we do for other legislation? Alternatively, they can come clean and say that they do not support the Bill.
Will the Leader of the House have to look at changing the right of a Member to present a Bill under a ten-minute rule motion and at the procedure for doing so? Finally, he kindly said that he will report back to the House within two months—is that before or after Christmas?
Mr Lidington
Our intention is to publish the Government’s response within the two-month timeframe that has been long established under the conventions of the House. We will respond in detail to the proposals from the Procedure Committee. I am always willing to look with an open mind at proposals, whether from the hon. Lady or from other hon. Members, for changes to our procedures that command significant and, ideally, cross-party support. I do not intend this to be in any way a rejection of what she said, but sometimes proposals are made that, when examined more closely, turn out to have the support of a minority of Members, who feel strongly, but which do not command widespread support.
To respond to another point that the hon. Lady made, it remains the case, as it always has, that if a promoter of a private Member’s Bill has sufficient support among colleagues in all parts of the House to deal with closure motions or insist on a Second Reading, they can do so. Their ability to do so would reflect a genuine surge of support for their Bill from the House as a whole.
Sir Alan Haselhurst (Saffron Walden) (Con)
As someone who has probably had the privilege of listening to more Friday debates than any other serving Member, I support the vehemence of my hon. Friend the Member for Broxbourne (Mr Walker), if not all the recommendations of the Procedure Committee. I hope that the Leader of the House is prepared to allow a fuller debate in which different ideas can be put forward, because we have really got to change the present arrangements.
Mr Lidington
I am happy to discuss further with my right hon. Friend his particular experience as a former Chairman of Ways and Means. I will consider the request for time to be made available, although I would gently say that time is available in the House for debates that is not within the gift of the Government but within the gift of Back Benchers.
Pete Wishart (Perth and North Perthshire) (SNP)
I do not think that we have ever witnessed such a depressing and dispiriting spectacle as the one we saw on Friday. A Government Minister got to his feet to talk out a private Member’s Bill. It was not political knockabout or a party political issue: it was a private Member’s Bill designed sensitively to try to ensure that generations of gay men were pardoned for crimes that no longer exist.
The public could not hold the way in which we conduct business in the House in more contempt. On Friday, they were proved right, and every single fear about the way in which we conduct business was justified. I totally support the hon. Member for Broxbourne (Mr Walker) in his attempt to ensure that we do something about the appalling way in which we deal with private Members’ Bills. It is the one opportunity that we have as Back Benchers to engage in the legislative process and to ensure that we get things on the statute book. We cannot continue to do things as we did on Friday, so I appeal to the Leader of the House to look at the report, treat it seriously and introduce solid plans so that we never, ever get the disgrace of Friday on the Floor of the House again.
Mr Lidington
I repeat the undertaking that I have given once this afternoon that the Government will indeed consider the report from the Procedure Committee very carefully and publish our response to it. As regards last Friday, the Under-Secretary of State for Justice, my hon. Friend the Member for East Surrey (Mr Gyimah), was speaking at 2.30 pm, having spoken for 26 minutes. During that time he took seven interventions, including at least two from the Scottish National party Benches, and refused four SNP requests to give way. I would have hoped that, on reflection after the weekend, the hon. Gentleman and his party would be willing to welcome the fact that the Government’s chosen course of moving an amendment to a Government Bill ensures that the legislative change that the hon. Gentleman and I both want to see will come into effect more swiftly and with many fewer risks that somebody convicted of an offence against a child would receive a pardon than would be the case if we had gone ahead with his hon. Friend’s Bill.
Several hon. Members rose—
Mr Speaker
Order. I intend to terminate exchanges on the urgent question 30 minutes after they started. I would like to accommodate all colleagues, but extreme brevity is required. We will be led in this exercise by Mrs Cheryl Gillan.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
The Leader of the House and I entered the House at the same time in 1992 and we spent an awful lot of time in this Chamber, often sitting through the night. Friday is a good constituency day for many Members of Parliament. Would the Leader of the House look at the possibility of debating private Members’ Bills on other days of the week or even in the evenings when Members are here?
Mr Lidington
As my right hon. Friend knows, that subject has been raised many times. The views and interests of Members vary a great deal on the issue that she has addressed to us.
Mr George Howarth (Knowsley) (Lab)
The Chair and members of the Procedure Committee are to be congratulated on putting forward what I believe are, taken together, a set of good proposals that point the way forward. Will the Leader of the House, who has a reputation as being a reasonable man, acknowledge that the current procedures as they now operate bring this House into disrepute? Does he accept that this short report—the main body of it is only 18 pages long—provides a way forward, and will he undertake to look at it quickly and arrive at what we hope will be a favourable decision as quickly as possible?
Mr Lidington
We will certainly consider the report as quickly as we can, but equally we want to make sure that we have given serious and proper consideration to the various proposals that the Committee has made. It is important that legislation, whether it stems from Government or from a private Member’s Bill, is thoroughly scrutinised in the House of Commons and enjoys a clear majority of support across the House. It would be wrong for legislation that lacked that support or that scrutiny to hit the statute book.
Mr Mark Harper (Forest of Dean) (Con)
You will remember, Mr Speaker, that, before I was fortunate to be in government, I was a regular attender on Fridays. Who knows, now that I am back on the Back Benches, I may well become so again. From my observations it seems to me that the real problem with Fridays is that many colleagues profess support for measures, but do not consider them important enough to bother appearing here in this House of Commons when it is sitting. That is the problem, and Members have it within their own power to deal with that by turning up here and supporting measures that they feel command the support of the House.
Mr Lidington
My right hon. Friend makes a very good point. Last Friday a closure motion was moved, but only 57 Members were present to vote in its support.
Caroline Lucas (Brighton, Pavilion) (Green)
I am surprised by what sounds like complacency from the Leader of the House. He knows that one of the reasons that Members cannot always be here is constituency obligations. When we know that his own Minister is going to talk out a Bill, that devalues this place. More than 130,000 people signed a petition when my National Health Service Bill was talked out earlier this year, so can he demonstrate greater seriousness and greater urgency in tackling this massive area of reputational damage to this House?
Mr Lidington
I said that we would consider seriously the proposals from the Committee. The hon. Lady needs to reflect on why her Bill failed to get the support of the majority of MPs.
Philip Davies (Shipley) (Con)
Does the Leader of the House agree that if people are particularly unhappy about a Bill not getting through on a Friday, they should make the effort to turn up to support it, because if at least 100 people turn up to support the first Bill that is taken, it will go through despite any opposition or attempt to block it? Does he agree that it is not too much to expect any Bill that goes through this House to have the support of 100 MPs?
Mr Lidington
I do not always agree with my hon. Friend, but on this occasion he makes a very reasonable point.
Chris Bryant (Rhondda) (Lab)
The thing is that tens of thousands of people were watching the debate last Friday as though it really were a matter of life and death for them, because it was about their own sense of shame, how society had treated them, and whether they would have a possibility of real exoneration. For all the fine words that we hear about 100 Members and all the rest of it, the truth is that last Friday brought the House into disrepute. I have no beef with the Minister; the problem is that the system encourages Ministers to do that week after week. The system is bust and it needs mending.
Mr Lidington
I repeat that as a result of the course that the Government have chosen, Turing’s law will now be enacted within weeks as part of a Government Bill, together with safeguards to ensure that anyone who is not supposed to receive a disregard or pardon will not be able to secure it by subterfuge.
Dr Sarah Wollaston (Totnes) (Con)
I fully support my hon. Friend the Chair of the Procedure Committee. Will the Leader of the House respond to the question he has been asked as to whether he accepts that the existing arrangements bring this House into disrepute? I believe that they do.
Mr Lidington
We will respond in full to the Committee’s report. Over the years, many criticisms of the private Members’ Bill procedure have been made from different quarters. I will take seriously the proposals the Committee has made. However, we also need to ensure that under our procedures, legislation does not reach the statute book, perhaps even creating criminal offences affecting our constituents, unless there is clear demonstrable support within Parliament among a majority of Members for it to be enacted.
Kirsten Oswald (East Renfrewshire) (SNP)
Does the Leader of the House understand that the people watching the unedifying carryings-on in this place when private Members’ Bills, such as that of my hon. Friend the Member for East Dunbartonshire (John Nicolson), are talked out, feel appalled and completely disfranchised? Does he truly think that his Government are acting in good faith in letting this situation continue any longer?
Mr Lidington
As I said, no complaints were made last Friday about filibustering. The Minister took a very large number of interventions during the course of his remarks, as is his normal courteous practice when speaking from the Dispatch Box. The hon. Member for East Dunbartonshire (John Nicolson), the promoter of the Bill debated last Friday, was told by the Government about a month ahead of the Second Reading debate that they would not be able to support it as he had at that time envisaged it.
Mr David Nuttall (Bury North) (Con)
May I urge my right hon. Friend, when he schedules the debate on the Procedure Committee’s report, to provide sufficient time to allow a full discussion of all the aspects of the private Members’ Bill procedure, because part of the problem seems to be that not every Member of this House fully understands what the procedure is?
Mr Lidington
It is a good bit of advice to all Members of the House, recently arrived or more senior, to be thoroughly cognisant of its procedures and to do additional homework from time to time.
Mr Ben Bradshaw (Exeter) (Lab)
As this weekend, yet again, we are plunged needlessly into winter darkness, what happened to the Daylight Saving Bill is a very good example of the Leader of the House being wrong when he says that if a Bill has overwhelming support it can proceed. That Bill did proceed, but the Government killed it by not implementing its provisions. Will he fully accept the recommendations of the Committee in order to restore public confidence and the reputation of this House?
Mr Lidington
That is obviously a matter for other Ministers, and I shall draw the right hon. Gentleman’s remarks to their attention. However, there was, I recall, very strong opposition in certain parts of the United Kingdom, particularly from Scotland and Northern Ireland, to the daylight saving measure that he supported.
Mr Peter Bone (Wellingborough) (Con)
I voted for the closure motion on Friday. The problem was that there were not enough Members here; that is the reason the Bill did not proceed. However, there are occasions when a Bill does get to Committee and can pass this House on Second Reading but is blocked by the lack of provision of a money resolution. That needs reforming. We need to debate this as soon as possible, because there are areas that do need reform.
Mr Lidington
The issue of money resolutions was mentioned in the Procedure Committee’s report, so the Government will respond on it in due course.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Instead of listening, it seems that the Leader of the House is hiding behind excuses about the closure motion not being supported, complacency about filibustering, and the fact that the Minister spoke for 26 minutes. The Minister treated this place, and the viewing public, with contempt. Will the Leader of the House commit to his Government not treating this place with contempt?
Mr Lidington
I completely reject the aspersions that the hon. Gentleman casts on the Minister, who handled last Friday’s business in a thoroughly reasonable and courteous fashion. The hon. Gentleman might ask himself why, if he and his colleagues genuinely wanted the Bill to reach the statute book, it was published only a couple of days before the Second Reading debate.
Kevin Foster (Torbay) (Con)
As a veteran of sitting through talk-outs and the sleep-out, I have seen all sides of the private Members’ Bill process. Does the Leader of the House agree that while there may be merit in the Backbench Business Committee being able to schedule Bills that have widespread support, it must still remain difficult to get it debated, and the key reform is that people should show up to debates?
Ian C. Lucas (Wrexham) (Lab)
Is not the real reason there is a bankruptcy of confidence in the private Members’ Bill system that the Government can always kill a Bill by using methods that are sometimes hidden and sometimes open? We need a shaft of sunlight on this system so that we can restore some confidence. Let us have a debate on it.
Mr Lidington
The convention for many years, under successive Governments, has been that the Government make their view on private Members’ Bills plain during the course of a Second Reading debate. I return to the point that a private Member’s Bill that enjoys genuine majority support within the House has a decent chance of success.
Bob Blackman (Harrow East) (Con)
This Friday, I will have the opportunity to present my Bill, which has all-party support and has been properly scrutinised before getting to this place. Does my right hon. Friend agree that we should not have a lottery to get serious legislation on to the statute book, but require the case to be argued before a Committee before we get to that stage?
Mr Lidington
In the light of the Procedure Committee’s recommendations, I would be genuinely interested in whether my hon. Friend’s suggestion represents the view of the House as a whole, or whether more Members feel that they might lose out through the abolition of the lottery, which very many Back-Bench Members in all parts of the House prize as a great annual occasion.
Helen Goodman (Bishop Auckland) (Lab)
When I was briefly Deputy Leader of the House, I had responsibility for private Members’ Bills. I found that, in practice, it was not Ministers in other Departments who were opposed to them, but officials in the Cabinet Office who did not want to devote the time to the briefings. The right hon. Gentleman has the opportunity to be a reforming Leader of the House and to improve on the performance of his recent successors—will he take it?
Mr Lidington
We shall consider all the recommendations of the Committee and respond within the timescale that the House usually expects.
Jake Berry (Rossendale and Darwen) (Con)
As I am someone who, in the previous Parliament, had the privilege of bringing a private Member’s Bill through this place, I hope that the Leader of the House will give serious consideration to reforms to the system. When I listened to coverage of the day’s proceedings on Friday night, my toes curled with embarrassment at the shabby treatment of the Turing Bill.
Mr Lidington
As someone who has also managed to get a private Member’s Bill on to the statute book, I understand my hon. Friend’s sense of pride. I reiterate that the Government, and the Minister in particular, have nothing to apologise for in the way that Friday’s business was handled. The fact that we now have an amendment tabled in the name of a Liberal Democrat Member of the House of Lords means, most assuredly, that the Turing Bill will be on the statute book much more quickly than if we had resorted to the private Members’ Bill route.
Kirsty Blackman (Aberdeen North) (SNP)
In too many places the Standing Orders of this House give power to the Government at the expense of Parliament. Will the Leader of the House admit that he will not make changes to the private Members’ Bill process because he does not want the Government to cede any power?
Mr Lidington
I point out to the hon. Lady that, through such measures as the creation of the Backbench Business Committee and the provision for the direct election of Select Committee Chairs, we now have a Parliament—a legislature—that is more powerful, less deferential and more outspoken than at any time during my 24 years of service.
Mr Philip Hollobone (Kettering) (Con)
Will the Leader of the House remind the Procedure Committee that there are, in fact, 52 Fridays in any year; that Members can attend all 13 private Members’ Bill Fridays and still have 39 constituency Fridays; and that, given that they involve creating laws of the land and that there are 650 Members, asking 100 Members to turn up to support any Bill really is not too much to ask?
Nick Thomas-Symonds (Torfaen) (Lab)
A constituent wrote to me after last Friday’s filibustering to say, “How on earth can this happen in this day and age?” If the Leader of the House responds positively to the report, will that not at least do something to improve the reputation of this House?
Mr Lidington
I do not know whether the hon. Gentleman was one of the 57 who voted in favour of the closure motion, or whether he was elsewhere at the time. Anyone who read the Minister’s speech on Friday in Hansard, or his subsequent article in PinkNews, will understand and sympathise with the arguments that he posed and will welcome the Government’s proposed legislation to give effect to the Turing Bill.
Patrick Grady (Glasgow North) (SNP)
Is it not the case that the Government accepted the Sharkey amendment simply because my hon. Friend the Member for East Dunbartonshire (John Nicolson) won a raffle? Does he agree that the Procedure Committee’s report brings us closer to the Scottish Parliament system, whereby a Bill that can demonstrate genuine cross-party support can continue to progress through the legislative process, or does he think that that is not the best way to proceed?
Mr Lidington
The reason we are introducing this legislation is that it was a Conservative manifesto commitment.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
SNP Members regard Friday as an extremely important opportunity to work in our constituencies. It is, therefore, not only frustrating for us, but incredibly disrespectful to our constituents, when private Members’ Bills are talked out. Will the Government look seriously at the report’s recommendations, in particular those that tackle the issue of filibustering?
Mr Lidington
No complaint was made about filibustering during the debate on Friday. Members on both sides of the House took part, and my hon. Friend the Minister spoke for a perfectly reasonable length of time and took seven different interventions during the course of his speech. The hon. Lady ought to reflect on that and welcome what the Government have done, which is provide a better, surer course of action than that proposed by her party.
Peter Grant (Glenrothes) (SNP)
May I correct the Leader of the House? In my speech I explicitly said that if the Bill was deliberately talked out by the Government, what should have been one of the brightest days in this Parliament’s history would become one of its darkest. May I therefore invite him to withdraw the suggestion that no complaints were made during the debate? Will the Leader of the House also confirm that several of the interventions that the Minister took were specifically from Back Benchers pleading with him to sit down, stop filibustering and give the democratic, elected Chamber the chance to make a decision?
Given that the Leader of the House is convinced that if a Member cannot get 100 Members in here to support a Bill, it does not deserve to go through, will he tell us how many Members were in this Chamber last night when the Health Service Medical Supplies (Costs) Bill was given its Second Reading?
Mr Speaker
Order. That last point has absolutely nothing to do with the Procedure Committee report. I am sure that the coming off of the topic was entirely inadvertent on the part of the hon. Gentleman, and it therefore requires no reply.
Mr Lidington
We will respond to the report in due course. The problem with the Bill that was debated last Friday is that it was flawed, in that it would have made it possible for people who are living today to receive a blanket pardon, even if they have been properly convicted of offences against minors or offences involving non-consensual sex. That is why the Government consistently took the view that the disregard procedure needed to be followed, and why we have taken swift action to provide for such a scheme though proposed Government legislation to give effect to the Turing Bill.
Airport Capacity
(7 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Transport (Chris Grayling)
With permission, Mr Speaker, I would like to make a statement about airport policy.
Last year, the independent Airports Commission delivered its final report under the chairmanship of Sir Howard Davies. I would like to pay tribute to the quality and professionalism of the commission’s work and express my thanks to all its members. The commission concluded that we need more capacity in the south-east and put forward three viable options for expansion. It unanimously agreed that the proposed north-west runway at Heathrow presented the strongest case. In December, my predecessor came to the House to announce that the Government accepted the commission’s assessment of the need for additional capacity, but made clear that further work was required before a decision could be made on the location of a new runway. That work is now complete.
This is a momentous step for our country. The decisions taken earlier today, which I shall outline in a moment, are long overdue, but they will serve our country for generations to come. I know that some Members have strong convictions on this issue and that everyone in this House will understand the significance of this announcement for jobs; an economy that works for everyone; passengers; the global importance of our country; the environment; and people affected by expansion. It also sends a very clear message that this country is open for business.
It is not an easy issue or a simple process. I make no apologies for the fact that we have taken time to get it right, but today also shows that this is a Government who are unafraid to take difficult decisions and get on with the job. Before I outline the decision that the Government have reached, I want to explain how today’s announcement fits within the planning process and the opportunities that Members will have to contribute.
In the new year, we will bring forward a draft national policy statement, which will include the details of the proposed scheme. As required under legislation, it will be subject to a full and extensive public consultation, followed by a period of parliamentary scrutiny. Only once Members have voted on the final national policy statement and it has been designated will the airport be able to make a detailed planning application.
Strong connections with global partners and the ability to trade with new and growing markets are vital to securing Britain’s place in the world. The UK currently has the third largest aviation network in the world—second only to the United States and China—contributing more than £22 billion to UK GDP. We have the second largest aerospace manufacturing sector, which generates annual exports of £26 billion. Our aviation industry supports almost 1 million jobs and invests £1.7 billion every year in research and development. Last year, UK airports handled more than 250 million passengers—up 5% on 2014—and 2.3 million tonnes of freight.
Heathrow is the busiest two-runway airport in the world, and Gatwick the busiest single-runway airport. Indeed, the London system will be almost entirely full by 2030, with the exception of a small amount of capacity at Luton, and that will be taken up soon afterwards. If we do nothing, the cost to our nation will be significant, amounting to more than £20 billion over 60 years through delays, fewer flights and passengers having to fly from airports elsewhere. In addition, the wider impacts on our economy will be in the region of £30 billion to £45 billion. That is why the decision we have reached today is so important to the future of our country, not just to tackle the immediate shortage of airport capacity, but to set our country on a course to even greater prosperity for future generations.
I have spent a considerable amount of time this summer visiting the different schemes, talking to their promoters, and assessing their strengths and weaknesses. I have been genuinely impressed by the quality of choice available to us and the detailed work that has been put into the three plans. Any one of them would bring benefits to our country. At the end of its work, however, the Airports Commission made a clear and unanimous recommendation to the Government—that we should accept the proposal to build a new north-west runway at Heathrow, subject to a package of measures to make expansion more acceptable to the airport’s local community. Since the publication of that recommendation, my Department has studied in detail not only the report, but new and supplementary information that has emerged about the different options since.
The commission’s report and the subsequent information formed the basis of the discussion that took place this morning at the Cabinet Sub-Committee. As a result of that discussion, the Government have decided to accept the recommendation. We believe that the expansion of Heathrow airport and the north-west runway scheme, in combination with a significant package of supporting measures on the scale recommended by the Airports Commission, offers the greatest benefit to passengers and business, and will help us to deliver the broadest possible benefit to the whole United Kingdom. That approach will deliver the greatest economic and strategic benefits for our economy. It will strengthen connectivity for passengers right across the United Kingdom. It offers a major boost to freight operators. It can be delivered within carbon and air quality limits and, crucially, it comes with world-leading measures to limit the impacts on those living nearby.
In addition to the benefits identified by the commission, the scheme will deliver the connectivity and hub capacity that the UK needs to compete with fast-growing European and middle eastern hubs. The airport’s location means it is more accessible to business and the rest of the United Kingdom by both road and rail. Access to Heathrow is more resilient, and it is better placed as the national freight hub. Ultimately, the proposal will bring the largest benefit to passengers and the wider economy: up to £61 billion over 60 years. But we are not alone in this view. UK airlines and businesses are also clear that Heathrow is the right place to expand.
Before I continue, I would like to pay genuine tribute to the promoters of the other two schemes considered by the Sub-Committee. As I have said, both presented well-developed and compelling cases for new capacity. In particular, I would like to place on record the fact that Gatwick, despite not being selected today, remains a key part of our national transport picture and will continue to do so in the future.
I want to be clear that expansion will not be at any cost to local people, to passengers or to industry. We have to make three assurances. The first is about making Heathrow a better neighbour. We must tackle air quality and noise, and meet our obligations on carbon both during and after construction. Air quality is a significant national health issue that the Government take immensely seriously. That was why we undertook further work, which confirms the commission’s original conclusion that a new runway at Heathrow is deliverable within air quality limits. We remain committed to ensuring that that remains the case. The airport has already committed to industry-leading measures to mitigate air quality impacts. Furthermore, the Government will grant development consent only if we remain satisfied that a new runway will not impact on the UK’s compliance with its air quality obligations.
The broader issue of air quality is something that the Government take very seriously, and the updated evidence base shows clearly that the biggest challenge we face is not the expansion of an airport, but the levels of emissions in urban areas more generally. That is the very reason for our national air quality plan. As part of our ongoing work on air quality, my Department has embarked on a joint project with the Department for Environment, Food and Rural Affairs and the Treasury to identify further ways in which we can tackle the issue. By the time a new runway opens in the next decade, we intend to have made substantial progress on tackling such air quality challenges across our nation as a whole.
On the issue of noise, no airport can be silent, but technology is making aircraft quieter. The new generation of aircraft coming into service have a noise footprint that is typically 50% smaller on departure, and at least 30% smaller on arrival, than that of the aircraft they are replacing. Although planes are getting quieter, however, they still have an impact, which is why we will expect a six-and-a-half hour ban on scheduled flights each night to be a requirement for development consent. That would also see the airport held to clear and legally enforceable noise performance targets. Even with expansion, therefore, fewer people will be affected by aircraft noise than is the case today. We also recognise the importance of providing local residents with a clear, predictable timetable of respite from aircraft noise. That is something local communities value, and we will ensure that it continues once a new runway is built.
I recognise that the decision will have a big impact on people who live close to Heathrow, which is why we have insisted on a world-class package of supporting measures. Communities affected by the decision will be supported by up to £2.6 billion towards compensation, noise insulation for homes and schools, improvements to public facilities and other measures. For those whose homes need to be bought to make way for the new runway, Heathrow plans to pay 25% above the full market value of those homes and to cover all costs, including stamp duty, moving and legal fees. That offer is significantly above the statutory requirement. In addition, I can announce the creation of a community compensation fund. Local authorities will benefit from our policy of local retention of business rates.
The second assurance is on costs for airlines and passengers. A new runway will bring in new capacity to meet demand and allow for greater levels of competition, which will lower fares relative to no expansion, even after the costs of construction are taken into account. This is an investment in our country’s future. It will deliver major economic and strategic benefits to the UK, but they must be delivered without hitting passengers in the pocket. The Airports Commission has made it clear that that is achievable, as has the Civil Aviation Authority. It is important to send the message that this is not expansion at any cost, but the right scheme at the right price. I expect the industry to work together to drive down costs for the benefit of passengers. As the regulator, the CAA will have a vital part to play in achieving that and ensuring that new capacity fosters competition. Its aim should be to deliver a plan for expansion that keeps landing charges close to current levels, and I have full confidence in its ability to do so.
The third assurance is about how the expanded airport will benefit the whole of the UK, not just by creating jobs across the airport’s UK-wide supply chain, but by giving even more of the UK access to important international markets by strengthening existing domestic links and developing new connections to regions that are not currently served. The airport expects to add six more domestic routes across the UK by 2030, bringing the total to 14. That will strengthen existing links to nations and regions such as Northern Ireland, Scotland and the north of England, and allow the development of new connections to regions such as the south-west.
I am determined that Heathrow will meet those pledges and that the Government will hold the airport to account on them. Furthermore, the Government will take all necessary steps, including, where appropriate, ring-fencing a suitable proportion of new slots for domestic routes through public service obligations to enhance connectivity within the United Kingdom. It is important to stress that this is a decision in the national interest; it is not just about the south-east of England.
A new runway will strengthen the aviation sector across the whole nation, but we need to do even more. Our airspace is out of date. Modernising it will boost the sector and help to further reduce noise and carbon emissions. We will soon introduce proposals to support improvements to the airspace and to manage noise, which will include a consideration of the way in which affected communities can be engaged and whether there is a role for a new independent aviation noise body such as the commission recommended.
Let me turn to what happens next. There have been recent suggestions in the media that the process has been slowed down or somehow delayed. In fact, the opposite is true. Members will remember the saga of the planning process behind terminal 5, which took years to resolve. Following that, the national policy statement process, which was created by the previous Labour Government in the Planning Act 2008 and improved through the Localism Act 2011, was designed to speed up major projects, but in an open and fair manner. By setting out now why we believe that there is a need for new runway capacity, along with the supporting evidence, we will fulfil our legal obligations to consult the public and allow Members to vote on the proposal before it becomes national policy. That is what the law requires. That means that Heathrow will be able to submit a planning application safe in the knowledge that the high-level arguments have been settled and will not be reopened.
Today, the Government have reached a view on their preferred scheme, and the national policy statement that we will publish in the new year will set out in more detail why we believe it is the right one for the UK. It will also set out in more detail the conditions we wish to place on the development, including the supporting measures I outlined. We want to make sure that we have considered all the evidence and heard the voices of all those who might be affected and, of course, of those who will benefit. The consultation will start in the new year, and I can announce today that I have appointed Sir Jeremy Sullivan, the former Senior President of Tribunals, to oversee the consultation process. This is an independent role, and Sir Jeremy will be responsible for holding the Government to account and for ensuring that best practice is upheld.
The issue of runway capacity in the south-east has challenged successive Administrations for decades. There are strong feelings both for and against a third runway at Heathrow. This is not the scheme that was previously promoted in 2009. It does much more to mitigate environmental impacts, to compensate communities and to distribute benefits across the nation. This is an issue of vital national interest that touches every part of our United Kingdom. It is vital to the economic prosperity and global status of our nation, and I commend this statement to the House.
Andy McDonald (Middlesbrough) (Lab)
Although I thank the Secretary of State for giving me advance sight of his statement, it cannot pass without comment that this decision has been widely leaked throughout the media during the past number of hours in advance of it being sent to me and of being announced to the House. It is simply unacceptable for such a decision to be announced in this manner; it is totally disrespectful to Members and the House. Be that as it may, aviation is crucial to our nation’s economy and our future as an outward-looking trading nation. That will be even more the case in the light of the vote to leave the European Union, so we welcome the fact that a decision on the preferred location has now been made. I hope we can put the years of procrastination and delay behind us.
Despite the Secretary of State’s proclamation that the work is now complete, today’s announcement is not the end of the process, but merely the start of it. It beggars belief that it has taken Ministers more than a year since the publication of the Davies report even to make a start. Just what have they been doing for all these months, apart from worrying about splits in the Cabinet, or about the Foreign Secretary throwing himself in front of the bulldozers and former mayoral candidates triggering by-elections? There is no justification for dithering on this scale. The Secretary of State has failed to provide the shorter timescale for getting to the national policy statement that was set out by the Transport Committee.
We cannot bring back the time that Ministers have already wasted, so over the coming months it will be vital that there is proper engagement, and full and fair consultation with all the interested parties, so that we secure an outcome that stands the test of time. It is essential that there is proper forensic examination and scrutiny. Labour has consistently said that support for any such decision will be conditional: first, on sufficient capacity being delivered; secondly, on meeting the UK’s legal climate change obligations; thirdly, on local noise and environmental impacts being managed and minimised; and, fourthly, on the benefits not being confined to London and the south-east.
Labour fully recognises the need for runway expansion in the south-east of England, but following today’s announcement, it could be a decade before an additional runway is operational. We face capacity challenges here and now, but we heard nothing in the Secretary of State’s statement about how the Government intend to tackle the immediate shortage of airport capacity. What are his plans to utilise existing capacity in the south-east at Stansted and Luton—and, indeed, elsewhere?
There was also no mention of more utilisation of our international gateways. What message does that send to Stansted, Manchester, Birmingham and East Midlands, and what message does it send about the Government’s commitment to the so-called northern powerhouse and the midlands engine? Surface access to many of our international gateways around the UK needs improving, yet it is unclear what action the Government are taking. That is why Labour is calling for the new National Infrastructure Commission to examine the road and rail needs of airports outside the south-east. I urge the Secretary of State to support that proposal as well as Labour’s call to update the West Anglia line to improve rail services to Stansted, and to have better connectivity to Luton airport.
The Government must ensure that we do not fall short of our legal climate change obligations. We have but one planet, and it is essential that the UK plays a leading role in ensuring that agreed reductions in carbon emissions are met. Sustainable Aviation believes that UK aviation could reduce its carbon dioxide emissions by up to 24% by 2050 through the deployment of sustainable alternative fuels. Other countries have made considerable progress but, sadly, the lack of commitment and clarity from our Government caused the collapse of the British Airways green sky project. May we hear more from the Government about what steps will be taken to meet our climate change targets, particularly on developing sustainable fuels and progressing the consultation on the inclusion of aviation in the renewable transport fuels obligation?
After the Davies commission, the Government announced that they wanted to look further at environmental matters and, in particular, at air quality. As was revealed in The Guardian last week, David Cameron’s former policy adviser at No. 10 warned the then Prime Minister a year ago that he was “exposed on Heathrow”, because the Government did not have an answer about the effect on air quality. Indeed, the need for further work on air quality was the reason given for the delay, yet there was not a single reference in the Secretary of State’s statement to explain what work on that has been completed or how such work has informed his position. Will he publish—I hope he will—the additional work that he tells us the Government have done post-Davies so that those inside and outside the House can scrutinise it properly?
It is essential that the unacceptable levels of nitrogen dioxide and particulates from diesel engines are reduced because their direct impact on the health and wellbeing of tens of thousands of citizens simply cannot be ignored or tolerated. Direct measures are needed to lower emissions across the nation, especially in areas with a high concentration of emissions. I urge the Secretary of State to be unrelenting in his pursuit of improved air quality.
The commission recommended establishing an independent aviation noise authority, so will the Secretary of State immediately advise us about the Government’s intentions in that respect? Our air traffic management infrastructure is ancient, and modernisation would secure great dividends not only in terms of carbon emissions, but through considerable mitigations on noise and air quality. What steps is he taking to ensure that the modernisation that is so urgently needed is prioritised and progressed?
On our fourth test that the benefits of expansion are not confined to London and the south-east, it is essential that landing slots affording better connectivity and trading links for our nations and regions are maintained in the longer term. Any assurances that the Secretary of State can give in that respect would be most welcome. Will he also assure the House that the entire UK will be afforded a proper opportunity to engage in the construction process? Perhaps some of the HS2 Ltd protocols can be adopted. You never know, but we might be using UK steel.
The location of an additional runway cannot be the sum total of aviation strategy, so I urge the Secretary of State to press ahead with the full range of measures that are necessary to sustain our successful aviation industry. We must also ensure that the best interests of all the United Kingdom are served, and that the legitimate environmental concerns that have been raised, and that will continue to be raised, are fully addressed. We must do all that we can to protect our precious planet for the generations to come.
Chris Grayling
I will start with the point about the announcement. You know, Mr Speaker, how seriously I, as a former Leader of the House, take such issues. You will also be aware that this matter is highly price sensitive. Indeed, when the Airports Commission published its initial reports, they were launched in a way—they were announced at the start of the morning—that was consistent with a market announcement. That is the approach we have taken with this announcement. I have come to the House at the earliest opportunity to make a statement, and I will take all the questions that Members have for me.
On the timeframe, the hon. Gentleman asked me what we have been doing for the past year. We have been doing precisely what he asked about: working on the issue of air quality. Today and over the coming days, we will publish additional material so that Members, the public and others who are interested will be able to scrutinise in detail the work we have done and the route we have followed to reach this conclusion. Given the particular importance of air quality, he would expect us to make sure that we had done the additional work to satisfy ourselves that this can be done in line with what we all accept are our necessary priorities for reducing emissions levels.
The hon. Gentleman talked about what will happen during the coming months. As I said earlier, yes, there will be a full and proper consultation. That consultation is set out clearly in statute—[Interruption.] Despite the murmurings of Opposition Members, the consultation is set out in an Act that Labour rightly passed to improve the process of going ahead with such a national project. That is the process we will follow. We will do so in as timely a way as we can, but we cannot short-change a process set out in primary legislation.
On the capacity challenges here and now, there is absolutely nothing to stop new routes being set up tomorrow. We have capacity at Stansted, and new routes have come into Heathrow and Gatwick in the past 12 months. We are not preventing the airports around London that still have capacity—
Chris Grayling
The hon. Gentleman talks about not doing anything. With respect, the Opposition do not appear to understand that the airports themselves go out to sell opportunities around the world and bring in new routes. The leaderships of those airports sell Britain as a great destination to fly to and do business in. They will carry on doing that.
There are clearly some big surface access issues to address in connection with this new scheme. However, I remind the hon. Member for Middlesbrough (Andy McDonald) that we are close to completion of Crossrail, which will make a major difference to connectivity to Heathrow, we will shortly be starting improvements to the M25 between Heathrow and Gatwick, and the new Thameslink routes are due to open in about 18 months’ time, which will significantly improve links to Luton airport. Things are already happening to improve surface access links to our airports.
Climate change is a very important issue that we take very seriously. I was delighted by the agreement reached at the International Civil Aviation Organisation summit in Montreal recently, which sets a way forward for the aviation industry with international agreement. That is a significant step forward. We agree that a significant challenge remains that we must monitor very carefully, but the Airports Commission said very clearly that the expansion could take place and we could meet our objectives. That is what we intend to do.
The hon. Gentleman mentioned sustainable fuels, and good work is being done on those, by Virgin in this country, for example, and by airlines around the world. The technology will improve as the years go by.
The hon. Gentleman asked what we are doing on air quality. I agree with him that it is a bigger issue for our country, affecting very many of our urban areas. It requires a broad-ranging response to deal with it through clean air zones, as set out in our national air quality strategy, and other measures that we are working on that go beyond that strategy and continue a process of improvement over the coming decade.
I said in my remarks that I would consult on a noise authority and that we would bring forward plans for airspace modernisation. On regional connectivity, I am happy to restate our commitment to hon. Members from Scotland, Wales, Northern Ireland, northern England and the south-west. We are very clear that this expansion must include binding provision for links to those parts of the country. This has to be a benefit to the entire United Kingdom and it will be. On the hon. Gentleman’s last point, Heathrow airport is committed to ensuring that the project will be built using UK steel.
Sir Alan Haselhurst (Saffron Walden) (Con)
Will my right hon. Friend acknowledge, in the light of the very courageous decision he has announced to the House, that in the 10 years before the extra runway at Heathrow is available great pressure will descend upon Stansted, to which he has referred? Does he understand that my constituents will expect the same level of compensation and care for them against noise disturbance, and wish the recommendations of the West Anglia task force to be implemented as soon as possible, as life will otherwise become intolerable for everyone on that railway line, whether passengers, employees at the airport or regular commuters?
Chris Grayling
My right hon. Friend has been a passionate advocate for the communities around Stansted for a very long time; I remember visiting the airport with him when I shadowed this brief a decade ago. This is something we must be immensely sensitive to, and I give him a commitment that we will be. We are now looking very carefully at the proposals he was involved in shaping and the set of recommendations that he published recently. I want everything done as soon as is practical to make sure that the links to Stansted are as good as those to London’s other airports.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I welcome the Secretary of State to his place and thank him for early sight of his statement. After what has been world-leading prevarication from his Government, we welcome this decision, which finally almost ends what the Scottish Chambers of Commerce has called the “economic illiteracy” of failing to make a decision. True to form, however, the Government’s indecisiveness could not resist one last piece of bad taste fudge to stick in people’s throats. The lack of a vote in this House for more than a year will not allow people and companies a true end, and the soap opera will therefore continue.
That said, we welcome the announcement of Heathrow as a preference. Although airport expansion of this type disproportionately benefits the south-east of England, it has strategic consequences for Scottish air routes. In preparation for this announcement, and after more than 18 months of meetings with, among others, airports, campaign groups, business bodies and the UK Government, the Scottish National party Scottish Government have agreed a memorandum of understanding with Heathrow that will bring, among many other things, jobs, an engineering hub and route support to Scotland.
It is now time for the UK Government to ensure a full and fair deal for Scotland. We must see a commitment to addressing those needs. A lot is required. Will the Secretary of State commit to meeting the following wider challenges? First, as he has intimated, will he work with me and the Scottish Government to develop genuine route support and public service obligations, and address Scotland’s needs in relation to this development? Secondly, will he make a proper commitment to supporting aircraft biofuels and giving genuine encouragement to carbon-reducing technology in aircraft? Thirdly, will he go further than he did in his statement and commit to starting immediate work to replace the airspace strategy for the UK, which is more than 50 years old?
Chris Grayling
I am grateful to the SNP for its support for today’s announcement. The hon. Gentleman talked about the lack of a vote. I remind him that this is the law. We are following a process that is set out in statute—he is surely not suggesting that we should not follow that process. We will do so in as timely a way as possible, but we have a duty to follow primary legislation.
The hon. Gentleman talked about the benefits the expansion can bring to Scotland. I absolutely agree and will be delighted to work with his party and my counterparts in other parties in Scotland to ensure that Scotland gets a good deal out of all of this. It is not just about Scotland, however, but about the whole United Kingdom. It is about Northern Ireland. It is about making sure that skills development happens in Wales. It is about ensuring better links to the south-west of England, and good links to the north-east—I am going to Newcastle tomorrow, and the north-east is one region that I hope will benefit from today’s announcement. This is about the whole United Kingdom and so I have every intention of ensuring that our work is about the whole UK.
The hon. Gentleman raised the airspace modernisation programme. The CAA has already started preparatory work on that, and we need to press ahead with it, not simply because of today’s announcement but because we need to change many of the things that unnecessarily use up fuel and cause additional carbon emissions, such as the stacking structures. That work is beginning. We will consult on it extensively over the next two years. That modernisation has to happen alongside the development of the runway plan.
Zac Goldsmith (Richmond Park) (Con)
The Government have chosen a course that is not only wrong but doomed. It is wrong because of the million people who will suffer directly on the back of the environmental harm this project unavoidably produces. It is doomed because the complexities, cost and legal complications mean that the project is almost certainly not going to be delivered. I believe it will be a millstone around the Government’s neck for many years to come—a constant source of delay, and of anger and betrayal among those people who will be directly affected. There are so many questions one could ask at a statement of this sort that I would not know where to begin, so I simply use this opportunity to put my absolute opposition on the record.
Chris Grayling
I very much respect the sincerity of the views that my hon. Friend holds and the commitment he has made to his constituents on this issue. I know how strongly he will disagree with the decision we have taken today. I hope that he will at least respect the fact that all of us in politics have to do what we believe is right. I am doing today what I believe is right. His views are very much what he believes is right. Not all of us can get it right all of the time, but we have to do what we believe is best for our country, and that is what I am doing now.
Lilian Greenwood (Nottingham South) (Lab)
The decision to build a new runway at Heathrow is the right one, but it is absolutely vital that the Secretary of State delivers on his pledge to ensure that the benefits of expansion are felt in every nation and region of the UK. The Davies commission noted the difficulties in reserving slots for domestic flights from regional airports posed by the EU slot regulations. Now that the UK has voted to leave the EU what assessment has he made of the decision for potential measures to protect and enhance domestic connectivity?
Chris Grayling
The slot issue is one avenue for us to follow. We want to have a detailed discussion with regional airports, airlines and Heathrow itself about the best mechanism. I am absolutely clear that the planning consents, which I hope and believe will eventually be granted, and the national policy statements we prepare must contain provisions that protect connectivity. We need to work out the best way of doing it. It is not just about having a handful of slots at 11 o’clock at night; it is also about connectivity with international flights. We have to get this right for the whole United Kingdom and I give a commitment that that is what our agenda will be.
Stephen Hammond (Wimbledon) (Con)
Respected outside experts have estimated the need for £11.5 billion of taxpayer support for the third runway and even the Airports Commission suggests up to £5 billion, yet post the Cabinet meeting this morning, the Government website says that the expansion costs will be paid for by the private sector. I listened carefully to the Secretary of State’s statement, but he did not reiterate that commitment. Will he tell the House how much the taxpayer will have to put in for runway 3 and the associated surface works?
Chris Grayling
The most fundamental point is that Heathrow has committed, and will be held, to a plan that: first, does not increase the current level of road transport to the airport; and, secondly, increases public transport access to the airport to 55% of those using it. Those will be obligations that it will have to fund. The Government’s financial advisers have said that that is viable and investible. There are question marks about what schemes are actually part of the surface access. Some of them we have to do anyway. For example, we are about to start improvements to the M4, which will benefit Heathrow and improve access, but they are not solely about Heathrow. There are, however, some very clear obligations in terms of actual deliverables that the airport will have to meet and pay for.
Mr Nigel Dodds (Belfast North) (DUP)
I welcome the fact that the new Government have made this important decision and I welcome the fact that they have made the right decision. In Northern Ireland, there is a wide consensus that Heathrow is the right decision. It will lead to thousands more jobs, and major investment in tourism and business. I therefore warmly welcome what the Secretary of State has said. I also welcome what he said about slots and domestic connectivity, but may I press him on whether there will be any Barnett consequentials through investment and infrastructure?
Chris Grayling
First, I am very grateful to the right hon. Gentleman for his support, and for the support of his party and colleagues in Northern Ireland. It is very much my belief that Northern Ireland will benefit enormously from this decision, and so it should. I hope it benefits not simply in terms of connectivity: I hope to see some of the work being done in Northern Ireland as we aim for a UK-wide supply chain and encourage the airport to achieve that. On other aspects, we will work hard to ensure that we deliver the best possible outcome for all parts of the United Kingdom, that we listen and consult, discuss issues such as the one he raised and try to make sure it is as beneficial as possible to the people he represents.
Crispin Blunt (Reigate) (Con)
As the chair of the Gatwick co-ordination group, I congratulate my right hon. Friend on this announcement and make clear to him the relief with which this somewhat overdue statement will be received by all the people represented by colleagues in the group. It will have been clear that keeping Gatwick in the game has delivered welcome improvements in the Heathrow proposition, but, as everyone who uses the Brighton main line will know, the Gatwick proposition, frankly, was not practical. Local authorities would have had to have found housing for the workforce to support the Gatwick option. Before this process began, Gatwick management ran the best single runway airport in the country and had a very good set of relationships with local communities. Will he now invite Gatwick management to go back to those priorities now that the scheme is over?
Chris Grayling
My hon. Friend has strong feelings about Gatwick expansion, as did many of those in his constituency and in his neighbouring constituencies. What I would like to say about Gatwick is that we need to understand the important role it plays in the economy of the southern part of the country—the Surrey-Sussex economy—and in the economic development of that area and the south coast. I recognise the very real amount of work that Gatwick airport put into its proposal, which, as I said, was very impressive and carefully crafted. I know it will be immensely disappointed with today’s decision. As I said earlier, I believe Gatwick will continue to be a really important part of our transport infrastructure and I send it all my best wishes.
Several hon. Members rose—
Mr Speaker
Well over 50 colleagues are still seeking to catch my eye and I am keen to accommodate them, but doing so will be brevity-dependent.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
The Secretary of State said in his statement that he plans to bring forward proposals to support improvements to airspace and how to manage noise, including the way affected communities, such as mine in Hounslow, can be best engaged. He stated that that would include consideration on whether there is a role for a new independent aviation noise body, but he also said that the commission had recommended one. Why has that been downgraded?
Chris Grayling
I have not downgraded it. I want to make sure there is proper independent noise monitoring. It is just a question of working out the best way to do that. The commission did not set out detailed plans. I will be discussing with interested parties how best to secure that.
Mr Graham Brady (Altrincham and Sale West) (Con)
A global trading nation clearly needs world-class infrastructure and I think this is the right judgment in the national interest. Will my right hon. Friend reflect on the damage done to our international competitiveness by this country maintaining the highest level of taxation on aviation?
Chris Grayling
Air passenger duty creates a lot of debate in this country. I am absolutely certain that none of us on the Conservative Benches would wish to maintain any tax higher than we needed to. We are, by instinct, a low-tax party, but we are also dealing with some quite challenging financial and public finance circumstances and therefore cannot always do the things we wish to do. Nevertheless, I am sure the Chancellor will have heard my hon. Friend’s wise words, ahead of planning for the next two financial moments.
Caroline Lucas (Brighton, Pavilion) (Green)
In 2009, the Committee on Energy and Climate Change suggested that a maximum 60% air passenger growth to 2050 could be compatible with UK climate change goals, provided various fantasy conditions are met. However, the Government’s own analysis shows that even without a new runway there will be 93% growth by 2050. That implies that aviation will take up to two thirds of the UK’s entire carbon budget in 2050, a scenario that is quite simply incredible. Given that the Committee advised against taking international offsetting as a substitute for domestic action, will the Secretary of State explain how this decision can possibly be compatible with our climate change objectives?
Chris Grayling
We listened to the Airports Commission, which did detailed work on this. It recommended that this was an approach we could take and meet our obligations. We have validated that work since and we still believe that to be the case. I was encouraged, as I said earlier, by the ICAO agreement, which I hope will make it easier for the aviation sector to meet those obligations.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
The business opportunities arising from the expansion are substantial for Buckinghamshire. Bucks Business First and the Buckinghamshire Thames Valley local enterprise partnership have both welcomed today’s announcement. It will continue to reinforce Buckinghamshire as a prime location for businesses to locate to. However, will the Secretary of State undertake to do an assessment of the impact on the local economy of the potential disruption and cumulative effect of having two major projects, namely Heathrow expansion and HS2, being constructed within the same timeframe and in close proximity?
Chris Grayling
Clearly, we have to work to ensure that the impact of two major projects on surrounding communities is minimised to the maximum possible extent. I know everyone involved in both projects will seek to do that. Undertaking two ambitious, modern future-looking projects is a sign of the direction that defines the approach we are taking to governing the country. We want to prepare for a stronger and better future for Britain.
Andy Burnham (Leigh) (Lab)
Is not the biggest loser from the Tory civil war over Heathrow neither the Foreign Secretary nor the hon. Member for Richmond Park (Zac Goldsmith) but transport everywhere else? For over five years, there has been an obsessive focus on London and the south-east. While welcoming this decision, may I ask the home counties-based Cabinet to listen to what William Hague has said today, and set out in the autumn statement a clear timetable for HS3, linking Manchester Airport to the great cities of the north?
Chris Grayling
I am not sure that Manchester Airport needs to be linked to the great cities of the north, since it is in one of the great cities of the north. Let us be clear first about what we are doing in the north. Across the north of England, a wide range of essential transport projects are happening: £350 million is being spent on improving the rail network in the right hon. Gentleman’s home city of Liverpool, and the construction of the link road between the M56 and the M6. Those are two long overdue projects. He knows that support for the next generation of the Manchester Metrolink is also happening. This is a Government who are doing things for the north of England. I have to say that if I look back on the Labour party’s years in government, I see that these projects were always on the drawing board but never actually happened.
Dr Tania Mathias (Twickenham) (Con)
I believe that this decision is misguided and not ultimately in the nation’s interests. Will the Secretary of State assure me that in the consultation and scrutiny to come there will be good and adequate scientific data, because the evidence will show that Heathrow expansion is neither possible nor deliverable? In the Minister’s words, we do not want expansion “at any cost”; this is the wrong scheme and the price is too high.
Chris Grayling
I know how strongly my hon. Friend feels about this issue. I give her an assurance that we will do this job properly. The appointment of Sir Jeremy Sullivan—an exemplary former judge who led an important part of our judicial system, as those who know him will acknowledge—will, I hope, give people comfort that we intend to take the consultation process properly and seriously.
Hannah Bardell (Livingston) (SNP)
The Secretary of State will know of my campaigning on the establishment of an independent aviation noise authority. About 70% of Edinburgh airport’s traffic goes over my constituency, and a recent flight path trial—the first in 40 years—caused havoc. This noise authority is for everyone in the UK; it should not be dependent on this decision. Will the Secretary of State include me in the discussions as an interested party and bring them forward as soon as possible?
Chris Grayling
Absolutely. Every Member will be included in the discussions as part of the consultation process. I will happily do what the hon. Lady asks.
Sir Roger Gale (North Thanet) (Con)
I congratulate my right hon. Friend on taking the right decision in the interest of the United Kingdom. Will he remind us of how much passenger traffic, and particularly freight traffic, is currently being lost to mainland European airports as a result of lack of capacity in our south-east? Does he agree that in order to bridge the gap, we need to use all the currently available capacity?
Chris Grayling
My hon. Friend is absolutely right. It is important for people to understand this issue. It is sometimes argued that connecting traffic does not add value to the United Kingdom. However, connecting traffic combined with our own domestic traffic can often make viable a new route to an important trading centre. Winning back some of those transfer passengers in order to ensure that routes to developing markets can be opened up from this country is therefore an important part of securing our trading future.
Ruth Cadbury (Brentford and Isleworth) (Lab)
With news of the replacement of the route to Chengdu with a new route serving New Orleans, why are the Government putting the commercial interests of an expensive airport whose primary passengers are tourists ahead of the health and quality of life of 300,000 people, the costs to passengers and the costs to the taxpayer?
Chris Grayling
I have talked to the boss of IAG, the parent company of British Airways, about the Chengdu decision. It has a number of routes to China and other parts of Asia. It has simply taken a commercial decision that the Chengdu situation has not proved viable. The issue is not about an individual route, but about connectivity for the future and the opportunity to open up new possibilities. It will not always be British Airways that opens up those routes; other airlines might choose to fly from developing markets to the United Kingdom. Those are the opportunities that we will need for the future. That is why we believe that expansion is necessary. If we are to open up new trading opportunities around the world, we must have the capacity to offer those new links. If we look at the price at which a slot trades at Heathrow airport, we realise that demand far exceeds supply.
Jeremy Quin (Horsham) (Con)
I, too, congratulate my right hon. Friend on taking a decision that is absolutely rooted in the national interest. Will he confirm that Heathrow has the support of all three of the devolved Administrations?
Chris Grayling
My hon. Friend is absolutely right. It does have that support, as well as support from business and the trade unions. That is not to say that the Gatwick proposals were not strong or attractive, but the Heathrow option was undoubtedly the one that gained the most support.
Mr Ben Bradshaw (Exeter) (Lab)
Heathrow has clear advantages over Gatwick for the south-west of England, both in respect of access to Heathrow and the hoped-for slots for our regional airports such as those at Exeter and Newquay to connect internationally. The Secretary of State must say much more about what he is going to do about air quality. He is quite right to say that road transport contributes by far the bulk of our emissions and our pollution, but he has not today said a single thing or produced a practical policy to tackle road transport and diesel in particular.
Chris Grayling
If the right hon. Gentleman wants a specific example, I can tell him that this morning we published the consultation document that will pave the way for significant expansion of the availability of electric charging points around the country. My view is that we all need greater diversity of our car fleet for the future, and we are already moving ahead with plans for low-emission zones in our cities. This is not an airports issue but a national one, and active measures are already in place to encourage diversification of the car fleet. Electric vehicles are being built in this country—for example, the Nissan Leaf is being built in Sunderland, which is the main centre in Europe for the production of that vehicle. We are seeing more and more of these cars on our streets, and I think that will continue into the future.
Kwasi Kwarteng (Spelthorne) (Con)
I commend my right hon. Friend for his strong statement. It is great to see the Government making some forward progress on this issue. Will he assure my constituents and many people in the local area that full consideration will be given to the environmental impact and noise control?
Chris Grayling
It is really important to find the right balance. Around Heathrow, a large number of people, particularly those who work there or whose family members work there or whose businesses depend on the airport, support the expansion. There is a significant amount of support for what I have announced today, but those people will rightly expect that we ensure we look after the environment in which they live, that appropriate compensation will be in place where necessary and that appropriate measures are in place to support local communities. I give my hon. Friend an absolute assurance that that will be the case.
Caroline Flint (Don Valley) (Lab)
Hallelujah—a decision has been made. The right hon. Gentleman should be in line for a “Minister of the Year” award. This is good news for Doncaster, good news for the north and good news for the UK. However, when we look at investment in infrastructure, we find that Crossrail costs £15 billion—nine times the combined expenditure for the rail projects planned for Yorkshire and the Humber, the north-east and the north-west. We see this as an opportunity for our regional airports, including my own, so will the right hon. Gentleman meet me and other MPs with regional airport interests to discuss how we get people to our airports to take advantage of the new slots?
Chris Grayling
We would be happy to meet Members who have regional airports in their constituencies. As I said earlier, this process needs to involve Members of all parties—and it will do.
Sir Paul Beresford (Mole Valley) (Con)
My right hon. Friend will not be surprised to find out that I, too, support everything in his statement. This United Kingdom is open for business, and Heathrow is the doorway. He said he wanted to make Heathrow a better neighbour. The neighbourhood for Heathrow is considerable, and it includes the effect of stacking over areas that affect Gatwick—with a detrimental effect on people in my constituency. Will my right hon. Friend ensure that when the Civil Aviation Authority looks at airspace, it reflects on the opportunities to make Gatwick a better neighbour as well?
Chris Grayling
The modernisation of UK airspace will hopefully make all airports better neighbours. This is a system that has barely changed for decades, and it is certainly not designed for the current patterns of usage. We very much believe that we need to modernise the use of airspace in a way that reduces stacking, for example. I know, because my constituency adjoins that of my hon. Friend, that stacking certainly affects our area. This modernisation is better for passengers and better for people on the ground; and it will also save fuel and thus reduce carbon emissions.
Mr Gavin Shuker (Luton South) (Lab/Co-op)
A majority of Labour MPs and a majority of Conservative MPs support the expansion at Heathrow. Given that this project is likely to span multiple Parliaments, will the right hon. Gentleman take the opportunity to set a good example for both parties and ensure that collective responsibility will apply to any votes in this House?
Chris Grayling
The Prime Minister has been very clear that she does not want to force—indeed, I do not think the public would expect us to force—MPs who have long-standing principles of disagreement over this issue to go against their own views. There are different views on both sides. There are senior figures on the Opposition Front Bench and on the Government Front Bench who disagree with this decision. The hon. Gentleman is right that the majority of Members believe that Heathrow is the right place for expansion. Of course, the whole House will, as part of this statutorily defined process, have to vote and approve the decision. I think we should respect people’s long-standing views and not ask them to go against what they have argued in the past.
Adam Afriyie (Windsor) (Con)
This is a devastating decision—for the national economic interest as well as for my constituents, hundreds of whose homes will be bulldozed, and for the millions of people affected by the very loud noise from Heathrow airport. Notwithstanding that—we could rehearse the arguments for ever—if during the consultation period the facts, the economics and the timescale on which the decision has been based, or Heathrow’s commitment to invest in the project, are called into question, will the Government have an open mind about changing their decision?
Chris Grayling
The Government decided very clearly today on their recommendation, which will have to be validated in the statutory process. It must be voted on and confirmed by the House, and that is what will happen. However, we are not entering the process with a view to changing our minds
Sammy Wilson (East Antrim) (DUP)
If the vote took place tomorrow, the Democratic Unionist party would give the Government their support, because we believe that this is good for Northern Ireland. We welcome the Secretary of State’s assurances about extra slots, extra routes, and a place in the procurement process for firms from Northern Ireland. In the meantime, however, will he tell us whether slots that are currently available for airports in Northern Ireland will be safeguarded at Heathrow, and also whether there are any Barnett consequentials for the Northern Ireland Executive?
Chris Grayling
I hope that the right hon. Member for Belfast North (Mr Dodds) will forgive me: I forgot to answer his earlier question about Barnett consequentials.
This project is funded by the private sector, and there are no Barnett consequentials in a private project. There are Barnett consequentials when we invest in our infrastructure in the public sector, but I fear that there will not be any as a result of spending by Heathrow airport shareholders. As for the question of slots in the meantime, we always want to protect connectivity with Northern Ireland—indeed, we have just done so in the case of the route from Londonderry to Stansted—and we would be extremely concerned if routes to Belfast were in any jeopardy.
Sir Gerald Howarth (Aldershot) (Con)
I congratulate the Government on grasping this nettle, although I personally believe that the Heathrow hub was a cheaper and less disruptive option, and I am sorry that it was ruled out.
I feel that an opportunity has been lost here. As a party, we believe in competition. Surely it would have been better to agree on extra runway capacity at both Gatwick and Heathrow, which would have settled the matter for a long time henceforth. What is Gatwick’s future following today’s announcement?
Chris Grayling
I pay tribute to the promoters of the Heathrow hub scheme, having already paid tribute to the other promoters generally. The scheme was very innovative and very different, but for two prime reasons we felt unable to endorse it. First, it did not allow respite for the surrounding communities, because the same two corridors would be used for taking off and landing all the time. Secondly, the scheme’s promoters could not ultimately provide the certainty that it would be built and adopted by Heathrow airport, if we opted for it rather than for the main route. Those, to my mind, are two strong reasons. However, I pay tribute again to the promoters. It was a very innovative concept, and we gave it very serious thought. After visiting and listening to the promoters, I considered very carefully whether it was the best option. In the end, however, my judgment was that the north-west runway was the better one for Britain.
Tom Brake (Carshalton and Wallington) (LD)
Mr Speaker,
“I hope…the Government will recognise…widespread hostility to Heathrow expansion and say no to a third runway.”
Those are not my words, but the words of our present Prime Minister. Why are the Government disregarding “widespread hostility”, and bulldozing through a third runway which will inflict crippling noise, significant climate change effects, health-damaging pollution and catastrophic congestion on 1 million Londoners?
Chris Grayling
Because we do not believe that it is going to do those things; because we do not believe that it will create the air pollution to which the right hon. Gentleman refers; because we do not believe that it will impose catastrophic congestion—I have already explained the position relating to public transport access and improved infrastructure around the airport—and, most fundamentally, because we believe that it is in the interests of the United Kingdom.
Sir Oliver Letwin (West Dorset) (Con)
As my right hon. Friend knows, a decade ago I was among those who were most sceptical about this proposal, but there are times, are there not, when the House must look beyond the immediate issues, on which he touched today, and out to the next 30, 40 or 50 years. In view of the decision that the country has made on Brexit, now is surely the time when we must grab that future and build at Heathrow in order to create a link with the east.
Chris Grayling
I think the message that Britain is open for business is one of the most important messages that we can send to the world. When are we ever going to create this gateway to the future if not now, at a time when we are changing our role in the world? I think we all regret the fact that, notwithstanding our ambitions, it still takes time to do, but we really must get on with it now.
Clive Efford (Eltham) (Lab)
The Department’s answers to questions that I tabled asking what protections there were from noise pollution at City airport for constituents such as mine were woefully inadequate. It is clear that once expansion has taken place there will be scant regard for protections for the public, whether from industry or the Government. It is hardly surprising that people roll their eyes when the Secretary of State comes here and tells us that there will be all these environmental protections. In order to convince people that he is in earnest, would he be prepared to make those requirements legally binding, with penalties in place, before any permission is granted for this expansion, so that people can be confident that there will indeed be environmental protections?
Chris Grayling
My view is straightforward. The commitments that are made in relation to compensation for the public and amelioration must form a binding part of the eventual agreements.
Several hon. Members rose—
Mr Speaker
Order. I am grateful to the Doorkeeper, who was beetling around the Chamber looking for the wallet of some hapless fellow, poor chap. Geoffrey Clifton-Brown.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am glad to say that I have not lost my wallet, Mr Speaker.
I warmly welcome the Secretary of State’s announcement, but if Heathrow is to meet its emissions targets a large number of people will have to be persuaded to travel by rail rather than car, so will he say something about the western rail link proposals? Will he also consider providing fast rail links between all London’s airports?
Chris Grayling
Both the western and the southern rail links are part of the schedule for Network Rail’s future projects. Heathrow airport is due to pay part of the cost of those links, since they involve broader issues than this project alone, but as a result of today’s decision their construction will need to be accelerated. Links between airports are not currently being considered, but if the economy of the south-east continues to grow and develop, they may well be considered in the future.
Rob Marris (Wolverhampton South West) (Lab)
I do not share this cosy consensus on airport expansion. Half the population each year does not fly; for environmental reasons, I have not flown for several years. The Secretary of State said today that this expansion would “further reduce…carbon emissions.” What a joke! Because of climate change, the Government should not be in the business of encouraging people to fly and encouraging more air freight, let alone subsidising increased airport capacity and higher total emissions. I urge the Secretary of State and the Government to think again.
Chris Grayling
We take the issue of climate change very seriously, and the Government have introduced a raft of measures to address it, but we must also ensure that we have the prosperity that enables us, for instance, to fund our national health service and our old age pensioners. Having a thriving, modern economy with strong links around the world is an important part of that.
Mr Mark Harper (Forest of Dean) (Con)
I was pleased to hear the Scottish National party’s spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), confirm that we are “better together”. I was also pleased to hear the support from the right hon. Member for Belfast North (Mr Dodds) for bringing the four nations of the United Kingdom together.
I strongly welcome my right hon. Friend’s announcement, which is very important to the south-west of England. Will he redouble his efforts to ensure that he holds the promoters to their commitments about regional connectivity, which he said he would do in his statement? Will he also ensure—my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) referred to this—that people in my constituency and elsewhere in the south-west can travel easily to the expanded Heathrow airport, and thence to the world?
Chris Grayling
My hon. Friend is right about the need for a commitment to the south-west of England in particular. I was in the south-west last week. We talk a great deal in the House about transport in the north and transport in the midlands, but I think that we also need to talk about transport in the south-west. There are many projects that are necessary to secure the economic future of the south-west. This project is part of ensuring that there is connectivity with places such as Newquay, and easy access for people such as my right hon. Friend’s constituents. That is why the western rail link must be a good priority for the future.
Andy Slaughter (Hammersmith) (Lab)
The Prime Minister was right when she said that the third runway was a bad idea. She may have caved in to the Heathrow lobby, but will the Secretary of State accept that the level of opposition from councils, mainly Tory-controlled, from local communities, and from Members of Parliament—most notably my right hon. Friend the Member for Hayes and Harlington (John McDonnell)— means that the chances of the toxic third runway being built are vanishingly small? Will he be sure to keep the Gatwick option open? We are going to need it sooner than he thinks.
Chris Grayling
I know how strongly Members in London feel about this decision, but, having listened to Members today, I have a sense that the balance of view around the country is that we need this connectivity because it is in the interests of the whole United Kingdom. As a Government who believe in delivering an economy that works for everyone, we must operate in the interests of the whole United Kingdom, and that is what we are doing today.
Paul Scully (Sutton and Cheam) (Con)
I welcome the quick decision by the Secretary of State since taking up his position over the summer, but I regret the decision not to include Gatwick at least as one of the options. Will he agree to look again at the Gatwick option as the one that is deliverable in the short term and that is more open for competition, for the benefit of passengers long term?
Chris Grayling
I know that a number of people have said, “Can’t we do both?” I am clear that today we are looking at the Airports Commission report, which set a clear path and said that a new runway would be needed by 2030 and that potentially there would be a need for further capacity by 2050, but only if that could be achieved alongside carbon limits. Therefore, today is about taking the long overdue decision as to how we take that path to 2030, and that is where our focus is.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
As the MP representing Newcastle airport, I know that the airport and the wider north-east business community welcome this decision. It enables both the safeguarding and growth of our connectivity to the UK and the rest of the world. However, given the time it has taken to arrive at this point, may I urge the Secretary of State to have some urgency in getting spades in the ground? When will we see the increased capacity and trading opportunities we vitally need in the wake of Brexit uncertainty?
Chris Grayling
I can save myself and my office a phone call today by telling the hon. Lady I will be visiting her constituency and her airport tomorrow to make precisely the point about the importance of regional connectivity. [Interruption.] No, I probably will not have a spade with me; I do not think Newcastle airport wants me digging it up.
I want this to move ahead as quickly as possible. There is a statutory process we have to follow. There is then a detailed period of design. This has always been something that will be ready for the middle of the next decade. I would love to wave a wand and have it quicker than that, but these things take a long time to design and construct, quite apart from the regulatory process. I know, however, that everybody involved will want to move as quickly as possible.
Stephen Crabb (Preseli Pembrokeshire) (Con)
This is the right decision for Wales, as it is for the whole of the UK. Will my right hon. Friend say a bit more about what specific powers are available to him and whether he needs to seek further powers to ensure this becomes an outstanding example of British procurement, so that we maximise opportunities for our labour pool, supply chain and, not least, the steel industry?
Chris Grayling
I have been very clear, and this drives to the heart of the debate about costs. I understand the point made by some of the airlines about wanting to ensure that the best possible value is delivered in this project, because ultimately the cost is borne by their passengers. I want to see the maximum possible benefit across the UK. I have extended to the Civil Aviation Authority the power to have a strong supervisory role over this process, not to dictate how the project is designed in detail, but to make sure that there is value at the heart of both the supply chain and the contracting. I want to make sure that this is a value-for-money proposition and that it delivers what we need at a price that is right for passengers.
Wes Streeting (Ilford North) (Lab)
The advent of Crossrail means my constituency on the London-Essex border has enormous potential to capitalise on the benefits for Heathrow, both for passengers and for business and jobs. I therefore welcome the Transport Secretary’s statement. When does he anticipate the third runway being open for business?
Chris Grayling
On the current timetable, in around nine years’ time. I wish it were quicker than that, but it is not. That is the length of time it takes to go through a process such as this—not just the regulatory process, which has been greatly simplified since 2008, but the sheer complexity of design, the acquisition of land, the preparation of sites and the construction not just of a runway, but of the terminal buildings. So this is not a short-term project. I know the decision on the issue has been kicked around for years, but the new Prime Minister and I have wanted to move as quickly as we could. We wanted to take the time over the summer to ensure we really understood the three projects before we decided today. We have done that; we now want to get on with it.
Henry Smith (Crawley) (Con)
In the national interest, I welcome the Government’s confirming what the Airports Commission has said is right for this country, and I also welcome my right hon. Friend’s warm words about Gatwick. Can he give assurances that surface access to Gatwick will continue to be enhanced, particularly the rail route, as we go forward?
Chris Grayling
I do not think that any of us could think that the Brighton main line was the priority, for a whole variety of different reasons. We have to deal with the short-term issues and challenges, but we also need to think about how we can best deliver the necessary improvements for the medium and longer term. There is no doubt we need a modernisation programme, but we also need a programme that causes the minimum possible disruption to passengers.
Yvonne Fovargue (Makerfield) (Lab)
Connectivity to Heathrow is essential for areas in Greater Manchester and beyond. However, does the Secretary of State agree that in tandem with expanding Heathrow, new point-to-point routes with emerging economies are essential from other international gateway airports, such as Manchester, and what is he doing to encourage that?
Chris Grayling
To be frank, I am not sure I need to do anything to encourage Manchester airport as it is doing a cracking job already. It had its runway expansion a few years ago and has made good use of it. It is a thriving airport with links around the world. I am hugely impressed by what it has achieved.
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
I welcome my right hon. Friend’s statement and the benefits it will clearly bring for British business and trade, but he was also right to acknowledge concerns about the environmental impact of the airport expansion and the potential that may have of interfering with our international commitments to reduce carbon emissions. As well as putting in place welcome consultations on electric cars, what other incentives does he envisage to encourage business to comply with these international commitments and reduce carbon emissions?
Chris Grayling
There are three elements to what we are doing. The first is the air quality strategy and the desire to put in place an environment which requires lower emission vehicles in terms of both carbon dioxide and diesel. This is about, first, a regulatory environment in our cities; secondly, incentivising the purchase of low-emission vehicles—something the Government now do extensively with incentives to buy electric vehicles, for example; and thirdly, fiscal incentives to change, which we have already introduced through the car tax system, and on which I have no doubt the Chancellor will be doing more in the future.
Chris Law (Dundee West) (SNP)
Given today’s announcement that the expansion of Heathrow is in the national interest, not just that of the south-east of England, will the Secretary of State commit today to have route connectivity and public service obligation support between Dundee airport and Heathrow?
Chris Grayling
I am not going to pick individual routes today, but I recognise that Dundee is one of the airports that can benefit. The hon. Gentleman will not expect me at this stage to be setting out detailed slot allocation plans, but it is precisely areas like Aberdeen, Inverness and Dundee that can benefit from greater capacity on this route and better connectivity within the United Kingdom.
Oliver Dowden (Hertsmere) (Con)
As the Secretary of State has correctly and repeatedly said, this sends a very clear signal that Britain is open for business, but does he agree that if we are to compete with the likes of China and South Korea we must deliver this rapidly, and what reassurance can he give on minimising any administrative and judicial burdens that may be used to slow down this project?
Chris Grayling
I am not in any doubt that there will be obstacles on the road towards delivering this project, but that will not stop us seeking to move ahead as quickly as we can, and clearly the scheme promoter will want to do so as well, but we are also subject to due process and in a democracy we have to respect that due process.
Bill Esterson (Sefton Central) (Lab)
This is indeed a hugely important project for the whole country, and the Liverpool city region stands to benefit, as other regions do, especially through freight and business travel, so I welcome the Government’s wholehearted support for the expansion of Heathrow. On the nine-year promise that the Secretary of State has now made, that will be challenging and there must be robust planning and consultation processes, so how will he make sure he gets through that and delivers on the nine-year programme?
Chris Grayling
Essentially, the way it works is that we have this overall process of the national policy statement over the next 12 months, which we will publish in the new year. Now that the recommendation has been made, my officials will prepare that detailed policy statement. It will be published in the new year, and then there will be a statutory period of consultation both outside and in this House, followed by a vote. That effectively seals the big picture stuff for the Planning Inspectorate. There is then the formal process of its submitting its detailed plans and the debate about the minutiae of the application. The Planning Inspectorate does not look at the big decision of whether we should have the runway in the first place; it looks at matters such as the details of the design for consistency with local planning laws.
Michael Fabricant (Lichfield) (Con)
This statement has been long overdue. Some countries will have developed three entire nuclear power stations and five airports in the amount of time this has taken to be kicked into the long grass by two Labour Prime Ministers and I am afraid a Conservative Prime Minister too, and it is a reflection on this Prime Minister that the decision has finally been made. But why can we not still be talking about expansion at Birmingham International airport and indeed at Gatwick, too?
Chris Grayling
I have no doubt that others will have views about the further expansion of regional airports, including Birmingham. Right now, though, the focus of the Government is on this process, which was after all set up to identify additional capacity in the south-east following a recommendation by an independent commission. This is about delivering what has been recommended to us.
Danny Kinahan (South Antrim) (UUP)
We very much welcome today’s announcement, as have my other colleagues from Northern Ireland, but my party is pushing for expansion at both airports. The chief airlines that fly from Belfast International airport, such as EasyJet and Ryanair, have given a new life to many people in Northern Ireland. Can we not keep the door open to expansion at Gatwick, to ensure that we make the most of that and all the other regional airports, because that will help all of us?
Chris Grayling
As I said earlier, Gatwick will remain an extremely important part of our national transport system, but today’s announcement is all about ensuring that we meet a very real need, as identified by the Airports Commission report. I do not think that this is the moment to start getting into a broader discussion about other airports. Let us concentrate on getting this job done; it has taken much too long to get even to this point.
Kelly Tolhurst (Rochester and Strood) (Con)
I welcome the Secretary of State’s announcement today. Now that the decision has been made, can my constituents be assured that the blight to their homes that they have suffered for more than a decade because of the threat of a peninsula or estuary airport is at an end and that those proposals are finally dead?
Chris Grayling
The Airports Commission looked very carefully at the issue of an airport in the Thames estuary and came to the view that that was not a viable option. I too have looked at the issue and I share that view. The Government have no intention of reopening that discussion.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Transport for London has estimated that the cost of associated transport infrastructure to service a third runway at Heathrow would be about £20 billion. Can the Secretary of State give the House a cast-iron guarantee that any public money used to pay for that work would result in full Barnett consequentials? Or is he saying that the routes identified by TfL would be paid for fully by private sources?
Chris Grayling
It is important to look at the committed outputs. Heathrow airport has committed to an expansion without an increase in the number of motor vehicles using the airport, and to an increase in the number of people accessing the airport by public transport to a level of 55%. That is the objective it has to meet, and it has agreed that it has a financial obligation to get to that point. Some projects are already in train. Crossrail is nearly complete, and the western and southern routes already in Network Rail’s plans will also make a contribution. There is clearly an obligation on the airport to meet those objectives.
Andrew Selous (South West Bedfordshire) (Con)
My right hon. Friend has not said a great deal about the already horrendous congestion on the M25 north and south of Heathrow. Does his Department monitor the extent of the existing traffic jams, which are already really bad? Will anything be done as part of Heathrow’s expansion to try to improve capacity on the M25 so that people can get to and past the airport?
Chris Grayling
As I indicated earlier, the situation around the south-west of the M25 in particular is a matter for concern. Highways England has plans in place to start to address some of those problems. My experience is that the worst jams occur to the south and the north where four lanes go into three, and I have asked Highways England to look at how we can address that issue, starting with the junctions to the south-west.
Sue Hayman (Workington) (Lab)
I welcome the Secretary of State’s commitment to developing new connections to the regional airports, but is he aware that it takes at least two and a half hours to get from west Cumbria to our nearest airport? Will he also look at how Carlisle airport could benefit from the expansion at Heathrow?
Chris Grayling
If there are more slots available at Heathrow and there is a market to fly there from Carlisle, there will be an opportunity for the air operators to do that. As I have said, I am keen to ensure that we protect the capacity of our regional airports, but exactly where and how that happens, and at which airports, will be a matter for the future.
Richard Drax (South Dorset) (Con)
I congratulate my right hon. Friend on his statement. There is no doubt that this will be in the best interests of the nation and of all our constituents in the south-west, where my seat is. Will he kindly confirm how many direct rail links there will be from the south-west to Heathrow, as that will be absolutely key for my constituents and everyone else in the region?
Chris Grayling
There are two options, depending on which part of the south-west you are coming from. The plan is to have a southern rail link that will join up with the South West Trains network and a western link that will join up with the Great Western network, so my hon. Friend will have a choice. The train paths will obviously be a matter for the train operators at the time, but he will have a choice of routes to follow.
Ian Murray (Edinburgh South) (Lab)
This is indeed the right decision for the UK and for Scotland, but will the Secretary of State confirm that any additional slot capacity for domestic airlines will be guaranteed either in the planning process or in legislation? Furthermore, will he undertake an ongoing assessment of the ability of regional airports such as Edinburgh to attract direct routes following Heathrow’s third runway coming on stream in nine years’ time?
Chris Grayling
We will look carefully at what the right mechanism should be. It might not be as simple as guaranteeing a number of slots, because I want there to be the right connectivity. For example, I do not want a regional airport to be given a tail-end slot at 11 o’clock at night that does not allow proper links between that airport and international destinations. We have to think carefully about how this should be done and what the best mechanism is for doing it. However, I have given a guarantee that there will be protections for the regional airports and the connectivity that they need.
Mr David Nuttall (Bury North) (Con)
I warmly welcome my right hon. Friend’s statement, but with the best will in the world, it will be several years before the new runway comes into use. Will he therefore urge his Friends in the Treasury to allow zero or reduced passenger duty rates on new routes from regional airports such as Manchester, which already have the capacity to expand?
Chris Grayling
All I can say on that is that I have no doubt that my right hon. Friend the Chancellor of the Exchequer will have heard that representation in advance of the autumn statement and the subsequent Budget.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I welcome the fact that the Heathrow proposals include the potential for a logistics hub at Prestwick airport, and I urge the Secretary of State to involve all the relevant parties to ensure that that happens. May I also ask him, in relation to strategic thinking, to consider Prestwick when making the spaceport decision? This would give Prestwick sustainability and a long- term future.
Chris Grayling
I know that the spaceport decision is on its way. I am delighted that the hon. Gentleman thinks the United Kingdom’s choice for the spaceport’s location should be Prestwick. That would cement the bonds that exist between Scotland and the rest of the United Kingdom, showing that we are all part of one United Kingdom.
James Berry (Kingston and Surbiton) (Con)
We need more airport capacity but, with respect to the Secretary of State, Heathrow is the worst of the choices available to the Government, particularly for my constituents. Will he confirm that the final decision will be made here in this House and that we will be free to reject Heathrow?
Chris Grayling
First, let me say to my hon. Friend, and to my hon. Friend the Member for Twickenham (Dr Mathias) and others, that I know this is a difficult decision for a number of colleagues to accept. I respect their views and have every sympathy for the pressure that we are putting them under by doing this. My hon. Friend the Member for Kingston and Surbiton (James Berry) is my constituency next-door neighbour and I have worked hard for him in his constituency. I was delighted when he won. All the same, he will understand that the Government have to do what is in the interests of the whole United Kingdom, and these decisions are sometimes difficult for colleagues. The matter will have to be approved by the House, which will have the final say on the national policy statement. If that national policy statement does not secure the approval of the House, this cannot happen.
Jim Shannon (Strangford) (DUP)
I welcome the Secretary of State’s statement. The Democratic Unionist party was the first political party in the United Kingdom to back Heathrow, and we have always been clear that its expansion would support growth in Northern Ireland and strengthen our Union. More cargo travels from Belfast through Heathrow than from any other UK airport. Will he commit to continuing that vital link in the supply chain between Northern Ireland’s businesses and their clients in every corner of the globe?
Chris Grayling
That is an important part of what this announcement is about, although it is not always at the top of the agenda. Heathrow is the United Kingdom’s biggest freight hub and an important point of connectivity that enables businesses around the UK to ship their products around the world. This is absolutely an important part of the way forward.
Jason McCartney (Colne Valley) (Con)
This is yet another major transport infrastructure investment in the south of England. Will the Secretary of State show similar decisiveness in supporting new long-haul routes from Manchester airport, a new road link for Leeds Bradford airport, the electrification of the trans-Pennine routes, the Manchester and Leeds legs of HS2 and maybe even a new junction 24A on the M62 near Huddersfield?
Chris Grayling
As my hon. Friends who represent seats in the north of the country know, I am very much of the view that we must do a better job for our regions in the north—and, as I said earlier, in the south-west and the midlands. Having shadowed this job 10 years ago, which involved going around the country and seeing schemes that should have happened, but which were sitting on the drawing board year after year, one of the most pleasurable things that I have found after arriving in my current job is finding so many projects that we have actually done or are doing. More are on the way. I look forward to delivering more improvements to help the constituents of more colleagues in this House.
Tom Pursglove (Corby) (Con)
In reaching the decision, what weight did Ministers give to the benefit for UK supply chains? People in Corby, for example, will be pleased with Heathrow’s commitment to use British steel because that will be good for jobs in our steel towns.
Chris Grayling
I was pleased by that undertaking. Heathrow will inevitably want to use a diverse supply chain within the UK. We will do everything that we can to encourage that, and I hope that Corby will be one of the beneficiaries.
Sir Desmond Swayne (New Forest West) (Con)
My hon. Friend the Member for Richmond Park (Zac Goldsmith) warned us that court decisions will prevent a decision taken by this House from being implemented. Has my right hon. Friend considered any legislative remedy to stop that, notwithstanding the fact that he has already told us that this is, after all, a democracy?
Chris Grayling
From what I have read in the newspapers, I suspect that there may be attempts to challenge the decision. However, such court cases usually hang on whether we have given a decision careful consideration. We have looked at the matter exhaustively and considered all the issues. We understand the challenges and the hurdles that we have to overcome. This is a rational, measured, thought-out decision about what is in our country’s best interests. Our elected Government are there to take such decisions and I hope that the courts will not seek to challenge that.
Rehman Chishti (Gillingham and Rainham) (Con)
I welcome the Secretary of State’s statement. It showed respect for the work of the independent Davies commission, which had already rejected the bizarre, pie-in-the-sky idea of an estuary airport due to delivery, structural and environmental concerns. I thank the Secretary of State for making the right decision on the basis of the evidence and in the national interest.
Chris Grayling
I am grateful to my hon. Friend for his comments. The commission did a first-rate job of looking at all possible options, including the concept of an estuary airport. It came out with a clear view in the end. Sir Howard Davies recently emphasised his strong commitment to his commission’s recommendation. When Governments set up independent commissions and ask them to make recommendations, they should listen carefully; that is what we have done.
Tom Tugendhat (Tonbridge and Malling) (Con)
I welcome my right hon. Friend’s announcement, but will he assure the people of west Kent, in particular the residents of Edenbridge, Penshurst and Tonbridge, that a decision regarding Gatwick will not come up in the next few years and continue to blight their lives? Will he also say a little more about the six-and-a-half hours’ relief that he is quite rightly offering to people near Heathrow? Could that ban on night flights, from which we suffer all the time, be extended to Gatwick?
Chris Grayling
I am very aware of the issues around Gatwick, including the concern about noise, which is very much on my desk. I have talked to the CAA about how best to find the right balance for residents in areas under Gatwick’s take-off and landing routes. Today’s announcement is about the decision to add new runway capacity. The Airports Commission’s view was that we needed one new runway in the south-east by 2030. That is what the Government have sought to implement.
Kevin Foster (Torbay) (Con)
I congratulate the Secretary of State on finally making a decision, which will be great news for Torbay businesses that export their seafood via Heathrow. Does he agree that the decision now makes even more urgent the resolution of another long-standing question: the dualling of the A303 and the riddle of Stonehenge?
Julian Sturdy (York Outer) (Con)
For a hub airport to benefit the whole country, regional airports such as Leeds Bradford need increased access—more than the status quo. While I welcome the statement, may I push the Secretary of State on how many more slots will be available to regional airports? I also emphasise that landing charges must not work against internal flights.
Chris Grayling
I am keen to ensure that we do not see a big uplift in landing charges as a result of the project. I have been clear that the project must be brought through affordably and delivered in a way that represents best value for everyone involved. As for connectivity, I am not in a position to start setting out details about numbers of slots or exact mechanisms. I simply commit to the House that those things will be a binding part of what we eventually conclude.
Stuart Andrew (Pudsey) (Con)
I, too, welcome the commitment about regional connectivity, not least because flights between Leeds Bradford and Heathrow have become increasingly popular. It is also important that passengers are able to get to Leeds Bradford airport. Will the Secretary of State meet me to explore how to make progress on the campaign for a rail link up to the airport, which would account for only a teeny-weeny amount of the money being spent on Crossrail?
National Health Service Provision (Local Consultation)
Tuesday 25th October 2016
(7 years, 6 months ago)
Commons ChamberRead Full debate National Health Service Provision (Local Consultation) Bill 2016-17 View all National Health Service Provision (Local Consultation) Bill 2016-17 Debates Read Hansard Text
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
For more information see: Ten Minute Bills
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Speaker
It is a great pleasure to be able to move on to the ten-minute rule motion. Without wishing to embarrass the hon. Member for Banbury, she must find it encouraging to have paternal support so nearby.
Victoria Prentis (Banbury) (Con)
I do find it encouraging to have paternal, maternal and, indeed, filial support in this place, Mr Speaker.
I beg to move,
That leave be given for to bring in a bill to make provision about mandatory local consultation in relation to changes in services proposed by NHS Trusts and healthcare commissioning authorities; and for connected purposes.
The Bill is the result of our experience in Oxfordshire this summer when the Oxford University Hospitals NHS Foundation Trust suspended consultant-led maternity services at our local general hospital with no warning and no consultation. Horton general hospital was a gift to the people of Banbury in 1872. It serves a community of some 150,000 people, although that number grows day by day as more houses are built. Horton general’s patients are spread across six parliamentary constituencies that cover a large rural hinterland and some of the most deprived areas in Oxfordshire. I was born at the Horton and four generations of my family have been treated there. Like my constituents, I am proud of my local hospital and feel passionately about keeping its acute services.
Our unit was fairly small by national standards, with about 1,500 births a year. It was well regarded, both medically and by the families who chose it, but despite that fine reputation, it has been under threat for as long as I can remember. The first speech I made in primary school was about saving maternity at the Horton. The last major threat we faced was in 2008 when my predecessor, the former Prime Minister, the former Member for Daventry and the passionate “Keep the Horton General” group all fought tooth and nail to save the hospital.
At that time, the matter was referred to the independent reconfiguration panel, which looked at the evidence in considerable detail and concluded that
“there are major concerns over whether such a large unit as that being proposed”—
at the John Radcliffe hospital—
“would be (a) safe and (b) sustainable…There are sufficient concerns around ambulance provision and the transfer of very sick babies and mothers from Banbury to Oxford to call into question the safety of what is being proposed by the Trust.”
After that, we thought that the fight would be over for a considerable time. How wrong we were. On 20 July, I was invited to what seemed to be a routine meeting with the trust, so I asked a member of staff to go. No other Members of Parliament were asked to attend—nor could they have done, of course, on a sitting Wednesday. I was horrified to hear that the trust had failed to recruit sufficient obstetricians and that, as a result, the Horton would be downgraded as an emergency and there would be no consultation.
On 31 August the trust board approved the downgrading. Three weeks ago, obstetricians left and we became a midwife-led unit. Colleagues know that I am, with good reason, passionate about both maternal and perinatal safety. Nevertheless, I accept that MLUs are the best place to be for most deliveries, particularly as most are located alongside or very near an obstetric unit. That is the nub of our problem: if an emergency arises, or a woman simply changes her mind about having an epidural, our labouring mothers will have to be transferred by ambulance to Oxford, which is about 23 miles away. The average time for that journey door to door in a blue-light ambulance will be between 30 and 45 minutes. The traffic is dreadful and unpredictable; many of my constituents, myself included, go to enormous lengths to avoid driving into Oxford. National Institute for Health and Care Excellence guidelines make it clear that when an emergency C-section is needed, that must happen within 30 minutes. Once the transfer time is factored in, along with how long it takes to move a labouring mother into and out of an ambulance, that will be quite impossible from the Horton. The worry, of course, is that some will not make it in time.
Clearly, most women will no longer be permitted to deliver in Banbury. In the past three weeks there have been 12 births, whereas ordinarily there would have been about 90. Many of the women who will now deliver in Oxford live up to an hour and a half’s drive from the John Radcliffe. I worry about these women, about the babies that will be born at the side of the road, and about everyone’s experience of labour. I can barely begin to imagine the situation facing women who do not own a car, as the journey to Oxford from many of the villages by public transport is almost impossible.
I have repeatedly asked the trust to show me risk assessments, but have been sent nothing. My office eventually tracked down some risk assessments online that set out an alarming number of “high risk” factors, including transfer time, ambulance provision and the John Radcliffe’s ability to cope with the additional births. I asked for an explanation and have received nothing. Without evidence, I struggle to accept that patient safety has been fully assessed, and the unit should have been staffed by locums and professionals from the trust’s other sites while that was done thoroughly. I must also question how this all became an emergency, given that I have since been told that the clinical research fellows programme had become increasingly unsustainable over the past 18 months. Serious concerns have been raised about whether sufficient and timely efforts were made to recruit. As a new MP, when meeting the new chief executive, I would have expected this problem to have been flagged up. I would have welcomed the chance to try to help to solve the problem, as my constituents are now doing by offering discounted housing, school fees and even free Hook Norton beer to those who apply to be obstetricians.
My constituents are fearful and angry. We have had a summer of protests. Many local consultants and GPs are against the suspension and have complained furiously that such an important decision was taken over six weeks during the school holidays. I have considerable sympathy for those who believe this is part of a wider conspiracy to downgrade our local hospital. For many years, a vociferous contingent at the trust has wanted to centralise services in Oxford and to use our site for more out-patient services. One of the options proposed in the forthcoming sustainability and transformation plan is for exactly that, with the Horton’s maternity services becoming midwife-led. We fear that the situation this summer has been engineered to make that a fait accompli.
I was a civil servant for 17 years and, on the whole, I like to believe the best of our public servants, but I feel let down by the way we have been treated this summer, and by the lack of good management, transparency or evidence-based decision making. I am concerned that without a change to the law, other areas may also suffer as we have. The trust holds all the cards, as only it has the ability to manipulate the number of births each centre receives. We have no control over recruitment. Only the trust has the power to make posts attractive, and it has all the evidence and carries out all the risk assessments. The clinical commissioning group has been notable by its silence.
The Bill would increase the accountability of local trusts and commissioning authorities. When major changes to service provision are proposed, clinical groups and medical consortiums are not a replacement for public consultation. Doctor may know best, but only when he has listened to the patient. Local decision making can work, but only with democratic accountability. We in north Oxfordshire and the surrounding area remain hopeful that our unit will reopen next March, when sufficient obstetricians have been recruited. In the meantime, we fear for the safety of our mothers and babies.
Question put and agreed to.
Ordered,
That Victoria Prentis, David Mackintosh, Alex Chalk, Nigel Huddleston, Antoinette Sandbach, Will Quince, Marie Rimmer, Heidi Allen, Maria Caulfield, Harriet Harman, Robert Courts and Mr David Hanson present the Bill.
Victoria Prentis accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 27 January, and to be printed (Bill 80).
Criminal Finances Bill
Tuesday 25th October 2016
(7 years, 6 months ago)
Commons ChamberRead Full debate Criminal Finances Act 2017 View all Criminal Finances Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts
The Minister for Security (Mr Ben Wallace)
I beg to move, That the Bill be now read a Second time.
First, may I, through you, Madam Deputy Speaker, apologise to the House on behalf of my right hon. Friend the Home Secretary, as she is unavoidably detained on departmental business pertaining to national security and has therefore asked me to open this debate?
Both terrorism and serious and organised crime pose a real and present threat to the UK. Those involved in terrorist activities endanger our domestic security and overseas interests. Terrorism may be the greatest threat we face, but serious criminality arguably causes the greatest harm, costing the UK at least £24 billion annually, causing loss of life, and depriving people of their security and prosperity. Right hon. and hon. Members must not doubt the scale of this problem, as it damages our economy and our communities. It also has impacts on real people, whether we are talking about a grandparent being scammed out of their life savings; the trade of weapons that enable the type of marauding firearms attacks we have seen in Paris; the smuggling of illegal drugs that blight our high streets and local neighbourhoods; or the organised trafficking of young women and children.
Those crimes have a corrosive impact on the most vulnerable in society—they ruin the lives of real people—but this is part of a truly global issue. As David Cameron has said, international corruption is
“one of the greatest enemies of progress in our time”
and the
“cancer at the heart of so many of the world’s problems”.
Financial profit is at the heart of almost all forms of serious and organised crime. The UK drugs trade alone is estimated to generate £4 billion of revenue, and Her Majesty’s Revenue and Customs estimates that more than £10 billion was lost to tax evasion and criminal attacks against the tax system in 2014-15 alone.
Gavin Robinson (Belfast East) (DUP)
I agree entirely with that comment from the former Prime Minister and with the thrust of the Bill. One great concern of Christian Aid is that the Bill does not extend to or legislate for the Crown dependencies or overseas territories. Will the Minister respond to that at this early stage?
Mr Wallace
I thank the hon. Gentleman for that point. The Bill does extend some of the offences and powers it contains to cover an extra-territorial extent, which will go a considerable way to getting to the bottom of money laundering, whether that be carried out here or elsewhere around the world. It also goes some way to dealing with people who evade tax overseas. Just because they are not evading our tax but are robbing another country, it does not mean that we would not still like to take action against those individuals. The Bill goes some way on that.
Mr Wallace
I will make some progress and Members will doubtless be able to make their points throughout the debate.
Many of the criminals who profit from such activities live in plain sight, untouched by law enforcement agencies. They reap the benefits by money laundering—moving, hiding and using the proceeds of their crimes to fund their lifestyles and enable further criminality. It is estimated that the annual amount of money laundered globally amounts to $1.6 trillion, while the National Crime Agency assesses that many billions of pounds are laundered into or through the UK as a result of international corruption.
We should be rightly proud of the UK’s status as a global financial centre. This is one of the best places in the world in which to do business, but we must recognise that the size of our financial sector and open economy and the attractiveness of the London property market to overseas investors make this country unusually exposed to the risks of international money laundering. That is why this Government are taking action—to combat money laundering, terrorist finance and corruption—here and overseas. We are sending a clear message that we will not stand for money laundering or the funding of terrorism through the UK.
Dame Margaret Hodge (Barking) (Lab)
I am extremely grateful to the Minister for giving way. I agree with the content of his remarks, but I wish to pursue further the issue that has been raised by the hon. Member for Belfast East (Gavin Robinson). Does the Minister agree that transparency is absolutely key to trying to tackle some of the corruption and money laundering that take place? If he does agree, why is he not using this Bill to ensure that the overseas territories and Crown dependencies, which come under our jurisdiction, publish publicly available registers of beneficial ownership?
Mr Wallace
Yes, I absolutely agree that transparency is one of the steps along the path of tackling both corruption and money laundering. That is why, at the anti-corruption summit in May, the Prime Minister basically reaffirmed that commitment. Even before that, we had worked with the overseas territories and Crown dependencies to ensure that, hopefully by the end of this year or into next year, there will be transparency, registers, of which a considerable number will be public, and automatic information exchange between our tax authorities and those of our dependencies. In that way, we will be able to have access to information about people hiding tax from us, and our law enforcement agencies will then be able to set about tackling the matter.
This Bill is part of that process. A key element of that approach will be ensuring that we work with the private sector to make the UK a more hostile place for those seeking to move, hide or use the proceeds of crime.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Prosecuting corporations for failing to prevent economic crimes was expected to be a core part of this legislation as it appeared during the consultation phase. It seems that, despite Government indications that they would include provisions to hold to account corporations that let their staff facilitate tax evasion and other economic crimes, those provisions are not part of the Bill. Will the Minister explain why he has chosen not to include such eminently sensible precautions?
Mr Wallace
Yes, but I will come to that part of the Bill later on. It is certainly our intention to prosecute those corporations, or the corporate body, that allow their companies to facilitate tax evasion. Under the current system, an individual can be prosecuted for evading tax, and someone within a company can be prosecuted if they facilitate that evasion. At the moment, it is very, very hard to prosecute the corporate body. We are intending to make that change in our Bill. If the hon. Lady reads the Bill, she will see how we will do that. We will go after not only the corporate body here in the UK, but overseas companies. Being an overseas company will not be an excuse, and we will go after them in the same extra-territorial way that we do with the Bribery Act 2010.
Keith Vaz (Leicester East) (Lab)
I congratulate the Minister on his appointment to the Home Office.
In evidence to Parliament earlier this year, the private sector made it very clear that it is trying to co-operate with the Government. There were 381,000 suspicious activity reports made under the ELMER system, only 20,000 of which could be looked into. What support is he giving the National Crime Agency to allow it to have a better system to deal with those reports?
Mr Wallace
I am grateful to the right hon. Gentleman for his intervention and for his kind comments about my appointment.
First, we will remove those barriers to information sharing. Often some of the regulators or the bodies that we deal with say that they would like to pass on more to us, but feel that they are not protected from sharing wider information. We will remove those barriers so that the National Crime Agency can see the full chain of a financial instruction. We will also empower the NCA with a stronger disclosure order so that it can force people—it can go and apply for an order—to release documentation or to comply with questions about a particular transaction. Such an order currently exists in the Proceeds of Crime Act 2002, but it only covers fraud. We will now do the same for money laundering. We will also extend the time limit for a suspicious activity report. At the moment, there is a one-off extension of up to 31 days, but we would like to see that extended to six months, which means that the NCA will have much longer for its investigations.
Keith Vaz
I thank the Minister for his very full answer, but the real problem is that the system is old. The ELMER system needs to be replaced and renewed. Will he give the National Crime Agency the additional resources to pay for the new system to do all the things that he is suggesting? Without a new system, 20,000 simply does not go into 381,000.
Mr Wallace
The right hon. Gentleman is absolutely right that 381,000 referrals is a hefty amount to get through. First, we need to ensure that there is time to get through them. Secondly, what we do not want is what has happened in the past, which is that the private sector makes a suspicious activity report by default. If we can remove those excuses about why it cannot get to the bottom of a transaction before it passes it on, that will ensure that it passes on proper suspicious activities, rather than the ones that it can satisfy itself are not such a problem. In that way, we can cut out some of the referrals that are unnecessarily done.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I thank the Minister for giving way. He is being exceptionally generous.
Does that example not actually illustrate exactly what prosecutors are up against here and the complexity of these cases? Compulsion for transparency will be necessary, as it will put prosecutors on the front foot. Will he look at this matter again—it has already been raised by a number of Members—as the Bill progresses?
Mr Wallace
Yes, I can assure the right hon. Gentleman that that will happen throughout the passage of the Bill and even after. This is part of a longer process. We will make sure that, where we cannot get hold of the information that we need, we will prosecute people who are deliberately trying to evade tax, and also prosecute people who are trying to launder money. That is part of the process. Many of these powers, including the unexplained wealth orders, give us the benefit of the doubt and put it on to us to say, “Actually, we think you’re linked to serious organised crime, or we can show you are. Explain to us where your money is from.” At the very least, that will get over some of those hurdles about not being able to get to the bottom of the information in that process. That is one of the steps that we will take and that I hope the right hon. Gentleman will support as the Bill goes through.
Charlie Elphicke (Dover) (Con)
I welcome my hon. Friend to his place as Security Minister. His appointment is much deserved.
May I ask him about seizure and forfeiture powers? Previous legislation in this area has not been entirely successful in ensuring that the assets of criminals are seized. Can the Minister explain to the House why the provisions in this Bill will make a difference? We want to ensure that we grab the money off the criminals so that they cannot carry on with their illegal enterprises.
Mr Wallace
My hon. Friend is right that, in the past, it has been a challenge. Crafty hoods have been very good at taking their money out of cash and putting it into a range of moveable valuables, such as fast cars, paintings, jewels, or even betting slips, which I know the Scottish Government are quite keen for us to consider. We need to broaden it out and ensure that when they are crafty, we are crafty as well.
This Government have already done more than any other to tackle money laundering and terrorist financing. More assets have been recovered from criminals than ever before, with a record £255 million recovered in 2015-16, and hundreds of millions of pounds more frozen and put beyond the reach of criminals. We set up the Panama papers taskforce to ensure an effective, joined-up approach to those revelations. The London anti-corruption summit in May built capacity with overseas partners.
It is important to note that we are already doing this. In November 2015, the UK returned £28 million to Macau, which were the proceeds of corruption laundered in the UK. That is a concrete example of our giving back money to those countries that have been robbed by crooks who have used Britain to launder the money or to make the money in its jurisdiction. I want to see more of that and to see it go further.
There was a need for legislation and a need to build on the process of the anti-corruption summit and to find out where we were still vulnerable. In October 2015, the Government published the “National risk assessment for money laundering and terrorist financing”, identifying a number of areas where these regimes could be strengthened. Our response to that assessment was the action plan for anti-money laundering and counter-terrorist finance, which was published in April 2016. It represents one of the most significant changes to our anti-money laundering and terrorist finance regime in more than a decade.
The Bill will give effect to key elements of that action plan. It will significantly enhance the capability of UK law enforcement to tackle money laundering and to recover the proceeds of crime. It will strengthen the relationship between public and private sectors and combat the financing of terrorism.
Part 1 contains a number of measures that will amend the Proceeds of Crime Act 2002, including the creation of unexplained wealth orders. There are criminals who declare themselves almost penniless, yet control millions of pounds. Law enforcement agencies may suspect that assets are the proceeds of international corruption, but they are unable to freeze or recover them, often because they cannot rely on full co-operation with other jurisdictions to obtain evidence. A court will be able to make an unexplained wealth order to require an individual or organisation suspected of association with serious criminality to explain the origin of assets, where they appear to be disproportionate to their known income. If that person does not respond, this may enable the property to be recovered under existing civil recovery powers.
Part 1 chapter 1 will extend the use of disclosure orders, which allow a law enforcement officer to require someone who has relevant information to answer questions as part of an investigation. Those orders are already in use for civil recovery and confiscation investigations. They will now be available for money laundering cases.
Chapter 2 will enhance the process by which private sector companies report suspected money laundering—the suspicious activity reports, or SARs, regime. Where a company in the regulated sector, such as a bank, accountancy or legal firm, suspects that it may commit a money laundering offence, it is obliged to submit a SAR to the National Crime Agency, seeking consent to proceed. At present, there are occasions where these SARs are incomplete and where further information is needed to inform the NCA’s decision. The Bill will give law enforcement agencies more time to investigate those suspicious transactions that require consent and the NCA extra powers to request further information from companies to help to pursue those investigations and conduct wider analysis.
The Bill will provide a gateway for the sharing of information between regulated companies—subject to appropriate oversight—to help to build a broader intelligence picture of suspected money laundering. This has been piloted through a programme known as the joint money laundering intelligence taskforce. In the 12 months from February 2015, the taskforce led directly to 11 arrests, the restraint of more than £500,000 and the identification of 1,700 bank accounts linked to suspected criminal activity. We want to build on the success of that work, by providing the clearest possible legal certainty that companies can share information for the purposes of preventing and detecting serious crime.
Part 1 chapter 3 will improve the ability of law enforcement agencies to recover the proceeds of crime. Existing legislation contains civil powers to confiscate cash, but criminals hold proceeds in other forms, as I said earlier, and we must adapt. The types of asset covered by the power are listed in the Bill, so that Parliament can properly scrutinise its potential use. We continue to consult operational partners on their requirements, and I expect that we will introduce a Government amendment to extend the list to include gambling slips and tokens, which are often used by organised criminals to launder their ill-gotten cash. I hope that such an amendment will attract cross-party support.
The rest of part 1 will extend existing POCA powers to a number of other organisations, including the Serious Fraud Office, Her Majesty’s Revenue and Customs and the Financial Conduct Authority. It will make a range of minor and technical amendments to POCA.
The first duty of any Government is to keep their citizens safe. The terrorist threat is real and is growing. If we are to combat that threat, we must cut off the funding streams that enable terrorist-related activity. The 2015 national risk assessment identified two key weaknesses in this area: the raising and moving of terrorist funds through vulnerabilities in the financial sector, including money service businesses and cash couriering; and the abuse of the charitable sector for terrorist purposes. To combat these issues, part 2 will make complementary changes to powers for terrorist finance cases, by mirroring many of the provisions in the Bill, such as those on SARs, disclosure orders and seizure and confiscation powers, so that they are also available for investigations into offences under the Terrorism Act 2000.
Part 3 will deliver on the Conservative manifesto commitment to make
“it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion”.
At present, if an individual evades tax and that is criminally facilitated by those working for a company, the individual taxpayer will have committed a crime and those individuals facilitating it could also be prosecuted, but it is very difficult and often impossible to hold the corporate entity to account. That needs to change. That is why we are creating two new offences of corporate failure to prevent the criminal facilitation of tax evasion—one in relation to UK taxes; another in relation to taxes owed to other countries.
Tax evasion is wrong. It is a crime. It cannot be right that a business operating in the UK can escape criminal liability simply because a tax loss is suffered by another country rather than the UK. The new offence in relation to foreign taxes will be of particular benefit in tackling corporate facilitation of corruption in developing countries. HMRC has conducted two public consultations on these offences, including engagement with the private sector—banks, accountants and legal practices—and everyone is clear of the need to take responsibility for ensuring the highest possible standards of compliance in this area.
As I have said, tax evasion and corruption in the developing world are key contributors to global poverty. Those crimes are frequently facilitated by companies in other jurisdictions. We cannot abdicate our responsibility and leave solving this problem to other countries. The UK’s financial sector should lead on the disruption of tax evasion, money laundering and corruption. This measure will help to do just that.
The Government are committed to reducing the regulatory burden on business, which can make it harder for companies to focus on real risks. The measures in the Bill were developed in close partnership with law enforcement agencies and the regulated sector, including major financial institutions, as well as other key representatives.
Robert Jenrick (Newark) (Con)
Although I support the Bill, does the Minister agree that there is no point in legislating if the agencies tasked with enforcing the legislation simply do not have the resources to do so? For example, since the creation of the Office of Financial Sanctions Implementation, as far as I am aware from talking to lawyers who work on white-collar crime practices, there has been no enforcement whatever. All of us who want to support the Bill would like to hear reassurance that there will be the resources to match the good intent.
Mr Wallace
I am grateful to my hon. Friend for his intervention. In the past few months, I have visited regional organised crime units up and down the country, including in his region, and the NCA, and they all say that their barrier to getting further with some of these problems is not the resource issue; they all say that their barrier has been the ability to find the cash, see the cash and seize it. Those three things are incredibly important. We can put all the resources in the world into our law enforcement agencies, but if they do not have the powers to take back some of the stolen assets, it will not make a difference.
The thing that struck me coming into this job only a few months ago, although I thought I knew a bit about terrorism from my previous life, and what has absolutely shocked me is the weight and strength of organised crime across the United Kingdom. To see its depth, how it affects my community in the north-west and how close it comes to us all really takes my breath away. I am absolutely determined not only that the guys and girls at the top, the Mr Bigs, get sent to jail for as long as possible, but that those people who consider themselves a little removed from it—the facilitators, the white-collar smoothies who launder the money into property and so on—also face their time in court, because they are the people who contribute to the message that there is a permissive society and that it is okay to be associated with crime. They are the people who help the nasties to put a gloss on themselves.
That is what I am determined to do with the Bill. All Members should rest assured that I will use the Bill to try to build momentum in non-legislative areas—in the non-regulated sector. I want to ask the regulators of estate agents and accountants what they are doing to play their part. If we can change the powers here, if their members get into trouble, what are they going to do to hold their members to account? Legislation is only one part of this. I hope that everyone supports the Bill and that the message goes out that there is more to do and that we will make sure that those people who facilitate and think that they live on the edge of the crime know that we are coming after them.
Charlie Elphicke
I thank my hon. Friend for giving way again; he is being incredibly generous. As he says, this is a question not just of laws but of the culture of the organisations. The NCA’s predecessor organisations all seemed to be more culturally bureaucratic. The NCA seems to be more intelligence-led. It seems to have more officials at the top who were intelligence operators in past times. From everything that I have seen, the NCA is far more vigorous at chasing down the intelligence, which is what it really needs to do.
Mr Wallace
There are several parts to this. The NCA has absolutely got the bit between its teeth, and I see a professional organisation up and down the country determined to tackle the threat that we face. I compliment police forces throughout the country that have put away the old-fashioned territorial boundaries that organised crime often exploited and have been determined to work together. When we visit Police Scotland and regional organised crime units in the north-west and all the other regions, we see police forces all sitting around the same table, working together for their own ends, led by intelligence, deciding on their priorities, sharing capabilities and knuckling down and getting on with it, rather than just focusing on their small areas. The NCA and regional organised crime units have provided the impetus on this, and the results will speak for themselves. I can assure the House that each of the Bill’s provisions will be subject to a set of stringent safeguards and robust oversight, so that they can be used only where it is necessary and proportionate to do so.
We considered carefully the responses to the public consultation on options for legislative proposals to implement the action plan. We published the Government response alongside the Bill earlier this month. I am grateful to everyone who responded to that consultation. There will inevitably be some additional pieces of statutory guidance to underpin the measures in the Bill. We will seek, wherever possible, to make that available to Parliament during the passage of the Bill, to ensure the widest possible consultation on how it will work in practice.
The Bill is only one part of a wider package of measures, as I have said, aimed at strengthening the Government’s response to money laundering and increasing the amount of criminal assets confiscated by the state. Our wider programme includes improving the effectiveness of the supervisory regime for the regulated sector; reforming the SARs regime, including investment in systems and processes; and further increasing our international reach, working with other Governments, overseas territories, Crown dependencies and international organisations to crack down on money laundering, tax evasion and corruption. We must ensure that the Bill and those other projects have the greatest possible impact on money laundering and terrorist finance in this country and abroad.
I welcome the hon. Member for Hackney North and Stoke Newington (Ms Abbott) to her post as shadow Home Secretary, and I am pleased that she has been able to meet me since her appointment to discuss this Bill. I would be delighted to continue to meet her and her team during the passage of the Bill to make sure that we get it right. Hopefully, we can work to ensure that the whole House agrees to support the Bill to send a message to the crooks, criminals and facilitators that we will not tolerate this any more. I hope that the hon. Lady, her colleagues and Members from the Scottish National party agree that it is in the public interest that the Bill be enacted at the earliest opportunity, hopefully with clear cross-party support.
I also congratulate the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) on her recent election as Chair of the Select Committee on Home Affairs. I am afraid that she is not in the Chamber, but she has a wealth of experience in home affairs, and I look forward to discussing these issues with her and the Select Committee.
The Government are committed to protecting the security and prosperity of our citizens, and the integrity of our world-leading financial system. We must ensure that we can pursue vigorously those who abuse that for illicit means. That is what the Bill will do, and I commend it to the House.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
If someone walks around the most expensive neighbourhoods of London—Knightsbridge and South Kensington—they will see house after house dark every night. Some have no lights on because the owners are out, but many more have no lights on because they have been bought as an investment and lie empty most of the time. Some of the most expensive properties in the capital are unoccupied because they have been bought solely for the purpose of laundering dirty money.
In 2016, money laundering is not just happening in accountancy offices or the back rooms of banks. It is happening in plain sight of ordinary Londoners, because we see some of the most expensive domestic properties in the world change hands but remain mysteriously and persistently empty. We welcome the Bill, which has been introduced with the express purpose of providing new powers and safeguards to improve the Government’s capacity to tackle money laundering and terrorist financing and, above all, to recover the proceeds of crime. I want to make it clear that, in principle, the Opposition support the aims of the Bill.
We do so because it is vital to do as much as we can to bear down on illegal activity, including targeting the enablers of illegal activity: lawyers, accountants and estate agents. We support the Bill partly because public opinion, encouraged by the work of the Public Accounts Committee under distinguished past and present leadership, rightly demands that politicians do more to stop tax evasion. We also do so because some of the poorest countries in the world have had their Treasuries denuded by money laundering. If the UK, which is often described as one of the money-laundering centres of the world, could act effectively against money laundering, not just our own tax authorities but the populations of countries in the global south, from which some of this money has been looted, would benefit.
We will wish, however, to ascertain that the provisions of the Bill will actually work and impact in reality on the harms that the Minister set out. We will weigh carefully the civil liberties implications of those provisions. Furthermore, we seek assurances that the Government agencies tasked with implementing the legislation will have all the resources and support that they need.
Keith Vaz
The issue of resources was raised by the hon. Member for Newark (Robert Jenrick). Despite the effective way in which the Minister made his case, he did not answer my question. When will the NCA get a new computer system? When will ELMER be renewed so that the agency can look through SARs? The system is designed for 20,000 complaints, but it is currently dealing 385,000. The agency needs a new computer system to do what the Minister and my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) want the Bill to achieve.
Ms Abbott
I am grateful to my right hon. Friend for that important intervention. If the Minister does not give a clear reply to that question on the Floor of the House, I can assure him that we will pursue the issue in Committee.
The Minister said that money is not the main obstacle to pursuing money launderers and criminal actors, but it does not help when agencies such as the NCA experience cuts. The Home Affairs Committee produced an important report in June on the proceeds of crime, and I am indebted to the then Chair and the Committee as a whole for their investigatory work. The Committee pointed out that money laundering takes many complicated forms, ranging from complex financial vehicles and activity in tax havens around the world to property investments in London and high-value jewellery. I share the Select Committee’s astonishment that of over 1 million property transactions last year only 335 were deemed suspicious. I agree with the Select Committee’s conclusion that supervision of the property market has been “totally inadequate” and has
“laid out a welcome mat for launderers”.
The Select Committee report also made the important point that it is all too easy for people who want to launder money to buy property in London, let it out in the capital’s high-value lettings market, then take in clean money in perpetuity.
Overall, the NCA believes that up to £100 billion of criminal funds could be passing through the UK each year in the form of property, luxury cars, art and jewellery. Transparency International estimates that there are hundreds of properties in the UK that are strongly suspected to have been acquired with the proceeds of corruption. Land Registry figures show that UK real estate worth more than £170 billion is held by more than 30,000 tax haven companies. I do not argue that there can never be a legitimate reason for holding UK real estate in a tax haven company, but I believe that, all too often, what we see could well be illicit activity.
Charlie Elphicke
As a former tax lawyer, may I point out to the hon. Lady that companies in tax havens own UK property because it was possible to do a stamp duty avoidance scheme called “enveloping” during most of the period in which the Labour Government were in office? Action taken by this Government has put a stop to a lot of that abuse.
Ms Abbott
I made a point of saying that there can be legitimates reasons for holding UK property in tax haven companies. I remind the hon. Gentleman that it was not every single detail of the activity of the last Labour Government that I supported.
Most owners of those companies hide behind anonymous trusts or nominee directors and shareholders. For instance, in a single 50-storey apartment complex in London, The Tower at St George Wharf in Vauxhall, a stone’s-throw from the House, a quarter of the flats are held through offshore companies. This Bill aims to close a loophole which means that authorities cannot seize property from overseas criminals unless the individuals are first convicted in their country of origin. The orders will apply to property and other assets worth more than £100,000. If the owner fails to demonstrate that a home or piece of jewellery was acquired using legal sources of income, agencies will be able to seize it.
The Opposition support the new law in principle, but stress that for it to be effective agencies must be given the financial and political support to take powerful and wealthy individuals to court. Furthermore, there is some concern, which we will explore in Committee, that the measures may be too widely drawn. Throughout, the sole safeguard for seizure orders is the reasonable suspicion of a police officer on their own authority. This may be too low a bar as a safeguard against the incompetent use or abuse of state powers.
Keith Vaz
I thank my hon. Friend for her kind comments about the Select Committee’s report published in July. In evidence to the Committee, Sir Bernard Hogan-Howe suggested that the criminal law should be amended to ensure that those who had not paid their compensation order should be the subject of a second criminal offence. Does my hon. Friend agree that it is wrong for those who are subject to a compensation order to go to prison, finish their sentence and come out without it being paid? We need to look very carefully at this aspect.
Sir Edward Garnier (Harborough) (Con)
I take the point that my neighbour, the right hon. Member for Leicester East (Keith Vaz), makes, but often when a criminal is sentenced, along with a compensation order or a proceeds of crime order, he is sentenced to an additional term of imprisonment in the event that he does not pay back the money. Sometimes those extended sentences can be very long—indeed, as long as or even longer than the original sentence.
Ms Abbott
Far be it from me to bandy words with the many lawyers in the Chamber. I repeat that as the Bill goes through Committee we will seek to examine the question of people flouting compensation orders. Overall, in relation to bearing down on money laundering, we welcome the relevant provisions, including the unexplained wealth orders, the reform to the suspicious activity reports regime, information sharing and the new disclosure orders.
The Bill also deals with tax evasion. In recent years there has been a great deal of public interest and a raft of Government measures on tax avoidance. Arguably, less attention has been paid to tax evasion. There is some blurring between the two terms, but broadly, tax evasion occurs when an individual or corporate entity acts in breach of the law, and tax avoidance occurs when an individual or corporate entity complies with the letter but not the spirit of the law. In recent years Her Majesty’s Revenue and Customs has produced estimates of the tax gap—that is, the difference between the tax that is collected and that which is theoretically due. Clearly, any such estimate must be speculative, but I draw the attention of the House to the fact that HMRC’s most recent estimate of the gap is £36 billion, which is the equivalent of 6.5% of total tax liabilities. Of that £36 billion that is lost, £5.2 billion is lost to evasion and only £2.2 billion is lost to avoidance.
We welcome the measures to bear down on tax evasion, and we welcome the provision that makes it a criminal offence for corporations to fail to stop their associated persons facilitating tax evasion. We particularly welcome the fact that this will have extra-territorial jurisdiction. However, we regret that in the tax evasion measures in part 3 there is no reference to the British overseas territories and Crown dependencies. That is a startling oversight. There are 14 British overseas territories. Just one of them, the British Virgin Islands, is mentioned no fewer than 113,000 times in the Panama papers. BVI, with a population of just 29,000—fewer than my own constituents in Hackney—is home to 452,000 international businesses. Maybe the 29,000 population is particularly skilled at accountancy and banking, but maybe some of those business entities are shells for tax evasion.
There are three Crown dependencies, Jersey, Guernsey and the Isle of Man, and it is frequently argued that the British overseas territories and the Crown dependencies are the largest tax evasion network in the world, so the failure to mention them in a Bill which purports to deal with issues surrounding tax evasion is a major omission. We will be seeking amendments as the Bill goes through Committee. It is frequently asserted that it is not possible to legislate for the British overseas territories and the Crown dependencies, but the Ministry of Justice seems to think differently. This is an issue that we will explore.
The Minister referred to the beneficial ownership register that we are encouraging the overseas territories and the Crown dependencies to introduce, but he must be aware that at least some of the overseas territories are boasting that they are in practice evading the Government’s efforts to get them to set up beneficial ownership registers, and many of them are saying that these registers will not be publicly available. The Opposition insist that if this Government are serious about dealing with tax evasion, they must ensure that the overseas territories and Crown dependencies not only set up beneficial ownership registers, but make them publicly available.
We note that there is little distinction in the Bill between corporate or partnership bodies which facilitate tax evasion, and those that do it routinely and as a central part of their business model. We believe that we should look into a new provision specifically criminalising entities and individuals for whom tax evasion is at the heart of their business model, and punishing them more harshly.
I shall not conclude my remarks on tax evasion without mentioning the Labour party’s tax transparency enforcement programme. We want a public inquiry to examine the loss of tax revenue, and increased powers for HMRC, including a specialised tax enforcement unit. We want to force foreign firms to list their owners and beneficiaries, and we want the introduction of a general anti-avoidance principle and the extension of current rules to cover offshore abuses.
The Bill deals with the important issue of terrorist finance. Those of us who have watched with horror terrorist atrocities all over the world, and here in London, know that terrorism is an existential threat to us and our society. We share the Government’s aims in reducing the terrorist threat, not just to us in the UK but to our allies and interests overseas, and agree that one way of doing this is to deprive terrorists of the financial resources required for terrorism-related activity. Globalisation means that we must constantly update our legal instruments. We note the changes that the Bill will make to the law enforcement and intelligence agencies in relation to investigations of offences under the Terrorism Act 2000, but we will examine these proposals because we are anxious that they do not have too harsh a bearing on genuine charities.
Labour Members support the Bill in principle. We will scrutinise its detail with care. We insist that it is vital that agencies such as the National Crime Agency get the money they need for implementation, because otherwise the Bill will be a dead letter. For too long, London has been accused of being a hub for money laundering, with all its terrible effects not only on the take of our Treasury but on the lives and countries of many of the poorest people in the world. We hope that this Bill is the beginning of a process that brings the curtain down on the era when London could be described as a money-laundering hub, instead ensuring that London and the UK set an example internationally about what can be done to bear down on money laundering and tax evasion.
Sir Edward Garnier (Harborough) (Con)
I begin by declaring an interest. I have been instructed in the past, and I am currently instructed, by the Serious Fraud Office in a number of matters that touch on this Bill and some of its predecessor legislation.
I apologise to my right hon. and hon. Friends on the Front Bench, and to the shadow Home Secretary, the hon. Member for Hackney North and Stoke Newington (Ms Abbott), for the fact that I might not be able to be here for the wind-ups. I hope that my right hon. Friend the Minister for Policing and the Fire Service will forgive me. All being well, however, the debate may run short—if I do not talk too much—in which case I shall be here.
Like the shadow Home Secretary, I broadly support the principle behind the Bill, which I assume is entirely uncontroversial. We all want the criminals whom we hope will be touched by it to be caught and to be prevented from committing such financial crimes. The days when people went into banks with sawn-off shotguns are long over. Criminals are now much more sophisticated: they go round the back with a set of wires, metaphorically, and extract money out of banks and other financial institutions through computer crime, rather than by using violence. We need to keep up with them. As my hon. Friend the Minister for Security said, we have to be craftier than the crafty hoods.
In our enthusiasm to pass the Bill, however, there are one or two matters about which we need to be a little cautious, although I am sure that, during its passage, the Government will think about how to get the detail right. It could be said that many of the points I am going to set out would be better made on Report than on Second Reading, but I might as well make them while I am on my feet.
Unexplained wealth orders, as a matter of principle, are in line with provisions in the Proceeds of Crime Act 2002 and similar measures, in that they reverse the burden of proof by making the respondent to the order explain himself, rather than requiring the prosecution or the state to make the case against him. That principle is now accepted in our criminal law, and that will continue as long as there are sufficient protections for the respondent. Under the Bill, the High Court may, on an application made by one of the prosecution authorities or enforcement agencies, make an unexplained wealth order in respect of any property if it is satisfied that each of the requirements for making the order is fulfilled. The order will be made in the High Court and the application will be made to the High Court in relation to a respondent who has a criminal connection, but also to politically exposed persons. We need to be careful that politically exposed persons, who will, as I understand it, be foreigners, are sufficiently protected from the making of an application that could trash their reputation and that, even when that is not acceded to by the High Court judge, none the less still leaves him or her exposed to the allegations made against them. I suppose that, to a lesser extent, the same could be said of a respondent with some form of criminal connection.
It seems to me that the way around that is to do what has been done with deferred prosecution agreements in the Crime and Courts Act 2013. Paragraphs 7 and 8 of schedule 17 to that Act provide a way of dealing with those issues so that reputations cannot be damaged until the necessary time when a particular state of affairs has been proved. In deferred prosecution agreements, the parties—the Serious Fraud Office in this case—apply to the court for a declaration that entering into a deferred prosecution agreement with the respondent is likely to be in the interests of justice and that
“the proposed terms of the DPA are fair, reasonable and proportionate.”
That hearing takes place in private. Once the court is satisfied, and the parties are agreed, that the terms of the order are correct, the judge makes an order that is made public, and also makes public the judgment that he made in the private hearing some days or weeks earlier.
That is a perfectly sensible way of maintaining the interests of doing justice in public, while holding in private the initial hearing in the event of an order not being made, or of it being altered in a way that makes the respondent look a lot less guilty than he might otherwise have looked. That allows a hearing to be heard without damaging an innocent man’s reputation. That is simply a matter of mechanics, and if the Government can spare the time between now and when the Bill leaves the House of Commons, we could achieve the end that we all want, without causing collateral or unintended damage.
I am also a little concerned—perhaps this can be dealt with at a later stage—that clause 1 deals with income as though that were all that needs to be considered. Proposed new section 362B(3) of the Proceeds of Crime Act 2002 states:
“The High Court must be satisfied that there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property.”
Proposed new subsection (6)(d) notes that
“‘known’ sources of the respondent’s income are the sources of income (whether arising from employment, assets or otherwise) that are reasonably ascertainable from available information at the time of the making of the application for the order.”
If “income” simply means money received, I understand that; but if it means income as opposed to capital, we need to make clear that by income we mean not just the interest from capital or a salary, but all that the respondent owns, so that we can capture the distinction between income and capital. A respondent could be capital-rich, but income-poor. We need to avoid a situation where he can get away from the order by saying that his income does not amount to much when we all know, or can anticipate, that his capital is larger. I am sure that plenty of the houses that the shadow Home Secretary spoke about are bought with cash—essentially, they are bought for great lumps of capital—rather than from borrowing.
I am concerned about the Bill’s use of the words “purports to comply”. I appreciate that that expression is to be found in earlier, similar Acts but, to me, purporting to do something means either doing or attempting to do one’s best, or doing something speciously—appearing, falsely, to do something. Albeit that we accept that that expression is used in earlier legislation, we need to be clear that to pretend to do something should not be a defence or an answer to an accusation of failure to comply with an unexplained wealth order.
I turn to the question of enforcement, which has been brought up on several occasions. Let us assume that an unexplained wealth order is made, and let us assume that there is a hearing, initially perhaps ex parte—singlehanded—by the authority. The matter then either comes back for a hearing between both parties, or moves on in some other way. It is all very well making these orders, but that will do no good if we do not have the necessary police officers or investigators to ensure that they are enforced.
I have noticed that in the past with confiscation orders. Very often, the courts make an order, and either the order is never put into action or very little of the amount required from the offender is ever recovered. We need to make sure that this legislation is not simply written in air; it must have real teeth to deter those who think they can get away with this sort of misbehaviour, and to enable the Treasury to recover the ill-gotten gains. I dare say that the same could be said in relation to suspicious activity reports.
Finally on unexplained wealth orders, is there to be any form of appeal system? It strikes me that under proposed new section 362H, an application for an unexplained wealth order may be made without notice, and I have dealt with points about that. Will the procedure be susceptible to any sort of appeal, and if not, why not?
I turn to the “failure to prevent” provisions, which my hon. Friend the Minister mentioned in his opening speech. I heartily approve of this new system for dealing with corporate misconduct. We saw it first in our jurisdiction under section 7 of the Bribery Act 2010. Although there have been only a few cases involving section 7, it strikes me as being a sensible way of dealing with the difficulty that we face, under English law at least, in pinning criminal liability on corporations. In the United States, a corporate body can be held to be criminally liable because it employed the criminal. It is vicariously liable for employing the criminal and his activities are pinned on the company. In this country—certainly in this jurisdiction—we rely on the Victorian principle of the directing mind. Nowadays, in huge international companies that have hundreds of thousands of employees posted right across the world, albeit that the headquarters of the company may be in this jurisdiction, it is extremely difficult to demonstrate that the directing mind of the company knew what the criminal employee was up to. Section 7 of the Bribery Act gets around that.
Richard Arkless (Dumfries and Galloway) (SNP)
Although I accept the directing mind principle, does the right hon. and learned Gentleman agree that when employees engage in less than ethical practices—such practices have caused a lot of the problems that we have seen in the UK over the past six or seven years—unless the liability goes to the top of an organisation, the organisation will never develop the protocols and processes required to make sure that those employees are responsible for their actions? Does he accept that point?
Sir Edward Garnier
What the hon. Gentleman says is perfectly true, but I am not sure whether that constitutes accepting what he says. The point I am trying to get across is that companies can avoid liability in the absence of the “failure to prevent” system under section 7 of the Bribery Act. Individuals can be prosecuted and imprisoned, but the company gets away free. The advantage of section 7 is that it brings the company within the ambit of responsibility.
Yes, the compliance system in banks and financial institutions is nowadays much more sophisticated and vigorously engineered, so that everybody from top to bottom should know what they are supposed to do and not do, and so that such a culture goes right the way through the company. It seems to me that there is no excuse for failing to behave properly, since we should all now know what to do. The compliance world is certainly keen to ensure that employees in banks and so forth know what they are supposed to do.
I want the Government not to limit the “failure to prevent” provisions to section 7 of the Bribery Act and those clauses in this Bill that deal with tax evasion, but to expand the regime to all offences that can sensibly be brought under it, as set out in part 2 of schedule 17 to the Crime and Courts Act 2013. The schedule covers 40 or 50 economic or financial crimes that corporations should be required to prevent. That would put a blanket across a range of criminal financial offences that are not dealt with at the moment, such as fraud, theft, false accounting, the suppression of documents, dishonestly retaining a wrongful credit, the exportation of prohibited or restricted goods and so on. There is a list for the Government to look at. I hope that thought will be given not just to expanding the regime to the evasion of taxation both in this country and abroad, but to some of, if not all, the offences listed in the schedule.
Finally, I want to make a small point, which I suppose comes back to resources. In an online article in “The Brief” from The Times this morning, a senior lawyer at a City firm of solicitors complained that tax officials were failing to use existing tools against tax avoidance schemes while seeking to expand their powers. He said:
“The huge range of swingeing powers HMRC has been given in recent years may have helped its image…but to date they have been little used as an enforcement tool, and some may question whether public time and resources could have been better spent.”
He also said:
“Before granting HMRC yet further powers…parliament should consider very carefully whether such powers are actually needed and ask HMRC to explain why some of the powers it has been granted in recent years have been under-utilised.”
I do not know whether that is pinpoint accurate, but it seems to me that we can do both: we can make better use of the powers provided to HMRC and ensure that it uses them; and we can also widen the ambit of our ability to catch those involved in financial crime and our ability to prevent it by introducing the “failure to prevent” provisions in this Bill in, I hope, an expanded form.
Richard Arkless (Dumfries and Galloway) (SNP)
Before I go through my speech, I think I can sum up our position on the Bill very succinctly. The crux is that we support in principle the aims of the Bill. To be truthful, there is not much within the four corners of the Bill that we would dispute. Our problem is not with what is in the Bill but with what is not in the Bill, as I will make clear in my speech.
When I studied the financial system at university in the 1990s, the focus of financial crime and of the Government with regard to it was on anti-money laundering regulations and proceeds of crime legislation, which were specifically geared towards getting at the proceeds of drug traffickers and, quite frankly, bank robbers. For the most part, that has worked. Long gone are the days when criminals could easily legitimise buckets of cash from ill-gotten gains. Thankfully, long gone are the days when the only concern involved in robbing a bank was being caught red-handed. The perception of criminals was that if they could evade capture and did not flash the cash, they could eventually spend the money. In many cases, criminals could be incarcerated for crimes and still look forward to spending loot they had stashed when they were eventually released. Money now needs to be accounted for; banks must consider the sources of funds and be satisfied that they are indeed legitimate. Police now have powers to recoup proceeds of crime even if they have been spent by the criminals, and pass them back to the victims.
In my view, we simply could not believe in the rule of law unless we supported such an evolution in rules and regulation. Fairness and the rule of law should be at the heart of everything we do as a society. It is not fair to anyone to live in a world where criminals are free to generate cash and spend it without fear of repercussion. There simply must be a level playing field for the vast majority of society who play by the rules. The past changes did not merely disincentivise criminals; they drove a police coach and horses right through their plans. There are many famous bank robbers and drug traffickers. We know them; we have watched all the films. I suggest that they simply would not have committed those crimes had we had tougher money laundering regulations then.
The challenges today are very different. We live in an era of evolving financial crime and now face a very different threat from that which we faced a generation ago, when I was at university. It is the threat of grand corruption, particularly in relation to politically exposed people, facilitated for the most part—perhaps unwittingly —by the City of London.
Earlier this year The Guardian revealed through the Panama papers how a powerful member of Gaddafi’s inner circle had built a multimillion-pound portfolio of boutique hotels in Scotland and luxury homes in Mayfair, Marylebone and Hampstead in London. He was head of Libya’s infrastructure fund for a decade and has been accused by Government prosecutors in Tripoli of plundering money meant for schools, hospitals and archaeology. Scottish police have confirmed that they are investigating. Libya has made a request for an asset freeze, but that has not yet been implemented.
These challenges are such that new and tougher legislation is required to give law enforcement the tools to really do something about this problem. We in the Scottish National party support that principle. Although I do not wish to undermine your Office’s consideration of the Bill, Madam Deputy Speaker, I respectfully suggest that the Bill applies to Scotland. There are specific clauses on how the provisions will apply to Scotland.
As far as devolved competencies go, the SNP Scottish Government have demonstrated their commitment to tackling criminal finances and tax avoidance, and boast a successful track record in doing so. In Scotland we have introduced robust anti-avoidance rules on devolved taxes, described by commentators as among the toughest in the world. The SNP Government’s approach to devolved taxes demonstrates that we are deadly serious about tackling tax avoidance in Scotland. For example, the Revenue Scotland and Tax Powers Act 2014 established the Scottish general anti-avoidance rule, which will allow Revenue Scotland to take counter-action against artificial tax avoidance schemes, making it more difficult for people to circumvent the requirement to pay tax.
That said, although we support the broad principle at stake here, we note with interest the clear terms of the most recent Tory manifesto:
“We will continue to lead the world on tax and transparency…We are also making it a crime if companies fail to put in place measures to stop economic crime”
and
“We will…crack down on tax evasion and aggressive tax avoidance”.
Admirable principles, and ones we support, but we have real doubts that the Bill goes far enough to achieve those goals, as I and my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) will make clear as we move through the debate.
Many mechanisms and vehicles are provided for in the Bill. One of the most important, and perhaps the easiest for the public to understand, is the unexplained wealth order. The Bill will enable a court—in Scotland, the Court of Session, upon application by Scottish Ministers—to make an unexplained wealth order. The order will require an individual or organisation to explain the origin of assets if there are reasonable grounds for suspecting that that individual or organisation may be involved in criminality or intend to use that wealth for criminal purposes, and the value of the assets exceeds £100,000.
The order will be available to the court where assets appear disproportionate to known legitimate income—for example, as recently reported, when a taxi driver owns a £1 million fish tank. Failure to provide a response to the order and explain the legitimate source of funds would give rise to a presumption that the property was recoverable, making any subsequent civil recovery action much easier.
As a lawyer, the notion of reversing the burden of proof is not one that sits comfortably with me, but, as in other areas, I consider it to be proportional to the issue at stake. Sound legal principles, such as the presumption of innocence and the burden of proof being on the Crown, should not inadvertently protect criminals, which I suspect may have happened thus far.
Unexplained wealth orders will also help to expose the owners of property. Land Registry figures show UK real estate worth more than £170 billion is held by more than 30,000 tax haven companies. The key to this provision is that a criminal conviction will no longer be necessary before law enforcement can pierce the criminals’ veil that camouflages their wealth. Getting away with the crime itself will no longer protect a criminal’s wealth. The Bill will allow for this power to be applied to foreign politicians and officials, or those associated with them, known as politically exposed persons, helping to tackle the issue of proceeds of grand corruption overseas being laundered in the UK.
I have a couple of specific questions for the Minister relating to unexplained wealth orders. There is a provision relating to interim freezing orders. If an unexplained wealth order is made, one could presume that the respondent would be keen to hotfoot it out of the country with a stash of cash. Freezing orders are available if the court is satisfied that they are necessary. Will the Government consider strengthening this position to ensure that the hotfoot temptation is not available to these criminals? I could imagine the rush to flee—I think we all could. Perhaps an automatic freezing order on the granting of the application for the unexplained wealth order can be considered. Will the £100,000 threshold create a new “out” for grand corruption? Will politically exposed people collaborate with many people to do numerous transactions under £100,000? That should also be considered and we should ensure that the provisions catch those types of activities.
Current legislation does not make it easy to seize criminals’ assets in the form of bank accounts and other value assets, such as precious metals and jewels, or indeed casino chips and high value betting slips. There is evidence, however, that these moveable items are being used increasingly, both domestically and across international borders. The Bill will create new civil powers similar to existing cash seizure and forfeiture schemes in current legislation, which would close that gap. The powers will be exercisable where there is reasonable suspicion that the property is the proceeds of crime or will be used in unlawful conduct.
The SNP’s 2016 manifesto stated:
“We will argue for changes in the law at Westminster to enable the police to seize items of monetary value from criminals, such as high value betting slips and casino chips.”
I was pleased to hear the Minister state that the changes will be included in a forthcoming amendment. I was struggling to conceive how criminals could be caught by the face value vouchers provisions currently in the Bill, so I was grateful for that statement and I thank the Minister for making it.
On corporate failure to prevent tax evasion, the Bill attempts to legislate on what we understand as corporate economic crime. As we heard from the Minister, the Bill will create two new offences. We support the measures as far as they go, but we see this as a huge missed opportunity. For example, nothing in the Bill would criminalise the banks themselves for their employees rigging the LIBOR market. I suspect that when the public begin to understand which corporate crimes are dealt with in the Bill and which ones are not, they may see this as a slight cop-out and a continuation of the status quo that has got us into so much difficulty. It is uncontroversial to hold companies to account for the tax evasion of their employees. It is tax evasion, for goodness’ sake. The public would expect it to be criminally sanctionable as is. What the public want are stronger measures to hold companies, in particular banks, liable for the crimes of their resident rogue bankers. It seems strange that the Government have ducked this issue.
Speaking as someone who has worked for a well-known retail bank—something that I do not advertise as much these days as I used to—I can testify with absolute certainty that until the banks themselves are in the frame they will never, as I claimed in my intervention, develop the risk management and other protocols necessary to make sure that their agents or employees do not commit these crimes. Only when liability goes to the top will we ever begin to solve these issues.
Will the Government consider reacting to what the public understand as corporate crime, and make banks liable for practices that have caused so much economic heartache to so many ordinary people since 2008? Why should the innocent ordinary punter pay for the mistakes of rogue bankers? If we make these bosses liable, we will see a tightening up almost instantly.
Sir Edward Garnier
As a first step, would the hon. Gentleman encourage the Government to look at the schedule to the 2013 Act, where the economic and financial crimes are set out, to see whether we could get “failure to prevent” provisions added to this Bill on a wider basis? Perhaps the hon. Gentleman and I could then get together to try to persuade the Government to introduce the American vicarious liability system of corporate criminal liability.
Richard Arkless
I have a great deal of sympathy with both of the right hon. and learned Gentleman’s points. I suggest, however, that the first one is rather a half-house measure that does not go far enough. It will not pin criminal liability on the banks. On the second point about vicarious liability, it is interesting to note that the United States is often considered as the free market monster of the entire world, yet the US feels comfortable with criminalising banks for the actions of their rogue employees. I suggest that we should do the same in the UK.
Mr Wallace
It is a joy as a non-lawyer to be skewered between two barristers in this place, but may I point out to the hon. Gentleman that one reason why the Bill imposes an unlimited fine for a conviction of corporate facilitating of tax evasion is that we believe it will change behaviour. It is one thing to fine a company for a capped fee, but we need to change the attitude not only of the bosses but of the shareholders—and massive fines make a difference. If that is coupled with our provision to increase the powers of the Financial Conduct Authority, we hope that both will help to change behaviour.
Richard Arkless
I agree with the Minister, but my point is that under the Bill, corporate economic crime extends only to tax evasion and not beyond it. Within the four corners of the Bill, there is relatively little to disagree with, but it does not go beyond tax evasion, which I think is a huge omission.
SNP Members can support other parts of the Bill without much hesitation—for example, the expansion of the suspicious activity reports regime, information sharing disclosure orders and combating terrorism. We support all those measures in principle. Notwithstanding our in principle support, we do not think it goes far enough, as I have said.
I shall shortly go through some of the issues that we think are missing from the Bill. Before I do so, however, I wish to make a small point about the time we have had to consider this Bill and its contents. We do not agree that the Scottish Government were given adequate time to scrutinise them. The Bill has been instructed and drafted with high speed, admirable though that may be, but with limited consultation. Only in the last fortnight were we shown draft clauses that related to unexplained wealth orders and mobile items of value—and even then, they were tagged “in confidence”. That said, we welcome the move to extend to Scotland the powers for wealth orders and disclosure orders, as requested by the Scottish Government.
For these reasons, the Scottish Government have not had the chance—and neither have I—to consider the Bill in sufficient detail, to consult Scottish stakeholders properly or to provide the Minister and the Government with some detailed advice. The Scottish Government will do so in due course. In addition, we are already aware of concerns among some Scottish stakeholders, particularly the civil recovery unit, that their advice has not been fully listened to and acted upon by the Home Office, and that the current approach adopted in the draft seizure and forfeiture powers provisions may not be the most effective available. I would encourage the Minister to continue his dialogue with the Scottish Government. He demonstrated yesterday evening that that is ongoing, for which I thank him.
So what is missing? It remains the case for us that the most notable aspect of the Bill is what is not in it. The headline objective of the Tory manifesto in this context was to deal with tax evasion, but, as has already been pointed out, the Bill makes absolutely no mention of the United Kingdom overseas territories and Crown dependencies. Given the aforementioned statement of intent in the Tory manifesto and the problems highlighted by the Panama papers—and the public reaction to the Panama papers—that omission seems very odd and very peculiar indeed.
Joanna Cherry (Edinburgh South West) (SNP)
The OECD estimates that tax havens may be costing developing countries a sum up to three times the size of the global aid budget. Does my hon. Friend agree with me, and with the charity Christian Aid, that the most effective way in which the Government could tackle corruption and counter the financing of terrorism would be to set a deadline by which the overseas territories and Crown dependencies would have to adopt the same level of transparency as the rest of the UK, and does he agree that the Bill constitutes a missed opportunity for them to do so?
Richard Arkless
Unsurprisingly, I agree wholeheartedly with my hon. and learned Friend. I should like the Minister to consider whether there is any way in which we could compel the overseas territories and Crown dependencies to publish registers of beneficial ownership, which would provide much needed transparency in what is turning out to be a bottleneck in the fight against tax evasion.
Joanna Cherry
Does my hon. Friend agree that there is a precedent? The Government have repeatedly legislated in respect of overseas territories—for example, on issues relating to corruption, abolishing the death penalty, pirate radio, and the decriminalisation of homosexuality.
Richard Arkless
Again unsurprisingly, I agree with my hon. and learned Friend. Where there is a political will, there will be a way. If the Government were inclined to legislate in relation to the overseas territories and Crown dependencies, I have no doubt that that could be done, but the omission indicates to me that there was not the necessary political will.
We do not believe that the Bill will tackle tax avoidance appropriately. Avoidance has increased under the Conservative Government. Last year the UK tax gap was a staggering £36 billion, and, despite the positive rhetoric emanating from the Tory Front Bench, it has increased by £2 billion on last year. More needs to be done in the Bill to achieve everyone’s stated aims.
Why does the Bill not address the tax code? The UK has one of the most complex tax codes in the world, which has clearly led to opportunities both to create new loopholes and to exploit existing ones. We therefore call on the Treasury to convene a commission, and to report back within two years following a comprehensive consultation on the simplification of the tax code. By opening the door to a simplified tax system, the Government could boost tax yield, encourage compliance, and avoid exploitative loopholes such as the Mayfair loophole and employee benefit trusts.
Changes are one thing, but they could become meaningless if we do not allocate the resources that are necessary to ensure that the Bill and subsequent measures have real effects. We think that the Government’s decision to close 137 HMRC offices will be completely counterproductive in relation to the laudable aims of the Bill. Those resources are needed to boost compliance, not to mention the human cost that has been incurred by families, employees, communities and local businesses.
Let me make one final point to the Minister, which will be expanded later by my hon. Friend the Member for Kirkcaldy and Cowdenbeath, and which we discussed yesterday evening. My request is for the wholly reserved issue of Scottish limited partnerships to be dealt with in the Bill, which it is not at present.
It is the view of the Scottish Government that a legislative consent motion will be required to give effect to the provisions covering seizure and forfeiture powers and unexplained wealth orders, and some of the minor and technical changes in the Proceeds of Crime Act 2002. The motion will also include the specific provisions on civil recovery and criminal confiscation that the Scottish Government require to be included in the Bill.
We will not trigger a Division this evening, but we want to reiterate very firmly that the Bill does not go nearly far enough in dealing with what I think is a real and tangible outcry from the public, given what has happened over the last five, six or seven years. If we are serious about creating and maintaining confidence in the banking system—which has completely evaporated—we need to tackle this issue head on, and do more than we are doing in the Bill.
James Berry (Kingston and Surbiton) (Con)
I rise to support the Bill—not to complain about what is not in it, but to praise the Government and agree with them on what they have put in this bold Bill.
I should declare I am a barrister and have represented a number of police forces across the country. That experience has taught me two things. The first is a genuine admiration for the men and women of our fantastic police service for their dedication to the task of keeping us safe. Thanks to their excellent work, led by Chief Superintendent Glenn Tunstall, Kingston is now the safest borough in London. However, as I learned at our recent police awards, even in London’s safest borough, there are humbling examples of everyday heroism and compassion by our police officers. We do not hear enough about them, but we are truly grateful.
I pledged at the election to do what I could to give the police the tools they need to do their job. That leads me on to the second thing my experience with the police has taught me: there are a number of powers in this Bill that the police have been, and still are, hamstrung without —where they are powerless to act in the face of wrongdoing.
Before talking about those powers, I want to make a broader point. I am proud to serve as a London MP, representing those who live and work in the best city in the world. London is the world’s financial services capital and I know the Government are working as hard as they can to ensure that that remains the case after Britain’s exit from the EU. But over the last few years there have been reports that London is becoming the capital of something rather more insidious—money laundering.
Following the global financial crisis, property in London has become one of the safest investments in the world. Rich criminals and money launderers are attracted to it in the same way as people who make their money legitimately. Put shortly, Londoners want this stain removed from their city. The Bill will help to do that.
It is not just London: the National Crime Agency assesses that billions of pounds in proceeds of international corruption are laundered into or through the UK every year. Her Majesty’s Revenue and Customs estimates that £4.4 billion was lost to the Exchequer last year alone due to tax evasion in the UK. Globally, laundered money is estimated to amount to 2.7% of GDP, or $1.6 trillion. To put that in perspective, there are only nine countries in the world with GDPs greater than that.
As the leading nation in the world for soft power, and as a nation that is trying to lead the global debate on anti-corruption, we need to ensure that our house is in order. The Bill is part of the Government’s wider efforts to ensure that that is the case. I want to touch on a few aspects of the Bill.
The first is unexplained wealth orders. We have seen many cases in the press where individuals suspected of grave criminal offences are living lavish lifestyles well beyond what any legitimate income they could evidence could possibly support. It is insulting to the many hard-working people in the UK who play by the rules and go to work day in, day out to earn an honest living to support themselves and their families to see this happening. It creates a feeling of impunity in the upper echelons of criminality.
Unexplained wealth orders will require those suspected of being involved in, or associated with serious criminality to explain the origin of assets of over £100,000 that appear disproportionate to their known income. A failure to provide a response, or a satisfactory response, could lead to a presumption that the property in question is recoverable in civil proceedings.
Unexplained wealth orders will have to be made by a High Court judge on application by a relevant law enforcement officer. Even with those protections, as might be expected of a lawyer, I ask the Minister to give a little more assurance about the nature of the protections in place, given that the measure does reverse the burden of proof that normally rests on the Crown. I am sure that he will be able to provide that reassurance, and I entirely agree with the hon. Member for Dumfries and Galloway (Richard Arkless) that that appears to be proportionate in this case, given the severity of the situation that law enforcement officers face.
Secondly, on enhanced forfeiture powers, I have spent many mornings in magistrates courts up and down the country making applications under the Proceeds of Crime Act 2002. I have some familiarity with this area. The current powers under the POCA apply to cash. The police may seize it when they have reasonable grounds to suspect that it is the proceeds of crime. They may then apply to the magistrates court to forfeit that cash. A classic example is a shoebox found in a house containing some drugs and rolls of cash. However, the provisions apply to cash alone. The more sophisticated criminals do not have rolls of cash and a little bit of cannabis or cocaine in a shoebox. They have their money in bank accounts and in high-value items of personal property, which are much harder to trace and much easier to move around, domestically and internationally. Such items include precious metals and jewels—and indeed betting slips. I am grateful to the hon. Member for Dumfries and Galloway for drawing those to the Government’s attention. His information appears to be being acted on. The seizure and forfeiture provisions in the Bill extend the cash seizure powers in POCA to bank accounts and high value-items. That will mean that the law and the police’s powers are keeping up with the ways in which crimes are being committed. That is a welcome move.
I now turn to part 3 and the new offence of corporate failure to prevent tax evasion. This is another manifesto commitment that the Government are delivering on today. It is already the case that a taxpayer who fraudulently evades a responsibility to pay tax commits a criminal offence. A person such as a banker, accountant or tax adviser who knowingly assists a taxpayer to fraudulently evade a responsibility to pay tax is committing a criminal offence, but the company employing that banker, accountant, tax adviser or other professional who criminally facilitates tax evasion does not commit any offence. The company is outside the reach of the law. The Bill aims to bring those companies within the reach of the law, not to duplicate the criminal liability of their employee or agent but to criminalise a failure by the company to prevent those acting on its behalf from facilitating tax evasion. It will criminalise the company for allowing an atmosphere to be created in which that tax evasion is possible.
That might seem draconian, but it is absolutely necessary. Companies will have a defence, much as they do under health and safety legislation, if they can show that they had reasonable prevention procedures in place. The new offence will be the stick that will drive up companies’ efforts to ensure that their internal procedures do the utmost to prevent their employees from facilitating tax evasion. It will drive up standards in the whole sector, and that is long overdue.
Richard Arkless
I am listening with great interest to what the hon. Gentleman is saying. Does he agree that there is a real case to be made for extending the provisions on corporate economic crime beyond the tax evasion issues covered by the remit of the Bill?
James Berry
That is certainly something that could be looked at and consulted on, but the Bill is achieving a manifesto commitment to do exactly what it says on the tin. That is what the Government are trying to deliver today.
James Berry
No.
I hope that this provision will have the same effect that health and safety legislation has had, with companies taking the lead in rooting out bad practice to avoid being liable themselves for incidents caused by their employees. Some businesses might dismiss this as red tape, but if it is red tape, it is important red tape that is focused on the aim that it is trying to achieve. It is important to ensure the integrity of our world-leading financial services sector in London, and these measures have been welcomed by many in the industry, including the chief executive of the British Bankers Association, even though I do not necessarily support the utterances he made earlier this week.
I have touched on just a few of the provisions in the Bill. It also contains many tidying-up provisions that are extensions of existing laws and that are based on feedback given to the Government by the police and law enforcement agencies on the deficiencies in their current powers. That approach is to be warmly welcomed, because when it comes to the fast-moving world of criminality that our police are trying to prevent and detect, we in this House must be fleet of foot. I believe that the Government are achieving that today. I am sure that hon. Members on both sides of the House will welcome the aims of the Bill unreservedly, and I hope that by the time it has been through its Committee stage, all its clauses will have been accepted.
Dame Margaret Hodge (Barking) (Lab)
This speech represents two firsts: I am the first non-lawyer to speak from the Back Benches; and I think I am the first to acknowledge the role played both by our former Prime Minister and by the right hon. Member for Brentwood and Ongar (Sir Eric Pickles), who was the anti-corruption tsar, in providing leadership on anti-corruption. They should both be acknowledged today as their work led to what we are considering. I agree with everyone who has spoken today that the Bill is extremely important. Whether from the National Crime Agency or HMRC, the estimates of the billions of pounds that are laundered through the UK or lost to public services because HMRC is unable to collect them make this an important measure. I fear, however, that the rhetoric that many have been given to this afternoon does not reflect the reality, so I hope that the Minister will able to respond to the points that I raise.
Others have mentioned the omission of tax havens, and the failure to take action on the overseas territories and Crown dependencies, which act as key jurisdictions in support of tax evasion, tax avoidance and corruption, is a grave error. I hope that the Minister will reflect on that during the Bill’s proceedings and see whether we can introduce some amendments. The Government’s failure to mention such territories makes them complicit in facilitating the very corruption that they say they want to tackle through the Bill.
Mr Jim Cunningham (Coventry South) (Lab)
I agree with my right hon. Friend and previous speakers that, were something done about the overseas territories and Crown dependencies, that would give the Government more credibility. They have committed to report annually on tax avoidance in some of these overseas tax havens—for want of a better term. Does she agree that, if they are going to negotiate with other Governments to get them on board, they should do something about the overseas territories?
Dame Margaret Hodge
Indeed. I would also add that the Brexit provisions might also lead to increased activity through the overseas territories and tax havens, so there are several dangers.
A number of Members have mentioned the evidence that backs up the importance of the Bill, but I want to point out two or three facts that have not yet been raised. The World Bank reviewed 213 corruption cases from a 30-year period between 1980 and 2010. Shell entities were involved in 70% of them, and UK Crown dependencies and overseas territories were second after the US on the list of those who provided shell entities. That is clear evidence of the importance of the role played by the Crown dependencies and overseas territories. Do we always have to wait for another leak to understand that? We will keep on getting them—the Mossack Fonseca leaks and the Panama papers will be just one in a stream. If we look at the information we garnered from the leaks, over 200,000 corporate entities were exposed, more than half of which were registered in the British Virgin Islands. I ask the Minister to consider that.
I also came across the African Progress Panel, which found that citizens of the Democratic Republic of the Congo were deprived of some £1.35 billion—twice their health and education budgets combined—due to the sale of mining contracts to five anonymous BVI companies. Those assets were sold at about one sixth of their commercial value, enabling the secretive offshore companies to sell them on and secure profits of more than 500% of the original moneys they paid. Again, desperately needed resources were lost to the poorest countries in the world.
If we are really to tackle the corruption, evasion and avoidance that occur in jurisdictions over which we have ultimate control, we must have the transparency that a number of Members have asked for this afternoon.
Mr Wallace
I have listened carefully to what the right hon. Lady said. Will she not concede that since the lead-up to the London anti-corruption summit in May, the Crown dependencies and overseas territories have agreed to establish a central register of beneficial ownership and a data-sharing system with the UK enforcement agencies that will give us access to those data almost in real time, and that that goes a long way to meeting some of her concerns? I recognise that the Scottish National party would like this to be public as well as shared with our law enforcement agencies, but it still goes some way on this issue. On the other side, the unexplained wealth orders for politically exposed persons will allow us to grab the money should they put it in this country and live in the nice houses that they sometimes seem to live in.
Dame Margaret Hodge
In my view, and indeed the British Government’s view, publicising those registers of ownership is crucial. We decided to do that for ourselves, so why are we not using our powers to enforce it on the Crown dependencies and overseas territories? There are multiple reasons why we have decided to do it for ourselves, and I shall mention two of them. First, for many of the poorer countries, getting their agencies up to speed so that they can pursue people and know what questions to ask is tough, and public registers make it much easier for those people to be interrogated. Civil society should interrogate them, and the registers make it much more likely that the type of activity that I mentioned in the DRC is revealed.
Secondly, we are talking about a very reactive response; if a register can be interrogated only by the international agencies that are allowed to have access, people will have to know that there is something they are after before being able to discover whether or not there is information about beneficial ownership that is relevant to a criminal activity or to aggressive tax avoidance and so on. Such an approach presupposes a degree of intensive resources and knowledge that will not necessarily be in place. Although one of course welcomes the creation of these registers, having them made public is central to making them work.
The Minister should listen not to my words on this, but to those of the former Prime Minister, who was absolutely clear, year on year, when talking about these issues, that the openness and transparency of these registers was what mattered. In 2013, he said to the Crown dependencies and overseas territories that they had to rip aside the “cloak of secrecy” by creating a public register of beneficial ownership. In April 2014, he wrote to the overseas territories, saying that
“beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion.”
He also expressed his hope that overseas territories would follow suit to
“consult on a public registry and look closely at what we are doing in the UK.”
On a trip to the Caribbean in September 2015, he said:
“Some of the British Crown Dependencies and Overseas Territories are making progress in this direction. And others, frankly, are not moving anywhere near fast enough. I say to them all today, including those in this region”—
the Caribbean—
“if we want to break the business model of stealing money and hiding it in places where it can’t be seen: transparency is the answer.”
When we established our own public register here in the UK, David Cameron said that
“there are also many wider benefits to making this information available to everyone. It’s better for businesses here, who’ll be better able to identify who really owns the companies they’re trading with. It’s better for developing countries, who’ll have easy access to all this data without having to submit endless requests for each line of inquiry. And it’s better for us all to have an open system which everyone has access to, because the more eyes that look at this information the more accurate it will be.”
I simply say to the Minister that I really do agree, in this instance, with the former Prime Minister and I hope the current Government will listen carefully to his wise words.
Joanna Cherry
The right hon. Lady is, as one would expect, making a very powerful speech. Does she agree that the Government can be comforted by the thought that extending this transparency to the tax havens would be a very popular move with the public, as YouGov polling shows that more than two thirds of people think that the Government should take such action? Research published by Oxfam shows that there are high levels of support for extending this transparency across the political spectrum.
Dame Margaret Hodge
I, too, have seen that survey. Any action that the Minister takes will be warmly welcomed by the public across the whole of the United Kingdom—by people of all ages and all genders. This is a really important bit of work, and I hope that the Minister will take it seriously.
I am concerned about the action taken so far. I am concerned that in December 2015 when we had the Overseas Territories Joint Ministerial Council, the Government failed to persuade those territories to implement public registers. I am concerned that, in March 2015, the Cayman Islands and the British Virgin Islands refused to meet Ministers from the Foreign Office and the Treasury. I am concerned that they failed to meet the Financial Secretary’s request that they adopt registers by November 2015. I am concerned that—as I understand it—they have ignored letters from UK Ministers. I am deeply concerned that tax is not even on the agenda for the forthcoming meeting of the Overseas Territories Joint Ministerial Council. I hope that the Minister can address that point. We do have the powers, and, as was mentioned in a previous intervention, we have used them before. The Government must act.
If the Minister could at least tell us that he will set a timeline, at the end of which, if matters cannot be resolved in a collective and collaborative way with the overseas territories and the Crown dependencies, the Government will use their power. That would go a long way to settling some of our concerns today. I hope that he can at least consider that as a possibility for taking the matter forward.
May I briefly comment on some of the other provisions in what is a warmly welcomed bit of legislation? On the unexplained wealth orders, it is particularly welcome that they will be applicable no matter where in the world the offence takes place. May I ask the Minister two questions? If the money comes from an overseas territory —a developing country, for example—will there be a notification to that country of the setting of an unexplained wealth order? Again, our enforcement agencies will be more capable than some others in pursuing laundered money.
Mr Wallace
I can get an exact answer to the right hon. Lady’s question. Just around that, though, we have started to sign memorandums of understanding with a number of countries—we signed one in August with Nigeria—to help them recover their assets, without barriers between here and there, and to assist them, both in their country and here, with tackling crime. Once they find their assets, we will get them back to them as soon as we can.
Dame Margaret Hodge
I am grateful to the Minister for providing that information. Will he explain why the orders do not apply to politically exposed people inside the European economic area? Will he look again at that issue, because there may occasionally be a relevant instance where that is important?
Mr Wallace
That is quite straightforward. We are unable under EU law to discriminate against different members of the EEA in relation to the UK citizen. What we do for the UK citizen we also have to do for other members of the EU.
Dame Margaret Hodge
I wish to raise two other issues. One arises from a debate held in the House on March 2012, initiated by the hon. Member for Esher and Walton (Mr Raab), on what is known as the Magnitsky-style amendment. The argument there arose from the horrific and brutal killing of Sergei Magnitsky—a Russian lawyer who was tortured and murdered because he uncovered a huge $230 million tax fraud in Russia. Allegedly, $30 million of that found its way laundered into the UK, according to evidence given to the Home Affairs Committee.
The hon. Gentleman proposed something similar to an amendment enacted in America—he and I would support such an amendment during the proceedings on the Bill—that would have ensured that foreign individuals involved in corruption and human rights abuses had their assets frozen, be denied right of entry to this country and be publicly named and shamed. Again, although that is slightly different to other provisions in the Bill, I think that there is strong cross-party support for introducing a Magnitsky-style amendment into UK legislation.
I hope that the Minister will look favourably on such an amendment. I have looked at the details, and a particularly disturbing aspect is how many UK banks were involved in laundering the alleged $30 million into the UK, according to evidence given to the Home Affairs Committee. They include Barclays, HSBC, NatWest, Bank of Scotland, RBS, Citibank, Bank of America, Lloyds TSB and the Bank of Tokyo. I hope that, from that horrific tragedy, we can introduce an important change in our legislation.
Finally, I want to talk about the corporate failure to prevent tax evasion, which other hon. Members have spoken about. I welcome the Bill as the first attempt to place responsibility for tax evasion not just on individuals but on corporations. However, this is a very small first step towards making those who are responsible for devising, advising and facilitating evasion and avoidance accountable for their actions.
Before we go over the top on saying what a great change the Bill represents, we should realise that it will apply only where a criminal offence has been successfully prosecuted against an individual or where an individual adviser has committed an offence when working for a corporation. It does not cover negligence by the corporation. It will not make the corporation responsible for the crimes of its staff. It does not cover aggressive tax avoidance. Unlike my Front-Bench colleague, I think that that is where the important bit of action must be taken if we are to ensure that we get the resources into coffers according to people’s wealth and their profits and incomes.
The Bill simply asks that reasonable procedures are in place, which is a risk-based and proportionate exercise, so it does not represent a fail-safe procedure. As I think through some of the instances we heard about during my time chairing the Public Accounts Committee, where we felt that corporations were misbehaving, I do not think that it would cover PricewaterhouseCoopers and all the stuff that it was doing in Luxembourg, where it was clearly selling schemes in an industrial way that had no other purpose than to avoid tax. We had a discussion earlier today about Heathrow. I do not think that it would cover Heathrow, which has managed to avoid paying a heck of a lot of tax on massive billion-pound profits that it has made. I do not think that it would cover Google. I do not think that it would cover—this is really important—the fact that when we interviewed advisers about the tax advice they give to corporations and individuals, they said that they would give advice so long as there was a 50% chance that it was not challenged by HMRC. The reverse of that is that there is a 50% chance that it will be challenged by HMRC, but given the size of the task and HMRC’s limited resources, it takes a long time to catch up with such schemes and does not have the resources that some of the big accountancy firms, advisers, banks and lawyers et al. have. That will be caught not by the first welcome but small measures that are being taken.
From all the work that we did in the PAC, the only thing that I can think would be caught is probably HSBC’s actions. The non-executive director, Rona Fairhead, gave evidence to us, sought to blame the whistleblower in that instance for being a thief—I thought that that was pretty awful—and blamed the front-line staff for doing what was obviously expected of them by the organisation for which they worked. She, as a non-executive director earning £500,000 a year at HSBC, felt that she did not have any responsibility to ensure corporate governance. The measure might catch that sort of instance, but it is very limited, and as we examine the Bill, I would welcome opportunities to extend that important first step in ensuring corporate liability as well as individual liability and accountability for actions that have been taken. I warmly welcome the Bill and I hope that the Minister can take the further steps that I have suggested.
Nusrat Ghani (Wealden) (Con)
It is a pleasure to follow the right hon. Member for Barking (Dame Margaret Hodge). I would also like to put on record the fact that I must be the second non-lawyer to speak in the debate.
I support the Bill, especially its provisions on countering terrorist financing. In November last year, shortly after the horrific terrorist attacks in Paris, I wrote to the then Prime Minister, the former right hon. Member for Witney, to raise my concerns about overseas funding received by religious or educational establishments in this country that radicalise and promote extremist values—basic criminality—whether they network through individuals, mosques, schools or community groups. I argued that if an organisation is unwilling to agree to a set of tolerant principles that society considers acceptable, it is not unreasonable to prevent it from receiving dubious funding from overseas. I am not so naive as to overlook the accusation that that approach could itself be seen as intolerant, but we have accepted that there are rules to which the funders of political parties and unions must adhere, so why not the funders of other important institutions? Extremism is a symptom of criminal ideology, and we must cut off any finance that helps to spread an ideology that promotes criminality, extremism and violence.
The Bill builds on the Government’s action plan for anti-money laundering and counter-terrorist finance by putting into law one of its main principles: more information sharing between the private and public sectors. It goes without saying that we cannot disrupt terrorist financing unless we know about it, and I welcome the fact that that is fully recognised in the Bill through concrete measures to deal with the problem. Measures to introduce a disclosure order regime under terrorism legislation offer new opportunities to uncover illicit financing of terrorist or extremist behaviour and the promotion of criminality. We have seen the benefits of the work of accredited financial investigators in proceeds of crime investigations, and it is right that those benefits should be extended to counter-terrorism investigations with the extension of powers to AFIs in the Bill.
We need to go further with provisions that are not appropriate for inclusion in this Bill but would, in my view, strengthen its provisions. Perhaps I may be so bold as to make a suggestion. The vast majority of churches are registered as charities, which means that their finances are transparent. I would suggest that a formal register of mosques in the United Kingdom would make it far easier to investigate their financial affairs and their recruitment of imams, especially if those people come from overseas. That would help us to understand the strand of Islam that they wish to promote, and it would flush out sources of financing that promote the intolerant ideas that put us at risk of harm from criminals who use those ideas to justify their actions.
The Islam that came to this country with the communities that settled here after the second world war is not the Islam that is being exported by Daesh today. With many of our communities and mosques feeling that they are under siege from that foreign death cult, it is our duty to protect those communities and show that we stand by them in countering extremism. As a member of the Home Affairs Committee, I have seen all the evidence that I need to justify our hard-headed response to the threat of terrorism and criminal extremism. I hope that the Government will consider such a step when the appropriate vehicle arises.
As of June this year, some 165 people were in custody for terrorism-related offences, and domestic extremism and separatism, but there are still individuals and organisations based overseas that have a mission to spread insidious intolerance and violence, which requires funding that travels across borders. As terrorist groups organise and reorganise, they need access to well-funded diverse networks, and they are becoming increasingly complex and sophisticated. Technology and the proliferation of financial instruments challenge the authorities’ ability to accurately trace and counter the flow of funds, but one thing remains the same: the objectives of terrorists. They seek to divide our communities, spread fear and hate, and undermine the good work of community leaders who do everything they can, often in the face of unhelpful opposition, to make sure that their communities are safe.
By enhancing our ability to counter the financing of terrorism, we are taking another step in preventing the spread of organised crime and terrorism. The Bill offers the Government’s support to leaders and communities, makes us all safer, undermines the financial management of terror groups and co-ordinates legal measures to combat them. I therefore warmly welcome it.
Chris Evans (Islwyn) (Lab/Co-op)
I congratulate the hon. Member for Wealden (Nusrat Ghani) on a rather succinct speech. There are many things that divide us in this House, but the subjects that she was talking about bring us together.
It is a pleasure to follow my right hon. Friend the Member for Barking (Dame Margaret Hodge), formerly a formidable Chair of the Public Accounts Committee, of which I am now a member. I know that her studs have been felt by many a civil servant and many in the private sector. A lot of people are pleased that she is no longer the Chair of that Committee, but I am not one of them.
For too long, law enforcement agencies have had to fight organised crime and terrorism with one arm effectively tied behind their back. It is simply not possible to counter organised crime and terrorism as effectively as is necessary without the power to investigate properly, and to confiscate criminal property and the proceeds of crime. Like many other speakers in the debate, I broadly support in principle most of the Bill’s measures. It is right that those who have gained assets in suspicious circumstances should be asked to explain where those assets came from. Where it is found that they have been involved in crime, and that those assets are the proceeds of crime, law enforcement should be able to confiscate and seize assets beyond cash. That is the only way to ensure that justice is done and for the proceeds of crime to be returned to the system and used for the public good.
Information sharing between banks is key to the investigation of financial crimes, so I am pleased that the Bill includes measures to improve that. Perhaps the Minister will tell us whether the banks have made any response. When I have talked about the sharing of data, they have been reticent, citing reasons of competition. I hope that concern has been overcome and that the Bill will provide good law.
Following the shocking revelations earlier this year in the so-called Panama papers, I am pleased that the Government are fulfilling their commitment to be tough on the middlemen involved in tax evasion and other financial crimes. Corporations and their employees who are involved in facilitating tax evasion and other financial crimes in the UK and internationally must be held to account. I welcome the fact that investigations into terrorist financing are covered by the Bill. If we are to clamp down on violent extremism, it is vital that such groups do not have access to the resources that they need to commission their acts of evil.
I believe, however, that some elements of the Bill are vulnerable to being undermined. Although its measures would apply in the United Kingdom, it does not appear that they would extend to British overseas territories and Crown dominions. This problem must be addressed, otherwise there is a risk that the Bill and law enforcement agencies’ ability to investigate crime will be weakened. In particular, British overseas territories such as the Cayman Islands and the British Virgin Islands have lamentable policies on transparency. I know that the former Prime Minister was desperate to change the situation and pay tribute to his work in that respect. Those islands literally harbour money, as they are the registered home of some of the largest and most valuable super-yachts in the world. Anybody can walk across any harbour in Spain or Italy, or see at sea, the Russian oligarchs’ huge super-yachts that are registered to the Cayman Islands. One has to ask why a Russian oligarch finds the Cayman Islands such an attractive place to register his rather large boat.
Chris Evans
It could be the weather, although I wonder whether the reason is something a little more sinister.
These islands have not agreed a timetable for introducing public, or at least central, registers of beneficial ownership of trusts and other companies, which are often used to launder money and hide assets. If the Government indeed intend to use the Bill to tackle money laundering and corruption, to recover the proceeds of crime, and to counter terrorist finance, their aim might be undermined as, by moving money between secret trusts and offshore companies, some of the most serious and organised criminals, including those who commission acts of terrorism, could still operate.
While the need to tackle organised crime and terrorism is important from a domestic standpoint, it is also important that we play our part in tackling international corruption. A review by the World Bank found that in more than 70% of 213 serious corruption cases, secret company ownerships were relied on to facilitate the corruption. The UK, alongside our overseas territories and Crown dominions, provided the second largest number of those companies. That situation demands urgent action.
It is sometimes hard for us to understand the serious effects of corruption, as corruption is largely under control in mainland Britain and Northern Ireland and is swiftly dealt with whenever it emerges. In developing countries, however, the misuse of public funds has a devastating impact. The Africa Progress Panel found that $1.35 billion had been stolen from the citizens of the Democratic Republic of the Congo due to the sale of mining contracts for just one sixth of their commercial value. Those contracts were sold to five anonymous companies based in the British Virgin Islands. To give some perspective on the scale of that loss to the people of the Democratic Republic of the Congo, $1.35 billion equals twice the country’s health and education budgets combined. That devastating loss is another sad chapter in the country’s long and tragic history of corruption, murder, death and executions, with many women, girls and children having become victims of a tyrant.
It might be unwise, for constitutional reasons, for the UK Government to use the Bill to force British overseas territories and Crown dominions to introduce more transparency, but it is clear that they must take action. Earlier this year, the former Prime Minister laid out a welcome commitment to transparency and urged all British overseas territories and Crown dominions to make changes. We can all agree that that was an important step forward, but the momentum has been falling away and more action must be taken. Real people are losing out every single day as a result of international corruption, organised crime and, yes, terrorism. If the Government are serious about countering that, and meeting our duty not only to ourselves but to others around the world, they must now stop dragging their feet on this very important issue.
As I said, I welcome the principle behind the Bill, but I fear that it will not do the job that is intended. I look to the Government and the Opposition to table amendments that would improve it. The Government are not covering all the bases, especially with regard to British overseas territories and Crown dominions, and I fear that that could lead to some of the Bill’s measures being circumvented. The Government must match their words with actions and commit to putting far more pressure on British overseas territories to embrace transparency. Only once transparency has been achieved will the Bill be able to meet its aims of ensuring that UK-based and international criminals and terrorists are stripped of their resources, and that our citizens are safe, wherever they live.
Kirsty Blackman (Aberdeen North) (SNP)
I had not been in a debate with the hon. Member for Islwyn (Chris Evans) until this morning, and now we have the pleasure of two in one day.
It is very strange to stand here and talk about the Criminal Finances Bill, because I think that a lot of the things under discussion are totally alien and completely baffling to many of my constituents. Many of them will be thinking, “Why aren’t we doing this stuff already? Why has it taken so long for Governments to get around to addressing the issues?” That is particularly true of unexplained wealth orders, which, for the avoidance of doubt, I support. It is a good idea to introduce them, but I am sure that many people are wondering why that has not happened before.
Most of my constituents will only ever pay tax through pay-as-you-earn. None of the taxes under discussion, such as corporation tax and inheritance tax, apply to them, so they will not know quite how complex the UK tax code is, or that a van is needed to transport it, as is regularly mentioned in this Chamber. I am aware that repetition is allowed—in fact, it is positively encouraged—in this place.
The fact that the tax code is so complex means that it is very easy for people to find and exploit loopholes in it. I appreciate the Bill’s measures to close at least some of them, but there are some glaring omissions. As my hon. Friend the Member for Dumfries and Galloway (Richard Arkless) has said—I am sure that my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) will mention this, too, because I may have read his speech—Scottish limited partnerships are still missing from the measures. We have brought up the issue and it has been widely reported by The Herald. I think that people in Scotland who have read those articles will be clear that the UK Government need to fix that and that they can do so relatively easily because of the high percentage of SLPs that are being used for financing crime.
The right hon. and learned Member for Harborough (Sir Edward Garnier) mentioned the Victorian principles behind some aspects of finance and tax law. That is a big problem. A lot of the laws have evolved over a number of years and there has never been a wholesale review. The approach has been not “Let’s take it all apart and start again,” but “Let’s tinker by adding a little bit and taking away a little bit.”
When some of the tax powers were devolved, Scotland was, in some ways, in a much better position, because we could start with a much cleaner slate. Our general anti-avoidance rule was said by Isobel d’Inverno, convenor of the tax law sub-committee of the Law Society of Scotland, to be
“much fiercer than the UK one.”
It has also been widely commented that the Scottish Government are in a positon to have a much stronger law and stronger rule, and that that has been beneficial for us to administer the devolved taxes.
As my hon. Friend the Member for Dumfries and Galloway has said, we are calling for a moratorium on the closure of HMRC offices. If it is a massive priority for the UK to ensure that tax loopholes are closed and that criminals do not exploit the tax system, particularly through tax evasion, it is bizarre that offices are being closed, rather than more staff being taken on and more resources being spent on ensuring that such exploitation does not happen. I would appreciate it if the UK Government would reconsider, again, the loss of those important offices and dedicated staff. That is key.
What the Government are doing and the way in which the current system is set up do not encourage people to have confidence in the economic system. It is much like the House of Commons, which is set up in a very traditional way with Standing Orders that were written hundreds of years ago. They do not encourage transparency or confidence in the system, because they allow some people to have too much power. The tax law and the tax codes have much the same problem. Some of them are far too old, and they have been tinkered with rather than changed wholesale. They encourage and allow some people who are in receipt of millions of pounds to continue to have millions of pounds without paying appropriate tax on it, whereas the people at the bottom cannot do so. One of the problems with the system is that nobody has confidence in it. Criminals have worked out how to get around it, and they continue to do so. The people at the bottom of the pile, who are not involved in those tax affairs and who do not see the criminal proceeds, do not have confidence in the system either.
The Government have a real job of work to do if they are to ensure that Bills such as this restore confidence in our tax and regulatory systems. My hon. Friend the Member for Dumfries and Galloway talked about the free market economy in America and some of the moves that that country has made. If we were to introduce similar financial regulation for banking and property ownership, not only in and around London but for those who own vast swathes of land in the Scottish highlands, we would inspire confidence among the general public.
The right hon. Member for Barking (Dame Margaret Hodge) and my hon. and learned Friend the Member for Edinburgh South West (Joanna Cherry) mentioned the recent YouGov poll, and they talked about public confidence in these measures and public concern about tax evasion, particularly in the Crown dependencies. Because such tax evasion has been widely reported in the news, the public are really concerned about it. Their concern is increased by the fact that the Government have not used the Bill to introduce a public beneficial ownership register, and they have not given Parliament a timetable for introducing such a register. The quicker the Government can publish such a timetable, the better for the confidence of the general public in the tax system. As my hon. Friend the Member for Dumfries and Galloway has said, we are generally supportive of some of the measures in the Bill, but it does not go far enough to inspire public confidence in the measures that the Government are taking.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Many people in the Chamber consider much of the Bill to be praiseworthy. It struck me that all the critical speeches this afternoon—spanning all parties represented by the Members who have spoken—have been about what is not in the Bill, rather than what is in it. I wondered who would put the Bill in the context of the challenge that we face, and I think the Minister did that best in his opening remarks. He said of the extent of the criminality that he discovered on becoming a Minister that
“it…takes my breath away.”
The extent to which the Bill will deal with such criminality does not quite take the breath away.
I would like to comment on three areas that have been mentioned, the first of which is the permissive culture of banks. The best critique of that culture has come not from me or from anybody who is currently in the Chamber, but from the right hon. and learned Member for Rushcliffe (Mr Clarke) on 24 May this year. When talking about this forthcoming Bill, he commented:
“we in this country are very bad at dealing with white-collar crime, and there is growing awareness of that. If someone wishes to rob a bank, they go to the LIBOR market; they do not put on a balaclava and pick up a shotgun—that is much less profitable.”
He very succinctly drew out the problem of how the culture in banks has created a context in which it is easier to commit grand crimes in them than it is for the old-fashioned external robber to do so. He went on:
“London is still the money-laundering capital of the world. For an African despot or a serious international criminal, London is the best place to put their money, because they can trust the bankers to look after it and not to steal it from them.”
He concluded:
“I hope we will also impose a duty on those at the head of the institutions involved to ensure that they take positive steps to stop those working for them encouraging such activities.”—[Official Report, 24 May 2016; Vol. 611, c. 450.]
I doubt whether anybody in this debate would disagree with the right hon. and learned Gentleman’s words in May, but I do not think that his optimism about the Bill is reflected by the reality of what we now face.
On banking, I suggest that the Minister look at two things. The right hon. Member for Barking, who is no longer in her place, gave the example of what happened in HSBC, where someone was willing to speak up but was then pilloried by senior management. One thing I would suggest to the Minister that needs doing is to strengthen protection for whistleblowing in the banking and financial sector. If we could find a mechanism to encourage people to speak up about criminality or bad practice, that in itself would be a useful measure. Many people have commented that the crisis in the banking sector in 2008 was not predominantly because of the details of regulation, but predominantly because of the culture at the top level. It was caused by group-think on the boards of banks, and by the over-confidence of individual chief executives who were immune to considering anything other than a dash for cash. The other thing I would suggest to the Minister is that it would be useful for a requirement for proper cultural analysis to be built into the banking sector.
The second area on which I want to comment has already been hinted at by my hon. Friends the Members for Dumfries and Galloway and for Aberdeen North (Kirsty Blackman), but no one else has talked about it in this debate thus far. It is the topic of Scottish limited partnerships. This may be new to some hon. Members, so I hope they will allow me to give a few examples. Scottish limited partnerships are not a new phenomenon. They are not a devolved matter; they are a matter for this House. Although they were created by Asquith in the Budget of 1907—even I do not remember it—from 2008 they began to be used much more extensively for criminal behaviour. Since 2008, the use of SLPs has risen by approximately 40% year on year.
Scottish limited partnerships have been at the heart of some of the major corruption scandals in the world. For example, they have been named in major corruption scandals involving the former Soviet Union, particularly Ukraine, where they are still openly marketed as off-the-peg zero-tax offshore companies. Elsewhere, one Scottish limited partnership is at the moment at the heart of a $1 billion digital bootlegging case in the United States. The International Monetary Fund has warned that the risk posed by SLPs to the fight against money laundering and organised crime is something to which attention needs to be given. Other Scottish limited partnerships are involved in pornographic and even in paedophilia websites. Indeed, the span of criminal activity through these financial vehicles seems to know absolutely no bounds.
Closer to home, The Herald newspaper, which has done extraordinary work in this area, revealed barely six days ago that the tax haven bank owned by Lord Ashcroft is being used, without his permission, as a base to set up dozens of firms utilising SLP loopholes linked to a known fraudster. Indeed, two Belize companies have been falsely using the address of the HQ of Lord Ashcroft’s bank for at least six years. Those secret Belizean businesses, Sherbrook Assets and Whitmoore Solutions, have formed at least 70 other Scottish entities, most of them registered, I am sorry to say, to a convicted fraudster who lives in Fife in Scotland, Anzelika Young. The Bill should be ensuring that every SLP, along with any similar financial vehicle elsewhere in the UK, is exposed to rigorous due diligence at the very least.
During proceedings on the recent Finance Bill, I attempted to add a very simple new clause calling on the Government to investigate SLPs. They chose to vote that new clause down. When, subsequently, yet more criminal activity came to light, on 26 September I wrote to the Chancellor—I have a copy of the letter with me—seeking a meeting about this major international criminal activity. As of last week, when I was yet again chasing this up, the only response I have had—this is after a month, showing the Government’s lack of concern about international criminal activity—is that they are still considering how to respond to my request for a meeting. It is quite inappropriate for a Member of this House seeking a meeting about a major criminal activity to have to wait a month for any response.
Mr Wallace
I reassure the hon. Gentleman, given our meeting yesterday, that I have listened to what he said. I will meet my ministerial colleagues to discuss the problem he raised with me and see what we can do about it.
Roger Mullin
I am particularly grateful to the Minister for that clarity. Indeed, in coming to the Dispatch Box at that moment he confirmed what I was about to say in my closing line on the issue of SLPs. Given how he has discussed this matter with those of us on the Opposition Benches who are interested in it, and his understandable and quite appropriate concern about the matters raised, I was going to suggest that the Prime Minister could appoint him the formal tutor for all Treasury Ministers, in addition to his role as Minister for Security; I am sure they would learn a great deal from the appropriate way he deals with matters. I commend that new appointment to the House. I speak in jest, but surely there is an issue here, as some of the Treasury Ministers who have been turning a blind eye for months need to learn that these are matters of great concern and importance, and deserve to be treated as such.
The third area I will briefly mention—and it will be very brief, as many Members have already commented on it—is what has been happening post Panama papers on Crown dependencies and the like. The clear view expressed in this debate is that the Bill does not yet go far enough, particularly on the much needed transparency and openness on beneficial ownership. If the Minister would be willing to think about how we might, in a collegiate way across the House, begin to address that issue and some of the others raised today, he will win himself many friends indeed.
Keith Vaz (Leicester East) (Lab)
It is a pleasure to follow the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) and listen very carefully to the important points he has had to make. I am glad he has had his meeting with the Minister and that promises have been made which I am sure he will ensure will be fulfilled.
It is a pleasure to speak in this debate, because one of the most important reports the Home Affairs Committee produced this year was that on the proceeds of crime. I am sorry to have missed the speech by the hon. Member for Wealden (Nusrat Ghani), who is a member of the Committee, but I am sure she spoke brilliantly about the conclusions of that report. I am grateful to the shadow Home Secretary for mentioning it and for the points she made concerning the practicalities and the issues it revealed.
The Minister did not mention the report, but I am sure he has read it. I am sure he has taken on board some of the points the Committee made. When seeking to legislate, it is important to first see where the problems are and where gaps exist, to listen to all those with experience—when we conducted the inquiry we did not just go to the usual suspects; many members of the private sector also gave evidence—and try to come to a conclusion that will provide the basis for sound legislation.
The Minister, who is newly appointed to his position in the Home Office, will have a pretty easy ride in respect of today’s proceedings, because I understand that there will be no vote. There is general support throughout the House for the measures the Government are proposing. They are the right measures and they are sound measures. They are designed to deal with the issues of criminality and terrorism. On those two issues, he will always find a House united. However, I hope he does not take that support as carte blanche to get the proposed legislation through in its entirety. I hope Members will table amendments in Committee based on the important points they have made today. I hope the hon. Members for Dumfries and Galloway (Richard Arkless) and for Aberdeen North (Kirsty Blackman), my hon. Friend the Member for Islwyn (Chris Evans) and others will table amendments relating to the important measures they have put forward. In advance of her speech, I want to congratulate my hon. Friend the Member for Ealing Central and Acton (Dr Huq), who will be making her maiden Opposition Front-Bench speech on this important subject. More importantly, she will not be dividing the House, for which I think we are all very grateful.
The Bill identifies three priorities, which I will compare in turn to the findings of the Select Committee report published earlier this year. Robert Barrington, the director of Transparency International, says that every year over £100 billion might be laundered through the United Kingdom. That is equivalent to the GDP of Ukraine. A lot of that money goes through London, but as we are reminded by our colleagues from north of the border, other great financial centres, such as Edinburgh, are also used. Colleagues from Northern Ireland—we were having our own little debate as the main debate was going on—pointed out the particular difficulties they face, as Dublin is sometimes used by money launderers as an entry point to the EU. All those great financial centres are being used in this way, which is why it is right that action is taken, and taken immediately.
The Committee was shocked to find that poor supervision and enforcement in the London property investment market are making a safe haven for laundering and the proceeds of crime, a point made by the shadow Home Secretary. As we found out from the regulators themselves, it is far too easy for this to happen in a financial centre like London, which we believe—Edinburgh is, of course, respected—to be the greatest financial centre in the world. It is therefore essential to look at the markets here, how regulation operates, and try to deal with it in a constructive and positive way.
The hon. Member for Newark (Robert Jenrick) is not in his place, but he raised what I thought was a very important point about the necessity for resources. The Committee found that the private sector was using suspicious activity reports as a box-ticking exercise, sending in their information because it was their duty to do so. I was heartened by what the Minister said about the Government’s wish to cut through red tape so that information is sent on as quickly as possible.
Only 335 of the 1.2 million property transactions were deemed to be suspicious in 2015. The estate agents and their regulators were saying themselves that it was not possible to deal with all the complaints because there were so many of them.
We—Committees of this House, Members of Parliament —have made the point over a number of years that the assets and finances available to our law enforcement agencies cannot compare with the level of criminality in existence. Let us look at the budgets of the three main organisations dealing with this issue: the National Crime Agency has a budget of £450 million; the Financial Conduct Authority has a budget of £500 million; and the Serious Fraud Office has a budget of £45 million. However, the amount of criminal assets recovered has been very poor—only £155 million was recovered in 2014-15.
In defence of those three agencies, whose assets total about £1 billion a year, they say that it is not just about the recovery of assets—they are involved in other areas and they are part of other operations, which mean that the contribution that they make is not fully assessed. However, if we just compare like for like, we will see quite a difference between what the budgets are and what is recovered.
I pay tribute to Lynne Owens, who has done a tremendous job as head of the NCA. The creation of the National Crime Agency was one of the legacies of the previous Home Secretary, now the Prime Minister. In fact, I am on record as saying that we had something of a revolution in policing in the six years when the Prime Minister was the Home Secretary. The whole of the Home Office was shaken up and new organisations and institutions came into existence. She stayed Home Secretary longer than any other Home Secretary since the last century. We cannot expect Home Secretaries to stay for ever—as with Chairs of Home Affairs Select Committees, there is always an end to the fun of doing these jobs. The fact remains that there are aspects that have not fully settled down, and one of them is the ability to give organisations the resources they need in order to finish the job.
Lynne Owens is doing a terrific job, as is her organisation, but I am extremely worried about the computer system that exists to do the very things that the Government want to do. I assume that the Policing Minister will be winding up this debate. When he does, he will, I hope, have the answer to the question I posed to the Minister for Security—the question has been posed over months and years—about when the ELMER system is going to be renewed. It is all very well saying that we want more information coming in but, if we look at the figures, we know that they just do not add up. This is an old and creaking system, designed to manage only 20,000 suspicious activity reports. On the basis of the last available figures, there were 381,882 suspicious activity reports, so how is a system designed to deal with 20,000 supposed to deal with 381,882?
The Minister seemed to be saying that people are ticking boxes and sending in information and they do not need to send in that information, but I do not think that we should expect the private sector to be involved in becoming officers of the law. It is similar to what we have seen over the last five years with landlords becoming immigration officers, as have people working for airlines when they check passports and tickets. Despite what immigration Ministers have said over a number of years, we do not have 100% immigration checks on exit. The airlines check, but no immigration officer checks a passport or a ticket on departure from our airports, which is very sad. That is a different story. My issue is that we cannot get staff in the private sector to act as enforcement officers; they are not trained to do so. That is why we need a new computer system.
When we asked the then Home Secretary—the present Prime Minister—about that, she had no answer to the question of who was going to pay the bill. Would the money come from the budget of the National Crime Agency? Would it come from the Home Office budget? That, I think, is crucial to ensuring that this legislation is properly resourced. Are we going to give the NCA and the Serious Fraud Office the equipment that will enable them to deal with these issues productively? I hope that the Minister will tell us when the new ELMER system will be established, because that is a fundamental issue when it comes to suspicious activity reports.
Another aspect of the Bill is the granting of powers allowing banks to close accounts. I believe that the threshold is too low, and that the Minister must look at that, although it is really a Treasury issue. A number of my constituents have come to me—I know that this applies to other Members as well—and expressed concern after being told that their banks have closed their accounts. They are never given an explanation. Unfortunately, that has happened to too many members of the south Asian diaspora community, and, indeed, the African community. The Somali community was so concerned that representations were made to Treasury Ministers that, just because they happened to be Somali, their bank accounts had been closed. On Friday, I met someone from the Yemeni community who had been told that his bank account had been shut down in 28 days. He had been given no explanation, because banks are private organisations.
Obviously we do not want people to be told “By the way, we are closing your bank account because you are a terrorist” if inquiries are ongoing, but certain explanations need to be given. We need to be sure that the powers that we are granting are appropriate to the agencies to which we are granting them.
Charlie Elphicke
May I take up the issue of money laundering and the NCA? When I was a lawyer, one would do an ID check and then the information would be put in the bottom drawer, never to be seen again. If one were at all concerned, one would just do a “tipping off” and dump it on the authorities as a box-ticking exercise. There is no qualitative method of processing such information. Does the right hon. Gentleman agree that there should be such a method?
Keith Vaz
I think that, when it comes to the hon. Gentleman, it is probably a case of “once a lawyer, always a lawyer”. He is absolutely right. Training should be given to those who are involved in these activities, and in each organisation there should be a compliance officer who has received the necessary training. I do not know what kind of law the hon. Gentleman practised, but we would not expect every single lawyer to be trained to deal with issues such as SARs. We would expect a compliance officer in a big firm of solicitors to be able to do that, because there would not be the time to train everyone. However, I do not believe that that would cut the figure of 381,000 to 20,000. Faced with a third of a million SARs, even the best-trained lawyer—and I would put the hon. Gentleman among, probably, the best that one could find—would not be able to lower that figure. So as well as giving the private sector more responsibility to check, we need to ensure that the equipment is fit for purpose.
Let me commend the suggestion made to the inquiry by the outgoing Metropolitan Police Commissioner, Sir Bernard Hogan-Howe. I pay tribute to the excellent work that he did as commissioner. The hon. Member for Louth and Horncastle (Victoria Atkins) will remember that, when she was a member of the Home Affairs Committee—before she was poached by the Policing Minister to become his Parliamentary Private Sector; we used to train them well in the Select Committee— Sir Bernard came up with a suggestion that was very important in relation to those who were involved in criminal activity. I raised this point with the shadow Home Secretary, and I am grateful to her for saying that she would consider it. I hope that the Policing Minister will also consider it, because when it comes from someone as distinguished as the Metropolitan Police Commissioner it is worth looking at again.
Those Mr Bigs or Mrs Bigs who serve their sentence and come out of prison and still have not paid their compensation order are at an advantage. I agree with my constituency neighbour, the right hon. and learned Member for Harborough (Sir Edward Garnier), that we probably should not keep them in prison indefinitely, but there needs to be some sanction for them to pay up.
One of the issues that arose was that compensation orders were given for assets that probably did not exist. They sound like fabulous figures in court—“This criminal involved in mass criminal activity has millions and millions of pounds”—but actually they do not have those kinds of assets. We need to be realistic about what we are going to recover when we issue the compensation orders. However, there needs to be a penalty. We need to ensure that something is done so these people have to pay up before they come out of jail, otherwise they will simply use a sentence as an opportunity to be detained at Her Majesty’s pleasure and come out and have access to that money.
Finally, Mr Deputy Speaker—or should I say very finally? [Interruption.] I did not realise we were short of time; I thought this debate was ending at 7 o’clock.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There is not a shortage of time, but when the right hon. Gentleman says “Finally” I actually believe him.
Keith Vaz
Mr Deputy Speaker, after all these years how can you believe a Member when they say, “Finally”—how can you assume they are about to finish their speech? But this is very finally, in honour of you, Mr Deputy Speaker: when the Policing Minister replies, I want him to address the issue of the police funding formula.
We have been waiting for a long time for the new police funding formula to be decided upon. Every Member of this House has a constabulary. That includes you, Mr Deputy Speaker, and Lancashire was very vocal last year: its Chief Constable Finnigan said he was running out of money and the reserves were going to run out.
All the constabularies have been waiting for the Policing Minister to announce the arrival of the police funding formula. His predecessor told the House he could not give us the formula because Sara Thornton, head of the Association of Chief Police Officers, now at the National Police Chiefs’ Council, was doing her analysis and we could not have a police funding formula until she had completed her work. I understand that that is not the case and that there is no reason why we cannot have the police funding formula.
Why do we need that to deal with the issues raised in the Bill? It is because it is not all about the City of London. This kind of activity happens all over the country and if we expect local police officers in Leicestershire, Lancashire, Kent, Sussex and throughout the country to be able to plan to deal with this issue, we need the formula. Therefore, I hope that, as well as telling us about ELMER, the Minister will give us the co-ordinates and the new date for the announcement of the police funding formula.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
This is the first time that I have spoken from the Dispatch Box and I am pleased to find it accommodates even people of Rupa size.
I am pleased to be responding for the Opposition on the Criminal Finances Bill, which touches on issues that have been catapulted into the public eye with both the Panama papers scandal and the anti-corruption summit held here in May under the previous Prime Minister—how long ago that all seems now.
We have had a good debate today, which has strayed into the murky underworld of illicit finance, terrorism and international aid as well as home affairs, and we have had contributions from my right hon. Friends the Members for Barking (Dame Margaret Hodge) and for Leicester East (Keith Vaz), my hon. Friend the Member for Islwyn (Chris Evans), the right hon. and learned Member for Harborough (Sir Edward Garnier) and the hon. Members for Kingston and Surbiton (James Berry) and for Dumfries and Galloway (Richard Arkless) among others.
This Bill seeks to tackle money laundering and corruption, to recover the proceeds of crime and to counteract terrorist financing, all measures Labour supports. This seems like good news in a year in which that has been in short supply on many fronts, but we must temper our reasons to be cheerful by identifying certain omissions and sounding some notes of caution.
First, the green ticks. We welcome the eye-catching unexplained wealth orders, which would force individuals with assets way above their means to account for those possessions, which can now include jewellery and art work as well as property. The new seizure and forfeiture powers will mean that such assets can be frozen and possession of them can be taken. As a London MP, I am all too aware of genuine Londoners who want to get a foot on the property ladder, but the transactions involving the ill-gotten gains of gangsters are messing things up for those people and creating an over-heated property market.
We also commend the fact that the investigatory powers are being extended to politically exposed persons. A thumbs up, too, for the new offence of failure to prevent the facilitation of tax evasion being applied to corporations and regulatory bodies. We also applaud the improved data sharing between the private and public sectors, and the Government’s extension of disclosure orders to money laundering investigations, bringing them into line with corruption and fraud investigations. Also to be commended are the strengthened suspicious activity reports. The period of investigation used to be 31 days. I think that there will now be six extension periods, adding up to 186 extra days. We live in an age when terrorism is probably the biggest threat of our time, so we also welcome the extension of powers to include terrorists’ property and finances.
So, what’s not to like? We acknowledge the steps being taken to tighten the net on corrupt practice, and we shall not seek to divide the House this evening, but more could be done to end the status of the UK as a magnet for dirty money. There should be no safe havens, particularly in our own back yard, where the proceeds of international corruption often turn up. Taken as a package along with its overseas territories and Crown dependencies, the UK constitutes the most secretive tax jurisdiction in the world. That is not a record to be proud of. Good work has been done in the reports produced by the Public Accounts Committee and the Home Affairs Committee, when they were chaired by my right hon. Friends the Members for Barking and for Leicester East, but not all their suggestions have been taken up. Many Members on both sides of the House have flagged up the fact that action must be taken on our overseas territories and Crown dependencies, and we argue that they need public registers of beneficial ownership. The British Virgin Islands and the Cayman Islands are among the worst offenders, and we administer them. We assert that this is the most gaping hole of all.
A trick has been missed. Applying transparency to those opaque corporate structures is a key part of the solution, but the Bill does not go there. We know that 75% of the corruption cases investigated by the Met police’s proceeds of corruption unit involve companies in secrecy jurisdictions, and that 78% of the companies involved are registered in the UK’s overseas territories or Crown dependencies. We need full transparency, but the Bill does not go far enough. A measure on the failure to prevent economic crime was trumpeted in May 2016, but it is missing from the Bill. Without some degree of transparency in company ownership, we cannot be completely aware of the scale of the problem or the damage that is being done. Kenya, Nigeria and Afghanistan have all conceded this point.
It has been pointed out that the people interpreting the rules need resources, and the weaponry that we use for crime-fighting could do with an update. The National Crime Agency will have more work to do, so the Bill will have cost implications in that regard. The agency is the successor to several bodies that have been merged. Notwithstanding the one-off cash injection that it received in the spending review, it needs consistency in its funding rather than just receiving one-off blockbuster sums. My right hon. Friend the Member for Leicester East eloquently made the point that there were serious question marks over the IT system designed to support the suspicious activity reports regime. It was originally designed to deal with some 20,000 cases, but, as he said, it is currently processing 381,882 of them. It is creaking at the seams. A new system was promised—I think its name is ELMER—and I again ask the Minister to tell us when we can expect it.
Keith Vaz
I can assure my hon. Friend that I would never want to reduce her time. I congratulate her on making an excellent maiden Front-Bench speech.
The delay in ELMER, and in the new system that the Government will want to put in place as technology moves on, will lead to more criminal activity. The quicker this is done, the better.
Madam Deputy Speaker (Mrs Eleanor Laing)
I reassure the hon. Lady that she is quite safe in giving way during a winding-up speech. She has plenty of time. Indeed, she has until 10 minutes to 7, but she will know that the House would prefer that she does not take quite that long.
Dr Huq
I am grateful to you, Madam Deputy Speaker, and to my right hon. Friend for his intervention. I will resist the temptation to sing, rap or recite poetry and will finish well before 10 minutes to 7.
My right hon. Friend makes a good point. We cannot fight modern cyber-wars with catapults. Technology changes and we need to upgrade this wholly inadequate system. We were told that that was happening; we want to know when.
New powers for the Serious Fraud Office are all well and good, but it needs officers with the right training. Since it was set up in 2009, it seems as though the public purse has been used to train officers in financial crime, yet we are simultaneously powerless to prevent them from falling prey to private sector poaching, so something needs to be done. There was to be a working group on the recruitment and retention of investigators—what became of that? Are some of those deficiencies to be plugged at a later stage?
At the moment, 27 separate bodies are responsible for asset recovery—people who investigate SARs—and they are often in the private sector and sometimes funded by the groups they regulate, so there is a mismatch. It would not be a bad idea to have an overall SAR tsar or tsarina to get some coherence. What progress is being made on the anti-corruption strategy due by the end of the year? I understand that a joint ministerial council will meet at the Foreign Office next week. Will tax issues be on the agenda? If the Minister does not know, will he have a word with his friends in the Foreign Office to find out? If it is not on the agenda, can I politely suggest that it be added urgently?
What are the Government doing to ensure transparency in our overseas territories and Crown dependencies? What is the plan? My right hon. Friend the Member for Barking suggested that the Government could at least set a timetable to allow them time to adjust. In the meantime, will the Government give them every support to transition their business? They have propped up this business model for a long time and they need to move away from facilitating corruption. Without action in our tax havens, the small bits of good news in the Bill will be overshadowed by the Government’s failure to act. The Government should be able to persuade their own territories to follow their lead. Members on both sides of the House paid tribute to the former Prime Minister and his ambitions in this area.
We need to get away from the idea that not paying tax, whether by avoidance or evasion, is a victimless crime. Countries in the developing world lose three times as much to tax havens through illicit funds and re-laundering than they gain in aid. It adds up to a trillion pounds a year and we are pumping aid into these places at the same time—it makes no sense. Given our straitened circumstances, we should be justifying every pound spent, but HMRC estimates the tax gap to be £36 billion, including £5.2 billion owed to our Exchequer from tax evasion. My right hon. Friend the Member for Barking quoted the same figures, but other interest groups say that they are conservative estimates. By definition, secret transactions and hidden money mean that we do not really know the true extent. For that £5.2 billion, we could get 42,000 full-time doctors or 54,054 nurses a year. As my right hon. Friend the Member for Leicester East pointed out, we have a poor record of recovering costs, and these things do not pay for themselves.
The practices that this Bill seeks to tackle expose the dark side of globalisation, its links to terrorism, and the way global financial cross-border crime, terrorism and all these things can be done nowadays at the click of a mouse, meaning that illicit funds can fuel a golden age of money laundering. That is entirely possible and we do not want it to happen. We do not want illicit funds to finance terrorist operations, aided and abetted by financial secrecy jurisdictions of our own.
Governments can hold all the summits they like and people can orate good intentions, but warm words need to be matched with action. This Bill is a case of “could do better” on the Government’s report card, and I urge them to work together with us. In Committee, we will be pressing the Government on some of the issues outlined today—and more. When the opportunity for reform presents itself, the Government will surely not want to go down as having bottled it. We will not oppose this Bill on Second Reading, and we look forward to contributing constructively to its passage through Parliament.
The Minister for Policing and the Fire Service (Brandon Lewis)
I thank right hon. and hon. Members for this informed and valuable debate. We have heard strong and important contributions, and there has been support from both sides of the House for the principles behind the Bill. We will have interesting and strong discussions in Committee.
As my hon. Friend the Minister for Security emphasised at the start of the debate, there can be no doubt about the seriousness of the threats of terrorism and organised crime, or about the scale of the challenge that we face in combating them. As of July last year, about 5,800 organised crime groups were operating in the UK. Fraud due to organised crime is thought to cost this country about £9 billion, and the social and economic costs of illegal drug supplies are estimated to be some £10.7 billion a year. As has been said, these are not faceless, victimless crimes; they have an impact on people we know and those who live in our constituencies.
As we have heard, the UK is a fantastic place to do business, and the Government want to maintain that. We want to send out a clear message across the country that we are open for business, but if we are to maintain our position, we must ensure that this is one of the cleanest and safest places to invest. We need to send a message to those who would seek to corrupt legitimate trade.
I am grateful to all right hon. and hon. Members who have contributed to the debate, and I particularly welcome the hon. Member for Ealing Central and Acton (Dr Huq) to her Front-Bench role. I also welcome the hon. Members for Dumfries and Galloway (Richard Arkless) and for Kirkcaldy and Cowdenbeath (Roger Mullin) to their roles. I was pleased to hear that the Minister for Security has had the opportunity to discuss the Bill with the official Opposition and Scottish National party Members prior to the debate—indeed, some of the paperwork was shared some two months ago—and I know that we will continue that conversation during the passage of the Bill.
It is clear that Members on both sides of the House want to contribute to make sure that we end up with a robust, strong system of which this country will be proud. Almost without exception, hon. Members who have spoken have understood the importance of these powers and been supportive of the Bill. Of course, it is right that on such issues as money laundering and terrorist finance, the House should present a united front, as it is doing on the principle behind the Bill. I welcome the fact that in our consultation on the Bill, a diverse group of stakeholders—ranging from the major banks, which have been mentioned today, to law enforcement investigators, prosecutors and civil society groups—have given an overwhelmingly positive response to its provisions.
Mark Field (Cities of London and Westminster) (Con)
I apologise that I was not able to contribute to the debate itself. I am afraid that I am a veteran of the consideration of the Bill that became the Proceeds of Crime Act 2002. Although I accept that there is a great deal of unity regarding some of this Bill’s provisions, the real issue is how enforceable those provisions are. It is important that the Bill is scrutinised very carefully in Committee because there is a danger that although we will put on to the statute book a lot of new laws, some of which might be regarded as rather draconian, they will not be properly enforced by the police, or will be ruled out by the judiciary when matters come to court. That is the one caveat I would set out, although it is right to say that these powers are important, especially the new ones in relation to counter-terrorism, which were not envisaged at the time of the 2002 Act.
Brandon Lewis
My right hon. Friend makes an important point, particularly by outlining the importance of the Bill’s Committee stage to ensure that Members have a chance to have an input into the debate, as indeed they have had this afternoon. He should have great faith in my hon. Friend the Minister for Security, who is determined to work with colleagues to ensure that the Bill is robust. The Bill gives a clear message to those who want to try to usurp our system that that will not continue—we will not allow it. Although we are a country that is open for business, we are also a country that believes in fairness and that will ensure that fairness prevails.
A couple of core issues have been raised by a number of Members, particularly about the overseas territories. We heard speeches from the right hon. Member for Barking (Dame Margaret Hodge), and the former Chair of the Home Affairs Committee, the right hon. Member for Leicester East (Keith Vaz). We have agreed that UK law enforcement and tax authorities will have, in real time, unrestricted and secure access to things such as the beneficial ownership initiative, and information about corporate and legal entities incorporated in the overseas territories and the Crown dependencies.
The right hon. Lady outlined the excellent work of David Cameron and the strong message that he gave when he was Prime Minister. This is something that the current Prime Minister is determined to continue. We will ensure that there is an end to people usurping the law. It is important that we work closely with our colleagues around the world to ensure that we have a strong and robust system. We have taken a lead on this. Those territories have agreed that they must commit to new global standards in tax transparency so that Her Majesty’s Revenue and Customs can investigate any untoward activity. As a result, later this year, HMRC will have new data on billions of pounds of accounts held in the overseas territories by UK taxpayers. This is a big step forward. I know that we as a Government are determined to ensure that we stamp out that kind of behaviour.
Funding was mentioned by a number of Members, including the right hon. Member for Leicester East. The NCA’s funding has increased from £448 million to nearly £478 million over the past year and police budgets have been protected. Funding for HMRC has also increased—up to £3.6 billion, with the £241 million input that was mentioned earlier.
I can be clear that we are determined to ensure that the police and the NCA have the resources that they need to be able to look at all this in the round, including IT issues. The right hon. Gentleman suggested that I use the debate to discuss the police funding formula, but he will have to excuse me for resisting that temptation for now. Over the past few weeks, I have written to all chief constables and police and crime commissioners to ask them to come to talk to me as we seek to deliver our election manifesto commitment of a fair funding formula for police, which we will do.
In response to comments about the overseas territories and Crown dependencies, I am pleased to announce that the British Virgin Islands and the Turks and Caicos Islands have just—conveniently, as I am here at the Dispatch Box this afternoon—committed themselves to the initiative on beneficial ownership, which many hon. Members have spoken about today. All the overseas territories have now agreed to have central registries, which will be accessible to law enforcement authorities. We will continue to push for all countries to introduce public registers. This is good news, and we will continue to work on it.
Richard Arkless
Clearly, I am delighted to hear the good news that the Minister has just given. Can he confirm whether his announcement confirms that those registers will be published?
Brandon Lewis
As I said just before the hon. Gentleman intervened, we will continue to push for all countries to introduce public registers. This is a step in the right direction. I welcome it, and we acknowledge that we want to continue to work on this. Another issue raised by his good self, as well as the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) and others, was about Scottish limited partnerships. I hope that they will take into account the fact that my hon. Friend the Minister for Security intervened to say that we want to work on that with colleagues across Parliament. We have very much taken those points on board.
My right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) and my hon. Friends the Members for Kingston and Surbiton (James Berry) and for Wealden (Nusrat Ghani) spoke passionately and made incisive contributions. In particular, my hon. Friend the Member for Wealden outlined the Bill’s importance given the part that it will play in ensuring that we fight the funding of extremism. We have discussed the Bill’s vital importance in protecting the UK’s position and status as a global financial centre and in ensuring that criminals cannot benefit from the proceeds of their crimes. I expect and hope that right hon. and hon. Members will want to give in-depth scrutiny to the Bill, as they have suggested this afternoon, as we move on to clause-by-clause examination in Committee, and I look forward to a lively debate on its provisions.
I am proud that, by comparison to most European countries, we are positioned high in the league table for having a strong and independent judiciary, as well as a determined law enforcement environment. If we are to maintain our record and position, we always need to stay one step ahead of those who seek to undermine our attempts, especially in such a fast-moving global environment. That is why the Bill is so important, why it is reassuring that it has received principled, cross-party support in the House, as that sends a clear message, and why we must ensure that law enforcement agencies have the powers they need to combat the ability of criminals to launder the proceeds of their crimes, as well as to tackle terrorism financing and to bring more offenders to justice. I hope that the House will agree that that is in the public interest and that the Bill should be passed at the earliest opportunity with clear, continued cross-party support. On that basis, I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Criminal Finances Bill (PROGRAMME)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Criminal Finances Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 24 November 2016.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Proceedings on Consideration and up to and including Third Reading
(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.
Other proceedings
(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Andrew Griffiths.)
Question agreed to.
Criminal Finances Bill (MONEY)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Criminal Finances Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of—
(a) any expenditure incurred under or by virtue of the Act by a Minister of the Crown or a government department; and
(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided; and
(2) the payment of sums into the Consolidated Fund.—(Mel Stride.)
Question agreed to.
Business without Debate
(7 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
PETITION
(7 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
I am delighted to have this opportunity to present this petition to the House. It calls for fair transitional arrangements for 1950s-born women who are affected by changes—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Mr Boswell is speaking and other people should not be making a noise in the Chamber while he is doing so. If Members wish to leave, they should do so swiftly and quietly.
Philip Boswell
Thank you, Madam Deputy Speaker.
Women born in the 1950s who are affected by changes to the state pension age are surely bearing an unfair burden. When the Pensions Act 2011 was debated, Ministers promised transitional arrangements to ease the burden, but those arrangements have not materialised, leaving women in my constituency—Coatbridge, Chryston and Bellshill—and many others facing hardship. I thank all those who have signed the petition and those in similar terms presented by other hon. Members. I also thank the Journal Office for its work in this respect.
The petition states:
The petition of residents of constituency of Coatbridge, Chryston and Bellshill,
Declares that as a result of the way in which the 1995 Pensions Act and the 2011 Pensions Act were implemented, women born in the 1950s (on or after 6 April 1951) have unfairly borne the burden of the increase to the State Pension Age; further that hundreds of thousands of women have had significant changes imposed upon them with little or no personal notice; further that implementation took place faster than promised; further that this gave no time to make alternative pension plans; and further that retirement plans have been shattered with devastating consequences.
The petitioners therefore request that the House of Commons urges the Government to make fair transitional arrangements for all women born in the 1950s (on or after 6 April 1951) who have unfairly borne the burden of the increase to the State Pension Age.
And the petitioners remain, etc.
[P001965]
Veterans Care Sector: Government Role
(7 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Johnny Mercer (Plymouth, Moor View) (Con)
Thank you very much, Madam Deputy Speaker, for granting me this debate.
I know that this is a persistent cause of mine, and sometimes I feel that I should apologise to the Minister for bringing him to the House to discuss his portfolio. I want to say from the outset how impressed I and many others in this sector are by his personal commitment to this agenda, and my comments are in no way directed at him or any of his staff who work hard to try to tackle the challenge of veterans care within the envelope that he has been given by the Secretary of State for Defence and the Prime Minister.
It is not easy. The political world is chaotic at present and priorities are hard to define, but the truth is that in this sector the challenge of closing the gap between what we say so promisingly at the Dispatch Box and how it feels to the men and women who serve increases in severity the longer we leave it. The landscape is clear, with ever increasing demand—an ongoing cost, as it were—resulting from the recent campaigns that this country has undertaken in Iraq and Afghanistan, set against a declining interest in this agenda, both from the wonderful people of this country who have carried the torch valiantly in recent years, but who are experiencing battle fatigue now that operations have faded from view and, I regret to say, from Government too.
Let me expand my argument. In January last year, I met the previous Prime Minister and presented a report that for the first time had almost universal support across the veterans care sector. It examined a sustainable veterans care model so that the United Kingdom could do its duty by those who serve. I also presented the report to the Secretary of State for Defence and others.
The paper was not my solution but that of many people involved in the arena: serving, retired, and third sector. It was our voice, and I was proud of it. It was greeted with warm words and encouraging lines about duty and responsibility, with a promise of a response, but regrettably, after a while, nothing materialised at all.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I congratulate my hon. Friend on securing this debate, and on all he does in this field. Having looked at the paper, I recommend its proposal on having a single point of contact. May I invite him to read another paper on the armed forces community health and wellbeing team for Dorset by Andy Gritt, and see how it fits with his model?
Johnny Mercer
Absolutely; I should be delighted to have a look at that.
In the current political landscape, I fear that the can of veterans care has received another good punt down the road in the wake of Brexit. I strongly welcome and support the new Prime Minster, who is supremely equipped to tackle a job which, from my position, looks almost impossible—that of managing my party and granulating the United Kingdom’s exit from the European Union. I could not wish her more strength to her arm in these challenges, and I will support her to a fault, as she well knows. I believe that we achieve nothing on our own in politics, and the strength to tackle the challenges ahead is in the team on the Conservative Benches.
However, I must confess myself to be disappointed at first sight on this single issue. In July I challenged the Prime Minister in the leadership campaign, in front of my entire party, about her commitment to this agenda and her willingness to look at a new Government Department—or something similar—to finally match our words with our deeds when it comes to the 2.6 million veterans in this country. Her response was that she was not keen to restructure Government and create any new Departments beyond a Department for Exiting the European Union, which I entirely understood. The House can imagine my concerns over the summer about where veterans care ranked on her agenda, as she subsequently re-ordered Government to face the challenges ahead which, as I mention frequently, I entirely support, but she chose not to include this cause too.
I was further concerned that the veterans care agenda was being diluted when the Under-Secretary of State for Defence, my hon. Friend the Member for Milton Keynes North (Mark Lancaster), had his veterans care duties spread even more thinly with the addition of the reserves brief to his work—an increasingly enormous challenge as the military reconfigures its relationship with the reserves heading into 2020. For me this was a clear movement in the opposite direction to that which we were pursuing, which did not go unnoticed by those who strive to deliver this country’s duty to those who serve.
That is the current position—ever-increasing demand, a general and understandable decline in interest in this agenda now that the wounds of war are not visible on those flying back from Iraq or Afghanistan every week, and a Government challenged by unprecedented political demands.
Simon Hoare (North Dorset) (Con)
I note what my hon. Friend says about the fading of memory, but when my constituent Robert de Ferry Foster came to see me at an advice surgery the other week, it was clear that the legacy of the injuries he sustained in Iraq are with him every day. He talked about sustainability, which my hon. Friend has spoken about as well, but he also spoke about the need for simplicity—a simple, transparent system for those who have served and sustained potentially life-threatening and very life-impacting injuries. They need a far simpler way of gathering the support and help to which they are legitimately entitled.
Johnny Mercer
I entirely agree, and I will come to the four principles, of which that is one, that should underlie veterans care. It is not a case of veterans being entitled to that care; we owe it to them and we must deliver it.
That is why I seek leave again to challenge the Minister on the Floor of the House and to challenge this Government to fulfil their duty to those who do our bidding from this House. I know that it can be a little tedious watching or listening to me keeping on about this agenda. I am not naive about that, but I cannot stop. I do not do it because I have nothing else to do. I do not do it because there are particularly good career prospects in this line of work, or because there is some sort of intangible crowd that I am playing to out there. I do it for the one simple thing that drove so many of us in the past decade and a half to conduct unpopular wars on this nation’s behalf, miles from home and often from the public eye.
I refer to that one word which I remember compelling the marine at the front of my patrol to do his duty, refusing any relief from those duties—in his case seeking out improvised explosive devices day after day for seven long months. I refer to that thing which makes a young officer calmly accept his fate with the words, “Lads, I’m going down,” rather than lose his composure in the heat of battle as he died in front of his men. I do not seek to lecture my esteemed colleagues in government, but it is my duty to those men to keep up this fight, and the sacrifice I make in doing this is so entirely insignificant compared to theirs that I feel I must keep going until we match what we say as a Government from that Dispatch Box with what it feels like for our men and women who serve.
I applaud the Government’s efforts on this agenda, but they are not enough— nowhere near enough. I have no doubt that this Minster and his staff work night and day trying to deliver this agenda, but he can only work with the resource and priorities that he is given by the Secretary of State for Defence and the Prime Minister.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I congratulate the hon. Gentleman on securing this incredibly important debate. I know that he shares my concerns about the mental health of veterans. Does he also share my specific concern about the availability of specialist mental health services for our veterans, which we know are particularly patchy in some parts of the country, exacerbating many of the challenges that we know our veterans face?
Johnny Mercer
Absolutely—I completely agree. On mental health, we have moved so far away from getting involved, getting our hands dirty and sorting this out that we are now in danger of being in a place where the perception is that everybody who leaves the armed forces has some form of post-traumatic stress disorder, and that is wildly inaccurate. We need to provide these services for those who need them, professionalise the standard, and take far more of an interest than we have done.
Given his current operating envelope, the Minister has achieved some significant things. Let us take, for example, his work in the healthcare arena for service personnel and veterans with complex care needs. The scheme he announced in July, assuming that the pilot is successful, could fundamentally change the way in which care for our most seriously injured is commissioned, easing the pressure on local clinical commissioning groups and retaining the knowledge and expertise within Defence for those who have been injured. This is the future—a first step. I urge the Prime Minister to note the early successes of this scheme and look to roll it out nationwide.
I plead with the Minister and his Department not to take my observations personally. He conducts valuable work, but it is my job to speak truth to power from these Benches, and I would be failing in my job if I were not to do so. What is the truth? I think it is the evidence. The evidence on this is not the endless announcements about what we have put into the sector. These announcements are clearly to be welcomed, although I cannot help but feel that they play somewhat to a home crowd. The evidence is how what we do affects and matters to those whom we are trying to help. I have said for a long time that until we fundamentally change this conversation from talking about what we are endlessly pouring into this sector to how it actually feels to be a veteran in the United Kingdom in 2016, we will never truly understand the scale of the work to be done.
I would say to the Secretary of State for Defence and to the Prime Minister that the evidence is there if we were only to look. For example, a study done by SSAFA just before the summer recess indicated that 85% of veterans feel that the UK Government do not support them well enough, while 84% believed that the much heralded armed forces covenant was not being implemented at all. Almost half the people in the armed forces surveyed in the study—the very people we are trying to help—had not even heard of the armed forces covenant. The gap between how we think this is being implemented as a policy and how it is really being implemented is so great that I hesitate to air it in public. It is a lottery of choice as to where local authorities or others choose to implement it, and that currently dictates whether the military covenant is a reality for our servicemen and women. It has become a catch-all phrase in this place and No. 10 that is becoming—I hesitate to say it— increasingly meaningless to the service community, and that will continue unless we stop this trend. I say this as someone who last week privately met the previous Prime Minster—a good man who genuinely “got” the military in this country—and could tell that he has genuine pride in his achievements with this policy. However, the gap between the top and the reality on the ground is vast.
I reference one study for evidence. In truth, there are many, for in this country we have been blessed for some time by a public and a third sector that has done wonders for our armed forces veterans over the years. Of the thousands who work in the sector—who do so for little reward but in the same vein as that duty of which I spoke earlier—I want to mention one couple who have left the sector in recent months, leaving their indelible mark, and the conversations around veterans care in the United Kingdom forever changed. Bryn Parry and his wife Emma set up Help for Heroes in 2007 as a result of the catastrophic consequences of a criminal dereliction of veterans care by the United Kingdom Government in the aftermath of the early days of Iraq and Afghanistan. The third sector presents its challenges as much as any other sector. It is a congested market, competing for the same funding, with people trying their best to do what they think is right for our armed forces veterans. We will hear good and bad of every organisation, but the truth is that Help for Heroes has completely and fundamentally changed the way in which veterans care happens in this country today.
Like any success story, Help for Heroes has its detractors, and I am not naive about this, but I will never countenance them, I am afraid. I am from that generation who had nowhere else to go in 2005 for veterans care. Help for Heroes grew faster than any similar organisation in history, but did the thing that so many, I regret to say, neglect—retained its focus on those whom this is all about: the guys and the girls. Bryn and Emma, have now passed their torch to their successors, but their light will never go out. From a generation of soldiers who felt that no one really cared once the battle finished, I want to say thank you from the bottom of our hearts for everything you did. They committed their lives to this pursuit, delivered extraordinary change and services, and I shiver to think where we would be without them.
Amanda Milling (Cannock Chase) (Con)
Yesterday, volunteers from Help a Squaddie Find a Home in Rugeley visited Parliament. Will my hon. Friend join me in congratulating them on their hard work, and does he agree that the responsibility to support veterans to integrate back into civilian life and to ensure that they do not find themselves homeless is critical?
Johnny Mercer
I do, and I commend the work of some of the brilliant charities that we have in this country; as I have said, I shiver to think where we would be without them. I think that it is a fundamental duty of Government to ensure that that care is available. We have a duty to these people. I do not think that we should deliver it, but we need to ensure that they are looked after. What is happening is not good enough. The Americans realised that after Vietnam. We need to catch up with the programme and make sure that care is delivered.
Will Quince (Colchester) (Con)
My hon. Friend is making an incredibly powerful speech. I am very proud to represent the garrison town of Colchester, and I know too well the fantastic charities that work in this sector. As we withdraw from theatres of operation, we will inevitably have a peace dividend. Does he agree that this is the time that we should invest money to support our veterans?
Johnny Mercer
I thank my hon. Friend for his intervention and absolutely support what he says. We are reaching a point where demand is going up and the mindset of war is declining, and the moneys are in decline as well. If we do not get this right now, it will be far too late to do so in 2020.
Rebecca Pow (Taunton Deane) (Con)
My hon. Friend is making a very passionate case, as always. Go Commando, a charity in Taunton Deane, does great work to support not only veterans, but their families, which is so important. Initiatives such as children’s centres, holiday vouchers, days out and the provision of emotional and practical help could be very good models for the Government to incorporate into all the things that my hon. Friend is suggesting.
Johnny Mercer
Absolutely. I thank my hon. Friend for her intervention. We are not asking for the moon on a stick; there are some brilliant practices out there—not only in this country, but internationally—that we could learn from quickly. The services are there, but the Government have a job to do to bring everything together.
The third sector remains deeply challenging, and that is the reason for this debate. There are almost 2,500 military charities and funds in the UK today. Okay, many are regimental or sub-unit funds that are not in day-to-day use, but that figure gives a picture of the chaos. I would not have called this debate if I thought that every single one of those charities was doing good. This is an awkward conversation, but if we did not have it we would be doing a disservice to those whom we are trying to help.
Some charities struggle with financial management; some are plainly criminal. Some practise evidence-based therapies or treatments; some are a vehicle to further their own unproven treatments, however well-meaning they may be. Some are run professionally, with complaints structures and staff management routines; others are a disaster.
We must now sort out that problem, for as time goes on the Iraq and Afghanistan generation of warriors will fade from memory. We will be on the same pages as the Falklands and the Gulf war, and in the same chapter as the Americans in Vietnam. Moreover, the public will stop giving, and understandably so. The income of some of our major charities is down by a third this financial year. No organisation can sustain that. The LIBOR funding that has sustained us for so long will eventually run out. Yet the duty to our veterans will only increase as the scars of our recent wars reveal themselves in communities up and down this land. Referrals to Combat Stress are up 71%.
Now is the time to have this fight—this dirty fight—of sorting out the third sector. I cannot help feeling that most of the sector would thank us for it. They loathe the criminal charities as much as I do, and they feel as sick as I do when, as they struggle like everyone else, unproven methods or groups attract Government funding. They curse the lack of a common needs assessment, which means that they have to start each case from scratch, causing more trauma to the individual using their services. If we do not have this fight—the Government are the only ones who can do it—it will look like we do not care and do not want to have this conversation because it is too difficult, too dirty, for us to get involved.
I am afraid that this comes back to what I discussed at the beginning, namely duty. This Government have a duty, not to always deliver, for the charities do that better than we ever could, but to ensure the provision of veterans care in this country. That includes ensuring that it is accessible to all, particularly our most vulnerable communities, perhaps through a single point of contact; too many have no idea how to access some of the brilliant services provided by our third sector. It also means ensuring that the care is of a standard and safety applicable to those who have served—and, indeed, to any other UK citizen—and that it is evidence based and correctly staffed by qualified personnel. We also need to ensure that cases are managed and individuals guided through the enormously complex treatment pathways, and that the great British public, who have carried this torch for so long, do not get ripped off by individuals raising money for a cause to which they will never stop giving.
Mrs Flick Drummond (Portsmouth South) (Con)
My hon. Friend is making a powerful speech. Does he agree that it is vital that services are set up before veterans leave the forces? In particular, it is not good enough to have veterans scrambling for social housing in the days just after they have left the forces, as has happened in some of the cases I have come across.
Johnny Mercer
I agree. Some sort of education before people leave would be helpful, and I understand that some work has been done. I agree that any sort of direction through this pathway is strongly to be welcomed.
Why do we have to do this? I ask you, Madam Deputy Speaker, to put yourself in the shoes of the average user—a corporal who is two or three years out. He gave the best years of his life to the service of this country, willingly. Now, in a civilian job, he starts to find his past a challenge to deal with. We have all seen someone like him in our constituencies, up and down this land. He does not want sympathy; when the bell came, he was proud to serve this nation of ours. He just wants to know where to go. He does not want to have to re-tell his story all the time. His wife wants to know that the course he is doing is safe, that he will be looked after and that his treatment has a fair chance of working. She wants to know that someone will be managing his case, taking an interest and encouraging him through the process. Crucially, she wants to know that he will get that help in a timely manner before his condition deteriorates and becomes so much harder and so much more costly to treat.
Ruth Smeeth (Stoke-on-Trent North) (Lab)
I congratulate the hon. Gentleman on securing such an important debate. Does he agree that we should use the armed forces covenant as an opportunity, and that it should be more than just talk? In places such as Staffordshire, with the relocation of regiments from Germany to Stafford, that would allow us to think about how we can help veterans over the next 10, 20 or 30 years—both now and when they retire—so that they can build families and homes without having to worry about some of the issues that he is raising.
Johnny Mercer
My view on the armed forces covenant is that it is a great policy and, if implemented, it could work. The trouble is that, as I alluded to earlier, it is a complete lottery. I have seen it done well and I have seen it done appallingly, and there is no accountability at all. I hate to talk about it becoming meaningless but, ultimately, unless it means something, it is just another phrase. It can be a bit of a “get out of jail free” card for those who talk about the matter from the Dispatch Box, and that is what I want to change.
Jack Lopresti (Filton and Bradley Stoke) (Con)
I pay tribute to my hon. Friend for his work on the veterans sector and for making a brilliant speech. Does he accept that the military covenant has made a huge difference to veterans’ lives since its inception and since it was enshrined in law? I agree that there has to be a better way of co-ordinating charities, and perhaps a centralised access point and standards across the board, but I would not dismiss what the military covenant has achieved thus far, even though there is always work to do.
Johnny Mercer
I agree with my hon. Friend, but I refer him to the evidence that I presented earlier: 85%—quite a significant proportion—of veterans do not believe that that is the case at the moment.
In looking at all this, I really struggle to put my finger on why any of it is so desperately hard for the Government to achieve. Nobody else is going to do it. The third sector cannot compel faux charities to cease. It cannot compel others to agree to a single point of contact or a common needs assessment. The issue needs leadership. It needs a small but strong Department with a Cabinet Minister whose single duty and career stands and falls on veterans care. It needs the Government to make the shift from talking a very good game on this agenda to actually delivering it. It needs a game-changing event such as Help for Heroes provided in 2007. It is in the Prime Minister’s gift to do this, and I again plead with her to listen this evening. There are always reasons not to do this, and I have heard them all, but they do not wash. Every other ally we fight alongside has tried different ways but has settled on creating a Department for veterans affairs, and we should do the same.
Bob Stewart (Beckenham) (Con)
I rise simply to say that we must not give the impression that Help for Heroes suddenly burst on to the scene and that no one else has helped veterans. The Soldiers Charity, the Army Benevolent Fund, the Royal Air Force Benevolent Fund—all those charities have helped for a very long time, and they will continue to support our soldiers. We must not give such an impression about the people who have helped my soldiers from 35 years ago—they are still suffering—unlike Help for Heroes, which at least to start with did nothing for my men. I just want to ask hon. Members not to say that Help for Heroes was suddenly wonderful and that everyone else had not really got on with the job. They did: they cared, and they looked after our men and women for a very long time before 2007.
Johnny Mercer
I have persistently said that in the House. I use the Help for Heroes example because I want to pay tribute to Bryn and Emma, who have recently left it, as I believe that they changed the market when it comes to veterans care. Of course those in the charity sector have carried this burden for years and years, and people such as I and my hon. Friend will be enormously grateful to them for years to come.
In closing—I will close now, because I want to give the Minister more than the four minutes I left him to respond last time—this duty is not going to go away. I am afraid my voice will not grow weaker on this matter. I apologise to my many right hon. and hon. colleagues in this place for my persistence, which must appear tedious at times, but I ask them to bear with me, for they could not have had the experiences I have had—having seen and felt the sacrifice of our armed forces day after day, far from the public gaze—and give up this torch now.
I am privileged beyond anything I could have envisaged in those days when I fought alongside members of our armed forces, and I will use and abuse that privilege until the situation changes because they deserve it. Some lost everything as the Helmand sky faded from view and their name was added to the wall at the National Memorial Arboretum. Some lost body parts they would never recover. Too many lost their minds in a process that is ongoing today. They deserve a country and a Government who care. In a world that I sometimes find so incredibly selfish and cruel, they sacrificed themselves for the greater cause in the furtherance of this great nation of ours. I have not mentioned their families: the mother who wakes without her son, and the wife who wakes without her husband. I said this on my first day in the Chamber, and it will forever remain true:
“Theirs is the greatest sacrifice on the altar of this nation’s continuing freedom”.—[Official Report, 1 June 2015; Vol. 596, c. 375.]
We must never tire in our duty to them.
Thank you for allowing this debate tonight, Madam Deputy Speaker. I hope I will not have to repeat the exercise too many more times.
The Parliamentary Under-Secretary of State for Defence (Mark Lancaster)
I congratulate my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer) on securing this debate. His sterling work and passion in ensuring that our veterans have the necessary support and welfare they deserve are highly commendable. As a veteran himself, he is well placed to speak in the House on their behalf. Since arriving in the Commons in 2015, he has made it his mission to campaign on this area. Although I cannot claim to be a veteran quite yet—I was described by a senior general at the Army Board last week as a “seasoned oak”, so clearly it cannot be long before I can—I do, through my rather more modest service, absolutely recognise the importance of this subject.
Equally, I am grateful to my hon. Friend for his concern about my ever-expanding portfolio, to which the reserves have been added. As a Royal Engineer, I have now been a serving member of the Army Reserve for some 28 years. I confess that I used to say that I looked far too young to have been one for so many years, but I fear that I nowadays do not look far too young. However, I do at least have some basic understanding of that brief, and I have not had to do too much background reading.
Comments have been made about the armed forces covenant—the recognition that the nation, as well as the Government, have a responsibility to ensure that our veterans suffer no disadvantage as a result of their service. There is an implication in those comments that the covenant has not been applied consistently across the United Kingdom. I have had such a concern for some time. That is why I commissioned the Forces in Mind Trust to do a review of the covenant across the United Kingdom earlier this year, and it has recently published a very extensive report that aims to share best practice.
I encourage colleagues in the House tonight to read that report and, crucially, pull out that best practice and encourage their own local authorities to follow it. There are some fantastic things happening across the UK. It will come as no surprise that the local authorities that seem to do things best are those with the greatest proportion of members of the armed forces. I take the opportunity of this debate to send the message: please spread that report far and wide, as it is the means by which we can begin to improve the level of understanding of the armed forces covenant.
The service charities have a crucial role to play. We have been supporting organisations such as Cobseo—the Confederation of Services Charities—which is an umbrella organisation for 250 charities, in its critical cluster work. I will talk about that in greater detail throughout the course of the debate.
My hon. Friend and I agree on many things, but I fear there is one on which we do not. I once again note his request for a separate Department for veterans. I can only repeat what I said in the debate in March this year, that on balance I do not believe that to be the best approach; if it meant I ended up in the Cabinet he might be able to persuade me to change my mind, but I fear it would not be me in the Cabinet. The needs of veterans straddle Whitehall boundaries and national borders because first and foremost our veterans are civilians. As I said previously, although we agree on the end, we do not necessarily agree on the means.
I fear a veterans Ministry would duplicate work that already exists through the Department of Health, the Department for Work and Pensions, the Department for Communities and Local Government and many organisations and Government agencies. I believe that the work of Defence Business Services Veterans UK provides a valuable service bringing together pensions, compensation and welfare support.
Mr James Gray (North Wiltshire) (Con)
My hon. Friend is making an important point about whether a Department for veterans’ affairs would be better for veterans or in fact worse. Does he agree that should there be such a Department that would demotivate some of the very good civil servants in the Department of Health, the Department for Work and Pensions and elsewhere who are currently thoroughly committed to the issue of veterans, as if there were to be a separate Department for veterans they might well say, “That is nothing to do with me—give that to them”?
Mark Lancaster
To a degree, this goes back to the principle of the armed forces covenant, which is really an agreement between the nation as a whole and our veterans. I would hate to think that we had moved to a position where we were in effect delegating this responsibility to a single Department and allowing others to feel that it somehow was not their responsibility to play a role in supporting our veterans.
The current system, whereby responsibility for veterans is cross-government, is positive. Yes, more should be done to ensure that all are playing their part, but on balance I agree with my hon. Friend that a dedicated veterans Department would be a retrograde step. We need not look too far, when looking at things across the Atlantic, to see some of the problems there. They are not simply financial; the very complex way in which care is given to veterans can be diluted. We also have the advantage of the national health service, which is a very comprehensive health service. That is a very good medium for supporting our veterans.
Bob Stewart
I am listening very carefully to the Minister. I also have great respect for the view of my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer). I ask this question. You are the veterans Minister—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. He is the veterans Minister.
Bob Stewart
Forgive me. I am getting carried away. My hon. Friend is the veterans Minister. As the veterans Minister, I take it that you actually have fingers in other Ministries, such as Health and Work and Pensions, and you make sure from your own efforts that veterans are well served, and you are the focus—
Bob Stewart
Forgive me—the Minister is the focus. I am getting seriously carried away—it is the fault of my hon. Friend the Member for Plymouth, Moor View. Thank you, Madam Deputy Speaker.
Mark Lancaster
I am certainly the only Minister with the word “veterans” in his title and I am certainly prepared to say that I take the lead on veterans matters. I would argue, however, that all Ministers in government should have our veterans on their mind and do what they can to support them. So, yes I am happy to take the lead, yes I am happy to have the title in my portfolio, and yes I am happy to try to ensure that all my ministerial colleagues also show the same interest. However, I would not want to be Minister with sole responsibility for veterans, for the reasons I gave when I answered my hon. Friend the Member for North Wiltshire (Mr Gray).
I recognise that the Ministry of Defence has a responsibility to ensure that the transition from service to civilian life is as smooth as possible, allowing service personnel process to draw upon the vast array of transferable skills they have obtained in service, but I am not for one second saying that there is not more that could and should be done. I believe firmly that effective transition to civilian life is a major factor in ensuring effective care. I must emphasise that most service leavers transition well to civilian life through our robust and effective resettlement system known as the career transition partnership, which in 2014-15 helped 85% of service leavers to find sustainable employment within six months.
Despite that, I recognise that there is a small percentage of service leavers who do not make a smooth transition. These are the people we must work hard to identify and support. This is also why I am keen to include a question on veterans in the national census. That will help us to identify the veteran community. I assure my hon. Friend the Member for Plymouth, Moor View that I will continue to pursue this energetically with the Office for National Statistics and the chief statistician.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
On that note, will the Minister ensure that his Cabinet Office colleagues are fully briefed? At the end of the day, the ONS will not make the final decision—the Cabinet Office will determine that. It would be a vital marker for the future.
Mark Lancaster
We have a perfect example of why it is so important that the responsibility for veterans runs across the piece in government. As was so rightly pointed out, it is not in my power, as veterans Minister, to force the chief statistician to include this in his survey. If my hon. Friend is right, the Cabinet Office has the right to do that.
Transition is seen as a through-career management process. We are looking at different ways to ensure that from the point that people join the armed forces, they can see that they not only have the possibility of a fulfilling career but are aware that one day they will become a civilian and need to prepare for that. Career transition should start on day one of service and we must communicate this message on the very first day an individual joins. However, where there are veterans who have difficulties in transition, the Government, local authorities and the charitable sector must step in to ensure that they are afforded appropriate support. Alongside the Government, some 2,500 service charities also play a role. Cobseo, the Confederation of Service Charities, of which many charities are a member, has also created various cluster groups to discuss important issues, such as mental health and housing, where they encourage collective working and provide a forum to raise issues and ideas to implement solutions.
To reiterate some of the points made during the debate in March on the role of charities in the veterans care sector, we value our partnership with the charitable and community sectors. They provide and address wider welfare requirements, particularly for the more vulnerable individuals in the armed forces community. Only last week at the MOD, I chaired the ministerial service charities partnership board, a meeting attended by relevant Government officials and Cobseo charities such as SSAFA, Help for Heroes and the Royal British Legion. In recognition of some of the concerns my hon. Friend raises, I reset its role with a focus on co-operation and a strategic approach to discussions, where actions are taken on current and important issues arising in the veterans sector, with a view to ensuring that the MOD, charities and other Government Departments can be held to account. I believe that accountability is important. Frankly, as the Minister with responsibility for veterans, I walk a tightrope when it comes to dealing with charities. Ultimately, I have no power to direct a charity to do anything. Charities are not responsible to Government—they are responsible to their trustees—but I believe that the Government have a role in providing leadership to try to unite the various sectors in supporting veterans. This is a role that I try to fulfil.
On the point about Help for Heroes, it was a charity that started up in 2007. The armed forces had recently re-engaged in Afghanistan and stayed for a further seven years. The support, welfare and treatment initially provided by Help for Heroes bore fruit from the horrendous injuries that our brave service personnel suffered in that conflict. Throughout those seven years and beyond, along with improvements to equipment, we have made great strides in ensuring that the best medical support is available from the MOD, charities and the NHS. I would like to take the opportunity to pay tribute to both Bryn and Emma Parry, whom I have got to know very well over the last couple of years, and thank them for all their service in leadership of this charity. I wish them well for the future.
Jim Shannon (Strangford) (DUP)
I had a meeting with a Department for Environment, Food and Rural Affairs Minister, which is why I could not attend this Adjournment debate any sooner.
In Northern Ireland, about 100 veterans have tried to commit suicide over the last year and a half, mainly those who served in Afghanistan. Those veterans are not with any charity or regimental association—they are under the radar. What can be done to reach those people that nobody knows about, but who have been affected very greatly by what they saw during their service in Afghanistan?
Mark Lancaster
I intend to visit Northern Ireland shortly. For obvious reasons, I appreciate that there is a unique set of circumstances over there, and I am determined to do my bit to address them. Of course, communication is the key. I shall explain in a few moments how I believe we can help, but the key is making sure that support services are available and communicated. All too often, help is out there, but it is not clear how our veterans access it. I intend to say a few words about that if the hon. Gentleman will bear with me.
I informed the House earlier this year of a plan to improve the care received by the most seriously injured and highly dependent service personnel and veterans. Currently, this support is funded and delivered by a number of separate agencies, including the MOD, the NHS, local authorities and charitable organisations. As such, we have a pilot, which is ongoing, that sees care of this kind co-ordinated and delivered by a new integrated high-dependency care system—I think we need a better name. It produces a joined-up and improved system of care for the individual, reducing strain on local care commissioning groups. The early signs are that this is going well. I am happy, once it is established, to see how to extend it to a wider cohort of veterans.
Michael Tomlinson
On that very point, I invite the Minister to look at the Dorset model—I mentioned a few moments ago the work that Andy Gritt is doing in this area—to see whether it can feed into the model that the Minister has just mentioned.
Mark Lancaster
I would be delighted to look at that model and see whether we can learn any lessons from it.
The aim is that this system will provide confidence for a small number of individuals and their families that their clinical, health and social support needs will continue to be met when they leave the armed forces and for the rest of their lives.
On the point about a single point of contact for veterans, I have good news for my hon. Friend the Member for Plymouth, Moor View. The armed forces covenant fund has £10 million each year to support the covenant by funding projects that address specific priorities, one of those being the creation of a veterans gateway. The aim of this initiative is to provide a single point of contact via a fully transactional website and one telephone number, together providing an information clearing house that takes into account the needs of all veterans, wherever they may be located. An announcement will be made very shortly on the preferred bidder for this contract, with this facility being launched during 2017. Further to that, there is the armed forces covenant website itself, which both serving and former serving personnel may access.
I am the first to recognise that the support of our veterans and the services that are provided for their welfare are not perfect. Nothing is, but I, like my hon. Friend, and indeed all hon. Members here tonight—it is a very good showing for an end-of-day Adjournment debate—am determined to do more. For example, the Department for Communities and Local Government is doing important work on supported housing, ensuring that local authorities have afforded priority where it is due. The DCLG has also introduced various measures to improve access to social housing for members of the service community, including veterans. That includes changing the law to ensure that local authorities always give seriously injured service personnel and veterans with urgent housing needs high priority in the provision of social housing. As for health, NHS England is introducing new initiatives in mental health services for veterans, the details of which contain expert input from MOD officials. Those are just a few examples of the collaborative work that we are undertaking throughout the Government.
Maria Caulfield (Lewes) (Con)
May I make a plea on behalf of NHS workers? Veterans care is a very specialised area, and doctors, nurses and other staff need training and support if they are to care for veterans adequately. We have a great deal to learn from veterans. For example, the McIndoe Centre in East Grinstead was established because of the need to look after veterans who were returning from warfare, and that has benefited the country as a whole.
Mark Lancaster
I entirely agree with my hon. Friend. The issue of veterans healthcare is crucial, and I have been looking into the issue of veterans mental health care in particular. I am delighted to see that my hon. Friend the Member for South West Wiltshire (Dr Murrison) has just entered the Chamber. His report “Fighting Fit” involved a great deal of work, and I am pleased to say that we have implemented nearly all his recommendations. Vital work is now being done to enable the medical records of service personnel to be transferred to the civilian national health service so that we can effectively track our veterans.
We must ensure, from the day people join the services until the day they leave, that they are ready for the transition to the civilian world, and collaboration and co-operation are key elements of that. We must continue to work with other Departments, with local authorities and with the charitable sector to build on what we have achieved thus far.
Once again, I thank my hon. Friend the Member for Plymouth, Moor View for raising this important issue.
Johnny Mercer
I sense that my hon. Friend is beginning to wind up his speech. Before he does so, let me thank him for his response, and also point out that it is imperative, as far as Conservative Members are concerned, that we do everything on the basis of the evidence that is presented to us. We can talk persistently about the fact that the armed forces covenant is working or about veterans care, but it is clear from the strength of the attendance in the Chamber this evening and from the stories that emerge each week that the current system is not working as well as it should.
I understand why my hon. Friend dismissed my proposal for a Department for Veterans Affairs, but such Departments work elsewhere. My proposal is not based on the United States model; it is completely different. I ask him not to close his mind to the concept, because I think that until we do something like that and fundamentally change the present position, we will not stop the haemorrhage of bad veterans care in this country.
Mark Lancaster
Let me say two things to my hon. Friend. First, I do not think that it is just Conservatives who care passionately about this issue; I am confident that Members on both sides of the House care passionately about it, and I have been greatly encouraged by the positive co-operation and constructive support for progress that I have observed on the part of Her Majesty’s loyal Opposition. I hope that that continues, and I am sure that it will. Secondly, I do not have a closed mind about anything. I would like to think that during my tenure as veterans Minister to date—given that I have just praised Her Majesty’s loyal Opposition, it may well come to an end quite shortly—I have demonstrably tried to take a fresh approach to a number of issues, including mesothelioma. I have looked at issues again, and I am currently looking at a couple of issues that are in my inbox.
I do not have a closed mind. All I am saying is that at the moment, on balance, I do not believe that my hon. Friend’s suggestion constitutes the right approach. We have heard this evening about how other areas of government can contribute effectively to the care of our veterans. I also feel—this point was made by my hon. Friend the Member for North Wiltshire—that we should not allow the other areas of government, and society, to feel that responsibility for our veterans has somehow been delegated to a small part of government. I believe—at the moment, on balance—that that would be a mistake.
Question put and agreed to.
Savings (Government Contributions) Bill (First sitting)
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Chair
Before we start, I remind everyone that there will be severe sanctions against anybody who uses their mobile phone or who allows their mobile phone to go off in this room. There will also be sanctions against those who drink tea or coffee rather than water. I hope that we will be able to take the Committee through in an orderly and quick fashion.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 10.00 am on Tuesday 25 October) meet—
(a) at 2.00 pm on Tuesday 25 October;
(b) at 11.30 am and 2.00 pm on Thursday 27 October;
(c) at 9.25 am and 2.00 pm on Tuesday 1 November;
(2) the Committee shall hear oral evidence in accordance with the following Table:
Date | Time | Witness |
|---|---|---|
Tuesday 25 October | Until no later than 10.45 am | The Tax Incentivised Savings Association The Association of British Insurers |
Tuesday 25 October | Until no later than 11.25 am | The British Banking Association Hargreaves Lansdown |
Tuesday 25 October | Until no later than 2.30 pm | StepChange Centre for Social Justice |
Tuesday 25 October | Until no later than 3.00 pm | Union Pension Services Limited |
Tuesday 25 October | Until no later than 3.30 pm | Scottish Friendly |
Tuesday 25 October | Until no later than 4.00 pm | MoneySavingExpert.com The Women’s Budget Group |
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clause 1; Schedule 1; Clause 2; Schedule 2; Clauses 3 to 6; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 1 November.—(Jane Ellison.)
The Chair
We know that the first deadline for tabling amendments has already passed, but the Chair will consider accepting starred amendments in special cases.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Jane Ellison.)
The Chair
Copies of the written evidence that the Committee receives will be made available in the Committee Room.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Jane Ellison.)
The Chair
Good morning, everybody. We will now resume our public sitting and we will hear evidence from the Tax Incentivised Savings Association and the Association of British Insurers.
I remind Members that questions should be limited to matters within the scope of the Bill and that this session of questions cannot go beyond 10.45 am.
Will the witnesses please introduce themselves? Carol Knight first.
Carol Knight: Good morning. I am Carol Knight, the chief operations officer of the Tax Incentivised Savings Association.
The Chair
Can I straight away say that you will have to raise your voice a bit more than that, because the acoustics in this room are notoriously bad?
Yvonne Braun: I am Yvonne Braun. I am director of policy, long-term savings and protection at the ABI.
Peter Dowd (Bootle) (Lab)
Q This is to Ms Knight. In a press release response to the Budget, you welcomed the lifetime individual savings account and said:
“The Lifetime ISA will encourage further tax-exempt saving and a dedicated account to save for a home and save for retirement.”
How do you perceive the marketing of the LISA in relation to traditional pension products?
Carol Knight: We do not really see the lifetime ISA as a direct competitor to pensions. We believe there is a cohort of the public for which the LISA will be an attractive proposition, particularly those who are in low-paid income and who fall outside the bracket for auto-enrolment. Self-employed people have an opportunity with the LISA that is not available with a workplace pension. So we believe there are a number of people who would be attracted by a matching proposition and who do not automatically have the opportunity to benefit necessarily from a pension product.
Peter Dowd
Ms Braun, would you like to comment on that question?
Yvonne Braun: For us, what is most important is that there is no confusion between automatic enrolment and the lifetime ISA, so we see it as a complementary product. What is quite important is how it is communicated to people, particularly employees, because we are very clear that there is no employee who will be better off if they switch out of their automatic enrolment pension into a LISA, because with automatic enrolment in a workplace pension scheme they get the employer contributions. If they decide to switch out of that into a LISA, they would lose quite a lot; in fact, we calculated that they could lose up to a third once they get to the age of 60. We think that is really, really important. Communication will also be very critical by the Government, by the guidance services and through providers themselves.
Peter Dowd
Q You mentioned the potential confusion. How do you think that could be avoided, because there is concern that these things will either meld or send out a confusing message?
Yvonne Braun: I think there are a number of mechanisms, such as what the Government put forward in terms of what the LISA is for, but also using the new guidance service, which will be the successor to the Money Advice Service, the Pensions Advisory Service and so on and so forth in 2018. That could also steer people and help them to make the right decision for their circumstances because, as Carol just said, for some people—the self-employed, people who have already maxed out the employer contributions on their pensions or people who may be fortunate enough already to have used up their annual allowance—it is a very positive thing, but it is important that every person makes a decision based on their own circumstances. For most people, switching out of a pension into a LISA will be a very bad decision.
Peter Dowd
Q To follow up on Carol’s comment earlier, you have expressed disappointment about the early withdrawal charges.
The Chair
Peter, sorry, can you please project your voice? There may be people at the back and at this end who are finding it hard to hear.
Peter Dowd
Okay. In the past you have expressed disappointment about early withdrawal charges. What would you suggest instead?
Carol Knight: We believe that the necessity to pay back a bonus if money is withdrawn outside the allowed circumstances is a great enough disincentive to withdrawal at inappropriate times. We believe that the 5% charge across the whole of a savings account is disproportionately difficult, particularly if we are looking at this as a product for people who are low paid and accessing a savings product that they would not use other products for, because of the 25% bonus.
A person’s life circumstances might mean that suddenly they have a need to take their money out. There are all sorts of events that happen during the course of a life, when someone has an urgent need to get some cash to help them through difficult times—for example, being made redundant. To have a 5% charge seems to us to be an inappropriate and harsh penalty to pay. We understand that it is there to encourage people to keep their money in it. As Yvonne said, we would not want to see the LISA used as an alternative to a pension. We believe that it is a complementary product, so keeping the distinction between the two is important. However, we feel that that can be addressed by means such as having to pay back the bonus, rather than having a 5% charge across the whole account.
Peter Dowd
Q Okay. It has been reported that many financial providers may not want or be able to offer a lifetime ISA by the time of its launch. Some have ruled out participating in it altogether. What is your organisation’s view on that?
Carol Knight: There are some organisations that will be ready in April. There is always the need for a lead-in period for people to get systems in place and get trained. To have clarity on the guidance and regulations at the earliest possible opportunity is critical. We have had a short lead-in period for this particular product and some people will be ready, some will not—unfortunately, that is the nature of the game.
Peter Dowd
Q Do you think that the proposed lead-in time is reasonable?
Carol Knight: We would normally ask for a year, but we have not had that opportunity this time.
Peter Dowd
Q I will come to Ms Braun in a second, but on that point, what is your assessment of the awareness of employees and employers of this particular scheme—the lifetime ISA? It is a short run-in period.
Carol Knight: We do not think it will affect employers. This is a personal individual savings account. We do not see it being marketed as an alternative to auto-enrolment. We do not necessarily see it being offered by employers.
Peter Dowd
Q How about awareness, given that you think the run-in period is pretty tight?
Carol Knight: Yes. The publicity to get the scheme in place is important for the public as well as for the industry. There has been a lot of publicity about it. Getting that clarification for people is really important, but the whole question of advice and guidance needs addressing. There is a lot of work going on in other areas looking at this, but it is really important to put more work into enabling people to get the information they need to make informed decisions. Those need to run hand in hand alongside each other.
Yvonne Braun: If I could come back on the lead-in times you mentioned, this was announced at the last fiscal event in April, to be coming into force next April. As the Tax Incentivised Savings Association has done, we have worked with the Treasury and HMRC officials over the summer, to understand better how the detail will work. We are still waiting for clarity from the Financial Conduct Authority about what the conduct rules are going to be. That inevitably puts pressure on providers who are trying to get this ready for next April. As I have said publicly, there will be quite a few who will not be ready for next April. That does not mean that they do not want to offer it, just that from the perspective of their own lead time and systems build time, they need longer.
Peter Dowd
Q I will ask you both to answer this one, if I may. Would you welcome a deferral for a period of time, beyond the suggested introduction date?
Yvonne Braun: In terms of the monthly bonus contributions from Government, there is an argument to defer it until April 2018.
Carol Knight: At this point in the game, a lot of people have put a lot of work into getting it delivered for April 2017, so a change at this point is going to be detrimental to those firms. I think it is too late in the game to make that change, personally.
Melanie Onn (Great Grimsby) (Lab)
Q I wonder whether I could follow up on the point about some financial providers choosing not to participate in the scheme at all. Do you have any further information on that? Do you have any percentage figures for organisations that are either not going to be ready or are not choosing to participate in the scheme at all?
Yvonne Braun: No, I don’t.
Jeremy Quin (Horsham) (Con)
Q May I pick up on a couple of points made by the witnesses? First, a powerful point was made that, although auto-enrolment has been a success, the self-employed do not have access to it, and this is an option, a vehicle, for the self-employed to improve their long-term savings. Could you expand on that?
Carol Knight: I think that is absolutely true. However, some of the data from the Office for National Statistics indicates that 15% of our workforce are self-employed. But of that 15%, over 50% are over 50 years old, so the lifetime ISA is not a vehicle available to them. To enable those people to benefit from it, there is an opportunity to expand the age at which you can open a lifetime ISA.
Yvonne Braun: I would make exactly that point. A lot of self-employed people do not fit the age restrictions on the product, so for them it is not going to be available. Of course, if they are higher rate taxpayers, the pension tax relief on offer to them looks better than the bonus they would have received under the lifetime ISA. That is also worth saying: for self-employed people, the lifetime ISA is particularly attractive if they are basic rate taxpayers, but not so much if they are higher rate taxpayers.
Jeremy Quin
Q I am grateful—it is 15% and 50%. I am a glass-half-full type of person, but I am sure the points were noted.
The other point I want to tease out is the reference to not everybody being ready, and the potential for delay. Hearing what Carol was saying, in particular, I take it that there is no sign that there will be an insufficient number of people to provide a market. There will be a market, and if people have to catch up they will have to catch up. We are offering a good product at an early stage—would that be fair?
Yvonne Braun: That is absolutely right. Our members very much want to make this work for their customers.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
Q A lot has been said about auto-enrolment and those who have been left behind in the process up till now—the self-employed. Given that we know there is going to be a review of auto-enrolment in 2017, is there an argument for postponing this until we deal with auto-enrolment and those who need to be included?
Carol Knight: Not necessarily, no. We need to monitor the effects, without a doubt. We need to look at the take-up of auto-enrolment to see whether there is any discernible drop-out and a corresponding number of people going into the LISA. There are so many unknowns with auto-enrolment that it is difficult to say that we should postpone the LISA because of that.
There are a lot of people who are not going to get caught by auto-enrolment. One of my biggest concerns is about people who earn too little to even fall into that bracket. An increasing number of people have multiple income streams, each of which is too low to get caught. Auto-enrolment is not going to solve the problem for them, but a lifetime ISA could.
Yvonne Braun: I think that question of people with multiple employment will be one that we will have to return to in the automatic enrolment review, because I think that is the very point of the review—to see whether some tweaks need to be made to make it work better for more people.
The point that Carol made about monitoring the outcome is absolutely right. I think the view has been expressed that the risk of higher opt-out rates from automatic enrolment is small, because that has not occurred with the introduction of the help to buy ISA. However, I think it is important to remember that the help to buy ISA is quite a different proposition, because the maximum bonus is much, much lower, and also the bonus is not paid into the actual account, whereas here it actually goes into the individual’s account. So I think the experience with the help to buy ISA should not give us false comfort that the lifetime ISA will not have an impact on automatic enrolment.
It will be really important that we look at what happens from next April, when the lifetime ISA is introduced, and, as I said earlier, it will also be really important that the information and guidance that people receive is very, very clear about the importance of the employer contribution and about not losing that through a switch into a lifetime ISA.
Ian Blackford
Q How concerned would you be on that issue, Yvonne, particularly given what you said previously—that nobody will be better off with an ISA than they would be with investing in a pension scheme? I think that the figures that you gave to the Work and Pensions Committee were quite illuminating, because they demonstrated that someone earning £25,000 a year and putting 4% of their salary in over a 40-year period would be 33% worse off with a LISA. How concerned are you that people may be seduced into investing in a LISA over the opportunities and the benefits of investing in a pension?
Yvonne Braun: I think that is absolutely not the intention of the policy, because the Government have been very clear, from day one, that the LISA was not intended to supplant automatic enrolment but was intended to work as a complement to it. I think that if we can stay with that, and if the communication to people is clear on that point, then that risk is mitigated, although we should still monitor what actually happens on the ground, because it is easy to get confused about the numbers. We are talking about 25% Government bonus, which sounds better than 20% basic rate tax relief but is in fact exactly the same.
So clarity of the message is really important in all of this, and as I said, we think it is important that we use the guidance services for that, and also that the work that is done by the financial advice market review on rules of thumb considers what could be communicated to people about a workplace pension vis-à-vis a lifetime ISA. I think the two should be seen as the lifetime ISA being on top of—in addition to—the workplace pension, rather than there being some sort of binary choice.
Ian Blackford
Q In order to achieve that, how would you architect the guidance and advice that consumers need to get, to make sure that they don’t fall into the trap of investing in an ISA when a pension would be better for them?
Yvonne Braun: I think there needs to be a strong signpost towards the guidance services, and the guidance services need to be clear about the complementary nature of the two products—that it is not an either/or, much like it should not really be an either/or for people whether they save for retirement or for a house deposit.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Q I want to continue along very similar lines to the previous questioner, because I was also very struck by the evidence that the Association of British Insurers submitted to the Work and Pensions Committee. I particularly note that a £25,000-a-year salary would be roughly the average female salary in this country. There has also been quite a lot of talk today about people on lower incomes, and it seems to me quite striking that if you are a person on an average or below-average salary, it is unlikely that you are going to “max out” your employer contributions or your annual allowance in any given year. So it does not seem to me that there are many advantages for a low or average-wage person in the LISA, and it seems that they would be better advised to invest in a pension. Looking at the discrepancy pointed out in the evidence, that could be £53,000 over a lifetime’s saving. Is it really advisable from a financial perspective to encourage anyone to invest in a LISA if they are on a low or average income?
Yvonne Braun: I think what is also important here is that we consider people’s individual choices. As long as people are clear about what they are giving up, we cannot stop them from potentially opting for a lifetime ISA if that makes sense. Ultimately, this is about giving people more options—that is the intention—but I think there has to be a very clear message of, “If you opt for a lifetime ISA over a workplace pension, the downsides look like that.” That is quite important to draw out.
Carol Knight: That is absolutely right. When you are looking at a workplace pension where you have got the employer contribution going in, that definitely changes the dynamic. So I think it would be very hard to justify anyone using a LISA as an alternative to that because of that extra contribution going in. However, for people for whom that is not an option—those people may be comparatively young and not necessarily have any sure view of how their life is going to pan out—the concept of putting money into a pension that is completely locked away might just stop them saving altogether, because their lifestyle is such that they want the option to be able to have access to money at a point at which they need it, and within a pension they cannot do that. The lifetime ISA gives them that flexibility, where they have the opportunity to save money and the opportunity for a 25% bonus that is easy to understand—matching contributions is an easy concept—and, if their lifestyle is such that a crisis arises where they need access to money, they can get to it. The lifetime ISA will give them that, but a pension will not.
Dr Whiteford
Q Would you agree that there is a serious risk of mis-selling in this context?
Carol Knight: There is always that risk. It is down to how it is communicated to people, and I think that clear, simple guidelines are going to be really important for people to help them understand the difference between the two and the benefits of both.
James Cartlidge (South Suffolk) (Con)
Q This is continuing on the same point but looking at it from the other point of view, as someone who has been involved in the housing market a lot. Surely it is not unreasonable that a young person who lives in an area where property is very expensive has an opportunity at last for their savings to be protected, other than in extreme circumstances, from house price inflation, and to be able to play catch-up. The biggest problem in the boom years was that you could save, but prices would be roaring ahead of what you could realistically save. Therefore, quite understandably, someone in that position who is many decades from retirement might think to themselves, “I’m going to put everything into this, because I am desperate to get a home. It is very expensive, but this is an opportunity.” To me, it is surely not unreasonable for someone in that position to make that choice.
Yvonne Braun: As long as they are clear about what is involved—to me that is the key.
Carol Knight: I think a lot of evidence shows that for a lot of young people the focus is their home, without a doubt.
James Cartlidge
Q Obviously if someone gets on the property ladder with a capital repayment mortgage at the age of, say, 25, in theory when they retire they should not have any housing costs—that was the old idea. So we should remember that there is an extra benefit in this. There are many other benefits to home ownership and many aspirations, but I take your point that we have to have the advice in such a way that anyone making the choice knows what the choices are. That, as always, will be the challenge.
Yvonne Braun: I think there is an additional point that it is important not to overlook. We know that the earlier you start retirement saving, the less effort you have to make later. If you start at 20—the rule of thumb always is that it is about half your age when you start saving—it will cost you an awful lot less and it will be an awful lot less painful to save for retirement than if you start at 30 or 40. That has to be in the equation for people. Actually, at the moment opt-out rates are lowest for young people, so automatic enrolment has worked very well for young people especially, and it is important that that success story does not get stopped.
Carol Knight: I think that is absolutely right. When you look at the savings culture in this country, a lot of savings go into cash and a comparatively small percentage go into investment. It is difficult for people to understand the investment cycle, and they are scared of it because it is not easy to understand. In something like auto-enrolment, it is done for you. It is a nice, easy way to enable people to move into that market. If you can inculcate a savings habit at an early age, it gives them a really good building base to go on. Auto-enrolment does provide people with that platform to get into an investment environment that they may be a little wary of going into individually. That is why we think that the lifetime ISA is complementary rather than “instead of”, because you have to choose that actively, whereas auto-enrolment is there for you if you are in that cohort of people who are caught.
Kelvin Hopkins (Luton North) (Lab)
Q I am concerned about the whole idea of persuading people to save when they are young. Is it not the sensible way forward to have a compulsory state scheme for everybody based on income? Young people with either high rent or a mortgage or children are constantly up against it financially—even those with an income better than £23,000 a year, which is a tiny amount for mortgages in particular. Is it not time to say that the Government have got it completely wrong, that all these complicated schemes will not actually benefit the people who really need help—those on low incomes with high expenditures they have to meet—and that replacing all those schemes with a compulsory state scheme with defined contributions and benefits at the end would be much better? If the better-off want to go and invest somewhere else, that is fine, but we are talking about ordinary people on relatively low incomes. Do tell the Government that they have got it completely wrong if you want to—no need to be too polite.
Carol Knight: Would you like that honour, Yvonne?
Yvonne Braun: I think that is the state pension, though. Ultimately the state pension is your safety net. Everybody is going to get the same, and especially for people on lower incomes, the state pension provides quite a good replacement rate.
If we look at some of the projections that the Department for Work and Pensions did, I think, two years ago when it looked at the adequacy problem in the population at different salary ranges, it found that the problem is between £22,000 and £52,000 of annual income. Lower than that, you have a lot of replacement income through the state pension, and higher than that people can usually sort themselves out. So that is where additional savings are more important.
I would say that the Government have not got it wrong. Automatic enrolment is a very good policy, and making it compulsory is also perhaps not terribly British, I suppose. The state pension provides the underpinning that you describe of an income that is there for everybody as a safety net.
Kelvin Hopkins
Q But the state pension is not earnings-related; it is for everyone. I agree with you—a much higher basic state pension would be a good idea as well—but earnings-related income on top of that means that those on better incomes do not suddenly drop down to the basic state pension when they reach retirement. They are compelled to save so that they can have a comfortable retirement.
Yvonne Braun: That is in many ways how automatic enrolment is supposed to work—it is a percentage of salary, so people with higher salaries will contribute more. There is then a question about whether 8%, as it is meant to end up in 2019, is the right percentage. We firmly believe it is not; it should be quite a bit more. That is the subject of the automatic enrolment review that will happen next year.
At this point I would not argue that it needs to be compulsory. Because the opt-out rates are so low, there is a question as to why you would go for a compulsory savings scheme.
Kelvin Hopkins
Q I have just one more question. If it were a compulsory state scheme with defined benefits, it would not be stock market-related; it would be a state fund. It would be extremely efficient, like national insurance is extremely efficient in how it works, and the whole thing would be better for those retiring at the end of their working lives and also provide a wonderful fund for Government investment in infrastructure or whatever, which would have returns. It is not a new idea. Barbara Castle, a great hero of mine, was talking about this sort of thing 40 years ago, and we are still fiddling around with all sorts of complicated schemes that do not actually provide the benefits that they should.
Yvonne Braun: I doubt that the Government would wish to take that on their balance sheet.
Kelvin Hopkins
Q I agree that the Government would not wish to do it for other reasons, but would it not be a sensible idea?
Carol Knight: I think it is a fiscal question more than anything else. It is a hard one to justify, if you could actually cover those costs.
Lucy Frazer (South East Cambridgeshire) (Con)
Q The Bill provides that you can take your savings out to buy your first home. Are there any other circumstances in which you think you ought to be able to take your money out?
Carol Knight: Yes. We ran a survey to get feedback from consumers and the industry. There were two, or maybe three, other areas where the feedback indicated that including additional lifetime events would be beneficial. One was critical illness and the other was redundancy. Those are incidents that are outside people’s control and that place a huge demand on finances. The other one was buying a second home, too. It is not just about your first-time purchase, but when you start a family and want to move on. Those are three additional lifetime events that we believe could be incorporated within the scheme.
Lucy Frazer
Q If you were an independent financial adviser and you were assessing the risk for a client, on a scale of one to 10, where 10 is the most risky and one is the least risky, what would you assess the risk as?
Yvonne Braun: The risk of?
David Rutley (Macclesfield) (Con)
How risky is the investment?
Carol Knight: A lifetime ISA can have anything within it, so the risk would be determined by the assets you choose to put in it. They will go from low to high. There is no restriction on the investments that can go into a lifetime ISA. It depends on what you choose to put in it, really.
Lucy Frazer
Is there anything that you would like to add?
Yvonne Braun: I completely agree that it will depend on the asset mix in the lifetime ISA. I am sure that an adviser would also take into account that 25% will be added, which will help to balance out the risk a bit. We are not sure that, beyond a first home purchase and terminal illness, which are currently in the Bill, additional lifetime events need to be included. If you take redundancy, there are other savings vehicles for that, so I am not necessarily sure that the state needs to step in with a Government contribution to support that. I would probably say the same for buying a second home—I take it that by that you do not mean buying an additional home, but moving the next step up and buying a bigger home.
Carol Knight: Not a holiday home, no.
Yvonne Braun: I think that the main pressure point in terms of housing seems to be for people to get on to the housing ladder in the first place because they are taking so long to get their deposit together. I think that issue is alleviated once people make the second step up.
Huw Merriman (Bexhill and Battle) (Con)
Q I want to pick up on something that Ms Knight said, and I have two questions as a result. First, the complexity of this product has been talked about. If you add the critical illness and redundancy rationales for withdrawal, have you not just made it more complex and are you not turning it more into an assurance or insurance-based product as a result?
Carol Knight: I think it depends on how much you want to support people going through their life, and if it is going to be the fundamental of the lifetime ISA to help fund those important events as people go through them. It is a balancing game, really.
Huw Merriman
Q The second point was with regard to your suggestion to permit the product to be used for second home owners. Is there not a danger that we already have challenges as it is with first-time buyers getting into the housing market? Effectively giving Government subsidies to help second home purchasers would perhaps strike some as a bit much. What is your observation on that comment?
Carol Knight: Housing is a big problem in this country, without a doubt, and I think it needs to be part and parcel of a much bigger picture. People use housing as part of their retirement planning, which is an important factor to throw in. When you talk to people about how they are going to fund their retirement, the value of their house is very often part of that. The whole question of how housing is used as a source of income on retirement is very important.
It is very difficult for people to get a clear view of how much income they can take out of their home at the point of retirement. If they are not in a position where they can gradually build the value of their home during their working life, they will have less available through an equity release product or whatever mechanism is available to them. They will have less available in the way of funds for retirement. It is part and parcel of a much bigger picture. We should be looking at retirement saving as a whole and helping people to put different types of assets towards funding later life.
Ian Blackford
Q I want to come back to the issue of risk. We all know that when you invest in a pension scheme, the trustees will then look at the appreciation of risk that you would expect to take on board. They obviously look at the timeline of when you expect to retire and gear any assets according to that assessment.
If we have a situation here where an individual can invest in an ISA, and can invest up to 100% in equities, they may decide to draw down that pot at any time for a particular type of event. We know that there is always a risk of a downturn in the market. Most actuaries will tell you there is a one in seven year risk of a downturn in the market. Are we not inadvertently exposing consumers to risk? Does it not come back to the point that was raised by my hon. Friend the Member for Banff and Buchan that we are exposing consumers to risk, not just of mis-selling, but of investing in an asset where there could be a risk of a downturn in the market seriously impacting the choices that they then make?
Carol Knight: There is always that risk, but I do not think we are looking at the lifetime ISA as an alternative to a pension. We are looking at it as complementary to a pension. Firstly, the lifetime ISA could go into a cash ISA, but as a long-term savings product it is generally accepted that cash is not necessarily the best way to do that. Again, it points to getting good guidance and information to people to help them make informed decisions as to the type of assets they are going to put into that product.
David Rutley
Q You have talked about some of the issues around signposting and also discussed the pros and cons versus pensions. That is clearly a very big issue. This issue is not quite as big, but do you have any views about the LISA versus the help to buy ISA, and any potential confusion that could cause in the minds of first-time buyers?
Yvonne Braun: As I understand it, the help to buy ISA lapses in 2019. This is the successor vehicle. It is important that the lifetime ISA, from the perspective of a house purchaser, is structured in a much more attractive way, because you actually get the payment of the Government contribution into your account, whereas with the help to buy ISA, the Government contribution goes through your conveyancer or solicitor towards the house purchase. It is a completely different ball game.
This is why I was saying it is difficult to draw comfort from the experience with automatic enrolment and the help to buy ISA, because it is not as attractive as the lifetime ISA. But yes, I see it as a successor vehicle. There is still a question around the transition and transfer of funds that sit in help to buy ISAs into lifetime ISAs, but I am sure that will be resolved.
Carol Knight: The other difference is that the help to buy ISA is just a cash ISA, whereas within a lifetime ISA you can have investments which, in the longer term, are generally considered to be a better option.
The Chair
I am afraid that brings us to the end of the session. On behalf of the Committee, I thank the witnesses for assisting us in the way that they have.
Examination of Witnesses
David Wren and Tom McPhail gave evidence.
The Chair
Good morning and thank you for coming along. Can you please introduce yourselves? First, Mr McPhail.
Tom McPhail: Hello. I am Tom McPhail. I am the head of retirement policy for Hargreaves Lansdown.
The Chair
And Mr Wren.
David Wren: Good morning. I am David Wren from the British Bankers Association, where I look after tax policy.
Peter Dowd
Q Mr McPhail, in the information you provided, you give your views on the Bill, and then you say:
“However, in the longer term we believe that the LISA is a misguided policy, emerging from a fudged review of pension taxation and that its introduction makes the decision making process for investors harder rather than easier and that it will therefore potentially undermine savings behaviour.”
Could you elaborate on that, please?
Tom McPhail: Yes. The context the lifetime ISA came from was a review of pension taxation, which was aborted, to a large extent, in that it did not ultimately change the overall structure of the taxation. It largely left pension taxation unchanged and it introduced a new product as an alternative.
An important point to acknowledge is that all the problems, inconsistencies and illogicalities that exist within pension taxation are still there and still unaddressed. What we have instead is a product that, as we heard from the previous witnesses, will serve purposes for some investors in some circumstances—for a minority of self-employed people, for example, and for people who cannot benefit from an employer contribution into a pension. It will have some benefits but, in the process, it will make the investment landscape more challenging for most investors.
We are in danger of sending ISAs down the same road as pensions, making them more and more complicated. Our business is to make it simple for people to save and invest and do the right thing—to invest responsibly for the future—and when clients ring up now and say, “I’ve got £100 a month I want to save,” we are going to be faced with asking, “Do you have access to a workplace pension? Do you want an individual pension? Do you want a cash ISA, an innovative finance ISA, a stocks and shares ISA or a lifetime ISA? Are you saving for the short term or the medium term? How soon will you need to have access to the money?” It is getting more and more complicated and, frankly, in terms of the big picture in the long term, I think we are going down the wrong road.
Peter Dowd
Q You referred to the fact that there are more challenges for investors, and to the effect that those challenges will have. Can you elaborate on what the effects of the challenges will be?
Tom McPhail: The more complicated you make the decision-making process, the more you put people off doing the right thing. One of the things we have worked very hard at as a business is to make it simple for people to save and invest. Going back 10 or 20 years, a typical pension application for someone who wanted to save for their retirement would run to 20 pages. We have stripped that down to one sheet of A4, and more people are investing in pensions as a consequence. We have 800,000-plus private investor clients—ordinary individuals —and more of them now log into their investment accounts using an app rather than online. We are making it simple for them to save and invest. Every time we have to ask them another question, every time we knock them back by making them think about one more thing, it slows the process down and we lose a few of them. It makes it more complicated. So half of the challenge for all of us here is to make it as simple as possible for people to save and invest for the long term.
Peter Dowd
Q Are you concerned, in the light of the fact that you believe that the area is becoming increasing complex, that there is the capacity out there to give the good information and advice that we seem to be getting told we need? It seems to me that the answer to everything we asked was, “More information, more information, good information, good information,” without it being said exactly what that meant. Would you agree?
Tom McPhail: A lot of the time, the answer is less information. I could send you a 50-page document and you might well not read it. We had that problem with the open market option on pensions: people would get to retirement and we would send them a big stack of papers saying, “You have a right to shop around,” but there was so much paper that people did not shop around, so they bought a poor-value annuity. Actually, the answer is to send them less information but to make sure it is the right information. The Government’s recent work around the financial advice market review was enormously encouraging. It gives us more latitude to give people simple, helpful information that will steer them towards making a good decision.
However, your point is absolutely right: if we do not give them that information and that support to steer them towards the right answers, risks do exist. We heard about workplace pensions earlier and the risks of people opting out of them; that is a good example of where it is really important that we support them with good information, to make sure that they do not do the wrong thing.
Peter Dowd
Q I have a final point and, if I may, Chair, I will ask Mr Wren to make an observation as well. You say that this will potentially undermine savings behaviour, which is exactly the opposite of what anybody wants. Could you tease that out more? It is fine to say that it is complex, but could you put some more meat on the bones? Why will this undermine savings behaviour?
Tom McPhail: We have a lot of people putting long-term money into cash. They are being excessively conservative. The bulk of ISA money sits in cash accounts. Auto-enrolment works from an inertia point of view: it gets people into pensions and it is proving to be a great success. The challenge thereafter is to encourage people to take some responsibility for that pot of money, to take an interest in their long-term savings and, as they move into their 50s and 60s, to think about what they are going to do with that pot of money, whether it is adequate, whether they have been saving enough and how they are going to apply it to draw an income in retirement.
Currently, we have a lot of people just putting money into cash ISAs—short-term money—and sometimes it ends up sitting there for 20 years. That is not a good outcome. It is about striking that balance: making it simple for people, but also drawing them in and getting them increasingly engaged. So the answer to your question is that the more complicated it is, the more we will lose people and the greater the risk that they will just make no decisions at all, as we saw with the open market option on annuities, for example.
Peter Dowd
Mr Wren, have you any observations on that question?
David Wren: Yes, I think a few of the questions that Tom has answered are things we are concerned about. The introduction of the lifetime ISA adds considerable complexity to a market that is not simple anyway. This will be the sixth type of ISA on the market. It directly competes with the help to buy ISA for certain savers with certain aims, and it has an overlap with pensions, savings and various other products. The hybrid nature of the product—between saving for a house and saving long term for retirement—also adds considerable complexity for people who are choosing where to save and what to do. For a single product to try to do both things, which are often competing aims in terms of what someone is saving for, is really challenging.
One of the things Tom spoke about was whether you save in cash or in stocks and shares. Saving for retirement is typically a long-term activity. Stocks and shares are probably a better investment for many people in that context, if not funds and others. Saving for a home was historically a short-term activity. Unfortunately, for many people it is probably becoming a mid-term activity, but the security that cash and similar investments bring is still probably more suitable. Balancing that within a lifetime ISA is going to be very challenging for savers and for organisations that want to offer them to their customers.
Peter Dowd
Q In the information you provided, you say:
“There are concerns that savers may end up with the wrong investments leading to the wrong outcomes as a result of the route through which they enter the market rather than as a result of a conscious investment decision.”
Again, it is important to try to unwrap that. Could you unwrap it a little more for us, please?
David Wren: Absolutely. There were some questions in the previous session about the risks in a lifetime ISA. Ultimately, the lifetime ISA is a wrapper around some assets, and the assets are for you to decide. There will be people who offer only cash lifetime ISAs; they do not offer stocks and shares to any customers, and they will not be offering it for this. There will, presumably, be people who offer only stocks and shares lifetime ISAs. The fact that you have picked up the phone to someone who offers only one particular product may not mean that that is the best product for you. There will hopefully be information out there, and we very much hope the Government will work with us to provide good information to customers on getting the right product.
To answer Tom’s point, to have cash sitting somewhere for 20 years is probably a bad idea, particularly with interest rates as they are at the moment. Similarly, going into stocks and shares for three years is a bad idea—there were questions earlier about the risks that people were exposing themselves to. Helping people get the right access to the right product at the right time is going to be a critical part of making sure that the lifetime ISA is successful.
Maria Caulfield (Lewes) (Con)
Q Tom, I want to go back to your point that this would make the market too complicated and crowded in terms of what products are available. Is it not true that for a long time, many people have been left out of savings altogether—I am particularly thinking of people on low incomes, the self-employed and those with multiple, low-paid occupations? Actually, there is a lack of culture around savings; it is just not the norm for some people. While the auto-enrolment pension will go some way to addressing the pensions issue, as we heard in the previous session, this is in addition to, not instead of, auto-enrolment. Is it not that the product is right, but the key is getting that advice available to people so they can make that decision? This will open up the market to people for whom savings have not been an option before.
Tom McPhail: Given where we are now, six months before the intended launch, our starting point would be to go ahead with this. However, in the longer term we are still of the opinion that it is not going to achieve those aims you have just described.
We also looked at the 2017 auto-enrolment review as an opportunity to adjust some of the thresholds to recognise the changes that have come about as a result of the pensions freedoms and the importance of giving more people more access to retirement savings, to bring some of the lower paid into the pensions system. We have looked at ways to revisit those questions that were not answered around pension tax reliefs and ways to reward people for saving for retirement, but the lifetime ISA is not going to achieve that.
You heard some numbers about the self-employed. Actually, two thirds of the self-employed are already ineligible for the lifetime ISA. So we have a situation where the one group of the population that, more than any other, sets to benefit from the lifetime ISA is ineligible for it. In what way is this a good policy?
You are right about the low-paid: we need to do more for them. We think there are ways we can do that through the pensions system. I am sure you will hear later about Help to Save, which is not an area I want to comment on, but there are other ways to address that. The lifetime ISA is not going to fix those problems.
Maria Caulfield
Q You say that in the short term it might work, but in the long term it is not going to help. Why is that?
Tom McPhail: Just because we keep moving the goalposts. It was really interesting doing some consumer focus groups around the pension freedoms. When we talked to people about all the risks around pension freedoms, we thought they would say they were worried about running out of money or not knowing where to invest, but pretty much everybody we spoke to said that their main worry was that the politicians would move the goalposts again, that they would change the rules again. It happens particularly with pensions, but it happens elsewhere as well. Every time this happens, it undermines people’s confidence and trust in the system.
The recent decision around the secondary annuity market was interesting. We think that was a good decision. We are actually quite glad that the Government made the decision to pull back from the secondary annuity market, but what did we see then? We saw headlines in the Daily Mail saying, “People have been denied pension freedoms—once more the opportunity has been snatched away from them”. Every time we do this, it chips away at people’s confidence. We need to think about how and when we make these decisions and these changes. Our preferred option would be to go ahead with the lifetime ISA, because this is where we are at now, but in the longer term to move towards consolidating all these different ISAs we have been hearing about into one simple super ISA and, separately, to go back and address the questions around pension taxation that we failed to deal with last time around.
Maria Caulfield
Q To push you a bit further on that, a lot of people only have a pension thanks to auto-enrolment. Do you not agree that anything that gets people saving and that encourages them into a culture of saving, whether it be for their first home or for later in life, is a good thing?
Tom McPhail: But it is not a zero-sum. We could give people a 100% top-up on their money, but we cannot afford to do that, so we have to make choices about how we go about doing things.
Maria Caulfield
Q Is it not better that they have a savings scheme rather than not save at all?
Tom McPhail: We need to get them into the auto-enrolment system. That is the way to help them save for the longer term. If we want to address their short-term savings, there are other ways to do that.
Dr Whiteford
Q I can see why lifetime ISAs are a very attractive savings option for the very wealthy, high-earning young people, and those who have maxed out their pensions allowance, but to my mind, the real challenge has been encouraging people on low and middle incomes to save for retirement purposes. From what I have heard in evidence so far, you seem to agree that auto-enrolment is an important step forward. Reflecting back on the questions I asked the earlier panel, would you agree that most people on low and middle incomes would be better advised to invest in pension schemes?
Tom McPhail: The numbers overwhelmingly point to the fact that, if you have any kind of employer contribution, you are almost invariably better off going through the auto-enrolment system at work and saving in a pension than going into a lifetime ISA. Separately, we think that there is more we can do with the incentives to save in a pension that would improve that equation even further. Yes, absolutely, for most people most of the time, for long-term savings, the pension should be, and is, a better answer.
Dr Whiteford
Q Could you say a bit more about the sort of incentives that you think might actually help?
Tom McPhail: There was a lot of work done last year around the idea of a flat-rate incentive—breaking the link between pension incentives and the tax system altogether. There was quite a lot of support across the industry for that concept, with talk of around a 30% top-up as an alternative to tax relief. All contributions would be made out of net income, and when you made a contribution to a pension you would get a flat-rate top-up. I think there was quite a lot of traction for that idea.
I think we can go further, and it would be quite desirable to weight those incentives particularly towards younger savers. You could get the benefit of compounding. If the incentive were progressively reduced the older you got, it would provide a behavioural incentive, because with every year that passed, you would lose out. That is a very powerful message that the industry and the Government could harness: to say to people, “If you wait another year, your incentive will drop a little bit.” We have been working through some ideas on how we could develop that as an alternative incentive. Either way, you are taking it away from the current messy, unfair, lumpy, illogical tax-relief system that continues to operate today.
David Wren: I think complexity is definitely the enemy of success in getting people to save. There are lots of subdivisions of pensions and savings. Helping people to find the right place within that for their needs is really challenging. The risk of complexity is not just that people go into the wrong product for them at the start, but that they are put off by the whole experience. To give an analogy, it is very similar to internet sign-up processes: each additional question you add to an internet sign-up process puts off a disproportionate number of people from continuing through that process. Having a dozen different products out there with different features does not necessarily push people to the wrong one; it encourages inertia, where you simply cannot decide and therefore do not invest in any of them.
Huw Merriman
Q You keep touching on the complexity of this product. I have read the blurb in the overview of the Bill and I understand the eligibility criteria—I am too old—and the withdrawal terms. I am inviting you to bamboozle me, as it were. What is so complicated about this product that I am missing?
Tom McPhail: To the credit of the Treasury team that worked on this, they listened to feedback from the industry and were really good at working to create as simple a product as possible. My answer to you is that it is a lot simpler than it might have been.
When you ring us up, we will still have to walk you through the circumstances in which you will be eligible to take the money out without a penalty, and the circumstances in which you will be able to take money out but would have to pay a penalty, so there is still a customer engagement process that will have to be undertaken at the front end. I think I made the point in the brief written submission I sent in ahead of this session that the problem is not the product itself. The product itself is reasonably simple—there are simpler products, such as the cash ISA; that is really simple—but you have dropped a moderately simple product into a complicated landscape, and you have just made it more complicated.
That is exactly what happened when we launched stakeholder pensions getting on for 20 years ago. Stakeholder was simple, but it was dropped into a complicated landscape, and—guess what?—it made life more complicated. This is analogous to that.
David Wren: That is what will really cause the challenge. When someone tries to open one of these products, the first question is going to be, “What are you saving for? Is it a home or a pension?” If it is neither of those, this is probably not the right product for you. If you pick house purchase, you have to decide between the lifetime ISA and, at least in the short term, help to buy. People have said that the lifetime ISA looks better, because you are getting the Government top-up and earning growth on that, but you cannot have the money back without a Government penalty. The help to buy ISA does not have that, so if you need flexibility, help to buy might be better for you. If you go down the pensions route, we need to ask about whether you have maxed out auto-enrolment and taken full advantage of employer contributions, and whether a different pension route might be better for you, again recognising that there are different features as to whether you benefit or not.
It is worth adding that I have been involved in this since it was announced in March—my work has a tax background—and it is not immediately obvious to me whether I would be better off topping up my pension or putting money into a lifetime ISA. The reason for that is that I would need to know what tax rate I would pay on that money when I retire, and I do not know that. It is far from simple in any one of those particular places to work out which is the right thing for you. It requires value judgments about a number of the elements. The risk is that complexity leads to inertia and dissuades people from saving at all. There is not just the risk of going into the wrong product.
Just one final thing, which the previous panel touched on: because of the Government penalty on withdrawals—you lose not only the bonus, but 6.25% of your contributions, because of the way the numbers work—there is no easy exit route from a lifetime ISA. If you make a mistake and a month down the road you say, “Gosh, I’ve made a terrible mistake. I should have gone into a different product,” you will lose some of your money in getting that money back out and into another product. Again, we have real concerns about that and what it will mean for customers.
Huw Merriman
Q I have one more question. This takes me back to my misspent youth, more than 25 years ago, when for four years as a student I worked for Abbey National as a cashier and customer service adviser. We would sell this type of product. We had a whole suite of products that had penalties if, say, you were five years into a bond and withdrew early. This is not rocket science. We could explain that to our customers, and that was without the benefits of the internet. I am still a bit sceptical about why this landscape is so complex to your members; it does not seem that different, and we were easily able to sell things 25 years ago.
David Wren: The landscape has probably changed slightly in 25 years. We very much welcome the Financial Conduct Authority consultation on this, because its view on how we engage with customers and make sure that they get the right protections is really important. Yes, a range of products are available, but as Tom said earlier, a lot of people will now buy online, through a call centre or through an app, so they are not going to see someone face to face. Again, we need to make sure that people are given access to the right information to allow them to make the right decisions. That is absolutely doable, and, as I said earlier, we hope that the Government will work with us on getting the right information to people. It is the landscape that is complex, as opposed to the individual products.
Ian Blackford
Q David, in your submission, you say:
“In particular, there is a concern that cash held in LISAs will only be suitable for those looking to buy a home, whilst stocks and shares will be more suitable for those investing for later life, looking towards retirement.”
Is there not a risk that if an individual invests in stocks and shares and then buys a home at the wrong time because the market has fallen, we inadvertently expose consumers to risk as a consequence of this policy?
David Wren: I think that is exactly right. That is exactly why we need to make sure that people are getting the right support in picking a product, and in the underlying investment for that product. I am sure that Tom is more expert in this than I am, but for pensions, stocks and shares are typically viewed as the right investment. Those ups and downs will average out over the course of your life. I assume that most people are saving for a home in a relatively short time-window—five to 10 years. Stocks and shares are inherently more risky. The point at which you are starting a family and want to buy a home may be the point at which the market is not going through a particularly buoyant phase.
We also need to recognise that for a lot of people—bear in mind that lifetime ISAs are available from 18—buying a house is a medium-term activity. That may well be over a more than 10-year timeframe. That becomes a very challenging time. It is not obvious that cash is the right investment; it is not obvious that stocks and shares are the right investment. That is a very difficult decision for someone to make.
Ian Blackford
Q There was this debate about moving from “exempt, exempt, taxed” to “taxed, exempt, exempt”, which was taken off the table. Was this not really just a back-door way for the previous Chancellor to bring forward this policy?
David Wren: I do not think I could comment on what the previous Chancellor was thinking when he introduced this. This is a “taxed, exempt, exempt” product. When I said earlier that it was difficult for me to work out whether I should open a lifetime ISA or pay into my pension, it is for exactly that reason: it is the difference between the money being exempt when I take it out, hopefully, at 60, versus paying tax on a pension at 60. Having both products in the market is incredibly complicated. Explaining the concept of “taxed, exempt, exempt” or “exempt, exempt, taxed” to someone is challenging. The Institute for Fiscal Studies wrote a very good study earlier in the year, in March-time, in which they talked about how this worked for different investments, but it is a thick document, and it requires a dark room and a lot of peace and quiet to really get into the detail.
Tom McPhail: We did some client research early this year on entry; everybody was under 40 and did not own a house. However, they were all Hargreaves Lansdown customers, so I cannot claim that this is representative of the population as a whole. Having said that, 14% of them said that they would look to use the lifetime ISA to save for a property, and 68% were looking to save for their future, so there was an emphasis on the longer term there.
The majority who expressed a preference did so for stocks and shares investing, rather than looking to cash, so there was a weighting—a sense that people were seeing this as a longer-term savings product, rather than a short-term cash product, in contrast to something like the help to buy ISA. This suggested to us that they were seeing it as being closer to a pension than a help to buy ISA. Clearly, there was a bit of both going on in there in the mix.
On your point about taxation, clearly we have different personnel at the helm now, so perhaps priorities and agendas have changed, but I think that it is worth reiterating that all the reasons why pension taxation was examined in the first place are still there and are unresolved.
James Cartlidge
Q I want to carry on with this point about complexity, because it seems to me that you are using the word “complexity” where others might use the word “flexibility”, dare I say. As we discussed with the previous witnesses, it is surely not unreasonable for a young family to be entirely focused on buying property, particularly if they live in areas that are very expensive. Perhaps they are on a short-hold tenancy with less security, and so on. Therefore, when presented with a savings option, they will want to opt for a deposit.
I take your point about help to buy ISAs, but they are going in two years, we understand. Do you accept that the flexibility that comes from a pseudo-pension product that could be used for a mid-life event—in other words, buying a house—is what makes LISAs unique, unlike auto-enrolment? There is a big market for this, and there are a lot of people who would welcome that choice.
Tom McPhail: We think there are other and better ways of addressing that problem that would be simpler and more sympathetic to investors’ needs. We support the auto-enrolment agenda, and we think it is important to get as many of the people you have just talked about as possible into an arrangement where they are saving for their retirement. Some of them may choose to opt out of a pension and eschew the benefit of an employer contribution, and to save into an ISA instead. For some, that might be a logical, rational and appropriate decision to make. That would, of course, mean that they were not saving for retirement in the most tax-efficient way available to them. In fact, potentially, they would not be saving for retirement at all, if they had opted out of a pension to achieve that goal.
One of the risks is that the lifetime ISA will subvert the pension-saving agenda. It is critical that pension providers and human resources managers—anyone involved in pensions—are communicating effectively around those trade-offs, the risks of giving up the benefits of the employer contribution, and the long-term consequences of that.
The help to buy product gave people taxpayer support in buying a house. There was actually relatively little wrong with it. It was there as a vehicle for saving in the short term, to build up a cash pot specifically to buy a house. The idea of trying to have your cake and eat it—of trying to save up for a house and for retirement within one product—that is where the complexity comes from, and that is where you are trying to do two things with one bag of money. If you use it to buy your house, it is not a savings product anymore.
We have already talked about eligibility for the lifetime ISA, and the fact that most self-employed people—for whom this could be a really good idea—are not eligible because of the age restriction. So I agree with you, but I am not sure that we are going about this in the best way.
David Wren: We really like the help to buy ISA; it is clear and unambiguous. Are you saving for a house? Are you a first-time buyer? Put money in. It is cash, and there is no confusion about whether you are also saving for your pension at the same time, because that is not a feature of the product. It is a really nice, neat product, which says, “Here’s what I do; here’s how I help you; and the Government will provide you with some help to buy your first house.” It is a shame that it will be removed in 2019. It has been very successful, and something like 250,000 were opened in the first six months of the product. That kind of really clear labelling and signposting that others have talked about is something that help to buy really had, and that the lifetime ISA risks not having.
Maria Caulfield
Q From an industry point of view, which product would make you most money from selling it, a lifetime ISA or a pension scheme?
Tom McPhail: We make the same money on all of them.
Maria Caulfield
Even a lifetime ISA?
Tom McPhail: Correct. We have the same platform charge, irrespective of the arrangements you are going into. Where we lose money, or where we potentially end up having to charge the customer more money, is when things get complicated. The more complicated it is, the more it costs us money, and the more, potentially, we have to pass on to the customer in costs, but we will make no more money on any of these products.
David Wren: As a trade body, I do not think that we have access to that kind of information.
Kelvin Hopkins
Q I have listened to you both with interest. I have to say that this scheme will do nothing for a high proportion of our population who are less well off and less sophisticated. Again, all these schemes seem to be designed for the better-off and the more articulate. I have had to ask to have my life insurance schemes explained to me two or three times, but I have not got a clue what those who explained it were talking about—and I am a graduate in economics and mathematics. Half the population are not numerate, and a fifth of the population are not functionally literate. We need a state automatic scheme to help people like that, going beyond auto-enrolment—a defined-benefit scheme, and that can only be done in the state sector.
The Chair
Do you want to comment on that?
Tom McPhail: I am not sure that it was a question, but I think the simpler and more accessible we can make things for investors, the better. It is beyond my remit to talk about the state pension here today.
The Chair
If there are no further questions, may I thank our two witnesses for a very informative session?
Ordered, That further consideration be now adjourned. —(Stephen Barclay.)
Savings (Government Contributions) Bill (Second sitting)
(7 years, 6 months ago)
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The Chair
We will now hear oral evidence from StepChange and the Centre for Social Justice. Would the witnesses please introduce themselves for the record? I call Ed Boyd first.
Ed Boyd: My name is Ed Boyd and I am the managing director of the Centre for Social Justice think-tank.
Joseph Surtees: Joseph Surtees, senior public policy advocate for the StepChange debt charity.
The Chair
Welcome to this afternoon’s hearings. I call Peter Dowd to start the first set of questions.
Peter Dowd (Bootle) (Lab)
Q 4747 The proposal for the lifetime individual savings account followed a wider public consultation about the future of tax relief in pension provision. How do you think the LISA, as proposed, fits into that wider public debate? Mr Surtees first.
Joseph Surtees: I am afraid that, as an organisation, we have no particular views on the LISA. We are very keen on any proposals that the Government can bring forward to boost both short-term and long-term savings, and I think with the LISA we are still going over detail.
Ed Boyd: I am afraid I will not be much more help. Our focus has very much been Help to Save, and that is what we have been doing research on. I can give a personal view, but it probably won’t be too beneficial.
However, the one thing I think it would be worth saying on the LISA side, and it is more of a comment than anything else, is that if you look at the panoply of savings products within LISA and Help to Save, in 2021, only 8% of those funds are budgeted in the impact statement to go towards Help to Save. That falls within an approach that this is about the “just about managing”. Those who are on universal credit—they are kind of in-work, but we would love them to be earning more and trying to progress up the earnings ladder—are the “just about managing”, I think. The majority of the people on universal credit when it is fully rolled out will be in deciles two to five. So it’s just a question about the balance between the two—LISA and Help to Save—but I am afraid I have no detailed comments on the LISA itself.
Peter Dowd
Q Given that response, I will try another angle. Some of the suggestions that we have had about the LISA are that although it might well be a simple product on its own, in the context of a wider market full of God knows how many products it just complicates things. Do you have a view on that?
Joseph Surtees: I suppose that in terms of how it fits into the wider market, the point Ed makes is very interesting, which is that if you refer back to the ISA itself, people earning about £80,000 are twice as likely to have an ISA as people earning the average income, which is £26,000. So the savings crisis, if I can put it like that, is among the very low earners. When products come forward in tandem, like LISA and Help to Save, it is important to ensure that they both have equal weight and an equal offer, and that they both appeal to the right markets.
Peter Dowd
Q Okay. If we’re talking about encouraging people to save in one fashion or another, do you think that Help to Save adds to that in any substantial way? Will people save significantly more as a result of it?
Ed Boyd: So the question is: do we think that it will help? I think the answer is yes. There are always little bits to tweak and improve, I guess, as the Bill goes through, but as a whole—I mean, the idea of Help to Save is a fantastic one. When you look, as the CSJ does, at the root causes of poverty, we very purposefully have as one of the five—alongside worklessness, addiction, family breakdown and things of that ilk—problem debt. The majority of the people who we are talking about, especially when they have just moved into work, are only working 16 hours on the national living wage, which this will apply to, and will often have very little savings.
It is about the unexpected shots, and StepChange’s research on this is brilliant. It shows that every six months or so there might be something, such as a washing machine that breaks down, or something else, and if you have no savings, the effect that can have on you—not just in terms of, “Oh, we have to go to slightly higher-cost credit”, but on your mental health, and how productive and efficient you are at your work because your mind is continually filled with the debt problems that you are trying to carry—is hugely significant. So, anything that can try to create a culture of saving and provide some Government backing to incentivise people to save more is a wonderful thing. It is a great thing to add to the armoury.
Joseph Surtees: I certainly agree. We are very big supporters of Help to Save. The research that we carried out, which Ed is referring to, found that if a family has £1,000 saved, that reduces the chance of them falling into problem debt by 44%—so we think that Help to Save will really help in this area. To agree with Ed again, there are little tweaks that would help to increase its appeal. When it was introduced in the Budget, the potential eligibility for the scheme was 3.5 million, but the impact assessment says that it will probably only reach about 500,000. When looking at the Bill and the way that Help to Save and its features are going to be rolled out, the question is: how do we get that 500,000 closer to the 3.5 million figure?
Peter Dowd
Q Can I just ask, on that basis, how well targeted you think Help to Save is on those with the lowest income? It is all very well to say “Save”, but if you have no money because you are on benefits or have a low income, how well targeted is that particular product?
Joseph Surtees: I think it is almost as well targeted as it could be without putting a huge onus on banks and, in a scenario in this case, running de facto means testing. We could possibly open up the eligibility. I know that the Institute for Fiscal Studies has done some work on this—which I have one or two questions about—but as a basic proposition it is pretty well targeted at the group that needs the savings the most. If you look at the figures, almost half of families with an income below £14,000, a category that a lot of the Help to Save target families fall into, do not have savings. We have one specific issue, which is to do with how it will help people under 25. That is very much to do with the benefits rules, which I can either discuss now or come back to later.
Maria Caulfield (Lewes) (Con)
Q I want to touch on one of the points raised in our previous evidence session, which was that someone can withdraw money from this lifetime ISA if they want to buy a home, but if they want to withdraw money for any other reason—you touched on some examples, such as if their washing machine breaks down or they have an urgent need to get money quickly—they face a penalty of between 5% and 6%. Are there certain criteria you would like to see where there are other options to withdraw money without hitting a penalty?
Ed Boyd: As I said before, the detailed knowledge, in terms of the research that the CSJ has done, is on the Help to Save side rather than the ISA side of things. There is a valuable question about the accessibility and flexibility of accessing savings within Help to Save. I could give a comment on that—perhaps it is applicable across to ISAs. I would need you to be the judge of that.
Maria Caulfield
Q But do you think that there should be an option for those people to withdraw money quickly rather than just having being able to buy property as a penalty-free reason?
Ed Boyd: On ISAs?
Maria Caulfield
Yes, on the lifetime ISA.
Ed Boyd: We have not done the research on the ISA, so we do not have a view. I can probably only help with the Help to Save side of things.
Joseph Surtees: On that point, I would say—and this is applicable to both—that a lot of the behavioural research in this area talks about a process called hyperbolic discounting, which is to do with the fact that the further away something is, the less appealing it will be. So, any mechanisms we can have in any of these products that allow people to access them before two years, in the case of Help to Save, or before much further in the future, in terms of the LISA, will appeal and widen the eligibility a lot more.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Q Some of the evidence we have taken this morning has already been more about long-term savings. In the evidence you presented just now, you emphasised the issue of accessibility and the need for people to be able to access their savings quickly to deal with external shocks. What kind of products do you think would be beneficial for people on low and average incomes for longer-term saving?
Ed Boyd: On the flexibility point in terms of accessibility of savings, there is a question. We produced a short paper on Help to Save off the back of a round table of experts in this area. One of the questions that kept coming up was whether there should be some friction for people taking out the money. For example, if someone starts to save for two years with the best intentions to make sure they get their Government bonus, but has one day of giving up on that plan, it would completely undermine it and they would not get the Government bonus. Potential frictions can be put in such as a 24-hour delay in taking out the money. I think that would be completely reasonable.
Where appropriate, someone could name a third party—a family member, husband, wife, carer or whoever—and when they say, “I want to bring it down in 24 hours”, that person is texted to make sure that there is enough friction to ensure that when the money is drawn down as a rainy-day fund, it is used for rainy-day activities and things that they really need the money for, rather than just for general expenditure. This would encourage people to save and make sure the money is used to help stop them getting into problem debt.
Joseph Surtees: I think there are two interesting points here, one of which is on Help to Save. There is a system in the UK that has proved very good at encouraging low-income people to save over a long period, and that is pensions auto-enrolment. So far, the opt-out rate for that is far lower than anticipated. It is only 10% when it was anticipated to be a quarter. People who are enrolled and have not opted out are those just above the enrolment limits.
That sort of approach is incredibly useful in this area, particularly for low-income people. When you look at products such as Help to Save, such as LISA, perhaps, if you can look at how to incorporate an auto-enrolment element into that—with Help to Save, you can in particular do it through the universal credit system. Universal credit has personal budgeting support which helps you to do that. Those sorts of little behavioural incentives will help to make it appeal and work better for these lower-income individuals.
Huw Merriman (Bexhill and Battle) (Con)
Q I am conscious that half of UK adults have less than £500 set aside for emergencies. Do you believe that the financial services market has done enough to attract and incentivise savers who are perhaps struggling with income? Do you think that the Help to Save initiative will help to plug that gap?
Joseph Surtees: In answer to the first question, I do not think the financial services sector has done enough to attract these customers and offer them a service. I will give two examples.
You may have heard of a product called prize-linked savings, which has proved to be incredibly successful in the United States. I can send you some information later, if that would be useful. It is incredibly successful at appealing to low-income families. For many years, people have talked about introducing such a system into the UK—a sort of slightly better premium bond offered via commercial providers. This was introduced in the UK by a bank, but only for people who already had £5,000 saved. To me that says that they were not really thinking about lower-income consumers.
The second example is Help to Save itself. One of the suggestions was that it would be offered by commercial high-street providers. Without giving anything away, my understanding is that most commercial providers displayed absolutely no interest in offering this product, but did display interest in taking on these customers once they had £2,000 saved at the end of two years.
Ed Boyd: There is a big problem here, which is that people are getting stuck in problem debt. It is a growing problem. I will check my stats on this—30 million people in the UK lack savings to keep up with essential bills for just one month if their income dropped by a quarter. Within the confines of that, rather than saying, “Do I think it is the financial services’ fault that we have not done enough, or the Government’s, or someone else’s?”, there is a real opportunity with products such as Help to Save for everyone to pull together and do what they need to do to help solve the problem together.
There is an opportunity for credit unions and community development financial institutions to play a big role, as well as mainstream financial institutions, not just in helping people to save but in helping to ensure that they are financially included. You have wider debates around issues such as the poverty premium—that is, the fact that people who have insecure incomes end up paying far more because they cannot do direct debits.
I do not think it is as simple as saying, “It’s just the financial services sector that needs to deal with this and help more.” I think there is a contribution needed from Government, from the private sector and from the voluntary sector as well to work together to help increase people’s ability to budget, to increase people’s incentives and ability to save and to ensure that people are financially included as they go on that journey.
Joseph Surtees: On that point, I always think about the famous Morecambe and Wise sketch: all the right notes, but not necessarily in the right order. Actually, out there you have lots of the products and approaches such as Help to Save, LISA and auto-enrolment and there are banks—and especially credit unions—that do very innovative things in these areas, but I think it is important to bring these things together so that people have access at the time they need it and can see the products laid out in front of them and make the right choices.
Huw Merriman
Q Have you made recommendations to Government about how they can link up with benefit payment providers, local authorities and the third sector to ensure that the market we are talking about is signposted adequately to this type of product?
Ed Boyd: Not in the work that we did, but we are really happy to help where we can. For example, we have an alliance of 350 front-line poverty-fighting voluntary organisations and they are a great avenue through which to ensure that things are articulated well to clients who might benefit from products such as this. If we can help in any way, we will be really happy to.
Joseph Surtees: We work very closely with the Money Advice Service on these issues; we worked very well with them on the single financial statement, which includes the savings element, throughout the process of Help to Save. We have also spoken to quite a lot of Treasury officials on this and I think they listened to what we had to say. There is one issue emerging from Help to Save that people and the Treasury may want to look at going forward: a very technical issue about financial advice and how debt advice providers and financial advisers can recommend products and whether they will be able to recommend things like Help to Save.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
Q Have you done any analysis of how many in this target market are currently in the area that would benefit from auto-enrolment? How do you see the interaction between auto-enrolment and Help to Save in that regard? What comments would you make on the incentives there for pension investment against the incentives there for Help to Save?
Ed Boyd: Before I come to that question, there is a point of context. One of the important things we stress in our research briefing is not seeing Help to Save in isolation. We are big fans of auto-enrolment as well. You look at the success with pensions and say, “This is important. Why wouldn’t we use that mechanism here, or at least try to tie that in?”
That brings up a question in our minds looking at things like contributory benefits. Over decades and decades and all kinds of Government, the generosity of them has slightly reduced continually and, actually, if you look at universal credit, the architecture is very different from legacy benefits, ensuring that people have the appropriate support if they fall out of work through their national insurance contributions. It is difficult to see how that ties up. One of the potential answers, and the reason I mention that, is to look at auto-enrolment and rainy-day guarantee funds being set up through employers in the same way you have done with pensions to provide insurance for people against smaller income shocks such as washing machine breakdowns and also for larger ones such as falling out of work.
To consider Help to Save in isolation from that wider debate would be a mistake. There is a great opportunity here to tie together different things that are happening around Government to ensure that you have a very clear, succinct, offer and approach to people who are in work but on low incomes, who we are encouraging to save. Combining those things together through Government thought would be useful.
As an organisation, we are not at a point yet to say, “Here is how we think it could work and here is the big solution,” but we are developing a lot of our agenda on this at the moment. Again, as the Bill is going through we are happy to contribute, but it feels like a really important thing to discuss as the Bill goes on its passage through the House of Lords and the House of Commons.
Joseph Surtees: In terms of the success and appeal of auto-enrolment, I referred earlier to the National Employment Savings Trust figures and auto-enrolment figures that say that there is more success and less opt-out from those with less income than from those with higher income. I would also refer you to a lot of work done in the United States by a couple of academics called Madrian and Shea, who looked at how auto-enrolment increases savings rates in businesses through payroll deduction. They found huge impacts, such as the number of people saving within a company doubling within a very short period of time once auto-enrolment was introduced.
On Help to Save, as I have said, auto-enrolment would really help, especially from the benefits side of things. There are even smaller tweaks that will help get that 500,000 figure closer to 3.5 million. Moving the bonus to getting it every six months would have a huge beneficial impact, as would allowing people to pay in an average of £50 a month rather than a maximum of £50 a month and looking at the issue of under 25-year-olds being excluded from Help to Save by the benefits rules concerning working tax credits. There are small changes you can make now that would have a big impact.
Ian Blackford
Q Thank you for that. Those were interesting answers from both of you. Ed, when you talk about how you see that auto-enrolment can deal with some of the challenges that you have outlined, I wonder whether you would see as an example something like an insurance wrapper that would give the kind of benefits that you are talking about as an advancement of auto-enrolment.
Ed Boyd: Could you say that again? I did not quite get that.
Ian Blackford
Maybe something like an insurance wrapper could give the kind of benefits that you are talking about—people losing their job and benefits and what they could get. There are things you could do perhaps to auto-enrolment that would give the kind of opportunities for people that we are talking about.
Ed Boyd: There is a number of ways you could do it. We have not yet got to the point to say, “This is specifically how you should do it.” We are at the stage of saying that maybe your question implies that there is an opportunity to do insurance wrappers or auto-enrol. There are a few different approaches that you could take. That is definitely one you would look at; I think that is what we would say.
James Cartlidge (South Suffolk) (Con)
Q I just wanted to ask you about the interaction with debt. You are talking about people who will potentially have payday loans or whatever. First, will there be legal protection for the savings that they have in respect of those lenders? On the other hand, it may well be the case that the most sensible thing for them to do with their savings, once they get bonuses et cetera, is to pay off some of their debt, especially if it is at a very high annual percentage rate. I wondered what sort of advice there would be.
You mentioned universal credit, where there is quite an important point. The thing that is really good here is that you are getting people into a habit but this is initially clearly for short-term savings, which I think will actually incentivise them more on the realisation that it can help them. It is a matter of how it interacts with the debt dynamic, because a lot of them will be in that area.
Joseph Surtees: That is a very good point because there is a very specific point here about the risk that these accounts are under if somebody who has one either goes insolvent or does not go insolvent but falls into debt. That will mean they are at risk both of having the money taken during insolvency proceedings or taken by a third-party debt order. In the same way that was done with pensions under the Welfare Reform and Pensions Act 1999, where there was a wraparound of pension savings, it would be useful to have a think about whether the bonus, or even all the money in the account, should be protected if somebody begins to go insolvent, or is threatened by insolvency or their creditors.
On the second point, this is an ongoing conundrum. I know you are seeing Martin Lewis later and he will probably have a slightly different view on this. All of the research and lived experience of organisations such as ours show that, while it is crucial to pay back your debts, people also need some savings or fall-back for sudden shocks. That does not only do their financial position well; it does their mental health position incredibly well. It has been proven by the work of the single financial statement that you can save while paying back debt. Yes, in terms of a purely rational decision, occasionally people saving instead of repaying debt may not be 100% the best thing to do but, in terms of the common-sense best thing to do, I think it should be allowed.
Ed Boyd: Likewise, if someone has a significant level of debt and we say, “We think you should save the full amount because you have just moved into work. You’re working 18 hours at the national living wage on universal credit,” for example—the advice needs to be tailored case by case. That is why I think the training experience of work coaches as they engage with these people is going to be absolutely crucial. You can say, “This is what the advice should be,” but the people who are advising people face to face and saying, “These are your options in terms of savings, paying off debt” are absolutely crucial. It will be really important to get that interface right.
This links with a programme that is being rolled out by the Department for Work and Pensions called universal support, which is the idea that when somebody comes into a jobcentre, they will not just get advice—“This is a job you can go for and we’ll try to push you into that”—but we will try to understand the root causes of why they are out of work. Debt is often one of those causes, so making sure that people have appropriate support for debt is really important.
I do not think I can say this is how it should happen in every situation. Building up savings is important, but you would not encourage someone to save the maximum amount in their scheme they could if they were paying off lots of debs separately. You would encourage them, if they have some spare capacity in terms of income, to use that to pay off the debt as part of the repayment plan. The interface with the work coach becomes very important to make sure that the advice is right.
The Chair
We have four minutes now and three Members who still want to ask questions. Can we bear that in mind?
Melanie Onn (Great Grimsby) (Lab)
Q I have a quick question. I am pleased that the line of questioning has taken us to problem debt. I am slightly worried that the way in which we are viewing this is through a prism where people are in regular work, on reasonable incomes and perhaps where, if they experience debt, it is a one-off emergency. In fact, a lot of families experience debt over an incremental, lengthier period of time, so they are regularly exceeding their income and then find themselves in a difficult position.
When it comes to the lifetime ISA, is it not the case that lots of people on lower incomes and struggling are not going to get the best deal? They will take the cash LISA rather than the investment ISA and will not benefit as much as other people who are in regular work, who are higher earners and already in a much better financial position than people on lower incomes.
Ed Boyd: On the general point, the reason why our focus has been on Help to Save rather than LISAs is that if you look at those who are just about managing, those who are really in need of just building up savings because they could be hit hardest by some of these shocks, the overwhelming majority of people who will be on universal credit when it is fully rolled out are in deciles 2 to 5. If you are thinking about those people who would really benefit from this, this is the avenue through which we should be pouring our support and efforts in order to try and help them. As I said before, we have not looked specifically at LISAs so it is difficult to comment on the cross-over and effect that they will have on that group, but going back to the previous question of targeting, Help to Save targets that group pretty well.
Joseph Surtees: It is an excellent point that most or a lot of saving products, certainly up to now, have not really thought about the best way to appeal to low- income consumers and the best way they can work with their lives. That is certainly a problem with ISAs and should be a slight problem with lifetime ISAs as well. The really good thing about Help to Save is that it has thought about how to appeal to this group and the bonus is the way that it has settled on that. All the evidence shows that that is overwhelmingly a great incentive and a much better incentive for this group, rather than interest rates or tax deductions or tax relief.
Other things could be looked at in future, such as prize-linked savings or even more innovative ideas such as adapting the auto-enrolment pension system, so that it has an accessible savings pot within in. I think that is slightly further down the road.
Lucy Frazer (South East Cambridgeshire) (Con)
Q You have identified that the two different measures, the LISA and Help to Save, are targeted at different people in society. If that is the case, do you see these measures as adding not complexity to the system but more choice?
Joseph Surtees: I would agree that they would both be useful. I emphasise that we are big supporters of Help to Save. It is introducing an option for these low-income families that does not exist at the moment, so it is not more complexity; it is, for many, their only choice.
Ed Boyd: They are both hugely welcome, especially Help to Save.
The Chair
I am sorry—that brings us to the end of the time allocated for the Committee to ask questions. On behalf of the Committee, I thank the witnesses for their evidence.
Examination of Witness
Bryn Davies gave evidence.
The Chair
We will now hear oral evidence from Union Pension Services Limited. Will the witness please introduce himself for the record?
Bryn Davies: My name is Bryn Davies. I am the director and actuary of Union Pension Services, which is a specialist consultancy helping trade unions with a range of issues involving pensions, both state and occupational, and of course saving.
Peter Dowd
Q I wanted a sense in the round of how you think the proposals in the Bill for LISA and Help to Save demonstrate a coherent approach to the Government’s objective of making it easier for everyone to build up savings as they need. How do they fit into that landscape?
Bryn Davies: It has to be recognised that these measures come out of the more fundamental review that was undertaken of taxation and provision for retirement. I do not think it would have come out now and in this form, particularly the LISA, without that preceding process. That process identified that it is difficult—the whole issue of how tax advantages are used to encourage people to provide adequately for their retirement is difficult. There was plenty of speculation in the press that the last Chancellor had made up his mind about some fundamental changes, primarily in pension taxation. He pulled back from that and came up with the three-pronged approach of increasing the ISA limit, introducing the LISA and Help to Save—which, set against that background, are relatively minor and unco-ordinated. I do not think anyone would say that they are a comprehensive approach to making sure that people provide properly for their retirement.
The LISA is functionally equivalent to the proposed pension ISA, which was much debated, though it has a different name. The particulars may not be as was proposed by the arch-proponents of a pension ISA, but functionally it is a pension ISA. Seen globally though, it is a pretty trivial contribution towards the much bigger problem. There is widespread acceptance that pension tax relief is a problem that needs to be dealt with. In that context the LISA is pretty limited, and Help to Save is obviously a very limited proposal that does not really fit within that scope at all. In terms of a comprehensive approach to the problems of making sure people save what they need, it is lacking—and I do not think anyone would be able to pretend otherwise.
This is something that I do not often say, but I very much agree with Richard Graham MP that we need a comprehensive approach. He has spread it a bit wider than I would: he is proposing that there should be a commission on saving. What I have argued for is that there should be a continuation of the Pensions Commission in one form or another to tackle the specific issue of tax relief. The Pensions Commission, which must be regarded in many ways as a great success, pulled back from tax relief—they sort of dodged it—but I think they or some successor should take on that issue and produce a comprehensive review. Set against that, the LISA is too little and too early. Unless you undertake a fundamental review of pension taxation, I do not think that the LISA really makes a lot of sense.
Peter Dowd
Q In that sense, given that there does not appear to be any appetite for any substantial review of the sort that you are talking about, let us take it at face value that that will not happen. Do you get the sense that this is—I will not say a gimmick, but simply the Government feeling that they have got to do something by chucking another product into the market as a smokescreen, or call it what you will?
Bryn Davies: I would not like to use the word “gimmick” but it was a policy in search of a solution rather than the other way round. The proposal for the LISA was seen as something that could be said to have come out of that earlier process, and not coming out with anything would have given the appearance of a significant failure in policy making. In that sense, it was seen as the least that could be done as part of that process.
The problem with it is not just that it does not fit—the argument I am making is that it does not fit within this broader review of how savings for retirement should be tackled—it is also problematic in itself. I watched your sessions this morning and I think the case has been made. There was some evidence in support but also, to my mind, powerful evidence pointing out the problems with the LISA, particularly in the context of the roll-out of automatic enrolment, which is a major concern in the trade union movement.
It is absolutely crucial that whatever comes out of the legislation should not in any way interfere with the completion of the process of automatic enrolment. It is particularly concerning that LISAs will start hitting the streets, as it were, at the same time as automatic enrolment is going to face its biggest test, when the contribution rates go up from their present very low rates to the full joint 8%. That is my major concern.
There will be such mixed messages that a lot of people will make wrong decisions at that time. The two processes should be disentangled. That is the simplest way. I know we are a long way down the road and evidence this morning from the industry was strongly that they just want to get on with the job and get these things delivered, as promised by the Government, from next year, but sufficient concerns have been raised about the interaction with automatic enrolment that it would be worth putting it off, to disentangle those two processes of people starting to sell LISAs at the same time as people start getting these increases in their contributions from the current level, as far as individuals are concerned, of up to 5% gross.
Peter Dowd
Q Can I take this in a slightly different direction? I suppose it is linked, to some extent, to some people’s concern about self-employment. That is perfectly legitimate and okay, but there are many people in effect being forced, de facto, down the self-employment line to take pressure off employers to pay national insurance and so on. Are there concerns that employers will encourage their employees to choose a LISA instead of a workplace pension, in effect reducing their contributions?
Bryn Davies: Of course, there are rules about enticing people away from automatic enrolment, and we want to see those enforced. The implication is that if people were offered a genuine choice, LISA would have to be better than the automatic enrolment offer. I am sure there will be some employers who decide to go down that road.
On the question of the self-employed, it has been identified that automatic enrolment does not really work for them. It is possible that something like a LISA would offer them something that can work alongside automatic enrolment for employees. That is leaving to one side the whole issue of whether this growth in self-employment is genuine self-employment or just a way of evading employment law by forcing people into self-employment when they should be employed—but that is a much broader issue, on which I am not an expert.
Huw Merriman
Q Mr Davies, could you help me a little? I have not come across Union Pension Services Limited before. Is there a formal link to the trade unions or do you represent anyone?
Bryn Davies: No, no—I am just an honest professional working to make my bread, but working just for trade unions. I work as a consultant to individual unions.
Huw Merriman
Q That means my next question is relevant—I wanted to make sure. I would have thought that, for a lot of trade union members who are trying to save up, perhaps for their first home, the LISA would be absolutely tailor-made. Also, for those trade union members on very low wages, Help to Save should be a boost to help them save and get some income in place. Is that welcomed by the trade union movement that you represent?
Bryn Davies: I think my function here this afternoon is to pour on a bit of cold water, on the whole. To be helpful, I should be the doubting voice. You have heard a lot in favour. It is quite clear that many people do welcome the LISA, and I am sure there are many trade unions among them. After all, who would not favour being able to buy £5 notes for £4? It is a no-brainer. Whether that has a proper role within an overall system of providing people’s retirement income is a separate issue. So, if they are there, I am sure they will be popular.
However, I would reiterate that there is a big concern that the introduction of the LISA, in the ways that are perhaps being suggested, interferes with the successful expansion of automatic enrolment to its full extent, to everyone paying the 8%. That would be of major concern. It is universally the view within the trade union movement that the best approach to providing people with retirement income is through collective schemes of one sort or another—perhaps a defined-benefit or defined-contribution scheme under automatic enrolment. There is a tension between those two objectives. There is no objection to a LISA in itself; it is where it fits within the overall landscape of provision for retirement that is the major concern.
On Help to Save, again, it is difficult to attack it. As usual, the House of Commons Library has provided a very useful briefing, which highlights the report from the Institute for Fiscal Studies. It has identified that of the 3.5 million people—I am not sure how the figures match up—more than half already reach the level of rainy-day fund, to put it crudely, that is sought by the policy. It strikes me that it is more than likely that the great majority of people who will go for Help to Save are people who are already in that position.
What the whole Help to Save discussion misses is the sheer difficulty of managing a budget on low and variable incomes and the ability to help people in that situation. The reason they do not save, obviously, is because they are poor, and poor people have to make all sorts of difficult decisions, some of which might not seem all that sensible to those who are more comfortably off. Should you spend your rainy-day money on having a summer holiday? That sort of decision is incredibly difficult and it is difficult to put yourself in the position of people of who have to make it.
It is also worth saying that the £70 million is not to be sniffed at, but in the context of public policy it is an insignificant amount. It could well be that a better way of helping the families that are truly under pressure—who do not have, and will not be attracted to, a rainy-day fund—is to look at the way in which the social fund, if it is still called that, helps families in poverty. To me, that seems a much better way of spending the money, but I have broadened out your question much wider than it started.
Huw Merriman
Q Perhaps I can just ask one more question—maybe it is more of a point. Surely one of the issues is that Help to Save will be targeted at many people who will be on benefits, but what has not been offered is a commercial product that treats them exactly the same as some of the people who may read the adverts in the financial press, who may not require help so much. Again, I would have thought it would play to the sector that you are representing that, all of a sudden, those people are in the game as well and being supported.
Bryn Davies: Yes, I do not want to be too much of a wet blanket. I am sure there are some people out there for whom the Help to Save scheme will be of great assistance. I do not think it will be that many—I do not think it will be a lot of help—and many of them are not the people who do not already have a rainy-day fund. Did I get that the right way round? Most of those it will help already have a rainy-day fund. So how is that money actually being used effectively to provide more people with rainy-day funds? We really do not know, from the evidence that is available.
Ian Blackford
Q I wonder, Mr Davies, whether you would agree that it is unlikely that there could be a scenario where a saver would be better off in a LISA than they would be in a workplace pension scheme. Could you just comment on the fact that we have not got the final architecture of automatic enrolment, in so far as it affects low-paid workers and the self-employed, and there is a danger in the short term, if this were adopted, that workers could be seduced into taking out LISAs when their best interests would be served through a workplace pension?
Bryn Davies: There is no doubt that the LISA is an attractive offer. People will be attracted by it, although whether they are seduced—that suggests it is against their best interests. It is difficult to know exactly how it will work.
One of my main criticisms of the LISA is that it is a sort of bait-and-switch for a change in pension taxation, because its finances are unsustainable. Those of you who are familiar with the jargon will know that the existing occupational pension scheme taxation is known as EET—exempt, exempt, taxed—so the roll up, the accumulation, is tax free and then it is taxed when the money is paid out. That is compared to an ISA, which is taxed on the way in and the roll up and pay out are tax free. You are either taxed at the beginning or taxed at the end. The oddity about the LISA for a standard rate taxpayer is that there is no tax at all—it is actually EEE—and, as such, I do not think it is a sustainable basis. That is why I am saying it should be looked at as an overall view of how people save for retirement.
A system that was entirely based on the pension LISA system for provision for retirement would be economically unsustainable. In that sense, it is a loss leader. It is not sustainable as a long-term policy, because it is so generous. That is the answer to the question. It is very generous and possibly some people in the short term might do well, depending on the expenses that are charged. We do not know how expensive LISAs are going to be. They could offer a financially attractive deal, but if that is at the cost of destroying an adequate pensions system in the long term, the whole of society will be losers.
It is not difficult to sustain a case that everyone will lose out because they choose a LISA rather than an automatically enrolled pension, particularly if employers choose to contribute to the LISA as well. There is nothing to stop them, if they see it as a way of avoiding the legislation.
The Chair
I call James Cartlidge. Four people still want to ask questions and we have nine minutes.
James Cartlidge
Q In respect of Help to Save, it seems to me that there is a real crisis of people who are living week to week, who are often using payday lenders or other forms of debt which are not sustainable for them and who are near the precipice all the time. I take your point that some may not have any spare income at all, but if a savings product such as this, which is so generous, is not going to help them save for those emergency funds that give them greater independence and less reliance on the lenders, which is important, what possibly could?
Bryn Davies: You are right. The work done by StepChange and the Centre for Social Justice very much endorses much of the evidence that you received in the previous session. There is no doubt that it can help people. How targeted it is on people who do not already have a rainy-day fund is unclear. The first point is that many of those people who would take it up already have their rainy-day fund. In that sense, the extra money is not solving that problem.
The other problem is the sheer difficulty of operating on limited budgets. It is not a case of saying, “Let’s give everyone the opportunity to save for a rainy-day fund and that will solve the problem.” I think that underrates the difficulty people face in running their day-to-day budgets and the competing demands that they have. I think that reflects the point that was made here earlier.
Kelvin Hopkins (Luton North) (Lab)
Q We are old colleagues from the TUC, so I have to say that I have great sympathy with everything you have said so far. It has always struck me that these alleged savings schemes—tax-exempt special savings accounts, personal equity plans and ISAs—help at the margin with people who are relatively comfortably off, but do not help those people who cannot save anything at all because they are too poor. Is this another of those schemes, which will help some people but not those in the most desperate need? They will be the people who are slightly better off and can afford to save something. Would it not be better to have some sort of universal state scheme for pensions, for one thing, but also, on the other hand, to have an emergency scheme where you can give more money to poor people one way or another? Raising their incomes is what the problem really is.
Bryn Davies: Yes, absolutely. These people do not save because they are poor. A hyped-up social fund would do much more directly to help people with these crisis problems. As was mentioned, it is the day-to-day grind of being poor that is the problem. It is not just crises—people are not just poor in crises; they are poor all the time. In those circumstances, there are very tough decisions to be made about how people use their money. Saving is sometimes seen by those people themselves as a luxury. They would rather run the risk than go without some relatively innocuous discretionary spending. We should, in a sense, respect their decisions. We may warn them that they are heading to a crisis but, ultimately, we need to trust people to make their decisions.
On the broader issue, you well know my views on state provision. I think that the market does fail and that it fails, in terms of saving and pension provision, for a much larger proportion of the population. There are very few people who could get by with just the new state pension. Everyone needs to save something for retirement but the market is a bad way of saving for a large proportion of the working population. I could speak on that at length.
Maria Caulfield
Q In your professional capacity, do you advise your clients to have pensions or savings or do you advise them to have both?
Bryn Davies: I do not give independent financial advice. I have to be very careful on that. I always promote the advantages of collective schemes and point out the advantages of having occupational schemes, and support unions when they are negotiating the best possible collective provision. I do not advise individuals about how to use their money.
Maria Caulfield
Q I am interested in why industry experts seem so against these schemes to encourage people to save, when we have heard from the experts in social mobility that these are good schemes to start people off on the savings process. Do you have a reason why that difference would be?
Bryn Davies: It is this interaction. There are all these different vehicles for providing it and the way they interact is not entirely clear. That is why we do need some sort of overarching review—a review of saving sounds quite attractive—specifically of pensions tax relief, so that we do not have these one-off initiatives where it is unclear exactly how they fit into the overall approach of encouraging saving. Taken individually, you could well say this is a good idea, but it is how they all work together that is the problem we face. That is why I am saying that, at this crucial stage of automatic enrolment, we should take a bit more time over introducing LISAs.
Jeremy Quin (Horsham) (Con)
Q You mentioned earlier, Mr Davies, that we had to respect the decisions made by people. I am totally with you that pensions are the right way for most people to save for their retirement. You have spoken eloquently about the problems and difficulties faced by the people who most need to save but find it most difficult to do so. Do you really want to deprive them of that ability to get £5 from £4 for another year?
Bryn Davies: No, no. I am not saying that this should not be included in the Bill. I do think probably that it is a bit tokenistic and that stronger measures to deal with poverty and crises caused by poverty within the social security system would be a more effective way of using the money, but I am not saying don’t do it.
Jeremy Quin
You would not stand against the principle of doing this, but you would like to do more things— I hear that.
Jane Ellison (Battersea) (Con)
Q I have just a brief comment. Does Mr Davies have any modelling or research that he has done to support his concerns around the interaction of these products and auto-enrolment? It would be useful if we could have that.
Bryn Davies: The short answer is that I do not and would not pretend that I did. If I were the only person saying this, I would be worried, but there is a broad swathe of opinion, not least including at least one Member in your own party, expressing these fears, so I do think they need to be taken seriously.
The Chair
Order. If there are no further questions, I thank the witness. Will he now make way for the next panel, please? Thanks very much.
Examination of Witness
Calum Bennie gave evidence.
The Chair
We will now take oral evidence from Scottish Friendly. Could the witness introduce himself for the record?
Calum Bennie: Good afternoon. My name is Calum Bennie. I am a communications manager at Scottish Friendly.
Peter Dowd
Q You have indicated in the past that,
“We at Scottish Friendly, while recognising LISA will not garner universal support, are enthusiastic about the initiative. It deals with one of the biggest problems society faces in the UK: trying to get under 40s to engage with planning for their retirement.”
Peter Dowd
Yes, I beg your pardon. When Paul Johnson of the Institute for Fiscal Studies came to address the Treasury Committee, he said he did not think that the lifetime ISA would encourage new savers. There seems to be a difference of opinion, although I am not saying that there is. Why are you so enthusiastic about it?
Calum Bennie: New savers are one issue, but we are supportive of the LISA because what it could do is attract people who are currently put off saving for life after work. They are not enamoured of pensions—they have been put off pensions for whatever reason, be it a bad experience of their own or bad experiences that their families have had. They are not interested in pensions per se. The lifetime ISA could be a way of them putting money aside for their retirement, which otherwise they would not have done. That is where we come from here.
Peter Dowd
Q Following on from that—I was trying to tease this out earlier—I get the sense that this is another product: “This one hasn’t worked, so let’s introduce another one; that one hasn’t worked, so let’s introduce another one,” or, “People aren’t saving for retirement, let’s introduce another one.” It begins to sound as if we are saying, “Let’s just try another thing. None of them work particularly well, but let’s just chuck this into the mix.”
Calum Bennie: I do not think we would disagree with that. As several people have said in the time that I have been in the meeting this afternoon, a more holistic approach to savings and pensions—or saving for life after work, as we would perhaps put it—needs to be looked at. In the meantime, though, we need to do something to get more people putting money aside for that period in their life. As has been raised several times, a key group of people who have not been saving for life after work or have been disadvantaged in doing so is the self-employed. There is a clear benefit from the lifetime ISA, at least for that group. From our point of view, it is quite clear that there is a group of people who are not interested in pensions. They have been put off pensions. This represents a way for them to put money aside for their future.
Peter Dowd
Q I have another quick question. The witness speaking before you was asked about evidence. I would ask you, what is your evidence that this will make people save? What evidence is there? You say that there is a flexibility in the system, but what is the evidence for encouraging this specific product to encourage people to save more? That was clumsy, but you get the gist.
Calum Bennie: When you introduce a product or investment that has clear advantages, as this one does, it will attract people to save. We have got quite a long experience of incentivised investment products for all sections of the community. In particular, our focus is on those with low to modest incomes. As a company with roots as a friendly society, for the last 30 years we have focused, initially, on friendly society tax-exempt savings plans. There was a clear tax advantage with those.
Twenty-five years ago, the minimum investment was £10 a month, and that attracted a substantial proportion of C2 and DE investors to put their money in those plans. In more recent years, the child trust fund was introduced. That is certainly going to help a reasonable group of people when they reach 18 with a reasonable start in life, and that has obviously then translated into the junior ISA. We were also a proponent of the insurance ISA that is no longer here, which attracted a mid-group part of the population that may have been put off by stocks and shares ISAs before.
That is why we are pretty certain that this product will also be taken up. It will not be by everyone, because there are going to be clear wealth warnings against it. If we were to introduce it, we would certainly need to make clear what you would be getting yourself into if you decided to try to access the fund before age 60—if you were saving for that length of time. But, all things being equal, savers do know what they are letting themselves in for. In our experience, a lot of savers like the discipline that they cannot touch the money. We have done focus group after focus group and that constantly comes up. That is why they like some of the products we offer—because they are long-term—and that could be a key incentive for something like this.
James Cartlidge
Q I was very interested in your main point. May I just clarify? Obviously there is this attraction for those who are self-employed, but are you suggesting that, perhaps because of a lack of faith or trust in pensions, even those who might actually be better off focusing on the pension side will simply be attracted to this, as it is something they have more trust and understanding in? Is that your basic point?
Calum Bennie: Yes. There are clearly some people who just do not want to touch pensions for whatever reason. The fact that we are having to force people into pensions is almost an indication that for many people, pensions are broke. We are not saying that pensions are bad and LISA is good; we are just recognising what is out there with people and that some people are very comfortable with ISAs.
We were one of the first friendly societies to introduce several ISAs in 1999 when they came out. More recently, we have moved away from friendly society tax-exempt plans, because they were inflexible, to a much more flexible ISA. We launched that five years ago. That was quite a risk. We did not quite know whether the market that we were aiming at—as I said, that is very much the low to mid-income group of people—would take ISAs, because it is a stocks and shares ISA that we market; it is not a cash ISA, because we are offering people growth potential. So there is a learning experience that people perhaps have got to think about before they invest in this, because it is a stocks and shares ISA, but it has been very successful in terms of the take-up of those ISAs.
In our experience anyway, because we are not focusing on the wealthy and well-advised, people are comfortable with ISAs; not everyone is comfortable with pensions. Therefore, this product, in the short-term perhaps—until a more holistic set of savings plans and investment plans, which perhaps has cross-party support, comes about—could attract lots of people who would otherwise not put money aside for life after work.
James Cartlidge
Q When this measure was originally brought in, the point was made by the previous Chancellor about the lack of consensus for the big, overarching reform, so these sorts of reforms were proposed. I do not think anyone disputes that they are not a complete answer. Of course, another part of it is Help to Save. You talked about many low-income savers. I just wonder what you think the impact will be of Help to Save on those on the really low incomes, who we want to see saving more.
Calum Bennie: We do a quarterly survey called the disposable income index survey and we look at people across the UK, and it is quite clear that particularly the 18 to 25 group are really struggling financially. About a quarter of them are spending more than their income. That is not to say that they are all in debt, because they may have other savings or family support to fall back on. Anything that can be done for them to help with a house purchase, which for young people today is a horrendous situation that they are faced with, compared with what many in this room faced when they were first buying their first house—they need all the help they can get, so Help to Save and the ISA are a boon for them.
Ian Blackford
Q You talk about some issues that people have with investing in pensions. Why do you think that is? You described pensions as “broke”. Can you just expand upon what you mean by that?
Calum Bennie: I said that for many people, pensions are broke. The reasons could be manifold. People I talk to have experienced problems, and their parents have had problems with pensions. They were saving in a pension and whatever has happened to it—maybe the company has gone bust, or something like that—they have not got the pension that they thought they would get. For many, final salary schemes have disappeared. The pension age has gone up. Women have perhaps been affected by the age going up quite recently, which they had not expected. It could be all those issues. Pensions have been tinkered with for quite a long time. The amount you could save and the lifetime limit had gone up, and now it has come down. Tax relief is being looked at. It is for all these reasons that some people feel, “I am just not comfortable with saving in a pension.”
Ian Blackford
Q A lot of these things, of course, are because of a change in Government policy.
Calum Bennie: Yes.
Ian Blackford
Q If you were talking to your clients about the advantages of an auto-enrolment pension, as opposed to looking at a lifetime ISA, how would you explain the different tax incentives?
Calum Bennie: We do not do pensions ourselves, and we do not give advice. We market our products directly to customers and they make their own decision. We do not actually give that advice. They would need to get that advice from a financial adviser.
Ian Blackford
Q So you do not sell pensions, but you would benefit directly from the offering of a LISA?
Calum Bennie: Yes.
David Rutley (Macclesfield) (Con)
Q You talk about the focus groups that you run, and there seems to be real interest in the LISA product.
Calum Bennie: ISAs in general. We have not specifically asked our groups about LISAs. Savings in general and the discipline of savings—that is the kind of thing that we have asked people about.
David Rutley
Q But your business has a keen interest in LISAs and believes that there is an opportunity.
Calum Bennie: In ISAs in general, yes.
David Rutley
Q We are talking about LISAs today. With the lifetime ISA, is your business keen and supportive?
Calum Bennie: In general, yes.
David Rutley
Q As you think about this product, you realise that the inertia out there in the financial services market is sometimes used by financial services companies in an unhelpful way. Clearly, this is an opportunity to help change people’s behaviours for the better. With your own operation, how would you seek to differentiate this product and get behind it to have the best possible success with your potential customers?
Calum Bennie: I think the key thing here is to make sure that people have enough savings before they commit to a LISA. Obviously, if they are investing in an ISA in general, there is always a risk that they could be disadvantaged if they take their money out in the early years. Even a stocks and shares ISA is very much a longer-term investment. You are talking about people being advised to put their money in a stocks and shares ISA for at least, say, seven years, and ideally 10 or more, but at least they are not going to be penalised with 25% coming off.
Any marketing that we would do on the LISA, and I have to clarify that the LISA would not necessarily be a focus of our marketing—our focus would be on our core products, which are our investment ISAs, as the LISA would not be for everyone—would certainly ask people to make sure that they have enough in their ISA to meet their general savings requirements, and any emergency fund requirements too.
Dr Whiteford
Q Good afternoon. One of the key issues we are grappling with today is the potential for the lifetime ISA to derail or undermine auto-enrolment. I have been listening very carefully to your evidence. Am I right to infer that you see the LISA as a viable alternative to pensions, rather than a complement to pensions, for some low to modest income people?
Calum Bennie: Can I just clarify what you are trying to find out from me here? Are you asking whether we would be promoting having a LISA over and above a pension?
Dr Whiteford
Not really. I am asking whether I am hearing you right when you promote the lifetime ISA to people as a product instead of a pension.
Calum Bennie: For those who do not want to go into a pension, it is there and it is complementary. We would certainly not want to take away from pensions. As they stand in the current framework, pensions are right. Auto-enrolment is right and is working for so many people; it is a success and has been more successful than the many detractors perhaps thought it would be. We would certainly not want to denigrate that at all. What we are saying is that there are some people who are just not attracted to pensions. They do not want to be forced into pensions and the LISA represents an alternative for them.
Dr Whiteford
Q Thanks, that is a helpful clarification. I also wanted to come back to something you said earlier about self-employed people. We took evidence earlier today that around two thirds of self-employed people would not actually qualify for a lifetime ISA. I just wondered whether Scottish Friendly had done alternative modelling or had an alternative assessment of the market.
Calum Bennie: No, we have not.
Melanie Onn
Q I will follow up along the lines of what the hon. Member for Banff and Buchan asked. Earlier we heard evidence from the Tax Incentivised Savings Association and the Association of British Insurers and their view was very much that a LISA would be complementary to a pension, not in isolation from a pension. Can you clarify your view that people may not actually have a pension and may exclusively go for a LISA? Do you think that will be a secure route for them, in terms of planning for their long-term older age?
Calum Bennie: In essence, yes. The whole traditional world of retirement is changing and a range of products for people to put money aside for their later years makes total sense. We have done research. With the many customers we have who are saving in ISAs and in other savings plans, when we do the research to find out what they are saving for—financial services companies traditionally market for the holiday of a lifetime, a car, or a home improvement and things like that—our research shows that people are actually saving for retirement. They may have a pension, but they are also saving independently in an investment plan. You cannot just force people to save for their later years in pensions; they are saving in all sorts of vehicles for their later years.
Melanie Onn
Q But it is very much, for you, a complementary product to pensions—
Calum Bennie: Yes.
Kelvin Hopkins
Q I am somewhat sceptical about the myriad private savings schemes and have argued the case for a much more comprehensive compulsory state savings scheme for everyone, on top of which people could save in other ways as well as in stocks and shares. What would be the case against having a universal state earnings-related system with defined contributions and defined benefits, which would be extremely efficient to operate, easy to administrate and which everybody would know they were going to get a good deal from? What would be the argument against that?
Calum Bennie: I don’t think there is an argument against that.
Maria Caulfield
Q I want to get to the bottom of the evidence that we were given earlier, especially from the experts and professionals in this sector, that these schemes—whether it is Help to Save or the LISA—are too complicated for those on a lower income really to grapple with, and therefore won’t be taken up and won’t be of use. What’s your experience? Do you think the way that these schemes are being set up is easily understandable and will encourage those on a low income to save?
Calum Bennie: We certainly don’t see any issue with that. If it’s us who are going to be promoting these schemes, then we will certainly make sure that our communications are clear and that they are researched in the first place. For instance, our ISAs—that is the basis of this product; it’s an ISA, with various add-ons—are as complicated or as non-complicated as you want them to be, and they are understood extremely well by our customers.
Maria Caulfield
Q Can you understand why some professionals in the financial industry sector are so against these measures, and yet those who promote social mobility are quite supportive of them? Can you understand the rationale as to why some people in your sector are not so supportive?
Calum Bennie: Perhaps they haven’t actually had the experience of working with lower to mid-income groups.
The Chair
Would any more Members like to ask questions? If not, I thank the witness for the evidence that he has given. We will now move on to the next panel.
Examination of Witnesses
Martin Lewis OBE and Jonquil Lowe gave evidence.
The Chair
We will now hear oral evidence from MoneySavingExpert.com and the Women’s Budget Group. Could the witnesses please introduce themselves for the record? I start with Martin Lewis.
Martin Lewis: Yes, I am Martin Lewis, founder and executive chair of MoneySavingExpert.com.
Jonquil Lowe: Hi, I’m Jonquil Lowe and I am senior lecturer in economics and personal finance at the Open University, and part of the policy advisory group for the Women’s Budget Group.
Peter Dowd
Q I will make an assertion here: I think the consensus of opinion today is that the pensions landscape is broken. However, in the absence of more structural change to that landscape, any product that helps—even if it is only a little bit and even if it’s for a limited number of people—is welcome. Mr Lewis, you have made this comment about the LISA:
“For retirement savings it works the same way, but whether it beats a pension or not is a much trickier conversation.”
Could you give us a view about that consensus claim that I just made?
Martin Lewis: If we just look at lifetime ISAs as a pension product and ignore the homebuying element, which of course is a substantial element, based on pure numbers—well, actually there isn’t really anybody who should get the lifetime ISA, if you’re contrasting it with a pension. Certainly, if you are employed, you want to be auto-enrolled. If you are not employed and are a higher-rate taxpayer, there is a clear distinction—it is far better to be in a pension than it is to be in a lifetime ISA. If you are a basic rate taxpayer, the numbers are much of a muchness, but you have the two key factors: one, in your inheritance tax planning, the LISA is part of your estate, whereas your pension isn’t; and, two, LISA counts for benefit cap purposes, which could have a massive effect on many people, whereas the pension doesn’t. Those two factors mean that if you really break it down and make this a black-and-white binary decision, don’t put your money in a LISA.
Having said that, there are some people, especially self-employed basic rate taxpayers, for whom the idea of putting money away into one of these schemes is attractive, and therefore I support this as a good concept. Remember, we are only talking about pension saving there; not the other side, where it is a complete, utter no-brainer. Do you want a house? Put your money in a lifetime ISA. There are some arguments about whether Help to Buy is not in those transitional arrangements and I have issues with the help to buy ISA, but overall it is a no brainer.
I think my great concern over the lifetime ISA, though, is the one that goes back to the point about explaining a product that has a level of complexity, although it is not that complex. In my career, I have learned that what people want—I have just told you what it is—is a trusted source. That is enough for most people— a trusted source who says, “Don’t put your money in a lifetime ISA rather than in a pension unless you are a basic rate taxpayer who is self-employed.” There you go. People do not really need to know why. You have put the proofs: you’ve seen it on the website, so you are therefore on it. That is pretty much all you need.
All products are complicated, so we make them simple. You get trusted sources to do that, and it works. My great concern, and I have the same concern with Help to Save, is not the product in itself—I support both of them—but that there are certain dangers in misprioritising your finances. In the lifetime ISA, the danger is in wrongly opting out of auto-enrolment and putting your money into a lifetime ISA. In Help to Save, it is not paying off your expensive debts, and saving when you should be paying off the expensive debts.
I am aware that there is a new guidance system being set up, which is right and I approve of that. The problem with that is that you have to be proactive to go there. I would strongly urge you, when you set these up—it is much easier with the National Savings and Investments product—to ensure that at the point of application, whether that be online, by phone or in branch, the questions are asked, and that people are forced to ask them. So at NS&I, when you are setting up the Help to Save, it asks you, “Do you have debts? Are they expensive?”. If they are, some information is given about the fact that you may be better off paying those down. You do that not in a leaflet, but at the point of application.
With the lifetime ISA, which in many cases will be an online or on-the-phone product, rather than a branch product, I would say at that point in the online form, the question should be asked, “Are you an employee? Does the employer have auto-enrolment? Are you planning to do this instead of a pension?” and at that point, information is given that explains that generally you will not be better off with the lifetime ISA.
There is no problem with the product; there is a problem with how we communicate it and how we stop people making bad decisions. The way that you do that in the world that I work in is you signpost it once, you signpost it again, and then you signpost it a third time, and now you might just be starting to start the process. I will tell them when I talk about it on the telly or on the website; you will have it in a brochure for the product; and you will hear it from the pension guys. Then when you are signing up, you will have a final warning. If we do that, we will probably touch 50% of the people we should, but not all of them. That is my biggest caution to you today: just make sure that people know when it is not right for them. Then we can all be very excited about two new products that are out there, and which should, in general, be beneficial to the people who should be using them and are a good thing.
Peter Dowd
Q Can I pick up that last point on knowledge? That is another issue we have touched on today. In an ideal world, people have complete control of their faculties and decision making, and have capacity and so on, but out there, that does not always happen. The concern that has been expressed today is about that knowledge landscape, and people’s ability to grasp that, without it sounding patronising. Do you think that, out there in the world that this product will be sold in, there is enough information and knowledge for most people to make a reasonable decision?
Martin Lewis: I do not think there is now, because the products are not out there. The truth is that it is mainly people in this room and the industry, and a few nerds like me, who will be interested in them before they launch—why would you be? Once they launch, we need to get it right. For my TV show, next February, I have already got a lifetime ISA special booked in; it will probably be the second or third week of February—half an hour of prime time on ITV—and we will get the message out, because people need to understand how it works. We will get that out, but that communication needs to be right and consistent; the messaging needs to be right.
My concern is about product-provider level, where product providers and different people within businesses have incentives to sell products. Even in wonderful building societies, the savings managers do not ask their customers whether they have debts before they encourage them to save. Will you do it as a blanket? That is not the right way for anybody to go.
As we are starting two new products, we have a very interesting point where you can set up the regulation before we start to make it proactive, which is what I am encouraging. With Help to Save, the message is: “If you save £50 a month, after a couple of years, we will give you 50% on top.” Yes, I know there are complexities about exactly how much you have saved and whether you can take it out, but that is all you really need to know. For the lifetime ISA, it is: “You can save up to £4,000 a year. You have to be under 40 when you start it. Then you can use it towards a house, in which case we will give you the bonus then, or at the age of 60, when we will give you the 25% on top, with a maximum bonus. If you have ifs and buts, do your reading—but do your reading.” Those are all the messages that you need to get people interested in it.
These two products have a very simple advantage: it is called free money. Go and have a look at the green deal. Until the cashback section came in, no one was interested in the green deal. Once you started giving people free money, suddenly it became very popular. Well, you have two free money schemes. Done right, talked about right and communicated right, they will be very popular. Unintended consequences are possible—the lifetime ISA might pump the housing market, which is a concern, and we have already seen it somewhat with Help to Buy—but done right, this is free money for people. As for looking at this at a macroeconomic level—are we skewing it? Are we giving it to the wrong people? Does it have the right political consequences?—that is not necessarily my bag, but I have some concerns over it. However, if you are talking about whether you can communicate these products in such a way that people will take them up, free money does a pretty good job of getting people interested.
Peter Dowd
Q Thanks. I have a question for Ms Lowe. I do not know whether you have a comment on my original statement. If you do, please feel free to give it. Also, a distributional analysis by the Women’s Budget Group shows that by 2020, single female pensioners will experience a whopping drop in living standards. Is there anything in this product, for the sake of argument, that you think will help to deal with, alleviate or mitigate that?
Jonquil Lowe: No, we do not. That is the short answer. Martin touched on this: is the money being given to the right people? Certainly the lifetime ISA is less regressive than the existing system of pension tax reliefs, in that it gives a flat-rate 25% bonus to everybody. However, we still think that this is a very regressive way to use taxpayers’ money. Simply making a product available to everyone does not make it gender-neutral. You also need to take into account people’s opportunity to take up these products.
The lifetime ISA targets people who can already afford to save. There are huge swathes of people, mainly women but some men, who are contributing to the economy in the form of unpaid work, rather than paid work. Their decisions on care—caring for children and adults—mean that they are more likely to be in part-time work and are more likely to have periods out of work. When in work, they are more likely to be in sectors where their earnings are low, which tends to affect them not just at that time but for the rest of their working life. It is much more difficult for women to take advantage of these products, so we do not really see the lifetime ISA as a solution to women’s poverty.
We are also concerned, as Martin said, that the lifetime ISA may be a simple product, but it throws up complex decisions. The worry is that people may well choose to go with the lifetime ISA, rather than a pension, simply because it seems a simple product and they feel that they have more control, but in doing so, they are going to lose the employer’s contribution under automatic enrolment. They will be making decisions that are actually not in their best interests, which is a concern to us.
David Rutley
Q Mr Lewis, you mentioned some concerns about transitional arrangements between help to buy ISAs and LISAs. Could you expand a little on that? I then have a question to both of you. One of the issues with financial service products is getting younger people interested in them. The great thing about the lifetime ISA is that it applies to youngsters at 18. We have some young people in the audience from Macclesfield. How would we seek to get young people more interested in these products early on?
Martin Lewis: First, there is a difference between the two. The help to buy ISA is available at 16, which is one issue. The second issue is that help to buy ISAs are limited to properties worth £250,000, or £450,000 in London, but for the lifetime ISA it is £450,000 across the country, which is a good thing.
Here’s where it gets rather complicated. You can use a help to buy ISA effectively after three months. You need £1,600 in it; that’s £1,200 in the first month, and £200 each month for two months. We have some people who have done it in two months and thirty days. We are allowing people to transfer their help to buy ISA into the lifetime ISA within the first year, which is a good rule, because it allows people to move it across and then they can put more in their lifetime ISA. However, the lifetime ISA has a one-year minimum hold before it can be used on cash, so I could have had a help to buy ISA for three years, transfer it across into the lifetime ISA and then save more money in, and then suddenly discover that I cannot buy the house that I want and have found, even though I have been saving in the help to buy ISA for three years, because I have to have held the lifetime ISA for a year.
A simple arrangement to fix that would be to ensure that the trigger-point, if you transfer a help to buy ISA into a lifetime ISA, is the start-point of the help to buy ISA, not the start-point of the lifetime ISA, so you would have had your year. Those are the types of transitional arrangements I am talking about. They are not big-picture, I think, even at this stage of a Bill Committee, and they are ones that we have had a discussion on the phone about.
The other classic thing that I would be very wary of—I will throw this in while we are talking about this—is that, as I have suggested, both these products will not be perfect. There will be unintended issues, such as the help to buy ISA issue—that it was a mortgage deposit, and some people thought it would exchange. It always was at that point, but it was revealed by the newspapers. I would strongly suggest that with both these products, there is a pre-arranged one-year review, where minor terms can be tweaked to make better products, and where we discover the things that none of the clever people who have given evidence or who are sitting around the table have thought of yet. That’s a sensible way to introduce products such as these, which are so complicated—especially the lifetime ISA—to be honest with you. Those are the types of transitional arrangements I am talking about. Forgive me, what was the second part of your question?
David Rutley
Q With young people, how do you get them interested in these sorts of products early on?
Martin Lewis: Young people are interested in buying a house, but it won’t be their financial priority. For many of the young people who have help to buy ISAs, it is money put in by their parents, and we need to be straight on that. That has a distributional impact too, because the people who are able to do that are people whose parents have the spare money, and you have to question whether that is right or wrong.
With help to buy ISAs, it depends on your definition of young people. It is a great product for 18-to-30s. If that is “young people”, it is a good product, and potentially, once they have started saving in their lifetime ISA, they may then continue it for their retirement savings. I again sound the caution, because of auto-enrolment, that we want it to be a complement, as opposed to an either/or.
There are problems with the help to buy ISA. I cannot put more than £5,000 a year into it, so I then have to have another ISA product. I would not mandate that all providers had to do that, because if you did, we would have lower interest rates on the lifetime ISA than we would have otherwise in the savings version.
As an aside, I have to tell you that when I tweeted and Facebooked that I was coming here today, the big point that everybody made was that I should tell you—I’m sure you know this, but I will tell you anyway—that interest rates are horrendous. People cannot earn money on their savings. You are helping two small blocks at the moment. People feel that our interest rate policy is penalising savers right now. Even with all the tricks in the world that I can play, we have worked out that you can put £35,000 away at 2% interest. That is the best you can get with every single trick in the book played. That is it right now. That is horrendous—a disincentive to save. Of course, a 25%, 55% or 50% bonus is a great encouragement on the back of that, but savings in the United Kingdom at the moment are in a crisis that we have never seen before, and there is a bigger picture here than the two Government-supported saving schemes—I am aware what this Bill Committee is for—that are going on right now.
The honest truth is that this will encourage some, but it will not encourage many. Children’s savings—even Halifax Kids’ Regular Saver, the last bastion of good rates for children at 6%, has now dropped down to 4%. There are big issues in the savings market, and this won’t fix them. This will help some people.
Jonquil Lowe: Perhaps we ought to keep in mind what the whole aim underlying all these schemes is. Certainly, when you are looking at housing, it is affordable, high-quality housing for all. Will the lifetime ISA deliver that? Will it excite young people? I think it will not, because what we are likely to see is that the people who can afford to save can save in it, and the people who have wealthy parents will see their parents transfer money into it. I think it will be very important to evaluate this scheme, to see whether it really does generate new saving that improves people’s financial resilience.
Help to Save is very similar to Saving Gateway. I do not know whether you recall this, but the Institute for Fiscal Studies did some evaluation work on the pilots for Saving Gateway and, in contrast to some of the other evaluation, came to the conclusion that Saving Gateway did not generate new saving. What it did was encourage people who had already built up a stock of saving to transfer that into that scheme, and I fear that we might see that with the lifetime ISA as well. It is just shuffling the money on the balance sheets; it is not actually generating new saving.
I think the lifetime ISA is not necessarily going to help more young people to buy the house that they may aspire to. The money can be drawn out for use not only on new build housing but existing housing stock, so there is a danger that it will just push house prices up. Although it may help some people at the margin to transfer from being renters to being owners, for other people, it is going to put the dream of home ownership even further out of reach.
We also have another concern, which is whether this is just another part of the transition of moving away from the collective risk that society bears to individualising risk. The lifetime ISA legislation allows the Government to consider early withdrawals without penalty for reasons other than house purchase. At the moment, that is not something that they are going to do when the scheme is first introduced, but schedule 1, part 3 allows for that option.
That starts to look very similar to a scheme that was tried in the Netherlands and abandoned in 2012, called the life-course savings scheme. The idea was that employees could build up some savings, tax-free, through deductions from their salary, and that those savings could be withdrawn to pay for periods caring for a frail relative, for example, or for the cost of childcare. Again, that is absolutely fine if you can afford to save, but if you cannot, that form of welfare is not helpful and excludes a lot of people. The evaluation of that Dutch scheme found that, as you might expect, fewer women and part-time workers took part. The amount saved went up dramatically with earnings, and the vast majority of people said that they were doing it because it was tax-free and would allow them to retire early. That scheme did not really address the aims that had been set out and was, again, a very regressive form of welfare.
Martin Lewis: I do not fully agree with this analysis. I think there are certain parts, and on the distribution part, I absolutely accept where you are going. Of course there is an issue of distribution, but we have to be very careful. Certainly there is a feeling out there in the country that it is the people who struggle and push to sort themselves out on their own who get the least help. Some of this does go towards addressing that; it goes towards addressing the fact that those people who have struggled all their lives and would like their children to buy houses will get some help with that within the lifetime ISA.
Where I perhaps disagree most strongly is that I think the help to buy ISA has encouraged people to save for a home; some of them would not have done so anyway, and for some, it would have taken a lot longer and been a rather depressing period of their life with no wellbeing. We already have a problem with disaffected young people who feel that they are not being given a chance out there, and this does go some way towards redressing that. You paint too dark a picture; I agree with some of the analysis, but I think that is too dark a picture.
The help to buy ISA has been a very positive thing that people have liked. There was this glitch over the exchange versus mortgage deposit point, which I think was a communication glitch from some of the product companies. I know it was in our guide from very early on that it could only be used at mortgage deposit. Actually, the lifetime ISA allows you to do both those points. We need to be very careful. If we look at a product in isolation, we see there are certainly distributive problems and there are certainly gender distribution problems. Looking at this product and simply saying not to do it for those reasons, rather than redressing that balance in a more direct manner, is not the right way to go forward.
Yes, I think this will have an impact on house prices, but because it affects only first-time buyers and we are talking about a level of deposit as opposed to the overall price, it would take a far better economist than me to work out how much will trickle down into the system. I do not think that every £1,000 the Government put in as a bonus will increase the need for a deposit by £1,000. I do not think it will work on that basis. I suspect a far, far smaller figure—way below 50% and probably below 20%—will trickle across. I am not sure that is a reason not to do it.
We need to try something to encourage people to save and there is a bigger picture out there. Whenever I talk about saving on the television, I am asked, “Why are you helping all those people who have got money?”, and I get lots of people saying, “Who can afford to save?”. The fact is there are something like five to six times more savings accounts in the UK than debt accounts. Those people are a big part of our population and in many ways they have been relatively the worst done by since 2008 because of interest rates. Our policy is so down on people who have saved hard all their working lives to put money across. I think we must be very careful not to bite off our nose to spite our face.
I think you are right and all the points you make have some semblance of good distributional analysis and good economics, but the bigger picture is that these are not bad products that are trying to do good things. Yes, they will certainly help some people whom we should perhaps not be helping, but they will also help other people whom we should be helping.
Jonquil Lowe: The point is that taxpayers’ money is scarce, so you must be careful how you use it. There isn’t even a great deal of evidence that tax incentives work. After all, we have automatic enrolment because decades and decades of tax incentives did not persuade people to put enough savings into pensions.
Martin Lewis: But the help to buy ISA has been a huge success for a huge number of people.
Ian Blackford
Q Thank you, Mr Wilson. We have talked about the need to save and the success of auto-enrolment. Should we not be targeting those who are being missed out, such as the self-employed and those earning less than £10,000—many women are caught up in that? That is the priority we should address first.
Secondly, when you talk about the exercise people will go through to apply for an ISA and those who can engage in auto-enrolment but choose not to, do you not think there will be an issue of people ending up in a LISA when they would be better off in auto-enrolment?
Jonquil Lowe: Is that for me?
Ian Blackford
Both of you.
Jonquil Lowe: Automatic enrolment, yes, is definitely superior. The employer’s subsidy is very valuable so it would be extremely concerning if people switched to lifetime ISAs. The problem for women with caring responsibilities is that they simply do not have a lot of money to save. It is very nice that they can have a bonus if they can save, but if they cannot save, where does that leave them?
The value of unpaid caring is huge. The Office for National Statistics tries to measure it and reckons the value of unpaid childcare is about £320 billion a year and unpaid adult care about £57 billion a year. The figures are huge—about a fifth of GDP. Countries address the problem in different ways. For example, Finland has a home care allowance that recognises the value of unpaid work and gives some income that can be used to buy childcare to release the woman for work, or perhaps for other matters, which might be setting money aside to save for emergencies or later life. Simply saying, “If you save, here’s a tax bonus,” does not solve the problem of the people who cannot afford to save.
Martin Lewis: It doesn’t, and some people should be paying off their debts, which again is a problem I mentioned earlier, especially with the Help to Save scheme. I would stretch Help to Save a little lower and allow younger people to engage in the scheme as well as people who work fewer hours but do work. If I were in charge, I would bring it lower down the net. I agree with you on that point.
The problem about the people who do not auto-enrol going into lifetime ISAs when they should auto-enrol is that products, once they become commercial—effectively Help to Save is not because it is from NS&I, but the lifetime ISA is—are sold, and they are sold to encourage people to engage. Therefore, you have competing sales messages.
That goes back to my original point of mandating messages at each point in the journey towards getting it to try to block people out. The person in charge of lifetime ISA savings at one of the big banks is incentivised by how many lifetime ISA savings he brings in and his staff, some way down the line, will be incentivised—or at least their jobs will be contingent on it—to get people to bring in lifetime ISA savings. They will not have a vested interest in telling you to put money in your pension instead, so you need to make sure that they cannot avoid doing so.
That is a subtle point, but it is about misprioritising. Every single product we have on the market, from credit cards to savings accounts and bank accounts, misprioritises someone’s finances if used incorrectly. That is not a reason for not doing the product, but this is the joyous point: we are creating a new product in our nice internet and app-based era where it is rather easy to mandate people to give certain messages. That is why I suggest you do so, in a way that you could not when everything was individually sold by incentivised sales staff sitting in a closed-room office of a bank branch, as it was 20 years ago. Now, most of these things can be automated, so make them automated.
Huw Merriman
Q Mr Lewis, this morning we heard from some of the representatives from the financial services industry, who seemed to think that this was a complex product.
Martin Lewis: They are not very bright people.
Huw Merriman
I will leave it to you to say that. My question for you—perhaps I should have asked them—is: do you think there is a danger that, as we advance and these products come on stream that people can follow by using the internet, all of a sudden fees will be lost, as people do not need their investment adviser? Perhaps that is why the industry pooh-poohs products such as this and dresses them up as “too complicated”.
Martin Lewis: One of the problems you will have with the lifetime ISA for pensions is that the vast majority of money will go into savings, not investments, which over a long period is probably not a good move. That is another issue, whereas pension money really goes into investing. I think most people who put money in a lifetime ISA will put it in a cash version and they will not need an investment manager because of that. I think there is an issue going on there.
Are these products complicated? All products are complicated; all products can be explained. I have always been anti the simplicity agenda—all that does is cut down choice and competition and take away flexibility of lifestyle to enable products to be different for different people. These products are no more complicated than those we have out there. It is always said of the state pension that there are only two people who understand it: one of them is dead and the other is still not sure whether he really does get it.
When you contrast these products with the state pension, they are pretty easy products to understand. They have to be explained and they have to be communicated. They will take time. We need to ensure that we use nice, easy and real terminology and not jargon when we do so. Certainly with the lifetime ISA, it is going to take five, six or seven years before it becomes a steady part of what people do. Certainly on the pensions side, the lifetime ISA is easier because it is really the help to buy ISA with some tweaks—that is all it is—and we have already started to do the education process on that.
The argument that they are too complicated is just a complete load of palpable balderdash. It sounds like an industry that is already making a lot of money from one product that does not want to see competition to it. I do not want to see competition to it when it is not right for punters, but when it is right for them and it is a good product, we should be offering it, and we should be slightly careful not to listen to people making bogus excuses because they are rent-seeking.
Dr Whiteford
Q I want to come back to the potential gender differential impacts of the policy and of the LISA in particular, because generally how we ensure that women are able to benefit from public policy decisions is critical. You said that the Women’s Budget Group had concerns that not many women would be able to benefit from it. We also know that, in later life, women are far more likely to be on means-tested benefits because they have smaller pension pots or do not have an occupational pension at all. Has the Women’s Budget Group crunched numbers on that or modelled that in any consistent way?
Jonquil Lowe: No, I do not think we have the detailed number crunching that you are after. It would be a really interesting thing to do, but it is always difficult to have these discussions because you are talking about different cohorts of people. The women who are currently retired and on low pensions did not experience the same set of circumstances as women today. Certainly, the state pension system now has much better protection for people who are caring, which is unlike the private pension system—
The Chair
Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions and, indeed, for the sitting. I thank our witnesses on behalf of the Committee for their evidence.
Digital Economy Bill (Seventh sitting)
Tuesday 25th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Digital Economy Act 2017 View all Digital Economy Act 2017 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 25 October 2016 - (25 Oct 2016)
Kevin Brennan (Cardiff West) (Lab)
I beg to move amendment 92, in clause 26, page 26, line 18, leave out
“, or will expose the owner of the copyright to the risk of loss.”
This amendment and amendment 93 is a probing amendment to explore the impact of Clause 26 on account holders.
The Chair
With this it will be convenient to discuss the following:
Amendment 93, in clause 26, page 26, line 35, leave out
“, or expose the owner of the rights to the risk of loss.”
See amendment 92.
New clause 3—Power to provide for a code of practice related to copyright infringement—
“(1) The Secretary of State may by regulations make provision for a search engine to be required to adopt a code of practice concerning copyright infringement that complies with criteria specified in the regulations.
(2) The regulations may provide that if a search engine fails to adopt such a code of practice, any code of practice that is approved for the purposes of that search engine by the Secretary of State, or by a person designated by the Secretary of State, has effect as a code of practice adopted by the search engine.
(3) The Secretary of State may by regulations make provision—
(a) for the investigation and determination of disputes about a search engine’s compliance with its code of practice,
(b) for the appointment of a regulator to review and report to the Secretary of State on—
(i) the codes of practice adopted by search engines, and
(ii) compliance with the codes of practice;
(c) for the consequences of a failure by a specified search engine to adopt or comply with a code of practice including financial penalties or other sanctions.
(4) Regulations made under this section—
(a) may make provision that applies only in respect of search engines of a particular description, or only in respect of activities of a particular description;
(b) may make incidental, supplementary or consequential provision;
(c) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.”
This would amend the Bill to present an opportunity for the Government to fulfil its manifesto commitment to reduce copyright infringement and ensure search engines do not link to the worst-offending sites. There is an absence of a specific provision in the Bill to achieve this.
New clause 33—Pre-loaded IPTV boxes—
“(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) In section 107(1)(d)(ii) after “offers” insert “, advertises”.
(3) After section 107(1)(d)(iv) insert—
(v) installs, maintains or replaces, or
(ii) otherwise promotes by means of commercial communications, or”
(4) In section 107(1)(e) after “article” insert “, device, product or component”.
(5) In section 107(1)(e) after “work” insert “or which is, and which he knows or has reason to believe is, primarily designed, produced, adapted or otherwise used in a manner described in this section whether alone or in conjunction with another article, device, product, component, or service supplied by or with the knowledge of the same person for the purpose of enabling or facilitating the infringement of copyright”.”
This new clause allows the Government to fulfil its commitment in the IPO’s Enforcement Strategy to ensure that UK business and rights holders have the necessary legal means to protect their IP. It brings in language to cover the supply of IPTV boxes clearly being marketed or sold for the purpose of enabling or facilitating copyright infringement, recognising that many devices may not, themselves, infringe copyright, but are supplied in conjunction with information which enables users to infringe copyright.
Kevin Brennan
Good morning, Mr Streeter. We now move to part 4 of the Bill. May I say first that it is a pleasure to serve under your chairmanship? I thank you and Mr Stringer for all the work that you have done so far in helping us to get through and scrutinise the Bill.
New clause 33 stands in my name and that of my hon. Friend the Member for Sheffield, Heeley. Although she is not in her place at the moment, I am sure that the rest of the Committee would want to join me in congratulating her on her efforts so far as a first-time Front Bencher. I only hope that I can come close to matching her assiduous scrutiny of—[Hon. Members: “Here she is!”] Right on cue, she makes an entrance so that I can complete my compliments for her efforts so far on our behalf and on behalf of the whole Committee in scrutinising the Bill.
New clause 3 is in the name of the hon. Member for Selby and Ainsty, but we have added our names to it because we think it a very good one. I hope that we can have a substantial debate about it this morning, because there are some real issues that we need to discuss.
This is quite a chunky clause. Amendments 92 and 93 are probing amendments. We just want to explore with the Minister the meaning of clause 26 and to clarify its implications. I should say at the outset that Opposition Members support the principle that there should not be any distinction between physical and digital copyright infringement, and therefore support the proposal in the clause to equalise the penalties for that kind of infringement.
For the benefit of the Committee, I point out that the penalty for digital copyright infringement will be increased, to equalise it with that for the physical world, from a maximum of two years’ imprisonment to a maximum of 10 years. That makes sense if we are to support the principle of there being no distinction between the two, although in supporting that principle we want to ensure that the penalty is used appropriately. Obviously, we want to hear about that from the Minister in his response.
It could be said that elsewhere in the Bill, because of its unevenness, is the implication that there is some kind of binary between the digital and the non-digital world. That, of course, is not true when we get into the real world. My hon. Friend the Member for Sheffield, Heeley, in her excellent scrutiny of the Bill from the Front Bench, has argued that we should have had a properly thought through digital future Bill, given all the issues in play, and that that would have done away with the false division that tends to exist between the digital economy and the general economy.
Instead, we have a bit of a Christmas tree Bill, on which the Government are hanging various vaguely related issues. That is what is in front of us, so that is what we must scrutinise, but the levelling of the law on copyright infringement is, I think, a partial acknowledgement of the point about the false division between the digital and the non-digital worlds. However, in increasing the penalty as the clause proposes, we must be sure that we do not leave a window cracked open for unscrupulous operators to be able to intimidate and take advantage of consumers, whom I do not believe the Government intend to target in the clause. I do not think that the Minister intends to target consumers, but he will tell us that in his response.
The issue is largely a matter of wording. Whenever we scrutinise legislation, however, we have to make sure that no aspect of the law is left unclear by muddled phrasing, so it would be helpful to the Committee—this is the purpose of our probing amendments—if the Minister explained the distinction made in clause 26 between
“the owner of the copyright”,
in line 18 and
“the owner of the right”
in line 35. What do the Government intend by the distinction?
Christian Matheson (City of Chester) (Lab)
Now we’re listening, Mr Streeter. Does my hon. Friend know what that represents in terms of sales?
Kevin Brennan
I shall stick strictly to the amendment, but I think it is mainly in relation to live performances, rather than through physical or online sales.
The impact of copyright infringement is very difficult to quantify precisely because not every copy of a music track that is illegally shared necessarily represents a lost sale. Nonetheless, the scale of illegal downloading and streaming of music remains significant and it continues to undermine the economic health of the UK’s music industry. The Ofcom Media Tracker survey, average retail prices and academic evidence taken together all suggest that the losses from piracy to the UK recorded music industry are between £150 million and £300 million a year. That is a significant loss of value to the UK economy and legitimate music-related businesses.
Christian Matheson
Do not many of the search engines make their money by prioritising businesses and organisations that have chosen to advertise with them? It is therefore easily within their power to change their algorithms at will to meet the requirements that my hon. Friend suggests.
Kevin Brennan
My hon. Friend is absolutely right: it is within search engines’ ability to change the algorithms. I had always thought that the problem might eventually solve itself, because when advertising is placed next to the results of an online search, the companies whose products and services are being advertised appear next to websites that are run in the shadows, often by criminal networks. Surely reputable businesses with statements of corporate social responsibility would not want their advertisements to appear next to a search that turned up an illegal website run by some gangsters somewhere in Russia. However, it turns out that search engines do not solely or even principally make their money from advertising; it is data that are valuable to them. As one of my hon. Friends said earlier, data are the new oil. It is the data acquired on individuals through search engine practices that are so valuable and that enable companies to put product placement in their advertising and search engines to tailor searches to individual consumers online. Embarrassingly, that fact once resulted in a Conservative Member criticising a quote of mine on the Labour party website because the advertising content that appeared next to it was to do with dating a certain type of person. The Member in question subsequently found out that the advert had been placed there not because the Labour party was short of money but because that advert was tailored to his personal search activities. Members should beware when making such criticisms.
My hon. Friend the Member for City of Chester is absolutely right that it is perfectly within search engines’ power to solve this problem. Some efforts have been made by Google, and they worked for a short time, but a search engine search for widely available music by some of the most popular artists in the UK will still return a lot of illegal results. The hon. Member for Selby and Ainsty may wish to cover that point in his remarks, so I will not go into further detail, but BPI research certainly indicates that.
The voluntary approach is not working. We have seen this movie before; we have downloaded it many times, and it always has the same inconclusive ending. New clause 3 would provide it with an ending to match one of the best last lines in the movies, which is “Shut up and deal.” Any offers from Government Members? It is from Billy Wilder’s great film “The Apartment”; Shirley MacLaine says it. The new clause would enable the Government to say to the search engines, “Shut up and deal,” because there is no incentive for search engines to do so at the moment. We are being helpful to the Minister, as is his colleague. We are trying to put a bit of lead in his pencil, and he should welcome this cross-party effort to ensure that progress is made.
One further point: I have a sneaky feeling that the Minister actually agrees with the new clause, although he will not agree with it today, and will want to make this change to the Bill but to do so in the House of Lords. If my prediction is wrong, I will take it back in due course. The only thing that I would say is that it does not do this House’s reputation any good when Governments behave that way. I accept completely that all Governments do it: they know that they want to make a concession on a Bill, but they decide to do it in the House of Lords rather than the Commons. Ultimately, although we hear all the talk about the House of Lords being such a wonderful revising Chamber, the Government should accept once or twice that hon. Members, including those of their own party, come up with amendments that are perfectly sensible and should be incorporated into a Bill. It would help the reputation of this House if the Government were prepared to behave in that manner.
One fundamental aim of the e-commerce directive was to identify clearly which practices fall within and outside safe harbour defences. Part of the legislation— article 16, to be specific—encourages member states and the Commission to draw up a code of conduct at community or national level. However, no such code of conduct has ever been drawn up due to resistance by the search engines. They should not be allowed to avoid parts of legislation at the expense of UK creative industries just because they find it inconvenient. The new clause would end the wasting of Ministers’ time in chairing meetings that go nowhere, the repetitive process of rights holders producing proposals and the practice of search engines consistently refusing to comply to combat piracy, thus ensuring that the digital economy continues to benefit both the UK creative industries and the British public.
New clause 33 is the last amendment in the group. Last month, the Government released their annual intellectual property crime report. Some of the trends are quite startling: they reported 33% more illegal TV programming downloads in March to May 2015 than in the same period in 2013—a rise from 12 million to 16 million. The report highlights as a major concern the proliferation of internet protocol TV, or IPTV as it is known, which offers viewers increasingly easy access to pirated digital content. Technological changes have led to exponential growth in this new form of piracy. Android-based IPTV boxes are being loaded with software linking thousands of streams of infringing entertainment, movie and sport content. The boxes are sold on mainstream marketplaces such as Amazon and eBay, and through Facebook.
The Copyright, Designs and Patents Act 1988 has yet to be updated to reflect the new technology. It offers no effective remedies to copyright owners, who at present can rely only on laws that are not particularly tailored to copyright infringement. The new clause would help prosecute those who pre-load and distribute such devices and make it easier to work with online marketplaces to remove listings by wholesalers of such products.
Nigel Adams (Selby and Ainsty) (Con)
I rise to speak to new clause 3. It is a pleasure to follow the hon. Gentleman, who knows an immense deal about this area, having been a huge recipient of earnings from rights over the past few years. I am not entirely sure whether all that income was derived from him buying presents for his family, but it is great to see that we genuinely do have talented musicians in this place.
The new clause would create a power that allowed the Secretary of State to consider introducing a code of practice between search engines and rights holders on copyright infringement, which we have heard about. This power could be used only in the absence of a voluntary code between the two parties; it would not automatically create new legislation. Instead, as has been said, it acts as a backstop power if all other attempts to get an agreement between the producers of creative content and those who facilitate access to infringing material fail.
According to the latest estimates from the Department for Culture, Media and Sport, the UK creative industries amount to £87.4 billion in gross value added, and have an export value of £19.8 billion. These are incredibly large sums. Industries such as the music sector contribute immensely to those figures. Last year, five of the top 10 biggest selling artists in the world were British. One in six albums sold globally is from a UK artist. Those are staggering figures, and they demonstrate the appetite for UK music content here and abroad. According to “Measuring Music”, a report developed by UK Music, the industry body, the sector grew by 17% over the past four years and is worth £4.1 billion to the UK economy; it generates exports of £2.2 billion.
Although the UK creative industries are much in demand, copyright infringement remains a significant challenge. It not only has negative economic consequences for our businesses and industries by driving consumers to illegal markets, but seriously undermines the respect for, and value placed on, the creativity and effort that go into producing content—music and films in particular. According to the latest Kantar Media copyright infringement tracker, commissioned by the Intellectual Property Office, 78 million music tracks were accessed illegally between March and May 2016. The same research indicated that 20% of internet users participated in some form of illegal music activity online during that short period. These are very worrying figures, and they remind us that despite the growth in access to legal streaming sites, such as Spotify for music and Netflix for films, piracy remains a significant problem that needs to be tackled.
If we are to ensure a prospering commercial market for UK music that benefits rights holders and creators, it is essential that the main method of discovering music and artists directs consumers to legitimate sources. Search engines are one of the key means by which consumers discover music and artists. However, the prevalence of search results linking to infringing content, particularly on the first few pages of a generated search result, as we heard from the hon. Member for Cardiff West, indicates that more needs to be done. Furthermore, search engines incorporate auto-complete functions that can provide access to terms associated with the discovery of illegal content even before an internet user has finished typing their search terms.
For example, I am sure that you, Mr Streeter, are aware of the artist James Arthur, who was at No. 1 with “Say You Won’t Let Go” until he was knocked off the top spot, as I am sure you are aware, by Little Mix, which caused great excitement in the Adams household. When searching on Google, all I need to do is type in “James Arthur say y”, and I am given an option of clicking “James Arthur ‘Say You Won't Let Go’ download”. This takes me to a series of search results, and the only legitimate link allowing me to access that track legally is at the bottom of the page. It is not acceptable that search engines allow such ease of access to infringing content.
Some searches involve wading through several pages of results before getting to the first legal site. That is clearly wrong. The effectiveness of Google making changes to its algorithms—an infringement solution that that particular search engine advocates—remains to be seen. In reply to a written parliamentary question that I tabled on 2 September, the Government admitted on 26 September that it is “not possible to say exactly how” an algorithm change “equates to changes in infringement”. In response to a separate question, they said that it was “not…possible to analyse the…effectiveness” of measures to decrease auto-complete suggestions that provide access to stream ripping and other illegal converter technologies via search results.
In the 12 months up to September 2015, the British Phonographic Industry—the representative body for the recorded music industry, which does much vital work in the pursuit of anti-piracy measures—submitted almost 66.5 million infringing URLs to search engines for removal from search results. The ability of search engines to link to legitimate websites should be straightforward. For example, pro-music.org identifies legal online services. The site identifies that the UK has over 50 legitimate music websites—28 download, 19 subscription and 14 supported through ad services.
Creating a legitimate marketplace increases industry’s capacity for growth and supports overall economic wellbeing. Consumers also stand to benefit from higher-quality search results, clear signposting to legal content, and reduced exposure to malware, viruses, and other types of deceptive advertising. Studies demonstrate that these risks to internet security are sadly prevalent on infringing sites.
Dealing with copyright infringement requires co-operation; the problem can be addressed through positive initiatives. We have seen success in website blocking and, as we have heard from the hon. Member for Cardiff West, from the “Get it Right from a Genuine Site” campaign. UK Music developed an app, aimed at young people, called Music Inc. in partnership with Aardman Animation and the IPO. It raises awareness by simulating the mechanics of the music industry and showing the impact of copyright infringement on business decision making. The app has attracted over 600,000 users since its launch. We have also seen positive results from activities by advertisers and payment providers, and from the work of the police intellectual property crime unit to take advertising and payment services away from illegal sites.
Recognising the challenges, the Government have facilitated a round-table process so that rights holders, industry bodies such as the BPI, and representatives from search engines can discuss the problems of copyright infringement. This process has yet to result in agreement on how infringing content should be tackled. Rights holders are trying to negotiate a voluntary code of practice. We must take this opportunity to ensure that that happens. A code of practice for search engines would result in the reduced prominence of known infringing websites in search results, through demotion and delisting. Search engines already use such practices with regard to a range of illegal activities. The demotion of illegitimate websites would be attractive, in that verified artist websites would benefit in the same way that licensed retail stores do. This is because they will be promoted in the rankings at the expense of infringing sites.
Nigel Huddleston (Mid Worcestershire) (Con)
Is my hon. Friend aware that rankings are vital? For some search terms, up to 90% of clicks can come from the top three results. Certainly more than 90% of people do not look past page 1, so being at the top is vital to clicks and activity.
Nigel Adams
My hon. Friend speaks with great knowledge on the subject. That is absolutely vital. Consumers searching are not necessarily aware of which sites are legal and which sites are not, so being in the top few search results is crucial. Much more needs to be done to ensure that genuine sites are recognised when people use search engines.
A code of practice should recognise that its scope includes legitimate artists’ websites where appropriate. The Bill presents an opportunity for the Government to fulfil their manifesto commitment to reduce copyright infringement and ensure that search engines do not link to the worst offending sites. At this stage, there is no specific provision in the Bill to achieve that. Although it is not my intention to push the new clause to a vote, I am keen to hear the Minister’s response, and his ideas about how to ensure that its intentions are delivered.
The Chair
It may help the Committee to know that we will not reach votes on new clauses today; that will come at the end of our proceedings, in case anyone is getting terribly excited.
Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)
I am sure that the Minister will be glad to hear that I will not be quite as thorough, because everything has been covered already. He was looking somewhat exasperated. I do not know what he was googling; “How to make this Bill go quicker”, perhaps.
Christian Matheson
Does the hon. Gentleman not agree that one way to make the Bill go quicker would have been for the Minister not to have tabled so many Government amendments?
Calum Kerr
That is an excellent point. I think that the ambition is to make the amendment paper longer than the Bill. If the Bill is a Christmas tree, the baubles must be hollow, with a little note inside saying “IOU a lot more detail, or an apology.” It has made my first Bill Committee an interesting experience.
Of course we support clause 26 and the spirit behind it. It is important that copyright be protected. Our creative industries in these isles are a huge success story, and they should be fully supported. The hon. Member for Cardiff West gave a thorough and excellent overview of the issues; I know that my hon. Friend the Member for Perth and North Perthshire (Pete Wishart) was delighted to hear that he was on the Bill Committee, as the subject is close to his heart. I would hazard a guess that he has made more than £10.60 from his past efforts. Before I come to the substance of what the hon. Member for Selby and Ainsty said, I put on record my appreciation and admiration for his contribution last Friday. That day showed the worst and best of democracy in this place, and he was part of the best.
On the new clauses, I have been sitting here messaging my staff asking, “Why didn’t we add my name to these?”. We need to learn how things operate a bit better. We fully support the amendments. New clause 3 is an essential addition. As the hon. Member for Cardiff West said, I am sure that the Government will add something at some point, because that is a logical step to take. As has been outlined in some detail, there are millions of sites flagged to the search engines by the relevant bodies. It is not as though they have to go and find them themselves; it is the process by which the search engines do or do not take the sites down that needs to be brought into sharp focus. Clearly, there are efforts at a voluntary approach, but this is the perfect opportunity to put into legislation something that might drive the right outcome and behaviour without the need for follow-through. Past experience supports that idea. We must see some movement in that area.
We support new clause 33 on IPTV boxes. It is necessary to move with the times. This Christmas tree of a Bill has a lot of aspects to do with the broader digital economy, but people will continue to innovate and find new ways of delivering content, and IPTV is one example. Someone in this place recommended an IPTV box to me for my London flat because it is quite a cheap way of accessing content, but I did not follow that advice because I would not want to access any illegal content. These boxes come pre-loaded, and there should be no pretence about it: they are designed to give people a way of avoiding paying for content that they know they should pay for. There is no excuse for that. New clauses 33 and 3 are essential additions to the Bill, and we are delighted to support them both.
Rishi Sunak (Richmond (Yorks)) (Con)
New clause 3 is about protecting content owners from copyright infringement. Most of the discussion we have heard today has centred on online platforms and their particular abuse of music content. However, has the Minister considered the connected issue of the newspaper industry? Historically, newspapers used revenue from advertising to help support their news-gathering operation, and to provide a vital service, especially in regional and local communities—I am sure that Members on both sides of the Committee will have experienced that service in their constituencies. Today, there is a concern that some online platforms are benefiting from such news-gathering, but are not always paying for it in the most appropriate way. That raises questions about the sustainability of the newspaper industry and the vital service it provides. Has the Minister considered the connected issue of newspapers? Will he share any thoughts with the Committee?
Thangam Debbonaire (Bristol West) (Lab)
I rise to speak in support of these amendments and new clauses, and to add a bit of colour and flavour to some of the arguments that have already been made. We often talk about rights holders, but we need to be aware that behind those rights holders are individual artists, musicians and technical people. It is not just about my hon. Friend the Member for Cardiff West; it is about the technical people involved in any recording, film or e-book. Many people are involved in those processes, and every time we deny their right to be paid, we are denying them the right to continue working in the way that we would want them to work.
Which of us here has not skipped gaily around the Palace of Westminster, at least in our imagination, with a song in our heart or a tune in our head? Maybe that is just me. Most of us have a favourite film, and we have music at special family occasions. A poem will be read at a funeral and a song will be danced to at a wedding, and all the people involved in producing them need to be paid properly for their work.
There should not be this wild west of a shopping mall where people can access whatever they want for free, without proper provision for reimbursing those involved. Unfortunately, search engines in particular, but also other providers, are allowing that illegal shopping mall to exist, and so artists, writers and others involved in the creative industries are not getting their proper deserts. That is important.
The hon. Member for Selby and Ainsty and my hon. Friend the Member for Cardiff West both mentioned economic value. I emphasise that according to the Government’s own website, the creative industries are contributing £9.6 million an hour to the UK economy. Since we sat down to work, the creative industries have contributed £9.6 million. UK music alone contributes £4.1 billion each year, which is something to think about. The creative industries are growing at twice the rate of the UK economy, at 8.9%, and we want them to continue to grow. We do not want to deny them part of their income—admittedly the minority, but it is still significant.
We tabled these amendments because we need to harmonise copyright and ensure that licensing laws work across the online and offline world. We want to help Conservative Members to fulfil their commitment in the Tory party manifesto, and new clause 3 would help
“the Government to fulfil its manifesto commitment to reduce copyright infringement and ensure search engines do not link to the worst-offending sites.”
We seem to have a degree of cross-party unity on the value of that measure. I look forward to hearing what the Minister has to say, because there is otherwise an absence of a specific provision in the Bill to achieve this.
I want us to make sure that the good examples, such as Get it Right from a Genuine Site, are taken up and followed, to avoid the unfortunate misdemeanours of others, such as search engines that can remain nameless—we can all guess who they are and others may have already mentioned them. It is not okay for search engines to drive—wittingly or unwittingly, but they should reasonably have known—towards illegal sites.
Consumers do not want musicians, film makers and others to be robbed of their just deserts. Mostly, we want to be able to be sure that when musicians have made a piece of music we love, they get properly paid for it. It is incumbent on search engines and others to make sure that that happens, and to use the power we know they have to create their algorithms to work properly in this respect. We would not tolerate a shopping mall in which signs and property space were given to illegal shops selling illegal goods. This is the equivalent.
I am absolutely convinced that the Minister would want to honour the commitment in the Tory party manifesto to rectify that. On Second Reading, the former Secretary of State, the right hon. Member for Maldon (Mr Whittingdale) said,
“there may well be a case for including a legal provision encouraging providers to establish a voluntary code.”
He also said:
“we cannot allow Google and other search providers to go on allowing people access to illegal sites.” —[Official Report, 13 September 2007; Vol. 614, c. 785.]
I am convinced that the Minister will want to take up the mantle he has been thrown by the former Secretary of State and I urge him to do so.
The Minister for Digital and Culture (Matt Hancock)
What a pleasure it is finally to stand to respond to the long interventions and speeches from Labour Members. It is a joy to hear that at least some of them understand and believe in property rights. Conservative Members certainly do.
The discussion has turned into a debate not only on amendments 92 and 93 and new clauses 3 and 33 but essentially on clause stand part. I therefore hope that Committee members will understand if I explain the whole clause in my response.
Kevin Brennan
The Minister is seeking to chair the Committee now as well as being the Minister.
Matt Hancock
It is a team effort.
The amendments are to clause 26, which increases the maximum sentence for online copyright infringement from two to 10 years, which is equal to the sentence for physical copyright infringement. The case for this has been made powerfully by Government and Opposition Members and it is an important change. Whether online or offline or a combination of the two, copyright infringement is IP theft and it is right that the maximum sentence is the same.
This sends a clear message that copyright infringement of either kind will not be tolerated and affirms that creators who produce the content that we all enjoy are valued. Furthermore, enforcement agencies will now have proportionate sanctions to tackle this serious criminality, whether offline or online.
We recognise that the maximum sentence of 10 years, even if only for the most serious cases, must be carefully targeted. Consequently, clause 26 also makes changes to the existing offence of online copyright infringement to make it clearer when that offence is committed and who should be considered liable. The amendments speak to some of those points.
The concept of prejudicial effect in the existing legislation will be replaced with a requirement that the infringer intends to make a monetary gain for themselves or knows or has reason to believe their actions will expose the rights holder to a loss or risk of loss in money. I will come to the debate around definition of that in more detail.
The point of this clarification is to act as a safeguard to ensure that the increased maximum penalty is applied only to serious criminals who deserve it and will not apply to those who share material accidently or without knowledge of the consequences.
Turning to the points made by the hon. Member for Cardiff West, or at least the ones that were pertinent—
Kevin Brennan
On a point of order, Mr Streeter. Am I right in saying that as the Chair of the Committee, had I made any points that were not pertinent, you would have ruled me out of order?
The Chair
I can certainly confirm that you were in order all the way through your comprehensive speech.
Matt Hancock
Undoubtedly in order and sometimes very broad ranging. A person who accidentally shares a single file without the appropriate licence, particularly when the copyright owner cannot demonstrate any loss or risk of loss, is not expected to be caught by this offence. I hope that gives the hon. Gentleman assurance on that point. However, of course, criminal infringement will be dealt with on a case-by-case basis and a court must be satisfied beyond reasonable doubt that all elements of the offence have been made out.
Kevin Brennan
We are getting to the crux of the matter: the words the Minister uses are very important. All joking and jibing aside, which he enjoys, there is a serious reason for laying these matters firmly on the record in Committee—that is our serious purpose here and our constitutional role. He said, “is not expected to be caught by this offence”. I fear that that is not really strong enough in response to my points. We need to understand whether it is possible for individual consumers to be captured by it. If so, the Minister should tell the Committee.
Matt Hancock
As I said, it is for the courts to decide about criminal infringement on a case-by-case basis, but I am making clear that that is unlikely and not the expected outcome in the case of a person who accidentally shares a single file without the appropriate licence. The reason I do not go further and make it absolute is to ensure that the court can make a fair judgment on this, rather than be bound. I want to go further, because there is another important point here about the impact of this on activities that are currently lawful. We do not expect things that are currently lawful to be caught by this change. This is a change in the scope of the sentence rather than in the definition of the offence. I want to make that very clear.
On the second point that the hon. Member for Cardiff West made about the legal distinction between “owners of copyright” and “owners of the rights”, “owners of copyright” relates to the offence of communicating to the public, whereas “owners of the rights” relates to the performer’s right of making available. This is a legal distinction: they are two separate offences but there is no substantive difference in the meaning of the two. The reason has to do with the legal drafting of the offence rather than the lay understanding of the meaning of the two.
The hon. Gentleman also raised the issue of trolls. I want to be clear that while we understand that some people may receive threatening letters from so-called trolls, we are not aware of any successful court case by these so-called trolls in this area. We do not endorse such aggressive tactics and we understand that this tactic is not widespread, but we will keep it under review.
Going more broadly into the debate that we have just enjoyed, since 2002, when the maximum custodial sentence for copyright infringement was changed, this has clearly been wrong. I am glad that there is all-party agreement on the change to 10 years, but in addition to increasing the maximum sentence, we have recast the relevant offences to include an additional element to the offences, which must be proved before an offence is made out, namely that the infringer intends to make a monetary gain for themselves or another person, or knows or has reason to believe that their actions will cause loss to the rights holder or a risk of loss in money. Amendments 92 and 93 would remove this additional element, but there are several reasons why it should be retained. We should remember that serious incidents of online copyright infringement or infringement of a performer’s making available right already fall within the scope of criminal law, as I mentioned.
It is right that the courts should be able to apply serious sanctions where they are warranted and apply the equivalent sanction to that available for physical copyright infringement, but it is our view that it is important to include the words, “risk of loss” to capture cases where the loss has not yet materialised. We believe that these same scenarios would fall within the current drafting of the offences, which relies on the prejudicial effect, but we have tightened the notion of prejudicial effect following consultation, to be more precise and targeted in the wording being examined today. I hope that satisfies the understandable request by the hon. Member for Cardiff West for clarity to be put on the record as to the intent of clause 26.
I now wish to turn to new clause 3 on search engines. We had a serious debate on the impact of search engines. We come from a position of being strong believers in the protection of property rights, and we want to ensure that the UK retains one of the best IP regimes in the world. Without content, there is no IP to protect, so I pay tribute to the BPI’s work: to support take-downs and to make the eloquent case for stronger IP protection. I also pay tribute to Get it Right from a Genuine Site, which does important work in making sure that culturally it is unreasonable—and seen as unreasonable—to take IP without paying for it.
I turn to my hon. Friend the Member for Richmond (Yorks) who made an important point on newspaper articles that appear in search engines. We support fair remuneration and we encourage content providers and online platforms to work together on this. This is an issue that has been raised with me directly, and it is pertinent to the debate. We want to encourage investment in new content, and we support returns for investigative journalism and other kinds of journalism, and I hope we come to a resolution on fair remuneration between content providers and online platforms, in the first instance. However, my hon. Friend’s intervention is noted.
In relation to clause 3, as the Committee knows from the discussion, the Minister for Intellectual Property, Baroness Neville-Rolfe, has been working closely with search engines and representatives of the creative industries. We are fulfilling our manifesto commitment to ensure that there is a fair return, and the group is currently considering a voluntary code of practice. I agree with the thrust of the arguments made by my hon. Friend the Member for Selby and Ainsty, who put the case strongly. Our intention is for the voluntary negotiations and the voluntary code of practice to come to a successful fruition, and the people involved in those negotiations will doubtless have heard the argument and understood the strength of feeling on this Committee. Given this ongoing work and the existing remedies for removing or blocking infringement content, I hope that hon. Members will agree that now is not the right time for a broad reserve power.
Kevin Brennan
Surely now, when we have a legislative vehicle in front of us that could not have been better designed for this very purpose, is exactly the right time. Committee members would have a right to be annoyed if, in making this broad assertion that now is not the right time, the Minister were subsequently to concede on this point at a later stage in the Bill’s progress, in another place and in an unelected House. Will he tell us truthfully what the Government’s intentions are on this point?
Matt Hancock
I care about the substance of getting this Bill through right. There are, of course, important parts of parliamentary process both here and in the other place. Given that the round-table discussions are ongoing, including a meeting next week, now is not the right time for the broad reserve power.
New clause 33 seeks to expand the criminal liability to include the supply of IPTV boxes for criminal infringement. As hon. Members will understand from the tone of my remarks, as a strong believer in property right protection, I understand the concern. The hon. Member for Cardiff West referred to the Copyright, Designs and Patents Act 1988 and the fact that the Minister for Intellectual Property had committed to making sure that we looked at this, and we have done so. This activity is already covered by criminal law under the Fraud Act 2006 and the Serious Crime Act 2015. The City of London police force is investigating cases. It seized over 500 set-top boxes earlier this year and arrested a man for fraud and IP offences.
There is a danger in the digital world of legislating for a specific technology as opposed to legislating for the offence in a technology-neutral way. I strongly prefer the latter. As the law is already in existence in the two Acts that I mentioned, the best thing to do is to prosecute under the existing Acts, rather than try to chase a particular technology, which may well be out of date. Our strategy for tackling IP crime includes a specific commitment to developing an understanding of the challenges posed by IPTV. We now need an approach that tackles the problem, rather than just current IPTV set top-box technology, which will no doubt be superseded in due course by future technologies. The existing criminal offences provide a legislative framework that is broad enough to protect our creative industries. However, I will of course keep this area under review.
I hope Members have been reassured of the work we are doing to make sure we apply the existing criminal law and make sure that intellectual property is protected. I concur with all the remarks made by Committee members about the importance of the creative industries, the importance of supporting content providers and the importance of intellectual property. I hope that with these explanations, the hon. Member for Cardiff West will feel able to withdraw the amendment.
The Chair
Before I call Mr Brennan, it may help the Committee to know that it is not my intention to allow a wider debate on clause 26. We have had a good old canter around the course.
Kevin Brennan
Thank you, Mr Streeter, for letting us know your decision—not influenced at all, I am sure, by the efforts of the Minister to chair the Committee as well as leading for the Government. I will take into account in my response that you are including clause stand part in this part of our debate.
I made it clear at the outset that amendments 92 and 93 were probing amendments and I am very grateful for Minister’s explanation of the meaning and intention of the wording. As I have made clear, it is not our intention to push the amendments to a Division, but I think we need to cogitate a little further before Report and the latter stages of the Bill and perform a more careful exegesis of what the Minister said when he used the phrase “not expected”.
Matt Hancock
I can go yet further on that. The reason this is rightly done on a case-by-case basis is that we are talking about an existing offence. It is important to remember that. We are not making something illegitimate which is currently legitimate; we are adding to what is required to make out an offence. We are not making something that is currently legitimate now illegitimate. That is why it is reasonable to proceed on that basis, with the language that I used.
Kevin Brennan
I am grateful for the further clarification and for the Minister engaging in the discussion. We will think further about what he has said. I think it has been a very helpful exploration of the issue. I am not sure that he is right when he receives advice that the trolling issue is not widespread, which was the phrase he used. Obviously we can dig into that a bit further as we progress with scrutinising the Bill, but I welcome the fact that he said he would keep that under review. This is a very real issue and the fact that there may not be many prosecutions around it is often related to the fact that such activity is not necessarily illegal—the point I made in my contribution. Nevertheless, it can bring great distress to vulnerable individuals. We all know that the issue of vulnerable individuals being targeted by unscrupulous individuals, organisations and networks online is growing.
Matt Hancock
The challenge, though, is to ensure that reasonable protection of intellectual property is not ruled out by stopping any such speculative activity. There is a genuine policy challenge in how to support the protection of intellectual property. We are not aware of any successful legal cases by the trolls. People should therefore be reassured.
Kevin Brennan
Quite the opposite, actually. The fact that there have not been any successful legal cases indicates that people are being very successfully scammed out of money because they are too afraid to resist the trolls who come to them saying, “You have infringed copyright.” The fact that there have not been legal cases should be a cause for concern, not complacency. The Minister might like to give that further consideration.
As we have made clear, our intention with the amendments is absolutely to support the protection of those whose intellectual property has been infringed. That is our aim, but as ever there is a balance to be struck. We want to ensure that the most vulnerable in society are not easily targeted by unscrupulous people using the fact that members of serious criminal networks engaged in copyright infringement can go to prison for 10 years under clause 26 to frighten them. Those vulnerable people may not always completely understand the law around intellectual property when they are online, and they could get a notice that could scare them into parting with some of their money. Such cases are a real problem across society in general, and this is just one area of these activities. We should be aware of the problem and be concerned about it. We should not be complacent.
As I have outlined, it is extremely unlikely that any such cases will come to court, because the people claiming that copyright infringement may have taken place are not interested in taking anyone to court. They are only interested in sending out enough notices to get a small number of people to respond and hand over their cash.
It is the same as when scammers send out millions of text messages and phone calls saying that a relative is stranded in some other country and asking for money to be sent immediately. They may say, “We have a wonderful investment that you should participate in,” or, “You as an elderly person should put your money into something, because then you can provide for your children and grandchildren. It’s a sure thing.” All those sorts of activities have become much more prevalent because of the internet, and this issue around copyright infringement is just one area of that. That is the point we are making.
I urge the Minister to go away with his officials, to think a bit more about this issue and to consider how we might be able to reduce the possibility of it becoming an even bigger problem in the future, with the 10-year sentence being used to frighten people even more than they are already being frightened by these scammers and so-called trolls.
Obviously we will not be voting on new clause 3 at this point, because that always happens at the end of Committee proceedings, as you rightly reminded us, Mr Streeter. The hon. Member for Selby and Ainsty made it clear that it is not his intention to divide the Committee on his new clause when we reach that stage, but I say to the Minister that saying simply that it is not the right time for such a measure is not good enough as a response to the range of serious issues raised by Members of all parties.
Thangam Debbonaire
I wish to ask the Minister whether he will give us some idea of the criteria by which he will assess when the right time is. I have no way of knowing for sure when that will be without an understanding of his reasoning and the reasons there might be for changing his mind in future.
Kevin Brennan
Obviously I cannot speak for the Minister, but he is free to say something after I have sat down. He is free to intervene now if he wants to clarify that point for my hon. Friend. It would be helpful if he did so, because I think this is exactly the right time for the measure. That is the purpose of new clause 3 and the thinking behind it. The talks have been going nowhere. As I have said, we have seen the movie several times before, and we know how it ends.
Christian Matheson
My hon. Friend makes a good point: talks are going nowhere. Would an indication from the Minister that there is an intention to bring the proposals forward into legislation perhaps aid those talks in going somewhere?
Kevin Brennan
In a nutshell, that is the reason for new clause 3, and I am sure that was exactly the thinking of the hon. Member for Selby and Ainsty when he tabled it.
It might help if the Minister indicated when he expects the talks to conclude. He says he hopes there will be a positive outcome to them and that this is not the right time for new clause 3. He likes to talk softly; if new clause 3 were incorporated into the Bill, he could carry a big stick while talking softly about this matter. If he is not prepared to amend the Bill, perhaps he could tell the Committee when he believes the talks should conclude, as that would help to focus minds a bit. Perhaps he could put it on record that he is not happy to allow the talks to drift on and on inconclusively, as they have for many years.
We are not satisfied with the Minister’s response on new clause 3, and I repeat that it is my belief that at some point during the progress of the Bill the Government will concede on that point. It would be a terrible shame if they did not concede to the hon. Member for Selby and Ainsty—one of their own elected Members here in the Commons, who has tabled a sensible amendment—but did so in another place, giving the credit, yet again, to the unelected House for being a wonderful House in revising legislation. There is plenty of expertise right here in the Committee and in this House, among elected Members who know about the subject and know that this is the right thing to do. I urge the Minister to change his mind about new clause 3, if not now, perhaps on Report, when we will no doubt return to the issue.
Finally, I hope it is helpful to you, Mr Streeter, to be aware that it is not my intention to divide the Committee on new clause 33. As for the Minister’s response, I think I referred to the shortcomings of the current offence. I did not say we did not think that people could currently be prosecuted, under the Fraud Act 2006 or the Serious Crime Act 2015; in fact, I specifically mentioned those Acts—it might have been while the Minister was searching for something online. I also mentioned why the Acts were inadequate, and the Minister did not respond. First, they require a great deal of expertise in the area on the part of the police, which is not necessarily a resource that is sufficient to meet the growing size of the problem. Secondly, by amending the Copyright, Designs and Patents Act 1988, my new clause would have not just allowed but compelled trading standards to get involved and would have allowed the body to take action.
It would be useful to hear from the Minister why he does not think it a good idea that trading standards should be brought into play in that way, rather than simply relying on a police force that is under pressure and has many things to investigate—an ever-growing problem. Is it the Government’s position that is it wrong that trading standards would be the right body to involve? It would be extremely useful if the Minister felt able to clarify that. He said that he would keep the matter under review. I welcome that, and I hope he will be able to tell us more about the issue at a later stage, but if he told us at this stage why trading standards is not the right body to involve, that would be helpful.
We have had a fairly comprehensive debate. I do not think I need to add much on clause stand part, apart from that the latest data, published by the IPO, demonstrate the need for Government action. The research found that 15% of internet users—6.7 million people—still access copyright-infringing content, so it is absolutely right that the Government should act. I hope that the Minister feels able to add a bit more, in light of what I have said.
Matt Hancock
Very briefly, I mentioned that one of the meetings in the negotiations with search engines is next week. We expect the meetings to conclude over the next few weeks, and that is why the timing is appropriate.
Kevin Brennan
Perhaps I am speaking against what I said earlier, but if the Government do not give way on that point and the talks conclude unsatisfactorily before Christmas, while the Bill is still before Parliament, will they consider amending the Bill at a later stage?
Matt Hancock
I do not want to get into answering conditionals that are dependent on some future action. I have made the case for why now is not the right time and I have given the hon. Gentleman the timeframe over which discussions are taking place.
The hon. Gentleman made the case against new clause 33 very well. These are criminal activities, and it is the police’s role to police them. There are increased resources for the police in this area and I look forward to their taking it on. Our principle is not to legislate for specific offences based on an individual technology when offences already exist that can be used to prosecute the illegal activity.
For instance, many IP TV boxes are sold without any software on them; some have it inbuilt and some do not, and the ones that do not can be used for legitimate and illegitimate purposes. It is far better to have an in principle criminal measure on the statute book and to prosecute with that. Everybody can see the united strength of purpose to ensure that such IP theft does not go unpunished.
Calum Kerr
I thank the Minister for his explanation. I know that he and the Government are not fans of amendments that would oblige them to do a report to see how they are doing in the area. However, is there a way of looking at it on an ongoing basis, so that progress can be monitored and we can see how many prosecutions are actually occurring under the current legislation?
Matt Hancock
That would be an excellent idea, if the Culture, Media and Sport Committee chose to take it up. That is what Select Committees are for; I know the hon. Gentleman does not like them, but I think they are excellent at scrutinising the Government and everything that is going on. With that response, I ask the hon. Member for Cardiff West to withdraw his amendment.
Kevin Brennan
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 26 ordered to stand part of the Bill.
Clause 27
Registered designs: infringement: marking product with internet link
Question proposed, That the clause stand part of the Bill.
Kevin Brennan
I hope that we can dispose of clause 27 more briefly than clause 26; I am sure we will, because it does not contain such controversial matters. By including an internet link in the ways in which a designer can indicate to consumers that their design is registered, clause 27 will remove the excuse that a potential or actual infringer did not know that a design had been registered. Like clause 26, it will do away with the false binary in law between online and offline by offering a digital means of checking design right protection. As I understand it, in addition to or instead of including the design registration number on the product itself or on the product packaging, the designer may include details of or a specific link to a website, with the important caveat that that website must be available at no cost to the visitor and must clearly associate the product with the number of the design. That ought to make it easier for designers to update and communicate design registration and other information about the rights associated with products without constantly having to change their packaging or their products. That will, in turn, make registering design cheaper for the designer.
Matt Hancock
First, that was an extremely good and unusually succinct description of the clause. The hon. Gentleman asked about costs; we think that it will reduce costs to business. In terms of the current problems, physically changing the required registration details on products imposes a cost. For instance, some businesses produce labels that must be applied to every single product. Such costs are unnecessary if a single label or web address can be built into the design and the update can then be done digitally rather than physically. It is, after all, illegal to claim that a product is registered when it is not. Therefore, the changes are required by law, and it is far cheaper for everybody if they are made on a website that is referenced on the physical product, rather than on labels, or sometimes labels stuck over labels. I am glad that there is cross-party understanding of and agreement on the clause, and I commend it to the Committee.
Question put and agreed to.
Clause 27 accordingly ordered to stand part of the Bill.
Clause 28
Copyright etc where broadcast retransmitted by cable
Nigel Adams
I beg to move amendment 63, in clause 28, page 27, line 31, leave out subsections (3) to (5).
This amendment, together with Amendment 64, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.
The Chair
With this it will be convenient to discuss the following: amendment 189, in clause 28, page 27, line 36, at end insert—
‘(6) The Secretary of State shall—
(a) produce a report on the implication of the repeal of section 73 of the Copyright, Designs and Patent Act 1988, and
(b) undertake a comprehensive consultation on the future of television content distribution and public service broadcasters.”
Amendment 64, in clause 82, page 80, line 2, at end insert—
“(a) section 28;”
This amendment, together with Amendment 63, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.
Amendment 94, in clause 82, page 80, line 14, at end insert—
“(h) section 28.”
This amendment would mean that repeal of section 73 of the Copyright Designs and Patents Act of 1988 would come into force two months after the Royal Assent of the Bill.
Nigel Adams
These are probing amendments to clauses 82 and 28 in order to establish a timeframe for enacting the provisions in clause 28, which repeals section 73 of the Copyright, Designs and Patents Act 1988. I warmly welcome those provisions, but from the clause as it stands, it is not quite clear when we can expect this important measure to come into force. The amendments would mean, instead, that repeal of section 73 of the 1988 Act would come into force as soon as Royal Assent is granted. That would involve consequential amendments to clause 28 to delete subsections (3) to (5), as Royal Assent would remove the need for them. Otherwise, in the Bill as drafted and as stipulated in clause 82, clause 28 would come into force on whatever day the Secretary of State appoints in regulations made by statutory instrument, which could mean further delay.
As I pointed out on Second Reading, online service providers such as TVCatchup use section 73 to make money from public service broadcaster channels by re-transmitting their content while selling their own advertising around it. That undermines the public service broadcasters’ own online streaming services and on-demand catch-up services, affecting the audience, advertising and sponsorship revenue of commercial PSBs. Furthermore, none of that money is being paid to the public service broadcasters, the underlying talents and the rights holders, and none is flowing back into original UK content production.
I have an important film studio in my constituency, so I take this issue very seriously. We want to see more great productions, such as “Victoria”, which was filmed largely at Church Fenton in my patch. The UK television sector is at the heart of the UK creative industries. It is a vibrant and dynamic sector, providing outstanding world-class content that is the envy of the world. Such programmes are also hugely popular internationally, and the UK is the second-largest exporter of TV in the world as a result. It is therefore vital that we do all we can to help protect investment in the programmes that viewers around the world love. For those reasons, it is important that the provisions in clause 28 to repeal section 73 of the 1988 Act are enacted as soon as possible.
The PSBs first wrote to the Intellectual Property Office asking for a repeal of section 73 eight years ago; since then they have spent a lot of time and money in litigation. Meanwhile, TVCatchup has made millions on the back of the PSB content. The only reliable way to stop that exploitation and ensure that people who make and own the programmes that viewers love gain a return on their investment is to repeal section 73. The public service broadcasters have been in litigation with TVCatchup for many years, and until section 73 is repealed those parasitic websites will be able to profit from the PSB content without any of the payment going back to the public service broadcasters.
Section 73 also allows cable platforms to profit from PSBs that invest in content, which means that the PSBs are effectively subsidising global cable giants. It prevents the commercial PSBs from negotiating with cable platforms for their PSB channels. In a normal situation, they would be able to negotiate freely, as they do for their digital channels such as ITV2 and E4, but section 73 currently prevents that.
Cable platforms make money out of PSB content while still benefiting from a regulatory regime designed for a different era, under which no payments go back to the PSB or any other holders of rights to the content.
Christian Matheson
The hon. Gentleman talks about a different era. Does he think that it was right to introduce section 73 at the time, because it allowed cable platforms to develop, but that things have moved on quite a bit since then?
Nigel Adams
The hon. Gentleman is yet again spot on. It clearly is of its time. The idea was to try to help a nascent cable industry, and the legislation has done that; we have a healthy TV industry across all broadcast platforms, including cable and satellite. That legislation has done its job.
On pay TV platforms, such as Virgin and Sky, up to 50% of some of our most valuable content, such as drama, is viewed via subscription personal video recorder, from which the pay TV platforms derive substantial benefit. That undermines the commercial PSBs’ ability to secure a return from advertising, because much of their advertising is skipped, and materially reduces as critical opportunities to generate secondary revenue—for instance, from on-demand services or box sets—because libraries of valuable drama content can be built up for free on the PVR. I therefore urge the Government to ensure that repeal of section 73 is delivered at the earliest opportunity. That would mean that those who wish to re-transmit or otherwise use PSB services in the future will have to negotiate to do so, which seems only fair. They should be able to negotiate within the must-offer regime in the Communications Act 2003. That would enable those who create the content to make a return on their investment and continue to make the programmes that viewers love, which are the envy of the world.
There has been extensive consultation on the issue so there is no need for further delay. I will therefore be very grateful if my right hon. Friend the Minister can provide more detail on the timeframe for the repeal of section 73 of the 1988 Act, as included in clause 28.
Kevin Brennan
I rise to speak to our amendments 189 and 94. I note the well-informed and cogent points made by the hon. Member for Selby and Ainsty, and I understand why the Government want to repeal section 73 of the Copyright, Designs and Patents Act 1988, as he laid out. Clearly apps such as TVCatchup cannot be allowed to profit from public service broadcasting content without making any sort of contribution to its creation, either by paying for it or in some other way; without agreeing some kind of licence for its use; and without abiding by public service broadcasting standards for its distribution. It is entirely logical to repeal the section and we support the intention to prevent TVCatchup from doing what it does, but the Government need to explain the knock-on effects on the market.
Calum Kerr
The SNP also supports and welcomes the repeal of the section 73 of the 1988 Act. I agree with supporting original drama, but I wonder about how Virgin in particular is affected, because Virgin is also rolling out broadband and helping the Government in their other targets. Perhaps the Minister can assure us that that has been considered and that pricing will not prohibit meeting other Government objectives.
Kevin Brennan
I am sure the Minister has heard what the hon. Gentleman said and will want to address it in his response. The hon. Gentleman is quite right to point out that Virgin in particular will be affected.
The Government’s reform is well meaning, but they need to explain how it will not put further pressure on the public service broadcasting compact. They need to answer questions about their long-term plans for television distribution and how this part of the Bill affects that. Public service broadcasters exist for a reason, as an intervention in the market and as part of public policy. We need to ensure that they do not accidentally drift out of existence or into insignificance, and we need to know the Government’s intentions.
In their response to the consultation on the repeal of section 73, the Government said that they do not expect or want to see charges from public service broadcasters to cable operators for their main channel content. If that is so, I ask the Minister in a genuine spirit of inquiry whether there is an argument for the Government to make it clear in legislation that they do not want to see such charges, because at least some of the public service broadcasters do not share that view. None of us believes that a dispute between a major public service broadcaster such as ITV and a major TV platform such as Virgin is in the viewer’s interest.
The amendments are intended to explore whether the Government are sure that they are not risking those viewers ultimately having to pay more than they should for what should be a free public service broadcast. What is the Government’s view on the risk that those viewers could lose that service, at least for a period of time, if a major dispute of that kind arose as a result of the repeal?
Digital Economy Bill (Eighth sitting)
Tuesday 25th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Digital Economy Act 2017 View all Digital Economy Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 25 October 2016 - (25 Oct 2016)
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 189, in clause 28, page 27, line 36, at end insert—
‘(6) The Secretary of State shall—
(a) produce a report on the implication of the repeal of section 73 of the Copyright, Designs and Patent Act 1988, and
(b) undertake a comprehensive consultation on the future of television content distribution and public service broadcasters.”
Amendment 64, in clause 82, page 80, line 2, at end insert—
“(a) section 28;”
This amendment, together with Amendment 63, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.
Amendment 94, in clause 82, page 80, line 14, at end insert—
“(h) section 28.”
This amendment would mean that repeal of section 73 of the Copyright Designs and Patents Act of 1988 would come into force two months after the Royal Assent of the Bill.
Kevin Brennan (Cardiff West) (Lab)
I thank the Minister for his warm acclamation of support for my continuing. As he will be aware, any huffing and puffing may influence how long I speak, but perhaps not in the way he hopes. It is a great pleasure to see you back chairing our proceedings this afternoon, Mr Streeter, having done so ably this morning without needing to heed any of the unsolicited advice from the Minister on how to chair a Committee. You did an absolutely superb job, and everyone on the Committee thanks you for that.
When stumps were pulled this morning, we were discussing amendment 189. To remind the Committee, that amendment calls on the Secretary of State to
“produce a report on the implication of the repeal of section 73 of the Copyright, Designs and Patent Act 1988, and…undertake a comprehensive consultation on the future of television content distribution and public service broadcasters.”
We feel that the repeal of section 73 has big potential implications, and we need to know what the Government’s strategic thinking amounts to on those issues. I was talking about how things were 30 years ago with public service broadcasters. They were reserved access to valuable spectrum and given prominence on that spectrum. That created a valuable and well-funded monopoly, whether that was advertising revenue for ITV or money from the licence fee for the BBC. We were going to discuss how every aspect of that original deal is undergoing rapid change, and that is why our amendment is important.
Spectrum is more valuable than ever. In 2015, Ofcom acknowledged that if the spectrum that public service broadcasters use was priced commercially, it would be out of reach for PSBs. Then again, other distribution methods are evolving rapidly. It is perfectly possible to imagine a day when spectrum is not used for direct TV broadcast at all, and that day might not be as far in the future as we might think.
We know that the prominence of public service broadcasters is coming under enormous pressure. Recent moves by Sky have made it very hard to find live TV or public service broadcast content at all, and that is potentially a serious assault on the public service broadcasting compact. Prominence enables scale, and scale has been the commercial and policy basis of our public service broadcasters from the start. It makes them economic and makes the notion of public service broadcasters tangible, so that they are not just widely available, but widely watched. We will return to that topic in our consideration of the next group of amendments, but it is relevant to any report that might be produced through the amendment.
Public service broadcasters are no longer the cash cow monopolies that they arguably once were. We have been in a multi-channel world for a long time, but on-demand viewing is accelerating that change even further. Public service broadcasters are not just competing for viewers with commercial channels, but with different offers from such organisations as Netflix, Amazon and YouTube and from other options, such as gaming. Netflix now outspends the BBC on original content development. It is a significant player in the original content market.
To be clear, I am not necessarily echoing what the Prime Minister said in her speech to the Conservative party conference. She seemed to be trying to channel Sam Cooke by saying, “Change is coming”, many times during her speech, but plenty already has changed, and the pace of that change is accelerating. The Government need to face up to this, and that is why we are suggesting that they should hold a proper review of the interconnected issues of distribution, carriage, content creation, prominence and funding before developing and pursuing a clear and fair strategy for television distribution in general, and public service broadcasting distribution specifically. That is what this amendment seeks to achieve. Without that proper vision for how our public sector service broadcasters will operate in a fast-changing, multi-distribution, multi-channel, globalising world, we worry that not only will they not thrive as public service broadcasters, but that ultimately they may not survive. As I said earlier, we should not allow that to happen, and we certainly should not allow it to happen by accident.
The Minister must make it clear that he wants public service broadcasters to survive. I believe that he does, but he also has to make the Government’s strategy clear in the light of this rapidly changing, complex world. It is to be hoped that he can partly do that in response to the amendments, as well as laying out his views on our suggestion of producing a comprehensive report on the subject.
We are also discussing amendment 94, which is a probing amendment that is intended to tease out a timeline for the repeal of section 73. It relates a little to the amendment that the hon. Member for Selby and Ainsty moved earlier in that it has a similar purpose. We just want to find out what the Government’s thinking is. Our amendment differs from his in that it states that the repeal should come into effect two months after Royal Assent, whereas his amendment states that it should come in immediately after Royal Assent. We will not press amendment 94 to a vote, but we want to hear the Minister’s thoughts and plans in relation to it.
Nigel Adams (Selby and Ainsty) (Con)
The hon. Gentleman may well cover this in his further remarks, but I would be delighted to hear his view on why there should be a two-month delay after Royal Assent.
Kevin Brennan
The hon. Gentleman is right to probe me on that. The truth of the matter is that there is a convenient clause to which we could add our amendments, which starts things two months after Royal Assent. As I said, amendment 94 is a probing amendment and I am sure the Minister will tell us all the reasons why it is technically defective. I will not push it to a vote so I am prepared to hear that, but we want to use it as a method of finding out the Government’s position.
Section 73 was originally introduced to encourage the roll-out of cable and to help a fledgling platform compete against terrestrial television by ensuring that cable platforms had access to public service broadcasting content. The Government have agreed that this policy objective was met some time ago, and in July reported that they were
“satisfied that the objective of ensuring that PSB services (as well as other TV services) are available throughout the UK has been met, and therefore section 73 is no longer required to achieve that objective.”
Subsection (3) states:
“The Secretary of State may by regulations make transitional, transitory or saving provision in connection with the coming into force of this section.”
Inasmuch as this generally means that the state will repeal section 73 when it sees fit, there are concerns among some public service broadcasters about understanding more clearly the Government’s intentions in relation to the timetable for that repeal. It would not be such a pressing issue were section 73 merely a harmless hangover and simply moribund. However, as we have heard, it is more than a legal anachronism. It is a loophole through which taxpayers’ money is effectively funnelled into private businesses.
As we have heard, section 73 allows companies, such as TVCatchup and FilmOn, to live stream the content of public service broadcasters and other channels online without permission. In other words, the money the public pay through their licence fee pays for content that is then, in effect, given away for free to companies other than public service broadcasters. Those companies then monetise that public service broadcasting content by placing their own advertising around it.
Public service broadcasters are granted public funding and the other advantages we have talked about on the understanding that, in exchange, they are obliged to air content that works for the public’s benefit, rather than solely for the benefit of commercial interests. Section 73, in effect, allows TVCatchup and FilmOn to benefit from that same public funding, but those companies are clearly not held to the same standards. That amounts not only to the taxpayer unwittingly subsidising those businesses, it effectively directs funds away from PSBs and impacts on their ability to generate legitimate commercial revenues and to reinvest in the wider creative economy. Those live-streaming sites increase public service broadcaster reliance on public money and can fuel a vicious cycle of under-funding.
There is cross-party agreement that that is wrong and has to be put right, which is what the Government are seeking to do, but why do we have to rely on the Secretary of State to
“make transitional, transitory or saving provisions”
for repealing section 73? Is it not the case that broadcasters and the public deserve a more explicit timeframe, for the reasons I have laid out, so that this does not persist for any more time than is absolutely necessary? Not only is that fair, but it would provide more certainty for public service broadcasters and ensure that their investment in UK content is protected. Amendments 63 and 64, which the hon. Member for Selby and Ainsty tabled, would mean the repeal of section 73 immediately after Royal Assent, which offers one way forward. Our probing amendments offer another alternative if the Government need more time.
Public service broadcasters first wrote to the Intellectual Property Office to ask for the repeal of section 73 in 2008. In the meantime, TVCatchup has obviously made millions on the back of PSB content and the European Commission has launched infraction proceedings against the UK Government, on the basis that section 73 denies public service broadcasters their intellectual property rights for their content, which is guaranteed under the 2001 copyright directive. It would also be helpful to know from the Minister how he believes that infraction proceeding plays into our discussion on the amendment, the repeal of section 73, and what role it has to play if the Bill indeed repeals section 73. In short, will the Minister explain why he is not offering a clear timetable for repeal in the Bill?
Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)
I feel that I should thank you for your chairmanship, Mr Streeter; I feel a bit left out, given that the Opposition spokesperson did it. Thank you so much for your chairmanship. It is nice to see a smile at the top table.
I will add a couple of brief points. I am surprised the hon. Member for Cardiff West earned only £10.60. I thought he displayed some creativity. I have never heard so many song lyrics or titles; I do not know if he is on commission for that. Hopefully, journalists across the country are googling—that is appropriate, given what we are discussing today—for what content he has earned £10.60, so that number may go up.
The Minister for Digital and Culture (Matt Hancock)
Other search engines are available.
Calum Kerr
Indeed—I thank the Minister. There is an interesting point here about the importance of parity across channels. The Scottish National party is clear in supporting the repeal of section 73. The hon. Member for Cardiff West made a point about the many different ways in which people can access content, which he articulated well, and the importance of being consciously competent across all areas when making legislative change. I am interested in hearing the Minister’s remarks on that.
We noted earlier the concerns specifically in relation to Virgin as a large cable company, but I want to put on the record very clearly that we absolutely support the Government in repealing section 73. As these models change and people access content in different ways, the ability for them to earn revenue from the content they produce becomes all the more important, because they cannot necessarily rely on its being consumed in a way that ensures that advertising revenues naturally flow. I emphasise that we support this, we welcome the Government’s bringing it forward but we would like a bit more clarity from the Minister around the broader picture.
Matt Hancock
I am delighted to respond to these points. I take this opportunity to commend the Opposition Front Benchers and, in particular, the hon. Member for Sheffield, Heeley, for how she proved, earlier in Committee, how it is possible to put points with great clarity and precision, such that on Thursday we rose early—somehow that seems unlikely today.
Matt Hancock
No. The Government are committed to repealing section 73 of the Copyright, Designs and Patents Act 1988, following public consultation which ended this year and concluded that section 73 is no longer relevant. Amendments 63, 64 and 94 seek to ensure that the repeal will be brought into force rapidly following Royal Assent and amendment 189 would provide for the Government to produce a report on the implications and a consultation on the future of television content distribution and public service broadcasters. I should say that after today’s Committee session I think that my hon. Friend the Member for Selby and Ainsty will be known as “the IP king”. He has been the most ardent defender of intellectual property and its protection and he made very strong arguments.
On the case for a report and a consultation, Opposition Front Benchers asked the Government to face up to the challenges of new technology and its impact on public sector broadcasting and more broadly, and it is absolutely true that there is a huge impact of technology, both in distribution methods and in software, in terms of how we are watching content. Indeed, I understand that in China more films are watched on a hand-held than on a fixed device, and the trend is in the same direction here. This is clearly a very big issue and I am glad that all members of the Committee are alive to it.
I would say, though, that in response to amendment 189, we did just hold a public consultation precisely on the balance of payments between television platforms and the public sector broadcasters which considered the regulatory framework. It considered these questions and came forward with the proposal to repeal section 73. So I gently say to Opposition Front Benchers that, although I can see the point of the amendment, the report that they seek and the consultation that they are asking for by way of what I accept is a probing amendment is what we delivered through that consultation earlier in the year. The changes that we are seeking to make in legislation are a conclusion of exactly the sort of consultation that they have been looking for. The consultation was published on 5 July. I am glad that its conclusions have cross-party support.
We strongly support public service broadcasting in the UK. We believe that it has a long, vital and sustainable future and we will ensure that it does. I cannot give a clearer commitment to public service broadcasting. Even through these changes in technology, the evidence on viewer habits shows that public service broadcasting remains valued and valuable, and we support it.
I turn to some of the detailed questions. I was asked about the TPS regulatory regime. That was also considered as part of the consultation. We decided that different regulatory regimes are still appropriate, given the differing technical requirements of different TV platforms. There is a big change: an amalgamation of different delivery platforms for broadcasting from the old cable, terrestrial and satellite, and increasingly things are moving to broadband and fibre.
Following our discussion last week, I note that today TalkTalk has announced a full roll-out of full fibre to the whole of York, so there is progress in the full fibre drive that we are looking for in this country. However, there remain different technologies, so we think that it is still appropriate to have different regulatory regimes for them, although clearly the interoperability between them is important. I hope that that explanation addresses the point.
Kevin Brennan
Does the Minister have any concerns, or did the review reveal any concerns, about the point that I made about the opaqueness of the kind of deal now done under the TPS regime? That makes it impossible to judge whether it is truly fairer to public service broadcasters.
Matt Hancock
I will come to that and answer it alongside the question about the impact of removing section 73 where there are must-offer obligations. In truth, there are a huge number of commercial deals between the public service broadcasters and those that carry the PSB content to a wider distribution network. Whether it is through the TPS regime or the regime that we are discussing, many PSB broadcasters have contractual arrangements for their non-PSB content. That happens perfectly reasonably, whether it is through that regulatory regime or through a non-PSB deal delivered using non-satellite transmission.
We do not expect PSB content to be withdrawn because of the existence of contractual arrangements for PSB content replacing section 73. Indeed, there are contractual arrangements for lots of non-PSB content, so I do not see why those contracts cannot be entered into, but the issue does lead to the question whether there should be a transitional regime to ensure that there is no interregnum.
In the event of a PSB and a platform failing to agree terms for the carriage of a service, it is for Ofcom to consider whether the proposal of the PSB was compliant with the must-offer obligations in its licence. Were Ofcom to conclude that it was not, it would expect the PSB to submit a revised offer to the platform. Until now, Ofcom has not had to intervene, because no disputes have arisen presenting any real risk of refusal to supply by PSBs or to carry by platform operators.
The timing question was raised by my hon. Friend the Member for Selby and Ainsty and by the Opposition. The consultation report included an assessment of the implications of repealing section 73, and there was recognition of the potential impacts on the underlying rights market, meaning that the Government have decided that a further technical consultation should be run by the Intellectual Property Office.
I assure the Committee that the Government have every intention of bringing into force the repeal of section 73 rapidly; we plan to do it before the start of summer recess 2017. Repealing section 73 immediately could impact rights that have previously been exempt from remuneration in relation to the underlying copyright content in cable retransmissions, such as those held by scriptwriters or musicians whose intellectual property forms part of the relevant broadcast content. Our approach is to ensure an orderly transition.
Some respondents to the original consultation said that there could be disputes between the cable platform and the underlying rights holders when trying to agree terms and that a transitional period may be helpful. The Intellectual Property Office is currently running a brief technical consultation, as has been mentioned, to examine the extent of those issues and to assess whether any transitional measures are required.
I do not want to prejudice the outcome of the consultation, but in terms of whether a transitional period would be required, the IPO’s consultation seeks views on options ranging from no transitional period to a transitional period of up to two years following Royal Assent. Even if the full transitional period is decided on as a result of that consultation, and assuming that the Bill receives Royal Assent in spring 2017, we expect the repeal of section 73 to come fully into force by spring 2019 at the latest.
Kevin Brennan
The Minister talked about bringing the repeal into force rapidly before the summer recess in 2017, and then issued further caveats and talked about 2019. Will he clarify that for the Committee?
Matt Hancock
Yes. We will bring the repeal into force before the start of the summer recess in 2017. There may then be a transitional period, depending on the current IPO consultation, but the maximum transitional period, should there be one, will be two years. I added two years on to the summer recess of 2017 to get to what the Government call spring 2019—it will probably be the warmer end of spring.
Nigel Adams
Will the Minister give some indication of the potential timescale of the IPO’s technical consultation?
Matt Hancock
It is a four-week consultation and it started yesterday, so it has three weeks and six days to run, if my maths are right.
Kevin Brennan
I am grateful to the Minister for clarifying that timetable as he envisages it. In addition to that, during the course of my remarks I talked about the possibility of a dispute arising between a public service broadcaster and a platform following the repeal of section 73. What is the Minister’s view on how that sort of dispute could be resolved without consumers being affected?
Matt Hancock
That could easily be resolved by a contractual agreement, as the two parties in such cases have in many other examples. For example, Channel 4 has a PSB element and non-PSB channels. The non-PSB channels are not covered by section 73, so the PSB element of Channel 4’s broadcasting will be in a similar position to its non-PSB element in future. Since those contractual arrangements exist between the parties covered by section 73, I see no reason why they cannot pretty quickly put in place similar contractual arrangements, not least because the decision to repeal section 73 was taken some months ago and the companies have had some time to prepare.
The final point raised was about the impact of the repeal on Virgin Media’s broadband roll-out. I see absolutely no link between the two. I am delighted that Virgin Media is looking at a broader, full-fibre roll-out, in the same way that TalkTalk has announced further progress today. Nobody at Virgin Media has raised this link with me, and given that Virgin Media is owned by one of the most well-capitalised companies in the world, I cannot see any crossover between the two—and I think it is disingenuous to suggest there is. With that, I hope hon. Members will withdraw the amendments so we can proceed.
Kevin Brennan
As I made clear, it is not our intention to put our amendments to a vote at this stage. The debate was extremely interesting, important and useful, despite the Minister’s seeming resentment of having debates that go into the detail of the Bill and despite his remarks about rising early. He should be careful about making such remarks, given that he was late for the first sitting of the Committee.
There is an important issue at stake here: in our proceedings, the Government get their way because they have a majority, but the Opposition have their say. That is the constitutional principle on which we are all here and it is the role that we play. The Minister’s continual grumpiness about that is not helping his cause. I thought it was a useful debate that has revealed and drawn out more clearly some of the Government’s thinking on the timetabling of the repeal of section 73. We are not going to put our amendments to a vote at this stage, but these are matters we might revisit later.
Nigel Adams
I very much enjoyed all the contributions, which were incredibly complete, informed and eloquent.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
With this it will be convenient to discuss the following:
New clause 14—Digital broadcasting and protection of listed sporting events—
‘Within 12 months of this Act coming into force, the Secretary of State shall commission an evaluation of the impact of developments in digital broadcasting on the protection of listed sporting events for public service broadcasters, and shall lay the report of the evaluation before each House of Parliament.’
New clause 17—PSB prominence—
‘(1) The Communications Act 2003 is amended as follows.
(2) At the end of section 310(1) add “that satisfy the qualification criteria to be set by OFCOM in the code.”
(3) In section 310(2) leave out “OFCOM consider appropriate” and insert “required by OFCOM”.
(4) In section 310(4)(a) after “programmes” insert “, including on-demand programme services,”.
(5) In section 310(5)(a) after “service” insert “, including on-demand programme service,”.
(6) In section 310(8)(a) after “services” insert “, including on-demand programme services,”.
(7) In section 310(8)(b) after “services” insert “, including on-demand programme services.’
This new clause would modernise the PSB prominence regime – as recommended by Ofcom in its 2015 PSB Review. Provisions in the Communications Act 2003 currently only apply to traditional public service TV channels on traditional TV channel menus (‘EPGs’). This proposal would extend the law to on-demand services such as catch-up TV and to the connected TV on-demand menus where such services are found.
Kevin Brennan
We are dealing with this group in a slightly novel way. I will discuss new clauses 14 and 17 and then move on to my clause stand part remarks.
New clause 14 calls on the Government to produce a report exploring the options available for future-proofing the at-risk listed events regime, which helps ensure that sporting events such as the Olympic games remain universally and freely available. The listed events regime has been enormously successful and is popular with the public, but it is undoubtedly currently at risk and could become obsolete unless the Government take action to make sure that that does not occur.
I ask the Minister to consider revising the qualifying criteria to deliver a listed events regime fit for the digital era, which we are discussing in this Bill. Since the 1980s, successive Governments have sought to ensure that TV coverage of certain major sports events remains available to everybody, irrespective of their ability to pay. The UK has an A list, which is designed to preserve live coverage of certain major events on free-to-air television—for example, the Olympic games, the football World Cup, the Grand National and the rugby World Cup final. There is also a B list that does the same for TV highlights—for example, the Six Nations rugby tournament and the Commonwealth games.
The listed events regime helps ensure that events such as the Olympics, the recent European football championships—in which Wales reached the semi-final—and Wimbledon all reach the widest possible audience, delivering enjoyment to millions, inspiring the next generation to get active, creating role models and helping make sport aspirational. In total, 45 million people in the UK watched Rio 2016 and the Euros this summer and more than 10 million people watched Laura Trott and Jason Kenny on BBC television both secure gold medals on the same day at Rio 2016.
The listed events regime strikes a balance between ensuring the public can gain free access to major events and the understandable desire of pay TV operators and sports federations to try and maximise their commercial revenues. Importantly, the regime does not prevent pay TV from acquiring TV rights to listed events; it simply ensures that qualifying services can acquire the free-to-air rights on fair and reasonable terms.
Under the current rules, the benefits of the listed events regime are restricted by statute to channels that are first, free, and secondly, received by at least 95% of the UK population. Those criteria are becoming increasingly outdated as the number of homes giving up their TVs for other media devices begins to rise; the 95% criterion will probably not be met by any TV channel at some stage in the course of this Parliament. It would be interesting to know whether the Minister recognises that that is the case and whether Ministers are thinking about it.
As a result, regulators would have no clear legal basis for discriminating between channels, which would likely lead to listed events being ultimately far less widely available and watched. That shows quite clearly that the qualifying criteria need updating, and there are options for doing that. We are trying to explore those options with our new clause in Committee this afternoon—performing our proper constitutional role, much to the resentment of the Minister.
The BBC prefers the option in which the 95% reception criterion could be updated and replaced with a measure testing whether the channel is widely watched. That would require a qualifying service to have reached at least 90% of the public in the last calendar year. That would ensure that the public continued to have access to these sporting events on channels that are easy for audiences to find and that we know they actually watch in large numbers; that is obviously the intention of the current regime. That measure would be a proxy for factors including free-to-air continuous availability, popularity and audience awareness. The proposed test would be consistent with the spirit of the regime and aligned with wider public benefits such as offering moments of national celebration and inspiring physical activity, as well as being simple to implement and more stable than the current reception test.
Furthermore, such a test would be open to any service that was free at the point of use, committed to maximising access and not tied to any one distribution platform, so it would be more able to incorporate broadband streaming, for example, as counting towards the reach of a service as and when the infrastructure allowed. That would prevent the regime from being manipulated by organisations whose purpose was to maximise the attractiveness and availability of pay TV services by providing nominally free coverage on channels that may meet an availability threshold but of which there is very low awareness.
There are alternatives. It has been suggested that the qualifying criteria might be interpreted differently—I am talking about adding broadband availability towards the 95%. However, some feel that that may involve major risks. The combined coverage of the UK’s commercial digital terrestrial TV multiplex and broadband may well allow services distributed via those means to qualify, yet their geographic coverage would exclude large rural areas. That would particularly be an issue—I say this as a Member representing a constituency in Wales; I am sure that the hon. Member for Berwickshire, Roxburgh and Selkirk, who speaks on behalf of the Scottish National party, will be aware of this—in the nations, where there is often greater difficulty with coverage in large rural areas, but it also applies to parts of rural England and, indeed, Northern Ireland.
Furthermore, broadband will not be able consistently to deliver a guaranteed quality of live streaming to mass audiences for some time to come. The BBC, in particular, feels that including broadband in the criteria implementation would be hard to measure and to implement.
The report proposed in our new clause would be an opportunity to fully explore concerns and the different options available for modernising the listed events regime. As I said, those events are very much valued by, and seem very much to be of benefit to, the public. Four in five people say that listed events are important to society. One in four said that the BBC’s 2012 Olympic coverage inspired them to take part in sport. Wide exposure of free-to-air sport can inspire, create role models and make sport aspirational. Indeed, it can bring the country, and the nations within the UK, together. Public service broadcasters likewise understand the importance of listed events and are committed to making sport freely available to all. Even though public service broadcasters are responsible for only 5% of sports output in the UK, they are responsible for 60% of sports viewing. That is something we would not wish to lose as a country, almost by accident, because of the technological changes that we have been discussing.
The UK has a mixed ecology that balances the public’s free access to major events with the potential for pay TV operators and sports federations to generate commercial revenues. The threat to listed events may radically tilt that balance. Rather than risk the abolition of listed events by the back door, Parliament and the Government should urgently consider revising the qualifying criteria to deliver a regime fit for the digital era. With this amendment, the Digital Economy Bill could be the vehicle to ensure that this happens. I shall be extremely interested in what the Minister has to say about this, and in the Government’s view of this important and much cherished feature of our sports broadcasting ecology. The Minister can feel free to dilate at length when he responds.
New clause 17 stands in my name and that of my hon. Friend the Member for Sheffield, Heeley. It proposes modernising the public service broadcasting prominence regime, as recommended by Ofcom, by extending the law to on-demand services and the menus, where they are found. Since PSB prominence was legislated for in the Communications Act 2003, many gaps have emerged. The Act was designed in a markedly different TV landscape, even 13 years ago. It was four years before the introduction of the BBC iPlayer, for example. It was eight years before the digital TV switchover took place, and seven years before the introduction of the iPad. It created public service broadcasting prominence principles for broadcast TV sets, but not for connected TV sets, public service broadcaster channels, or PSB catch-up services, such as BBC iPlayer.
The regime has not kept up well, even with the multichannel world. For example, as I am sure hon. Members with young children will be aware, CBeebies and CBBC are behind 12 US cartoon network channels in the channel listings of the UK’s leading pay platform, Sky. As someone who was brought up on public service children’s television broadcasting—God knows what I would have been like if I had not been—and as a parent, I think that that is a shame, and that the Government should have a view on it.
Kevin Brennan
I am not going to respond; I shall focus on my remarks. My hon. Friend may wish to regale us later with his favourite children’s TV programmes or public service broadcasters.
PSBs now face a far bigger transition to online delivery of TV programmes, and the regulatory regime lags far behind, so we should not miss any opportunity presented by the Bill to do something about this ever-changing situation. A growing number of existing and future services are being left out of scope, from BBC iPlayer to the now online-only youth service BBC 3, and from the new BBC iPlayer Kids, offering access to the best BBC kids’ content, to the upcoming iPlay, which will be a front door to the best British children’s content from any provider. Equally out of scope in the current regime are growing numbers of major gateways to accessing public service broadcaster content. The number of connected television sets in the UK is expected to nearly triple over the course of this Parliament, from 11 million to 29 million.
Calum Kerr
Oh, the curse of a word of praise from the Minister! I thank him none the less.
I support these two excellent new clauses tabled by Labour Members. I was delighted to hear the Minister say in response to the debate on the last clause, “We strongly support public service broadcasting.” Hot on the heels of that, the Opposition have provided him with an opportunity to put his money where his mouth is and show that he truly does. I think—at least, I hope—that we all support public service broadcasting, but there has been a lot of chat in this place about the PSB funding settlement and about it not encroaching on competition. Let us push beyond that to consider how to support public service broadcasters. Let us find a way to ensure that they maintain their place in an adapting world.
I will touch briefly on both clauses. New clause 14, on the review of listed events, is close to my heart. I note that the football World cup is one of them; I do not know whether we can table an amendment to ensure that Scotland has a chance of getting there—
Calum Kerr
I thought so. At least when we eventually get there, we will not expect to win it, unlike others.
Calum Kerr
“We’re on the march with Ally’s Army. We’re going to win the World cup.”
Calum Kerr
I will keep to the subject with a bit of brevity and levity.
I support the Labour move to review this whole area to ensure that we have a set of listed events that is fit for purpose and, more importantly, to ensure that the protection will continue. Likewise, we fully support new clause 17 on prominence. The Committee has spent a lot of time talking about the changing digital landscape. There is no doubt that if we do not introduce measures to protect listings, the public service broadcasters will disappear, slide down the pecking order and be harder to find. We will then be on the slow road to an argument that says that public service broadcasting is not as popular as it once was, but the reality will be that it is just difficult to find.
I conclude by thanking the Labour party for beating me to it with both amendments, to which I should have added my name and which I fully endorse.
Graham Jones
It is a pleasure to serve under your chairmanship for the first time, Mr Streeter. My hon. Friend the Member for Cardiff West encouraged me to talk about children’s programmes—I was thinking about “Play Away”—and I apologise for not being here earlier. I was observing a NATO training exercise as part of the armed forces parliamentary scheme.
I rise to talk about retransmission charges, and I will do so briefly because I am conscious of the time. We obviously have a listening Minister who is deeply concerned about these matters, and I hope he will go away and give due consideration to some of the points that have been raised, perhaps coming back with some thoughts of his own and some changes that could improve the Bill. On retransmission charges, repealing section 73 of the Copyright, Designs and Patents Act 1988—the intellectual property rights element—is important and welcome. It will put Virgin on an equal footing with the public service broadcasters in the marketplace of buying and selling channels.
I will return to that second issue and the financial impact in a moment, but I will first highlight an anomaly. Unless there has been a change in the last few days, the Bill does not include satellite channels, which fall under the Communications Act 2003. The Sky platform is exempt from the Bill and will not be liable for retransmission charges, which seems to be a market anomaly—I stand to be corrected by the Minister. We should have a level playing field for everyone. Sky benefits significantly not only from the five public service broadcast channels but from some of the other channels—my hon. Friend the Member for Cardiff West has just mentioned S4C and Alba, among others—and the radio stations. Sky has a huge commercial advantage in not paying for receiving something that is very complementary to its platform. We are applying a principle to Virgin, and the Bill should treat Sky equally.
We demand a lot from public service broadcasters, particularly the BBC, for which we pay a licence fee, and it is only right that the BBC should be able to recover some of that money for the licence fee payer in the commercial marketplace, rather than the service being literally given away to some platform providers. There is obviously a commercial benefit to the Sky platform or, for that matter, any satellite platform that automatically has to deliver PSBs under the 2003 Act. There ought to be something that provides clarity and a level playing field, because without it, Sky has another advantage among the many it already has.
Graham Jones
Okay. If the Minister has any proposals, can he provide some clarity? There does not appear to be any and there are many people out there raising questions about this.
The guidance seems to suggest there will be no material change to the relationship between Virgin and public sector broadcasters, despite the repeal of section 73 of the 1988 Act, so I look to the Minister for some advice on where we are with that. The Government expect the relationship to be neutral, with no cost transfer. Will the Minister clarify that and confirm that he is not giving with one hand and taking away with another, but is in fact allowing public service broadcasters, such as the BBC licence fee payer, to receive payments for programmes produced by the BBC and the other public service broadcasters?
I want to pick up on the comments made by my hon. Friend the Member for Cardiff West about new clause 17 and perhaps add my own thoughts. The Government have taken their eye off the electronic programme guide. I would ask them to cast their eye back over it, as my hon. Friend suggested. Eleven clicks to S4C is just ridiculous, but we all see now—when people are reminded and it is pointed out to them, they say, “Oh yes, that is true.” Sky has put the electronic programme guide on the second tier, where there is Sky Box Office, Sky products and Sky everything else. We are seeing a diminution of the electronic programme guide and Ofcom unable to act in the public interest.
This is important because we are talking about a huge commercial space and, very quietly, Sky has clearly adapted that space for the benefit of the Sky platform. Other people are going to come along and we will see that contested. Companies such as Netflix in particular, which wants to enter the market in an assertive manner, want a big presence and are willing to spend a lot of money. Only in the last week, we have seen the amount of money that it has been suggested that Amazon is spending on Jeremy Clarkson’s latest foray into high-speed petrol-head motoring. Is it £160 million? There is a considerable amount of money in the marketplace from these other organisations and broadcast providers, and we are going to start to see the electronic programme guide being contested. In fact, it is already being contested, as Sky has already snatched the front page of the EPG on its platform.
I raise the following points with the Minister: Ofcom currently seems to be behind the curve on this issue and the guidance needs to be updated. We do not want to see public service broadcasters relegated in any way, shape or form. We do not want to see the design or architecture of the EPG manipulated so that maybe the BBC is number one but somehow Netflix catches people’s eye more prominently, with small letters for the first five and big graphics for some of the more commercial providers, such as Amazon. It is not just about having slots one to five; Ofcom should be mindful of the actual graphic presentation.
We do not want to see adverts creeping into the EPG either, so Ofcom needs to be absolutely clear in the regulations and guidelines about the type of space that the EPG is. The Government should be mindful not only of platform providers such as Sky, but of TV manufacturers, which will come over the hill and see the space. Someone will turn on their television and, after “LG—Life’s Good”, the first thing they will see is Netflix in the top corner, before they even click on an EPG. Technology is moving fast and the presentation of available services must have some framework and clearer guidance from Ofcom, because it is important that we do not end up in a world where public service broadcasters are relegated several clicks away from primacy—ITV needs the commercial return and Channel 4 also has a commercial element and needs the returns on advertising. That scenario should not be allowed, as it would affect the broadcasters as a business, along with their funding model and audience figures and therefore their advertisers and advertising revenue. We absolutely must be clear about what the graphical interface and its parameters should be—no adverts—and also about which broader platforms might seek to enter the market, such as TV manufacturers.
I welcome new clause 17. The Government have a lot of work to do on EPG guidance, because this legislation will go down for the next 10 years and in that time we will see incredible technological advancements, with companies wanting to capture that prime retail space. It is incumbent on the Government to step in, not just to make the situation better and more consistent for the viewer but to protect the public service broadcasters, as not only the licence fee payer but the advertiser on the commercial channels is affected. We have a national interest, therefore, in protecting that space. It is important that the Government revisit the EPG guidelines.
I am interested in hearing the Minister’s comments on my questions, particularly his clarification regarding Sky and the 2003 Act—I cannot find anything on that in the documentation—and also some reassurance on the EPG.
Matt Hancock
Terrific! I am delighted to respond. As we know, clause 28 will repeal section 73 of the Copyright, Designs and Patent Act 1988, which currently provides that copyright in a broadcast of public service broadcasting services, and any work in the broadcast, that is retransmitted by cable is not infringed when the broadcast is receivable in the area of the retransmission. In effect, that means that cable TV platforms are not required to provide copyright fees in relation to core public service broadcasting channels. The provision was brought in at the onset of the cable industry in the UK to provide for the industry to compete with terrestrial by providing PSB content. However, that was a long time ago and technology, as everyone has noticed, has moved on a long way.
Last year we consulted on the repeal of section 73, and I am glad that there is cross-party agreement on it. The conclusion that the Government reached, and which has been agreed to by the Committee, is that the section is no longer relevant. There are a wide variety of platforms that ensure that virtually everyone in the UK is able to receive public service broadcasts and, following the completion of the digital switchover in 2012, digital TV services are now available to more than 99% of customers, whether through terrestrial, satellite, cable or fibre platforms. The cable market has moved from a large number of local providers in the 1980s, when section 73 was introduced, to one big one, and it has also gone up massively in scale, from hundreds of thousands to more than 4 million subscribers.
We are satisfied that the objective of ensuring that PSB services are available throughout the UK has been met. Therefore, section 73 is no longer required. Moreover, as my hon. Friend the Member for Selby and Ainsty pointed out earlier, this also closes a loophole, because live streaming services based on the internet are broadcasting TV programmes and relying on section 73 to exploit PSB content by retransmitting channels and selling advertising around the service without any of the benefit flowing to the PSBs. I think we all agree that is wrong, so I am glad there is cross-party support for the change.
Let me respond to some of the questions that were put, looking first at new clause 14. I am a strong believer in the listed events system. Major events such as the Olympic games and the FA cup final draw huge audiences. The listed events regime has worked well. The status of these events, as listed events, boosts them and their broadcast to the nation brings us together. I am delighted that the SNP supports the listed events regime as well. I fear I am going to have to resist the SNP’s suggestion that we should use the listed events regime to ensure that Scotland is always in the World cup finals, in the same way that we cannot legislate for the tide never to come in or the sun never to set, but it is very important and it is close to people’s hearts.
The right to broadcast listed events must be offered to qualifying channels, defined as those that are received without payment by at least 95% of the UK population. Ofcom is responsible for publishing the list of channels that satisfy those criteria. We have no evidence to suggest that recent developments, with more online viewing, will put the BBC or other PSBs at immediate risk of failing to meet these qualifying criteria. I know that concern has been raised, but I have discussed it with the BBC and Ofcom, I have gone into the details, and I am not convinced there is a risk in the near term at all.
Kevin Brennan
I did say that, because of the criteria’s increasingly outdated nature, the 95% threshold will probably not be met by any TV channel at some stage during this Parliament. Is the Minister telling the Committee that that is categorically wrong?
Matt Hancock
Yes; I disagree with that analysis. Were that to become the problem, then we would need to act, because we support the listed events regime. However, we do not agree with the analysis that the hon. Gentleman has put forward, not only because of the measurement on the existing, most restrictive definition of the 95%, but because the definition of qualifying channels are those that are received without payment. There are many ways to receive a channel without payment, including online, so viewers moving from terrestrial TV to online does not necessarily—and in my view does not—remove them from that 95%.
Kevin Brennan
The Minister has made the point, and I thank him for making it categorically: he believes that that will not happen during this Parliament. However, he also said that if it were to happen, the Government would have to act. Is that not the very reason why he should support the new clause? It would give legislative backing to the Government to produce a report to examine what ought to be done in those circumstances.
Matt Hancock
No, because I do not think that is going to happen. The hon. Gentleman also raised the question of what we should do if the legislative underpinning of the regime were to collapse. He came up with a specific proposal. I think that the proposal is itself flawed because it was to switch the measure from channels received without payment to those that are viewed, and that changes its nature significantly: from channels that are received, so can be viewed by somebody, to those channels that are viewed, which would be far more restrictive in terms of the channels that could then provide listed events. It is not a surprise to me that it is incumbents who want to make that argument because they are the ones that are watched, as opposed to those that can be watched.
Kevin Brennan
The Minister alluded at the end to the fact that we are not making that proposal in our new clause. We were rehearsing that argument during discussion of the new clause. Obviously he does not agree with it, but it is important to put on the record that that particular proposal is not in the new clause. It asks for a report.
Matt Hancock
I am grateful for that clarification. We will obviously keep the matter under review. It is important that the listed events scheme continues to operate. I could not be clearer in our assessment of the definition of qualifying channels based on the existing statute. A specific review within 12 months of the legislation’s coming into force is in my view not necessary, but we will keep the situation under close review.
New clause 17 would amend the public service broadcaster prominence review. The hon. Member for Hyndburn made a powerful and eloquent speech with some incredibly good points in it. The new clause would extend the prominence provisions to on-demand services such as catch-up TV and connected TV on-demand menus. The matter was considered in the balance of payments consultation. We have very strong support for S4C and some of the other channels mentioned in the debate, but our conclusion was that we have not seen compelling evidence of harm to PSBs to date, so we decided not to extend the EPG prominence regime at this stage.
In a way, the debate has brought out the challenges in this area. The hon. Gentleman started talking about the description of the graphical representation on an EPG, and the discussion can easily get into acute micromanagement of an EPG when the increasing integration of TV and internet services makes that more rather than less redundant. I therefore caution against an attempt at extreme micromanagement of the interface.
Graham Jones
The Minister flags up a cautionary point, but I again ask him a question I asked earlier: if he had a graphical interface with tiny letters that fulfilled its obligations, but at the bottom it said, “Amazon” and “Netflix”—it effectively had some commercial advertising —would he be happy to see that? Would that satisfy his current position? Alternatively, would he reflect and think, “That is not quite right”?
Matt Hancock
The hon. Gentleman is a great man who is worried about my happiness, but this is not about my happiness; it is about what is best for public service broadcasting and the PSB compact. My response is that it is for Ofcom to issue guidance on ensuring that the EPG works. It is better done that way, so that it can be proportionate, flexible as technology changes over time and not micromanaging things. The guidelines do that and pull that off. That is why when we considered the proposal as part of the consultation, we decided not to go there.
Graham Jones
I welcome the opportunity to engage in the issue, but when the Minister looks at Sky taking over the splash screen and relegating the EPG to the second tier—obviously Ofcom cannot act in that case, or it would have done already—is he happy?
Matt Hancock
Again, my happiness is secondary really, but my problem with the proposition being put forward is that trying to define sub-menus and user interfaces in regulation, especially statutory regulation, is incredibly hard. The technological landscape is shifting quickly. It is best left to the Ofcom guidance to answer such questions. We looked into the matter in some detail in the consultation, so I hope that the hon. Gentleman will withdraw his support for the new clause.
Kevin Brennan
The Minister is saying that it is up to Ofcom to decide, but is not the point that what we are trying to do here is exactly what Ofcom is proposing?
Matt Hancock
No, because it is for Ofcom to issue guidance on linear EPGs. Ofcom is required as a duty to make the system work. Rather than going further down this route, having considered it, we do not want to be over-prescriptive, given the technological changes that are happening. With that, I hope that hon. Members will withdraw their amendment and then vote that clause 28 stand part of the Bill.
The Chair
We will, of course, be voting on any new clauses not today but later in our proceedings. Does Mr Brennan have any remarks to make?
Kevin Brennan
Yes, briefly. As you say, Mr Streeter, we will come to the new clauses later in the Bill. I do not think that it will necessarily be our intention at this point—we will cogitate further—to push them to a vote, but there are issues here to which we might want to refer on Report. One of my colleagues has pointed out that the Minister did not answer a question about Sky. Rather than making another speech, does he want to intervene during my brief remarks?
Matt Hancock
As I said in the discussion of the previous set of amendments, Sky is subject to a different regulatory regime. There are conditional access charges for satellite within that regime, which must be fair, reasonable and non-discriminatory for all channels. We considered that as part of the balance of payments consultation and came to the conclusion that it did not need to be changed, because of the requirement set out in the DPS code.
Kevin Brennan
I am grateful to the Minister for saving us time with that helpful intervention.
Graham Jones
This is an opportunity to ask my hon. Friend a question. There seems to be some doubt about the relationship between Sky’s retransmission charges and public service broadcasters. Does he know whether Sky pays for public service broadcasters? I understand that Sky pays for ITV commercial channels, but as I understand it, it does not pay anything for public service broadcasting.
Kevin Brennan
We discussed this issue, and the nature of that regime, earlier today. My observation was that the situation was extremely opaque, which is why we proposed earlier amendments to the Bill to suggest that the whole area should be reviewed—for that very reason. My hon. Friend makes an extremely pertinent point. It will be worth reading his remarks, and those made earlier today by Government and Opposition Committee members, on that point.
When we discussed new clause 14, which deals with listed sporting events, I worried that there is a degree of complacency in the Government. People will have heard what the Minister said about the issue, and we will be interested to hear what others have to say about his response. We should lay down a marker to say that we do not think that the Government are really listening or hearing what we are saying about this subject, and they are not sufficiently attuned to the dangers to listed sporting events. I know that the Minister is a keen and successful sportsman in his jockeying activities, on which I congratulate him. I am sure that he would want to see—
Kevin Brennan
He is a flat racing jockey—and, from what I have seen, a very good one—but he should be concerned about the possible future of events such as the Grand National, which, as he rightly said, bring the country together and are meaningful and important cultural events as well as sporting ones.
On new clause 17 and PSB prominence, again, the Minister says that he has not seen compelling evidence of harm, but I think that we supplied him with plenty of compelling evidence of the potential for harm, which is what the Bill is about. It should be about the digital future, as we have said. I take his point about extreme micromanagement—that is valid—but we are not talking about that; we are talking about setting clear parameters to ensure that public service broadcasting prominence remains across all platforms. Although we are unlikely to press the new clause to a vote later, we reserve the right to return to these issues.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
The Chair
We are catapulted into part 5 of the Bill.
Clause 29
Disclosure of information to improve public service delivery
Louise Haigh (Sheffield, Heeley) (Lab)
I beg to move amendment 98, in clause 29, page 28, line 25, leave out “had regard to” and insert “complied with”.
This amendment provides stronger compliance with the code of practice on the disclosure of information.
The Chair
With this it will be convenient to discuss the following:
Amendment 100, in clause 30, page 29, line 33, leave out “had regard to” and insert “complied with”.
This amendment provides stronger compliance with the code of practice on the disclosure of information.
Amendment 99, in clause 32, page 30, line 13, at end insert—
‘(1A) In determining whether to make regulations under section 29, 30 or 31 the appropriate national authority must ensure that—
(a) the sharing of information authorised by the regulations is minimised to what is strictly necessary,
(b) the conduct authorised by the regulations to achieve the “specified objective” is proportionate to what is sought to be achieved by that conduct,
(c) a Privacy Impact Assessment compliant with the relevant code of practice of the Information Commissioner’s Office has taken place and been made publicly available,
(d) the proposed measures have been subject to public consultation for a minimum of 12 weeks, and responses have been given conscientious consideration.
(1B) As soon as is reasonably practicable after the end of three years beginning with the day on which the regulations come into force, the relevant Minister must review its operation for the purposes of deciding whether these should be amended or repealed.
(1C) Before carrying out the review the relevant Minister must publish the criteria by reference to which that determination will be made.
(1D) In carrying out the review the relevant Minister must consult—
(a) the Information Commissioner, and
(b) open the review to public consultation for a minimum of 12 weeks, and demonstrate that responses have been given conscientious consideration.”
This amendment seeks to reduce the risk of successful legal challenges. Challenges are often made on grounds of privacy and this would amend that to increase privacy safeguards.
Amendment 96, in clause 32, page 30, line 33, at end insert—
‘(3A) A particular person identified in personal information disclosed under sections 29, 30 or 31 is able to request to a specified person under subsection 29(1) that the personal information is modified and corrected if necessary.”
Amendment 95, in clause 32, page 30, line 34, leave out
“(including a body corporate)”
and insert
“, a group of persons, a private company or a publicly traded company irrespective of their size and revenue, but”.
Amendment 105, in clause 35, page 32, line 31, leave out “have regard to” and insert “comply with”.
Louise Haigh
I am very grateful to my hon. Friend the Member for Cardiff West for giving me some much-needed time off. I do not wish to disappoint the Minister by not being as brief as we were earlier, but I am not sorry, because part 5 really does require some further scrutiny. I think the Government know that it was not ready for Committee, not least because they have tabled several dozen amendments to it, but also because the codes of practice were not in good enough shape last week, according to the Information Commissioner, but were published just a few days later—some civil servants were clearly working overtime in the intervening period.
Clause 29 allows specified persons to share data for a specified objective. All national authorities will be enabled to lay regulations through secondary legislation for exactly what those data-sharing arrangements will be and what they will be for. In doing so, this clause lays out that they will be required to ensure the secure handling of information and to have regard to the codes of practice. Our amendments seek to strengthen this and to ensure that anyone involved in the sharing of data under these new powers is in full compliance with the codes of practice that were published last week.
I want to be very clear here: the Opposition do not oppose the Government’s sharing data among themselves to improve policy making and public services, but we must get this absolutely right and we are still a long way away from that, given the state of the current proposals. This is a key point: the public support the sharing of data to better enable the Government to provide services and to better enable the public to make use of those services, but public trust is fragile and has been rocked in recent years by varying degrees of incompetence in managing those data. Before Government Members point out that previous Labour Administrations were just as guilty, I should say that I fully accept that. This is not a political but rather an administrative point, which is why such proposals need to proceed with the utmost caution.
The Information Commissioner produced a very instructive report on this very point, which is extremely important to this part of the Bill, because it demonstrates the circumstances in which the public are happy for their data to be shared. The commonly recurring themes of what the public want regarding data could not be clearer: they want control over their data; they want to know what organisations are doing with those data; and they want to understand the different purposes and benefits of sharing their data. In that context, 63% of people agreed that they had lost control over the way in which their data are being used. This demonstrates that if there is to be sharing of data, which we support, there must be very clearly defined safeguards based on consent and transparency.
This part of the Bill gives considerable powers to Government to share data, but there are essentially no safeguards built in to ensure privacy, data protection, proportionality and a whole host of other principles that should sit alongside data sharing. It is vital that these reforms go ahead and we are completely in favour of effective data sharing across Government to achieve public sector efficiencies, value for money, improved public sector services, take-up of benefits for the most vulnerable, such as the warm home discount or free school meals, and, most importantly, an improved experience for those who use public services.
The Minister for Digital and Culture claimed in an evidence session that the safeguards are in the Bill, but that is simply not the case. I would be grateful if the Parliamentary Secretary, Cabinet Office outlined what safeguards he thinks there are. As I, a relatively amateur observer, as well as those who are much more expert in the matter read it, the safeguards are to be added at a later date, written up by the Government and consulted on with people whom the Government deem fit to consult. Furthermore, there is absolutely nothing the public sector does that is not covered by the clause. I would be grateful, therefore, if the Minister gave give us a single example that that—I quote from the clause—for the purposes of
“the improvement of the well-being of individuals or households”,
or of improving
“the contribution made by them to society”,
would not deliver.
Calum Kerr
It is good to see the shadow Minister back in her place. She is making an excellent start to this section of the debate, pulling out many of the key issues. I am afraid that the ministerial team might not like the scrutiny that the process is supposed to provide—and essentially does. The point about transparency is critical and there is a confidential submission that points out that transparency does not prevent people from doing anything; it simply requires them to be accountable for what they do. We have recently seen the case of HMRC outsourcing to Concentrix the ability to collect tax credits. Data from another source were used, and we all know the damage that can be done when that is not done well.
Louise Haigh
I am grateful for that intervention. I am very aware of the Concentrix case and will come on to it shortly.
On the inclusion of non-public sector authorities and the Government’s intention to strictly define the circumstances and purposes under which data sharing with such organisations will be allowed, their statement of intent was clear. However, only one paragraph in the 101-page draft code mentions non-public sector organisations. That paragraph says that an assessment should be made of any conflicts of interest that the non-public authority may have but it does not give any examples of what those conflicts of interest might look like, so perhaps the Minister will elaborate on that when he responds. It states that a data-sharing agreement should identify whether any unintended risks are involved in disclosing data to the organisation—the risk regarding Concentrix was just highlighted—but the code of practice does not list any examples or set out how specified persons might go about ascertaining those. It also states that non-public authorities can only participate in a data-sharing agreement once their sponsoring public authority has assessed their systems and procedures to be appropriate for the secure handling of data, but it does not give any sense of what conditions they will be measured against or how officials should assess them.
That is not the kind of reassurance that was provided in the Government’s consultation response. Given that these are draft codes, I hope the Minister will take what I have said away and improve them, not least because of the recent scandal relating to the US multinational company, Concentrix, which was contracted by HMRC to investigate tax credit error and fraud. Concentrix sent letters to individuals—mostly working single mothers across the country receiving tax credits—in what was essentially a large-scale phishing exercise. Not only did it get things catastrophically wrong by cancelling benefits that it should not have cancelled and leaving working mothers destitute over many weeks and months in some cases, but it performed serious data breaches in sending multiple letters to the wrong individuals and disclosing personal information.
We have made it very clear that the Bill could have done with considerably more work before it was brought before the House. I understand that the civil servant who wrote part 5 has now left, or is in the verge of leaving, the employ of the civil service, so there is even more reason for us to work cross party and with expert organisations on improving the proposals.
As I have said, public trust in Government handling of data is not strong. Unfortunately, the public have not been given any reason to put their concerns to rest. The recent National Audit Office report, “Protecting information across government”, revealed the prevalence of weak controls on the protection and management of personal information in Government. Any continuation of the existing poor information management identified by the NAO, or the further weakening of cyber-security and data protection implied by part 5, is likely to have negative economic and social impacts.
As the Information Commissioner’s Office commented:
“It is important that any provisions that may increase data sharing inspire confidence in those who will be affected. Our research shows that the public are concerned about who their data is shared with and reflects concerns that they have lost control over how their information is used. Even apparently well-meaning sharing of data such as GP patient records for research purposes can arouse strong opinions.”
This is an important time to strengthen cyber-security and the minimisation and protection of data, which is why it is so important to get this part of the Bill right. A huge prize is on offer, but this has the potential of going the way of the care.data scandal. Frankly, it is astonishing that neither Ministers nor civil servants have learnt their lessons from that very regrettable episode, because there was absolutely nothing wrong with the principle of care.data either; it attempted to achieve exactly the kind of aims as the Bill’s reforms.
The idea was to create a database of medical records showing how individuals have been cared for across the GP and hospital sectors. Researchers believed that the information would be vital in helping them to develop new treatments as well as assessing the performance of NHS services. The records would be pseudo-anonymised, meaning that the identifiable data would be taken out. Indeed, they would just contain the patient’s age range, gender and the area they lived in. However, researchers could apply for the safeguards to be lifted in exceptional circumstances, such as during an epidemic. That would have needed the Health Secretary’s permission.
The concept had the backing of almost the entire medical community, many charities and some of the most influential patient groups. The UK’s leading doctors told us how access to so many NHS records would help them to understand the causes of disease, quickly spot the side effects of new drugs and detect outbreaks of infectious diseases.
The problem with care.data was that the advantages and the principles upon which the data would be shared were simply not communicated by the Government or by NHS England, and so it attracted the criticism of bodies as disparate as the British Medical Association, the privacy campaign group Big Brother Watch and the Association of Medical Research Charities. Such was the botched handling of the publicity surrounding care.data that, by April 2014, the launch was aborted. However, it emerged the following June that nearly 1 million people who had opted out of the database were still having their confidential medical data shared with third parties, because the Health and Social Care Information Centre had not processed their requests.
A review by the National Data Guardian, Dame Fiona Caldicott, found that care.data had caused the NHS to lose the trust of patients, and recommended a rethink. That prompted the then Life Sciences Minister, the hon. Member for Mid Norfolk (George Freeman), to announce that the scheme was being scrapped altogether, even though £7.5 million had already been spent on constructing a database, printing leaflets, setting up a patient information helpline and researching public attitudes to data sharing.
The Caldicott review established a set of Caldicott principles, with the primary one being that the public as well as the professionals should be involved in data-sharing arrangements. Dame Fiona Caldicott proposed a simple model that gives people the option to opt out of any of their information being used for purposes beyond care. She said:
“We made it slightly more complicated by saying it was worth putting to the public the choice of having two separate groups of information to opt out of – [those being] research and information used for running the health service. If you put all of the possible uses of data currently in the system together and asked people to opt in or out of that, it’s actually asking them to make a choice about a very big collection of information. [People] may want to have the possibility of saying, ‘Yes, I’d like my data to be used for the possibility of research, but I don’t want it to be used for running the health service’.”
She also made it very clear that the benefits of data sharing and what it means need to be communicated clearly to the public, as there is a lot of confusion around how the data are shared.
Absolutely nothing has changed since that disaster and the subsequent review, so it is concerning not to see those basic principles included in the Bill. I am interested to hear the Minister’s response to those principles laid out by the National Data Guardian. The public need to be able to trust organisations that handle their data and they need to retain control over those data. Both those things are essential to build confidence and encourage participation in the digital economy. The principles have been debated over the past several years at the European level, and we should be told here and now—today—whether the Government intend to implement the EU’s General Data Protection Regulation. If they are, why is the Bill not compliant with it?
The new EU GDPR and the law enforcement directive were adopted in May and will take effect from May 2018. The GDPR includes stronger provisions on: processing only the minimum data needed; consent; requirements on clear privacy notices; explicit requirements for data protection by design and by default; and on carrying out data protection impact assessments.
Although the Government’s arrangements for exiting the European Union have yet to be decided, it seems likely that the GDPR will take effect before the UK leaves, so the Government will have to introduce national level derogations prior to its implementation. If that is the case, there will have to be a thorough consideration of the impact of the new legal framework on all aspects of the Bill affecting data sharing, including implementation arrangements. Indeed, as the Information Commissioner said when giving evidence to the Committee two weeks ago:
“There may be some challenges between the provisions and the GDPR… There would ?be a need to carefully review the provisions of this Bill against the GDPR to ensure that individuals could have the right to be forgotten, for example, so that they could ask for the deletion of certain types of data, as long as that was not integral to a service.”––[Official Report, Digital Economy Public Bill Committee, 13 October 2016; c. 112-13, Q256.]
The GDPR states that data are lawfully processed only if consent has been given by the individual, which is completely lacking in this section of the Bill. It also gives data subjects that right to withdraw consent at any time:
“It shall be as easy to withdraw as to give consent.”
Controllers must inform data subjects of the right to withdraw before consent is given. Once consent is withdrawn, data subjects have the right to have their personal data erased or no longer used for processing.
The Chair
Order. May I gently assist the hon. Lady by saying that I am not sure she has referred to her amendments much yet? She is making an excellent clause stand part speech. This will certainly now be the clause stand part debate, but it might help the Committee if she came on to her amendments as soon as possible.
Louise Haigh
Of course. Thank you very much, Mr Streeter.
Our amendments would ensure that the codes of practice, which have been vastly improved over the past week, are statutory. It is important that the principles and safeguards outlined so far are included and are statutory. That is what I have been alluding to so far in my speech. It seems pointless for civil servants to have put all this work into the codes for them merely to be regarded, rather than statutorily complied with. The codes must be improved further, and we hope that Ministers and officials will work with the industry and organisations to do just that, but we want to see them referenced properly in the legislation and properly complied with. Anything less means that the powers enabled in the clause dwarf any safeguards or checks included in the codes.
Amendment 99, in my name and that of my hon. Friend the Member for Cardiff West, would help to build trust in the Government’s data-sharing provisions—trust that has been rocked over a number of years. That trust is absolutely essential if this extension of the Government’s data-sharing powers is to be effective. It is worth noting again that the draft regulations allow a significant extension of data-sharing powers with a significant number of Departments. That extension is rightly set within defined and strict criteria, but some of the definitions contained within those criteria are at best vague.
Subsection (8) of clause 29 allows for the sharing of data if it is of defined “benefit” to the individual or households. Subsection (9) allows for the sharing of data if it
“has as its purpose the improvement of the well-being of individuals or households.”
While the extension is ostensibly for tightly defined reasons, those reasons are in fact so broad that they could refer to anything at all.
We again come back to the point about public trust. The public want to know why their data are being shared and that it is strictly necessary. Amendment 99 would help build that trust by ensuring that, under clauses 29, 30 and 31,
“the sharing of information authorised by the regulations is minimised to what is strictly necessary…the conduct authorised by the regulations to achieve the “specified objective” is proportionate…”
and that
“a Privacy Impact Assessment…has taken place”.
The amendment would require the Minister to establish a review that consults the Information Commissioner and the public on the effectiveness of the measures. The amendment would require the Minister, after a three-year period, to review the operation of these provisions to decide whether they should be amended or repealed.
A similar measure is included in the Bill in the provisions relating to data sharing for the purposes of the collection of public debt, so it is puzzling that it is not included in this part, too, as these provisions are so much broader and just as risky, if not riskier. Individuals are right to be anxious about their sensitive data being shared. The amendment would allow for the public to be reassured that their data are being handled within the strictest confines.
Amendment 96 would give individuals a right to access and correct their own data. Empowering citizens to have access to and control over their own personal data and how they are used would clearly help improve data quality. Citizens could see, correct and maintain their own records. Data need to work for people and society. Citizens need to be actively engaged in how their data are secured, accessed and used. Again, that needs to be put on the face of the Bill.
Part 5 does not make clear how proposals to data share comply with the Government policy of citizens’ data being under their own control, as set out in paragraph 3 of the UK Government’s technology code of practice. Indeed, the proposals appear to weaken citizens’ control over their personal data in order for public bodies and other organisations to share their data. Weakening controls on the protection of their data is likely to undermine trust in the Government and make citizens less willing to share their data, challenging the move towards digital government and eroding the data insights needed to better inform policy making and related statistical analysis. That type of organisation-centred, rather than citizen-centred, approach characterised the failure of the top-down imposition of care.data in the NHS. That is why we tabled these amendments.
The Parliamentary Secretary, Cabinet Office (Chris Skidmore)
It is an honour to serve under your chairmanship, Mr Streeter, and to be standing here making my Committee debut. The hon. Member for Sheffield, Heeley is obviously new to the business as well, and I hope to follow her example. She has been gracious and proportionate in holding the Government to account. I hope we can have a full and frank exchange—hopefully, a rapid one—as we move through part 5.
The Government share information every day. Like every organisation, we rely on information to deliver the support and services that everybody relies on. These proposals will not do anything radical. They are simple measures designed to provide legal clarity in uncontroversial areas. The hon. Lady said that the Bill’s objectives are too broad, but I am afraid I disagree. We have made available draft regulations that set out three clear objectives, which are constrained and meet the criteria. I believe it is possible to strike a balance between the regulations and the evidence to set out specific objectives on identifying individuals and households that have multiple disadvantages, improving fuel poverty schemes and helping citizens retune their televisions when the broadcasting frequency is changed in a couple of years’ time.
The hon. Lady mentioned some specific examples. I want to turn to the fuel poverty schemes. When we look at those several years down the line, I genuinely believe that we will be proud to have sat here and legislated in a Committee that introduced data-sharing measures that enable, for instance, a significant number of vulnerable people to benefit from the warm home discount scheme. At the moment, about 15% of warm home discount scheme recipients are classed as fuel poor, according to the Government’s definition. By utilising Government-held data on property characteristics to benefit the recipients, we estimate that that figure could be at least tripled. That could mean that an additional 750,000 fuel poor households receive a £140 rebate off their electricity bill each year.
We know that some vulnerable households miss out on the warm home discount because they need to apply and they either do not know the scheme exists or, for one reason or another, are unable to complete an application. Our proposed changes could result in the majority of the 2.1 million recipients receiving the rebate automatically. It will come straight off their energy bills without the need to apply. That is simply an extension of the data-sharing measures that already exist in the Pensions Act 2014 for pension credit. It is evolution, not revolution.
That example clearly sets out how we will require data to be shared among Government organisations and for there to be a flag to suppliers of eligible customers. In that instance, we will require the suppliers to use data only to support customers. Each objective will require a business case setting out the purpose and participants, which will be approved by Ministers and subject to parliamentary scrutiny.
I note that we are debating clause 29 stand part as well as the amendments, so after talking generally about part 5, let me move on to the clause. I believe that these powers do not erode citizens’ privacy rights. They will operate within the existing data protection framework. The new powers explicitly provide that information cannot be disclosed if it contravenes the Data Protection Act 1998 or part 1 of the Regulation of Investigatory Powers Act 2000. Further, they are carefully constrained to allow information to be shared only for specified purposes and in accordance with the 1998 Act’s privacy principles.
The new codes of practice, which the hon. Lady mentioned—I have been assured that they are on the parliamentary website—have been developed to provide guidance to officials in sharing information under the new powers in respect to public service delivery, fraud and debt, civil registration, research and statistics. The codes are consistent with the Information Commissioner’s data sharing code of practice. Transparency and fairness are at the heart of the guidance. Privacy impact assessments will need to be published, and privacy notices issued, to ensure that citizens’ data are held transparently. I was delighted that the Information Commissioner wrote to the Committee on 19 October saying:
“Transparency is key to building people’s trust and confidence in the government’s use of their data. I am pleased to see that further safeguards such as references in some of the codes to the mandatory implementation and publication of privacy impact assessments (PIAs), and reference to my privacy notices code of practice, have been highlighted in the Bill’s codes of practice.”
Louise Haigh
The Information Commissioner also said that she wanted the privacy impact notices to be included in the Bill, and the codes to be explicitly subordinate to her code on data-sharing practices. Will the Minister confirm that those codes are indeed subordinate? Will he also explain why the codes are not included in the Bill if they are so central to the process?
Chris Skidmore
I will come to the second point later. On the Information Commissioner’s desire to include privacy impact assessments, it is clear to me from her letter that she is now content with the situation as it stands:
“I am content that the codes all now reference and better align with the guidance on sharing personal data set out in our statutory code and include effective safeguards to protect people’s information.”
Louise Haigh
The Information Commissioner was referring to the codes being improved since she gave evidence to the Committee. Later in that letter, which I think the Minister has in his hand, she goes on to say that she stands by the other evidence, both the oral evidence that she gave the Committee and her written evidence, which included her view that privacy impact notices should be in the Bill.
Chris Skidmore
The Information Commissioner also mentions that, on privacy impact assessments and with reference to her privacy notices code of practice:
“This will build in transparency at two levels:—”
in the current situation—
“greater accountability through the publication of PIAs and timely and clear information for individuals so they can understand what is going to happen to their data.”
The Government remain committed to working with the Information Commissioner’s Office. When it came to the evidence sessions, I was aware of the fact that we had a long process discussion around the codes of practice and when their publication dates were due. It was very important for me, as a Minister, to ensure that we had the confidence of the ICO going forward and that we could publish those draft codes. We will continue those conversations.
When looking at putting the codes or privacy impact assessments in the Bill, it comes back to the key point of being able to continue that conversation when it comes to a transformational technology that we may not even know exists at the moment and that may radically change our ability to look at how we data share. At the moment we are looking at specified portals through which we will data share for the benefit of the most vulnerable in society, but there may be a new technology that allows the Government to expand our scope. If that new technology comes into being and we write the codes and privacy impact assessments into the Bill, we will have the chilling effect of ossifying the practice; it will impact on our ability to adapt and to be able to look at new technology, to move fast and to realise the opportunities that we may have to data share for the benefit of the most vulnerable in society.
Louise Haigh
I completely agree that we should not tie ourselves down in the Bill, particularly to technology. It came through loud and clear from the evidence sessions that part 5 seems to tie us to a very outdated approach to data sharing. It does not talk about data access; we heard that an awful lot in the evidence sessions. The Bill goes against the Minister’s own guidance on that. We should look not at bulk sharing, which takes us back to when we had filing cabinets or were sending across spreadsheets and databases on USB sticks, but at using application programming interfaces and canonical datasets, on which the Cabinet Office is leading the way. I would appreciate it if the Minister commented on that.
Chris Skidmore
The hon. Lady highlights the argument I am trying to make, which is that the data-sharing measures in the Bill are proportionate, constrained and there to ensure that we can bring public confidence with us, which she mentioned. That is why we have highlighted specific portals through which we will be able to share Government information across Departments. In future, there will be secondary legislation powers to review and expand that, but there will be a whole process for which we need scrutiny.
That is why the Bill is so important: by highlighting how we can help those most in need and how, when it comes to data and consent, some people are in circumstances, by virtue of being in deprived communities or particularly vulnerable, of not knowing that they can benefit from their data being shared. It is the Government’s responsibility to act in this particular area to ensure that data are shared for the benefit of the most vulnerable. That is why the Bill is designed as it is. We have the secondary regulations in place, limited as they are at the moment, going through impact assessments and everything that we need to ensure that we have a proportionate response to sharing data.
I fully appreciate what the hon. Lady said but I hope that she will accept that the Government have pulled out all the stops to ensure that we can take public confidence with us. That is why, for instance, under clause 33, new criminal sanctions have been developed to protect information shared under the new powers in respect of public service delivery, fraud, debt and research, so those convicted of offences could face a maximum penalty of up to two years imprisonment for illegal data sharing, a heavy fine or both.
No statutory restrictions that currently exist on sharing of data, such as in the Adoption and Children Act 2002, will be affected by these data measures. When it comes to audits, which the hon. Lady mentioned, data-sharing agreements entered into under the power will set out a governance structure of how audits will take place. This structure will oversee the arrangement and what participating bodies are required to do under data sharing. The Information Commissioner’s Office also has a general power to conduct audits, including compulsory audits of Departments and organisations to check that they are complying with the law in relation to the handling of personal information. All bodies are required to comply with the ICO’s request for assistance so that it can determine whether data have been processed lawfully in data-sharing arrangements. The ICO can pursue criminal proceedings where necessary.
Louise Haigh
Will the Minister confirm that every Department that undergoes a data-sharing arrangement will complete a full audit of all data-sharing arrangements in that Department? Will that be available under the Freedom of Information Act?
Chris Skidmore
On the individual point of audit, I will have to write to the hon. Lady. I will further consider her amendments and speak about them when we discuss three-year reviews. I want to ensure that bodies sharing information under the public service delivery power, for instance, strictly observe and follow codes of practice. Although I welcome the intention of the amendments, I think they are unnecessary. The Bill sets out the key conditions for disclosing and using information, including what can be shared by whom and for what purposes. We followed the common approach taken by the Government to set out details of how data are shared in the code of practice.
I want to return to the hon. Lady’s question of whether we use “have regard to” or “comply with”. The wording, “have regard to” already follows common practice in legislation, as illustrated in section 25 of the Immigration Act 2016 and section 77 of the Children and Families Act 2014. As the power covers a range of public authorities and devolved territories we want the flexibility that I mentioned about how the powers are to be operated, so that we can learn what works and adapt the code as necessary. To put it into the Bill, as I mentioned, would hamper that ability to adapt for future purposes. If bodies fail to adhere to the code, the Minister will make regulations that remove their ability to share information under that power, as is indicated, indeed, in part 11 of the code of practice, which states:
“Government departments will expect public authorities wishing to participate in a data sharing arrangement to agree to adhere to the code before data is shared. Failure to have regard to the Code may result in your public authority or organisation being removed from the relevant regulations and losing the ability to disclose, receive and use information under the powers”.
Amendment 106 requires the Minister to run a public consultation for a minimum of 12 weeks before issuing or reissuing a code of practice. The code of practice is essentially a technical document that sets out procedures and best practice with guidance produced by the ICO and Her Majesty’s Government. Clause 35 requires the Minister to consult the Information Commissioner and other persons, as the Minister thinks appropriate. I think that that strikes a good balance. Indeed, as I mentioned, we have been working closely with the ICO to ensure that there is confidence in the codes and the Information Commissioner states:
“I am pleased to report that significant progress has been made since my evidence session and I am content that my main concerns about the codes have now been addressed”.
I think it is very important to put that on record.
Calum Kerr
I welcome the Minister to his place. He comes across, to me, as rather bullish now, despite the damning evidence we heard over a very condensed couple of days. Does he think that he has cracked it now, that these codes of practice are all fit for purpose and that we should be sufficiently reassured?
Chris Skidmore
The codes of practice remain in draft form and obviously we are in Committee having a discussion around the nature of what is in the codes of practice. We had criticisms last week of, “Where are the codes of practice?” We were still in the process of a conversation about the codes of practice with the Information Commissioner’s Office to ensure that the Information Commissioner was content. If she is content with the codes of practice as they currently stand, I am not one to go against the ICO. I am not saying that that is a form of complacency, although maybe the hon. Gentleman is, but I trust the ICO’s decision and am confident in its ability to deliver on the codes as they currently stand.
Calum Kerr
I thank the Minister for that mildly reassuring answer that the codes of practice are a work in progress. We welcome that, but in the spirit of helping improve them, I hope that he will consider some of the feedback from Big Brother Watch, which I thought gave the Committee excellent advice. Although Big Brother Watch recognises that the draft codes published by the UK Statistics Authority on research and statistics are detailed and comprehensive, it says that the draft codes published by the Cabinet Office and the Home Office are the polar opposite, offering very little detail or clarity.
Chris Skidmore
The codes are quite extensive in terms of being able to provide the material information that is there. They have gone through an extensive process. Although we had evidence from certain critical witnesses drawn by Opposition Members, there was also significant support for data-sharing measures and the ability to have flexibility through the codes.
As for considering how to go forward, the codes are now published—the hon. Gentleman can read them for himself—and the ICO is now content with the codes. That is a great position from which the Government intend to move forward. In terms of whether the codes are comprehensive, it is set out that the Government have a duty to consult the ICO and territorial Ministers. That is important, and we are following a process and a journey over which the Bill has been developed for a number of years. We are content that we are on track.
I welcome the intention of amendment 99 that only the minimum and necessary information is shared under the power to achieve the objective. The principles are set out in the Data Protection Act 1998. The public service delivery power will need to operate in compliance with the 1998 Act. The principle of data minimisation is also strongly embedded in the code of practice, to which specified persons who use the power must have regard.
In addition, the public service delivery power is intended to act as a more conventional gateway to allow public authorities to share information without the need for central oversight by Whitehall. It is important to reflect on that. Rather than having the dead hand of Whitehall overlooking a measure that should allow for local flexibility and local freedom, we expect a large number of local authorities to use the power to deliver their troubled families programmes. A central monitoring power could impose significant resourcing burdens, which we felt were unnecessary given the intended positive outcomes for citizens. On that basis, we feel that the amendment is unnecessary.
Amendment 95 intends to modify the definition of “personal information”. The definition in the Bill is consistent with section 39 of the Statistics and Registration Service Act 2007, which relates to the confidentiality of personal information. It has been drafted with that consistency in mind. The amendment proposes a definition that includes a vague group of persons. We believe it unsuitable because of its vagueness, and it risks causing confusion.
Amendment 96 requires that data subjects be allowed to request and correct as necessary personal information relating to them that is disclosed under the public service delivery powers. The amendment is unnecessary because the data subject already has those rights under the Data Protection Act 1998. In addition, the impact of such an amendment on public authorities would be significant. An assessment would need to be made of how many requests could be made to public authorities, and of the resulting resourcing requirements in terms of staff and any supporting technical infrastructure. Work would also need to be carried out to ensure that we can verify the identity of individuals requesting access to data and assess the risk of corrections and modifications to data held being made for the purposes of committing fraud.
I understand the intention of the amendments, and I hope that the hon. Member for Sheffield, Heeley will understand that the Government believe that progress has been made, as well as provision for ensuring that the sharing of data is proportionate. The regard for individuals’ privacy is central to the Bill and is set out in the code of practice, and the Government have put in place measures to work with the ICO and other civil society groups on that. I urge her to withdraw the amendment.
Graham Jones
I want to make a small point about part 5, chapter 1, clause 29. There is one small glaring omission that the Government ought to look at and which has been raised by my local authorities. In Hyndburn, we have what the Minister will understand as a two-tier authority. We have a district council and a shire council as opposed to, in metropolitan areas, a unitary council. The Minister is probably wondering where this is going: when light is thrown on an example, some of the problems begin to be seen.
My shire authority wanted to increase the uptake of free school meals but a lot of the data on constituents in the borough of Rossendale and the borough of Hyndburn, which I represent, are held by the local district authority. That includes data on council tax benefit, housing benefit and numerous other small interventions carried out by the district council. A unitary council does not have that problem. It can share data and resolve such problems. It can identify people and send out public information to potential recipients—beneficiaries—of free school meals, who trigger the pupil premium.
I will give an example of how that problem is inflated. We currently have free school meals for everyone aged between four and seven, so parents see no reason to come forward and register their children for the meals, which then does not trigger the pupil premium. In a unitary authority, relevant information in other council departments would be readily available, but in my two-tier authority, the chief executive of Lancashire county council says to me, “We want to increase the uptake of free school meals, particularly for four to seven-year-olds, because we want to trigger the pupil premium, but we can’t find potential recipients. We have some data on people who may use some of our services and may be entitled and some people who we could disseminate public information to, but there is a whole tranche of people we can’t see—we are blind to them, they are just not on our radar. There is no scope for us to see who they are.” That is because, of course, it is Hyndburn borough council and Rossendale borough council that have an interface with those people—they come into their offices regarding a plethora of issues—and those people may well benefit from free school meals. In this case, however, they will not benefit if their children are aged between four and seven so, again, they are not likely to see the connection.
My upper-tier authority, Lancashire county council, cannot access the relevant information that my local authority, Hyndburn borough council has, but a unitary authority does not face that issue. That is not fair or reasonable. It is not conducive to public policy. It is not reaching the target audiences that the Government themselves want to reach. This Government brought in the pupil premium and they want to push that policy, yet the absence of data sharing between upper and lower-tier authorities prevents Government policy from being pursued and creates an unfair situation.
So I left my chief executive’s office at Lancashire county council and travelled the distance to meet the chief executive of my local district council, who fully understood the problem, and we were able, in some way, to get that public information out to the relevant people. There was no direct contact, however, and those issues are problematic when they should not be. I believe that the Government should look at the clause, and look at that inequity. It is not right. It is not good for the delivery of public policy. Clearly, it creates barriers to reaching some people while others can be reached. The Government ought to come back with something that exempts local authorities, because without a shadow of a doubt there should be parity between unitary authorities and two-tier shire and upper county council districts.
I hope the Government come back and create that level playing field—that parity of opportunity—for the Government to be able to pursue their own policies through local government mechanisms without this barrier impinging on those very same Government policies, which are probably not reaching the people they ought to reach because of this inequity and this element that is missing from the Bill.
I ask the Minister to take a deep look at this issue, to create parity and to bring forward something that will bring my two local authorities together and not create a barrier between the two, and certainly not create this iniquitous situation whereby unitary authorities are able to deliver these public services but my two chief executives cannot deliver them to the very people who ought to be receiving them.
Chris Skidmore
To respond to the hon. Gentleman on his specific point, we will update the lists of bodies able to share information of the public service delivery power, and the PSD power allows for new objectives to be added by regulations if they meet the conditions specified in primary legislation. So the issue of the pupil premium, which he mentioned, may be one of the many worthy purposes for which new objectives could be created.
I would like also to draw the hon. Gentleman’s attention to the disclosure of information in the draft regulations, which I hope will reassure him. Paragraphs 21 and 22 of schedule 1 to the Bill refer to the organisations that will be sharing data, or that will be permitted to do so once they have applied to do so, including the county councils of England, the district councils in England and even the council of the Isles of Scilly. We recognise that there is that local government fracture that he mentioned and we hope that when it comes to data-sharing measures we will be able to heal that.
Louise Haigh
It was disappointing not to hear the Minister mention the General Data Protection Regulation and explain why this legislation has not been written in compliance with it, or my points about non-public sector authorities. I hope that he can return to those issues later in his remarks.
On the point about the Information Commissioner, in her evidence she supported statutory codes of practice. She also recommended that Parliament should review all aspects of data-sharing, and not just the clauses relating to fraud, after an appropriate time, which is what informed our amendment.
As our amendment says, we would also like the codes to make it clear that good cyber-security practice should not be about data sharing and that it should be about leaving the data with their original owner. I hope that the Minister will return to those issues when he comments on later stages of the Bill.
With that in mind, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 29 ordered to stand part of the Bill.
Clause 30
Disclosure of information to gas and electricity suppliers
Chris Skidmore
I beg to move Government amendment 108, in clause 30, page 29, line 21, at end insert “, or
() the making of grants (by any person) under section 15 of the Social Security Act 1990 in accordance with regulations under that section made by the Scottish Ministers or the Welsh Ministers.”
This amendment enables information to be disclosed by a specified person to a licensed gas or electricity supplier for the purposes of a scheme in Scotland or Wales for the payments of grants to improve energy efficiency under section 15 of the Social Security Act 1990.
This clause enables the person specified in regulations to disclose information to gas and electricity suppliers. The disclosure must be for the purpose of reducing energy costs, or improving energy efficiency or the health or financial wellbeing of those living in fuel poverty, and it must be disclosed for use in connection with one of the fuel poverty support schemes listed in the clause.
The schemes referenced are the warm home discount scheme and the energy company obligation. Although the territorial extent of both these schemes is GB-wide, fuel poverty itself is a devolved matter. Officials in the devolved Administrations, including Labour-run Wales, have asked for Scottish and Welsh fuel poverty schemes to be included in the provisions of the clause. That is because there are grant schemes that fall under section 15 of the Social Security Act 1990 that address fuel poverty in Scotland and Wales. Those schemes would also benefit from the ability to share information between public authorities, and with gas and electricity suppliers, for the provision of assistance to fuel-poor households. The schemes are Nest and Arbed in Wales, and Scotland’s home energy efficiency programme. They help to reduce energy costs, or to improve energy efficiency or the health and financial wellbeing of people living in fuel poverty. The same safeguards will be in place as for all data disclosed under the clause—that is, data can only be disclosed by persons specified in regulations and for the specific purposes identified in the clause. All persons involved in a data-share must have regard to the code of practice.
The inclusion of these grant schemes will strengthen the ability to deliver better targeted, cost-effective fuel poverty schemes in Wales and Scotland.
Amendment 108 agreed to.
Question proposed, That the clause stand part of the Bill.
Louise Haigh
May I welcome the Minister to his position? It was remiss of me not to do so earlier; he is the model of a patient Minister and very polite with it, too.
As with clause 29, we very much support the objective behind the proposals in clause 30—to identify the individuals most in need of warm home funding and any other grant or benefit that will alleviate fuel poverty. As we heard from Citizens Advice, energy firms have found it difficult to establish whether people are entitled to funding, so people who should get the help do not get it. Sharing the data should smooth that process. We know that fuel poverty is a significant contributor to debt. StepChange said that about 10% of its clients would be within the old definition of fuel poverty—they spend more than 10% of their income on fuel—and it has seen the number of people in gas and electricity arrears rise sharply from where things were in 2010.
However, there are concerns about disclosing personal data to gas and electricity suppliers, again with no detail on what personal information might be disclosed or how. There is none of the legal or technical detail essential to ensure data security, the ethical use of data and the necessary trust framework essential to protect the rights, privacy and security of citizens. The same problems plague the rest of part 5, not least that the general data protection regulation explicitly bans the use of data to monitor the behaviour of people in a way that could be seen as profiling, so we would appreciate the Minister’s comments on that point.
As we have seen, the warm home discount can work well, but it must be set within strict safeguards. The initial legislation was introduced to allow data sharing to be carried out, and we know that the Department of Energy and Climate Change was extremely careful with the idea, and concerned about public perceptions about trust and private sector companies’ use of data. There was a great deal of anxiety about the public view when the proposal was put as a theoretical proposition. The public are not convinced about the sharing of data with private companies—let alone between Departments—and particularly with private providers such as energy companies who have a potential commercial stake in the data.
That is why the warm home scheme currently works through data from the DWP and energy suppliers going to a third party, which crunches the data to identify the matches. The energy suppliers are then sent onward a list of their eligible customers and the data are deleted from the third party’s computers. The data are not held on any computers; that provides an appropriate safeguard for all individuals concerned. That is critical to alleviating concerns about the sharing of personal information.
At present, therefore, companies with no public accountability learn nothing of any commercial value to their activities, which is a crucial point. The sharing of data cannot be done if there is a company with a potential conflict of interest. However, clause 30 allows for the disclosure of information to gas and electricity suppliers to help people living in fuel poverty and within other tightly defined criteria. Although the clause is clear that data may be used only for the purposes intended, unease will remain about why, in this instance, the Government have allowed personal information to be shared with electricity suppliers rather than with a third-party trusted provider.
There will be a serious concern that electricity and gas suppliers are being passed information whose content could present a potential conflict of interest. Nobody is suggesting that the electricity or gas suppliers would do anything in breach of their obligations, but the risk is certainly there. That was the basis behind the creation of a third-party supplier in relation to the warm home scheme.
We therefore welcome the creation of an offence for passing on any of this information and we welcome the maximum sentence of two years. It provides a clear steer from Government on the sensitivity of the data, yet clearly we would prefer that the disclosure would not happen directly at all.
Chris Skidmore
Clause 31 will enable specified public authorities to share information with gas and electricity suppliers or other persons specified in regulations. The disclosure must be for the purpose of reducing energy costs, or improving energy efficiency or the health or financial well-being of people living in fuel poverty, and it must be disclosed for use in connection with an energy supplier obligation scheme. The energy supplier obligation schemes referenced are the warm home discount scheme and the energy company obligation.
The warm home discount scheme provides a £140 energy bill rebate to certain vulnerable households during the winter months, helping those households to heat their homes. Some pensioner households already receive the rebate automatically, but that is possible only if the Government are able to inform the energy supplier, through a data match, which of their customers should receive it. It is important to recognise that that is not a new process. Rebates have been provided automatically to pensioner households in that way since 2011, and the process is considered to be working well. Not only has it helped to ensure that those entitled to support receive it, but it has significantly lower administrative costs—evidence suggests automatic payments cost under £1 per customer to deliver, compared to costs of up to £30 per customer for the non-automated method.
The hon. Member for Sheffield, Heeley mentioned the issue of trust and whether energy suppliers can be trusted with those data. She asked for an assurance from the Government on the continuity of the current scheme and whether similar security measures would be put in place. I can give her that reassurance. The sharing arrangements with third parties will remain exactly the same. Under current data-sharing arrangements for the warm home discount, suppliers are given a simple “yes”, “no” or “unknown” answer as to whether their customers were in receipt of state pension credit and so eligible for the core group rebate under the scheme. We would simply look to expand those disaggregated data. If wider data-sharing arrangements are put in place for fuel poverty schemes, we would expect only Government data to be shared with suppliers under those arrangements, which would have a similar yes or no answer as to whether the customer was eligible for support. The existing warm home discount core group of pensioners already receive automatic support through data sharing. It is a popular scheme and serves as proof that this model works and is safe.
The warm home discount scheme and the energy company obligation represent around £1 billion of investment per year. Although substantial, that is still a finite resource that needs to be targeted as effectively as possible on those who need it most. The data sharing enabled by this clause will significantly strengthen the ability to deliver better targeted, cost-effective fuel poverty support to households who need it the most.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 31 ordered to stand part of the Bill.
Clause 32
Further provisions about disclosures under section 29, 30 or 31
Chris Skidmore
I beg to move amendment 109, in clause 32, page 30, line 18, at end insert—
“(ba) for the prevention or detection of crime or the prevention of anti-social behaviour,”
This amendment and amendment 112 create a further exception to the bar on using information disclosed under Chapter 1 of Part 5 of the Bill for a purpose other than that for which it was disclosed. The amendments allow use for the prevention or detection of crime or the prevention of anti-social behaviour.
The Chair
With this it will be convenient to discuss Government amendments 110 to 117, 120 to 128, 131 to 139 and 154 to 158.
Chris Skidmore
These Government amendments concern sanctions for unlawful disclosure and the disclosure and use of data to prevent and detect crime or prevent antisocial behaviour. A person receiving personal information under the public service delivery, debt, fraud and research powers cannot disclose that personal information unless it is for one of the exceptional reasons listed in the Bill, such as preventing loss of life or for national security. Technical amendments will ensure that it is clear that the list of exceptional reasons includes the prevention or detection of crime, or the prevention of antisocial behaviour.
The Bill provides that any person who contravenes the prohibition on further disclosure is guilty of an offence, which carries a penalty of imprisonment, a fine, or both. The introduction of criminal sanctions shows how seriously we take our responsibility to protect personal information, and we consider that it represents a key safeguard to accompany the new powers. It is imperative that individuals handling personal information under the powers take great care in handling that information.
We do not think that mistakes when handling personal data are acceptable, but we do not want to criminalise honest mistakes. The current drafting is slightly overzealous, so amendments 117, 128, 139 and 158 ensure that criminal liability arises only where there has been intent to disclose information. In circumstances involving disclosures made in error, we consider that other sanctions would be more appropriate, such as those set out in the Data Protection Act 1998 or internal disciplinary action.
The remaining amendments are minor technical amendments to ensure that information received under the powers can be shared to assist legal proceedings or criminal investigations outside the United Kingdom where necessary, while maintaining consistency across our clauses and aligning with other similar provisions in other legislation.
Louise Haigh
These Government amendments are technical and seem absolutely fine, apart from the provision to prevent antisocial behaviour. It is not clear to me why the disclosure would be necessary for the purposes of antisocial behaviour as defined under Anti-social Behaviour, Crime and Policing Act 2014. Can the Minister provide a clearer explanation of why any data that are ostensibly there to be shared for the purposes of alleviating fuel poverty and managing public sector debts would be used to prevent antisocial behaviour? Does that point to the concern I expressed earlier about the provisions leading to a broader scope for the use of information?
Chris Skidmore
The exemption has been included to ensure that if information received under the powers points to possible antisocial behaviour, it can be shared. That is intended to avoid any risk that by failing to refer explicitly to antisocial behaviour we cause ambiguity about whether certain information on antisocial behaviour can be shared. That ambiguity would have a chilling effect on multi-agency responses to antisocial behaviour, thereby undermining one of the key purposes of the 2014 Act.
Louise Haigh
Can the Minister give an example of how data relating to fuel poverty shared between a Government agency and a gas and electricity company could possibly relate to antisocial behaviour?
Chris Skidmore
We are talking about public service delivery powers, which do not just cover the warm home discount, attractive though that is. I know that all members of the Committee will be grateful, when this legislation goes through, to go back to their constituents and talk about being on this Bill Committee and how they delivered savings for millions of pensioners, but there are other key aspects of the Bill in relation to the troubled families programme and those living in communities blighted by antisocial behaviour. Data sharing around those programmes could create data matches that point to antisocial behaviour taking place or flag that up. We have a public duty to ensure that we have that power so that we can protect those vulnerable people whose lives are blighted in communities affected by particular types of antisocial behaviour.
Amendment 109 agreed to.
Amendments made: 110, in clause 32, page 30, line 19, leave out
“(whether or not in the United Kingdom)”.
This amendment removes the provision stating that a criminal investigation for the purposes of clause 32(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to a criminal investigation covers an investigation overseas in any event.
Amendment 111, in clause 32, page 30, line 21, leave out
“and whether or not in the United Kingdom”.
This amendment removes the provision stating that legal proceedings for the purposes of clause 32(2) may be within or outside the United Kingdom. This is for consistency and on the basis that a reference to legal proceedings covers proceedings overseas in any event.
Amendment 112, in clause 32, page 30, line 28, at end insert—
“( ) In subsection (2)(ba) “anti-social behaviour” has the same meaning as in Part 1 of the Anti-social Behaviour, Crime and Policing Act 2014 (see section 2 of that Act).”—(Chris Skidmore.)
See the explanatory statement for amendment 109.
Clause 32, as amended, ordered to stand part of the Bill.
Clause 33
Confidentiality of personal information
Louise Haigh
I beg to move amendment 101, in clause 33, page 31, line 19, leave out “or permitted”.
The Chair
With this it will be convenient to discuss the following:
Amendment 102, in clause 33, page 31, line 25, leave out “made” and insert “necessary”.
This amendment and amendments 103 and 104 seek to place a stricter requirement to reduce the risk of non-compliance with data protection.
Amendment 103, in clause 33, page 31, line 27, leave out “made” and insert “necessary”.
See the explanatory statement for amendment 102.
Amendment 104, in clause 33, page 31, line 30, leave out “made” and insert “necessary”.
See the explanatory statement for amendment 103.
Louise Haigh
The amendments would restrict the onward disclosure of data. As we know, the public value their data, and the amendments would place a higher test on onward disclosure.
It is important that data disclosures of information as sensitive as we have been discussing are appropriately considered; they must not simply be nodded through. Introducing a principle of necessity would mean that organisations have to make a case, rather than merely tick a box. Crucially, that would help to make the Bill more consistent with existing data protection. As the Information Commissioner’s data sharing code of practice clearly states:
“You should employ ‘need to know’ principles, meaning that other organisations should only have access to your data if they need it, and that only relevant staff within those organisations should have access to the data. This should also address any necessary restrictions on onward sharing of data with third parties.”
The ICO’s data sharing code of practice could not be any clearer. It is designed to protect an individual’s data and to prevent any onward disclosure to the organisations that have access to those data.
The Data Protection Act is also framed in terms of necessity. The ICO’s code of practice states:
“The processing is necessary because of a legal obligation that applies to you (except an obligation imposed by a contract)…The processing is necessary to protect the individual’s “vital interests”. This condition only applies in cases of life or death, such as where an individual’s medical history is disclosed to a hospital’s A&E department treating them after a serious road accident…The processing is necessary for administering justice, or for exercising statutory, governmental, or other public functions.”
The amendments, which would insert the word “necessary”, ask a simple question: why are the exemptions in the Data Protection Act set aside when there is disclosure of confidential personal data for certain public interest purposes? That is already clearly well established. For example, in the context of policing, section 29(3) of the Data Protection Act states that:
“Personal data are exempt from the non-disclosure provisions in any case in which”
the disclosure is for any of the purposes of a criminal investigation, and failure to disclose
“would be likely to prejudice”
that investigation. One element of the application of that exemption from the non-disclosure provisions has the effect of excluding the lawfulness of the disclosure. It therefore protects the disclosing body from action for breach of confidence.
To disclose under the Data Protection Act, there has to be prejudice to an investigation before a disclosure of personal data can occur. Clause 33(2)(e) refers to disclosures
“made for the purposes of a criminal investigation”,
with no test of prejudice. The advantage of the amendments is that they would bring in the word “necessary”. That minor shift would at least ensure that the disclosure of personal data is proportionate.
Similarly, section 35(2) of the Data Protection Act permits disclosure of personal data for legal proceedings without risk of the disclosing party being subject to an action for breach of confidence if the disclosure of personal data
“is necessary… for the purpose of, or in connection with, any legal proceeding”.
In contrast, clause 33(2)(f) does not include the word “necessary” and reduces the threshold of disclosure to one that could facilitate speculative disclosures that could not be made under the Data Protection Act. We would be grateful if the Minister explained why the necessity is removed and why the DPA provisions are not sufficient when personal data are disclosed, but only when it is necessary in connection with any legal proceedings. The amendments would align disclosure with the provisions of the DPA.
The changes to clause 33(2)(h)(i) to (iv) are proposed to make it clear why the DPA is insufficient. Schedule 2(4) permits disclosure of personal data if it
“is necessary in order to protect the vital interests of the data subject.”
Schedule 2(5)(b) allows disclosure that is necessary
“for the exercise of any functions conferred on any person by or under any enactment”.
Can the Minister describe what disclosures of personal data do not fall within those two provisions? The amendments insert the word “necessary” and simply align the disclosure with the Data Protection Act.
Chris Skidmore
Amendment 101 looks at tightening the restrictions around the onward disclosure of personal information in clause 33. Its effect would be to restrict the onward disclosure by public authorities to only those purposes required by existing legislation, rather than those permitted by existing legislation. Amendments 102, 103 and 104 would restrict the ability of public authorities to onwardly disclose personal information under this power for matters of great importance to all of us. The Government believe the amendments would have the effect of restricting our ability to share information for matters such as saving lives, investigating criminal activities and safeguarding vulnerable adults and children, unless it can be determined “necessary”.
Unfortunately, amendment 101 would considerably reduce the scope of public authorities to share data under that power. We are looking to provide legal clarity. Many existing legislative gateways for information sharing by public authorities tend to be permissive, rather than mandatory. Given that the purpose of the power is to provide legal clarity around data sharing to better target public services, the Government believe the amendment would, at best, introduce a degree of uncertainty as to whether a proposed data share is legal and, at worst, place a bar on existing permissive information sharing gateways for a range of important purposes.
Amendments 102, 103 and 104 could, in practice, inhibit public authorities from disclosing information, or delay them from disclosing it until they were content it was “necessary” to do so. The consequence of the amendments would therefore be to create an uncertainty where we are trying to provide legal clarity.
I welcome the intention behind the amendments—to ensure that personal information is disclosed—yet we believe they would create uncertainty. Furthermore, they are unnecessary as the powers are to be used in a way that is consistent with the DPA, and tough penalties under the new criminal offence will help ensure public officials handle the information lawfully. I invite the hon. Lady to withdraw the amendment.
Louise Haigh
I am concerned about why the Minister thinks the amendments will provide confusion; they will actually bring the clause into alignment with the Data Protection Act 1998—currently, large swathes of the Bill are not. Personal information is not defined as in the Data Protection Act, and nor are other clauses in this part. With your leave, Mr Streeter, I will test the will of the Committee.
Question put, That the amendment be made.
Chris Skidmore
I beg to move amendment 118, in clause 35, page 32, line 30, at end insert—
“( ) The code of practice must be consistent with the code of practice issued under section 52B (data-sharing code) of the Data Protection Act 1998 (as altered or replaced from time to time).”
This amendment requires a code of practice issued under clause 35 by the relevant Minister and relating to the disclosure of information under clause 29, 30 or 31 to be consistent with the data-sharing code of practice issued by the Information Commissioner under the Data Protection Act 1998.
The Chair
With this it will be convenient to discuss Government amendments 119, 129, 140, 161 and 188.
Chris Skidmore
These are minor and technical amendments to clauses on the code of practice and statements of principles that will be issued under part 5 of the Bill. The amendments will require that the code of practice be consistent with the data sharing code of practice issued by the Information Commissioner under the Data Protection Act 1998, ensuring greater clarity for practitioners and increased transparency for citizens about the relationship between the provisions in the Bill and the DPA. The amendments have been tabled with our conversations with the ICO in mind; we have the Information Commissioner’s confidence that the codes are right. I commend the amendments to the Committee.
Amendment 118 agreed to.
Louise Haigh
I beg to move amendment 106, in clause 35, page 32, line 42, at end insert—
“(ea) the public for a minimum of 12 weeks, and the relevant Minister, must demonstrate that responses have been given conscientious consideration, and”.
The amendment relates simply to the fact that the Opposition would like a full public consultation on the draft codes of practice. A much better version has been put before the Committee, and I understand that it is now on the parliamentary website, but we would like a proper consultation period, not just a consultation with whomever the Government see fit to consult.
Chris Skidmore
Amendment 106 would introduce a requirement for the Minister to publicly consult for a minimum of 12 weeks before issuing or reissuing the code of practice under clause 35.
Many details of the code of practice are drawn from the ICO data sharing code of practice. Others were drawn from two years of open policy making with civil society and other groups. We have just discussed a Government amendment intended to ensure that our codes will be consistent with the ICO’s data sharing code of practice. On that basis, we see no need for a compulsory public consultation before issuing the code, and even less need to make it a requirement in respect of any reissue. Some future changes to the code may be minor. We do not see a need to run a public consultation in those instances—indeed, to do so would be disproportionate in a great number of such cases.
Clause 35 requires that the Minister consult the Information Commissioner and other persons as the Minister thinks appropriate. Those other persons will include civil society groups and experts from the data and technology areas. We will run a full public consultation when a significant revision is expected, such as before the EU data protection regulation comes into effect, which I believe will be in May 2018. The clause as drafted provides the flexibility required. On that basis, the amendment is unnecessary and I invite the hon. Lady to withdraw it.
Louise Haigh
I am pleased to hear that the Government intend to consult on major revisions, and I hope that the draft codes, although much improved, will improve further in Committee, particularly in the areas outlined earlier relating to non-public authorities. As the Government have not listened to many of the recommendations made in their own consultation earlier this year, perhaps it is a futile amendment. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Louise Haigh
I will just lay some further concerns about the draft codes. Clause 35 requires specified authorities and specified persons to have regard to the code of practice. We have conducted our own mini-consultation. One member of the Government’s own open policy group described the codes of practice as “discursive and poorly constructed”, another as “empty waffle”. Agreement was widespread that they still require significant legal and technical improvements, and that safeguards should be included in the Bill itself.
Part 5’s provisions for personal data sharing enable officials to decide unilaterally when they may access and share citizens’ personal data without consent and for purposes other than that for which it was provided. It raises serious concerns about how the UK will be able to host any EU citizens’ personal data post-Brexit. If UK officials are able to access and use their data without consent, it is highly unlikely that the EU will regard that as approaching anything like “adequacy” with respect to the general data protection regulation.
It is an incredibly worrying aspect of the Bill and the accompanying codes of practice that nowhere do they refer to the EU’s GDPR, which will not come into effect until 2018, as the Minister said, although the Information Commissioner’s Office has stated that organisations must comply with the GDPR if they wish to continue to do business across the EU or with EU citizens’ data. Although we are referring to Government agencies and Departments, there is every likelihood that they will process EU citizens’ data.
Where consent is to be overridden by officials, the approach is not well defined. There is no consideration of or support for alternative approaches, such as empowering citizens to be helped by letting them nominate someone other than officials to act on their behalf, rather than officials doing so. There is inadequate attention to transparency and accountability. We have many lessons to learn from the Estonian Government, as we heard in evidence sessions.
Furthermore, the personal data-sharing code perpetuates errors from the two-year consultation. For example, when the code refers to application programming interfaces, it incorrectly implies that they are a new thing. They are not, with modern web APIs generally recognised as having been in existence since around 2002—hardly state of the art. The code also displays no apparent awareness of, for example, zero knowledge proof, a method by which one party can prove to another that a given statement is true without conveying any information apart from the fact that the statement is true.
For that reason, both technical and legal safeguards must be within the Bill, not the lengthy and vaguely drafted codes of practice relating to personal data. Quite simply, none of the codes contains the safeguards alluded to earlier in the consultation and Bill process. In the interests of time, I simply say to the Minister that we will revisit concerns about the codes of practice. We have serious concerns about the lack of transparency still built into the codes of practice, let alone on the face of the Bill, and we would like some updated technological references in those codes.
Question put and agreed to.
Clause 35, as amended, accordingly ordered to stand part of the Bill.
Clauses 36 and 37 ordered to stand part of the Bill.
Clause 38
Disclosure of information by civil registration officials
Louise Haigh
I beg to move amendment 97, in clause 38, page 36, line 15, at end insert—
‘(2A) An authority or civil registration official requiring the information must specify the reasons for requiring the information to be disclosed.
(2AA) Information disclosed under this section shall not be shared with any other public or private body beyond those specified in subsection (1).”
The Chair
With this it will be convenient to discuss amendment 107, in clause 38, page 36, line 12, leave out from “that” to end of subsection and insert—
“(a) the authority or civil registration official to whom it is disclosed (the “recipient”) requires the information to enable the recipient to exercise one or more of the recipient’s functions and,
(b) the data subjects whose information is being disclosed have given valid consent under data protection legislation.”
This amendment would remove bulk sharing while allowing certificates to be shared to support electronic government services.
Louise Haigh
These provisions, more than any others in relation to civil registration officials, have surprised and confused those involved in the data-sharing proposals and the open data policy-making process, as they were never mentioned in the more than two years of discussion about data sharing in that open policy-making group. In the Government’s consultation response, they said that
“a large number of individual respondents and representatives from civil society stated strong opposition to the proposed power providing the ability for the bulk sharing of data, believing that the power would effectively create an identity database and enable personal data to be shared between public authorities even where there is no public benefit to do so.”
The amendments would address exactly that.
The publicly stated policy intent of the clause is to allow a citizen interacting with the Department to allow that Department to confirm their civil registration information electronically. That could undeniably enable better informed decision making, allocation of resources and service delivery, and would support the modernisation of public services. However, as drafted, the legislation also allows the entire civil registration database to be copied over to arbitrary locations for arbitrary purposes. That is not the same thing as a citizen allowing access when using digital services.
There are further concerns about the clause’s lack of compliance with the Data Protection Act 1998. Civil registration documents will be shared in bulk to improve service delivery where there is a clear and compelling need, according to the Bill. However, “clear and compelling” remains a lower test than the Data Protection Act’s “necessary and proportionate”, and is likely to be challenged. The use of bulk data runs counter to the Centre for the Protection of National Infrastructure guidance, which warns of the risks associated with bulk data, particularly from hostile foreign intelligence services.
The example given by Government that would require the sharing of civil registration data is around child reference numbers, which become national insurance numbers. National insurance numbers used to be attached to child benefit. It worked on the assumption that every parent would claim child benefit for their child and, when that child reached 15 and a half years of age, their national insurance number would be dispatched.
When the Government changed their policy on child benefit and effectively restricted it to parents who earned less than £50,000 per year, that created a potential problem for the assigning of national insurance numbers. The proposals will presumably address the problem by using birth-certificate data to inform who should be issued with NI numbers and when. That seems a perfectly reasonable and sensible method to correct an unintended consequence of the changes to child benefit policy, but can the Minister give us any other examples of when and why such bulk data sharing would ever be necessary or proportionate? The example I have just run through is incredibly specific and I hope that it would not be and is not repeated across Government.
The Chair
I sense that the Government Whip is trying to catch my eye.
Ordered, That the debate be now adjourned.—(Graham Stuart.)
Neighbourhood Planning Bill (Fifth sitting)
Tuesday 25th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Neighbourhood Planning Act 2017 View all Neighbourhood Planning Act 2017 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 25 October 2016 - (25 Oct 2016)
Dr Roberta Blackman-Woods (City of Durham) (Lab)
I beg to move amendment 12, in clause 6, page 5, line 27, at end insert
“in cases where the local authorities’ statement of community involvement was regarded as inadequate.”
This amendment allows the Secretary of State only to require planning authorities to review their statement of community involvement if they have failed to produce one.
It is a pleasure to serve under your chairmanship, Mr Bone. Clause 6 will enable the Secretary of State to make regulations to prescribe how and when a statement of community involvement is reviewed by a local authority. Amendment 12 would mean that the regulations only apply where there is some evidence that what a local authority is currently doing with regard to its statement of community involvement is inadequate. We want to do that for two reasons.
First, we are not sure what problem the Government are trying to fix with the clause. It would be helpful if the Minister outlined whether there is widespread evidence of local authorities not doing a statement of community involvement or not doing it properly. Secondly, and perhaps more importantly, we have some concerns about the Bill being a continuation of previous Bills on housing and planning that contain lots of centralising measures, giving the Secretary of State lots more power to get directly involved in what local authorities are doing. Of course, if I wanted to, I could say that this is part of what is actually an anti-localist strategy, not a localist one.
This might seem an innocuous little clause, but it sanctions a major interference from the Secretary of State in the everyday affairs of local authorities. However, if there is good reason for that—for example, if local authorities simply are not doing the job properly—we would want to look at it. We would need to look at why local authorities are not producing their statements of community involvement or why those statements are in some way inadequate.
From our discussions in this Committee and the evidence we have taken, we know that local authority planning departments are incredibly under-resourced. The British Property Federation’s annual planning survey last year had 300 responses from planning departments. Some 86% of local planning authority respondents believed that under-resourcing of their departments was their most significant challenge and was really impeding them achieving the aims they had set themselves.
I will outline a scenario for the Minister. A local authority might have great ambitions in its statement of community involvement to be as inclusive as possible and to ensure that there is a regular review process in which local people feel they can be directly involved. However, if the local authority does not have the resources within its planning budget to achieve those aims and that great vision of local community involvement in planning, what is the statement there to do? These are the really stark choices that a lot of local authorities are having to face. Do they take money from the social care budget? Do they take money from their gritting budget, as we are about to go into winter? Where are they to get the additional resources from in order to have an up-to-date statement of community involvement and to make it really inclusive?
I am sure that is what the Minister wants the clause to achieve. He may correct me if I am wrong, but my reading of it is that rather than just having a statement of community involvement that sits there on the shelf with a tick box, as he will know, on the local plan documents—“We have done our statement of community involvement and been out there and talked to some community groups; that is done and we do not need to revisit it until we are doing some major revision to the plan or a new plan”—I am sure that the Minister wants this to be a much more living document with direct involvement from local people, and that he wants people to know how they can get directly involved and what the timetable is for reviewing it. That is the sort of engagement and involvement that we all want from our planning system, but that will not be achieved simply by putting a clause in the Bill. In particular, that will not be achieved by putting a clause in the Bill that simply puts more burdens on local authority planning departments, without ensuring that there is adequate resourcing for whatever the additional burden is.
It would also be helpful to hear whether the Minister has any idea what the Secretary of State is likely to prescribe in terms of the statement of community involvement and the timings of when it has to be subject to review. We have not yet heard from the Minister on this point and it would be useful to know how much of a burden is being placed on local authorities. I say “a burden” because at the moment I cannot see any way that they will be able to fund this.
That is not to suggest for a minute that Opposition members of the Committee do not think statements of community involvement are important. I am sure the Minister heard me say on Thursday that in drawing up a local plan, local authorities should start with the neighbourhood. They should start with the community and find out what people want. My experience is that, generally speaking, people are very good at knowing what their communities should look like for 20 or 25 years going forward, and if they are included in some of the Planning for Real exercises, or with Planning Aid, that can be a very helpful exercise for the local authority.
It is really important that communities are directly involved in drawing up their local plans. In fact, the Opposition are arguing that that should really be where local planning starts. We want local authorities to be able to have a very strong community involvement plan, but we also want to ensure that they have the resources to do a really good piece of work and for it to be very meaningful, not only for the community but for the local authority as well. I look forward to hearing what the Minister has to say.
The Minister for Housing and Planning (Gavin Barwell)
Mr Bone, it is a pleasure to serve under your chairmanship again. If this meets with your approval, I would be happy to talk to both the amendment and clause stand part.
Gavin Barwell
The clause will ensure that no community can be left in any doubt about the ways in which they can participate in wider plan-making in their area. It will do that in two ways. First, it will introduce a requirement for local planning authorities to set out, in their statements of community involvement, their policies for involving communities and other interested parties in the exercise of their functions. Secondly, it will enable the Secretary of State to require authorities to review those statements. It will then be at an authority’s discretion as to whether it is necessary to update it; if an authority is content that its statement does not need updating, it will need to publicise its reasons for not doing so.
Let me now try to address the points that the hon. Member for City of Durham raised about amendment 12. I hope we can all agree that in order for statements of community involvement to be effective, it is essential that they are reviewed and kept up to date. The hon. Lady asked for evidence that there is a problem, which is a perfectly reasonable question. During the summer, my Department undertook a review of local planning authorities’ statements of community involvement, and found that a third were last updated before 2012—shortly after the introduction of the Localism Act 2011 and neighbourhood planning—and that 10% were 10 or more years old.
Clearly, a number of councils have not reviewed the statements since the entire world of neighbourhood planning came into being. I hope we can all agree on the importance of the communities that we have the privilege to represent having up-to-date information on how their local planning authority will support their ambitions. That is why it is necessary to legislate in this way.
The Bill will enable the Secretary of State to introduce regulations that require local planning authorities to review their statements at prescribed times. On 7 September, we issued a consultation in which we proposed that statements be updated every five years. We chose that figure because, as members of the Committee are aware, that is the existing expectation for local plans. Therefore, it makes sense to align those two things. The consultation closed on 19 October. It also sought views on proposals for an initial deadline of 12 months following Royal Assent for an initial review. The consultation provided an opportunity for authorities to comment on the implications for resourcing. I hope that reassures the hon. Lady in that regard.
There is consensus in the Committee that the issue needs to be addressed, but I felt that the hon. Lady overdid the case a little bit. I entirely accept that there is pressure on local authority planning departments and I went a long way to try to show what the Government’s thinking might be on that. However—this goes to the point I made to the hon. Member for Bassetlaw in the previous sitting—despite the difficult period that local government has gone through over the past five or six years, local authority planning departments have generally done an amazing job in raising their performance in updating local plans and dealing with major applications on time. Perhaps I have more confidence than the hon. Member for City of Durham in local authority planning departments’ ability to review a statement of community involvement in their existing budgets.
Dr Blackman-Woods
I would not want anyone to get the impression that we think that local planning authorities are not doing a very good job with limited resources. Nevertheless, my point was that statements of community involvement put particular expectations into the community because they see what involvement they are supposed to have. In some instances, that has a huge resourcing implication. Does the Minister accept that?
Gavin Barwell
I do accept that in so far as our constituents’ heavy involvement in the planning system—in the preparation of local plans and the consideration of planning applications—can, in instances, create more work for planning officers dealing with particular situations. However, it might also save money in the long run because if a local plan enjoys broad support among a local community, a lot of the contention that can creep into our planning system down the line should be removed. I certainly regard—as I hope all Members of the House do—putting an effort into engaging our constituents in how the planning process works as a worthwhile investment that will pay dividends in the long run.
Let me explain one concern I have about the amendment. Whereas the Bill currently says that the statements should be reviewed—potentially on a five-yearly basis, if we proceed with what we have set out in the consultation—and does not seek to make judgments about the quality or otherwise of the plans, the amendment would ask the Government to make a judgment on whether they are happy with the plans put forward by an authority. That seems to be a more centralist measure than the Government’s one. The Government are merely saying, “Councils can come up with their own statements. All we ask is that they are updated regularly.” However, the amendment would ask us to make a judgment on the quality or otherwise of the statements.
In response to other points made by the hon. Lady, if I may say so—I do not want to start the proceedings on an off note after Thursday’s consensual sitting—I thought it was something of an exaggeration to suggest that the power is a major interference in local government. It is simply asking councils to check that this important statement of how communities can get involved in the planning system is kept up to date. I do not think most people would regard that as a draconian, centralist measure.
I thought we had reached a consensus on this. We have a new shadow housing Minister and I have spent time reading some of the things he has said in recent months and years. One thing that really interested me in an interview he gave was that he acknowledged that the planning system had become far too centralised under the previous Labour Government, and he recognised that as a mistake. That may even be seen as welcoming the move towards the more locally, plan-driven system that we have seen under this Government.
Those who know me will know that my natural inclination is not to seek division. I quite like the fact that on several of the statutory instruments we have discussed, the Opposition have supported some of the things that the Government are doing. It is good if we can build consensus around these things.
Let me reassure the Committee that my starting point is that we should have a planning system that is locally driven through the development of neighbourhood and local plans. I see my role as purely intervening on occasion to ensure that things are kept up to date or compliant with the overall strategic national policy.
Dr Blackman-Woods
I have not had the opportunity to see the responses to the consultation paper, so it is not clear to us why 10% of councils have not updated their statement of community involvement for such a long time. That is a fairly low percentage but it would be useful to know what reasons were given in the responses to the consultation and when we might see the responses.
Gavin Barwell
I confess that I have not had the chance to read every single one of the consultation responses yet, either. I will certainly ensure that we publish a summary of those consultation responses as quickly as possible. The intention regarding the regulations is certainly to make them available as the Bill goes through its parliamentary process, so there will be plenty of opportunity for Parliament to scrutinise those regulations.
The hon. Lady focused on the 10% that are significantly out of date. I will check, but I think I said about a third since 2012. That is when the provisions from the Localism Act began to come into force. It is quite a substantial minority whose statements are not sufficiently up to date.
Jim McMahon (Oldham West and Royton) (Lab)
I do not think it is right for us to assume the reason that those could be delayed, because planning authorities may have their own reasons for that. It is probably more likely that this is just a very pragmatic sequencing decision that has been made, where land supply and local plan reviews are taking place. It would be reasonable for a local authority to say in that context that neighbourhood plans would be sequenced in order to meet that timetable. It is far less likely that they just decided it was not important.
Gavin Barwell
I do not make any assumptions. I am sure it is not deliberate malice, if the hon. Gentleman would like that reassurance. None the less, given that there appears to be a strong consensus across the House that neighbourhood planning is a good thing, I hope we can all agree that it is disappointing if there is a significant minority of councils whose statements of community involvement do not explain to residents how they go about setting up a neighbourhood plan.
The hon. Member for City of Durham asked for evidence as to why we might want to require people to update regularly: that is the evidence. Whether the hon. Gentleman finds that compelling is up to him.
I will make one final point, very gently tweaking the hon. Lady’s hair. She talked of the need not to put pressure on local authorities’ resources and all those issues. I remind her of an amendment we considered earlier, where the Opposition sought to put more specific detail into the statements of community involvement, saying exactly how to set up a parish council.
To a degree, the two amendments point in different directions. On Thursday, the argument was that we should be more prescriptive about what goes into these statements. I think I said there was a strong case that such information should be covered but I was not convinced that we should include it in statute. Today it is argued, in support of an amendment, that it is a terrible major centralising measure that they should be reviewed every five years.
I would gently say to the hon. Lady that there is good evidence that these statements have not all been kept up to date, and that it is reasonable to require them to be reviewed, ideally every five years. However, as a national Government we should not get into the business of prescribing exactly what is in them or assessing whether we think they are good or bad statements. We should simply ask councils to keep them up to date. For that reason, I urge the hon. Lady to withdraw the amendment.
The Chair
Order. To be clear, we are now debating not only the amendment but clause stand part—we are doing both at the same time. I also remind Members that they are not restricted to speaking once; they may speak as many times as they like, if they catch my eye.
Dr Blackman-Woods
Thank you, Mr Bone.
The Minister made a point about consistency. The amendments that were tabled on Thursday—along with, indeed, amendment 12, although perhaps not so much the latter—are clearly probing amendments. It is the Opposition’s job in Committee to test the Government’s thinking. It is not what we are doing that is the subject of the Committee’s scrutiny, but what the Minister is doing. Our amendments are merely about trying to get on the record further information from the Minister about what underpins some of the clauses in the Bill.
I was going to say that our discussion of clause 6 had been very helpful in getting on to the public record the Minister’s thinking and the limits of the Secretary of State’s involvement. I am sure that once the Minister has the chance to catch sight of the responses to the consultation, he will want to shape the regulations that will underpin the clause in the light of what has been said throughout the consultation process. Again, that was a useful exchange to have and it gave us a useful bit of information.
The Minister is welcome to go on discussing whether every single amendment we table in the Committee is mutually consistent, but I remind him that that is not the point of the amendments. Their point is to elicit from him further information. Because of the extra information I got from him this morning, I—along with, I am sure, my Opposition colleagues—would like to look at the outcome of the consultation and see whether the Government’s response is indeed proportionate to the problem. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 ordered to stand part of the Bill.
Clause 7
Restrictions on power to impose planning conditions
Dr Blackman-Woods
I beg to move amendment 15, in clause 7, page 6, line 7, at end insert—
“(1A) Regulations made under subsection (1) must make provisions for local planning authorities to make exceptions to conditions relating to matters set out in paragraphs (a), (b) and (c) of subsection (1).”
This amendment would ensure that there is a local voice and judgement taking into account local circumstances and impact.
The Chair
With this it will be convenient to discuss the following:
Amendment 18, in clause 7, page 6, line 12, leave out subsection (2)(a).
This amendment would ensure that “acceptable in planning terms” does not mean that conditions can be overlooked because they are unacceptable for other reasons.
Amendment 16, in clause 7, page 6, line 20, at end insert
“which must include consultation with local authorities.”
This amendment would ensure that local authorities are consulted on the draft regulations.
Dr Blackman-Woods
Amendment 15 speaks for itself, and relates to the conditions set by the Secretary of State under proposed section 100ZA(1), which states that,
“(a) conditions of a prescribed description may not be imposed in any circumstances on a grant of planning permission for the development of land in England,
(b) conditions of a prescribed description may be imposed on any such grant only in circumstances of a prescribed description, or
(c) no conditions may be imposed on any such grant in circumstances of a prescribed description.”
Those powers are given to the Secretary of State so that he or she will be able to add or take away conditions that are set by a local authority for a specific planning application.
I stress at the outset that this is very much a probing amendment. It seeks to elicit from the Minister whether there are any circumstances in which it might be necessary for local authorities to have an exception from a direction made by the Secretary of State requiring them to add or remove a particular condition. It would give councils flexibility to apply conditions that have been restricted by the Secretary of State, where they deem that necessary to address local circumstances.
The Local Government Association and councils have raised concerns that the imposition of certain conditions by the Secretary of State could reduce the ability of local planning authorities to include conditions necessary to address issues specific to a local area or an individual development that might not be clear to the Secretary of State.
Friends of the Earth has said that the provisions in subsection (1)(a), (b) and (c) of proposed section 100ZA are probably a step too far. It comes back to the point raised in amendment 12: the provisions give the Secretary of State substantial additional powers to interfere directly in conditions that might be set or deemed appropriate by the local authority.
I hope that the Minister can take us through some examples, because the Opposition are struggling to come up with a set of circumstances in which a Secretary of State would want to interfere in such a way, and to take the risk of something going badly wrong with the development because a condition that the local authority thought was important, but that the Secretary of State did not, turns out to have been very much necessary. I will discuss a couple of examples to see whether the Minister has thought about whether any exceptions should be made.
Let us imagine that a local authority wants a flood mitigation scheme in an area that traditionally has not flooded. Due to other developments elsewhere in the area, the local authority thinks that such a scheme might be needed for the longer term benefit of the site and its occupants. There might not be a good evidence base for such a scheme but, because the other developments are about to take place, there could be an impact on the site in future. The local authority might therefore take a cautious approach because it does not want future occupants to be flooded, or even to be at a higher risk of flooding. However, because there is no evidence base, that need might not be immediately apparent to the Secretary of State, who might water down or diminish the local authority’s ambitions.
The Chair
Order. I am sorry to interrupt the hon. Lady in mid flow. Minister, you well know that you are not supposed to pass documents to officials.
Dr Blackman-Woods
Similarly, there might not be a particularly strong evidence base for additional traffic management works, but they might need to be undertaken if there are a number of developments in the area. Again, I suspect that would have to be carefully explained to the Secretary of State so that he did not remove a condition that developers could reasonably argue is not entirely relevant to their site, because it would be relevant when the other sites are added. The amendment probes whether there might be exceptions, because the clause does not specify.
I am also curious—the Minister will need to enlighten me on this—because we know that local authorities must set their conditions in line with what is already in the national planning policy framework. I am sure that the Minister will be pleased to know that I have looked at every clause in the NPPF that mentions conditions, whether planning conditions or other sorts of conditions. Actually, the provisions in clause 7(2) are already clearly outlined in the NPPF, and tight guidance is given to local authorities—we might look at this later—on the evidence they need in order to adhere to planning guidance. The NPPF tells local authorities clearly what they have to do in terms of planning conditions, and the planning guidance gives even more information, very helpful, on what they should do, but somehow the Secretary of State will decide whether they are abiding by the guidance—if that is the process he or she will go through—or abiding by the NPPF.
I am just not completely confident that by giving the Secretary of State the exact same guidance and policy, somehow everything will become okay with the application of conditions, particularly because local authorities work within a local context, whereas the Secretary of State does not. What reassurances can the Minister give us that that will work in practice? I think he will agree that this time significant additional powers are going to the Secretary of State. When will they be triggered and in what way?
I ask that because in our evidence sessions I asked both the Home Builders Federation and the British Property Federation what evidence they had that conditions were being applied in an unnecessary and whimsical fashion, or that local authorities were routinely setting conditions, particularly pre-commencement conditions. I have to say that they did not break it down into pre-commencement conditions and conditions that relate to the ongoing development itself. Nevertheless, let us look at what they said and assume that it was at least partly about pre-commencement conditions. They said that they had evidence that builders were experiencing problems with pre-commencement conditions but could not give any examples. That is what I find worrying about the premise underpinning the clause, particularly the additional powers given to the Secretary of State in proposed section 100ZA(1).
Kevin Hollinrake (Thirsk and Malton) (Con)
Has the hon. Lady spoken to some of the small developers in her constituency? I have certainly spoken to some in mine, and they, too, cite pre-commencement conditions as critical to their ability to get a speedy resolution to planning applications.
Dr Blackman-Woods
I was just about to come to the Federation of Master Builders, which looks after smaller builders; I was dealing with the HBF first because it tends to deal with the volume builders. We heard in oral evidence the opinion of some of the volume house builders, although we did not get from the HBF any examples of what types of conditions were proving problematic.
Dr Blackman-Woods
May I finish responding to the previous intervention? To answer the hon. Gentleman’s second point, I talk to the small home builders—in fact, builders generally—in my constituency a lot. When we are looking at evidence, we have to look at it really carefully. Builders will often say to me, “We have to do a bat survey”—it is usually a bat survey, but occasionally a newt survey. Sometimes I ask them how long it takes and they say, “Well, it depends on the time of year, so it can be a bit problematic.” Generally, though, something has been done locally that they can tap into. Bats are usually the worst, but if we can find a way to deal with that without it being too onerous, perhaps such a drastic clause would not be necessary.
Kevin Hollinrake
The hon. Lady mentions bat surveys. In September, one of my constituents was required to carry out a bat survey on a building that was due to be demolished. When it came to granting planning permission in December, the planning officer decided that there were no bats around in September so they would have to wait until May to do the survey again. Having carried it out once, they had to wait until the bats came back to see whether any bats were there in the first place. The hon. Lady asked for specific examples. A small developer was asked for a landscaping scheme before he was allowed to start building the houses, and that was not in a conservation area. These things clearly are an issue. We cannot just reject out of hand the fact that they are causing problems.
Dr Blackman-Woods
I would like to reassure the hon. Gentleman that we are not dismissing those examples out of hand. My first point is that we are struggling to find examples. My second point is that, when we find examples, we have to decide whether they should be dealt with under a particular clause, such as clause 7, or whether we should find some other way of minimising the impact on the conditions set by the local authority.
The only example that the FMB was able to give us was of landscaping. However, landscaping is often what makes what might be a non-acceptable development acceptable to the local community. Communities want to know at the outset what a development will look like in the end, as the hon. Member for Thirsk and Malton must know from his constituents—I know it from mine. If a building has an unsightly façade or a high wall, or if there is something that people are unhappy with, they will ask at the earliest stage, “What sort of screening will there be so that we don’t have to look at that ugly edifice?” Far from landscaping being a good example for the hon. Gentleman, it actually helps our case. He and builders might think that pre-commencement conditions are unnecessary, but our constituents think that they are really important.
Gavin Barwell
It is undoubtedly the case that our constituents are interested in what schemes will look like. Does the hon. Lady at least accept that requiring a developer to set out all that detail before a single shovel goes into the ground slows down house building? She might think that that is a price worth paying, but does she accept that point?
Dr Blackman-Woods
The Minister will have to bring forward evidence to show that it will slow down house building. If landscaping makes acceptable to a local community a development that it would otherwise find unacceptable, it might no longer object to an application, in which case the condition could speed up development, rather than slowing it down.
Jim McMahon
I refer the Committee to my entry in the Register of Members’ Financial Interests—I should have mentioned earlier that I am a member of Oldham Council.
I struggle with the idea that asking developers to produce a landscaping plan is onerous. We are not talking about amateurs. When developers employ an architect to design a scheme, it is not that difficult to overlay it with a landscaping plan. The point has been made that, for a lot of people, that plan is the difference between whether a development is acceptable or not. That is not just because it can provide good screening but, importantly, because it forms part of the character of the locality.
We should all be trying to promote good development and good design in good context. Removing the conditions would not really help towards that. I can think of loads of planning schemes where really good landscaping design has added value. It has been good for the community, for the developer—which was able to get a premium on those properties—and for the people who live in the development, and it does not actually take that much time.
I struggle because—I wonder whether my hon. Friend agrees with me—we are just talking about planning. If developers are professionals, they will get their ducks lined up—or their bats—and ensure that they have the surveys in place. If they are refurbishing an old barn or building, they know that those things are needed and should just crack on and get them done.
Dr Blackman-Woods
My hon. Friend makes an excellent point that is pertinent to our discussion.
Chris Philp (Croydon South) (Con)
The hon. Lady is very kind to give way, and it is a pleasure to serve under your chairmanship, Mr Bone. In response to the suggestion made by the hon. Member for Oldham West and Royton, if one requires developers to do all the surveys before the application, and the application is then declined by the local authority, the developer will incur significant costs to no purpose. That may prove prohibitive, particularly for smaller developers. What is her view on that?
Dr Blackman-Woods
I am sure the hon. Gentleman knows that local authorities approve nine out of 10 planning applications. It would be a rare event for such a detailed plan to come forward to a local authority without the developer knowing that it was breaching local planning policy. That is what must be happening if the application is rejected. That is not a very usual occurrence these days.
If the hon. Member for Thirsk and Malton and the Minister are serious about speeding up development, they might want to look at the outcome of the FMB’s house builders survey 2016. One would assume, from reading the Bill, that the major problem in bringing forward development was pre-commencement planning conditions. However, when the small house builders were asked what was the biggest problem, they said it was the lack of available and viable land. That was the most commonly cited barrier to increasing output. We have to look right at the back of the survey, to a few specific questions on planning, to find any mention of planning conditions, and even then they were not the biggest problem; the biggest problem was the inadequate resourcing of planning departments. I hate to say that again and reinforce the message, but we are not the ones saying it; it is the small house builders.
Land is the biggest problem by far, and pre-commencement conditions do not come anywhere near that. Within planning itself, the biggest problem is the resourcing of planning departments—and that comment came only after prompting. They do not mention the setting of planning conditions at all; what they mention is sign-off of planning conditions. That seems to be a very different issue that they are raising. They are not raising an issue about the nature of pre-commencement planning conditions, or whether those conditions are appropriate. What they say in the text is that they could be signed off more quickly and that might help. Why are they not signed off more quickly? It is because of a lack of resourcing for local authority planning departments.
That was the only survey brought to our attention. I searched and found no other evidence, apart from the opinions of some of the larger volume builders. Giving such additional powers to the Secretary of State with no solid evidence base does not seem a very sensible way forward.
Some clauses in the Bill do not have the worrying aspects attached to them that this one does. If the effect of clause 7 is to restrict conditions that are set on developers, that could have a real impact on the community—not only on those who will ultimately occupy that development but on the neighbourhood. That is why we are so concerned about clause 7. We do not think it is necessary; we have not seen the evidence base. If the Bill is to contain such drastic measures, which could have real impacts on the areas that we all serve and represent, we need to hear something from the Minister.
Amendment 18 seeks to amend clause 7 so that if a condition cannot be enforced by the Secretary of State to make the development acceptable in planning terms, it makes the development unacceptable in other ways. Proposed section 100ZA(2) states:
“Regulations under subsection (1) may make provision only if (and in so far as) the Secretary of State is satisfied that the provision is appropriate for the purposes of ensuring that any condition imposed on a grant of planning permission for the development of land in England is...necessary to make the development acceptable in planning terms”.
Gavin Barwell
Many of the things that might be covered by social, economic or environmental concerns are absolutely central to the planning system. I want to check that the hon. Lady is not suggesting that councils should be able to consider things that are not material planning considerations when dealing with planning applications.
Dr Blackman-Woods
I am happy to answer the Minister’s question, but I am trying to find out what the Minister thinks about this particular subsection. Has he thought through a set of circumstances in which adding or removing a restriction or adding or removing a condition would make something acceptable in planning terms, but might have unforeseen consequences somewhere else? I am just giving the Minister an example because there could be environmental concerns. I suppose there are a lot of examples when we think about it. The removal of trees might be allowed under this clause, because that would be acceptable in planning terms, although I am not sure why it would be acceptable. There might be ongoing environmental or even social issues arising from that.
If we come back to the traffic measures, there is the issue of the roundabout. Traffic measures could be applied to make a development acceptable, and there could be absolutely dreadful issues for the local community in terms of air quality because of the requirement to make the development acceptable in planning terms. So the amendment is very much probing like amendment 15. We are trying to find out what this is all about in actuality. How will it work in practice? What sort of conditions might be set or removed by the Secretary of State? What is the impact of the decisions made by the Secretary of State and how will proposed section 100ZA(2)(a), (b) and (c) work in practice?
I will now move on to discuss amendment 16, which is innocuous and quite helpful. It simply asks for some consultation with local authorities when regulations are being drawn up. I actually thought this might be a helpful amendment for the Minister because, as we have already explained, we clearly have some difficulty understanding and finding an evidence base to support what is in clause 7.
If these regulations are to do the job that the Government want them to do—transfer powers to the Secretary of State, so that he or she can apply conditions or take conditions away—presumably they want the regulations to work in practice. These regulations really impact on the work of local authority planning departments, and local authority planning officers will be the people to know whether this clause is going to produce anything helpful or not in practice. It seems entirely reasonable that there would be a particular role for local authorities to contribute to the drawing up of the regulations, so that they are proportionate, and that the way in which the Secretary of State can interfere should be proportionate to the problem that the Government have identified.
I say that because nobody else seems to have identified pre-commencement conditions as a problem, but clearly the Minister thinks they are and some of his colleagues seem to think they are. All that we ask is that a very sensible approach is taken to local authorities, and that rather than simply having a set of regulations imposed upon them, which may or may not work in practice, they are involved in the process. Then, hopefully, we will get something commensurate to the problem and not a whole-scale transference of powers to the Secretary of State. I look forward to hearing what the Minister has to say.
Helen Hayes (Dulwich and West Norwood) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bone. I have listened to evidence from both the development industry and local authorities both as a member of this Committee and as a member of the Communities and Local Government Committee. Although there are some examples, which have been much quoted, of the excessive use of pre-commencement planning conditions, the evidence is really not very strong. There are many reasons why the measures proposed in clause 7 are, in fact, an attempt to treat the symptom of a problem rather than the cause of that problem itself.
When asked, and when I have questioned them, all the witnesses—pretty much without exception—who have spoken about pre-commencement planning conditions have acknowledged, and in some cases spoken extensively about, the constraints on local authority planning departments. As we know, planning is the second most cut area of local authority services since 2010. It is an area that has, for good reason, lost out in the competition for local authority resources between it and statutory services such as children and adult social services, which affect some of the most vulnerable in our communities. To my mind, that is because the funding of planning, and in particular development management, is not on an appropriate footing.
I was very disappointed and frustrated that the previous Housing and Planning Minister simply ignored this issue during the debate on the Housing and Planning Act 2016, and did not acknowledge that we needed well-functioning, properly resourced planning departments to facilitate the building of the new homes that we need. It is absolutely not right that planning should be competing with services that are needed by the most vulnerable in our communities, and therefore we need a different way of funding planning departments.
Kevin Hollinrake
How will extensive pre-commencement conditions that are difficult to discharge help with that process? Local authorities will choose where to resource their departments. The pre-commencement conditions simply increase the burden on planning officers.
Helen Hayes
If the hon. Gentleman bears with me, I will explain exactly how that part of the argument hangs together.
There is evidence that officers are currently using pre-commencement conditions because they are simply unable to resolve every aspect of the planning application before the deadline for making a decision. In some cases, they are unable to look in detail at all the documents submitted as part of a planning application. In some cases, they are unable to spend the time negotiating and discussing with the applicant the type of detail that might be necessary. There is no question but that that is clearly not acceptable practice. Some have referred to that as lazy conditioning, but I would argue that it is, in fact, more commonly a symptom of the problem of under-resourcing, rather than deliberately poor practice.
When faced with the threat of appeal on the grounds of non-determination, local authorities and individual officers will look to use conditions as a way of making a timely decision to avoid losing control of every aspect of that planning application to the Planning Inspectorate. That is an entirely rational way for authorities to behave, rather than taking the risk of losing an appeal on the grounds of non-determination.
Gavin Barwell
I very much welcome the hon. Lady’s speech, because she is admitting that there is a problem and that the pre-commencement conditions are being abused. She believes that the reason for that abuse is that local authorities are under-resourced. That is exactly what she just said. Would not the right solution be to stop that abuse? That will do one of two things. It will show either that it is all about resourcing—the proportion of applications approved in time will drop dramatically—or that there is a problem. Either way, it will stop the abuse and reveal the true problem.
Helen Hayes
I am arguing, first, that the scale of the problem is not nearly as great as the Government say, and secondly, that where there is a problem it is a symptom of the lack of resourcing in planning departments—the primary cause of that problem—not a problem in its own right. Therefore, the Government should be directing their energy towards the resourcing of local planning departments. I have argued many times that local authorities should be able to recover the full cost of resourcing and development management services through the fees they charge for those services. That proposal has broad support from the development industry, local planning departments and the organisations that represent local government in London and across the country. It would be a far better place to start the debate than clause 7.
As we have heard from many witnesses, there are circumstances where pre-commencement conditions are welcomed by developers, and where there is flexibility to agree some details when finance has been secured on the basis of a planning application, or when more is known about the site due to site investigations that take place in the earlier stages of a scheme. Last week, I sat down with several representatives of the local community and a developer who is bringing forward a very sensitive scheme in my constituency. The planning permission for the site in question was a detailed consent secured by a previous landowner who used that consent to sell the site on; that was a controversial issue in its own right.
Last week we met the developer, which did not take part in the planning application process for the site that it has now inherited. In that case, there are pre-commencement conditions on materials and archaeology. It is entirely right and proper that the developer has the opportunity to consider those conditions and make proposals to the local authority for those conditions to be discharged before development commences.
Chris Philp
In the hon. Lady’s example, did not the new owner have ample opportunity to consider those pre-commencement conditions before the purchase of the site? If they did not like the conditions, they could simply have not purchased the site.
Helen Hayes
That is a rather blunt and not nuanced enough understanding of how such things work in practice. Last week, the developer met with the community —a vociferous community who feel very strongly about the site. That conversation will enable the developer to inform the discussions and plans for some important detailed aspects of the scheme. That is entirely the right order of things. It would not have been appropriate for the developer to speak to the community ahead of securing the purchase of the site; the developer would not have had a relationship with the community that allowed such a conversation. The way that things are progressing is entirely right and timely; it is not leading to any delay in bringing forward the site in question.
Dr Blackman-Woods
My hon. Friend is making a series of important points, which are helping us to understand pre-commencement conditions more thoroughly. Does she agree that the provisions in the clause will in fact make communities much more anxious about possible development in their area? The local authority may set conditions that will make a particular planning application acceptable and then find some way down the line that those conditions have been removed by the Secretary of State.
Helen Hayes
My hon. Friend is exactly right. It is so important that the voices of local communities are heard, particularly given the volume of development that is needed to deliver the new homes that we need in this country. Conditions are one way that a local authority can broker and establish a relationship between applicant and community and the genuine and material concerns that our constituents all have about development can be taken into account and addressed. Communities will find ways for their voices to be heard. If the planning system excludes those voices and makes those negotiations much more difficult, those voices will be heard in other ways: there will be an increase in applications for judicial review of planning applications and much more in the way of petitions, protests and attempts to frustrate development. It is right that the concerns of local communities are heard and addressed through the planning system.
I further take issue with the clause and support the amendments in the name of my hon. Friend the Member for City of Durham because it simply does not reflect or encourage good practice. It is widely acknowledged—the Committee has heard evidence from experts across the sector about this—that best practice involves applicants and planning authorities, having undertaken appropriate public engagement and consultation, coming together to agree what is necessary for an application to meet policy requirements in relation to a given site.
Members on the Government side of the Committee have made the point that there is cost and risk for applicants in taking applications through the planning process. That risk is mitigated and minimised when applicants fully understand and take into account the policy context and do everything possible to ensure that their applications are policy-compliant. To suggest that local authorities are in the business of refusing planning applications on a whim in a policy vacuum misrepresents what actually happens. In the case that a local authority makes a flawed decision, it is open to the applicant to appeal, and such appeals will succeed.
Kevin Hollinrake
Is the hon. Lady not arguing for the clause? She talks about best practice and engaging with the applicant and the planning authority to agree the way forward rather than unilaterally sticking in some pre-commencement conditions without discussing those with the applicant. Is that not exactly what the clause will do?
Helen Hayes
It is my view that a clause that requires an exchange of letters and makes agreement to the principle of pre-commencement conditions the preserve of the applicant rather than the local authority does the opposite. It does not encourage best practice; it encourages a much more litigious and formalised approach to negotiation, which does not allow for genuine engagement between applicant and planning authority. It would be far better to resource planning authorities properly to undertake those detailed discussions with applicants, so that they can agree and discuss the issues that are important to local communities and ensure they are properly addressed, with as many as possible being within the planning permission itself rather than within pre-commencement conditions. However, there is a role for pre-commencement conditions and it is a very important one.
Finally, we should remind ourselves of what pre-commencement conditions seek to achieve and why they are important. Conditions cover many aspects of application, such as the choice of materials, which is sometimes belittled as a trivial matter but is in fact so important in determining the impact that a new development will have on a community in the long term. Once something is built, it is there certainly for the rest of our lifetimes and perhaps those of future generations. What a development looks like, the impact it has and how sensitively considered the materials are plays a really important role in how acceptable it is to the local community.
Conditions also cover issues such as sewerage capacity, which influences whether residents will have serious problems, sometimes in their own homes, in the long term. They are a key means by which local authorities can safeguard the interests of local communities and ensure the quality of new development. Of course, they should not be overused or misused, but where that occurs it is a symptom of the lack of resources rather than wilful misuse or poor practice.
I argue that the setting of conditions should be the preserve of democratically elected local authorities, not contingent on the agreement of the applicant. Local authorities must be properly resourced to undertake pre-planning discussions, to review properly the content of applications and to agree as much as possible within the framework of the planning permission itself, in order to minimise the use of conditions. The clause is simply misdirected. It is trying to treat the symptom of a problem, rather than the cause. I hope the Government will therefore reconsider it.
Mrs Theresa Villiers (Chipping Barnet) (Con)
It is a pleasure to take part in this Committee under your chairmanship, Mr Bone. I have what amounts more to an intervention than a full speech. I spoke about this clause on Second Reading and received some useful reassurance from the Minister, but now we have the more relaxed circumstances and timings of a Committee, I would like to reiterate broadly the importance that many of my constituents place on matters relating to the protection of habitats—that includes bats and newts—and landscape and flooding.
It would be helpful if the Minister expanded on his remarks on Second Reading to explain how it will still be legitimate for the planning process to consider such matters and how there will still be opportunities for local authorities to require research to be done into them, so that planning permission can be granted on the basis of full awareness of the facts. While the clause as drafted will help streamline the planning process, it must leave planning authorities with the ability not only to take matters such as habitats into account, but to require developers to provide the appropriate surveys and research. Will the Minister explain at what stage that is still open to the planning authorities? I am sure my constituents would be very grateful for that.
Gavin Barwell
I should say at the outset that the three amendments we are debating do not deal with the pre-commencement and application issue. We have rather drifted into a clause stand part debate, but I will try to respond to all the points colleagues have made.
This is probably the moment in the Bill when there is the strongest disagreement between the two sides of the Committee. Let me start on a consensual note. The hon. Member for City of Durham asked me to accept that this was a wide-ranging power, compared with the one in the previous clause, and I do accept that. The Government have sought, in drafting the legislation and in some of the other things we have done, to provide as much reassurance as possible.
We have put two provisions in the Bill that it might be helpful to clarify at the outset. The clause does two things: it gives the Secretary of State the power to prescribe certain types of planning condition, and separately it requires that pre-commencement planning conditions may only be made with the agreement of the applicant. So there are two different issues, and the amendments we are considering deal with the first part of the clause. We will come to the amendments that deal with pre-commencement later. It might be helpful to the Committee to put that on the record.
On the Secretary of State taking the power to prescribe certain types of conditions, I can offer three pieces of reassurance to the Committee. First, the Bill makes it very clear that the Secretary of State may use that power only to back up what is in the NPPF—the basic tests are written into proposed section 100ZA(2), which is inserted in the Town and Country Planning Act 1990 by the clause. One of the amendments deals with those four tests, which I will come to later. Secondly, proposed section 100ZA(3) makes it clear that the Secretary of State, before making any regulations, will have to carry out a specific consultation on them, so each time the Secretary of State seeks to use the powers under proposed section 100ZA(1), there will have to be a public consultation. That is written into the Bill to provide reassurance about how the power is to be used. Thirdly, when we published the Bill, we also published a consultation paper setting out how we believed that we would want to use the powers, were Parliament to grant them to the Secretary of State. I will refer to that consultation paper later on in what I have to say.
The point of principle is the point of difference, so let us start with evidence. I would argue that there is a lot of evidence to show that there is a problem, but first I point out that the Opposition have fallen into one of the traps that has bedevilled the housing debate in this country for 30 or 40 years—a trap into which many of the people who have come into my office over the past three months have also fallen—and that is to set out an either/or choice.
For the first two months that I was doing this job, I asked everyone, “Why do we not build enough houses in this country?” People would reply, “It’s all the planning system’s fault,” or, “It’s all down to the major developers, who are banking huge chunks of land. If they released those, we wouldn’t have a problem.” Some people came into my office and said, “Do you know what? It is impossible for people nowadays to own their own home. We should just give up on home ownership and put all the focus of housing policy on renting,” but others say, “There has been too much focus on renting. People want to own their own home. Everything should be about helping people to own their own home.” I believe such choices to be completely false.
Gavin Barwell
If the hon. Lady allows me to expand the argument, I will be happy to allow her to intervene.
The reasons why we do not build enough homes in this country are complicated. Lots of things work, but if the answer were simple my predecessors would have solved the problem. There is no silver bullet and no one thing that will solve the problem, which instead will require a complex web of policy interventions.
Gavin Barwell
To say that there is a problem with local authority resourcing of planning departments, which I think everyone on the Committee has accepted, and that therefore that is the sole problem and we do not need to worry about anything else, is to miss the point completely. There are a lot of reasons why there are problems in our system. We need to take action to deal with all those things, not simply say, “This is the main problem, so we should solely deal with that and forget about the rest.” I will now happily take the interventions.
Dr Blackman-Woods
I want to challenge the Minister’s characterisation of what the Opposition think about why in this country we are not building as many houses as we should. I know the Minister knows that that characterisation is not fair, because he has read the Lyons review; I know that because he and his predecessor have been cherry-picking bits out of it and bringing them forward in Government policy. It was a wide-ranging review, which looked at a whole set of different reasons why we do not build enough houses—everything from land availability to the failure of the duty to co-operate, to the inadequacy of the local plan-making system, and so on. I hope he and the rest of the Committee will understand that the Opposition do indeed know that the problem is multifaceted. This morning, however, we are simply arguing about this group of amendments, and saying that we do not think that pre-commencement planning conditions are the major issue that he sets them out to be.
Gavin Barwell
If it is helpful and the interventions are on the same subject, I will take both before responding.
Helen Hayes
I want to make two quick points in response to the Minister’s remarks. There might be multiple causes of the issue that the clause seeks to address in relation to the use of pre-commencement planning conditions, but as my hon. Friend has argued, we do not believe there is evidence that this is a primary cause of the problem. We believe the primary cause is the under-resourcing of planning departments, and Government Members acknowledge the extent of that problem. Will the Minister explain why there is nothing in the Bill that addresses that problem?
My second point relates to the remarks made by the Minister about housing. I welcome his acknowledgment that renting and the affordability of housing are part of the problem. His predecessor took an entirely binary approach to housing: he put all of the Government’s resource into home ownership and did not recognise that nuance at all. If the Minister is thinking of changing direction, that would be welcome.
Gavin Barwell
On the latter point, if the hon. Lady were to look back at some of the things I have said over the period that I have been Housing Minister, she would find that those signals have been loud and clear. A White Paper is coming shortly. I do not want to add any more on that point, but on the resourcing point, other members of the Committee will say that I was pretty clear about where I stood last Thursday. On the question about why there is nothing in the Bill, some things do not need legislation to fix them. There is a White Paper coming out. I have to be careful, but the Government have consulted on the issue of whether we need to get more resourcing into local authority planning departments. The results of the consultation were clear, and the Government will reflect on them.
I was glad to hear the comments of the hon. Member for City of Durham. I will come to the evidence on this point, which is where we should concentrate our debate, but I would observe that the modern Labour party, which is a rather different creature from the one in the late 1990s when I was getting involved in politics, seems to find it easier to recognise problems when the private sector is involved and is more reluctant to recognise problems when the public sector is responsible.
Let us turn to the question of evidence. Knight Frank’s house building report 2016 refers to
“the need to address the increasingly onerous levels of pre-commencement conditions applied in some planning permissions and the length of time taken to sign them off.”
Crest Nicholson’s half-yearly report 2016 states:
“Speeding up the clearance of pre-start planning conditions and securing sufficient labour resources to deliver growth plans”
remain the two challenges to delivery.
The Persimmon annual report states:
“Whilst planning-related pre-start conditions continue to increase the time taken to bring new outlets to market, we are pleased to have...opened 60 of the 120 new outlets planned”.
I referred on Second Reading to a survey done by the National House-Building Council in 2014, which showed that a third of small and medium-sized builders identified planning conditions as the largest constraint to delivery. Specifically, the two questions were about the time taken to clear conditions and the extent of the conditions.
Gavin Barwell
The hon. Lady asked for evidence; I am giving it. The time to clear conditions was mentioned by 34% of respondents and the extent of conditions was mentioned by 29%.
The District Councils Network—local government, not developers—stated, in its submission to the Committee:
“The DCN has acknowledged that the discharge of planning conditions can be a factor in slow decision making and supports the government in seeking to address conditions.”
The hon. Member for City of Durham referred to a survey, but did not give the issue the prominence that it has in the survey. The planning system was identified as the second biggest challenge to small builders—tied with finance and behind the availability of land. The Government will be addressing all three issues. Among those commenting on planning difficulties, the signing of conditions was the second most cited challenge, behind the resourcing of planning departments, and the Government will be addressing both of those things.
The speech by the hon. Member for Dulwich and West Norwood was commendable. She acknowledged the abuse of pre-commencement conditions. Her explanation for it was not that local authorities were being lazy, but that there was a resourcing issue. I think the words she used were that people just did not have time to read planning applications, so they slapped pre-commencement conditions down. That clearly is not right, so the Government are absolutely justified in taking action in that area as well as looking to address the resourcing issues that she rightly identified.
Helen Hayes
The example I referred to was one that we heard in evidence to the Committee. It was an example of a landscape strategy having conditions despite having been submitted with the planning application. That practice is of course completely unacceptable, but it is, along with many other things, a symptom of the lack of resourcing.
More than half of the evidence that the Minister has just provided related to concerns about the signing off and discharge of pre-commencement planning conditions, not the setting of conditions themselves. If that is, indeed, a problem, as it would seem to be from the Minister’s evidence, I ask once again why the Bill is dealing with the symptom of a problem rather than the cause. Why does it contain nothing to deal with the issue of the discharging of planning conditions, and instead deal only with the setting of pre-commencement planning conditions?
Gavin Barwell
I have tried to answer that question already. Some of those things do not require legislation. There are problems in our house building system that require policy changes, and others that require legislative changes. We want to pursue a range of solutions encompassing both those options.
I want to pick up on three specific examples that we were given of pre-commencement conditions, one of which may help to provide my right hon. Friend the Member for Chipping Barnet with the reassurance she sought. I thought that the three examples delineated very well the difference between the two sides of the Committee on this issue. One example related to archaeological concerns. Clearly it is entirely appropriate to address those through a pre-commencement condition. If there are concerns that the moment someone gets on site and starts to do ground works they will destroy a key archaeological site, the issue has to be dealt with by a pre-commencement procedure.
The other examples concerned the use of materials and landscaping. I, and I am sure all members of the Committee, would accept that those issues are legitimate ones that communities would want to address through the planning process. However, I do not accept that they must be dealt with before a single thing can be done on site, as the development begins to get under way. There is no reason why they cannot be dealt with during the process.
The hon. Member for Oldham West and Royton made an interesting intervention in which he said that it is all very simple if—I will take care not to use unparliamentary language—one gets one’s ducks lined up. He said that people need to do all the work at the outset, come to the planning committee with everything sorted out, and then away they go. However, not only does that expose applicants to extra expense before they get planning permission, as my neighbour, my hon. Friend the Member for Croydon South, said, but it delays the process. The point that I am trying to get the hon. Member for City of Durham to accept is that, particularly with a large application, a huge amount of work must be done to get to the point where the applicant has satisfied all the legitimate concerns a community might have about it.
If, as I passionately feel, there is a desperate need to get us building more houses as quickly as possible in this country, surely anyone who has ever had any experience of managing a large project will think it is better to deal up front with the things that must be dealt with up front and then, while work is beginning on site, deal with some of the other issues that need to be dealt with. If we want housing to be built more quickly, we must allow developers to proceed in that way and not say that they must get every single thing sorted out before they can even turn up on site and begin vital work.
Dr Blackman-Woods
The Minister is in danger of presenting a bit of a caricature. It is not a question of absolutely everything being presented up front; it is a question of what is needed to be able to assure a planning committee and the community that a development is acceptable. If the Minister is serious about speeding up development, we know that the major problem with pre-commencement conditions is signing them off, so if he wants to address that it must be by further resourcing of planning departments, not by the removal of conditions.
Gavin Barwell
Again, the hon. Lady falls into the either/or trap. Both those things are problems. It is a problem both that the conditions are overused and that when they are legitimately used it can often take too long to sign them off. We are going to deal with both problems.
Gavin Barwell
I will give way once more; then I want to look at the specific example of flooding, talk about the consultation document and discuss the amendments.
Chris Philp
I have a genuine question on which I should be grateful for the Minister’s thoughts. If we proceed as per the clause as drafted, and the applicant has to agree in writing to the pre-commencement conditions, what if the applicant—the developer—unreasonably refuses to agree to any of the pre-commencement conditions, in order to frustrate them? What would happen in that circumstance?
Gavin Barwell
I am sure that my hon. Friend never asks anything but genuine questions. The answer is very clear. In those circumstances, the local authority would be able to refuse permission for the development. If the pre-commencement condition that the applicant sought to resist was an entirely legitimate one of the kind we have already discussed, and if the applicant appealed, the Planning Inspectorate would turn down their appeal.
Chris Philp
Just to be clear, any condition that a local authority feels strongly about has to be imposed as part of the main planning condition. It has to accept that anything that it does not put into the main planning condition, it cannot subsequently impose.
Gavin Barwell
Pre-commencement conditions must be agreed with the applicant. If the applicant is not willing to agree to a legitimate condition, without which the authority does not feel the application would be acceptable, the application should be refused. The authority absolutely has the right to refuse such an application. I put it on record that I expect the Planning Inspectorate to back up the decisions of local councils when it judges that such a condition is perfectly reasonable to make a development acceptable. I hope that any developer silly enough to play those games will quickly learn that lesson through the appeals process.
What we want is good practice; my hon. Friend the Member for Thirsk and Malton made that point powerfully. We want applicants and councils to sit down together and work out what legitimate pre-commencement issues are. We have no problem at all with such issues being used for pre-commencement conditions, but we want to stop them being abused.
The hon. Member for City of Durham used the instructive example of flooding. The test seems to me to be one of reasonableness. She used the phrase “There may not be evidence”. Local authorities are in difficult circumstances if there is no evidence to back up what they seek to do. However, if there is evidence of genuine concerns, that is clearly a legitimate and material planning consideration.
Dr Blackman-Woods
My point was not that there would be no evidence; it was that there might not be evidence about that specific site at that time, but that a wider reading of what a local authority was doing would produce evidence of the need to put in flood allevation some way down the line.
Gavin Barwell
I cannot sit in judgment on how a particular case might be considered, but I refer the hon. Lady to page 12 of the consultation paper, which sets out some examples from current planning guidance, which the Act will put into secondary legislation, of conditions that should not be used. It might be helpful to the Committee if I run through those examples. The first is:
“Conditions which unreasonably impact on the deliverability of a development”,
such as those
“which place…disproportionate financial burdens”.
The test is one of reasonableness. An inspector would look at whether the evidence that the local authority had presented was reasonable with respect to the use of those conditions. If the hon. Lady is asking me to make it clear that we would not rule out any consideration of flooding matters in planning considerations, I confirm that we absolutely would not. There are often applications in which it is entirely legitimate to do what she suggests.
The second example given in the guidance is:
“Conditions reserving outline application details”—
in other words, where an authority tries to specify things for an outline planning application that could very well be dealt with in a full application further down the line. The third example is:
“Conditions requiring the development to be carried out in its entirety”.
The fourth example is conditions that duplicate a requirement for
“compliance with other regulatory requirements”,
such as by just repeating something that is already in the building regulations and is therefore covered. The fifth example is:
“Conditions requiring land to be given up”.
The sixth is:
“Positively worded conditions requiring payment of money”,
as opposed to a section 106 agreement, which says that an application could become viable if a developer deals with certain issues. Those are the clear examples that we have tried to give in the consultation paper of the kinds of things we have in mind.
Having tried to address some wider remarks from Committee members, I turn to the three amendments tabled by the hon. Member for City of Durham. We believe that amendment 15 runs contrary to the purposes of the Bill, as it would clearly allow local authorities to get around regulations approved by this House to prohibit certain kinds of planning conditions. I hope my earlier remarks about reassurances in the Bill to limit the way in which the Secretary of State can use the power, and the requirement on each occasion for a public consultation, have reassured the hon. Lady about how the powers will be used.
Dr Blackman-Woods
That was a very helpful and, in some ways, enlightening response from the Minister. Unfortunately, we ended up having evidence presented to us that was not evidence and examples that were not examples, but instead a typology of circumstances in which the clause may or may not be applied. That is in a consultation document that sits outwith the Bill at this point.
Kevin Hollinrake
What does the hon. Lady regard as evidence? The submissions of developers, district councils, small and large builders—are they not evidence? Does she not recognise them as such?
Dr Blackman-Woods
The only example that has been given to us in the Committee, apart from the ones I speculated on myself, was landscaping. I think we dealt with why landscaping is so vital to know about at an early stage in the process.
Jim McMahon
A lot of examples have been used—we have had this debate often, and we have gone around the houses on bats and newts and, at one point, hedgehogs. That is all fine and well, but we really wanted to get to facts and numbers. How many planning applications have been frustrated or delayed significantly because of these conditions? We do not have those facts. We have people giving evidence of their experience and opinion, which is important, but is not the same as the hard numbers we have asked for.
Dr Blackman-Woods
My hon. Friend makes an excellent point about the various surveys that the Minister mentioned, which I was about to come to.
Chris Philp
I was about to draw the hon. Lady’s attention to the extensive list of submissions that the Minister read out in his speech a few minutes ago. Perhaps I might add my own experience. As I mentioned in my declaration of interests, prior to being elected I ran a business that provided finance for construction projects. The whole array of pre-commencement conditions are often very detailed. For example, they frequently stipulate precisely what kind of brick must be used and it often takes a very long time to get discharged. The pre-commencement conditions are often more detailed than one would reasonably expect.
With respect to the shadow Minister, I do think there is an issue here and that the Minister is trying to address it in a balanced and reasonable way.
Dr Blackman-Woods
In which case, what I would say is that we need the evidence in front of us. What examples are there? In how many sets of circumstances? How and why are the conditions inappropriate? In a conservation area, for example, the type of brick would be an important pre-commencement condition.
The evidence from Knight Frank was an assertion that there was a problem because we had no details and no number of applications—nothing. The Crest Nicholson example was a problem with signing off pre-commencement conditions and we on the Labour Benches have already said we recognise that is a problem. The signing off of pre-commencement conditions is a very different issue from the setting of conditions, and the clause is about the setting of planning conditions.
In the NHBC survey, the primary problem identified was again the time taken to discharge the conditions, not the conditions themselves. That was also the primary concern in the District Councils Network survey. We are not saying there is no evidence out there of problems signing off pre-commencement conditions—
Gavin Barwell
It is becoming increasingly frustrating that the Opposition do not seem to want to listen to evidence presented to them. Let me repeat two points so that the hon. Lady cannot skip over them. In the NHBC survey 34% referred to the time to clear conditions—she is quite right about that—and 29% referred to the extent of those conditions. She skipped over the quote from Persimmon that,
“planning-related pre-start conditions continue to increase the time taken to bring new outlets”—
not a word I like, so new homes—
“to market”.
What does she have to say about the very clear evidence?
Dr Blackman-Woods
I think the Minister and I have a really different understanding of what evidence means. I was coming to the District Councils Network and Persimmon because they mentioned, as did other people who gave evidence to the Committee, that there is an assertion that there is a problem, but we do not have hard and fast evidence of it. That is the point we have been trying to make to the Minister. He has not brought forward the hard evidence and we have not had good examples. We have been struggling to come up with examples and the Minister has certainly not presented any. We are not convinced that the clause is necessary.
For some of the reasons given by the Minister, I will not press the amendment to a vote, particularly as I take at face value his assurance about amendment 16 and that there will be consultation with local authorities. I am surprised that he did not take the opportunity in proposed section 100ZA(3) to add, “including local authorities”. If he is going to include “public consultation” in the Bill, he may as well include “consultation with local authorities.” Not doing so seems rather odd, especially as he has acknowledged so strongly that he wishes to consult local authorities in drawing up the regulations. Why not take the opportunity to amendment that subsection and put “local authorities” in the Bill? I am not sure why he does not want to do that, but at least something has been read into the record that perhaps will give some reassurance to local authorities that these regulations will not be as drastic or unworkable as they may be if local authorities were not involved in drawing them up. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Blackman-Woods
I beg to move amendment 19, in clause 7, page 6, line 18, at end insert—
“including in terms of sustainable development and public interest.”
This amendment would ensure that there is a sustainable development test in conditions and that they are acceptable to local people.
The Minister often takes our probing amendments in a way that seeks to shine light on the Opposition’s view, but I stress that we have tabled those amendments to test the Government’s view, because, alas, the Government are putting forward the Bill, not the Opposition.
Amendment 19 would ensure that where regulations are brought forward by the Secretary of State, he would have to comply with an additional measure to those set out in proposed section 100ZA(2), to get around the problem that amendment 18 in some senses addressed. We understand that the list of measures in that subsection follows what is in the NPPF and the planning guidance, but it may be missing some important aspects of a development and the pre-conditions that apply to it.
The subsection says that when the Secretary of State is making regulations, he has to consider things such as whether whatever he is asking local authorities to do or not to do will
“make the development acceptable in planning terms”,
and whether it is
“relevant…to planning considerations”
and
“reasonable in all other respects.”
Given the way in which sustainable development apparently underpins the NPPF, the amendment would require the Secretary of State also to look at whether the regulations would make the development more acceptable in terms of sustainable development and the public interest.
I am sure the Minister will want to know that several bodies—not just the Opposition—are concerned that something could accidentally slip through the provisions in proposed section 100ZA(2) that may be unhelpful to wider sustainable development considerations, and in particular contrary to the wider placemaking objectives that a local authority may want to pursue. The amendment seeks to ensure that in setting or removing any conditions, the Secretary of State ensures that they contribute to the sustainable economic development of the community, protect and enhance the natural and historical environment, and contribute—the Minister has covered this to a degree, but we will test him again—to mitigation of and adaptation to climate change, in line with the objectives of the Climate Change Act 2008, which I will come to.
The amendment is important because the NPPF makes it clear that development should be sustainable. Paragraph 5 says:
“International and national bodies have set out broad principles of sustainable development. Resolution 42/187 of the United Nations General Assembly defined sustainable development as meeting the needs of the present without compromising the ability of future generations to meet their own needs. The UK Sustainable Development Strategy Securing the Future set out five ‘guiding principles’ of sustainable development: living within the planet’s environmental limits; ensuring a strong, healthy and just society; achieving a sustainable economy; promoting good governance; and using sound science responsibly.”
Neighbourhood Planning Bill (Sixth sitting)
Tuesday 25th October 2016
(7 years, 6 months ago)
Public Bill CommitteesRead Full debate Neighbourhood Planning Act 2017 View all Neighbourhood Planning Act 2017 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 25 October 2016 - (25 Oct 2016)
The Committee divided: - Ayes: 4 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 10 / Noes: 4 - Question accordingly agreed to.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
It is a pleasure to serve under your chairmanship, Mr McCabe. The Minister will be relieved to know that I was not quite in the middle but towards the end of moving amendment 19. I was extolling the virtues of adding to clause 7 a provision that would ensure that the Secretary of State had to take account of the need to promote development that is both sustainable and in the public interest.
To recap, I went through the provisions in the national planning policy framework and in planning guidance relating to sustainable development. Of course, we are also asked to look at the key provisions of the Climate Change Act 2008, which I will only do in a cursory way. Those provisions rely heavily on reducing carbon and on further adaptation measures that help with addressing climate change issues. I am sure the Minister is very familiar with the provisions of that Act and the need to ensure that, where possible, all development addresses those provisions and therefore helps us to combat climate change.
That deals with the first part of the amendment, which is about sustainable development. The amendment also asks that the Secretary of State have some consideration of the public interest, which is much more difficult to deal with than sustainable development, in terms of having a straightforward definition of exactly what we are talking about. For sustainable development we have the NPPF, the guidance and the Climate Change Act. The definition of “public interest” is much harder to agree on.
“Public interest” is a term with a long history. It says something about transforming the interests of many people into some notion of a common good. I am sure that we all think that is a central task of the whole political process. Thomas Aquinas maintained the common good to be the end of government and law, which is interesting—we might want to ponder that for a moment or two, as a bit of light relief. We also know that John Locke put
“peace, safety, and public good of the people”
as the ends of the political system. That is quite a nice thing for us to reflect on as well. One says that the public interest is central to our task this afternoon, and the other says that it should be nothing to do with us at all. I use that only to show that there is probably no absolute and complete understanding of what public interest is.
Rousseau, as always, has come up with something that helps us. He took the common good to be the object of the general will and purpose of government. That might help the Secretary of State in this regard, because it says clearly that the common good should be an outcome of legislation and of what we are all doing in this room. I therefore take it as read that there will be no problem putting those words on the face of the Bill.
Of course, it is not quite that straightforward. In practice, the public interest is often subject to differing views. People can decide that a public or common good can be met in a variety of ways. It is therefore not always exactly clear in practice what is meant by the public interest, but we are happy to leave it to the Secretary of State to come forward with a clear definition, if he so wishes.
Standard dictionaries manage to come up with a generally held view of the public interest as
“the welfare or well-being of the general public”
and of
“appeal or relevance to the general populace”.
That Random House dictionary definition is incredibly helpful, because that is what we would want planning developments to be. We would want them to promote the welfare or wellbeing of the general public, and we would want them to have an appeal to, and be considered relevant to, the general populace. We would like that sort of consideration, particularly the relevance of a development’s appeal to the local population, to be quite high up on the Secretary of State’s list of issues and interests when determining which conditions he will or will not allow.
We have had a wide-ranging look at the amendment, so I really look forward to hearing what the Minister has to say.
The Minister for Housing and Planning (Gavin Barwell)
It is a pleasure to serve under your chairmanship, Mr McCabe.
I thank the hon. Member for City of Durham for tabling amendment 19, which brings us back to less divisive territory and raises the important issue of having to take planning decisions both in the public interest and with the aim of achieving sustainable development. As she explained, it would add to the list of constraints on the Secretary of State’s regulation-making power in proposed section 100ZA(2) by explicitly requiring the Secretary of State to take account of sustainable development and the public interest when deciding whether it is appropriate to prohibit certain classes of planning conditions. Although the matters that the hon. Lady has raised are of the greatest importance in the planning system, I shall argue that the amendment is not necessary, in much the same way as amendment 16 was not necessary.
Subsection (2)(a) and (b) of proposed section 100ZA already provide assurance that the Secretary of State will be able to prohibit conditions only in so far as it is necessary to ensure that conditions will
“make the development acceptable in planning terms”
and are
“relevant to…planning considerations generally”.
That includes the need to consider the presumption in favour of sustainable development, which is at the heart of planning policy, plan making and decision taking. Local views are also already central to the planning system.
I thought that the hon. Lady made my point for me quite powerfully by quoting voluminously from the NPPF. Nevertheless, I shall briefly pick out a couple of other quotes. The then Secretary of State’s forward to the NPPF starts with the words:
“The purpose of planning is to help achieve sustainable development.”
Further on in the document, at paragraph 14, it states:
“At the heart of the National Planning Policy Framework is a presumption in favour of sustainable development, which should be seen as a golden thread running through both plan-making and decision-taking.”
I do not think that anybody who has spent even a moment reading the document could doubt the extent to which it is based on the principle of sustainable development.
I assure Members that clause 7 will in no shape or form restrict the ability of local planning authorities to seek to impose planning conditions that are necessary to achieving sustainable development, in line with national policy. The proposals will not change the way that conditions can be used to maintain existing protections for important matters such as heritage, the natural environment and measures to mitigate flood risk.
On taking account of the public interest—I greatly enjoyed the quotes that the hon. Lady read out—and ensuring that planning decisions and conditions are acceptable to local people, the Government continue to ensure that the planning system is built on the principle of community involvement. The system gives communities statutory rights to become involved in the preparation of the local plan for their area, bring forward proposals for neighbourhood plans, make representations on individual planning applications and make comments on planning appeals should applicants object to decisions made by local planning authorities. Account is also taken of the views of local people if an application comes to my desk, as happens infrequently.
I have no problem with the language in the hon. Lady’s amendment; the principles of public interest and sustainable development sit at the heart of the planning system. I simply say that it is not necessary to add that language to subsection (2)(d), because that language goes much wider than that one subsection; it runs right through the NPPF, which is referred to elsewhere.
Dr Blackman-Woods
I have listened carefully to what the Minister has said. We are probably all just a little disappointed that we are not going to hear the outcome of the Secretary of State’s deliberations on what exactly is meant by the public interest and that that will not be put in the Bill. The purpose of the amendment was really to elicit from the Minister how important he felt upholding the principle of sustainable development was, and to get that read into the record.
The national planning policy framework document is widely accepted as a very good piece of work, but that does not mean that it will always be there. In the future there may be a significantly amended NPPF in which sustainable development is not so obvious. I quoted from it today to show that it is there at the moment. We want to ensure that decisions made under the provisions in the Bill are made with sustainable development and the public interest in mind. Given the Minister’s reassurances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Blackman-Woods
I beg to move amendment 17, in clause 7, page 6, line 20, at end insert—
“(1A) Regulations made under subsection (1) must make provision for an appeal process.”
This amendment would ensure that provision is made for an appeals process.
The Chair
With this it will be convenient to discuss the following:
Amendment 20, in clause 7, page 6, line 24, at end insert—
“where agreement cannot be reached a mediation system should be prescribed.”
This amendment would allow for there to be a mechanism to resolve disputes.
Amendment 21, in clause 7, page 6, line 26, at end insert—
“(5A) The Secretary of State should provide guidance for appeal routes where an agreement cannot be reached on pre-commencement conditions, along with guidance on pre-completion and pre-occupation conditions.”
This amendment would ensure that there is clarity on appeal routes, pre-completion and pre-occupation conditions.
Dr Blackman-Woods
The amendments in this group deal with the need that may arise from clause 7 for appeal systems or mediation arrangements. The Minister did not like our amendment 15, which sought to provide a series of exceptions whereby local authorities may not have to follow the conditions directed by the Secretary of State. Amendment 17 seeks to put in place an appeals process for local authorities so that if they strongly disagree with regulations that the Secretary of State is trying to introduce through conditions that he or she has already applied, they can appeal against that decision. I understand that that puts us in a constitutionally difficult situation, because it is of course the Secretary of State who ultimately adjudicates on appeals, but I am sure it is not beyond the wit of all of us here to come up with an independent arbitration system whereby local authorities at least feel that they can put their case to an independent body or an individual and have them adjudicate on whether the Secretary of State has acted properly and reasonably.
Jim McMahon (Oldham West and Royton) (Lab)
It is a pleasure to serve under your chairmanship, Mr McCabe. May I refer you to my declaration of interest as a member of Oldham Council?
Clearly, I agree entirely with my hon. Friend the Member for City of Durham, who added real weight to what the Secretary of State and the Minister are trying to achieve. The Bill allows the Secretary of State to make regulations that prescribe the circumstances in which certain conditions may or may not be imposed, but we believe that it is important for the planning authorities to be consulted.
There has been some conflict in the discussion that has taken place about the spirit in which the guidance has been written so far, because a lot relates to how matters of heritage, the natural environment, green spaces and flood mitigation will be accommodated. A lot of the pre-planning conditions that have been raised to date have dismissed such issues—we have talked about bat surveys, newts, drainage conditions and landscaping, all exactly the types of issues that fall into those categories. It is important that we are absolutely clear, not just for us, but for the public who will have to navigate what is already a very complex system for people not used to it, so that they know what to expect.
An appeals process makes complete sense. Any idea of natural justice allows people who are unhappy with a decision to go somewhere—where can be up for debate—and to have their argument heard again. That is right, and why worry about it? In this whole debate, in all our sittings, we have seemed to talk down what are quite small matters—to be honest, when we talk about them in Parliament they can be very small issues. The colour, type or texture of bricks are perhaps not issues that we should be discussing in this House, but they are very important for someone in a sensitive area with deep history and heritage when there is a development taking place next door.
If something is not agreed pre-commencement and then goes to appeal, is it right that someone who lives hundreds of miles away from the development should be able to express a very different view about the importance of that feature of the application? Local people want to know that, in the spirit of the neighbourhood plans, which we all welcome because they empower people to have more say over their communities, we will not snatch that control away from them unintentionally because we have not made accommodation further down here.
I will leave it there, but in the spirit of trying to make this work—nobody wants Bills that do not work in practice—let me add that the art of consensus is not waiting for people to come to our point of view, but accepting that we all have a responsibility to add to this process and take on board others’ views. If a good suggestion has been made, it should be taken on board.
Gavin Barwell
Addressing that last point directly, it is certainly my intention to achieve consensus where possible, but sometimes we have to accept that we disagree on issues. Let us look at the three amendments in detail and with a positive spirit.
Amendment 17 introduces a rather radical constitutional concept. The hon. Member for City of Durham went even further, suggesting that Governments always follow the results of every consultation they have, but I will not be drawn into that territory. In the current planning system, if an application for planning permission is refused by the local planning authority or granted with conditions, an appeal can be made to the Secretary of State under section 78 of the Town and Country Planning Act 1990. It is also possible for the applicant to apply to the local planning authority for the removal or variation of a condition attached to planning permission. If such an application is turned down, it is also possible to appeal to the Secretary of State in relation to that decision. As Opposition Members have recognised, in the unlikely event that an applicant refuses to accept a necessary condition proposed by a local planning authority, the authority can refuse planning permission for the application as a whole.
Amendment 17 would do a much more radical thing, which is to give an individual local authority the right of appeal against regulations passed by Parliament. There are some rather interesting constitutional questions about who would hear that appeal and what the result would be if it was upheld. Whoever was hearing the appeal would essentially be telling Parliament that the regulations were wrong and should be abandoned. The hon. Lady is always keen to stress that these are probing amendments and that she is merely inquiring into the Government’s thinking. I understand that, but this amendment raises some rather complex questions.
I will repeat the reassurances I have already given. Safeguards are in place under subsections (2) and (3) of proposed section 100ZA of the 1990 Act, inserted by the clause, which constrain the Secretary of State’s power to prohibit conditions imposed so that he or she can only prevent the use of conditions that clearly fail to meet the well-established policy tests in the national planning policy framework. It was very nice to hear the hon. Lady be so complimentary about the NPPF document. I share her admiration for it and, like her, cannot envisage a future Government wanting to unpick its key principles. Subsection (2) will ensure that conditions we all agree are necessary and appropriate to the development in question—for example, as my right hon. Friend the Member for Chipping Barnet mentioned, to protect important matters such as heritage or the natural environment—are not prohibited through use of this power.
The second safeguard, in subsection (3), states that before making any regulations on how the Secretary of State might use this power, the Secretary of State must carry out a public consultation. As I have told the Committee, we are currently consulting on the detail of how we might wish to use those powers. Ultimately, we want local authorities and developers to work together from the earliest stage in the development process, including holding discussions about what conditions may be necessary and reasonable. That is the approach advocated in the NPPF and the planning guidance.
I understand what the hon. Lady is trying to achieve with amendment 20. Of course, we have to ensure that where agreements cannot be reached, a sensible solution can be found. However, I am not convinced that a formal mediation system would speed things up, which is the test that the hon. Lady set for it. Clause 7 builds on best practice, as set out in our planning guidance, which states that applicants and local authorities should engage at the earliest possible stage to come to an agreement about these matters. That is what we all want. The question is how best to frame the law and policy to make that happen.
My concern is that if agreement was not possible and there was then a mediation process, and then a possible appeal, that would effectively add another possible stage to the process, which I fear would delay things further. I repeat the assurance that I gave to my neighbour, my hon. Friend the Member for Croydon South, that it is clear in the Bill that if a planning authority felt that an applicant was being unreasonable in not being prepared to accept a well warranted pre-commencement condition, the application could be turned down and the council should be confident that that judgment would be backed up by the Planning Inspectorate.
Dr Blackman-Woods
I wonder whether the Minister has thought about circumstances in which a local authority could not get the developer’s agreement and may feel pressured into lifting a condition that it would otherwise think was necessary because the developer tried to suggest it was unreasonable by making the local authority go to appeal. We are not sure—I would like some assurances from the Minister on this—that that would not trigger the Secretary of State getting involved to impose restrictions on conditions. It seems to me that if the Secretary of State will be able to do that in such circumstances, local authorities will be placed in a difficult situation.
Gavin Barwell
I think I can provide the hon. Lady with quite a lot of reassurance on that front. I think she is envisaging a situation in which a particular application is the cause of conflict and the applicant goes to the Secretary of State and says, “Council A is being unreasonable and you should exercise your power under these regulations to resolve the problem.” I think that this House would want to see a more substantive body of evidence for the use of these regulations than one particular case, and in any event there would clearly be a significant time delay in drafting the regulations and bringing them before the House. I think I am also right in saying that there is a general presumption that there are two dates during a given year on which most regulations are brought in. Practically, it is highly unlikely that an applicant will be able to run off to Marsham Street and say, “We need help with this; deal with this.” Speaking for myself, I would not want to take decisions based on such one-off cases.
More generally, the hon. Lady raised the question of the balance of power in the planning system. I can speak only for myself, but my approach—it was when I was a councillor and it is now I am a Minister—is to listen to the evidence that people give me when they make complaints about things that they think are unreasonable about the planning system. If I am convinced that they have a case, I think the right thing to do is to shift public policy, as I am doing in relation to pre-commencement conditions.
People complain to me about other matters. For example, developers often complain about how local planning committees work. Local democratic representation has an important role in our planning system, and when developers fall foul of planning committees, it is often because they have not engaged with the relevant local political representatives early enough in the process—or they have engaged, they have been given clear feedback about the likely concerns, and they have not reflected or responded to those concerns.
The point that I have slowly been trying to work my way around to is that my advice to local authorities is to listen, and if a developer is saying, “This condition is unreasonable, for the following reasons,” to consider that argument fairly. But if, having reflected on it, they think that the argument has no merit and they are doing the right thing for their community, they should stick to their guns and not be afraid to stick up for the position they believe in.
Dr Blackman-Woods
I have heard the Minister’s reassurances on specific individual cases, but what about the generality? For example, a lot of developers may come to Marsham Street and say, “We’re absolutely fed up with having to do bat surveys and think about newts”—or even, as the hon. Member for Plymouth, Sutton and Devonport may say, hedgehogs—“and therefore we want these regulations to have much clearer guidance for local authorities in terms of restricting the conditions that they can apply to protect wildlife.” Is that a real danger of the clause? Would it not help to have an appeal or mediation system to deal with that?
Gavin Barwell
I can give the hon. Lady strong reassurance on that front. First, she has my hon. Friend the Member for Plymouth, Sutton and Devonport completely wrong; far from wanting to further persecute hedgehogs, he is first to the barricades to protect and defend them.
Let us take the hypothetical example that the hon. Lady gave, where at some point in the future more and more developers are coming to the Secretary of State and saying, “There’s a real problem about the way in which the protection of bats is working and the onerous conditions that are being put on us.” If the Secretary of State was persuaded by those arguments, we would need to look at planning policy and whether we wished to shift it.
Broadly speaking, the test with all these things is one of proportionality. I think all of us would place significant weight on the protection of our wildlife and fauna. The test is always one of reasonableness, in terms of the costs incurred by the developer to do that. If a future Secretary of State decided that in his or her judgment that balance was wrong, that would involve a shift in policy. It would not be possible to outlaw a type of condition that is consistent with what current policy says. I hope that reassures the hon. Lady.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
It is not only a case of trying to talk to politicians at an early stage; it is also about engaging with the local community, so that it feels it has a say and has been involved in the decision-making process.
Gavin Barwell
My hon. Friend makes a good point. Clearly, councillors and Members of Parliament are representatives of those communities, and engagement with them is important, but he is quite right that developers should also be talking directly to local people in the relevant area. They should be talking and listening. In my experience of the planning system, that kind of positive engagement is very good for the developer because it avoids problems later on when things come to a planning committee.
The broad point I was making to the hon. Lady is that my approach, were I on a local planning committee, would be to listen to concerns that developers expressed about planning conditions and judge whether the evidence backed up those concerns. If it did, I would adjust my policy, but if it did not, I would stick to my guns and do what I thought was the right thing for my local community.
On amendment 21, the hon. Lady made an important point about providing clarity for the applicant during the process. The amendment seeks to ensure that associated guidance is made accessible to inform parties of the appeals procedure, should an agreement not be reached on the application of conditions. I agree that we need to ensure that applicants are fully aware of the options available to them and how they can pursue that action. However, I would like to assure hon. Members that that information can already be found online as part of our planning guidance, and I believe it provides the right support to those looking to appeal against the imposition of certain conditions. On that basis, I hope the hon. Lady will accept that the necessary protections are there.
Dr Blackman-Woods
I thank the Minister for his helpful additional information on how this process might work in practice, particularly with regard to instances that might provoke the Secretary of State to develop and put out to consultation regulations to affect the conditions being applied by local planning authorities. I heard what he said about giving clarity to applicants about the appeals process and the circumstances in which the Secretary of State might get involved. I would like some time to consider that further. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
We now come to amendment 22 to clause 7. Before I call the shadow Minister, it might be helpful to advise the Committee that, in the light of the wide debate we have had on the amendments tabled to the clause, we are not planning to have a separate debate on clause stand part. If hon. Members wish to make any further comments about clause 7, I suggest they do so after the shadow Minister’s speech on amendment 22.
Dr Blackman-Woods
I beg to move amendment 22, in clause 7, page 6, line 23, leave out subsection (5).
This amendment would ensure that local authorities are still able to make necessary pre-commencement conditions on developers.
Thank you for that direction, Mr McCabe. I will address my comments not only to amendment 22, but to some of our wider concerns about clause 7.
The Minister knows, because he heard the evidence, as we did, that clause 7 was the one bit of this relatively short Bill that concerned people who gave evidence to the Committee. In fact, a number of people thought that the clause was just as likely to slow down development as it was to speed it up. Councillor Newman, who represented the LGA, said:
“The whole perspective of what I am seeing in the Bill looks very much like a sledgehammer to crack a nut approach—another layer of red tape.”
Kevin Hollinrake (Thirsk and Malton) (Con)
It is a pleasure, Mr McCabe, to serve under your chairmanship. Is not that exactly the opposite of what has been said? We are trying to get rid of the complexity of the system. Clause 7 creates conditions of good practice, where people sit down together and make an agreement. If a council is being reasonable and a developer is reasonable, there will be no issue. There will be written agreement and things will move forward. If either party is being unreasonable, an inspector will be able to look at that and judge for the other party. It is in everybody’s interests to sit down and get a sensible agreement on the conditions. Is not that a sensible piece of legislation?
Dr Blackman-Woods
The hon. Gentleman has described the situation that exists at the moment, not the position in which we will all be in after the Bill is enacted. The Bill puts in writing the agreement between the local authority and the developer. Significantly, as we have all been discussing, it gives powers to the Secretary of State to intervene in the process by producing regulations that will say something about the conditions that can be attached.
I agree with the hon. Gentleman that the system is working well at the moment because, as Councillor Newman reminded the Committee,
“nine out of 10 permissions are given, and 470,000 permissions are already granted for homes up and down the land that await development for various reasons.”
All those reasons are not pre-commencement planning conditions.
Hugh Ellis said:
“From our point of view, the concern about conditions is that they are fairly crucial in delivering quality outcomes.”––[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 23, Q31.]
He also said that he had no evidence whatever that conditions result in delay. Duncan Wilson from Historic England said that local authorities are usually reasonable already. He did not feel that unnecessary conditions were being imposed, and he believed that that particular assertion could be challenged. That is what we have been attempting to do thus far today.
It is not just Her Majesty’s Opposition saying that all this is unnecessary; it is the Town and Country Planning Association, the LGA, Historic England and the British Property Federation, which said that it saw an issue with the discharge of conditions, but could not give us much detail on pre-commencement conditions.
I want to outline the evidence we have been given on why the clause is unnecessary. Various people who gave evidence said that they felt that if an application was turned down because an agreement could not be reached with the developer, it could take longer to argue about the condition and determine it than under the current set of arrangements. I point out to the hon. Member for Thirsk and Malton that that point has been made not only by me but by lots of other people.
Helen Hayes (Dulwich and West Norwood) (Lab)
My hon. Friend is setting out her case powerfully. It has been suggested that the proposal set out in clause 7 is a sledgehammer to crack a nut. Does she agree that it is a sledgehammer to crack the wrong nut, because what really needs to be addressed is the resourcing of local authority planning departments, so that they can apply the existing guidance thoroughly and rigorously, give each application the time it needs and properly negotiate with applicants to ensure that applications are policy compliant?
Dr Blackman-Woods
My hon. Friend, as ever, hits the nail on the head. It is the wrong target, which is exactly our point. A lot of information is available to local authorities, never mind their experience of applying conditions. The problem is not setting conditions, but the lack of resourcing for planning departments. As we rehearsed this morning, most people’s problem with pre-commencement planning conditions is not the conditions themselves but the time it takes to discharge them because of the lack of resources in planning departments. A lot of information is available to local authorities, so in general one would not expect them to set unnecessary conditions, because that would clearly be in breach of all the documents I have discussed.
I picked up, at random, a list of pre-commencement planning conditions from my constituency. The developer has just written to me about them, to ask me to ensure that the local authority discharges them, and I thought, “Here’s a helpful bit of information that has just dropped into my inbox at a very appropriate time.” To give the Committee some context, the development is taking place in a conservation area—a rather large student accommodation block—so one would expect the local authority to take some care and use some diligence over the pre-commencement planning conditions, and indeed it has. I want to go through the list—I will do so as quickly as possible—because Government Members are saying that these pre-commencement planning conditions are often unnecessary, yet when I went through the list I could not find a single one that was unnecessary. The list states:
“No development shall take place until samples of the materials to be used in the construction of the building hereby permitted have been submitted to and approved in writing by the local planning authority.”
Dr Blackman-Woods
It is absolutely necessary; it is in a conservation area.
Dr Blackman-Woods
Well, we will have to disagree. I think that if somebody is asking for planning permission—not just outline planning permission—for a major development in a conservation area that abuts a world heritage site, it is vital that the materials to be used are included as a pre-commencement condition.
Government Members will love the next part:
“No development shall take place until full details of the location of the proposed bat loft and a scheme for the provision of 10 house sparrow terraces have been submitted to and agreed in writing by the local planning authority.”
We all agreed earlier that protecting wildlife is really important. As the Minister knows, sparrows need to be protected if they are to survive and thrive. Such mitigation and compensation are necessary within the breeding bird assessment regulations.
Kit Malthouse (North West Hampshire) (Con)
I hope that the hon. Lady is not going to go through too extensive a list. One of the points that we have been trying to make is that quite a lot of the conditions that have been mentioned could be carried out during, say, the demolition phase; they do not have to take place or be agreed before the contractor starts at the site.
On the particular condition that the hon. Lady just raised, although it might be possible for the developer to agree a location for the bat and sparrow accommodation, there is no guarantee that the inmates will transfer willingly. Anybody who knows anything about bats—I happen to, strangely—will know that one can put up a bat loft to accommodate displaced bats but they might not use it for years, and they might never use it. They are capricious creatures that might decide to go elsewhere, perhaps because of the noise of the development.
The same is true of colonies of sparrows. Sparrows are strange birds, in that they do not travel very much. They tend to live in one place—as the hon. Lady said, they colonise particular areas—and they might even pick a particular tree that they never leave, but they are unlikely to move simply because someone decides to put up accommodation. All these things are iterative and could be done during the demolition phase. There is no reason to wait months and to have an argument about where the sparrow accommodation should go, because even the sparrows might not agree on where is decided.
Dr Blackman-Woods
The hon. Gentleman might have had a point had there been a demolition phase. As there is not, it is important that all these things are known up front. A further condition was noise mitigation. The developers were asked for details of proposed foul and surface water drainage; for an archaeological investigation; to refrain from site clearance, preparatory work or development; for a tree-protection strategy; and for a site map.
Dr Blackman-Woods
I shall take the hon. Gentleman’s intervention and then explain why, given the circumstances, those preconditions were necessary.
Oliver Colvile
I thank the hon. Lady very much. I should have declared an interest: I have a shareholding in a communications company. Does she agree that we need to ensure that we have hedgehog super-highways so that hedgehogs can get from one garden to another?
Dr Blackman-Woods
Absolutely. The hon. Gentleman makes an excellent point. In the development in Durham that I am describing, because it abuts a wooded area in the centre of the city called Flass Vale, several local residents were concerned that there was no particular order in the pre-commencement conditions about the protection of hedgehogs. We are all terribly concerned about hedgehogs and I am grateful to the hon. Gentleman for raising their profile in Parliament—it is very much needed.
The point I wanted to make by going through that list—I have not gone through it all, but I have highlighted the most important conditions—is that it is an extremely contentious development in a very sensitive area of the city. Because the developers were made to provide all that information to the local community, the development is going ahead and the community is engaged with the developer in ensuring that the pre-commencement conditions are discharged. That seems to me to be a sensible way forward.
Had the developers been able to not agree, and to hope that six months down the line the Secretary of State would intervene and overrule the local authority, they might not have worked so hard to meet the conditions, and the local community might have been very upset with them indeed. As it is, as the local MP I have been able to ensure that everyone is speaking to each other about the trees and the sparrows, and about the hours during which work will take place on the site, as it abuts residential properties. The conditions have been carefully thought through by the local authority and were applied for a reason. I would like to hear why the Minister thinks—this is the important point—that those conditions do not comply with the requirements set out in the NPPF, because that is what the Government would have to show in order to have a provision in the clause to take away from local government the power to set the conditions, and give it to the Secretary of State.
The LGA and London Councils both made exactly that point to the Committee, so it is not just the Opposition who are saying that there is no evidence. The LGA said:
“The NPPF, and the associated national planning practice guidance, already clearly sets out expectations on use of planning conditions and the new primary legislation is unnecessary…There is little evidence to suggest development is being delayed by planning conditions. Planning conditions provide a vital role by enabling planning permissions to go ahead which would otherwise be refused or delayed while the details are worked out. They can also save developers time and money as they do not need to invest in detailed submissions until after the principle of the development is granted…Joint working between councils and developers is the most effective way of dealing with any concerns about planning conditions and the LGA strongly advocates the use of early, collaborative discussions ahead of planning applications being submitted for consideration.”
I do not think it could be clearer.
To rub the point in, London Councils said that there was little robust evidence to suggest that the current system of planning conditions was the reason for the under-supply of housing generally or for the slow build-out rates of residential developments. It also questioned the need for the Bill to prohibit certain conditions in defined circumstances, where they do not meet the national policy test. It said that adequate tests on conditions were already set out in national policy, and that there is already a system in place that allows applicants to appeal against conditions that they consider fail those tests.
London Councils, the LGA and lots of other people who gave evidence to the Committee appear to back up what the Opposition are saying, which is that there is already a huge amount of information, advice and guidance that local authorities have to apply in setting pre-commencement planning conditions—and, indeed, conditions per se. The provisions in clause 7 are unnecessary and are further evidence that the Government are anti-localist and are taking powers back to the centre.
Gavin Barwell
We had some of this debate this morning when we considered the first group of amendments, while Mr Bone was in the Chair. Let me rehearse some of the arguments. There are four points that I want to make.
First, it is pretty undeniable that we have had a very partial presentation of the evidence we received, so I want to put on the record again what the evidence we received is. I acknowledge that it is mixed. Certainly, people came to us and said, “I don’t see a problem here,” but there were also plenty of people who said that there is a problem, so let me counterbalance what the hon. Lady said. The district councils network said that it supports the Government in seeking to address conditions. It was interesting that when I put it to Councillor Newman, who was speaking on behalf of the LGA, that that was the view of district councils, which make up the vast majority of local planning authorities, it seemed to be news to him.
I quoted a number of major developers earlier. Persimmon said in its annual report that,
“planning-related pre-start conditions continue to increase the time taken to bring new outlets”—
new homes—
“to market”.
Knight Frank stated that we
“need to address the increasingly onerous levels of pre-commencement conditions”.
The NHBC survey that I quoted provided clear evidence of small and medium-sized enterprises being concerned about, yes, the speed of discharge of planning conditions, but also the extent of those conditions.
Dr Blackman-Woods
Actually, I am pretty certain that I did answer the Minister’s question. I simply do not accept its premise, because we do not believe that pre-commencement planning conditions slow down development. In fact, much of the point that I have been making is that the system that the Government are about to put in place could slow down development, because more developers may now have to use an appeal route. We do not think that pre-commencement conditions slow down development; that is the Government’s case. It is not me who has to address that point; it is the Minister.
Gavin Barwell
—and my hon. Friend the Member for North West Hampshire is going to help me.
Kit Malthouse
I am grateful to the Minister for giving way, because I could not intervene on an intervention. Would the Minister care to ask the hon. Member for City of Durham how long the period was between the granting of the application of which she spoke, and a spade going into the ground, while materials, sparrows, bats and all those sorts of things were dealt with? How long did the process take?
Gavin Barwell
The hon. Member for City of Durham may intervene, but I suspect that the answer is that it has not happened yet. I was going to come to that, but the hon. Lady gave a clear response to my point, so let me deal with her two points in turn.
The hon. Lady’s first argument is that there is a danger that the process will lead to more appeals, and will therefore slow things down, not speed them up. I do not agree, and I will make it clear why. If, at the moment, an applicant does not like the pre-commencement conditions imposed on them, they already have the right to appeal. It seems that there is no evidence that they are any more likely to appeal as a result of the fact that the local authority will now not be able to impose those conditions on them than they would have been otherwise.
The second argument, which is irrefutable, is that if an applicant is asked to do a large number of things before they can start any work on site, that is bound to delay the start of work on site. On most things, my hon. Friend the Member for North West Hampshire is beyond reproach, but on this issue, I blame him, because the hon. Member for City of Durham was in the midst of giving us a long and detailed list, and he rather hurried her up, so we did not get the full list. I managed to scribble down at least six of the conditions she mentioned. One condition was details of the materials to be used. That does not necessarily have to be a pre-commencement issue, but I accept that it is not that onerous. However, the designs of new homes for bats and birds will clearly take some time, as will the noise mitigation scheme, a drainage scheme, and tree protection schemes. Archaeological work is necessary and will always have to be pre-commencement, but it clearly takes time. All those things take time to design, work up, go to the local authority with, and get discharged.
It is difficult to comment with certainty, not knowing the site in question, and I would not want, without knowing the site, to express strong opinions, because the hon. Lady will have pictures of me printed and shown at local protests or something. None the less, some of those things, all of which it is important to deal with, can arguably be dealt with later in the process. It seems unarguable that the hon. Lady’s council requires of the developer a significant chunk of work that will take time and will delay the point at which the developer can get on site. The question of how many of those conditions are a necessary delay to the development is a legitimate source of public debate. The legislation tries to weed out those that are not necessary and focus on those that are.
Gavin Barwell
I will take one final intervention and then conclude my remarks.
Jim McMahon
I fear that the Minister has chosen the wrong application to pick on, because it is a very particular one—for anyone without knowledge of it to say what should or should not be allowed is embarrassing, to say the least. In a local context, those issues could well be extremely important. If you, Mr McCabe, lived next door to that development, you would want to know that the noise mitigation element would be dealt with before it was approved. If it could not be dealt with, we would all want to have a say on whether it was appropriate for the development to go ahead at all. With all due respect, I am not convinced that this was the right battle for the Minister to choose.
Gavin Barwell
I thought that I had been careful, but perhaps I was not careful enough; I think I said that I did not know the site in question and could not comment on the detail.
Let me comment instead on a generic application in which these issues arose. My view, generally speaking, is that materials are important, particularly in a conservation area, but their colour does not necessarily need to be agreed before a spade can go into the ground. The situation of bats, birds or other species that inhabit a site clearly needs to be dealt with before their habitats are disturbed. However, on a large site, of which a part was existing buildings and another part was a wooded area where those species had their homes, work could be done on the buildings before touching the habitat. Noise mitigation needs to be dealt with at the outset, because clearly initial works can be noisy. On drainage, a clear commitment would be needed at the outset that the drainage solution would be sustainable, but the detail would not be needed until the detailed works were to be done. Archaeology clearly needs to be considered.
On a generic site, some of those points are clearly pre-commencement, but I argue that some are not. It cannot be denied, however, that the more a developer is asked to do before a spade goes into the ground, the longer the wait until that happens. The Government are therefore quite right to focus on this issue, alongside lots of other issues such as raising the performance of our utility companies, resourcing our planning departments better so that they can take decisions more quickly, and getting section 106 agreements more quickly.
The hon. Member for City of Durham cited a statistic that gets to the core of the issue. The coalition Government’s planning reforms have done an amazing job of increasing the number of homes given consent through our planning system. In the year to 30 June, a record number of homes were given consent. However, we have seen a growing gap between consents and homes being started, because the number of homes being started has also gone up but not by anything like as much. A strategy to get the country building the homes we desperately need therefore needs to address bridging that gap. My contention is that these pre-commencement conditions and other abuses of planning conditions are one issue, albeit not the only one, that we need to address in order to do that.
Dr Blackman-Woods
I will start by addressing the specific question asked by the hon. Member for North West Hampshire: when did the scheme I mentioned start on site? Planning permission came through in April and the developer was hoping to start on site in August. Actually, I got a phone call to say that there was a delay in the system. Hon. Members are right that there was a delay in the system, but it had nothing whatsoever to do with the pre-commencement planning conditions, which were not mentioned at all; it was because the Brexit vote meant that the developer lost its funding and had to go out to the market again to get support for the development. It was therefore unable to start on site until October—and start in October it did. We have had the first meeting with residents, and they all agree that the pre-commencement conditions were essential.
Gavin Barwell
I will not delay the Committee for long. Schedule 2 sets out the amendments that need to be made to the Town and Country Planning Act 1990 as a consequence of clause 7(1), which will allow the Secretary of State to make regulations that prohibit local authorities from imposing certain planning conditions in circumstances to be prescribed when they grant planning permission.
The amendments in schedule 2 seek to ensure that any such regulations the Secretary of State may make under clause 7(1) would also apply to conditions that are imposed via the ways in which it is possible to gain planning permission other than by application to the local planning authority. That includes planning permission granted by: development order; local development order; mayoral development order; neighbourhood development order; applications to develop without compliance with conditions previously attached; simplified planning zones; development in enterprise zones; orders requiring the discontinuance of use or alteration or removal of building works; and appeals against enforcement notices. We have already debated the principles.
Question put and agreed to.
Schedule 2 accordingly agreed to.
Clause 8
Register of planning applications etc
Jim McMahon
I beg to move amendment 28, in clause 8, page 7, line 21, at end insert—
“(e) information on the number of permitted demolition of offices for residential use to a similar scale including—
(a) the impact on a local plan;
(b) an estimate as to how many homes the development will deliver and
(c) a consultation with the local authority regarding the effect of the change of use on any urban regeneration plans.”
This amendment would ensure monitoring of the impact of permitted right of demolition on offices, on urban regeneration that requires office space and on the provision of housing.
The Chair
With this it will be convenient to discuss amendment 29, in clause 8, page 8, line 10, at end insert—
“(9) The cost of compiling a register and gathering the information to underpin it should be met by the Secretary of State.”
Jim McMahon
I have been brought off the subs bench to do this. I am quite excited about the debate we have had and the evidence we have heard, because I am a localist; I believe that communities should have a say and be able to direct their futures in the most appropriate way. Neighbourhood planning gives them the ability to do that, framed in the context of a national plan and the land supply. That means national Government can achieve what they want to achieve, local authorities can take a view of the wider area and, integral to that, the community has a strong voice. That is why I am slightly at odds with permitted development.
A number of representations have been made over the years that are at odds with the “community first” approach that we have been talking about. The Local Government Association’s evidence frames that quite well. In the survey it carried out of its members, to which 93 local authorities responded, 82% were making a loss on maintaining that process. It is important we get some comfort from the Minister today and accept that local authorities are taking on an additional burden that they should be compensated for.
Moreover, that flies in the face of what we might assume would happen. Let us take light industrial and office accommodation as an example. The view surely is, “Well, there’s all this accommodation that isn’t being taken because the market demand for it isn’t there, so it’s far better to put that to good use as residential accommodation.” However, that is not what we have seen. Areas often have low office demand and low residential demand going hand in hand. I could take Members to Oldham town centre and show them empty office blocks, and alongside those is an empty potential residential conversion that, because demand has not taken hold, is commercially unviable.
We have seen a displacement in areas where there is significant high demand. In some London boroughs, for example, we have not seen empty office blocks being converted into solely residential accommodation; we have seen profitable businesses and charities that are there for the community benefit and value being displaced by landlords, who recognise that it is more financially beneficial to get rid of a tenant who is not paying anywhere near enough. They convert the building for residential use and displace the local business or charity in favour of greater profits.
Don’t take my word for it. We have examples in Barnet, where 100 small businesses and charities were displaced with just four to six weeks’ notice. We have a situation in Islington where 71 office buildings have been converted to residential accommodation. More than 40,000 square feet of office accommodation has been taken in that one borough, where there is demand for that facility.
Chris Philp
Is not Islington, along with many other London boroughs, now subject to an article 4 direction, which will prevent the conversions that the hon. Gentleman describes from taking place in future?
Jim McMahon
That is a fair point about where things are today, but the damage has been done and we cannot change things back to what they were. The phrase “a sledgehammer to crack a nut” has been used probably once too often today, but article 4 is a good example of a very big sledgehammer being used to crack a very particular nut. Article 4 affects everybody in the vicinity or within the boundary and obliges them to comply with the directive. I am talking about a particular problem that has been brought about by the extension of permitted development.
Dr Blackman-Woods
My hon. Friend is making a powerful case. Does he agree that in policy-making terms it is nonsense to set up a scheme to relax permitted development rights, recognise that it causes a huge problem and then introduce another system to try to counteract the adverse consequences of the original policy? All the Government had to do was allow local authorities to grant planning permission in the first place, rather than introducing a relaxation of permitted development rights.
Jim McMahon
My hon. Friend is absolutely right. A lot of people are of the view that permitted developments of this type mean that an empty office is simply converted—from the outside there is very little difference, but it is what happens inside that changes, and that is surely up to the person who owns the building—but the rules actually allow for a building to be completely demolished and then rebuilt to a similar scale. That can change the street scene significantly, so it does go further.
Let us also consider the location of some of the buildings. Take an everyday town centre. It is easy to imagine two restaurants or bars operating with an office block in between. If the office block is converted under permitted development, the tenants who move in are forced to live with the noise nuisance of a pre-existing use in an acceptable location. What is not taken into consideration is how to create a vibrant community that has the requisite facilities, amenities and, importantly, quality of life. For a lot of people, permitted development as it stands does not have that balance in place.
The LGA, which is the voice of local government, has said that. It consults its members, who have been clear in numbers that the problems with permitted development should be looked at. It is odd that a Government who say that they are all about community voice and control—about people being empowered, for once, to have some control over what their communities look and feel like—are not tackling permitted development in the right way.
If we take ourselves out of the town centre, we could go to an industrial estate where small industrial units can be converted for residential use. It is perhaps okay if a unit is converted, but what about the existing users who suddenly have a barrage of complaints from the local authority about the noise nuisance from their pre-existing use, which might have been going on for decades? There might be early-morning or late-night deliveries at what is a predominantly industrial location that has suddenly changed into a residential neighbourhood, without the required facilities or amenities. It is a really big issue.
We have talked a lot about bricks and how important their colour and texture are. We have discussed whether they are important in pre-commencement or could be dealt with later. At least we are talking about them. If someone goes for a change of use under permitted development, very little attention is given to the quality of finish, design and detail. An entire shopfront has been removed in my town. Imagine how a shopfront block looks: there is a hole on the ground floor where a full shopfront used to be, with a sign on top. I know of several examples where the shopfront has been taken away, leaving an exposed girder where the sign used to be, and a completely inappropriate insert has been added that has no relationship to the wider street scene. In a normal planning application, such issues would be negotiated with a developer to ensure that they were dealt with appropriately.
We must recognise that permitted development flies in the face of the community voice and empowerment that we have been talking about.
Chris Philp
On the question of shopfronts, class A1 retail use, to which the hon. Gentleman is referring, is not subject to permitted development rights, which apply only to class B1 office use.
Jim McMahon
Of course, what I am talking about is the physical appearance of a shopfront, not necessarily the fact that a building was previously a shop. A building may be in use as an office but have the external appearance of a shop. It is that conversion that I am talking about. I am thinking in particular of professional services businesses that are based in accommodation with a shopfront façade but where there is office-type use behind that. That is the point that I was getting to.
Whatever our view about the finish, we need to accept that when we are talking about a policy of empowering communities and giving them a voice and a say, it is important to manage expectations to ensure that they are not let down after the fact. Permitted development flies in the face of that empowerment, because it takes power and control away from them. If nothing else, we should at least accept that permitted development rights are a significant burden for local authorities, and when we talk about capacity being an issue, we should at least ensure that local authorities are given the finances to administer that policy in the right way.
Helen Hayes
It is a pleasure to serve under your chairmanship, Mr McCabe. The gathering of data on homes delivered through permitted development rights is a small beneficial step. It is long overdue; it should have been introduced when permitted development rights were extended. It remains a significant problem that although the negative impacts of the extension of permitted development rights are widely reported, there are no consistent data to monitor those impacts, and we therefore cannot have the debate that we need in the House and elsewhere about this significant problem.
Concerns have been raised with me consistently, ever since the permitted development rights policy was introduced, about the size and type of new homes that are being delivered under those rights; the quality of those homes; the lack of section 106 contributions to provide properly for the physical facilities and public services that an expanding residential population needs; the lack of affordable homes; and, particularly in London, the loss of much-valued employment space for small and medium-sized businesses. We cannot quantify the scale of the problem, because the policy was flawed from the start.
Although the small measure in the clause will help with the monitoring of data, I am concerned by the fact that the Government are extending permitted development rights to include the demolition and rebuilding of office accommodation for residential purposes. That brings with it exactly the same concerns that I have about the previous extension of permitted development rights—but more than that, it will result in local authorities’ total loss of control over the quality and aesthetics of new development. As we debated earlier, those are often among the issues that matter most to local communities and make the difference between something being acceptable and not being acceptable.
The Minister argued on Second Reading that permitted development rights are helping to accelerate the delivery of new homes. The delivery of new homes at speed and at scale is of course of utmost importance, but the housing crisis is more complicated than that.
Kevin Hollinrake
The hon. Lady refers to the Minister’s comments about speeding up delivery. Does she accept that permitted development rights have in many cases done exactly that? She talks about the negative consequences of that policy but has not spoken about the positive consequences. Does she accept that there have been positive consequences, including the delivery of more residential units?
Helen Hayes
I was just about to say that in addition to the numbers, which I do not dispute are important, the size and type of homes that we are delivering matters. It matters whether we are delivering homes that families can live in and have a good quality of life in, or only homes that are too small even to fit adequate furniture into. Minimum space standards matter, and the Government have failed to address that issue. The provision of amenities matters. It matters whether there is a local park that is properly funded through the planning process. It matters whether the roads and pavements are of an appropriate standard, whether there is lighting and whether our neighbourhoods are attractive to live in. It matters whether there are places in schools and GP practices for an expanding population to access.
Above all else, affordability matters to my constituents. It is simply not fair and not appropriate that new homes are allowed to be delivered with no contribution at all to the affordable housing that we need more than any other type of housing in London. As a Member of Parliament for a London constituency, the Minister should, quite frankly, know that.
The extension of permitted development rights is a disaster for the delivery of the high-quality neighbourhoods with good facilities and services that we all want to see. We want to see the right numbers of homes being delivered, but we also want to build attractive and successful communities for the future, not tomorrow’s regeneration projects. I am deeply disappointed that, through the Bill, the Government are trying to patch up a broken policy, rather than accepting that it is not working in the way it needs to and reforming it to make it more fit for purpose, so that we can deliver not only the number, but the type and quality, of new homes needed within the successful neighbourhoods that we all want to see.
Dr Blackman-Woods
My hon. Friends the Members for Oldham West and Royton and for Dulwich and West Norwood have done an effective demolition job on the Government’s case for promoting permitted development. The Opposition are on record, on a number of occasions, as being totally against the relaxation of permitted development rights for all the reasons that my hon. Friends outlined, including the very poor-quality development that often ensues from developers taking a permitted development route.
It is not that we are against a change of use from offices or agricultural buildings to residential; we just think that it is critical that local people have a say on whether those changes of use take place. The process should take place through the planning system, not through permitted development. We are living with some of the huge consequences, such as poorly planned developments and neighbourhoods, emerging from too much permitted development.
On amendment 28, we are not in favour of permitted development, but if the Government are in favour of it, it makes some sense that they might actually want to know what is going on with it. To date, they are probably not that aware. The compilation of the planning register would elicit further information from local authorities about what is happening with regard to permitted development. The circumstances set out in clause 8 are too restrictive and will not capture some of the information that local authorities have told all members of the Committee is very important to them.
How many additional homes have been created through permitted development? What is the impact on any local council regeneration plans, and on the local plan? Those questions are important. Let us begin with the local plan. If a lot of windfall sites have emerged through permitted development, and a lot of homes—even of relatively poor quality—have been created that contribute towards meeting the housing need, there might be an impact on local plan provisions. The local authority might like an opportunity to tell the Minister and everyone else about the impact of permitted development on the local plan. It will also want to be able to give information not only on the type of housing delivered but on the number of homes, who they are for, whether they are affordable, their quality and a whole lot of other issues.
My most significant point about the amendment is what it would mean for regeneration, and I am really interested to hear what the Minister says about that. As my hon. Friend the Member for Oldham West and Royton touched on earlier, a number of cities and towns have areas with empty shops, pubs or offices, but they are empty for a reason: the local authority has or is developing a plan to regenerate the area. Local authorities have told us that a developer will now be able to come along, get the office block and say, “I can make a quick buck here by converting this block into housing through the prior approval route”—and bang goes the council’s ability to regenerate the whole area in line with a local plan that has emerged through the neighbourhood planning system or consultations with the community. That does not seem a very sensible way forward.
If I were the Minister, I would want to know whether a policy of mine was actually impeding local authorities from regenerating their areas because permitted development was getting in the way. I would want to do something to put that right and to help the local authority with that process. The Minister will know that the prior approval system in place for permitted development simply does not give a local authority the tools to turn down a permitted development, either for regeneration reasons or because it severely, or even mildly, affects the authority’s local plan.
Indeed, the prior approval system is very complicated. The Government make much of the fact that they have simplified the planning system; I could not help but smile when I saw the statutory instrument that they passed last year, the Town and Country Planning (General Permitted Development) (England) Order 2015, which is 162 pages long—such have been their extensions to permitted development. Each class of permitted development has different prior approval conditions, but none of them allows consideration of the issues addressed by our amendment. For instance, for a change from offices to dwelling houses, the local planning authority has to consider
“whether the prior approval of the authority will be required as to…transport and highways impacts…contamination risks…and…flooding risks”,
but it cannot take account of anything else. If the development will impede a regeneration scheme, the authority cannot even consider that. If there are huge energy conservation issues because the office block has poor energy efficiency, the authority cannot do anything about that either. If it thinks the materials are wrong, it cannot do anything about that. If it absolutely needs affordable housing in the area, it cannot do anything about that. There is really a very small list of things that it can do anything about, and that list certainly does not cover the issues in the amendment.
Jim McMahon
The resources of local government are a critical issue. Many are looking at the next three to four years and wondering how on earth they will make ends meet or cover the costs of adult social care and children’s services. When faced with such choices, clearly the councils go to the back office—or what people consider the back office until they are an applicant who needs to use the planning system when, all of a sudden, it becomes a front-line service. If the Minister is determined to make everything work, it is important that the proper resource is given. We have been given some hint about a White Paper that is due and about conversations that might or might not be taking place, and we are intrigued, but a bit more certainty would go a long way.
Dr Blackman-Woods
My hon. Friend makes an excellent point. He more than any of us in Committee understands the day-to-day, lived experience of people in local authorities and just how difficult it is to keep managing, in particular, the huge portfolios that some of our local planning officers have to on such limited resources and—this is pertinent—with no end in sight. We do not know what is to come in the Minister’s White Paper, but there is no clarity at all about when the contraction of budgets in local planning departments will stop. At the moment, we have contraction figures right up to 2020. If the Minister is to reverse that and put in additional resources, that would be a good thing, but at this point in time we do not know whether that is the case.
We do not know whether there will be any means by which local authorities can fund the putting together of the register. Several people who gave evidence to the Committee were at pains to stress to the Minister that responsibility for an operation of this type will fall on planning policy officers. Some district councils have only one planning policy officer to do all their local plan-making work, to support all neighbourhood planning and to do all the work required for a register. That just does not seem possible, or possible to deliver.
We have made the case that the planning register as proposed under clause 8 is wholly inadequate. If the Government did not rely so heavily on permitted development, it would not be necessary anyway. If the Minister wants to stick to his thoroughly discredited permitted development scheme and ask local authorities to produce a register, he should also pay for it. I look forward to hearing what he has to say.
Gavin Barwell
It is a pleasure to welcome the hon. Member for Oldham West and Royton to the Front Bench as a substitute, as he described himself. I am a keen fan of the beautiful game, and I observe that substitutions happen in one of two circumstances: either a team are winning and coasting, so give some fresh talent a chance, or they are struggling and bring on someone different. I shall leave it to Committee members to decide which of those sets of circumstances applies now.
I thank Opposition Members for tabling amendments 28 and 29 on changes to the planning register. Before I address them specifically, perhaps I can say a few general words about clause 8, which, as we have heard, aims to ensure that both local and central Government further understand the contribution that permitted development rights make to increasing the housing supply, while also increasing transparency about development proposals in an area.
The Government have introduced a series of permitted development rights for change of use to residential use since January 2013, and they are playing an important role in supporting the delivery of the homes that our country so desperately needs. We do not know exactly how many homes they have delivered, which is part of the purpose of the clause, but we have two bits of data that I shall share with the Committee.
First, since April 2014 there have been more than 6,500 applications for prior approval for changing from office to residential. We do not know how many housing units have been created, but we do know that. Secondly, the Estates Gazette reported that more than 5,300 new homes have been started in London as a result of permitted development, although I cannot tell the Committee the source of the data. I shall return to the remarks made by the hon. Member for City of Durham later in my speech, but it is worth putting clearly on the record now that 5,300 families in London have had the opportunity of a home as a result of the policy. Whatever other critiques may be made of it, that important fact should not be lost in the balance.
Clause 8 enables the Secretary of State to require local planning authorities to place information about prior approval applications or notifications for permitted development rights on the planning register. For the first time there will be consistent public-access data on the number of homes being created through permitted development rights in England. Details of which prior approval applications or notifications should be placed on the register, and specific information relating to them, will be provided in subsequent regulations, which we expect to be made available during the passage of the Bill.
Before I discuss the amendments in detail, I make a general observation: good-quality data are important in assessing public policy. My officials know me well enough by now to understand that I am interested in data and in understanding figures properly, so that Ministers can take good decisions based on clear evidence. The data collected under the clause will be important with respect to the main way we measure the success of the Government’s housing policies—the net additions measure of housing supply. I shall not detain the Committee too long on one of my pet subjects, but Members might be aware that data on starts and completions are published quarterly, and we then get annual data on net additions, which takes in not only starts but changes of use and permitted developments. That way, we get a total picture in terms of the net change in the number of homes.
Interestingly, even the starts figure in the net additions data is not consistent. If one adds up the net starts for the previous four quarters, one will not get the same total because they are measured differently. That often creates room for people to have political fun by using different figures. Even for those who oppose permitted development, clause 8 is good because it will provide data on the effect of the policy, which can inform our political discussions of it.
Dr Blackman-Woods
I want to return to the Minister’s point about planning permissions being put on the register. Planning permissions do not completely cover the cost of determining a planning application, but more money certainly goes to the local authority than under the prior approval system. Although there might be a case for additional resources to allow local authorities to put planning permissions on the register, does he accept that requiring them to put prior approvals on the register when they receive so little money from them is really a burden of a different order?
Gavin Barwell
I tried to answer that question in my remarks: we do not believe that there is any additional cost in requiring local authorities to place these applications on the register. The register is not new; it already exists and holds information on individual planning applications. We do not think that the requirement will place a new burden on planning authorities. However, the Department will carry out an assessment to confirm that before introducing regulations. I hope that reassures the hon. Lady.
Let me turn to some more generic points about permitted development. The hon. Member for Oldham West and Royton spoke passionately about his views as a localist and suggested that this area of policy points in the opposite direction. I understand his point, but I think it all depends on how we look at things. Our planning system is built on the understanding that people do not have the right to do whatever they want with their land; they need to seek permission from the state because what they do might affect the amenity of adjoining landowners or people who live on adjoining sites.
However, there has always been an understanding that, for certain kinds of applications that fall below a particular de minimis threshold, it is possible to proceed without having to make a planning application. A good example is that some of the smallest, single-storey extensions to domestic properties can proceed as permitted developments. That has been in our planning system for a long time. As the Government wish to drive up supply, they have extended that right to others.
There is no denying that permitted development removes from councils the right to consider a full planning application. It limits the freedom they have to the matters specified in any prior approval. However, it also gives the owner of a building the freedom to do what they will with their land because we have judged that the issue is unlikely to have a significant impact on adjoining owners.
Jim McMahon
Does the Minister accept, in this context, that the council is a community? The elected members of the council derive from the local community and are elected by it to represent it and sit on planning committees that make decisions based on the community interest.
Gavin Barwell
I would not accept that a council is a community, but I certainly accept that it comprises the elected representatives of that community and speaks with the authority of the community, if that is helpful to the hon. Gentleman.
Stepping aside from the controversial topic of office-to-residential conversion, the question that we should ask ourselves when deciding whether something should be a permitted development right or require a full planning application is whether the change being made to a property is sufficiently significant that it is likely to have implications for adjoining owners. If it does have implications, there are clearly arguments that it should go through the planning application process. I was trying to make the point that the Government did not invent permitted development—it has existed for a period of time—but have chosen to extend it to particular classes of conversion.
The hon. Member for Dulwich and West Norwood, who represents a constituency not too far from mine, spoke passionately, as she did on Second Reading, of her concerns about the permitted development process. It is entirely legitimate to say that, compared with the full planning application, the authority does not receive a section 106 contribution for local infrastructure or for affordable housing, and neither do the space standard rules apply. She raises legitimate concerns.
Weighed against that, we must look at the contribution of the policy to housing supply. I believe that in Croydon—my constituency neighbour, my hon. Friend the Member for Croydon South, also sits on this Committee—the policy has certainly brought back into use buildings that would otherwise not have come back into use. Therefore, it has contributed to supply. The debate on space standards is particularly interesting. We certainly need to ensure that at least a proportion of our housing stock is sufficiently large, providing the space to accommodate families with particular needs. There is a much more difficult balance to strike on whether we should say that all homes must meet a minimum standard, or whether we should allow flexibility. Strong arguments can be made both ways.
I visited a site just south of Nottingham at the end of last week, where I saw a good mixed tenure development with some owner-occupied housing. The housing association also provided some shared ownership properties and some affordable rent. When the Homes and Communities Agency master-planned that site before selling it on to the developer, it insisted that all the homes built on it meet the national space standard. Perhaps predictably, the developer argued to me that it would have preferred to have that requirement only for some properties, because it would have been able to build more homes, which is clearly in its commercial interests.
Interestingly, the housing association made the same argument. It needed some stock with sufficient space to accommodate families who perhaps needed a carer, or included somebody in a wheelchair. However, the association believed that housing need in the area was sufficiently acute that it would rather have had a compromise whereby some of the homes had that space standard but it could have got a larger number of homes overall out of the site. I am not expressing a view one way or the other; I am simply saying that there is a choice to be made between overall supply and space standards.
Helen Hayes
I simply do not accept that, in seeking to meet the need for new homes, we aspire to rabbit-hutch Britain. There are of course families who have exceptional needs for space, but every family deserves a home into which they can fit the right amount of furniture and within which their waste and recycling storage commitments can be met and there is appropriate storage for cycling equipment and all the other stuff that people accumulate in the course of family life. We should not accept that families being asked to live in homes that are too mean in space terms so they can afford an adequate and appropriate standard of life is a fair compromise anywhere in the country.
Gavin Barwell
The hon. Lady makes her point passionately. Let me be clear that I do not think anyone wants people to live in rabbit hutches. Her own local authority—her constituency crosses local authority boundaries, so I should be clear that I am talking about the London Borough of Lambeth—has given planning permission to a scheme in the north of the borough by Pocket Living, which I had the opportunity to visit. As part of a deal with the GLA, that developer has been given the flexibility to develop homes below the minimum space standard, and those homes have proved popular with young professional people.
A journalist gave a rather slanted representation of a presentation I gave at party conference in which I talked about housing for young people. I ran through a whole load of things that we could consider as part of that, and I referenced that Pocket Living scheme. The journalist wrote an article saying that I wanted people to live in rabbit hutches. Interestingly, that night I was speaking to students at a university and one of them had read the article in question and said, “I’d just like to say that, given the choice of being able to buy a small home of my own or there being bigger homes that I can’t afford, I’d be interested in looking at that flexibility.” Every single student in the audience agreed.
Helen Hayes
To be clear, developments of the type produced by Pocket Living are a specific type of housing—they are a niche in the market. There is certainly a place for that type of accommodation in the market, and Pocket balances space standards and quality particularly well for that niche, but we are talking about the much broader issue of national space standards for all types of homes, and particularly family homes. I have too often seen examples of schemes up and down the country that are not built to the national space standard, whose quality is too mean and that do not provide the best possible basis for successful communities or places that people want to live in.
Gavin Barwell
Well, it may be that the hon. Lady and I are not as far apart as I thought we were, because I agree with that. People have different requirements at different ages, and it is certainly important that adequate space is provided for family housing. She may agree with the point that I am going to make. I was going to close by giving an example of a permitted development conversion that I had the opportunity to see in Croydon. She may want to go and have a look at it herself.
Kevin Hollinrake
I quite agree with the hon. Member for Dulwich and West Norwood about family homes, but where the opportunity exists to innovate and create homes for young people and first-time buyers, particularly in areas of high house prices, should we discourage that purely on the basis of space standards?
Gavin Barwell
I suppose the story I told that prompted the hon. Lady’s intervention interested me because one might to a degree expect private developers to look to maximise the units that they can build on a site and their commercial return, but what was striking about that conversation was that the chief executive of a housing association also wanted that flexibility. He saw clearly that there was a trade-off between having homes that were fully accessible and fulfilled the space standard and maximising the number of homes for vulnerable people that he could have on the site. There is a debate to be had, but I do not think that the hon. Lady and I are as far apart on this as I thought we were.
Let me give an example. There is a building in Croydon called Green Dragon House, which was a fairly old office building that was not wholly vacant but had very limited use. It has been converted into 119 homes—a mixture of one and two-bed homes. It is a little like the Pocket housing schemes. It is very high-spec—the quality of the finish is very good—but the rooms are smaller than the national space standard. Interestingly, what is not taken into account is that there is a huge amount of communal space. Virtually the whole of the first floor of the building is given over to a high-standard communal lounge, and the whole of the roof is a terrace, which is communal space for residents. In a way, it is a different vision of how people might live, and it is targeted very much at young professional people.
Helen Hayes
The Minister is being generous with his time. I will simply say that the scheme he describes sounds commendable. It also sounds like exactly the kind of scheme that a local authority would have given planning permission for. The point about permitted development rights is that we cannot leave to chance whether the development industry will deliver to that high standard. We have to secure that high standard through the planning system.
Gavin Barwell
Clearly, part of the issue is that these schemes were not coming forward before. The cost of the conversion, if it goes through the full planning process, meant the schemes were often not viable, and permitted development rights have allowed some of these schemes to come forward that would not otherwise have done so.
I have had an interesting exchange of views with the hon. Lady. As I said, I understand her point of view, but these things have to be balanced against the urgent need to drive up supply of housing. She will know that there is no part of this country with a greater gap between what we are currently building and what we need to build than the city she and I represent. There are different views in the House about permitted development, but whatever one’s views on the issue, this is a good clause because it will give not only the Government but Members of the House and the wider world that is interested access to data, which we can then use as we debate this policy.
Jim McMahon
I thank the Minister for that response. Like him, I am a geek when it comes to data. I love nothing more than spending time in the library on the Office for National Statistics website—that counts as entertainment for me. However, I am also aware that data can often be used as a crutch for a weak argument. Data have been thrown out in bucket-loads, but the substance of this argument has not been deployed in quite the same way. We talked a lot about numbers, which is great. We have not talked anywhere near enough about affordability, quality or even if these units are occupied. We know that in many towns and cities foreign investors are coming in and buying up units that local people could live in, ensuring that no one lives there.
When we talk about data collection and how councils have enough to do—that is a fair point—we must also accept that development control teams will be in those buildings, making sure they comply with development control rules. They will be signing those buildings off for occupation. At that point the buildings will come on to the council tax register, and any council worth its salt will then make applications for the new homes bonus. So councils are reporting units anyway, but via a different route. One thing that councils would appreciate is a single point of reporting. Rather than all these Government Departments coming to councils from all over the place asking for individual pieces of data, the Government should say with one voice, “This is what we need to know.” Collating the data in one place would helpfully save time and energy.
There is quite a lot of agreement on the principles we have been talking about. The combination being mooted here is of quite small living spaces with a lot of communal areas. A development is being built today in Oldham on that model, where the flats are quite small but there is a gym facility, communal areas and quality space that will attract a niche market of commuters who no doubt work or study in Manchester city centre. There is a place for that, but that is where the local authority has made a conscious decision that that would add value to the overall mix of accommodation within the town. It is not a free-for-all. Unfortunately, the permitted development route at the moment is a free-for-all for far too many people, without the right checks and balances in place.
I suspect that we will not be able to come much closer than agreeing that permitted development seems to have worked quite well in one or two locations. The evidence, in particular when we hear representations from local government, says that it is fraught with difficulties and removes the local control we know is very important. Perhaps we cannot get any closer than that. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Dr Blackman-Woods
I will not detain the Committee for long, because we have had quite a wide-ranging discussion. The Minister started his comments on amendment 28 by referring to Opposition Members’ subbing policy. I want to tell him exactly what our policy is, then perhaps he will explain his. The Opposition recognise the talents of all our Members, including my hon. Friend the Member for Bassetlaw, who is not currently present. We have an incredibly inclusive policy because we want to ensure that everybody participates and is able to use their talents to the full. I am not sure that that is the policy the Minister is employing with regard to Government Members, but I will let him answer for himself.
We will return to permitted development when we discuss new clause 14, but I should say to the Minister quickly that a number of people who gave evidence to the Committee pointed out that permitted development was weakening the planning system. In particular, his own councillor, Councillor Newman from the Local Government Association, pointed out the nonsense of what had happened in Croydon where they had to get an article 4 direction. Although we are not going to vote against the clause, permitted development is not working as well in practice as the Minister suggests, for all the reasons given by my hon. Friend the Member for Oldham West and Royton. I hope the Minister will consider whether the register is really necessary. If he got rid of all the permitted development, it would be unnecessary.
Gavin Barwell
I will keep my remarks brief because I think I already covered clause stand part in my earlier comments on the amendments. To rehearse those arguments, if we got rid of permitted development rights, we would be giving up the thousands of homes—we will find out exactly how many—that the policy has contributed in the nine quarters since it came into place. I repeat the point that I made earlier: if Opposition Members share our view that there is a desperate need to get this country building more homes, it seems strange to oppose a policy that is making a significant contribution to that aim. I commend the clause to the Committee.
Question put and agreed to.
Clause 8 accordingly ordered to stand part of the Bill.
Clause 9
Power to take temporary possession of land
Dr Blackman-Woods
I beg to move amendment 30, in clause 9, page 8, line 23, at end insert—
“(2A) The power of temporary possession of leasehold interests is not available if an interest would terminate within one year of the date on which the authority intends to hand back possession to the occupier.”
This amendment would establish a limitation on the temporary possession of leasehold interests.
Having been at the dizzy heights of permitted development, we turn to the really exciting bit of the Bill—the changes that the Government wish to make to the compulsory purchase order system. This is where we get particularly excited about the Government’s reading of the Lyons report, which recommended a major look at this country’s CPO system, with the particular intention of simplifying it and making it much easier for local government to operate.
Several of the people who gave evidence to the Committee seemed to suggest that the proposed changes to the compulsory purchase system were okay as far as they went, but that the Government could have used the opportunity provided by the Bill to do something much more substantial. However, people did express some concern about how the Government were taking simplification and rationalisation forward with regard to the power to take temporary possession in clause 9. Amendments 30 and 31 relate to temporary compulsory purchase, to which we do not object per se, but nevertheless we wonder whether, in pursuing the changes, the Minister should put in place further safeguards.
Some general concerns were expressed in the evidence received by the Committee about the interaction between temporary and permanent possessions. Witnesses just did not think that that had been suitably clarified. Richard Asher of the Royal Institute of Chartered Surveyors told us:
“There is one area of difficulty: the danger that authorities may use powers to acquire land compulsorily when it is only required on a temporary basis. That interferes with long-term prospects for development by landowners, whose development plans are quite often disrupted by compulsory purchase on a temporary basis. That needs to be considered to ensure that authorities only acquire land on a temporary basis when it is required temporarily.”––[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 61-62, Q113.]
Similarly, Colin Cottage from the Compulsory Purchase Association said:
“There is still the possibility of taking both temporary and permanent possession, and that will create uncertainty for people affected by it, because, even if there is a period of temporary possession, it may be converted at a future date to permanent possession and they will have no control over that.”––[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 66, Q117.]
Amendment 30 is a probing amendment that seeks to gain some clarification on whether the Minister thinks there should be a limitation on the temporary possession of leasehold interests so that there may be a greater degree of certainty in this area for the landowner, for the local authority and, indeed, for any possible future developer.
Some specific problems seemed to emerge on the temporary possession of leasehold land. The CPA pointed to those concerns in its written evidence:
“We are concerned that there should be limitations on the power to acquire short leasehold or other subordinate interests because the Bill does not deal with the situation where a leaseholder remains responsible to the landlord for the use, repair and payment of rent under the lease but is not in control of the property whilst it is under temporary use. The area is complex and clarity of the relative parties’ obligations to each other must be clarified in a leasehold situation where temporary possession powers are exercised.”
That was reiterated by Colin Cottage of the CPA when he said that,
“there are practical issues with temporary possession that need to be dealt with, including the interrelationships between different tenures in land, how to deal with an occupier of land when that land is taken temporarily, and what to do if buildings have to be demolished and so on. Those issues can be overcome, but they need to be looked at carefully if the Bill is to come into law and to not cause, rather than solve, problems.”––[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 62, Q113.]
Those problems might be experienced by either the landowners or the local authority.
I hope the Minister will be able to answer some of the questions about the nature of temporary possessions, particularly with regard to leaseholds, and whether there might be some limitation on the timeframe. More generally, it is clear from some of the evidence we received that CPO legislation needs serious reform. The witness from the RICS said:
“I believe, and the Royal Institution of Chartered Surveyors has always believed, that codification of the whole of the CPO rules, which go back to 1845 and are highly complex, would be a sensible way forward. I think the simplification of the rules for CPO would be a major step forward…I think the complexity often deters people—particularly local authorities, in my experience—from using CPO powers. It also results in a number of CPOs being refused or rejected by the courts because of the complexity of the rules that surround them.”––[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 63, Q114.]
Gavin Barwell
We have now moved on to the CPO section of the Bill. A number of clauses relate to those provisions. Let me address a couple of the points that the hon. Lady made right at the outset.
The hon. Lady is right to say that several witnesses said that they would be interested to see a more fundamental reform of the CPO system, and I am certainly interested in talking to people about that, but I do not think that that should preclude some sensible reforms to simplify the system now, to make it clearer, fairer and faster. We can then have a longer-term debate about a more radical reform.
On whether more homes will be delivered, I do not think that anyone claims this particular reform to be a game changer. However, I believe that simplifying the system will make it easier for local authorities to make use of those powers. I speak from some experience because my own local authority recently embarked on a significant compulsory purchase order in relation to the redevelopment of the Whitgift Centre in the centre of Croydon.
Amendment 30 would amend clause 9, “Power to take temporary possession of land”, so it might help if I briefly explain the purpose of the clause. All acquiring authorities may need to enter and use land for a temporary period to help to deliver development for which they have made a compulsory purchase order; for example, they may require land to store construction materials for the scheme or to provide access to the construction site. At present, however, only certain acquiring authorities—such as those authorised under special Acts for very large schemes, such as the Crossrail Act 2008—have the compulsory power to occupy and use land on a temporary basis. Crucially, compulsory purchase orders cannot authorise temporary possession.
Clauses 9 to 21 will give all acquiring authorities the power to take temporary possession of land needed to deliver their scheme. At the same time, they will ensure that those whose land is taken are fairly compensated, and that appropriate safeguards are in place to protect their interests. The hon. Member for City of Durham quoted a witness who said that we needed to ensure that when land is required only temporarily, only a temporary occupation is taken. That is precisely why the clauses are in the Bill: to ensure that all acquiring authorities can take both permanent and temporary possession. Clause 9 sets out who may exercise the new power; essentially, everyone with the power to acquire land, either by compulsion or agreement, will have the power to take temporary possession of land for purposes associated with the development scheme for which they need compulsory acquisition.
I agree with the hon. Member for City of Durham that we need to ensure that the interests of leaseholders are adequately protected in introducing this power. However, I believe that amendment 30 is unnecessary, because we have already built in a safeguard that will deliver the outcome she is looking for but in a more flexible way. Her amendment would restrict the temporary possession power so that it could never be used if a leasehold interest had less than a year to run after the land was handed back. It is completely understandable why she wishes to do that, but her amendment would mean—this is quite complicated, so I hope Members will bear with me—that if the land was essential to the delivery of the scheme, the acquiring authority would have to seek to acquire the leasehold interest by compulsion. At the same time, given that there would still be a need to occupy the land on a temporary basis to implement the scheme, the authority would have to seek temporary possession of the freehold interest and any other longer leasehold interests in the same land. That would be contrary to the established principle that the authorising instrument deals with the need for the land, while the interests in the land are dealt with afterwards. It would make the authorising instrument more complicated, because it would have to deal with different interests in different ways for that plot of land. It would also restrict the leaseholder’s options, because they might be content for temporary possession to go ahead.
There is a problem and the hon. Lady has rightly put her finger on it, but we have tried to build in a safeguard that I believe will achieve the outcome she seeks in a different way. That safeguard is clause 12(3), which allows leaseholders who are not content with the situation to
“give the acquiring authority a counter-notice which provides that the authority may not take temporary possession of the land.”
On receipt of that counter-notice, if the land is essential to the delivery of the scheme, the acquiring authority will have to look into taking it permanently. That is a neater solution. because it will give leaseholders the flexibility to decide whether they are content with what the acquiring authority sought to do or whether they have concerns and want to serve a counter-notice. I therefore ask the hon. Lady to withdraw her amendment.
Before I take my seat, it might help if I briefly respond on a couple of wider issues that the hon. Lady raised in relation to clause 9 and to temporary possession in general. She is right to say that some witnesses questioned whether being able to take both temporary and compulsory acquisition over the same piece of land would work. The Government believe that there may be circumstances in which that is required. It would be for an acquiring authority to make the case to the confirming authority that it was necessary. For example, temporary possession of a large field might be needed for a working compound for construction of a pipeline, but compulsory acquisition of a small part of the field might be required on a permanent basis to install and then maintain the pipeline. Actually, there are some good historical examples. Compulsory purchase and temporary possession powers are often sought in relation to the same land in development consent orders. To give two examples, the docklands light railway extension and the Nottingham tram system both involved a mixture of those powers.
There was one other point that the hon. Lady referred to that I probably need to respond to. Her amendment deals with the issue of a minimum time—what happens to a leaseholder when they reacquire their land and there is less than a year left on the lease—but she was also probing about whether there should be a maximum period of time for which somebody could take temporary possession of land.
No maximum period is set in the legislation, because circumstances can vary a great deal from case to case; however, acquiring authorities must specify the total period of time for which they need temporary possession at the outset of the authorising instrument. The confirming authority will then consider whether the acquiring authority’s justification for the length of temporary possession is strong enough before deciding whether to authorise it. There are some safeguards built in. Both freeholders and leaseholders can serve a counter-notice on an acquiring authority, requiring them to limit the temporary possession period to 12 months when the land is part of a dwelling, or to six years in any other situation. Again, leaseholders have the ability to serve a counter-notice provided that the acquiring authority cannot take temporary possession of the land at all, in which case the acquiring authority would have to look at taking permanent possession.
This is a complicated area, but I hope I have been clear—maybe not.
Jim McMahon
I am not usually a suspicious person, but during that contribution there was a voice at the back of my head saying, “Is this all about fracking?” Is this about the Government’s newfound commitment to fracking and about trying to remove landowners’ rights, trying to create temporary compounds and trying to create opportunities to drill without going through the full and proper procedure? That may not be for today, but I would certainly appreciate the position on that in writing.
Gavin Barwell
I am happy to write to the hon. Gentleman and provide him with a full response to that question. I can reassure him that these provisions do not come from that particular policy area. It was before my time—I am looking for inspiration—but I think I am right in saying that there were compulsory purchase provisions in the Housing and Planning Act 2016. It was in the discussion and debate around those provisions that these issues got raised, and that is why the Government are seeking to clarify the law in that regard. I will happily write to the hon. Gentleman and hope that I have now addressed the points that the hon. Lady raised, so I ask her to withdraw the amendment and hope the clause can stand part of the Bill.
Dr Blackman-Woods
I listened carefully to what the Minister had to say. I did emphasise that this is very much a probing amendment, testing whether the Minister and his Department had thought through some of the possible complexities that could arise with a temporary possession and a more permanent possession going through at the same time, and also some of the difficulties that might arise for landowners when a temporary possession is granted but they still have liabilities.
In the main, the Minister’s comments were quite reassuring. I am still not sure whether there is a need to have an overall time limit on temporary possession, to make sure that local authorities do not use it as a way of letting things run forward without having to put a full application for a CPO in place. I want to think about that; I will do so and will consult the Compulsory Purchase Association. For the moment, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 ordered to stand part of the Bill.
Clause 10
Procedure for authorising temporary possession etc
Question proposed, That the clause stand part of the Bill.
Gavin Barwell
It is clearly important that where an acquiring authority wishes to exercise the temporary possession power, it is subject to proper scrutiny, and that those with an interest in the land that will be affected have the opportunity to put forward their views. The clause achieves that by requiring the case for temporary possession to be set out in the same type of authorising instrument as the associated compulsory purchase—for example, in a compulsory purchase order or in a development consent order. It will then be subject to the same procedures for authorising and challenging it as the compulsory acquisition. That means that if, for example, a planning inspector holds a public inquiry to consider the CPO before it is decided whether the order should be confirmed, the public inquiry will also need to consider whether the temporary possession power should be authorised.
The clause sets out which information must be included in the authorising instrument—for example, the purpose for which the acquiring authority needs temporary possession of the land and, as I have previously mentioned, the total period of time for which temporary possession is required.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Notice requirements
Question proposed, That the clause stand part of the Bill.
Gavin Barwell
The clause requires acquiring authorities to give at least three months’ notice of their intention to enter and take temporary possession of the land. It will ensure that those affected have sufficient time to put in place any necessary arrangements—for example, to move livestock. The measure is a minimum requirement, and acquiring authorities will be able to give more notice where they consider it appropriate. The notice must specify how long the temporary possession will last, and a separate notice must be served for each period of temporary possession.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Jackie Doyle-Price.)
Westminster Hall
(7 years, 6 months ago)
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Leaving the EU: Wales
(7 years, 6 months ago)
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Stephen Kinnock (Aberavon) (Lab)
I beg to move,
That this House has considered the effect on funding for Wales of the UK leaving the EU.
It is a pleasure to serve under your chairmanship, Mr Bailey. The debate is technically about budget decisions but, as we all know, making such decisions is not simply about working out how one reallocates figures. At its fundamental essence, the debate is about the people and the constituencies we represent, and their future, and that is where I would like to begin.
At the core of my constituency is the town of Port Talbot, which is home to more than 37,000 people. Since 1902, the beating heart of Port Talbot has been its steelworks—the largest and, I confidently say, the best in the UK, producing a third of the UK’s steel. Many people do not give a second thought to steel, but when they are driving their cars, having a can of baked beans or putting in a load of washing there is a decent chance they are using a piece of steel produced in Port Talbot. Everyone here today knows that the future existence of the works, as we call them, currently hangs in the balance.
The story of Port Talbot over the past 50 years is the reason for the debate. It is a story shared by many towns and cities across the country, from Stoke-on-Trent and its potteries to Dagenham and its Ford factory or Merthyr and its coal mines. Like them, Port Talbot was truly built, and grew, on the foundation of one industry and one company. Half a century ago, the works employed nearly 20,000 people out of a population of 50,000. Every other shop and business in the town depended on the custom of those workers and did a thriving trade, especially on Thursdays, which was payday. Times were good; the town centre was bustling and huge crowds would enjoy their summer weekends on the sandy beaches of Aberavon. As the plant churned out steel faster and better than anywhere else, we also produced extraordinary talent, such as Richard Burton and Sir Anthony Hopkins and, more recently, Rob Brydon and Michael Sheen.
The decline of the steel industry in the UK over the past 50 years can be seen in the standard of living in Port Talbot. The enormous lay-off of 6,000 people in 1980 led to huge numbers signing on to benefits. Today, the works employs just 4,000 people. They are in highly coveted jobs that still provide a decent wage, but nothing has replaced the jobs that were lost or the energy and pride that the industry gave Port Talbot. Icons of our community, such as the Plaza cinema, are boarded up, and smaller shops that depended heavily on steelworkers struggle on. Unemployment is 10% higher than in the rest of the UK, with one in four people relying on benefits to make ends meet. The level of education in our community is proportionally much lower than in the rest of the country. The people of Port Talbot are as warm, tough, hard-working and talented as anyone we could ever wish to meet, but many are losing hope that their lives will give them the kind of security that we all want. They simply do not see that there are opportunities for them. They know that we cannot recreate the jobs and economy of half a century ago, but they are frustrated that there are not the jobs and the economy for the next half century in which they can play a role.
I have told the story of Port Talbot today because it is a town that, despite recent improvements, is in long-term crisis. The future of my constituents hangs in the balance, and unless we take concerted action their prospects will continue rapidly to decline. That is why the debate is so important. As much as iron needs oxygen to be transformed into steel, our area, and the whole of Wales, needs investment to transform its future into one where people have security and opportunity.
And we now come to the crux of the matter. For years, the EU, in various guises, has contributed an enormous amount of investment in Wales, working closely with the Labour Welsh Government. Due to the consequences of the history I have described, south Wales qualified for the highest level of European structural and regeneration funding. All in all, EU structural funds and the common agricultural policy deliver well over half a billion pounds a year, in addition to money from other key funding areas such as higher education, culture and urban development. Working with Government, charities and businesses, the investment has made an enormous difference.
Albert Owen (Ynys Môn) (Lab)
European funding also provides leverage for getting matching funds from the UK and Welsh Governments, which makes it very valuable to our communities.
Stephen Kinnock
My hon. Friend makes a valid point. There is a clear multiplier effect with EU funding, because it provides the confidence that opens the door to all sorts of other sources and channels of investment. Although we are giving the raw data here, the multiplier effect is absolutely enormous.
Infrastructure built with EU funding is creating jobs and easier access for people and business, including through the Harbour Way road network, the new Port Talbot Parkway station and our town centre. That investment has helped to develop skills, funding 4,885 apprenticeships and 1,360 traineeships for young people, as well as programmes that have led to local people gaining 14,860 qualifications, which has prepared them for work. It has also been a catalyst for business, funding the Baglan energy park, upgrading our commercial centres and being a major investor in the SPECIFIC innovation centre. It has backed world-class industrial excellence in south Wales by being a principal backer of Swansea University’s bay campus, and has contributed to programmes—from historic gardens and activity centres to toddler play areas and community sports facilities— that have improved our family and community life, ensuring that one day Wales will once again dominate the Six Nations.
Christina Rees (Neath) (Lab/Co-op)
Does my hon. Friend agree that 16,000 farmers across Wales gain direct subsidies from the CAP? Without that funding, more than 90% of them would go bust. Will he join me in calling on the UK Government to commit to ensuing that the subsidies continue for all farmers?
Stephen Kinnock
I agree absolutely that the role the CAP has played in the agricultural industry in Wales and the UK, and indeed across the entire European Union, has been critical and has supported thousands of farmers and their livelihoods. I will talk a little later about how we need to see a clear commitment to long-term funding to replace every aspect of the European funding on a like-for-like basis, including the CAP.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on bringing this important debate to Westminster Hall. Does he agree that European funding has been used to great advantage, including in Northern Ireland, but that Brexit signals not an end to the funding of worthy schemes but rather a new way of distribution and the opportunity to ensure that the schemes that are funded are necessary and helpful to local communities? With that in mind, the Government have committed to helping to ensure that the farming grants and community schemes are retained within this Parliament, until 2020. Does the hon. Gentleman not accept that with Brexit, we have a new way of doing things?
Stephen Kinnock
There is an old phrase, “Never let a crisis go to waste”. Brexit has caused a crisis, and that opens up massive questions about where we go now as a country. A major part of that, of course, is what will happen in Northern Ireland. The Government have made commitments up to 2020, but 2020 is within the blink of an eye. We need a far more long-term plan and a strategy that goes way beyond that.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Gentleman on obtaining the debate. Is it not the case that Welsh steel and other industries will benefit from Brexit with respect to the procurement rules? Indigenous businesses in the construction industry and so on may prosper.
Stephen Kinnock
The way in which the Government have interpreted EU procurement rules has been completely wrong-headed for many years. There are ways to build in local content clauses in procurement, to ensure that the use of British steel in British projects is maximised. Unfortunately, the Government, because of their laissez-faire attitude, have hidden behind EU state aid rules. As a result, they have failed to use those rules in a way that could have benefited the steel industry, which is one of the industry’s five major asks. We have seen some improvements, but we need a proper industrial strategy in this country that clearly sets out how procurement can be used to promote British industry.
Stephen Kinnock
I will give way once more, to my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), but then I must make some progress.
Nick Thomas-Symonds
Does my hon. Friend agree that the real worry for steel outside the European Union is that the Government will simply put no trade defence mechanism in place?
Stephen Kinnock
That is a major concern. The British Government have been the ringleader of a set of countries trying to roll out the red carpet for China, to allow it to dump untold amounts of its unfairly subsidised steel on the EU and British markets. As we know, the Secretary of State for International Trade has said that he has no plans to support the steel industry with trade defence instruments. When combined with all the other uncertainty that Brexit has caused, that is a major concern for our industry.
Workways+ is a project that helps long-term unemployed people and people with complex needs to develop the skills and qualifications that will help them into paid positions. The Cynnydd Project works to help young people avoid the unemployment trap. BEACON is helping Swansea University to work with industry to pioneer renewable chemicals, fuels and other materials, bringing another key future industry to the area. Those are just three EU-funded projects already under way, and many others are in the pipeline. Each one makes the lives of our constituents better.
In reality, the situation in Port Talbot, Aberavon and across Wales calls for far more investment to accelerate our recovery from decades of under-investment in the face of the impact of globalisation and deindustrialisation. Yet all that funding and all that progress is at risk after the referendum vote to leave the European Union. While the leave campaign made promises that all EU funding would continue to flow to Wales at the same levels, I think we know that those promises are about as valid as what could be printed on the side of a bus.
Wayne David (Caerphilly) (Lab)
My hon. Friend will be aware that the Chancellor of the Exchequer has made that promise, but he has also said that he wants to guarantee funding for projects that meet UK priorities. Does that not imply that the Government intend to use this opportunity to insist that money is spent on their priorities, rather than those agreed with partners and the European Union?
Stephen Kinnock
I thank my hon. Friend. One of the huge risks to Wales of Brexit is that we will see a power grab by the Westminster Government. We will start to see the Westminster Government using the opportunity to claw back funding. We know that the £350 million was a lie. The figure was far more like £190 million, but where will that money go? Will it just disappear into the black hole of the Treasury in Westminster, never to be seen again in Wales? That is a huge risk for Wales in light of Brexit.
Now that all the bluff and bluster of the referendum campaign is behind us, it is all about what the Prime Minister’s Government actually do. So far on that score, the signs have not been positive. Despite repeated requests from the First Minister for a commitment to full continued funding, so far the Government have pledged only to continue funding agreed EU-funded projects until 2020.
That is not as powerful a pledge as it may first seem, for a number of reasons. First, it is for only one additional year after we are scheduled to leave the European Union in March 2019. The Government have made zero assurances that funding will be retained after 2020. Secondly, the Chancellor made clear in his statement on 13 August that the pledge applied only to projects signed before this year’s autumn statement. Apparently, any projects signed after that will be assessed by a method that is yet to be revealed to us—a mystery method. Funding is therefore not guaranteed for multi-year projects signed after next month, even if they are in the current EU 2014 to 2020 funding round.
Carolyn Harris (Swansea East) (Lab)
I congratulate my hon. Friend on securing this debate. He is making an excellent case. Does he agree that uncertainty is the enemy of business? The Government have made no commitment on funding post-2020, and that could have devastating consequences for attracting investment to Wales.
Stephen Kinnock
I absolutely agree. We have seen in all the feedback since the Brexit vote that businesses are in a holding pattern. Many companies, both outside and within the UK and the EU, are waiting to see how things develop in the wake of Brexit. We have no idea what the Government’s top-level negotiating position will be in terms of hard or soft Brexit, and we have no idea what the plan is on the budgetary side in terms of replacing EU funding. That double whammy causes massive uncertainty for business. It relates back to the point on the multiplier effect. EU funding opens the door for other businesses coming in, and that uncertainty is the enemy of business, as my hon. Friend says.
Craig Williams
Almost, Mr Bailey. [Laughter.]
I thank the hon. Gentleman for securing this debate. On the multiplier effect—I know why he has not touched on this today—the Wales Audit Office produced the Wales transport projects report in 2010-11 about how the Welsh Government had spent EU funds. He mentioned half a billion pounds, but there was a huge concern that there had been wasted opportunity to the tune of £1 billion.
Mr Adrian Bailey (in the Chair)
I call Stephen Kinnock. He is definitely Stephen Kinnock.
Stephen Kinnock
I am, Mr Bailey.
I thank the hon. Gentleman for his intervention. My sense is that we are moving firmly off topic with that intervention, but delivering value for taxpayers’ money is a top priority for all Governments, including the Welsh Assembly Government. In light of the unemployment figures coming out of Wales at the moment, which are certainly going in the right direction, along with a range of other economic indicators, I would argue that the Welsh Assembly Government are definitely providing value for money for Welsh taxpayers.
Geraint Davies
Does my hon. Friend agree that Wales faces a triple whammy? First, we start from a position of generating only 70% of average UK GDP per head. That is why, secondly, we get multimillion-pound investment that we are about to lose. Thirdly, given the advent of tariffs that we are so dependent on and the inward investment that has just been attracted, we will end up in a situation where we lose trade and grants and start from a weak position that will be catastrophic for the people of Wales.
Stephen Kinnock
I agree absolutely with my hon. Friend. In many ways, this debate is about resilience. The resilience of the Welsh economy in relative terms is weaker compared with that of many other parts of the United Kingdom. With the impact of Brexit, the loss of funding and inflation—the weakening of the pound will send inflation up, and we know that the poorest are always hardest hit by inflation—his reference to the triple whammy is an apt and correct way of describing what is happening.
The third reason why the pledge is not as powerful as it appears is that the Government have not yet agreed with other EU Governments that UK-based applications for EU funding will be in any way affected. The EU funding programmes for 2014 to 2020 are well under way—they have either already been launched or are in the advanced stage of planning. I fear that the Government’s antagonistic behaviour towards the EU and their lack of clarity over future funding will harm the prospects of Welsh applications.
Fourthly, the Government appear to have no plan for how the underwriting of funding will work at a small business or charity level, which is so important. Fifthly, even if Westminster does replace EU funding, there are serious considerations as to how that will be done and calculated. The Government will likely be tempted simply to increase the funds available on the basis of the Barnett formula. However, as the Welsh Labour Government have made abundantly clear, the Barnett formula has disadvantaged Wales for years, and we simply cannot afford or accept such chronic under-investment any longer.
At a minimum, the chosen approach to replacing EU funds must be ring-fenced—it must be in addition to the block grant. Beyond that, a revision of the Barnett formula is long overdue. In short, there is no clarity and no confidence for the people of Wales. The Government must urgently make it clear that they will underwrite all project funds agreed in the 2014 to 2020 mechanism. They must make it clear that they will maintain EU levels of annual funding to Wales for at least a decade post-Brexit, and they must set out how the replacement of funds will work in practice for the Welsh Government and local organisations in the spectrum of Brexit scenarios.
Also, the Government must commit to including Welsh voices in the negotiations, especially with regard to other themed EU funding programmes such as the Erasmus student exchange programme or the Horizon 2020 higher education innovation partnership. Of particular concern to south Wales is the future of the UK relationship with the European Investment Bank, whose loans have helped to build the Swansea bay campus; improved the Welsh Water and Severn Trent network in 2015; and upgraded the Great Western mainline. The last loan was worth £430 million. Such institutions matter greatly to us. The head of the bank, Werner Hoyer, has already publicly made it clear that current levels of lending to the UK cannot be maintained after Brexit. Welsh voices must be heard in the negotiations as our future so critically depends on those relationships with the continent. The Government must make clear whether they will seek associate status to the programmes and institutions. They must bring clarity quickly as the futures of people, communities and organisations across Wales hang in the balance.
Although it looks likely that the entirety of the UK will suffer economically in the coming years as a result of Brexit, it is in many parts of Wales where it will hit hardest, as our economic resilience is relatively low. That does not take into consideration the impact of Brexit on the steel industry, which would be hugely endangered if EU tariffs are imposed on it. If investment in Wales is not maintained, vital projects will go under, followed by businesses. People will lose jobs, and unemployment and welfare bills will shoot up. Communities will fracture. Port Talbot and its people have been through enough. That does not have to be our future.
In Port Talbot, Aberavon and across south Wales we are seeing the enormous potential to accelerate what we are doing. There is innovation. One company, SPECIFIC, has developed a steel-based paint that acts as a solar cell to generate power. It could turn every building in the country into a power station—except perhaps for Boris’s Foreign Office. The Swansea bay tidal lagoon is a world-leading project to capture wave energy. The Swansea bay city region proposal, Internet Coast, could transform south Wales into one of the best digitally connected places in the world. All that is being done without any sign of a proper industrial strategy. Imagine if we actually had one.
Alongside the Government’s Brexit negotiations, they must also present a modern industrial strategy, backing skill development, innovation, modern manufacturing, sustainability and the digital revolution. The strategy must focus on regions such as south Wales, where we have so much underdeveloped talent. When the Welsh Secretary declares that we should not simply replace EU money with Westminster money because we have to address underlying issues, we have to laugh. First, of course we need to address the underlying issues. Unlike him, I am unwilling to settle for basic skills. I am ambitious to ensure my constituents have the high skills needed for new industry to flourish in south Wales. Secondly, it seems blindingly obvious that financial support is a precondition for building such industries and developing skills. Finally, it was very nice of the Welsh Secretary to say that publicly, but it is his Government’s responsibility to come up with the solution, so he may wish to get on with it.
The Government must recognise with humility and sobriety rather than the gung-ho hubris they have shown so far that, if Wales does not continue to receive funding for crucial programmes, communities will be devastated for generations, with everything that that means for people’s lives. It will result in a lack of security, a lack of dignity and a lack of hope. I therefore hope that the Government will reassure the people of Wales quickly that they will ensure the floor is not ripped out from underneath them.
Ian C. Lucas (Wrexham) (Lab)
Parallel to the UK’s membership of the EU has been the rise of one of the most successful businesses in the world: Airbus. One of the real threats to business is the arrangement concerning communication between the multinational aspects of that business. It is essential that the Government work closely with business to preserve a premier economic powerhouse such as Airbus.
Stephen Kinnock
I agree absolutely with my hon. Friend. There is no better example than Airbus, which is an exemplar of a cross-country, cross-industry collaboration. Airbus has worked as a consortium that has developed through its supply chains a world market-leading capability. When people say the European Union is a sclerotic project that does not work anymore, there is one answer to that question: Airbus. It is a fantastic example, as my hon. Friend has described. We must now see a commitment from the Government to continue to support such projects moving forward. It will be more difficult in the wake of Brexit, but it is still possible. It is up to the Government to show leadership to ensure that that happens.
We need a comprehensive funding and industrial strategy that does not say our best days were in the coal and steel boom years of the 1960s. We need a strategy that says our best days are still ahead of us.
Several hon. Members rose—
Mr Adrian Bailey (in the Chair)
Order. There is great pressure on time. Nine Members indicated in advance that they wished to speak in this debate and I have had another three since. I want to call the Front-Bench speakers at around 10.30 am, so we will start with a time limit of four minutes, which I might reduce as time goes on. I also ask that Members recognise it will be necessary for speakers to take no interventions. If Members persist in intervening, they may lose their priority on the speakers list.
Also, the clock controlling the time limits is working here at the desk, but not up there on the wall, so the Clerk will hit the bell one minute prior to the end of the time limit. The bell is not a fire alarm; you do not need to vacate the building. It is simply an indication to the speaker.
Byron Davies (Gower) (Con)
I am delighted, as the real Byron Davies, to have the opportunity to contribute to this debate, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this debate. I am pleased that we are all here contributing to what should be a wider and national conversation about what happens to Wales post-Brexit. I am sure that we here today recognise the importance of ensuring Wales gets the best possible deal from Brexit. The UK Treasury has of course guaranteed European structural and investment funds in Wales for projects signed before the UK leaves the EU. The Treasury has also guaranteed funding received directly from the European Commission: for example, the universities participating in Horizon 2020. The guarantee also includes pillar 1 of the common agricultural policy, so the agricultural sector in Wales will receive the same level of funding it was expecting under the 2014-2020 programme. The access of the UK, and consequently Wales, to the EU funding programmes will be subject to negotiations during the withdrawal process. Even once outside the EU, it is possible that the UK will receive funding from it.
Although it is essential that we support the Secretary of State for Wales and the Minister, who are ensuring we have funds for important infrastructure projects, as part of this process we must scrutinise how the money is spent. I must admit that I was shocked that Carwyn Jones did not have a plan for Wales after Brexit and failed to lobby the British Government prior to the referendum. Apparently, it was too political. That means he did not obtain any guarantees about having funding matched. That is staggering, given the importance of the current funding to Wales. The fact that the First Minister, of all people, did not think of that or secure it is beyond me. It could be argued, however, that it is part of a deeper undercurrent of thoughtlessness and evidence of the Welsh Government’s blasé attitude to the spending of public money. Unfortunately, Wales’ lack of scrutiny is part of the problem. It is due to myriad factors, including a lack of a competitive national media, which leaves the public with an information deficit, and the processes in the Assembly, which mean that many parts of Welsh policy and spending decisions have received a woeful lack of scrutiny. It is no longer good enough to say that the Assembly will get there or that things will change. It has been two decades, and in this place and the Assembly we must seriously start to look at and tackle the problems that the Assembly and Wales face post Brexit.
Wales has received three rounds of EU funding worth almost £4 billion in less than two decades. In the heady early days of devolution, the then First Minister, Rhodri Morgan, said that the first round of funding was a once-in-a-lifetime opportunity to shape a new Wales, shake off the shackles and take advantage of the myriad opportunities and the booming years of the early 2000s to create a hi-tech, trading nation that is proud of its industrial past. We were told that it would grow to become a confident, outward-looking nation once again. Two decades on, we are on our third round of funding.
The Welsh Government’s wasted spending includes a £7.5 million Government procurement card for luxury hotels, iTunes, Victoria’s Secret underwear, yacht wear and other vital uses of taxpayers’ funds for Welsh Government officials. Some £1.6 million was spent on a martial arts centre that never opened in north Wales. Tens of millions of pounds in business loans went from the former economy Minister to firms that went bankrupt, despite warnings about their viability. Some £1.8 million was spent on chauffeur-driven cars; £20 million was spent on properties on the M4 relief road, without a spade in the ground; £3.4 million was spent on a heritage centre that closed within three years; and hundreds of millions of pounds have been spent on major road projects that a 2010 Wales Audit Office report said cost 61% more than estimated and hampered wider transport objectives. My point is that, although it is of fundamental importance that we debate and discuss the future of funding for Wales and support the Wales Office in achieving that—
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this debate. I agree with much of what he said in his excellent introduction.
As a democrat, I fully accept the referendum result, but that does not mean that the ideological Brexiteers in charge of Government policy at the moment can act with impunity. There is an ongoing fight for the type of Brexit we will have, and my priority is to campaign for the least damaging option for the Welsh economy and for Welsh funding and finances. That is why Plaid Cymru and I have been united in our campaign to maintain membership of the single market and the customs union from the very beginning. That would be by far the least damaging option for the Welsh economy, first, because there are wide-reaching benefits to being a single market and customs union member for trade in Wales; and, secondly, because it will enable Wales to qualify for certain cross-border and transnational programmes for research and innovation funding, which the hon. Gentleman mentioned in his opening remarks.
Wales is more exposed to a hard Brexit because we are an exporting economy. We have a trade surplus of £5 billion per annum, whereas the UK has a massive trade deficit. Wales’ great trade figures are aided by our membership of the single market—the world’s largest trading bloc—and the 53 international trade deals that we have by being a part of the customs union. The Centre for Economics and Business Research found that more than 4 million jobs directly and indirectly depend on exports to the EU. That is approximately 200,000 jobs in Wales—about 14% of our workforce. That should make our eyes water.
The hon. Gentleman talked in great detail about many of the different types of funding streams that we qualify for due to our membership of the European Union. The UK is the most unequal member of the European Union, in terms of the geographical gap in wealth. The richest region in northern Europe is London and the south-east. Nine of the poorest regions in northern Europe are also in the UK. Tragically, they include the communities that I and many colleagues here serve.
In contrast, the UK has no regional policy for moving wealth from richer to poorer parts of the state. The EU has a very successful regional strategy, and Wales has qualified for three rounds of the highest form of structural funding. Of all the funding streams that we receive from the European Union, the loss of that structural funding—we probably qualify for a fourth round, given the state of the Welsh economy at the moment—would be the biggest hit for us. We could also lose very cheap finance from the European Investment Bank, which has helped to deliver the excellent new campus at Swansea University, which the hon. Gentleman mentioned.
Wales has benefited from many other EU funding opportunities, including for agriculture, fishing and rural areas, education, training, and research and innovation. The education, training and research schemes will still be available to us if we remain a member of the single market and the customs union, but the huge support our rural economy receives in common agricultural policy payments will not. I believe that we received about €3 billion to support our rural economy between 2007 and 2013. Our economy depends on those streams. Even under my preferred deal, we would not qualify for CAP payments. Norway gets around that by paying the CAP payments and tariffs that it would receive if it were in receipt of CAP. Unless we have those guarantees from the UK Government, I fear dark days lie ahead for the rural economy and the Welsh economy as a whole. Diolch yn fawr iawn.
Geraint Davies (Swansea West) (Lab/Co-op)
Britain has been terrorised by clowns, and we now know that their ringleader is a peroxide blonde with a German name and a red nose masquerading as the Foreign Secretary. He promised a mixture of lower costs, market access and lower migration, but we are obviously going to get higher costs, which is why the deficit reduction plan has been torn up, no market access—it sounds like it will be a hard Brexit—and increasing migration, as ever. Boris said that we could have our EU cake and eat it, but Donald Tusk has said that all we will get is salt and vinegar.
The referendum took place immediately after the Welsh Assembly elections, so the Welsh people did not have time to contemplate all the ramifications of Brexit on their grants, and 16-year-olds and people living abroad were not allowed to vote. It is now coming home to us that we face the triple whammy that I mentioned earlier. Wales starts from a position of having something like 70% of UK GDP per head. As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said, 200,000 people who rely on EU trade—25,000 of them are in Swansea bay—face tariffs.
There is enormous uncertainty. We hear today that the promised electrification to Swansea may not proceed, and we do not know what is happening about the lagoon or the Swansea city deal. Tariffs are going up, and companies such as Nissan want compensation. It is like someone going to a shop and buying a mobile phone that they are told has a colour picture, but when they get home they find it is black and white. In other words, if the promises that were made were not a reasonable representation of the future—the falling pound, the loss of investment and the loss of jobs—the British and Welsh people deserve a referendum on the exit package before we trigger article 50. Article 50 should not be triggered until something like next October.
David T. C. Davies (Monmouth) (Con)
Does the hon. Gentleman agree that the fall in the pound has been excellent for exporters?
Geraint Davies
I assume that the fall in the pound to a 30-year low was designed to make Polish workers better off when moving abroad. The weak pound is a nightmare that will generate huge inflation in Britain. People will not be able to go on holiday, except on the £14 visa. If the hon. Gentleman thinks that, he should have said before the referendum, “We are fighting for a lower pound and less investment, and we are ripping up our deficit strategy.” In fact, the hon. Member for Cardiff North (Craig Williams), who has now left the Chamber, seems to think that we should have £1 billion less, because we are wasting our money—so much for representing Wales. Last week when I asked the Minister in Question Time about the “body blow” of Brexit, he said simply that Swansea had voted for it, as if to say, “Well, it’s their own fault—like it or lump it.”
In reality, we need support where it is most necessary, and we need promises from the Minister to ensure that funding is sustained and that we still have the city deal, the lagoon and the electrification. We need a helping hand to succeed in difficult days. If possible, we should also have another crack at this with an exit package referendum, so that people can have a say on what they get and whether they want to go ahead. They have said that they want to go ahead in principle, but in practice is a hard Brexit what they wanted? No.
Nick Thomas-Symonds (Torfaen) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey, and I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate.
In my home town of Blaenavon, in the northernmost part of my constituency, are the Blaenavon ironworks, with their iconic balance arch, which are a very good example of a successful regeneration project. The houses in the ironworks, including No. 2 Stack Square, where my father was born, are each set out in the style of a different era, giving a flavour of the industrial heritage of the Eastern valley. The project has been a great success and my local authority, Torfaen, deserves great credit for it, but if someone walks out of the Blaenavon ironworks they will see outside the European flag, indicating the European structural funding drawn upon by such regeneration projects.
I totally respect the result of the referendum of 23 June, but it does not mean that the leave campaign can escape from the promises that were made in the weeks and months leading up to it. What promises were made? I have with me the letter written on 14 June, released under the headline, “Leave Ministers commit to maintain EU funding”. What did they say exactly? The letter states:
“After protecting those now in receipt of EU funding, we will still have billions more to spend on our priorities. We propose that at least £5.5 billion of that be spent on the NHS by 2020, giving it a much-needed £100 million per week cash transfusion, and to use £1.7 billion to abolish VAT on household energy bills.”
That was a specific pledge made nine days before the referendum, not for some slipping date in the future, but by a specific date—precise figures, specific pledges.
Furthermore, there is no point in the Prime Minister trying to distance herself from the promises made. I know she virtually went into hibernation for the course of the referendum campaign, but none the less, of the signatories to that letter, one is now the International Development Secretary, another is the Transport Secretary and a third is the Foreign Secretary. They are now in government, and they should honour the pledges that they made. Unfortunately, however, as my hon. Friend the Member for Caerphilly (Wayne David) alluded to in his intervention, it already looks as if those promises are slipping.
We know about the pledge on projects started before the autumn statement, but we have no idea about what will happen after that, as my hon. Friend the Member for Aberavon said. Even worse, the Secretary of State for Exiting the European Union said at Question Time last Thursday—I listened very carefully:
“Most EU funds will be guaranteed post-departure by the Treasury, as we said in August.”—[Official Report, 20 October 2016; Vol. 615, c. 950.]
“Most” is simply not good enough—the pledge made on 14 June should be honoured. My constituents deserve not only a continuation of EU funding, but the extra funds promised as well. Any failure to deliver will be a gross betrayal.
Mr Mark Williams (Ceredigion) (LD)
Thank you, Mr Bailey, for the opportunity to say a few words in this important debate. I thank the hon. Member for Aberavon (Stephen Kinnock) for speaking for the heart of industrial south Wales on this important issue. If I can do half the job speaking for rural Wales that he did for that area, I will be doing a good thing, because it was an excellent speech.
Farming is crucial to our economy, directly employing 58,000 people and with an output of produce worth about £1.5 billion. Some 80% of Wales’s land area is farmed, so there is no doubt that farming contributes substantially to the landscape, which is a vital element of our tourism, and—this is key—to producing and selling food tariff-free in the EU. Any possible funding loss to our farmers, therefore, will inevitably have a wider impact on Wales’s economy. A survey taken before the vote on 23 June revealed that two out of five businesses in the countryside depend on farms, and each of those farms contributes £100,000 to the local rural economy.
We note that funding under pillar one of the common agricultural policy will be upheld until 2020 as part of a transitional arrangement, and there was thanks from the farming community for that, but we need further clarification on the situation post-2020. We need clarification on structural and investment fund projects and agri-environmental schemes, and we need more detail on environmental stewardship policies. Despite the red tape and many criticisms over the years, the CAP did and does ensure that family farms survive. Post-Brexit, there is a huge challenge that is fundamental to the whole rural economy, and the Department for Environment, Food and Rural Affairs, working with the Assembly Government, needs to have a holistic rural strategy that combines food, farming and biodiversity. To date, such a strategy has been lacking. We need an early and clear communication, post-Brexit vote, on the subsidy regime and the position of seasonal foreign labour.
The maintenance of a subsidy regime to 2020 was welcomed, but the sector has been encouraged to diversify and invest for its survival. Investment, however, not least in negotiation with banks, requires certainty over cash flows and a baseline on which to continue operations. In that context, a three-year window until 2020 for the farmers whom I represent is completely inadequate. Between 2014 and 2016, net farm incomes in Wales declined by about 25% to some £13,000 a year. There is also the impact on secondary businesses in the rural economy. EU support amounted to £250 million a year, together with an investment programme of some £500 million for 2014 to 2020. Such funding is vital.
The UK Government have been giving conflicting messages. The Secretary of State for Environment, Food and Rural Affairs has implied that funding will continue, but her junior Minister, the hon. Member for Camborne and Redruth (George Eustice), said at the Royal Welsh show this year that the Government cannot guarantee that future agricultural support will be as generous as the current subsidy regime. That is completely unacceptable to the rural community that I represent and would have a dreadful effect on the capacity of family farms to function in the future. The farmers and businesses of rural Wales need clarity and answers from the Government, which so far have been woefully lacking.
Chris Elmore (Ogmore) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing the debate.
As matters stand, the implications of the UK leaving the EU will be seen in each town, city and village in Wales. Although we can be blasé about EU funding, and it is often not obvious, it has contributed enormously to each of our communities. In my constituency, agricultural funds have had a tremendously positive impact on all the farms. The common agricultural policy provides funds for more than 16,000 farms in Wales, and the European structural fund has also made a considerable contribution to various projects throughout Ogmore. Farmers throughout Wales benefit hugely from such funds, and in the same way, people in other industries have benefited from other such projects and funding, as my hon. Friend said so eloquently.
According to the Welsh Government, EU funding and projects have supported more than 200,000 people to gain qualifications, helped more than 70,000 people into work and created close to 40,000 jobs. The effect on funding for Wales of the UK leaving the EU should not be understated, and unless we plan accordingly, that funding will be sorely missed.
Uncertainty clouds the future of every aspect of EU funding in Wales. As I mentioned, the EU makes a fantastic contribution to our farming industry, but although the CAP pillar one scheme will be upheld until 2020, we do not know any detail of the arrangements with which the UK will replace it. Our farmers are therefore left in the dark and cannot feasibly plan for the future—they have no idea what funding they will receive in only four years’ time.
Those set to benefit from the proposed south Wales metro have also been left in the dark, as that project was almost certainly going to receive EU funding, without which it has become far more ambitious and possibly harder to achieve.
In August, the Chancellor offered what he referred to as a funding guarantee, which in truth is nothing of the sort. According to First Minister Carwyn Jones, the funding that the Chancellor referred to covers only about half of Wales’s regional funding. The Treasury’s guarantee to back EU-funded projects signed before this year’s autumn statement should be applauded, but there remains uncertainty for many other projects. Uncertainty benefits no one, and I hope that the Government will recognise that and clarify their position. The Welsh Government have worked well to ensure that Wales is on the way up, and I am sure that we all hope things will stay that way.
The future of Wales is in the hands of those who are managing our departure from the EU, and I fear that they do not understand the scale of the EU’s contribution to Wales. If agriculture funding is not replaced pound for pound, farms will close and jobs will be lost. If the Government do not replace the funding that would have come from the European social fund, there will be a skills shortage. I am sure all Members can agree about the success of the Jobs Growth Wales scheme, which is partly funded by the EU and has been led by the Welsh Government for several years. Likewise, if funding from the European maritime and fisheries fund is not replaced, those industries will suffer. The effect of the UK leaving the EU on funding for Wales could spell the end of some of the greatest projects in Wales and Welsh prosperity, and I hope that the Government will work to ensure that that is not the case.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey. Like the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) and my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), I am a democrat and accept the result of the referendum. Indeed, my constituency and Wales mirror the United Kingdom in that roughly 52% voted to leave and 48% voted to remain. We are talking about the future, and although the Prime Minister has said that she has a mandate from the 52%, we must talk for 100% of the residents of Wales and 100% of our constituents. It is important to put that on the record.
I was shocked, as many people were, that the previous Prime Minister, David Cameron, did not have a contingency plan. There was a simple question—leave or remain—and I could not believe that the Government did not cover both those bases, and particularly a leave outcome. We are in a difficult position. The captain—the then Prime Minister—has abandoned ship and left us rudderless and clueless about how to move forward.
I am a strong advocate of the European Union. Indeed, I am a strong advocate of unions—the EU and the Union of Wales, Scotland, England and Northern Ireland. I do not like the word “Brexit”, because it excludes Northern Ireland. We must have a better, more positive word about the United Kingdom’s future outside the European Union.
I worked with the Minister on structural fund projects before he came to this place. He knows how important structural funds have been to the development of Ynys Môn and north-west Wales. It is wrong of Conservative Members to say that that was a waste of money. The social cohesion that those funds have brought to my area after decades of under-investment is a testament to the European vision and the vision of the Welsh Government, which worked with the UK Government and the European Union to develop those areas.
My constituency is the gateway to Wales. It contains the major port of Holyhead, which links Wales to the Irish Republic. The Dublin to Holyhead route has been called the new Dover to Calais route, yet because of our exit from the European Union, that link is now uncertain. We need to look at that, because it will impact hundreds of jobs in my constituency. I remember working with our then MEP—it just happens to be Glenys Kinnock, the mother of my hon. Friend the Member for Aberavon (Stephen Kinnock), who moved the motion—the Welsh Government Minister and the UK Government to get extra resources for that port. They understood the importance of linking Wales and the UK with the rest of Europe.
It is important that we have a vision for the future. Guaranteeing structural funds until 2020, as has already been committed to, is not good enough. We want a clear vision and a clear plan for the future. I want devolved Administrations, the farming unions and rural Wales to be part of that—I want them not on the fringes, but at the centre making decisions. Many of the issues that we are talking about are already devolved. I do not want them to be centralised here in the UK Parliament. I want devolved Administrations to have a direct voice in the future of Wales and the future of the United Kingdom.
Chris Evans (Islwyn) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock), who spoke movingly about his constituency and his fears about our impending exit from the European Union.
I take issue with the hon. Member for Gower (Byron Davies), who said that Carwyn Jones did not have a contingency plan. I ask the hon. Gentleman to look at the Treasury’s recent evidence to the Public Accounts Committee, in which it said that it had no contingency plan because the referendum was not a general election and the Government’s official policy was to stay in the European Union. It therefore made no plans. How naive can it be?
Wales receives more EU funding than any other part of the UK. The Wales Governance Centre estimated in 2016 that Wales received a net £245 million from the European budget in 2014. That equates to £79 per person, yet Wales voted out, with 52.5% opting to leave. Like many others, I am at a loss to understand why the nation voted against the public interest. However, as a democrat, I accept the result. Unlike Members of some other parties in the House, I believe that we cannot continually have referendums until we get the answer we want from the people.
There is no future in debating our past; we should debate where we go from here. Let us begin by trusting the people of Wales. President Abraham Lincoln said:
“I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts”.
He went on to say “and beer.” As we know, we like some of that in Wales too. The UK Government here in London and the Welsh Assembly both have a role in ensuring that Wales continues to prosper even after exit from the European Union.
We must demand from the UK Government a new funding settlement for Wales. EU funding is critical to Wales’s development. We have heard from many hon. Members about the projects in their constituencies. Those must be funded beyond 2020. I find it embarrassing, frankly, when companies that are wondering what exit from the European Union will mean for them come to see me and want to be briefed. At the moment, I have no answers. I was extremely disappointed that when the leaders of the nations of this country met the Prime Minister yesterday, they too were told that the Government had no answers. It is no good for the Prime Minister to go on saying, “We’re not giving a running commentary on the exit from the European Union.” She needs to give facts, a rationale and a road map right now. [Interruption.] I have started, so I will finish.
However, Brexit must be seen as an opportunity. Wales cannot rely solely on EU funding or the public sector. Wales is an innovative country. In my constituency, General Dynamics UK in Oakdale and Axiom in Newbridge both stand up to that. The Welsh Assembly must create an entrepreneurial spirit. Wales is a trading nation. Our exports to EU countries in the year to the end of the second quarter of 2016 were worth £4.7 billion but, as a trading nation, Wales must have a dedicated trade ambassador who reaches out across the world and ensures that Wales is the place to do business. I have attempted to do that in Islwyn by encouraging businesses that I meet to come to Wales. It is time for the Welsh Assembly Government and the Government in London to step up to the plate. We need a trade deal. We need a strategy for Wales to prosper. Even though we are disappointed, exiting the EU provides a real opportunity for Wales.
Mr Adrian Bailey (in the Chair)
Order. I now intend to call the Opposition spokespersons. It would be helpful if you could keep your remarks within 10 minutes to leave adequate time for the Minister to respond and Stephen Kinnock to summarise at the end.
Kirsty Blackman (Aberdeen North) (SNP)
Thank you, Mr Bailey. It is a pleasure to serve under your chairmanship. I will be well within 10 minutes. I thank the hon. Member for Aberavon (Stephen Kinnock) for bringing the debate before us.
As was said by numerous Members, for a number of reasons, Wales stands to lose a huge amount—more than many other areas in the United Kingdom—from the UK’s exit from the EU. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) talked about Wales’s trade surplus. Wales is a trading nation with a massive trading surplus, so it stands to lose out from the massive changes proposed to the way in which trade works.
The hon. Member for Ceredigion (Mr Williams) talked about the rural community and the common agricultural policy in particular. The Government have given certainty on that up until 2020, but farmers need certainty way longer out than that. They are planning 10 or 20 years ahead and thinking about how their land will be used well into the future. As he mentioned, 80% of Wales’s landmass is used for farming, so it is really important that the Government give certainty. That is a major area in which Wales stands to lose out.
The hon. Member for Aberavon talked about Wales’s industries and its post-industrial areas. One problem that Scotland and Wales have in addition to a democratic deficit—our voices are rarely heard because the UK Government is never made up from a majority of Scots—is that the UK Government often poorly understand some of the industries and things that are most prominent and prevalent in our local communities. The UK Government, made up mostly from the south-east and less from the north of England and from Wales, poorly understand what it is like to live in a post-industrial place. They poorly understand what it is like to live in a heavily industrialised area and how communities rely on those industries. As a result, when the UK Government negotiate with the EU, those areas will be forgotten. Those things are not high enough on the priority list.
We keep hearing about how the City will receive special deals, but what about industry? What about areas in Wales and Scotland that actually need that support and have received, for example, EU structural funding? They are really important. It is vital that the devolved Administrations have a major voice in the exit negotiations so that we can explain to the UK Government how the industries work and how our communities live so that they can ensure that they prioritise them and not just the views of the City of London.
In a huge number of cases, people voted in protest against Tory austerity. It would be shocking if the UK Government used that as an excuse to centralise power in Whitehall, as a Labour colleague said. In the exit negotiations there is a real risk to Wales, Scotland and the north of England that our voice will be too small, too quiet and not heard enough. Leanne Wood, the leader of Plaid Cymru, said:
“The Prime Minister’s commitment to “a country that works for all” will ring hollow if Brexit leaves Wales in a weaker position than before.”
The UK Government need to reflect on that.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate and on the powerful case he made. We have heard from an array of hon. Members from across Wales who have a variety of views on what leaving the EU will mean for their constituencies, for Wales and for the people of Wales. The one theme that has come through is that the next few years will be an uncertain period for all, and for our communities and businesses in particular, as highlighted by my hon. Friend the Member for Swansea East (Carolyn Harris).
The Government have a clear and pressing duty to reduce that uncertainty. We have all heard of investment decisions that have been delayed and of businesses that are genuinely worried for their futures. People voted to leave, but they did not vote to damage our economy, so the Government need to step up and set out their plans more clearly to deliver the clarity and business confidence we so badly need.
As my hon. Friend the Member for Islwyn (Chris Evans) highlighted, Wales currently receives a significant net gain from the European budget because west Wales and the valleys qualify for the highest level of EU regional development funding. The Welsh European Funding Office estimates that projects in the 2007-13 round of funding created 11,925 enterprises, supported nearly 40,000 jobs and helped more than 72,000 people into work and 56,000 people into further learning. As my hon. Friend the Member for Neath (Christina Rees) said, 16,000 farmers in Wales get direct subsidies from the common agricultural policy, without which 90% would be in financial difficulty. My hon. Friend the Member for Ogmore (Chris Elmore) highlighted the positive impact that that funding has on farmers and the risk posed by leaving the EU.
Wales is set to receive £2.7 billion in structural funds up to 2020. We have heard examples of local regeneration already delivered across Wales. Many communities have been transformed with the support of EU funding, including many in my constituency. We heard my hon. Friend the Member for Aberavon outline the iconic Swansea University campus and the Workways+ and BEACON schemes, which have been supported through the EU.
My hon. Friend the Member for Ynys Môn (Albert Owen) highlighted the important point of matched funding and what that means in supporting EU funding to go even further in regenerating Wales. My hon. Friend the Member for Swansea West (Geraint Davies) highlighted the regeneration projects in his area and the lack of reassurance coming from the Government.
Despite that, Wales voted in line with England to leave the European Union, and we respect that decision. However, Wales did not vote to become poorer or to damage its public services. That is why, as we begin the process of leaving the EU, we need to work together to ensure that Wales, its economy and its communities get the best deal.
Albert Owen
Does my hon. Friend understand that many people who voted to leave were under the impression that some £350 million saved from Europe was going to be spent on the health service in the UK? Five percent under Barnett would give Wales about £17 million. Does he think that should be honoured by the Government, or at least debated?
Gerald Jones
My hon. Friend makes a correct point. During the referendum campaign lots of lies were told and comments made, and the people of Wales and the rest of the UK voted for a specific set of circumstances. They did not vote to make our services poorer. Indeed, the investment promised by the Brexiteers—as highlighted by my hon. Friend the Member for Torfaen (Nick Thomas-Symonds)—in the pledge signed on 14 June should be honoured.
Geraint Davies
Further to that, will my hon. Friend accept that the people of Wales and Britain voted in good faith in principle to leave and that that was subject to the exit package set out? There is a strong case for another vote not on the principle of whether to leave but on the exit package and whether it represents the reasonable expectations of voters, because already something like 7% of the people who voted to leave now say they do not want to leave. As this is a once-in-a-lifetime choice, surely they should look at the exit package in a referendum.
Gerald Jones
As I mentioned earlier, it is important that we respect the result, but it is also important that we ensure we get the best deal for Wales and for the UK in the coming negotiations. Despite the many challenges ahead, we must ensure that Wales has a positive voice throughout the negotiations to secure the best possible outcome. It is essential that the UK Government work closely with the Welsh Government and other devolved Administrations to ensure that their negotiating strategy works for the whole of the UK, not just for England.
The Joint Ministerial Committee met yesterday, although clarity was lacking on the current position and on what future discussions will look like. As we begin the process of exiting the EU, Wales has several priorities. We must prioritise the protection of jobs and ensure business confidence in the aftermath of the referendum. Full and unfettered access to the EU single market is crucial for Wales. Welsh businesses currently benefit from our trading relationship with the EU. If we were to leave the single market, and if tariffs were to be imposed on Welsh goods, that could have a crushing impact on our manufacturing and agricultural sectors. We need certainty about funding for current and future EU programmes.
The First Minister of Wales sought an urgent guarantee, immediately following the referendum, that Wales would not lose a single penny of EU funding up to the end of the EU financial perspective, running until 2020. This month the Treasury pledged to extend the guaranteed funding for all projects agreed before the UK leaves the EU. However, it has not given any commitment to replace the funding, further into the future, that we would reasonably have expected to receive if the UK were to remain in the EU. That is vital to our universities and agricultural businesses. Wales currently receives £650 million in EU funding, in particular through the common agricultural policy and structural funding. Campaigners for leave said that Wales would not lose a single penny in European funding, and we will hold them to that promise.
As my hon. Friend the Member for Aberavon outlined, the case for revision of the Barnett formula arrangements for Wales is now even stronger, to ensure fair funding for Wales during and after the current EU programmes. The Wales Bill provides an important opportunity to consider future funding arrangements for Wales. I urge the Government to reconsider their opposition to delivering a much needed fiscal framework to Wales as part of the Bill, and perhaps the Minister will comment on that.
It is my view, and the view of my party, that EU citizens working and living in Wales now should be able to remain here after the UK’s exit from the EU. EU citizens should not be used as bargaining chips in the negotiations, and we must stamp out the unacceptable abuse that has, sadly, risen since the referendum result.
Christina Rees
Since the referendum the UK Government have said little more than “Brexit means Brexit,” but Ministers have alluded to a hard Brexit. Will my hon. Friend agree with the Welsh Labour MEP Derek Vaughan who has said that as a result of that stance the EU has withdrawn behind its lines, and we will end up with a hard Brexit?
Gerald Jones
I do indeed agree. As I said in my speech, the people of Wales and the UK voted to leave but not to reduce public services. They certainly did not vote for a hard Brexit. It is important to have the clarity that we need as we go forward. It is essential that we remain outward looking, internationalist and pro-business. We require that we remain committed to fairness and opportunity for all, and I look forward to some reassurances, perhaps, from the Minister this morning.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
It is a pleasure to serve under your chairmanship this morning, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing the debate, and the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones), who I think is appearing in Westminster Hall in his new capacity for the first time. I also congratulate him on being the only Member from the Opposition ranks who has understood the commitment given by the Treasury on EU funding in Wales. A number of Opposition Members have raised questions in relation to its running out at the autumn statement; but that is not the case. A further letter has been delivered to the Welsh Government, highlighting the fact that the Treasury would be willing to underwrite EU programmes in Wales up to the point of exit. That is a crucial and important Government commitment.
Nick Thomas-Symonds
I respect what the Minister says about what the Treasury has said; but what about the letter of 14 June that I read? Is it now Government policy simply to ignore that?
Guto Bebb
The hon. Gentleman must understand that initially, in the immediate aftermath of the referendum, the Government gave a commitment to support EU funding up to the autumn statement; but a further Treasury commitment has been made since then. Those letters have been delivered to the Welsh Government. Indeed, I assure the hon. Gentleman that the First Minister of Wales has given a genuine welcome to the Treasury’s commitment to trying to ensure that there is a commitment to the 2020 programmes in a Welsh context. Opposition Members should be aware that in claiming, in contrast with the Labour spokesman, that there is no commitment up to the exit from the EU, they are doing the people of Wales and their constituents a disservice.
Wayne David
The Chancellor of the Exchequer said that there will be a guarantee, but only for those projects that “meet UK priorities”. That is a qualification, surely.
Guto Bebb
It is a terrible thing for hon. Members to speak from a position of lack of knowledge. The commitment that has been given is very clear. Where a project is considered to be a Welsh Government priority it will be accepted by the Treasury as a priority for the UK Government as well. I recommend that Opposition Members read the comments by the Treasury. Some of them have raised the issue of a south Wales metro, and I recommend that they read the comments about that made by the Under-Secretary of State for Transport, my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), to the Select Committee on Welsh Affairs yesterday. It will be well worth their while. The Welsh Government need to get on with that project, because if the scheme is in place in good time the money will be forthcoming from the EU. If it is signed off before our exit from the EU, again, the Treasury will give a commitment. Opposition Members peddle scare stories about the commitments we have given. It is important for them to get their facts right.
Nick Thomas-Symonds
It is not a scare story. I quoted precisely from the letter of 14 June, not just about guaranteeing EU funding but about additional funding for the NHS and a pledge on VAT, both by 2020. Is that the Government policy now or not?
Guto Bebb
I am unsure which letter of 14 June the hon. Gentleman is referring to. I am referring to the Treasury commitment of October this year. I think that a commitment made this October trumps a letter of 14 June. The hon. Gentleman has also raised a number of issues about promises made in the referendum campaign that imply a lack of understanding of how a referendum campaign works. It is not about electing a Government. In the referendum campaign there were members of the Labour party on either side of the argument, and the same was true of the Government. To claim that promises made by the referendum campaign are binding on the Government is nonsense, and I think that the hon. Gentleman knows it.
Albert Owen
A few years ago the Minister would have been agreeing with us. It is the first time I have ever been accused of scaremongering for quoting the Chancellor of the Exchequer and Finance Ministers. As to the referendum campaign, we are not talking just about individuals making commitments. We are talking about the Foreign Secretary, the Secretary of State for International Trade and the Secretary of State for Exiting the EU. Those are three leading individuals. Will the Minister hold them to account, on behalf of the people of north Wales?
Guto Bebb
Again, I highlight the fact that comments made about the letter of 14 June do not reflect the Treasury’s position as it has developed. [Interruption.] Also, it is important to understand that those individuals from the leave campaign who joined the Government have done so with the intention—[Interruption.]
Mr Adrian Bailey (in the Chair)
Order. Members have had the opportunity to intervene. They must not continue to harass the Minister from a sedentary position when he is trying to respond.
Guto Bebb
I thank you, Mr Bailey. I assure you I was not feeling harassed.
It is important to point out that the individuals from the leave campaign who joined the Government will serve in relation to the Government’s agenda, which, to a large extent, is still based on the manifesto commitment of the last election.
I need to move on to reflect on some of the comments of the hon. Member for Aberavon. He began with an important comment about the way a single-industry town is affected by the fact that that single industry has contracted. He highlighted the changes that have happened over a period of years. However, the debate is about European funding in Wales. That funding has been important, but there is no denying that we have qualified for three rounds of such intervention. I do not believe that there is fault with Brussels in the fact that we still qualify for the highest percentage of support from the European Union, but Opposition Members should reflect on the fact that time after time we have ended up still qualifying for the highest level of intervention.
As my hon. Friend the Member for Gower (Byron Davies) stated, when we qualified for the first round of intervention the expectation was that it would be a one-off opportunity, because eastern European countries were joining the European Union whose standard of living was significantly lower than that enjoyed in Wales at that time. However, we have qualified again and again, and it appears that Opposition Members here expect Wales to qualify again in 2020. That is an indication of the failure of the Welsh Government in Cardiff to make the best of the funding available.
I fully accept that some European schemes across Wales have been successful and have made a difference, but no Member can deny that other schemes in Wales have been wasteful and inefficient. The real issue Opposition Members should face is that Welsh GDP per head is continually falling, despite the intervention that has been described by Opposition Members as absolutely crucial to the future of Wales. I believe we need a funding stream in place to support Wales, and I will fight for that as part of the Wales Office, but the crucial point is that to claim the status quo is the way forward is to ignore the realities on the ground in Wales, which were reflected in the referendum. The only two parts of the west Wales and valleys region, which receives the highest level of European intervention, that voted to remain were Gwynedd and Ceredigion. Opposition Members should reflect on that.
Geraint Davies
If the Minister expects GDP per head to go up in Wales, does he accept that the Government should stick by the cast-iron promise from the previous Prime Minister to electrify the railway to Swansea? The Government could make Swansea bay part of the wider electrified European network and give us the tools to export, rather than cutting us off at the knees and laughing as they are now.
Guto Bebb
The hon. Gentleman asks where the money is from a sedentary position. It would be a very irresponsible Government—perhaps like the one down the M4 in Cardiff—who would commit funding to a project without even having the costings. The hon. Gentleman should also be aware that we have a commitment to look carefully at the Swansea tidal lagoon. The Wales Office is working hard to ensure that that project has an opportunity to succeed, but it has to work for both the taxpayers and the people of south Wales.
I will take no lessons from the hon. Gentleman. He claims to be a democrat, but on several occasions in the debate he has called for another referendum. I think what we are seeing is an individual who perhaps did not fight as hard for his beliefs as he should have during the referendum and is now asking for a second chance. On the electrification of the south Wales main line, I will take no lessons from the Labour party, which did nothing to electrify the south Wales mainline, when the Government have just delivered improvements to the Severn tunnel and a new service from Swansea that started yesterday, and we will see fast trains getting to Cardiff and Swansea in due course. I expect the hon. Gentleman to welcome that. [Interruption.] The excitement of Opposition Members indicates to me that they are aware that some truths are being told.
Chris Elmore
I am not getting anywhere near as animated as the Minister suggests. Specifically on electrification, the chair of Network Rail yesterday said there is no money beyond 2019 to fund electrification to Swansea, which affects my constituency and affects the electrification of the valley lines. Will the Minister confirm whether the Swansea electrification will be completed by 2024, as previously committed to by the Welsh Secretary, the Transport Secretary and, I believe, the previous Prime Minister?
Albert Owen
I assure the Minister that none of us in objective 1 structural fund areas wear it as a badge of pride. He and I were on the same side in the 1980s and 1990s fighting for such funds; the then Conservative Government refused even to apply for them, which is why we are now in a dire situation. Will he commit, post-Brexit, to fight for the assisted areas scheme in Wales, to help the areas that need the greatest help?
Guto Bebb
The hon. Gentleman makes a constructive point, which I welcome. We are discussing EU funding in Wales post-2020, which will not happen because the people of Wales, along with the people of the rest of the UK, made a decision to leave the European Union.
It is imperative that we highlight the need to continually support Wales, which is clear from the Government’s commitments to Wales that have been highlighted: we are increasing revenue funding to the Welsh Government to £370 million; we have provided a funding floor to the Welsh Government, which has never been provided previously by the Labour party; over £900 million in new capital funding has been made available to Wales; there is a commitment of £500 million for the south Wales metro; we are waiting for proposals on the Swansea city deal; and we are in the process of encouraging a growth deal for north Wales. It is clear that the Government are delivering on our commitment to a regional policy that works for the whole of the UK.
I think the hon. Member for Ynys Môn (Albert Owen), who is making signs from a sedentary position that are unworthy of him, if I may say so, should be aware that the failure of EU funds in Wales to help our GDP position was not the fault of the EU funding. There is no denying that the way in which that funding has been utilised on three successive opportunities is a reflection on the Labour Government in Cardiff.
I am glad to say that the relationship between the Wales Office and the Welsh Government is extremely good, and I am glad to say that we have an understanding of the historical failures of EU funding streams. We are getting a constructive approach from the Welsh Government—unlike their colleagues in Westminster—who want to see a way forward in giving stability in the short term so that people who are committed to European projects know that those funds will be in place until 2020, which is precisely what we are offering.
Beyond 2020, it is important that we develop a strategy for the whole of the UK, which is exactly what we will do, working hand in hand with colleagues in the Welsh Government. Opposition Members should not take to their high horses and claim that they have no responsibility for the situation we face in Wales; they do, and they should acknowledge that. The people who vote for them highlighted their concerns in the referendum, which was a reflection, in my view, on the mismanagement of Wales by the Welsh Government for a very long time.
Kirsty Blackman
I have not been in Westminster Hall for quite a while, but I did not expect that Opposition Members would ask important, constructive questions and that the Minister would stand up and throw out political points. Will he commit to actually replying to the wide range of issues raised by Members on this side of the House and to providing a comprehensive response?
Guto Bebb
To be frank, I am astounded to be accused of making political points by a Member from the Scottish National party; there are always firsts in life. In relation to the crucial question that was asked, which has been misunderstood by Opposition Members and which is the point I want to make sure that people in Wales hear, there is a commitment to EU funding in Wales up until the point that we exit the European Union. That was the misunderstanding that was highlighted in the speech of the hon. Member for Aberavon who secured the debate, and is the point that was misunderstood by many Opposition Members, although it was properly understood by the hon. Member for Merthyr Tydfil and Rhymney. It is important to highlight that.
I will finish on agriculture. Concerns have been expressed about the future of the agricultural sector. As with general EU funding for Wales, there is a commitment to agricultural funding up to the point of exit from the European Union. The hon. Member for Ceredigion (Mr Williams), who represents a rural constituency, will be as aware as any other hon. Member that there are complexities involved in ensuring that we develop a support structure for the agricultural sector moving forward. That work is in hand and information will be provided in due course. The hon. Gentleman will understand that the complexity in the change we are facing is something that will take time to resolve, but I assure him that the Government are committed to ensure that that issue is also reflected in our work.
Stephen Kinnock
I thank all of my hon. Friends and other hon. Members for making powerful and passionate speeches. We have seen how high passions are running on these vital issues, which is because the future of our communities is at stake. We will defend the fact that we need funding and resourcing until our dying day. The Government are teetering on the brink of a gross betrayal of our communities. The Minister made the point that, although we have had all those years of funding from the EU, the west Wales and valleys, for example, still qualifies for it as it is below 75% of EU GDP. That is not something we would ever wish to celebrate, but can we really argue that EU funding has been the cause of that difficulty? Surely to address that issue we need to continue the funding and support?
There are three questions. First, what happens after 2020? Secondly, what about the projects signed after the autumn statement and what is that secret method? Thirdly, what about Welsh applications that are suffering because of the antagonistic behaviour of the UK Government towards the rest of the EU? Those are the three questions that I asked in my opening remarks and that my hon. Friends have continued to ask. Unfortunately, we have not received answers today, but I assure the Minister and his colleagues that we will continue to press for those answers.
Question put and agreed to.
Resolved,
That this House has considered the effect on funding for Wales of the UK leaving the EU.
Plumbers’ Pensions
(7 years, 6 months ago)
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Pete Wishart (Perth and North Perthshire) (SNP)
I beg to move,
That this House has considered the future of plumbers’ pensions.
It is a pleasure to serve under your chairmanship, Mr Bailey, for what will be a short but hopefully considered debate about the future of plumbers’ pensions. I want to bring the issue to the attention of the House to ensure that we acknowledge the complicated concerns that plumbers have right across the country. I plead with the Government and everybody involved that we all work together to try to resolve the difficult and technical issues that are having a quite grievous impact on plumbers not just in my constituency but throughout the whole of the United Kingdom.
I first became aware of the difficulties with plumbers’ pensions when I was invited to attend a meeting of Perthshire plumbers by a Conservative councillor colleague who was associated with the trade, so that I could listen to some of the concerns that were starting to emerge from plumbers right across Scotland. I was totally shocked when I heard the scale of the difficulties, the sheer numbers involved and the concerns and anxieties presented to me by plumbers that evening. Theirs are businesses that have been serving communities such as mine, the Minister’s and yours, Mr Bailey, for decades. They are family businesses, run by people we all know and are familiar with, that do a fantastic service on behalf of the people they look after.
Plumbers have been blissfully unaware of the ticking time bomb that has been waiting for them at the end of their careers and working lives, because they have been busy getting on with their work, developing their businesses and ensuring that our pipes are fixed and our washing machines are repaired. Now they find, at the end of their careers, that life savings and family homes are at risk. These people have done absolutely nothing wrong. They have conscientiously contributed to their pension pot and ensured they have done the right thing for all the people they have employed throughout the years.
This is a technical issue, so if Members will bear with me, I will try to explain and define it as simply as I can. It seems that many plumbers are caught up in a living nightmare of huge liabilities and potential debts upon retirement because of unintended consequences associated with section 75 of the Pensions Act 1995. I have had a good look at the Pensions Act and the provisions associated with section 75. It seems to me, on paper, a perfectly legitimate and reasonable inclusion in the Act, to ensure that pension scheme integrity is retained and pension benefits are protected. It is, though, that measure that has had unintended consequences for plumbers’ pension schemes.
The simple fact is that pension schemes for small, non-associated multi-employer businesses such as those designed by plumbers are a potential disaster, with huge consequences for plumbers simply wanting to retire or wind up their businesses. That is because under section 75, employers can become liable for what is known as a section 75 employer debt, which is triggered when plumbers seek to retire or wind up their business or if their business becomes insolvent. Section 75 employer debt is calculated on the departing employer’s share of the shortfall in the scheme on a buy-out basis, based on the hypothetical situation that the whole scheme is wound up and annuities are to be paid to all existing members.
That debt is also calculated on securing the scheme’s benefits with an insurance company, which will inevitably lead to a greater figure than if the scheme deficit was determined on the ongoing basis that would normally apply in such situations. The calculation produces a significantly higher scheme deficit than if it was calculated on an ongoing or technical provisions basis. It also ignores the fact that a scheme had no deficit on a technical provisions basis at its last actuarial valuation. That has led to some plumbers facing potential liabilities of millions of pounds.
The scheme that most Scottish plumbers buy into is run and administered by the Scottish and Northern Ireland Plumbing Employers Federation—SNIPEF. It is a fantastic scheme that plumbers have enjoyed, and it is actually more than fully funded. The last actuarial valuation was carried out in 2014, and the actuary found that the assets were enough to cover 101% of the scheme’s liability. That calculation was assumed on the ongoing basis, which assumes that the scheme would continue to pay out to members.
Probably the most invidious part of the calculation is the inclusion of what is called orphan liabilities—liabilities that cannot be identified from people who have already left the scheme. Those account for something like 60% of the liabilities included in the whole scheme, and a shortfall of £453 million. It is totally unfair and almost absurd that plumbers who have conscientiously paid into the scheme are exposed to such huge liabilities.
Alison Thewliss (Glasgow Central) (SNP)
Eric Cuthill, who runs Hugh Stirling Ltd in my constituency, has raised concerns about this issue. He has been paying in for his employees for 34 years, meaning that his employer debt liability could run into the tens of thousands. Does my hon. Friend agree that that kind of liability is quite unfair when small businesses such as my constituent’s have done so much to support their employees through occupational schemes?
Pete Wishart
Absolutely. These people are not city spivs. They have not malevolently tried to get out of paying their contributions. They are people like my hon. Friend’s constituent, who have conscientiously paid into schemes and never knew they would face a potential issue at the end of their working careers. It is so unfair that they are being exposed to issues such as this. These are the people who fix our central heating, get the washing machine working again, fix our broken pipes and repair the boiler.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Is it not strange that last year in the Budget, the Government found £6 billion to make cuts in inheritance tax and capital gains tax? This issue is actually about inheritance. I have a constituent who is unwilling or unable to pass on his business to his son, because of its liabilities. My hon. Friend has touched on a very simple solution, which is a change in the method of valuation of the pension liabilities.
Pete Wishart
I want to come up with a few suggestions for the Government about how they can resolve some of these real and difficult situations. My hon. Friend is right; it is incumbent upon the Government to work with us. This is not about having a go at the Government. We were all unaware of these unintended consequences. My plea today is that the Government do two things: first, acknowledge that there is a serious difficulty here, and secondly, work with us and the sector to resolve it.
I want to give a couple of examples that show how invidious the situation is for many of our constituents right across the country. One is a guy called Mike. Mike’s business was established in 1985 by his father. He joined the business a few years later as an apprentice plumber. Mike and his dad built a business like so many family plumber businesses that we are familiar with, which provided a professional service to customers and tried to ensure that its employees were looked after. Their business grew, and by 1990 they had a pension scheme for their employees and were paying sick pay and holiday pay through a scheme operated by SNIPEF. Over the years they have had many apprentices, and they currently employ 14 staff. Their employees have all been trained to the highest possible standard.
Over the past 26 years, Mike has paid something approaching £400,000 in employer pension contributions to the scheme. Mike’s father is now retired and seriously ill, and Mike cannot bear to share his worries about the business with him, despite the fact that they have worked so closely together over the years. Mike, like so many employers including the plumbers I met in my constituency, has only just been able fully to understand the magnitude and significance of section 75 and cannot believe its implications for responsible employers. Mike’s business is unincorporated and he now realises that by triggering the debt he will lose his home, his life savings and other assets that he has spent all his working life securing. In his words, he is faced with continuing to work and accruing a section 75 debt until he dies, because he fears the effect of triggering the debt.
I have loads of example, which I might send to the Minister for his reflection and views, but I will give one more. Kyle’s business—another family business—was started by his father in 1982. Until recently he was a 50% shareholder, but in 2015 he bought out his partner for more than £100,000 and, at 52, he now owns 100% of the business. He currently has one plumber in the scheme and has contributed £242,000 to it over the past 37 years. Kyle has a young family and is worried sick about his potential liability. He has made all but one of his employees redundant and is now working for another company. He would like to close his business completely and sell off his business property, but he knows that doing so would trigger a huge debt. His time is now split between running his own company and working as an employee for another.
Kyle has contacted SNIPEF and has been told that his liability is an incredible £1.7 million. He is worried beyond belief, he cannot sleep at night and he feels totally destroyed and depressed. He says he just wants to curl up in a ball and die. Plumbers in our constituencies have done nothing wrong, but they are left in that condition. I have given real-life examples that we must address. I have many other examples, and I will pass them on to the Minister.
I want the Government to do a couple of things. I know the matter is difficult and technical—I have looked at it and understand the Minister’s difficulty in resolving it, but resolve it he must. First, let us agree today that the issue is huge and acknowledge that something must be done to resolve it. The Minister could make a start by considering the problem of the debt being triggered by the departure of the last active scheme member working in a business. The Pension and Lifetime Savings Association has said that employers are artificially retaining a single active member so as not to trigger the scheme.
The Government could also look at how the debt is calculated. It is based on an insurance assessment of the scheme’s value, which will obviously inflate its value. Surely it could be calculated by technical measures looking at the way the scheme operates and the actual membership. The phantom liabilities, or orphan liabilities, must be dealt with, because they inflate the scheme’s value. No one knows where the people to whom those liabilities relate are, and they no longer participate in the scheme, yet the valuation is kept artificially high. To enable us to move forward, there should be exceptions for small and micro non-associated family businesses. The Minister has an army of civil servants available to try to resolve the matter, and a pensions Bill is going to be introduced, which will allow him to look at it. I hope very much that he will do that.
I want to allow my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) a few minutes to speak, as she has been looking at the matter and SNIPEF is based in her constituency, but I have a plea for the Minister. We know that something is going on, and he has acknowledged that—I have seen some of his helpful responses to hon. Members who have raised these concerns. Will he please work with us? These people have done absolutely nothing wrong. They are the cornerstone of our community and provide a service to it. My appeal is that MPs, the Government and the sector work together to resolve some of these issues.
Deidre Brock (Edinburgh North and Leith) (SNP)
It is a pleasure to serve under your chairship, Mr Bailey. I congratulate my hon. Friend the Member for Perth and North Perthshire (Pete Wishart) on securing this extremely important debate. I should say at the outset that both the plumbing employers federation, SNIPEF, and the pension scheme for plumbers are headquartered in my constituency, and that both have made representations to me.
The essence of this debate is the treatment of small companies: the person round the corner who runs a business out of the back of a van and employs one or two people. Carrying the orphan liabilities of the pension scheme is utterly debilitating for such small businesses. It can leave them with unsustainable debts and therefore make their businesses unsustainable too.
As my hon. Friend outlined, orphan liabilities include liabilities incurred by companies that left the scheme before the legislation changed, so current employers who get to the end of their time in the scheme can be picking up the tab for employers who ceased to be scheme members years ago. Those former employers may have retired and have no interest in the industry now, but their business life continues to have an impact on people still working in the industry, and especially on people who are approaching retirement. If the current circumstances continue, those people will face the loss of their savings, their houses and their retirement. Having spent their working life in hard physical labour, they now face spending their retirement in penury. That simply cannot be right, especially when the cause of it is their desire to do right by their employees by ensuring a decent retirement for them.
I will be interested to hear what the Minister says on another point that we should have regard to: the effect on younger plumbers who may be sole traders at the moment, but who are thinking about taking on another member of staff. If they are discouraged from providing a workplace pension by seeing what it has done to previous generations of plumbing employers, will that not run counter to the current efforts to have everyone signed up to a pension? We must find a way to amend the section 75 regulations—my hon. Friend gave a couple of good examples of how that might be possible—and give employers a break. Certainly the pension scheme must be sure that it can meet its liabilities, but that must not be at the cost of people’s savings and investments being destroyed through no fault of their own.
The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)
It is a huge pleasure to serve under your chairmanship, Mr Bailey. I thank and commend the hon. Member for Perth and North Perthshire (Pete Wishart) for securing this debate. I am delighted that I can pronounce his constituency name without assistance. I also thank other hon. Members for their contributions.
This is a serious matter and not one the Government take lightly. I am quite new to this job, but it seems to me that the real lobbying from constituents through their Members of Parliament to the Government is an example of how things should work instead of teams of lobbyists coming to formal meetings. I commend hon. Members who are representing their constituents. They are not facing a heartless Government who treat the matter as a minor detail. The examples the hon. Gentleman gave of Mike and Kyle are typical and I would be pleased if he would send me details because I have seen similar examples and the question is how we deal with them.
I have listened carefully to what has been said about this worrying situation faced by small employers. As the hon. Gentleman said, they are fantastic people who have been going about their business for many years. The Government have received and listened to representations asserting that there is a simple solution. There is not. The issue is complex and, unfortunately because of the way government works, we cannot react quickly because the unintended consequences that have happened can lead to others. I hope hon. Members will not think this is just Government waffle.
Before I came into the Government I thought things were much simpler than they are and that is part of our democratic system, but it does not mean that we treat them lightly. I am well aware of the difficulties facing small employers in these schemes when managing their own pension commitments in the current economic climate and their responsibility for other people in the scheme.
Alan Brown
I appreciate what the Minister is saying about the matter being complicated for technical reasons and that the Government are sympathetic, but we need to know about the timescale. Some of these plumbers have already triggered section 75, so there is debt coming at them at a rate of knots. Timescales and assurances are required.
Richard Harrington
The hon. Gentleman has made a very reasonable point, which I hope to come to. By the way, my door is open to hon. Members and, if they feel it necessary, their constituents or representatives. This is not something that we are avoiding. I had better make progress now if the hon. Member for Kilmarnock and Loudoun will excuse me.
We have been talking to a lot of stakeholders about aspects of the operation of employer debt for some time. I have read the files. The hon. Gentleman asked for urgency, and he is right, but the matter is in hand. Last year, there was a call for evidence, which is an official mechanism for seeking views, on the operation of the current regime, the effectiveness of the current easements and the impacts of proposed changes. My officials are reviewing the responses that we received and exploring what further flexibility we could introduce to help employers to manage precisely the kind of debt that has been referred to, but as many respondents to the call for evidence highlighted, there is no easy or quick solution. Quite a few different ones have been mentioned.
My original thought was, as I said, that the issue was much simpler and that a change to the system of valuation could deal with it—the hon. Member for Perth and North Perthshire made a point about that in his opening speech. However, all of this has consequences. The reason why these laws were in existence in the first place was to protect the very people who otherwise could have found themselves retiring with no pension because of all the surrounding circumstances, but we are not saying that this is something that will just go on for years and years; we hope to do a formal consultation very soon.
I should like to state again on the record that the current employer debt legislation is there for a very good reason: to protect members of occupational pension schemes and ensure that, when they retire, they receive the pension that they have been promised. We cannot let that aim disappear. We have to find a way to ensure that the injustices mentioned by hon. Members contributing to the debate are dealt with, but at the same time we must not do anything to threaten the pensions of the other people.
The Government have made a significant number of changes to the legislation in response to representations made by employers. A number of mechanisms are in place whereby only part of the debt, or no debt at all, may be payable. The hon. Member for Perth and North Perthshire may be aware that there are currently eight such mechanisms in legislation, which reflects the wide variety of circumstances that can arise with diverse scheme structures and the equally diverse range of employer types. For example, the existing scheme and flexible apportionment arrangements permit an employer debt attributable to the departing employer to be shared among the remaining employers or taken over by them, so reducing the debt to nil or a nominal amount. Those can be useful provisions in cases in which an employer ceases to employ members or undertakes corporate restructuring.
For small employers, which we are talking about today, that are participating in a large non-associated multi-employer scheme such as the plumbers scheme, a period-of-grace arrangement provides for the situation in which an employer temporarily ceases to employ active members but intends to do so again in the future. The regulations provide for a period of grace of up to 36 months when no debt triggers, giving time for new employees to be recruited.
The high proportion of orphan members has been mentioned. The scheme would like the liabilities that relate to such members, whose employers no longer participate in the scheme, to be passed elsewhere rather than be shared among remaining employers. The requirement to meet a share of orphan liabilities is common to all schemes and an important part of member protection. Although it would be very difficult to make a special case for a particular scheme, we are looking more widely at the challenges faced by defined-benefit schemes and want to encourage a wide debate about the challenges facing those schemes and what the solutions might be, including that one. We are well aware that some parts of the pension sector are stressed, but the situation is very mixed and the problems are far from universal. We are trying to build a better understanding of those, using the call for evidence and all the meetings with stakeholders, to form an opinion on what the Government intervention should be.
Alan Brown
I thank the Minister for giving way again. The topics that he is covering involve wider pension issues. Does that not underline yet again the fact that there should be an independent pensions regulator to help to address these matters?
Richard Harrington
That is a whole different argument, as the hon. Gentleman knows. I would be very happy if we could have another debate on that and I am happy to check with him informally about it because it is something that has been proposed, particularly by his party. Respectfully, however, as far as this issue is concerned, that is irrelevant. I am not saying that the argument has merits or does not, but as far as this issue is concerned, we do not have a standing commission. The Government are here to try to deal with the issue and it is our intention to do so. We will produce a Green Paper very soon. We have said that that will be in the winter, which will certainly be before the leaves reappear, even in Scotland. We will do it as quickly as we possibly can.
Pete Wishart
The Minister is very reassuring today, and I am grateful for the very generous responses given to the concerns. I get the sense that we are trying to resolve this, and the Green Paper is a great opportunity to do that. May I just make this plea to the Minister and seek clarity from him? Will there be retrospection to ensure that any plumber or anyone who is caught up in this situation before the change is enacted is not left out and left high and dry with the huge debts that may have accrued?
Richard Harrington
I cannot give the hon. Gentleman that undertaking, precisely because it is exactly the sort of thing that we will be discussing in the Green Paper, but I would like to state that there is not a plan to ensure that these people do not get what is very logical and right. I am very conscious of the fact that we are not dealing with some offshore hedge fund, but with people who did not really want to be in the pensions business and did not want the liability—they just wanted themselves or their employees to have an ordinary pension. There is a difference, and it is right that Members of Parliament represent their constituents in this way, although I will just say that as far as the pensions industry is concerned, some of the bodies, such as the Pensions and Lifetime Savings Association and others, are also very knowledgeable on these subjects.
My door is open. We want to get this right. I ask the hon. Member for Perth and North Perthshire and his colleagues, who have made such passionate and decent contributions, to be a little more patient, but I would be very happy to be summoned back here or to the Floor of the House if they feel progress is too slow.
Question put and agreed to.
British Indian Ocean Territory and the Chagos Islands
(7 years, 6 months ago)
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Andrew Rosindell (Romford) (Con)
I beg to move,
That this House has considered Government policy on the British Indian Ocean Territory and Chagos Islands.
It is a pleasure to serve under your chairmanship, Mr Betts. I rise to address the House as chairman of the Chagos Islands British Indian Ocean Territory all-party parliamentary group, a role I gladly accepted exactly one year ago when I took over from my predecessor, the right hon. Member for Islington North (Jeremy Corbyn), when he became Leader of Her Majesty’s Opposition. He founded the group back in 2008, having championed the cause of justice for the Chagossian people since his election to Parliament in 1983. Today I am proud to follow his good work at such a crucial point, with a decision being made on resettlement, so we understand, in the very near future.
I say to the Minister and to the whole House that, before the end of 2016, the United Kingdom has a duty to put right this great wrong. It is a wrong that has failed to be resolved by every UK Government for more than half a century. Now is the moment to end the years of shame and bring justice and dignity, which the Chagossian people so rightly deserve. Today, the Chagos BIOT all-party parliamentary group includes 47 Members representing all 10 political parties in Westminster, as well as House of Lords Cross Benchers. I speak on behalf of the broadest possible spectrum of politicians as well as many in the general public, media and international community, all of whom seek justice for the Chagossian people.
BIOT and Chagos islands policy has been debated in both Houses since the 1970s. The most recent debate was a year ago in this very Chamber, led by the hon. Member for Caithness, Sutherland and Easter Ross (Dr Monaghan), and there has been a steady flow of interventions and parliamentary questions from Members on both sides of the House. Fifty-one years after the creation of the British Indian Ocean Territory and 49 years since the expulsion of the Chagossians began, this must surely be one of the longest periods of exile in the history of the world.
Sir Henry Bellingham (North West Norfolk) (Con)
I am grateful to my hon. Friend for giving way, and congratulate him on this important debate. He mentioned that it is a pivotal time in this saga. He may well come to this point, but does he agree that the Anglo-US agreement gives a big opportunity to secure some additional rights for the Chagossians—for example, perhaps more Chagossians can be employed on the US air base at Diego Garcia?
Andrew Rosindell
I thank my hon. Friend for his intervention, which was absolutely to the point. As a former Minister for the British overseas territories, my hon. Friend knows only too well that those possibilities exist. As he rightly said, I will come to those points later, but I thank him for his support over many years for the Chagossian cause.
Sir Peter Bottomley (Worthing West) (Con)
The whole House will be grateful to my hon. Friend for raising this issue, and he has rightly pointed out the all-party support that there is. Given the enormous amount of money—millions of pounds—spent by the Government in resisting resettlement initiatives, does he agree that the only serious issues now are conservation and resettlement, where there does not seem to be a major problem, the Americans, where there does not seem to be a major problem, and economic existence? If some of the money spent on resisting their claims had been spent on resettlement, we would have had the pilot resettlement and would know how much further we can go.
Andrew Rosindell
My hon. Friend makes a superb point. He is completely right: had previous Governments addressed that long ago, we would not be in this very unfortunate position today. It only takes common sense to realise that this could have been resolved a long time ago, and that the money spent has been a huge waste. The appalling record that we have left in not dealing with this when it should have been dealt with has left many of us feeling very sad. That is why we hope that, today, we will get some indication of whether the Government will now resolve the matter once and for all.
Hope for a resolution came in November 2000 following the High Court judgment and the decision of the then Foreign Secretary, the late Robin Cook, who restored the right to return to the outer islands. That remained the case until that right was withdrawn in June 2004 by Order in Council—thus overturning the High Court and bypassing Parliament. Then, nearly four years ago, as Foreign Secretary, William Hague announced a review of the policy, the results of which are still awaited. The Government now state that they intend to make a decision on resettlement before the Christmas recess this year, so today I will focus on why the decision should be in favour of resettlement and on the consequences of not doing so.
The expulsion of the Chagossian people from their homeland remains a blot on the UK’s human rights record, and a breach of international human rights law and, many would argue, of Magna Carta itself, the very basis of our cherished liberties. As long as this situation prevails, I believe the United Kingdom remains guilty of double standards. How can Her Majesty’s Government argue that the people of the British overseas territories of Gibraltar or the Falkland Islands should have the right to remain living peacefully in their homelands and their right of self-determination, and be prepared to use the British armed forces to defend their rights, yet at the same time refuse to accept that the exact same principle applies to the Chagossian people of the British Indian Ocean Territory who, despite their forced removal from their island home, have remained loyal subjects of the Crown throughout and cherish the fact that they are British subjects?
If the UK refuses to allow the Chagossians the right of return to live in their homeland if they choose, will the Minister explain how that fits with Britain’s desire to be re-elected to the United Nations Human Rights Council next year? A decision to grant the right of return would surely demonstrate that, under the leadership of my right hon. Friend the Prime Minister, the United Kingdom is now taking its human rights responsibilities very seriously indeed.
Bob Stewart (Beckenham) (Con)
I am sorry, Mr Betts, that I was a few seconds late. I ask my hon. Friend whether the right to return should also imply a right to a job. I really am concerned that when the Chagossians get home, there will not be a decent economy for them to function in, apart, perhaps, from working for Americans. We should try to build up some kind of support society, as it were.
Andrew Rosindell
My hon. Friend makes a valid point. We are talking about a community that has not lived there for more than 50 years, and just giving the right of return on its own is not good enough. We will need to ensure that there are adequate facilities for the people to live in an appropriate way and to work. There are many options, including working for the Americans on the base on Diego Garcia and possibly working in conservation in the marine protected area—I will come to those matters later. He is absolutely right: we cannot just say, “Go home if you wish”, but do nothing to support the community. It was our British Government who forcibly removed them in the first place, so if they go back, we have a duty to ensure that they have adequate resources to have a sustainable community.
This is surely an appropriate time for our new Prime Minister to end this shameful episode once and for all, and to make a right decision after so many years of procrastination by her predecessors. The recent report by the UN Committee on the Elimination of Racial Discrimination urged the UK to
“hold full and meaningful consultations with the Chagossians...to facilitate their return to their islands and to provide them with an effective remedy, including compensation.”
To argue, as sadly Her Majesty’s Government seem to, that the convention does not apply because the British Indian Ocean Territory has no population when the UK expelled those people in the first place must rank as the height of cynicism. The UN Human Rights Committee, which monitors observance of the UN human rights covenants, has on two occasions urged Her Majesty’s Government to rectify the situation and report on the measures they have taken to comply with the international covenant on civil and political rights. The committee’s last report said:
“The State party should ensure that the Chagos islanders can exercise their right to return to their territory and should indicate what measures have been taken in this regard. It should consider compensation for the denial of this right over an extended period. It should also include the Territory in its next periodic report.”
In June, the UK Supreme Court concluded that, in the light of the 2014 KPMG feasibility study that found no obstacle to settlement, maintaining the ban on a Chagossian return may no longer be lawful. The judgment noted that if the Government failed to restore the rights of abode, it would be open to Chagossians to mount a new challenge by way of judicial review on the grounds of irrationality, unreasonableness or disproportionality. After 17 years of litigation, is it not high time that our Government stopped incurring litigation costs that must now amount to several million pounds? Although there is one outstanding case relating to the marine protected area, which the Supreme Court will hear next year, surely the Minister must agree that the resumption of further litigation cannot be in our national interest.
The extension on 30 December this year of the 1966 UK-US agreement for the use of the island of Diego Garcia for a further 20 years provides an ideal peg for agreeing to resettlement. It is the unanimous view of the all-party parliamentary group that the extension should be conditional on both parties agreeing to support and facilitate resettlement. If the UK does not make the extension conditional, there is a danger of losing important leverage with the United States. A decision in favour of resettlement might then be postponed for many years to come. We simply cannot allow that to happen.
Kate Hoey (Vauxhall) (Lab)
I am sorry for being a couple of minutes late to the debate. After the debate last year, I received a letter from one of my constituents who had watched, having previously known nothing about the situation. He said to me, “What is behind this? After all these years, what would make Her Majesty’s Government decide not to allow resettlement?” Can the hon. Gentleman tell us, from his long experience, what is behind the fact that the Government might not agree to what seems to be an absolutely just case for allowing the Chagossians to go back home?
Andrew Rosindell
As always, the hon. Lady makes an excellent point and gets to the heart of the issue. I only wish that I could give her an answer. Perhaps the Minister can. I certainly know that it is not down to the United States of America because, as a member of the Select Committee on Foreign Affairs, I have raised the matter every time I have been to Washington. When I ask why it is not possible for the Chagossian people to go back and why Washington blocks it, the Americans say, “We’re not blocking anything.”
I find it astonishing that the situation has gone on for 50 years—half a century—and that no one has got to the bottom of it. Of course there are financial implications. Any responsible Government cannot just agree to something without working out how things will be funded, but we have a moral responsibility. This has gone on for so long and it has been handled totally differently from all our other overseas territories, where self-determination has been paramount.
James Duddridge (Rochford and Southend East) (Con)
I hope to catch Mr Betts’ eye later and make a contribution, but I have visited the islands with the Americans. They were very clear when we were on the island and in subsequent discussions with me when I was a Minister and with the Government more generally that they unequivocally oppose resettlement. I am not sure exactly who my hon. Friend has spoken to but, as far as I am concerned, the Americans have always opposed resettlement.
Andrew Rosindell
I thank my hon. Friend, a former Minister, for his helpful intervention, but that is not what I have discovered when I have directly confronted the Americans. I would love to know which particular American said that they oppose resettlement because when I speak to senior level Americans in Washington, they are baffled and do not really understand.
The Leader of the Opposition has raised the matter with President Obama, and I understand that even he had no understanding of what objections there could possibly be. It is completely contrary to the attitude when Americans have air bases elsewhere, where the local community work on the bases. There is no sense and there is no moral justification.
Chris Bryant (Rhondda) (Lab)
We might as well have the full list of the former Ministers with responsibility for the matter. It may be that President Obama is not very well sighted on the precise situation of the Chagossians, but it is certainly true that every single American official that I had formal dealings with in relation to the British Indian Ocean Territory was absolutely clear that they wholeheartedly opposed any resettlement. That should not be the defining point for a British Government, but it is an important factor to bear in mind.
Andrew Rosindell
We will move on from this point because, even if it is correct—I do not believe it is—this line has been carried forward by every generation without anyone questioning its original purpose. The duty of Her Majesty’s Government is to defend the rights and freedoms of Her Majesty’s subjects. These people are Chagossians. They are British. They are of equal status to the people of the Falkland Islands or Gibraltar, and there is no way on this planet that we can justify treating them in an inferior way. Sadly, that is what successive Governments have done but, in this very year, we have a chance to rectify it. In my view, it has been clear for many years that there is no fundamental objection from the United States to resettlement, even if it is of the outer islands, rather than Diego Garcia.
Sir Peter Bottomley
My hon. Friend has come to an important point. I hope he will forgive me for not being able to stay for the rest of the debate. When I was a Minister, I put forward a good suggestion, and the officials said, “That’s against ministerial policy.” I asked the Secretary of State, “Is it against your policy?”, and he said, “No, it’s not against mine.” That is an example of the historical negative: one cannot do something in a new way because it has not been done that way before.
The Americans ought to be big enough to say which island they want protected and what will happen with all the rest. We are not talking about something as small as the Isle of Wight, close to the mainland. We are talking about the Indian Ocean Territory. There are plenty of opportunities. Any sensible American could say, “Yes, there’s no problem. Let’s argue about some margin, but there is no particular problem, and there is no particular reason for total exclusion.”
Andrew Rosindell
My hon. Friend is correct. We must fully accept the need to secure the base and its operations, but I believe that a resettlement, even on Diego Garcia, can be made compatible with that requirement, as is the case with other US bases around the world. Indeed, the US may find that a neighbouring community of Chagossians could provide a convenient source of workers and security personnel when they are trained for work on the base.
The all-party parliamentary group had expected the Government to make a decision on resettlement following the KPMG report in February last year. We were not convinced of the need for yet another consultation with Chagossians, this time on likely costs and the demand for resettlement. Although it is impossible to remove all uncertainty, the Foreign and Commonwealth Office consultation showed 98%—or 825 Chagossians—in favour of resettlement. In reality, fewer will take up that offer, but there will certainly be enough to make resettlement viable. Of course, all Chagossians rightly want the restoration of their basic right to visit their homeland at any time of their choosing.
Our all-party group believes that a pilot resettlement for 50 to 100 people on Diego Garcia is the best starting point, but we should consider the outer islands if the Americans have genuine security concerns. That would cost more and would not please some conservationists, although many think that conservation and resettlement can be compatible and are necessary for an effective marine protected area. Chagossians could fill a much-needed conservation protection role. Travel would then be via the Maldives. The APPG would not support any alternative options to resettlement unless they were the collective wish of the Chagossian groups in Mauritius, the Seychelles and here in the United Kingdom. We see the restoration of the right of return and abode, which was denied by Orders in Council in June 2004, as a basic requirement.
As the United States was complicit in the removal of the Chagossians from their homeland, it is perfectly reasonable to expect the US to contribute in kind and money to the resettlement. Also, we would expect the Department for International Development, which already finds it hard to spend its budget, to contribute as the British overseas territories are, I believe, supposed to have a first call on the aid budget. With further support from non-governmental organisations and private sector funding, the costs of resettlement need not be much of a burden on the UK taxpayer.
The Times published a letter from the APPG on 7 November 2015, which said:
“Discussions with the US, for the renewal next year of the 1966 agreement on the use of the Territory, provide a unique opportunity to resolve the future of the Chagossians and of the Chagos Islands. Fifty years on Britain should dispose of this albatross and rectify the injustices and human rights violations of the past.”
The continuing damage to the UK’s reputation for promoting human rights far outweighs the costs, liabilities and risks of trying out resettlement. There would be all-party support for resettlement, not least from the leader of the Labour party, who is now the honorary president of our APPG. There would be negative international repercussions if we did not restore the rights of return and abode to the Chagossian people. There would be damage to the UK’s reputation in Africa and wider afield, playing to those who accuse us of ongoing colonialism, with a knock-on effect for the Falkland Islands and Gibraltar and for the ongoing actions in the United Nations General Assembly, the United Nations Human Rights Council, the African Union and the Commonwealth.
Hopes having been raised more than four years ago, the Chagossian and Mauritian reactions will, inevitably, be greater than ever before. The national and international campaign is certain to continue, with ever more negative publicity for the United Kingdom Government. As a Government-supporting MP, that is something that I do not wish to see. It cannot be in the UK’s interests for that situation to continue for a further 20 years. Allowing resettlement will be welcomed by the United Nations, by Parliament, by the media and, I believe, by the vast majority of the British people.
There could be no better time than now to make this decision. As the all-party group said in its letter to The Times on 4 July 2016:
“It is time for a political decision which restores the rights of the Chagossians to return to Chagos and to put this shameful episode behind us.”
Several hon. Members rose—
Mr Clive Betts (in the Chair)
Order. The Minister asked at the beginning of the debate whether it would be appropriate for him to take off his jacket. In view of the temperature in the room, which seems to be trying to replicate the temperature of the area we are talking about, it is fine if anyone wants to follow suit and remove their jacket.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship again, Mr Betts. I congratulate the hon. Member for Romford (Andrew Rosindell), the chair of the all-party parliamentary group on the Chagos islands, on securing this timely debate.
As the hon. Gentleman said, we have had 50 years of denial, cover-up, obstruction and plotting against the rights of the Chagos islanders. This is a truly shameful episode that reflects a lot of what is wrong with UK foreign policy—it is truly a hangover of colonial thinking. Imagine if Vladimir Putin and his officials were discussing moving on some “Man Fridays” or “Tarzans” to clear room for a military base, and imagine if they then forcibly evicted those people, allowing them to take only a suitcase, before dumping them at docklands or holding them intermediately in police cells. We would be incandescent with rage, and we would say it is typical of such an authoritarian leader, yet that is what has happened in the UK’s name within the lifetime of many of us in this room.
Worse, as part of that operation, these people were used as bargaining chips for the Polaris nuclear missiles. Imagine the detachment and the uncaring attitude that saw the islanders cleared for a US naval base and an £11 million discount on the Polaris system. That trading of people’s homes, livelihoods and heritage has an equivalent value of £200 million today, which would more than pay for the return of the Chagos islanders.
Even since the true picture emerged after initial denials and cover-ups, the UK Government have spent approximately £3 million defending the indefensible in court. That sum was revealed to me yesterday in a written answer, and I am sure it will be a quantifiable lawyer cost that excludes civil servant and ministerial costs over a 17-year period. Will the Minister confirm that the true costs are greater than the £2.6 million mentioned in the written answer?
The costs become more pertinent when we consider that the Supreme Court judgment in June concluded that, in light of the KPMG study, maintaining the ban on Chagossians returning may no longer be lawful. It is also interesting that the Supreme Court castigated the Foreign and Commonwealth Office, noting that its conduct in withholding important documents has been “highly regrettable”. That sums up the denials and cover-ups over this 50-year period.
There have been plenty of other wrongs, too. One was the creation of the marine protected area, which has been deemed to breach international law and has been confirmed by WikiLeaks to be a ruse to prevent people from returning to the islands.
Chris Bryant
As the Minister who introduced the marine protected area, I should respond to that specific point, which has been raised several times in the press. When my hon. Friend the Member for Vauxhall (Kate Hoey) asked in the House of Commons whether the marine protected area was being advanced merely to prevent people from returning to the Chagos islands, I made it absolutely clear that that was not the case and that these were two completely separate matters. For that matter, the then Member for Crawley pointed out that the Chagossians in Crawley, who had been asked whether they were in favour of the zone, supported it by 90%. These two matters are completely separate.
Alan Brown
I thank the ex-Minister for his intervention. It is clearly difficult for me to argue against him on one level, but a view has been taken that the zone breaches international law, so I stand by the spirit of my comments.
The Immigration Act 2016 denies British citizenship to Chagos islanders’ descendants, which creates an absurd position whereby the UK is refusing to cede sovereignty over the islands yet is denying British citizenship to descendants. That is a complete contradiction.
Another wrong that I would like the Minister to address is that Diego Garcia has reputedly been used for rendition flights. Will the UK ever give us the true picture on that? As the hon. Member for Romford said, another ongoing deception appears to be that the original clearance and the subsequent non-return is a security matter, yet we know that yachts continue to visit the Chagos islands, and people live near US bases all over the world. A base in itself should not be a barrier to return, especially in the outer islands. I have listened to interventions from two ex-Ministers, who said that the Americans oppose return. It is therefore incumbent on the Minister to make the true position clear. How much consultation have the Government really had on the return of Chagos islanders? Is that factored into the potential renewal of the agreement, which is due at the end of this year? What is the true American attitude?
I believe that the exorbitant costs quoted in the KPMG report are also being used as a potential barrier to return to the islands. We must remember that, again, the UK benefited from an initial cash discount worth £200 million in today’s money and that, as the hon. Member for Romford said, the international development fund can easily accommodate those costs. I also remind the Minister that if the Government released some of the military spending that is double-counted as international aid, it could be put to much better use to support the return of the Chagos islanders. There is also the clear moral argument that the islanders should have the right to return, and that 98% of Chagossians surveyed want to return. I remind the Minister that time is running out for some of the original inhabitants who were cleared off 50 years ago.
This issue has been debated in both Houses for more than 50 years. As has been pointed out, members from all parties in the UK Parliament have joined the all-party group, which shows the will of the House of Commons. I also note that the Scottish National party passed a conference resolution calling for right of return for the Chagos islanders. Once again, I plead with the Government, after 50 years, to do the right thing.
Several hon. Members rose—
Mr Clive Betts (in the Chair)
Order. Three hon. Members want to speak. We have until half-past 4, so that gives Members no more than eight minutes each.
Henry Smith (Crawley) (Con)
It is a pleasure to serve once again under your chairmanship, Mr Betts. As a vice-chair of the all-party parliamentary group on the Chagos islands, I thank and congratulate my hon. Friend the Member for Romford (Andrew Rosindell) on securing this important debate.
About three decades ago, I remember reading a book that outlined, chapter by chapter, all the remaining British overseas territories, many and varied as they were. When I came to the chapter on the Chagos islands, I could barely believe what I was reading. As recently as the late 1960s, through Orders in Council, the then Wilson Administration forcibly evicted the people of the Chagos islands from their homeland, and they were dispersed, mainly to Mauritius, but also to the Seychelles and other parts of the world. It was a story that I would have expected to have read from 150 or 200 years ago, a colonial account, but it was just within my lifetime.
Little did I think that 20 years later, I would be personally involved in the situation. I was leader of West Sussex County Council, an area that contained Gatwick airport, the main route from Port Louis in Mauritius, when many Chagos islanders who had been exiled to that country started arriving at Gatwick, and we needed to house them and support those British citizens coming to the UK mainland. Since then, I have had the privilege of representing, in my constituency of Crawley, the largest Chagos islander community in the UK, and possibly one of the largest populations anywhere in the world. There are many more Chagos islanders in Crawley than there are, sadly, on the Chagos islands themselves; I do not think that any indigenous islanders are permitted on the islands.
Over the years, we have heard excuse after excuse for why Chagos islanders cannot have right of return to the British Indian Ocean Territory. We have heard arguments that the US objects on military grounds to the islanders’ presence, yet there are US air bases in this country and around the world where civilians live in close proximity, and indeed, as we have heard, work there. Why should it be any different for the British Indian Ocean Territory?
Sir Henry Bellingham
Is the hon. Gentleman aware of any examples from his constituency of Chagossians who have applied for jobs on Diego Garcia, or any opportunities that the Americans have publicised and made available? Is there any appetite among the Chagossians in his constituency and elsewhere to secure some of those jobs?
Henry Smith
I thank the former Minister for overseas territories for the attention that he has always given the issue. I can answer the last part first by saying that yes, the Chagos islanders would very much like to live and work in their homeland, but I am not aware of any employment opportunities being offered by the US authorities or the British authorities, who are also present on the island.
Other excuses have been used over the years, including environmental reasons such as sea level rise. There is some evidence to suggest that due to the uniqueness of the ocean topography there, in a rare exception, sea levels are falling slightly around the Chagos islands. During the devastating Indian ocean tsunami on Boxing day more than 10 years ago, the Chagos islands were not affected by the tsunami risk. Then, as we rehearsed a few moments ago, there are the arguments involving the marine protected area, but it does not extend right up to the shore—there is a limit, three miles out, I believe—and subsistence fishing is allowed, so it is not really a reason either.
Chris Bryant
I still want to nail down this particular issue. I have never thought that the marine protection zone played any role in whether people could or could not be resettled in the Chagos islands. The overwhelming view that I heard from Chagossians was that they wanted the marine protection zone to be put in place, for the protection of their own future livelihood.
Henry Smith
I think that the marine protection zone is a distraction, and another reason why there should not be a bar to resettlement.
As my hon. Friend the Member for Romford mentioned in his opening remarks, we are now coming up to a break clause in what is essentially an agreement between the United Kingdom and the United States about the future use of Diego Garcia, which occupies a strategic location. It was strategic during the cold war and the various Iraq and Afghanistan conflicts, and given the ongoing turmoil in the middle east, it remains so. It is in Washington’s interest to continue to have an air base there. We have only until the end of the year, just over two months, to sort out the issue, which is why this debate is so important. We are in a strong position to set conditions for the United States. If it wants to renew its military presence on Diego Garcia for a further 20 years, the US should help us facilitate a right of return for the Chagos islanders.
Bob Stewart
How many people are we talking about when we talk about those who wish to return to the Chagos archipelago? How many people are there already—I think it is about 3,000 maximum, and they are transitory—and how many people from there want to go back?
Henry Smith
I am grateful for the interest that my hon. Friend is showing in this debate. I have yet to meet a Chagos islander or somebody of Chagos descent who does not want the right of return. I think hundreds of people, or possibly a few thousand, want to return. However, the important thing is the principle of being allowed to return. As for the makeup of the current population on Diego Garcia, it is of course US and British military personnel, as well as a lot of Filipinos who work on the base in a service capacity.
Andrew Rosindell
Perhaps my hon. Friend can enlighten me because I am puzzled by this. The former Minister said the Americans absolutely object to Chagossians going there, but Filipinos go there. How can that be right? I do not understand what the problem is. As it is their homeland, the Chagossians are surely the right people to help on the airbase. This puzzles me.
Henry Smith
I am as perplexed as my hon. Friend. It is one of those appalling ironies that appear time and again when we debate this sorry matter in British history. I am a patriotic person, but on this issue the British Governments of many persuasions over many decades should be ashamed.
I do congratulate the Government on convening an independent commission on the right of return, which has concluded that return is possible. Mention has been made of the international aid budget. The costs of return have been estimated at well below £100 million, which is a small fraction of the overseas aid budget. As my hon. Friend the Member for Romford says, the British overseas territories have first call on that budget.
In conclusion, there is no reason why Chagos islanders should not have the right of return. We cannot turn back time and we cannot undo the past four and a half decades, but we can put things right now. Time is running out with regard to the leverage that we have with the United States and their lease renewal, so I therefore implore the British Government to do the honourable, decent, British thing and allow these British citizens to return to the British Indian Ocean Territory.
Several hon. Members rose—
Mr Clive Betts (in the Chair)
Order. Will hon. Members who wish to speak please stand? There are people now standing who had not stood before. If each Member takes six minutes, we will get everybody in.
James Duddridge (Rochford and Southend East) (Con)
I had the privilege of travelling to the islands last November during a two-year stint as a Minister for various parts of the world, including the overseas territories. My views are personal and not those of Her Majesty’s Government, but they are based on two years of looking into the matter. I certainly read every word of the KPMG report and every piece of consultation that came across my desk very fully, and I have spoken to all the key people involved.
We cannot undo an historic wrong, but we can mitigate it. In all candour I must say to hon. Members that I do not believe it is right to repopulate the islands as part of that mitigation, but there are things we can do. I want to explain why. I visited Diego Garcia, the military base that formed a part of the main island, and I visited the part of the island that does not have a military base and the outer islands. During my five-day visit I slept in a bed for 15 minutes; the rest of the time I spent travelling. The time that I got to actually do any visiting was quite small.
I mention this because it was a very expensive trip to get there. This is the line of route that everyone will have to take, as will every block of cement, every video recorder or TV, or—in many cases—the foodstuffs we will have to take. I travelled via Singapore and Bahrain on a military flight. I then travelled on a rough fishing vessel for nearly 20 hours to get to the outer islands, where I got on to a military RIB that was able to conduct assaults on islands. We were unable to get on to the island and we had to jump into the water to wade to the outer islands that had coconut palms right up to the beach and there was foliage hanging off the beach area into the water. I am not saying one could not populate the islands, but the concept that the outer islands are an idyllic possibility is for the birds. They were difficult, overgrown, humid areas that were accessible only where the Marines had gone in and chopped down foliage.
I asked to look at a memorial that was put there and I asked whether we could cut through to the cemetery, which was a depressing place with lots of small graves of children and babies. When the outer islands were depopulated, they were very difficult places to live. Had it not been for the British Government depopulating those islands, I am not sure how viable they would have been within five years, given the only revenue stream was coconut oil, which was already declining. It was difficult to support life even at that time.
James Duddridge
I will try to give way in a second if I can.
On the main island, the military element of the island is not just a runway. There is space for tens of thousands of troops to be potentially deployed on hard standing. In the conservation area going up into the old town, the houses are falling apart. There is no real infrastructure there at all. I met British and American military there. During the whole of my trip I was with Americans and Brits. I am unequivocal as to the American position on a political and diplomatic level.
Dr Matthew Offord (Hendon) (Con)
The former Minister is painting a wonderful picture for someone like me who would love to undertake such a journey. When he was a minster, a consultation was undertaken with members of the Chagossian community. The then Minister said on 12 April:
“I recognise that Chagossians have urged us to announce a decision soon, and we very much hope to do so.”—[Official Report, 12 April 2016; Vol. 608, c. 171.]
Can he give us his recollection of that time and when he thought a decision would be made by the Foreign Office?
James Duddridge
I think the hon. Gentleman is citing a debate in this room. It was certainly not my intention that things would be left quite so far. We have had a change of Prime Minister and the focus has been elsewhere, but at that time we were waiting for the full consultation to complete. I also met other hon. Members, so I extended the consultation. There is a broader process; it is not simply one Minister making a decision.
The islands have a great use for prepositioned ships. I went on board one of the five prepositioned ships. They have five or six storeys—like multi-storey car parks—with the smallest vehicles being almost the width of this room. Two Afghanistan and Iraq style wars could be conducted for a month using those ships. They are absolutely essential to American, British and global security. Many other nations use that area.
I also met the Filipinos who worked there. They lived in not great accommodation, in what I would describe as a prefabricated hut with rooms on either side and a shared bathroom in the middle. Those cost contractors about £1 million to put in place for accommodation for two, because of the costs of getting all the equipment on to the island. I do not think we can underestimate the costs.
I also visited a hospital that was used by the Americans, the Brits and the Filipinos. Provision was basic, so anyone giving birth or experiencing complications needed to be flown off the island, and it was very difficult to move around the island.
Andrew Rosindell
Is the former Minister suggesting that we go round the world and perhaps depopulate lots of other British overseas territories, such as Pitcairn, St Helena and Tristan da Cunha? Shall we just depopulate? Is that the right thing to do?
James Duddridge
Certainly, if Tristan da Cunha or Pitcairn were unpopulated, I think it would be wrong to repopulate those islands. If the Americans were not on the island I am not sure it would be the right thing to repopulate Diego Garcia. We cannot provide the level of services that people demand. In the United Kingdom we are already providing benefit to people in Diego Garcia as members of the British public. After I stopped being a Minister, I visited Mauritius, where I saw the community—[Interruption.]
I apologise for taking longer than I might have over my speech and for not taking more interventions. I am happy to attend the all-party group—and, indeed, to join the group, if I would be accepted as a dissenting member—and to discuss my visit and experiences with parliamentarians in a bit more detail.
Several hon. Members rose—
Mr Clive Betts (in the Chair)
Order. Members now have only four minutes for speeches, because we must start the winding-up speeches at half-past.
Jim Shannon (Strangford) (DUP)
I will make my comments very quick, but perhaps by saying less rather than speaking quickly.
I congratulate the hon. Member for Romford (Andrew Rosindell) on making, as always, a cohesive speech to set the scene. The issue is full of uncertainty. The three issues of resettlement, the marine protected area and sovereignty are weighty, and much thought needs to go into them. That is why it has taken so long to come to firm conclusions and why I join the all-party group in asking for the right decision to be made.
We all know the history of the islands and the reason why the British Government took the steps they did to secure defence for us and our allies. What was done was necessary at the time. The human aspect is that more than 1,000 islanders had to move from their home. My heart goes out to the people who had to settle elsewhere. We cannot ignore that, but we need to think about it in the context of that time in our history, when defence was at a premium. We are not at the same point, internationally, as we were. Perhaps we no longer need the use of the islands, but that decision cannot be taken without regard to the pressures put on us by the UN tribunal judgment. We cannot ignore it. Clearly, decisions were made by Britain as a colonial power and we still have the right to make those decisions.
I know that we do not have—indeed, we may not even want—the reputation of a colonial power, but we do have responsibilities that must be addressed, such as the legacy of colonial nations. Despite the legal steps that Mauritius has taken recently, it should be hoped that we can work together to determine what is best for all involved. We are the closest of allies with another former colony, although after Brexit I do not know if that is still the case, considering President Obama’s “back of the queue” remarks. It is to be hoped that relations with Mauritius can be rebuilt. I am certainly of the belief that those who were resettled must have the option to return home, and must be aided in doing so, should it be decided that the issues have progressed enough for our security in the area to be solid without having the territory.
We asked the islanders to leave, and we must be of a mind to help them to go back if that is what is needed. However, we should not bear the responsibility alone. Our American allies were instrumental in the decision-making process in the 1960s and they should now facilitate the resettlement of islanders as a matter of urgency. The American military base in Diego Garcia plays a large part in considerations, and there are certainly responsibilities on the part of the Americans. Will the Minister explain what discussions have taken place with our allies to see what role they will play in resettlement in the near future?
The marine protected area was legally established—that has been a big issue in the debate—and is a further decision for the Government. I would again urge caution. The fact is that we had the right to take the steps that were taken. Now is the time to reconsider what is needed and how we can help facilitate the return of those who want it. However, the issue is not one for emotions alone. It requires in-depth thought, and consideration of our global defence and security strategy. We cannot ignore the human aspect, but we must understand that there is a larger picture to be considered.
Bob Stewart (Beckenham) (Con)
I will be quick, Mr Betts. Let us be quite clear. Diego Garcia is the largest US base outside continental America. Its strategic position is vital for the western world. It is clear that it has got to stay, because, in these troubled times, we should not give up such a positioning. Diego Garcia has a huge air base. It also has facilities for military ships and, clearly, it is a forward mounting base for a large number of troops—allied troops, not just Americans—if necessary.
We all understand the importance of the base’s strategic position in the middle of the Indian ocean. We understand why it was built there. We also probably understand why Chagossians were evicted between 1967 and 1973. I understand it, but it is wrong. It was wrong then and it is wrong now. A solution is required to this problem and compromise is necessary. The British Government—our Government—say they want to try to get people back. That is great, but it is clear that the base is going to have to stay there. It must stay there. It is too good a strategic military facility for us to give it up lightly. Well, I do not think we are going to give it up. It is not ours. It is America’s, but actually we own the territory—or do we? Actually the Chagossians own it. I am very much in favour of getting Chagossians back to their homeland.
My hon. Friend the Member for Romford (Andrew Rosindell) has suggested a way for that to happen. If there are about 3,000 Filipino people working there, and about 3,000 Chagossians want to return, how about slowly changing the mix, so that Chagossians can go back and have a job there if they wish? It is mad that Chagossians cannot work there but Filipinos can.
Sir Henry Bellingham (North West Norfolk) (Con)
I will be very brief. I just wanted to comment on the remarks of my hon. Friend the Member for Beckenham (Bob Stewart). I do not think there is any question of the base being given up in our lifetimes because it is obviously of key strategic importance. We should follow the advice of my hon. Friend the Member for Romford (Andrew Rosindell), whose speech introducing the debate revealed great wisdom and huge experience on everything to do with the overseas territories. We need to draw a distinction between the different arguments.
The argument about resettlement is incredibly important. We have had a report and heard many speeches. I personally feel that there is a powerful case. I take on board entirely some of the obvious practical objections and difficulties. My hon. Friend the Member for Rochford and Southend East (James Duddridge), who was my successor as Minister with responsibility for Africa and the overseas territories, went to the British Indian Ocean Territory and the Chagos islands—I was removed from office before I had the chance to do so, unfortunately. The House appreciated his words of wisdom this afternoon. There are many practical difficulties, but with the help of DFID and with a great deal of imagination and innovation, the arguments are quite strong.
We need to separate that issue from jobs on the base. We need to be clear about the fact that the distances involved are huge. Diego Garcia is many miles from the outer islands. We are talking, therefore, on the one hand, about possible resettlement not on Diego Garcia as such but in the old villages and towns on the outer islands, and on the other about jobs on the base. We need to draw a distinction. There are a lot of jobs, provided mainly by the United States Air Force and the American military, but also by the smaller UK team there. It is a great pity that the old town is in a dreadful state, and that American corporate social responsibility has not put money into building up the old town and repairing some of the buildings and putting some of the Filipinos and other workers into them rather than Nissen huts or containers.
The logic behind my questioning of my hon. Friend the Member for Romford and my hon. Friend the Member for Crawley (Henry Smith) about what effort the Americans are making to employ more Chagossians in Diego Garcia is that there are many jobs available. I would like there to be some sort of outreach programme in Mauritius and the Seychelles, and in Crawley, to find out what the demand would be. That could be an important next step—it is absolutely doable and achievable now—and a key part in the negotiations about renewal of the agreement. There is a great opportunity to do that but, as my hon. Friend the Member for Romford pointed out, time is running out. The Foreign Office really needs to put a great deal of effort into seeing whether some form of scheme can be put in place immediately. I hope the Minister takes that on board.
Patrick Grady (Glasgow North) (SNP)
It is a pleasure to serve under your chairmanship, Mr Betts, and to speak on this matter in Westminster Hall for the second time. The first was exactly a year ago, in the debate secured by my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Dr Monaghan), who sends his apologies that he cannot be here today. I congratulate the hon. Member for Romford (Andrew Rosindell) on securing the debate, on giving us a comprehensive introduction to the current situation and on replacing the right hon. Member for Islington North (Jeremy Corbyn)—I am sure some Labour Back Benchers wish that that was as easy in all circumstances as he appears to have found it.
This has been a comprehensive debate. To leave plenty of time for the Minister to respond, I will dwell briefly on just a few points: resettlement of the Chagos islanders as a human rights issue; the weakness of the various arguments that we have heard against resettlement; and a couple of broader questions about the sovereignty of the islands and their use as a US base.
As my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) said, the Scottish National party clearly stands for the principle of self-determination. It is great to hear so many Conservative Members standing up for that principle today, and I hope they will want to endorse it again if the Scottish Parliament considers another referendum Bill. We have stood in solidarity with the Chagossians for a long time; indeed, in 2004 my right hon. Friend the Member for Gordon (Alex Salmond) said in this Chamber:
“The more we discover about the matter, the more disgraceful, underhand and thoroughly disreputable the long-term treatment of those few thousand people is shown to have been.”—[Official Report, 7 July 2004; Vol. 423, c. 277WH.]
That disgraceful treatment continues to this day, at the cost of the United Kingdom’s reputation as a defender of fundamental human rights. We remain guilty of double standards and hypocrisy; as was said earlier, if the eviction took place today, it would be considered a breach of fundamental human rights under international law.
In 2009, the right hon. Member for Broadland (Mr Simpson), who was then a shadow Foreign Office Minister, said in this Chamber:
“There is no doubt that there is a moral imperative.”
He mentioned
“what I suspect is the all-party view that the rights of the Chagossian people should be recognised, and that there should at the very least be a timetable for the return of those people at least to the outer islands”—[Official Report, 23 April 2009; Vol. 491, c. 176WH.]
That was the Conservative position in 2009; it would be interesting to hear whether it still is, now that the Conservative party is in actually a position to do something about it.
We have heard a number of objections about the feasibility of resettlement, not least from the former Minister, the hon. Member for Rochford and Southend East (James Duddridge). I say to him with the greatest respect that there may well be logistical challenges to resettling people on the islands, but—as the hon. Member for Crawley (Henry Smith) said—this is about their right to return almost as much as it is about whether they do return. As for logistics, there is a US naval base, which I presume has electricity and running water, on the island. If it is possible for the United States Government to build such a sophisticated base of operations in such a remote location, surely it is possible for people to choose to make their own lives on the island in the way that their ancestors did for generations.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I apologise for the fact that I could not be here for the start of the debate. Hon. Members will recall my position on the matter as the shadow Foreign Office Minister in the last debate: I am a strong supporter of righting this historical injustice. With respect to logistics, we have been able to move ahead with building an airport in St Helena, and we have done many other things in the overseas territories that have cost an awful lot and have been logistically difficult.
Patrick Grady
Absolutely. I do not think any of this is beyond the wit of man. The point has been made several times that if the Government diverted some of the money they spend on litigating the issue towards helping the people they forcibly removed to resettle in their own homes in their ancestral territory, the infrastructure issues could be overcome.
I am excited to hear what the Minister has to say about the US position, given the differing views we have heard on what that might be, but perhaps we should flip our perspective. Perhaps we should think about not whether resettlement is a barrier to US activity, but whether US activity has to get in the way of resettlement. Those things ought to be able to co-exist, although perhaps there are questions about the US use of the area as well. The former Assistant Secretary of Defence under Ronald Reagan, Lawrence Korb, has said that there is “no good…reason” to oppose the Chagossians’ return. As my hon. Friend the Member for Kilmarnock and Loudoun said, yachtists seem to visit the island pretty frequently, so there does not seem to be much of a security concern there.
Nor should conservation and the right to return be mutually exclusive. I imagine that people who want to live on remote islands want to live in harmony with nature, ensure that their lifestyles are as sustainable as possible and respect the sustainability of the environment, even if the marine protected area is on questionable legal ground—or in questionable waters.
There are general questions about the sovereignty of the islands. It is not just a question of the right to return. We are in a critical phase, with the roll-over of the 1966 agreement about to take place. I would be interested to hear whether the Minister believes that part 2 of the Constitutional Reform and Governance Act 2010 applies. That Act places treaty ratification into statute and requires parliamentary scrutiny of it. We may be faced with the roll-over of a treaty, but surely the particular circumstances of the 20-year extension mean that it should be subject to the affirmative procedure in Parliament, and surely the Government have nothing to hide or to be concerned about. If the Minister cannot answer that question today, I hope he will do so in the not-too-distant future. In any event, not only Parliament but the Government of Mauritius must be included in any future dialogue.
Finally, there are issues relating to the use of the naval base, as my hon. Friend the Member for Kilmarnock and Loudoun alluded to. It is important that we get assurances that the British Indian Ocean Territory has not been used for the illegal rendition or torture of detainees during the so-called war on terror. If it has, people should be brought to justice. We call on the Government to recognise that Diego Garcia is part of the internationally recognised African nuclear weapon-free zone and to give assurances that no nuclear weapons or other weapons of mass destruction have ever been placed there. They must also give assurances that military installations on Diego Garcia have not been used to store cluster bombs, in violation of their treaty obligations under the convention on cluster munitions.
The SNP stands fully behind the right of the Chagos islanders to return home. As recently as 16 September, we heard that the Government want to keep the matter under review, but we need an answer at long last. As several hon. Members have noted, it is not clear what makes the Chagos situation so unique. Why are the Government so insistent on standing in the way of the right of return? Is it cost, is it security, or do they simply not want to admit that successive Governments have got it wrong? Britannia has not ruled the waves for some considerable time; the sooner the UK Government realise that, the better.
Catherine West (Hornsey and Wood Green) (Lab)
It is an honour to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Romford (Andrew Rosindell) on securing this important debate and on the work of his all-party group, which has relentlessly promoted the issue in Parliament.
The Chagos islands attract cross-party consensus on the right thing to do. Today is the day to break through the institutional inertia, the sense of paralysis and the 17 years of expensive litigation that has amounted to millions of pounds of public funds wasted. This could all have been sorted if it had been looked at from the beginning as a fundamental human rights issue.
Many Members have made excellent contributions today. The hon. Member for Crawley (Henry Smith) described the appalling irony that Filipinos who work on the base in Diego Garcia are permitted to live there, but indigenous islanders cannot—a very important point. Mr Bryant, the Member for Rhondda, observed that while the US position should definitely be taken into consideration, it should not be the defining principle for this Parliament. Mr Duddridge described—
Mr Clive Betts (in the Chair)
Order. It is not appropriate to address hon. Members by name; please refer to them by constituency.
Catherine West
Thank you for that timely reminder, Chair—Mr Betts. [Laughter.]
The hon. Member for Rochford and Southend East (James Duddridge) described vividly his journey to the British Indian Ocean Territory islands. He also described some of the difficulties of any resettlement package, which are of course understandable after 50 years. However, there remains a question simply of justice. It is some 51 years since the creation of the British Indian Ocean Territory and 49 years since the expulsions began—that must be one of the longest exiles in world history.
Nearly four years ago, on 20 December 2012, the then Foreign Secretary Lord Hague announced a review of policy, and in 2013 he commissioned the much mentioned KPMG study into the feasibility of a return for the islanders. That study was concluded in 2014 and published in February 2015. It found no insuperable obstacles to resettlement. In a further consultation with the Chagossians, the Foreign and Commonwealth Office found that 98% of the 825 who responded were in favour of resettlement.
With the extension of the 1966 UK-US agreement on the use of the British Indian Ocean Territory due by 30 December this year, now is the ideal time to allow Chagossians who want to do so to return to their homeland and rebuild their lives. In any case, all Chagossians want to be able to visit their islands at will. The all-party group believes that the extension should be conditional on both parties agreeing to support and facilitate resettlement, and that that should be reflected in a new side agreement.
It has been clear for some time from various discussions, including those between my right hon. Friend the Member for Islington North (Jeremy Corbyn) and President Obama last autumn, that although there are concerns that need to be addressed, the US has no strong objections to resettlement; otherwise, I am sure they would have come up at that meeting. We need to look carefully at the conservation issues, but we know that there are several miles around the islands in which fishing can be undertaken as a subsistence occupation.
The cost of resettlement could be reduced by simple infrastructure and the supply of goods and services from elsewhere in the region, such as Mauritius. We should look to the US, the European development fund and the DFID budget for that—after all, the Secretary of State for International Development said this morning that she was looking for some new projects to fund. I am sure that there are British companies that would be interested in infrastructure projects on the islands. Resettlement need not be much of a burden on the taxpayer, particularly compared with how much has so far been spent on expensive legal fees.
The continuing damage to the UK’s reputation for the promotion of human rights far outweighs the cost, liabilities and risks of trying out a resettlement. The UK’s reputation is tarnished by the ongoing violation of fundamental human rights. It is clear that this is not a one-party issue; it is cross-party, and we agree about it. As the hon. Member for Beckenham (Bob Stewart) said, it was wrong then and it is wrong now.
In June, the Supreme Court concluded that in the light of the KPMG study, maintaining the ban on the Chagossians’ return may no longer be lawful. The court noted that if the Government failed to restore the right of abode, it would be open to Chagossians to mount a new challenge by way of judicial review on grounds of irrationality, unreasonableness and disproportionality. The court castigated the FCO, noting that, in withholding important documents, its conduct had been “highly regrettable”. Surely, after all these years of expensive litigation, costing several million pounds, this should be the day on which we proclaim that we will do the right thing. If we do not rectify the situation, it will be for ever on our consciences. I note the presence of several former Ministers; I think that is because this issue must be resolved.
In 23 April 2009 the right hon. Member for Broadland (Mr Simpson), then a shadow Foreign Office Minister, said in this Chamber on behalf of the Conservatives something that the hon. Member for Glasgow North (Patrick Grady) quoted earlier. It is worth repeating:
“There is no doubt that there is a moral imperative…I suspect…the all-party view”
is
“that the rights of the Chagossian people should be recognised, and that there should at the very least be a timetable for the return of those people at least to the outer islands…The Foreign Office should recognise that the House of Commons feels very strongly on that.”—[Official Report, 23 April 2009; Vol. 491, c. 176WH.]
More than seven years later, can we now expect the Government to fulfil that commitment?
Mr Clive Betts (in the Chair)
If the Minister could leave a couple of minutes at the end for the mover of the motion to wind up the debate, that would be appreciated.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood)
It is a pleasure and an honour to respond to this very important debate, in which Members have eloquently summed up the wrongs and challenges facing the Chagossians, as well as the length of time it has taken for us to work towards a solution. Like the shadow Minister, the hon. Member for Hornsey and Wood Green (Catherine West), I am conscious that there are present many previous Ministers who covered the portfolio. At one point I thought I could just stand back and allow them to answer all the questions, such is their detailed knowledge, which I shall draw on as I develop my points.
I begin as others have by congratulating my hon. Friend the Member for Romford (Andrew Rosindell) not only on securing the debate and raising the issues, but on his work throughout the Commonwealth. He gives a sterling effort in ensuring that the voices from the British overseas territories are heard and that these matters are debated. The whole House pays tribute to him for that. I also congratulate him on his election to chair of the all-party group, which is important in promoting these debates and in ensuring that these matters are considered.
I apologise on behalf of my right hon. Friend the Minister for Europe and the Americas. Normally he would respond to the debate, but is currently travelling. We have been keeping notes on all the questions that were raised, and I will ensure that they are in his in-tray when he returns from his overseas visit.
I shall be up-front straightaway and, like successive Governments before this one, make it clear that we need to express our sincere regret about the manner in which the Chagossians were removed from the British Indian Ocean Territory in the late 1960s and early 1970s. We can all agree that what happened was wrong. That has been summed up by many of the voices we have heard during the debate, but most powerfully by my hon. Friend the Member for Crawley (Henry Smith), who made the case very clearly indeed. What happened in the ’60s and ’70s was unforgivable.
We are aware of the Chagossian community’s strong attachment to the islands and their long-stated wish to resettle. It is the job of the Government to examine the issue dispassionately. We must consider the interests of the Chagossian community as well as the wider UK interests, including our security and the interest of UK taxpayers, and we must be honest and realistic about the lifestyle that a resettled population might expect. That is why, as we have heard, in 2012 the Government launched a review of the resettlement policy to understand the demand, viability and cost. We have taken great care over that work, commissioning an independent feasibility study, consulting widely, including with our US allies, and visiting and listening to all those with expertise and interests.
I must be clear that, as has already been articulated, establishing a small and remote community on the territory would not be straightforward. The independent feasibility study published in 2015 found that resettlement could be viable, but also highlighted significant practical challenges, including the difficulty of establishing modern public services, healthcare, education and economic opportunities, particularly job prospects. The challenge that we face, even if we want to pursue this ambition, was best and vividly described by the former Minister, my hon. Friend the Member for Rochford and Southend East (James Duddridge)—he described the challenges we face on some of the outer islands that might be considered for resettlement. It would be a very difficult task indeed.
When the House last debated this issue almost a year ago, a 12-week public consultation had just concluded. The results of that consultation were published in January 2016. It found that, although resettlement was a key issue for the 832 Chagossians who responded, there were more nuanced views about the resettlement scenarios. Only a quarter of those who were in favour of resettlement were also content with the realistic scenarios of how it might work in practice. Our consultations highlighted that further work was needed to refine those policy options—what actually works in practice? That work is under way and when it is complete, the final policy decision will be taken and announced to Parliament and the public. As yet, there is no fixed date for that announcement, but I assure hon. Members that we expect it to be before the end of this year.
Alan Brown
Will the Minister elaborate more fully on what exactly that additional work, which he says is ongoing, is in terms of policy, lifestyle and presumably the viability of a settlement?
Mr Ellwood
As I touched on, the work is on some of the economic opportunities that exist, lifestyles and the ability to provide the necessary support. We need further work to ensure that the proposal is viable. I think that it was mentioned in one of the earlier contributions that it is simply not enough just to find a solution to return those who want to go back; there needs to be a viable and sustainable community. The options need to be examined in more detail.
Dr Offord
I am very grateful to the Minister for setting out a time frame—he said he hoped to make an announcement by the end of the year. He will correct me if I am wrong, but did I understand that he just said that a quarter of the respondents to the consultation said that they did not want to go back? I ask because the House of Commons Library is under the impression that 89% of the 895 Chagossian respondents supported resettlement.
Mr Ellwood
If I may, I will get a more detailed report on the analysis that came back from the consultation and write to my hon. Friend so that he is fully appraised of the response to the consultation. However, the bottom line is that the details about how a resettlement would work in practice need to be pursued. We hope to make sure that that happens, but I will articulate to the Minister responsible that we want an answer and a report back to Parliament within the year.
Many hon. Members have stressed the strategic importance of the military location. Anybody with a military background is soon made aware of the significance of Diego Garcia and its role internationally for our allies, for NATO, for the United States and for Britain. The joint UK and US military facility on Diego Garcia contributes significantly towards global security—I cannot stress it any more than that. It is central to our operations, and to those of the United States and our international partners, to counter threats in the region, including terrorism and piracy. The continuing operation of the base is a key factor that we must take into account in our considerations.
One hon. Member asked about dual accounting in official development assistance and defence spending. I will make it very clear that there are occasions when military activity comes under the Ministry of Defence budget and qualifies for ODA activity. I complained about that when I visited Afghanistan and found that Britain was doing work in military training, mine clearance and so on, which is “ODA-able” but we were not charging for it. We were doing things that did not go towards that figure. It is very important to put into context that this is not a competition as such. Those who make the ODA rules—it is not us—recognise that certain minimal activities to do with stabilisation, reconstruction and peacekeeping can be paid for by military personnel. There are not many activities, but there are some.
Bob Stewart
On that very point, would it be possible to use the Royal Air Force’s Voyager aircraft—the big ones—to take Chagossians back for a visit, and then bring them out again?
Mr Ellwood
That is another point I will pass on to my right hon. Friend the Minister for Europe and the Americas to consider when he gets back.
The British Indian Ocean Territory marine protected area in the north, which the UK declared in 2010, is highly valued by scientists from many countries. They consider it to be a global reference site for marine conservation in an ocean that is heavily overfished. We are aware that some concerns have been raised about the motives for the creation of the MPA, but those concerns are unfounded and I was pleased that previous Ministers were able to clarify exactly how the MPA came about.
The UN convention on the law of the sea arbitral tribunal found no evidence of improper purpose in the creation of the MPA. This issue has been scrutinised by UK courts, which have consistently found, including as recently as May 2014, that there is no substance whatever to the allegations of improper use. The arbitral tribunal found that we should have consulted Mauritius about the establishment of the MPA, so as to give due regard to its rights, and we have started a series of bilateral meetings to implement the tribunal award. The most recent of those meetings took place in August.
I reassure the House that the Government are very aware of the views and concerns of the Chagossian people, and of all those who support them. Those views have been fully and passionately represented by hon. Members today. We want to make the right decision, based on all relevant factors, including what we have heard during the course of our consultations with Chagossians living here in the UK, and with Chagossians in Mauritius and the Seychelles. We have to balance the Chagossians’ views against the practical difficulties that our feasibility study has highlighted, the very real concerns about costs, and our need to operate a military facility that is vital to our security.
I thank my hon. Friend the Member for Romford for securing this important debate, and all hon. Members for their contributions. The Minister for the Commonwealth and the United Nations, Baroness Anelay of St Johns, is looking forward to meeting the all-party group in due course.
Andrew Rosindell
I thank hon. Members from all political parties who have contributed to this important debate today. However, we still do not know what will happen. We are still waiting anxiously to find out what Her Majesty’s Government’s decision will be. It is not only those of us here in Westminster Hall today who are waiting but the people of the Chagos islands, whose spirit has been broken these last 50 years.
We in this House have a duty, first and foremost, to stand up for the interests of the British people, and the Chagossians are British. They are as entitled to their human rights, their dignity and their right of self-determination just as much as we are in this Chamber and just as much as our constituents are. We defend our overseas territories and their rights to remain British and to self-determination, and yet we single out one of them and say, “Your rights are not at the same level as the others.” There is no moral justification for that.
I say to the Minister that my right hon. Friend the Member for Broadland (Mr Simpson) made it clear when he was shadow Foreign Minister that this issue had to be addressed when we were in government. Why after six years have we failed to do so?
I do not buy for one moment the idea that the islands cannot be inhabited. That is propaganda. Other remote islands around the world—the Maldives are not that far away from the Chagos islands—are fantastic tourist destinations. If they can be inhabited and used, whether for marine conservation or as a military base—we defend the importance of the military base on Diego Garcia—there is absolutely no reason why we cannot come up with a plan to put right this situation, which has gone on for far too long.
I know the Minister is a defender of the rights of British subjects to self-determination in the rest of the overseas territories. I ask him please to take this back to the Foreign Secretary and the Prime Minister. Please say to them that this is the last chance—the very last chance—that we are going to get, prior to the potential renewal of the agreement between the US and the UK, finally to resolve this injustice and to give the Chagossian people the same rights that we would always defend for our own constituents.
The British way is to stand up for human rights and self-determination, and to give people the right to determine their own destiny. As my hon. Friend the Member for Crawley (Henry Smith) said, let us do the British thing and give the people of the Chagos islands the right to continue to be British in their own homeland.
Question put and agreed to.
Resolved,
That this House has considered Government policy on the British Indian Ocean Territory and Chagos islands.
Child Sexual Exploitation: Telford
(7 years, 6 months ago)
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Lucy Allan (Telford) (Con)
I beg to move,
That this House has considered child sexual exploitation in Telford.
It is a great pleasure to serve under your chairmanship for the first time, Mr Hollobone. I take this opportunity to congratulate the Minister on her appointment. I know that she will be a great champion of the vulnerable.
Child sexual exploitation is a sensitive and difficult subject, and I am grateful for the opportunity to speak for the victims in my constituency. Telford has the highest recorded rate of child sex offences in the country, a rate that has continued to increase. House of Commons Library documentation shows that child sex offences in Telford are now at a rate of 18.4 per 10,000 heads of population. That rate is greater than in higher-profile places such as Rotherham, Rochdale and Middlesbrough, and compares with a national average of 7.9 cases per 10,000 heads of population. We know that the crime has gone on in Telford for more than 20 years and is still going on. I raise the matter today so that we can better understand the causes and break the silence that surrounds the issue, giving victims the chance to be heard. We need to find out what went wrong and what could have been done to prevent the exploitation, and ensure that we learn the lessons of the past.
In recent weeks, I have met with bright, articulate, young women who have come to tell me about their experiences, in some cases stretching back over many years. What has come across powerfully for me is that victims want to be reassured that they will not be brushed aside. They want recognition, and they want acceptance that something went wrong. We all want to have confidence in the authorities in Telford, which are tasked with the difficult responsibility of protecting our young people, and that is why I have asked for an independent review. We need to be sure that we have put mistakes right and that the culture has changed. It is not about blame, but about acknowledgement that victims were failed. Pretending otherwise intensifies the sense some victims and their families have that what happened to them was somehow their fault.
There needs to be a much better understanding of social and cultural attitudes towards women, because it was, in part, the attitudes to the victims that led to the crime being unidentified or unaddressed for so long. We must move away from victim blaming and shaming and recognise that these were children who were victims of a crime. We must change our perception of the victims. Too often, assumptions were made that the young girls were making choices to have regular underage sex. We see, for example, GPs handing out morning-after pills to the same young girls week after week, without asking questions, simply assuming that it is a choice the girls are making. It is wrong to blame children as young as 12 for “indulging in risky behaviour” or label them as sexually promiscuous. That is completely wrong.
In Telford we have seen the recent phenomenon of shaming videos, in which derogatory terms are used to describe young girls. The girls are “outed” for allegedly promiscuous behaviour. That attitude to women and girls promotes a culture in which it ultimately ends up being acceptable to trade women like commodities and then blame the women themselves. There has been an emphasis on educating girls and their families about the risks of grooming, but it is equally important that our boys are educated so they do not think it is normal to treat young girls in that way.
One particularly poignant aspect of child sexual exploitation is that the young victims often believe themselves to be in relationships with the men who groom them. I have had victims tell of their conflicting emotions of loyalty and attachment to men who befriended them and gained their trust but then went on to trade them for sex with other men and trap them in fear of being exposed or shamed, or of their friends and families finding out. It is essential, therefore, to do more to encourage victims and their families to come forward, and to ensure that they are properly supported and helped to overcome their experience. Too many of them fear being stigmatised and blamed, and for that reason keep quiet. In many cases, young women who are now adults are only just starting to make sense of what happened to them when they were as young as 12, and they may have parents, partners and children who know nothing about it. Shaming leads to a culture of silence around the issue, and we should therefore speak out so that victims feel more confident about telling their own stories themselves.
We have to be honest: this is a crime in which 95% of perpetrators are men and most victims are young girls. We do no one any favours to ignore that fact or to avoid the conclusion that historical child sexual exploitation, like many sex crimes, is a consequence of social and cultural attitudes towards women and negative gender stereotyping.
I commend the Government’s commitment to dealing with child sexual abuse. Their setting up of the independent inquiry led by Professor Jay is a testament to that commitment. Authorities in Telford have said that no independent review of what happened there is necessary, because the overarching national investigation into child sexual abuse will look at that. The Jay inquiry is tasked with investigating child sexual abuse in institutions, and in cases where abuse was reported but no action was taken, but for victims in Telford the abuse happened in cars, in the streets, in betting shops, in takeaways and in taxis, and we know that many of the victims not only did not report it but to this day remain afraid to tell anyone what happened. I have looked at the terms of the truth project, which is how the Jay inquiry will take evidence, and they clearly set out three different scenarios in which evidence will be taken from young people. They all relate to institutional settings or to institutions failing to act on reports of abuse.
On the face of it, it therefore appears that the Jay inquiry does not cover child exploitation, and I should be very grateful if the Minister could clarify that, either in her response today or after the debate. Can a victim of grooming and child sexual exploitation in Telford come forward and tell their story to the Jay inquiry, and have their experience inform the inquiry and its findings? Even if the Jay inquiry is to cover child sexual exploitation in Telford, we do not expect the report to be finalised until 2020, given the many competing strands and areasof investigation. How likely is it that we will get to understand fully the causes of what happened in Telford if we can rely only on the Jay investigation?
A Select Committee on Communities and Local Government report on lessons learned from Rotherham, produced in the 2014-15 parliamentary session, stated:
“We would be seriously concerned if other local authorities…were to hold off…investigations”
pending the outcome of the Jay inquiry. It also noted that “the stimulus for action” in getting the Rotherham inquiry to take place was the press and not any council processes or external inspections. It is important to challenge those in authority so as to avoid any complacency creeping in, and we should all, as Members of Parliament, challenge attitudes towards the powerless and the voiceless.
I know that good work is going on in Telford and that progress is being made. However, even if we accept that everything is as it should be—and that very well might be the case—there still needs to be recognition that this happened. There are those who would rather we did not talk about the issue. I understand that it is difficult, but we should not shy away from it just because it is difficult. If we brush it off and say, “It’s all okay now”, that is not much comfort to victims.
I invite those who would rather we did not speak about the issue to think about how that makes victims feel. I urge them to realise what a sensitive, complex issue it is. Not talking about it does not make it go away; it diminishes the experiences of victims. It is almost to dismiss the experience as though it never happened. When people in authority say, “Well, it’s all okay now”, it feels like no one is listening. We do not want any young woman feeling that there is no point in saying anything because nothing will be done or that she will be blamed, shamed or in some way made to feel culpable. In any event, there is a natural reluctance to go to social workers or the police, and we should do all we can to give the victims the confidence to come forward.
I want to say to those girls in Telford who have not yet spoken out that they are not to blame. This was a crime. It was something that happened to them that should never have happened. It takes huge courage for them to see their MP and talk about it, and I pay tribute to all the bright and articulate young women who have told me their stories.
I also want to touch on the distress caused to parents. There is a sense of self-blame, with parents asking, “Did I fail my child? I do not know how to make it better. How could I not have known this was happening?” Support for families is a vital part of the healing.
I pay tribute to the street pastors in Telford for their fantastic work. I have been out with them at night and seen the work they do with young people leaving clubs, sometimes the worse for wear. People in Telford feel a huge sense of trust and warmth towards them, and they must be congratulated for being such an important part of our community.
In conclusion, there needs to be more work on challenging cultural and social attitudes towards women and girls, or this crime will keep on happening. We need to recognise the social and cultural prejudice—albeit unconscious—that exists. Much can be done to focus on the perpetrators: the men who buy and sell young girls for sex. We should also be mindful of those who turn a blind eye or who see these girls through a negative gender stereotype. It is not the victims who are to blame.
I take this opportunity to thank the Home Secretary for a very full and thorough response to my recent correspondence on the issue. I am most grateful to her for taking these concerns so seriously and for making the issue a priority. I am pleased to learn that she is sending her officials to Telford to discuss the issue with the authorities. I know that the authorities in Telford are committed to getting it right. I know they want to build the confidence of the people they are there to protect and the public. An independent review will find out why this crime happened and will give reassurance to victims that they will be heard and will not be ignored, and it will ensure that all is being done to stop it happening in the future. I have been a councillor, and I know how difficult it is for even the best councils to find fault with themselves and to cast a critical eye. It is easy to drift into complacency or close down challenge by seeing complainants as a nuisance or those who speak out as somehow vexatious. Respectful challenge is to be encouraged and is part of a healthy transparent process that enables victims to come forward and get the help and support they need.
Finally, I pay a special tribute to one young woman who motivated me to ask for the review and this debate, and who is here today. She has been incredibly courageous and has fought hard to make things better for others. She has been willing to challenge the system, question authority and put forward solutions to ensure that this crime is tackled. She has already made a huge difference to the debate on this issue, and I thank her for that. She can be assured that as her MP, I will continue to speak for her and for others who have suffered, to ensure that their voices are always heard.
The Parliamentary Under-Secretary of State for the Home Department (Sarah Newton)
I warmly congratulate my hon. Friend the Member for Telford (Lucy Allan) on securing this vital debate, which is of huge importance to her constituents. She has shown herself to be a doughty champion of them. I am grateful to her constituent for being so brave. It could not have been easy for her to speak her MP, even though my hon. Friend is so lovely and so nice. Her constituent would not have known that. She had the courage to speak to a Member of Parliament and share intimate, personal and difficult issues in her life. She was so brave, and she motivated my hon. Friend to take up this cause. Whoever she is, I pay great tribute to her for doing that. I can absolutely assure her that her voice has been heard today, and I have no doubt that her Member of Parliament will continue to champion such causes to make things much better for everyone in Telford.
Rightly, we all understand that child sexual abuse and exploitation is a despicable crime, and we must do everything in our power to prevent it from happening. I am clear that where abuse has occurred, it must be thoroughly and properly investigated and those responsible brought to justice. Anyone who has suffered child sexual abuse, however long ago, should feel confident to report what has happened to them to the police in the knowledge that they will be supported and their abusers will be brought to justice. Abuse should be reported to the local police force, but if victims feel more comfortable telling someone they trust who can then support them to make the disclosure to the police when they are ready, that is also welcomed.
As a result of a lot of training, police attitudes have improved. My hon. Friend may have constituents who were frightened to go to the police, but they should have the confidence to go to the police now. Wherever and however long ago the incidents happened, they will be listened to carefully. I am sure they will find it is a different experience today than it perhaps was in the past. The police will gather evidence so that they can press charges and secure a conviction through the Crown Prosecution Service. If there are any remaining concerns that allegations are not being investigated thoroughly, that can be escalated, first through a complaint to the local force. Any complaint against the local police force on allegations of child sexual exploitation is automatically referred to the Independent Police Complaints Commission. There is a more rapid and serious escalation of those concerns.
As my hon. Friend mentioned, the Government are undertaking an ambitious programme of work to tackle child sexual abuse nationally, as we clearly set out in the “Tackling Child Sexual Exploitation” report. That report includes a lot of the issues that she raised, including education and challenging stereotypes about women, as well as looking at working with perpetrators and the attitudes of young people. We have urgently tackled the culture of denial within professions about the scale and nature of this crime, and we have strengthened local accountability. More victims and survivors of abuse are now being identified and are getting the protection and support they need.
The issues that my hon. Friend raised relating to historical failings in Telford are of great concern to me and to the Secretary of State. That is why we asked officials, ahead of this debate and their visit, to speak with us. We spoke to police leaders, the director of children’s services and the Local Government Association. Likewise, council leaders have written to the Home Secretary to provide reassurances that they are taking action to address past failures and are better able to protect children from abuse. Service leaders have separately told my officials that they acknowledge the scale of the problem and the past failures in Telford, as well as the remaining problems. They are prioritising tackling child sexual exploitation and are working together to address the issues.
I know that my hon. Friend recognises that steps have been taken in this area. Although overall children’s services were judged still to require improvement in Ofsted’s July report, it found that:
“Work with children and young people at risk of sexual exploitation is very strong. The local authority has been a champion for tackling this issue. It provides leadership to partner agencies, with who this work is well-coordinated.”
Her Majesty’s inspectorate of constabulary’s 2015 vulnerability inspection said that the police are
“demonstrating a strong desire to improve outcomes for children who are at risk of harm.”
The council and others must now focus on implementing the recommendations made by Ofsted, the council’s scrutiny committee and HMIC, so they can continue to improve their response to young people in Telford. A wide range of support is available to services in Telford and elsewhere through both the Local Government Association and the recently launched child sexual exploitation response unit, which is backed by £1.24 million of Government funding. The unit operates independently of the Government and will ensure specialist support is made available to people working in children’s safeguarding across the country, enabling them to develop and deliver a strong and robust first response to children and families who are the victims of child sexual exploitation.
It is for the authorities in Telford to decide whether they want to access that additional support, and whether they think an independent inquiry would help them make the further improvements they clearly need. I suggest that, if my hon. Friend has not already done so, she should encourage them to take up those offers of help, to look at the resources available in the child sexual exploitation response unit and to ensure they are doing absolutely everything to address her constituents’ legitimate concerns and to give the whole community of Telford the confidence and assurances that she seeks. She is absolutely right that the victims in Telford, to whom dreadful things have happened, must feel, first, that they have been listened to and, secondly, that those in power and with responsibility have learned lessons from the past. I hope she and the council can agree on the mechanisms by which that can be addressed locally.
My hon. Friend rightly commented on the national Independent Inquiry into Child Sexual Abuse, which has announced 13 strands of work. It is possible for her constituents to share their experiences with the inquiry. One of the strands of work allows people who have been affected to come to the inquiry independently and have their concerns listened to—they do not have to do so via an institution. Part of the inquiry’s work is to look at what more the BBC and other institutions could have done, but individuals can come forward with their experiences to shape our understanding and lead to better services in the future. I assure my hon. Friend that we are not waiting for the end of the inquiry. It is a huge inquiry, and it will take many years to hear all the evidence. It will report at least annually on lessons it has learned so people in the Home Office, the health service, local government and the police—the whole of society—can take on board that learning and start to change their actions. Again, I encourage her constituents to talk to the inquiry.
Ultimately, if my hon. Friend is not satisfied that the council and its leadership are really listening to the victims and the community at large, she has the opportunity to give evidence to the Secretary of State for Communities and Local Government. If there is good evidence that the council is failing, section 15 of the Local Government Act 1999 enables the Secretary of States to intervene directly but, as I am sure my hon. Friend understands, that is very much an action of last resort. We respect local government, but we expect them to conduct themselves in an open, transparent and good way, and they should be wholly accountable to the local people they represent. We will intervene, but it has to be based on a lot of hard evidence. From the independent inspections of Ofsted and the constabulary, we have not seen enough evidence to warrant intervention, but if my hon. Friend or councillors have evidence of a systematic failure of leadership, and if they feel they are not making progress, they should share that information with me and we will take it up.
I hope I have reassured my hon. Friend, her constituents who are here today and the wider community that we take this issue extremely seriously. My hon. Friend has done a very good job in raising those concerns. She should use some of the tools I highlighted, and she should not hesitate to meet with me and officials if she feels there is anything more we can do collectively or individually. We want to leave no stone unturned in stamping out the vile and despicable crime of child sexual exploitation.
Question put and agreed to.
Leaving the EU: North-East Exports
(7 years, 6 months ago)
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Phil Wilson (Sedgefield) (Lab)
I beg to move,
That this House has considered the effect on exports from the North East of the UK leaving the EU.
It is a pleasure to serve under your chairmanship, Mr Hollobone.
We all agree that the British people’s decision on 23 June to leave the EU was the most profound decision to affect this country since the second world war. I, like many in the House, very much wanted the UK to stay part of the EU, but the country, including the north-east of England, voted otherwise. That decision must be implemented, but as my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) has pointed out, the country voted on the principle of leaving, not on the terms. The detail is therefore important.
The referendum result has created much uncertainty about the UK economy’s long-term prospects, not just internationally but in many boardrooms around the country. I wonder how soon it will be before that uncertainty is felt in households in communities from south-east England to Scotland, from County Durham to Northern Ireland, and from Wales to East Anglia, and how soon it will be before that uncertainty spreads from the boardroom to the shop floor.
I want to use this debate to explain the importance of the European single market to the north-east of England, to raise several issues and to probe the Minister on what he and the Government think is the best option for the north-east of England in a post-Brexit Britain. I know the Minister shares the view that remain was the best option for the British people, but in our own ways we have both taken on responsibility for delivering the best deal for the UK under the circumstances, unlike the former—or perhaps the current—leader of the UK Independence party, Nigel Farage, who abandoned the field of play once he got the referendum outcome he wanted. Like all populists, he was ready to pick up the megaphone to let us know what he thought to be wrong, but when the argument went in his favour he was not prepared to hang around and take responsibility for putting right those perceived wrongs.
The Minister has the unenviable task of securing the best deal for Britain. Since he wanted to remain in the EU and the single market, how is he going to convince his colleagues that maintaining access to the single market is the best option? Furthermore, how are the Government going to implement all the promises made by the leave campaign, of which he now has ownership?
“Let’s give our NHS the £350 million the EU takes every week”—
so said Vote Leave’s website. That slogan was emblazoned on the side of the campaign’s battle bus. Vote Leave committed to “hundreds of new schools” in a campaign video on YouTube, and to the abolition of prescription charges. According to a Vote Leave press release from 14 June:
“There is more than enough money to ensure that those who now get funding from the EU...will continue to do so”.
There was a promise of new roads and the expansion of regional airports, and the right hon. Member for Surrey Heath (Michael Gove) even said in a Vote Leave press release from 19 April that there would be enough money for 14 Astute-class submarines. There was to be money for pothole repairs and tax cuts, and wages would be higher and fuel bills cheaper—no doubt, Brexit would be a land of milk and honey, where the sun shines and everyone lives happily ever after. The Minister is on record, in his blog, as saying:
“There was no manifesto for ‘out’”—
but yes, there was, and the people voted for it.
For the people of north-east England, we must get Brexit right, because although my constituents may have voted to leave the EU, I do not believe that they voted to be poorer, to put their jobs at risk or to see their region fall further behind. If I were them, I can imagine how disappointed and betrayed I would feel if, on top of all the uncertainty, which was not there before, all the promises made by those who supported the leave campaign were not met. That disappointment would be deepened by the fact that so many of those who made the pledges not only now sit on the Front Bench, but will sit around the negotiating table to negotiate our exit. The Minister and the Government have a duty to inform the British people of how those promises are to be fulfilled—the Minister might make a start today. If they cannot be fulfilled, perhaps the Minister will be straight with the British people and say so.
The EU single market is essential to the north-east of England: 58% of the region’s trade is with the EU, which is a full 10% higher than the national average; it is the only region that exports more than it imports; more than 100,000 jobs in the region rely on trade with the continent; and, over the past five years, almost 90 European investment projects have created or safeguarded more than 6,000 jobs, and £1.1 billion in inward foreign investment has come to the north-east from EU members.
According to the North East England chamber of commerce and a report by Ernst and Young, the north-east has seen the second highest increase in foreign direct investment—sitting just behind the north-west—with a substantial 83% increase on last year in FDI projects. An EY survey of investors about the link between the EU referendum and FDI asked how important access to the single market was, and 79% of investors cited access to the single market as a key feature of the UK’s attractiveness, a higher figure than last year’s. The same survey found that 52% of investors thought that a “slight change” in access to the single market would affect the attractiveness of the UK as a destination for business; in the event of a “significantly less favourable” change, the figure rose to 55%.
The North East England chamber of commerce has major concerns about future trade deals. Membership of the single market has brought significant benefits to the north-east of England, attracting business and creating jobs. The chamber stated in its EU referendum briefing paper of July 2016:
“There are also major implications for relationships with overseas markets where existing trade deals have been negotiated by the EU and for the future of trade documentation needed by businesses. Due to the complexities of these issues, there is significant concern among businesses about the UK Government’s capacity to address these issues in the required timescale before Britain exits the EU. Many of our members are also concerned about the effective flow of information so businesses are aware of any changes they need to make to their practices. Assurances about this are vital.”
What assurances about that will the Minister give to companies in the north-east?
In the same briefing paper, the chamber also stated:
“There is also....the hope and expectation that the anticipated benefits of Brexit in being able to conclude trade deals more quickly around the world will be realised. The new department headed by the International Trade Secretary...should aim to quickly set out its plans in this regard so businesses can see that Government is seeking to get beyond a damage limitation exercise to exploit new opportunities.”
I offer this opportunity to the Minister to lay out those plans. Business needs certainty, and that would seem to be the one thing in short supply at present.
As I am sure the Minister is aware, Japanese investment is key to the north-east of England. There are about 50 Japanese companies in the region, including Hitachi in my constituency. It provides almost 1,000 direct jobs, with many more in a growing supply chain. Nissan provides 7,000 direct jobs and 30,000 in the supply chain. With 300 automotive companies in the region, the car industry in the north-east produces £11 billion in sales and is responsible for more than £5 billion in exports.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Nissan is the UK steel industry’s largest customer in the automotive trade, purchasing most of its steel from Tata in the UK, largely from Port Talbot and the strip-producing sites. What does my hon. Friend think about the potential barriers to trade if energy imported from the European Union via interconnectors were to carry a World Trade Organisation tariff for the United Kingdom in future? What will happen to large manufacturing plants and energy-intensive industries when they face larger tariffs on energy imports?
Phil Wilson
My hon. Friend makes an important point. So much of Brexit has to be sorted out, and I do not know the answers, but I hope that the Minister will enlighten us. There will, however, be major consequences for industry in this country, but especially in the north-east, where a lot of our manufacturing industry is. It employs a lot of people there and provides skills that we need to revitalise the economy in the region.
Throughout the referendum campaign, I was clear about saying that if Britain voted to leave, companies such as Hitachi and Nissan would not immediately cease production, close their factory doors and ship out to the EU. I still believe, though, that if we are not part of the EU single market, the potential for long-term growth must be called into question. Furthermore, what growth there might be could come at a cost to the Exchequer.
Following Britain’s decision to withdraw from the EU, Nissan’s chief executive, Carlos Ghosn, indicated that the company might halt further investment in its Sunderland plant unless the Government agreed to compensate it for any adverse financial impact of Brexit. At the Paris motor show in August, Ghosn warned that
“important investment decisions will not be made in the dark…If I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK Government”,
and he suggested:
“You can have commitments of compensation in case you have something negative. If there are tax barriers being established on cars, you have to have a commitment for car-makers who export to Europe that there is some kind of compensation.”
Earlier this month, the Prime Minister met with Mr Ghosn to explore what assurances Nissan was seeking. The Financial Times reported that the meeting came ahead of Nissan’s decision on whether to build its new Qashqai SUV in Sunderland, a decision that might be taken as early as November. After the meeting, Mr Ghosn said:
“Since Mrs May’s appointment, we have maintained a clear dialogue with the UK Government during this challenging time”,
and he stressed:
“We want to ensure that this high-performing, high-employment factory remains competitive globally and continues to deliver for our business and for Britain.”
He added:
“Following our productive meeting, I am confident the government will continue to ensure the UK remains a competitive place to do business. I look forward to continued positive collaboration between Nissan and the UK Government.”
On the face of it, those are nothing more than warm words, but last weekend The Sun newspaper reported that Nissan is to announce that it will build the Qashqai SUV at its Sunderland plant—I hope so—and that an announcement is imminent. If the new Qashqai model is to be built in the north-east, however, what kind of compensation is Mr Ghosn anticipating? To keep Nissan in Sunderland, what price will Britain need to pay that we did not need to pay before? Don’t get me wrong, I want Nissan to stay, but I believe that it is incumbent on the Government to tell us what the cost is. It seems to me that the much vaunted windfall to the Exchequer from not being in the EU will not be available to spend on the NHS—if ever it was—because it will be needed to subsidise industry in a way we have not needed to before.
The Japanese Government are so concerned about Brexit that they published a 15-page document at the time of the G20 summit in China, pointing out:
“In light of the fact that a number of Japanese businesses, invited by the Government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”
The document also laid out several requests, such as maintenance of
“the current tariff rates and customs clearance procedures”
and the introduction of
“provisions for cumulative rules of origin”.
The Japanese Government gave those two key reasons, and others, for the UK remaining part of the single market and the customs union. I fear the consequences of all this uncertainty for the continued growth of existing foreign direct investment in the north-east of England and the region’s ability to attract FDI in the future. The Japanese, like many businesses in the north-east, have asked for transparency in the Brexit negotiations. It is not only Westminster politicians who are asking for transparency; business and the wider world are too.
The Minister wrote in a blog post on his website on 25 October 2011:
“A vote to come out of the EU would be to try to reverse nearly four decades of economic development…I am convinced that the advantages of membership outweigh the disadvantages.”
I agree. He said to the BBC just last month that
“we must…try to achieve…zero-tariff access to this market of 500 million people in the EU”.
Again, I agree, but it seems to me that in so doing, the Government are setting out in a direction that the Conservative party accused the Labour Government of taking back in the 1970s and upon which it frowned at the time.
The Prime Minister said in her closing speech at the Conservative party conference:
“It’s not about picking winners, propping up failing industries, or bringing old companies back from the dead. It’s about identifying the industries that are of strategic value to our economy and supporting and promoting them”.
That sounds very much like picking winners to me. We should support our industry and develop an innovative industrial strategy, but don’t let’s write off whole industries. Millions of people may have voted for Brexit, but let us not forget the millions who did not. I am of the view that the Brexit negotiations will be complicated and uncertainty will reign for some time to come.
We know that the Minister’s preferred option is access to the single market—if not membership—but in what form? The existing model? The Swiss model? Will we stay part of the customs union? Does he agree with the report by his own Government that said that leaving the customs union could cause a 4.5% fall in British GDP and a reduction in foreign direct investment of as much as £9 billion, with trading falling by as much as 15.6%?
Brexit is the defining issue of our time, and it is more than apparent that the Government did not have any contingency planning in place to deal with the immensity of the task ahead, so I doubt very much that this will be the last Westminster Hall debate on how the issue affects the north-east of England, let alone the rest of the country. The future prosperity of the north-east of England, and indeed our nation, depends on getting this right. In answering the questions that I have asked today, the Minister will have the opportunity to start to allay fears, provide certainty, promote confidence and offer optimism, and to show vision and belief in our country. We must have the right to stand tall in the world while acknowledging our responsibility to others. I look forward to his response.
Several hon. Members rose—
Mr Philip Hollobone (in the Chair)
Order. The debate runs until 5.30 pm. The guidelines for speeches by Front Benchers are five minutes for the Scottish National party spokesman, five minutes for Her Majesty’s Opposition’s spokesman and 10 minutes for the Minister. There will then be three minutes at the end for Phil Wilson to sum up. I therefore need to start calling the Front Benchers no later than 5.07 pm. Between now and then, the debate is open to Back Benchers. Three Members have stood to catch my eye. There is a galaxy of parliamentary talent before me, and it will be led by Hannah Bardell.
Hannah Bardell (Livingston) (SNP)
I am delighted to head up that galaxy of parliamentary talent, as you so eloquently put it, Mr Hollobone. I congratulate the hon. Member for Sedgefield (Phil Wilson) on securing the debate. As he says, I am sure there will be many more such debates and opportunities to drill down and have an ongoing conversation. If the Government are not going to have an ongoing commentary on the EU, we Back Benchers certainly will.
As the hon. Gentleman said, the UK’s relationship with the EU is significant for the north-east, which in 2015 exported £7 billion of goods to the EU—58% of its total, which is well above the UK average of 48%. This debate is about the north-east, but I hope he and you, Mr Hollobone, will indulge me if I touch a little on the impact on Scotland and the rest of the UK.
The value of the pound has dropped significantly since the announcement of the referendum result. Although that offers a short-term gain for some, such as those looking to buy property in the UK, increasingly expensive imports and exports will hurt the UK and all the countries in it in the long term. I noted with interest the Financial Times article yesterday that stated that the percentage of foreign buyers in London’s property market had increased from 23% to 29%. It seems obvious to me that that creates further problems for local people, who were already struggling to get on the property ladder. Not only are their savings being devalued by the falling pound, but they will be up against an increasing number of foreign buyers and investors. The weakening of the pound since the Brexit vote has helped Tata Steel’s profits, but as we well know, such companies rely on imported iron ore and coking coal, so they will be negatively affected if tariffs increase in the longer term.
The hon. Gentleman mentioned the impact on Nissan’s Sunderland factory, which ships nearly 75% of its cars to the EU and relies on parts from outside the UK. The north-east economy cannot flourish without the automotive industry, or even with a damaged one. Failing to negotiate trade deals quickly will cause repercussions years down the line. I suggest that the Tory Government’s much-vaunted northern powerhouse is fast becoming more of a northern power cut.
Scotland will feel the impact of the UK leaving the customs union just as the north-east will. In 2014, 42% of Scotland’s international exports were to the EU, and 58% of Scottish exports to the EU are in the food, tobacco and beverage manufacturing industries. I have spoken to several companies in those industries and will address some of their concerns shortly. Last year in Scotland alone, there were more than 2,300 foreign owned companies, employing nearly 314,000 people and turning over £90 billion. When the Government create uncertainty for those companies—I know there will be others in the north-east—hundreds of thousands of workers are uncertain about their futures.
With such uncertainty, it is not unreasonable to ask for a clear plan and an open debate. At the moment, we are expected simply to have faith in the Government—a Government who promised to double exports to £1 trillion by the end of the decade but saw them fall to £511 billion just last year. If those numbers are moving in the wrong direction, how are we to believe that the EU trade negotiations will move in the right direction for the UK economy and its workers, especially given that at a recent European Council meeting, the Prime Minister was given just five minutes—at 1 am, after the dinner plates had been cleared—to set out her view on Britain’s exit from the EU?
We had a debate on the Government’s industrial strategy just last week. The conclusions could not have been clearer. It is nearly impossible to debate industry, trade and the economy when the Government have neither the outline nor an inkling of a plan. There is a lot that we need to debate about the impact on the north-east and Scotland, and I hope we will have many more such debates and the opportunity properly to scrutinise the plans when they come forward.
Let us take the UK’s membership of the EU customs union and common tariff. Beyond the party political and theoretical points are some gritty IT issues that need to be looked at more closely—we know about the UK Government’s track record on IT. If Britain leaves the EU customs union, it will have to go through its own system of customs declarations and security checks whenever trading with the EU. After the Brexit vote, the EU began looking at increasing its capacity for customs declarations from 50 million to 350 million a year to account for future customs forms from the UK. Changing that system will take time, and before it is finalised we will not know how delays will be managed. I recently met the Scotch Whisky Association, which emphasised the importance of the excise movement and control system, a trading system by which all exports are tracked and managed. Staying part of that is key, but we have had no answers about it. Perhaps the Minister can enlighten us.
On the other side, the UK’s current system for importing and exporting non-EU products, which following Brexit will have to be used for all products, is about 25 years old and due to be replaced. However, its replacement, the customs declaration services system, is expected to be functioning by December 2018, just before the UK is expected officially to leave the EU. The CDS system is designed for managing about 100 million declarations a year, rather than the now expected 350 million that will be required once the UK leaves the European Union. That puts us two years behind already.
Desmond Hiscock, who runs the UK Association for International Trade, said that the system
“will not be able to cope and there is not much confidence that the untested and still incomplete replacement…will fare much better.”
Mr Philip Hollobone (in the Chair)
Order. I am listening to the hon. Lady’s remarks with great interest. She will be aware that two Members of the House who represent constituencies in the north-east also want to contribute and that, within 30 seconds, she is coming up to having used a third of the allocated Back-Bench time. She might, out of politeness, want to think about drawing her remarks to a close.
Hannah Bardell
Thank you, Mr Hollobone. I will wrap up my comments, because of course I want to let colleagues in. If the Prime Minister truly wants to find the best trade deal for the north-east and for the rest of the UK, she would do well to engage actively across all parties and all countries within the UK.
Julie Elliott (Sunderland Central) (Lab)
I thank my hon. Friend the Member for Sedgefield (Phil Wilson) for gaining this important, if not crucial, debate for the region of the country that I come from. I was a passionate supporter of the remain campaign—I thought it was in the best interests of my city, my region and my country to remain a member of the EU—but I absolutely respect the decision taken and totally accept that we are leaving the EU. It is important to put that on the record.
There has been much mention in the debate of the automotive sector and the fantastic Nissan plant—it is not in my constituency but in the city where I live. The issues surrounding that plant bring together all the problems faced by the wider manufacturing industry in the north-east in one place. I welcomed the Prime Minister’s statement after she met Mr Ghosn a week ago in which she said she was committed to
“supporting the right conditions for the automotive industry to go from strength to strength in the UK, now and into the future”.
That was important. However, the automotive industry is not the sum total of the problem we face in the north-east from Brexit. In fact, it is a very small part of it.
Even if some sort of agreement is made for the automotive industry, it would not necessarily include all the companies in Nissan’s supply chain. Those companies produce many parts for cars built in Sunderland and in other parts of the country but, because they also produce parts for other companies’ manufacturing, they may not be entirely protected by a special arrangement for the automotive industry. We have to bear that in mind when we look at the Prime Minister’s comments. I wrote to her a few weeks ago asking her to address the problems facing Nissan and the wider automotive industry and manufacturing quickly. I have not yet received a response, but I am sure I will in due course.
I want to talk about wider manufacturing not just because it does an amazing job in trade for our region—we have a positive balance of trade and there are fantastic examples of business doing well—but because of the impact down the line on our skills shortage. Those big manufacturing companies in the north-east train lots of high-skilled, high-end apprentices not on two-year courses but on four or five-year apprenticeships. The best go on to do degree-level qualifications. There would be a major impact on that if any of those companies started downscaling—goodness only knows what would happen if they disappeared.
We have to think about the long term, training and the future skills supply. We know that, in engineering, a bubble is coming when there will be a shortage of good, trained young people to replace the people heading towards retirement, but in the short time I have I want to talk about the tariffs problem. The investment uncertainty that the debacle since the referendum is causing is enormous. We know of examples of investment on hold for the north-east and of examples where investment has stopped. Those are the soft things. Let us think of the tariff situation not necessarily for the car industry but for wider manufacturing. Many of the companies involved in manufacturing in the north-east import parts and raw supplies for the things they make, so they will be hit by tariffs. They export right around the world, but in the main they export to the EU.
We also have major international companies in the north-east—names we all know—whose cost centres are in central Europe, which creates a knock-on effect. A rejigging of their business models is going on. I do not want to highlight any one in particular because they are general problems that all manufacturers say they are facing, with an impact across the piece. All the parent companies and boards and most of the manufacturing companies in the north-east are not British businesses dealing with British supply chains that provide all the supplies they need to produce products from the UK, and they are certainly not selling everything into the UK. For them, tariffs are crucial.
If we do not get the situation resolved—at this stage we are talking not about the detail but about the broad parameters of where the Government are going to stop the uncertainty and create certainty in the marketplace—the potential threat down the line is that British manufacturing will become more and more uncompetitive, which means we will lose jobs, the training I talked about, and revenues from taxes. There will be a massive impact on the economy of the north-east and the UK in general.
My preference would be to remain part of the single market. The Prime Minister needs to look at that as a matter of urgency and make a decision. If that is not what she and her Government are going to do, we need to know what is on the agenda. We need to be working on a cross-party basis to get the best deal for businesses in my constituency, the wider north-east and the country as a whole.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to my hon. Friend the Member for Sedgefield (Phil Wilson) for securing this important debate about the future of our region.
Like many here, I made no secret of my preference for the UK to remain a member of the European Union, but a majority of people in my city and in the region voted a different way. Many people who voted to leave did so in the belief that a brighter economic future lay ahead for the UK and for the north-east. If their optimism is to be fulfilled, it is vital that exports from the north-east to the European Union are protected.
Export trade with the EU is critical to the north-east’s economy. The region is unique in England in being the only one to consistently maintain a balance of trade surplus. Last year, more than half our goods exports were to the EU, and the most recent figures from Her Majesty’s Revenue and Customs indicate that four of the five top export partners for the region are EU countries. Given that the proportion of exports destined for the single market from the north-east is relatively high compared with other regions of the country, those of us who represent north-east constituencies have a particular responsibility to raise concerns about the impact Brexit will have on the region’s economic interests, especially if the Government decide to take the UK out of the single market as well as the European Union.
As has been said, the automotive sector is central to Sunderland’s and the region’s economy and to the future success that lies ahead. A recent report by IPPR North found that the export of road vehicles, parts and accessories accounts for more than 40% of north-east goods exports to the EU and that the value of those exports grew by 118% in the past decade. Much of that trade depends on the continued success of Nissan in Sunderland and it is clear that future investment decisions by Nissan will play a major role in driving long-term economic growth in the north-east. Let us not forget that membership of the single market has been central to that success. The renaissance in car building in this country also demonstrates what can be achieved when Government pursues a focused, sector-led industrial strategy.
I sincerely hope that the decision on where to build the next Qashqai is a positive one for Sunderland. I will welcome any steps Ministers can take to assuage the company’s fears. What will require greater clarity from Ministers is the degree to which small and medium-sized businesses in my constituency and in the supply chain will be protected. Those businesses are already suffering from the collapse of sterling and the uncertainty that has dogged the economy since June. If Ministers intend to offer the automotive sector special protection from the impact of Brexit, presumably on the basis that they intend to take our country out of the single market, it must have wider coverage and not ignore SMEs in the north-east and beyond.
How do Ministers intend to act to safeguard the interests of the rest of the manufacturing sector in the north-east? What of the growing and thriving tech and software start-ups in my constituency, in Rainton Bridge and elsewhere? The region’s current strong track record on exports is a source of pride, but we still face the highest level of unemployment in the UK and a skills gap that holds back our young people as well as our economy. We can ill afford to see a decline in jobs, wages and living standards. As the North East local enterprise partnership has pointed out, we are a region that needs EU funding more than most—and we have a track record of investing it well. I note the guarantee offered by the Chancellor, but the north-east was originally allocated £437 million in EU structural funds up to 2020. Of that central pot, at present more than £198 million remains unallocated. There is clearly room for improvement.
In the north-east we have long needed Ministers to add some substance to the so-called northern powerhouse—a concept that appears to have fallen out of favour with the new Government. Now more than ever we need the Government to use all of the powers and levers available to them to support our region and its people to fulfil our economic potential in these difficult times.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Sedgefield (Phil Wilson) on securing the debate. We have heard from the Secretary of State for Exiting the European Union on the Floor of the House on many an occasion, given how much he is before the House to answer questions. We continue to have these debates because, unfortunately, no answers are forthcoming. In fact, the most interesting piece of information we have heard today is the determination that Brexit is in the masculine form—“le Brexit”—unless, of course, spoken in Italian. That is the latest up-to-date revelation in relation to the debate.
The hon. Member for Sedgefield correctly spoke about the uncertainty that surrounds the Brexit debate and the importance of the European single market, and said that people did not vote to be poorer or for jobs to be put at risk, so assurances are absolutely essential. That was followed up by my hon. Friend the Member for Livingston (Hannah Bardell), who also correctly said that even if the Government will not have debates in Government time—although I should say that the Prime Minister said at the Dispatch Box yesterday that there will be debates in Government time, which is very welcome—Back Benchers will continue to discuss matters that are hugely important to our constituents and businesses in our constituencies.
Hundreds of thousands of workers are concerned about what Brexit means for their future. As my hon. Friend said, if the Prime Minister wants the best trade deal she should interact with all parties and all nations across the whole of the UK. The hon. Member for Sunderland Central (Julie Elliott) spoke of respecting the decision of the referendum, but also of concerns that most major manufacturing companies in her constituency—which also have bases in the EU—have about what it will mean for them. That is an important matter and needs to be addressed. Finally, we heard from the hon. Member for Houghton and Sunderland South (Bridget Phillipson), who spoke of the responsibility to raise concerns about how Brexit will affect constituencies and wider regions.
I know the debate is about the north-east, but it would be remiss not to mention that the people of Scotland have been subjected to a Tory Government they did not vote for, a referendum they did not want and a result they did not vote for. Some 62% of the people of Scotland voted to remain in the European Union, and with that in mind, and in relation to the north-east, we want to work with all parts of the UK that want to retain single market status. To be clear, the Prime Minister and her Conservative Government stood on a manifesto that said:
“yes to the Single Market”.
That is the one definitive piece of information upon which we should be able to rely to hold the Government to account. The Scottish National party intends to take all possible steps to explore all options to give effect to how the people of Scotland voted, and indeed for other parts of the United Kingdom that voted in a similar manner.
Key industries in the north-east could be seriously compromised as a result of the uncertainty of a post-Brexit economy. As we have heard so eloquently from all of the speakers in the debate, the UK Government must provide a clear and comprehensive economic strategy that will allow investment to flourish and jobs to be created, and will attract skilled labour. Prior to Brexit, the UK Government were already failing on key economic indicators and have missed the targets they set for themselves as a result of the failing austerity agenda.
The Prime Minister’s inability to answer the simple question of whether she supports continued membership of the EU single market is damaging business prospects and job certainty throughout the UK. Businesses need to know what is happening next for them. We have heard in the course of debates from many Secretaries of State, not least the Secretary of State for International Trade, whose comments have had to be clarified or amended. I wonder if the Minister can demonstrate that he has achieved “head boy” status and will not get into trouble for giving us the facts for which we have been asking for so long.
Barry Gardiner (Brent North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Sedgefield (Phil Wilson) on securing this vital debate. Had he not, I know that my formidable colleagues, my hon. Friends the Members for Sunderland Central (Julie Elliott) and for Houghton and Sunderland South (Bridget Phillipson), who both spoke with such clarity, would certainly have initiated the debate otherwise. It is good to see a strong contingent from the north-east here in defence of their region.
The north-east is the major goods-exporting region of this country, with more than £12 billion of goods exported last year. It is therefore a powerful indicator to the rest of the country about the impact that the Government’s approach to Brexit will have. Let us be clear: 58% of voters in the region voted to leave, and all of us who have spoken from the Labour benches have said that we respect that—and we do. We must now all rise to the challenge of delivering that departure from the EU, but that departure must not undercut our industry, our labour rights or our prosperity. That is our clear message to the Government today. We have heard from several hon. Members about the destabilising effect on industry in the north-east of a divided Cabinet and a Secretary of State for International Trade who is pushing his own ideological agenda that will disrupt investment and threaten jobs in the north-east.
Of the £12 billion-worth of goods exported last year from the north-east, £7 billion were exported to the EU. That is 50% of the region’s total exports, making the region one of the most highly exposed to the uncertainty arising from the Government’s refusal to set out a clear plan and approach to the negotiations with the EU Parliament, or indeed to make that clear to the public. The value of north-east exports to the EU grew 30% from 2005 to 2015, yet in July, after the vote to leave, companies across the north-east suffered the sharpest rate of decline in business activity in four years, leading to scaled-down activity and jobs being laid off. Lloyds bank attributed that downturn to
“post-referendum vote market uncertainty”,
which caused the number of new incoming orders to the region to fall at the fastest pace in almost seven and a half years.
We know the Government will not provide a running commentary, and we do not ask for that, but perhaps they will provide some much-needed clarity to business about their futures. That is what I think all Members here are really asking of the Minister. What guarantees will the Government provide to businesses in the north-east about access to those markets in the future, and how similar will those terms be to the current ones? James Ramsbotham, chief executive of the North East England chamber of commerce, said:
“With the automotive sector being such a major part of the business community in the North East the future of the car-making is of crucial importance to our economy and employment prospects.”
What assurances will the Minister provide to car manufacturers about continued access to import parts from the EU to their supply chains, and to export cars, tariff-free, into mainland Europe?
My hon. Friend the Member for Sunderland Central raised that issue, but there is also a need for the Minister to answer the question about non-tariff barriers. Country of origin rules may well mean that, in the future, if we are outside the EU we cannot provide goods from this country—indeed, from many of the smaller companies in the north-east that my hon. Friend spoke of—that feed into supply chains in Europe for products that are then sold into third countries. They will not be admitted into the supply chain in the first place. The Minister knows that those supply chains are 18 months’ long, which means that decisions will be taken in Europe within the next six months on whether to source items for the supply chain from the UK. This is of vital and urgent importance, and it is critical that the Minister provides some answers on it for business.
What assessment have the Government made of the contribution that skilled workers coming into the UK make to the north-east export industries? Skilled workers in these industries are vital. Have the Government conducted a survey to find out what the skills base is in the north-east and to determine how they will continue to ensure that skills supply in the future?
While the weakened pound has given a short-term boost to certain exports, the steel industry is not benefiting from a low pound. The deal to buy the Tata pipe mill in Hartlepool is clouded with uncertainty, and the suggestion is that it would have been completed by now if it were not for the referendum result. That puts hundreds of jobs at risk. We have heard from my hon. Friends about the household brands that are facing difficulties, but we must not forget the small and medium-sized enterprises and the family businesses that are finding it impossible to invest in their own future in the region until the Government provide a clear plan. Ministers continue to drop heavy hints about their preferred—often contradictory—directions of travel. That is causing these businesses absolute turmoil with their investment profiles.
The priorities of manufacturing bodies are clear. The Society of Motor Manufacturers and Traders, EEF, the Chemical Industries Association, the British Ceramic Confederation and the UK Petroleum Industry Association—all representing phenomenal industries based in the north-east—are demanding guaranteed access to the single market to continue exporting without the extra costs that will make it harder to keep doing business there. Almost two thirds of the north-east’s exports to the EU are reliant on road vehicles, medical and pharmaceutical products and organic chemicals.
It is not just the goods exporters calling for this. A fast-growing marketing and PR agency based in Newcastle told my colleague, the MEP for the region, Jude Kirton-Darling,
“Creative and digital service industries like ours don’t export in the traditional way that goods companies do—but we benefit just as much from...membership and could be impacted badly by exit”
from the single market. Service industries are asking the same questions of Government. What analysis has the Department conducted of the impact on the trading balance in the north-east of different post-Brexit trading arrangements with the EU? Have the Government quantified the impact of losing access to the single market on the north-east economy? Will they do so before making a firm decision on their negotiating priorities? If we default to WTO tariffs post-Brexit, what impact will that have on exporters in the north-east? Bearing in mind the strong dependence on the single market of north-east exports and the regional trade surplus, what special measures will the Government consider to diversify export options for the region and avoid negative employment impacts that might arise?
The Government must clarify what will happen to the UK’s European Investment Bank status. Will we continue to be a shareholder and have unrestricted access to funding, or will we be considered a third country and thus only be eligible for the 10% of the fund made available for third countries? The Government’s webpage entitled “UKTI North East: helping companies export and grow overseas” was last updated in May this year. It reads:
“We’ve helped…create 346.5 new jobs through the European Regional Development Fund (ERDF) project”
and
“secure a further 1,014 jobs with our trade support activities for the ERDF project”.
That fund was actually proposed by the United Kingdom in 1972, but it is available only to European member states. We need to know what access we will have to those funds in future, because they are vital for industries in the north-east.
The Government might want to update their website, but it might also help if they provided their new strategy. The Government’s strategy has relied on EU funds to boost exports to BRICs markets and create jobs in the north-east. They must now provide answers about how they will ensure jobs and exports are maintained in the future through support for new projects once we have left the EU. The Chancellor’s guarantee of funding while we remain a member state, and for projects agreed before this year’s autumn statement, does not go far enough in giving answers to families, businesses and investors in the north-east. Can the Government commit to continued investment in trade promotion measures for the region post-2020?
Mr Philip Hollobone (in the Chair)
Order. I am enjoying the hon. Gentleman’s speech hugely, but he is almost twice over the guideline limit. If he carries on much longer, he will speak for longer than the Minister. He may, out of politeness, want to draw his remarks to a close.
Barry Gardiner
I would not wish to leave the Minister too little time to answer all the questions that my hon. Friends and I have asked this afternoon.
I will simply conclude by saying this. The danger is that the favoured trade model will not give control back to voters who told us that that was what they wanted. If the Government wanted to make the UK a great trading nation, they would not be putting forward options that would decisively cut ties with the world’s largest free trade area. The Government are not pursuing a free trade agenda. It would appear that they are using the vote to leave to embark on a ruthless deregulatory agenda, which will threaten jobs, public services, labour standards and environmental protections in the north-east and the rest of this country. The Minister must provide answers and clarity for business and the public.
Mr Philip Hollobone (in the Chair)
If the Minister could conclude his remarks at no later than 5.27 pm, Phil Wilson will have time to sum up.
The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)
Thank you, Mr Hollobone. May I start by congratulating the hon. Member for Sedgefield (Phil Wilson) on securing the debate? He has worked extraordinarily hard for his constituency. He did not mention in his speech that he was instrumental in securing the investment from Hitachi in his constituency, which we should all recognise.
It is interesting to speak in a debate such as this. I have to say that I agree with many of the points raised about the debate we had several months ago in the lead-up to the referendum. I think that everybody in this room—with the possible exception of you, Mr Hollobone—was on the same side of the debate on how we should vote in the referendum. It was 58% to leave in the north-east. In my constituency of Wyre Forest, it was 63%, so I sadly failed even more than Opposition Members to secure a remain vote.
I think we are all in agreement that the success of the north-east is entirely relevant to the success of the whole of the UK. We need to work extraordinarily hard to ensure that we get through this process over the next few years and that we are a resilient and strong economic nation afterwards. I will endeavour to address the points raised by hon. Members throughout the course of my speech, but I would like to open by saying a little about the Department for International Trade, in which I am now a Minister, and how we are trying to work with the whole of the UK.
This debate focuses on just one region, but we are representing the whole of the UK, which also involves the devolved Assemblies, so we represent Scotland, Northern Ireland and Wales as well. Irrespective of local votes, we are all Brexiteers together. Our aim is for the UK to be a beacon of open trade for the entire world, with the benefits of that trade to be felt from Bournemouth to Belfast and from Aberystwyth to Aberdeen. That means working with our dedicated regional teams, the devolved Administrations, devolution partners, regional chambers of commerce and local enterprise partnerships to ensure that together we build a strong and resilient economy from the bottom up.
It has been mentioned on a couple of occasions that the Secretary of State was an enthusiastic leaver, but it is worth bearing in mind not only that are we all leavers now, but that Ministers in the Department are balanced. The four Ministers—three in the House of Commons and one in the House of Lords—were on both sides of the debate, and all of us bring a lot of experience and views, giving a balanced view. That is important to remember.
Mr Iain Wright (Hartlepool) (Lab)
Given the establishment of the Department for International Trade and the importance of our region to trade performance, what additional capacity will the Minister put into the north-east to ensure that we can boost exports further?
Mark Garnier
I hope to be able to answer the hon. Gentleman in the course of my speech, but he can by all means intervene again if I miss his point.
The performance of the north-east is nothing short of exceptional. It is worth bearing in mind that 30 years ago last month, Margaret Thatcher persuaded Nissan that it should come along and assemble the Bluebird kits. That started off as a relatively small investment and has now turned into a phenomenal manufacturing plant. It is one of the premier auto factories not just in the UK but in the world. The region exported approximately £12 billion-worth of goods in the past year, racking up a positive goods trade balance of nearly £3 billion. That is incredibly important for our current account deficit. The region sold more than £1 billion-worth of cars between April and June alone, as well as nearly half a billion pounds of pharmaceutical and medical goods over the same period. Trade with the EU is important for the north-east—no one is questioning that. The single market is a destination for more than 61% of the region’s exports.
We have heard a lot about Nissan in particular. The Secretary of State for Business, Energy and Industrial Strategy has met Nissan and will be meeting Hitachi to try to make sure that the investment that the hon. Member for Sedgefield secured remains in the UK. We are having ongoing dialogue with those large automotive manufacturers. I have met Nissan twice, and my colleagues in BEIS have also met it. We are continuing to make sure we offer it as much assurance about the future as possible.
Anna Turley (Redcar) (Lab/Co-op)
The Minister is being generous with his time. One of the crucial points in my hon. Friends’ speeches was the emphasis on small and medium-sized business and their supply chains. What efforts is his Department making to engage with them?
Mark Garnier
We are certainly engaging with them through the local delivery networks of the Department for International Trade, formerly known as UKTI, and through the local chambers of commerce. That is an ongoing process that will continue. The economy of the north-east is so dominated by big manufacturers that if we get that part right, that should encourage a huge number of small manufacturers.
The hon. Lady raises the right point, which is that we cannot simply look at the big manufacturers. We have a very diverse economy and there are around 5 million businesses in the UK, the vast majority of which employ fewer than 10 members of staff, so we do not forget SMEs.
Mr Iain Wright
The automotive industry and the train manufacturing sector are crucial to the north-east’s economy, but what other sectors has the Minister identified that really make a difference? I am thinking particularly of the steel, chemical and processing industries, but what other sectors has he identified that should be prioritised?
Mark Garnier
The steel industry is in a special position at the moment, as we have discussed in the House over the past few months, for obvious and tragic reasons with the closing down of plants. All sectors are important to the UK economy. We need a diverse economy manufacturing a wide range of products—not just steel but graphene and carbon fibre. Those specialist material industries are also very important.
It is important that over the past 12 months the north-east has sold £4.5 billion of goods to non-EU countries, so it is a region that takes opportunities from the rest of the world. America is behind the Netherlands as the region’s second biggest export destination, not to mention continued significant sales to China and Turkey. There are fantastic local examples of north-east companies finding success beyond the EU. Small companies such as Annie Barr International are delivering vital training courses in China and Hong Kong. Newcastle-based mobile app developers Hedgehog Lab celebrated an amazing 2015, achieving $500,000 of sales in the USA. Those are examples of small businesses that are doing very well.
Our future trading relationship with the EU has yet to be determined, as hon. Members have said, but I will be as clear as possible. When the formal process of exiting the EU has been completed, the sky will not fall on our head. We will continue to trade with the EU. It is our friend, our ally and our trading partner. That will not change. We want to build the strongest possible trading links with our partners on the mainland, which throughout history have brought prosperity to Europe and raised living standards for all Europeans. Trade has always brought us closer together as a continent, fostering a common identity that will never diminish, regardless of whether the UK is in or out of the EU. We want the EU to succeed. It is really important to our country that our nearest neighbours are a success story.
A UK outside the EU can now reset and enhance its trading ties with the rest of the world, which already recognises that products made on these shores are synonymous with heritage, quality and innovation. DIT Ministers are travelling the world, and the extraordinary demand for British brands in places like the far east and America, and across the whole world, is truly remarkable. Let us take the example of cars. Today, a car manufactured in the UK and sold to India would face tariffs of up to 100%. The tariff for selling the same car to Brazil is less at 35% and for China it is 25%. We can do deals with those markets and find opportunities for cheaper tariffs there. A UK in full control of its trading arrangements can start to address the barriers that exist. There is untapped potential in the global economy that the UK is primed to take advantage of.
One or two points were made about delivering a manifesto for leaving. The hon. Member for Sedgefield said that there had been a promise of £350 million a week. He and I remember that that was checked by the UK statistical authority and there were questions about it ever being delivered. Dare I say, Mr Hollobone—I would not want to upset your sensibilities—there was a lot of hype that might be difficult to deliver on, but the Government must deliver the right outcome.
The shadow Minister talked about tariff and non-tariff barriers. Tariffs are probably relatively easy and straightforward to negotiate, because the outcome is numerical. We must be careful about non-tariff barriers, but we are all working extraordinarily carefully in trying to get to the right answer.
We talk about what sort of model we want. One of our problems in this debate is that people try to force the argument into a pre-determined shape: will it be a Swiss model, a Norwegian model or a Turkish model? The answer is that we will try to achieve a British model, which will achieve the best possible outcome that we can imagine. We will not try to do a deal that looks like someone else’s, because we can do our own deal. That is our starting point.
When it comes to the issue of a running commentary, I take a slightly different view. We are all aware of the argument that no one lays all their cards on the table when playing poker—why would they do that? The important point is that we must be extraordinarily careful. We have heard from many people about the importance of businesses not misunderstanding what is going on. They want clarity, but I think it would be more dangerous were we to give the wrong idea about what is happening than no idea. If businesses start chasing false hares, they could head off in the wrong direction, and that would be dangerous, so we must be very careful.
I want to reassure businesses in the north-east and investors around the world that in our future trade negotiations, we will fight to ensure that the UK’s sector strengths, be they automotive, aerospace, professional or financial services, remain as competitive as possible. We will achieve the best deal for the UK. I and my colleagues will continue to speak to businesses and investors, and the Secretary of State will meet big investors in the UK on more occasions.
A thriving north-east is vital to the long-term economic health of the whole country. It is a timely reminder that Britain still makes things the world wants to buy. The British people’s decision to leave the EU does not mean that we will abandon or neglect our manufacturing prowess. We have opportunities. I was on the wrong side of the argument a few months ago, as was everyone else in the Chamber with the exception of you, Mr Hollobone, but that does not stop me being optimistic about the future for Britain. We are a great nation, and we are very enterprising and innovative. A big, economically disruptive event is happening, but I believe that with the Government’s help, when we can provide it, businesses will take advantage of the opportunities.
Phil Wilson
I thank all hon. Members who have contributed to the debate, especially my colleagues from the north-east of England. I want to make one or two points. The Office for National Statistics may have said the £350 million figure was wrong, but people believed it. They did not consult the ONS’s website to see whether it was accurate, they just accepted it.
I picked Nissan as an example of the issues that will arise. As my hon. Friend the Member for Hartlepool (Mr Wright) said, the north-east is about the automotive sector, steel, chemicals, pharmaceuticals, and research and development. It is on the coast, and we have two ports facing Europe. Europe is important, because 80% of the raw materials and parts we need for industry comes from there. Brexit is a big issue, and I worked tirelessly to try to ensure that we stayed in Europe. This is bigger than party—it is about more than just the Conservative party and the Labour party. It is about the future of the country.
My hon. Friend the Member for Sunderland Central (Julie Elliott) said that the issue is partly a cross-party one. We must hold the Government to account, but we must also work together when necessary, because this issue is for all people whether they voted to remain or to leave.
Question put and agreed to.
Resolved,
That this House has considered the effect on exports from the North East of the UK leaving the EU.
Written Statements
(7 years, 6 months ago)
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Hinkley Point C: UK Guarantee
(7 years, 6 months ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
The UK Guarantees scheme was announced in July 2012 with spending cover provided through the Infrastructure (Financial Assistance) Act 2012, receiving Royal Assent on 31 October 2012. The scheme provides a sovereign-backed guarantee to help infrastructure projects raise debt finance. Guarantees for up to £40 billion in aggregate can be offered under the initiative.
As part of the Hinkley Point C negotiations, EDF sought a Government guarantee to assist in bringing forward investment. The Government are confirming that they have approved the provision of a guarantee for up to £2 billion to the project for the construction of its new EPR nuclear plant in Somerset, backed by commitments from the shareholders. The guarantee will be available from 2018 to 2020 if necessary conditions are met and is at Government’s discretion. Even if made available, and EDF have indicated to the Secretary of State for Business, Energy and Industrial Strategy that it is not their current intention to take up the guarantee, I judge the likelihood of any call under the guarantee to be very low.
The Government will report to Parliament on the financial assistance given in line with the requirements set out in the Infrastructure (Financial Assistance) Act 2012.
[HCWS216]
Supporting Apprenticeships
(7 years, 6 months ago)
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The Secretary of State for Education (Justine Greening)
Apprenticeships transform lives and are vital in making this a country that works for everyone. As well as giving young people the chance to build a better future by taking their first step on the employment ladder, they give those already in work the opportunity to progress further. And for those just about managing, they can unlock a brighter future. That is why we are committed to 3 million new apprenticeships by 2020, spending £2.5 billion to transform this country’s investment in skills, in our people.
For employers, apprenticeships bring great benefits too, by boosting the skills of the workforce and helping to increase economic productivity. Yet for too long far too many employers have under-invested in the skills of their employees compared to other countries. It is time to change that and ensure all employers play their part in improving productivity and social mobility. So we are working in partnership with employers to implement major reforms.
The new apprenticeship levy, which we are introducing in April 2017, will put the funding of apprenticeships on a sustainable long-term footing so we can support opportunities for all. The levy will be set at 0.5% of pay bill and only employers with a pay bill of more than £3 million will have to pay the levy. Employers that are not eligible to pay the levy will continue to receive Government support towards the costs of apprenticeship training and assessment.
The levy applies to all UK employers but apprenticeship funding policy is devolved. It is for the devolved administrations to decide how they use their levy income. This statement sets out how we will fund apprenticeships in England to help build an economy that works for everyone.
To do that we are not only introducing the levy but also reforming the way we fund apprenticeships, introducing a dedicated register of approved apprenticeship training providers and launching the employer-led institute for apprenticeships. These changes will ensure apprenticeships are high quality, meet the needs of employers and provide opportunities for millions more people.
After extensive discussions with employers and training providers we are today publishing the final funding policy for May 2017 onwards and details of the new register of apprenticeship training providers. The adjustments we have made to the funding policy since our proposals in August will help ensure that the reforms benefit more employers, providers and apprentices.
Today we are confirming the final funding policy. Key features are:
Higher funding for STEM apprenticeship frameworks and higher pricing of apprenticeship standards to support improved quality, and greater flexibility to train those with prior qualifications;
Longer period of time for employers to spend funds in their digital account, now with 24 months before they expire, an increase from our original proposal of just 18 months;
A commitment to introducing the ability for employers to transfer digital funds to other employers in their supply chains, sector or to apprenticeship training agencies in 2018, with a new employer group including the Confederation of British Industry, Federation of Small Businesses, British Chambers of Commerce, Charity Finance Group and EEF—the Manufacturers’ Organisation—to help Government develop this system so that it works for employers.
90% contribution from Government to the cost of training for employers that will not pay the levy;
100% contribution from Government to the cost of training for small employers that will not pay the levy and who take on apprentices who are 16 to 18 years old, 19 to 24 year old care leavers or 19 to 24 year olds with an Education and Health Care Plan;
£1,000 each from Government to employers and training providers when they take on 16 to 18 year olds, 19 to 24 year olds who were in care or who have an Education and Health Care Plan;
Help for training providers to adapt to the new, simpler funding model through an additional cash payment equal to 20% of the funding band maximum where they train 16 to 18 year olds on frameworks; and
A simplified version of the current system of support for people from disadvantaged areas to ensure the opportunity to undertake an apprenticeship is open to everyone, no matter where in England they live, their background or family circumstances.
We will continue to work in close partnership with employers and providers in the implementation of these reforms. We know they are major changes and we want to work together to ensure we transform our country’s skills for the benefit of all.
[HCWS214]
Foreign Affairs Council
(7 years, 6 months ago)
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The Minister for Europe and the Americas (Sir Alan Duncan)
My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs attended the Foreign Affairs Council on 17 October. The Foreign Affairs Council was chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Federica Mogherini. The meeting was held in Luxembourg.
Foreign Affairs Council
A provisional report of the meeting and conclusions adopted can be found at:
http://www.consilium.europa.eu/en/meetings/fac/2016/10/17/.
European Union global strategy
The Council discussed the follow up the EU global strategy on foreign and security policy and adopted Council conclusions. The Foreign Secretary made clear that the UK would continue to support European security after Brexit. He encouraged other European countries to spend more on defence and exploit the EU’s soft power.
Tunisia
The Council discussed Tunisia and adopted conclusions on the joint communication “Strengthening EU support for Tunisia”, which was presented by Member states Mogherini and Commissioner Hahn. Member states welcomed the EU stepping up its support but underlined that Tunisia needed to deliver reform for real progress to be made.
Syria
Foreign Ministers discussed the situation in Syria, in light of recent developments on the ground and the escalation of violence, including in Aleppo. The Foreign Secretary briefed Ministers on the 16 October London meeting that he had hosted. Ms Mogherini concluded that the EU should work closely with the UN both on the humanitarian track and on preparing for the post-conflict phase.
Migration
Foreign Ministers took stock of recent developments related to the external aspects of migration. Ms Mogherini briefly updated the Council on migration partnership frameworks, underlining to Ministers her view that they had created a positive change in attitude within partner countries.
Ministers agreed without discussion a number of measures:
Council conclusions on the Democratic Republic of Congo
The Council adopted decisions on partnerships priorities and compacts with Jordan for the period 2016-18 and with Lebanon for the period 2016-20.
The Council renewed the EU restrictive measures in view of the situation in the Republic of Guinea until 27 October 2017.
The Council approved the state of preparations of the first inter-summit meeting of the Ministers of Foreign Affairs of the Community of Latin American and Caribbean States (CELAC) and of the European Union, which will take place on 25 and 26 October 2016 in Santo Domingo.
The Council adopted the provisional agenda of the second EU-Iraq Co-operation Council, which will take place on 18 October 2016 in Brussels.
The Council adopted the common foreign and security policy report “Our priorities in 2016”.
The Council authorised the signature of an acquisition and cross-servicing agreement between the EU and the United States of America.
The Council approved the High Representative’s report on the 24th Operation Althea six-monthly review.
[HCWS217]
IBRD Loan to the Government of Iraq
(7 years, 6 months ago)
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The Secretary of State for International Development (Priti Patel)
I have today laid a departmental minute outlining details of a contingent liability of the US dollar equivalent of £360 million which DFID has undertaken, in respect of the World Bank Group.
The twin shocks of the Daesh insurgency and the 40% decline in Government revenue following the fall in oil prices since 2014 have threatened Iraq’s stability. At the G7 in May, the IMF, World Bank and G7 partners pledged to provide a $12 billion package of assistance to the Government of Iraq. The World Bank’s share of the package comprises three $1 billion development policy loans from the International Bank for Reconstruction and Development (IBRD) arm of the World Bank, with the first to be disbursed this year. Provision of the IBRD loans will be conditional on Iraq committing to, and implementing, reforms in the areas of public expenditure, energy efficiency, and transparency of state-owned enterprises. These reforms complement the package of reforms already agreed between the Government of Iraq and the IMF in July of this year, and will support Iraq’s economic development.
The IBRD’s internal rules on loan exposure to any one country constrain the extent to which it can increase its lending to Iraq. This proposed UK guarantee will allow the IBRD to increase the size of its 2016 loan by the US dollar equivalent of £300 million. This will support fiscal stability in Iraq, and will underline the UK’s commitment to supporting a key ally in the fight against Daesh.
DFID’s contingent liability under this agreement is expected to be the US dollar equivalent of £360 million, covering the equivalent of £300 million of loan principal, plus the equivalent of around £60 million of interest payments. The agreement would be in place for the expected 15 year life of the IBRD loan. France and Canada are also currently considering using the same guarantee instrument to guarantee further additional IBRD lending to Iraq.
For the guarantee to be triggered, the Government of Iraq would have to be in arrears with the IBRD for over 180 days. The risk of Iraq defaulting, and the UK guarantee being called upon, is the same as the risk of Iraq defaulting on other IBRD lending. There is a strong incentive for Iraq avoiding a default, as this would prevent the IBRD from providing any further funding to Iraq. But in the event that the Government of Iraq do default on a loan repayment to the IBRD, and the liability is called, the UK will provide a payment to the World Bank, in proportion to the UK’s guaranteed share of the overall IBRD loan. The payment will prevent the loss on the loan from impacting on the World Bank’s other lending activities. If the liability is called, provision for any payment will be sought through the normal Supply procedure.
If the Government of Iraq subsequently provide a payment to reduce its arrears, the World Bank will transfer the UK’s share of the payment into a UK-controlled trust fund held at the Bank, to be used towards other World Bank activity as the UK sees fit.
[HCWS218]
European Maritime Safety Agency
(7 years, 6 months ago)
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The Minister of State, Department for Transport (Mr John Hayes)
The Government welcome the efforts of the Commission to address the ongoing migration crisis, but have decided not to opt in to the JHA content in the proposal for a regulation of the European Parliament and of the Council amending regulation (EC) No. 1406/2002 establishing a European Maritime Safety Agency (EMSA).
The proposal—which has now been adopted—forms part of a wider package of measures by the Commission to ensure the protection of the EU’s external borders.
The Commission has taken the view that the challenges which have arisen from the recent migratory crisis cannot be adequately dealt with by member states acting in an uncoordinated manner and that integrated border management should be a shared responsibility of a new European Border and Coast Guard into which national authorities with coastguard and border control responsibilities, the European Maritime Safety Agency (EMSA) and European Fisheries Control Agency (EFCA) can provide additional resources and contribute to better, more effective co-ordination and co-operation.
The core tasks of EMSA currently deliver a high, uniform and effective level of maritime safety and prevention of pollution within the EU, achieved by ensuring a consistent application of EU maritime law.
The amendments to the EMSA founding regulation will have the effect of immediately expanding EMSA’s role and responsibilities beyond its current core tasks of managing maritime pollution and safety. It will formally establish co-operation for the prevention, detection and investigation of criminal offences by enabling EMSA to make available information with other national authorities with coastguard and border control responsibilities, the European Fisheries Control Agency (EFCA) and the European Border and Coast Guard Agency, which is currently accessible through ship reporting and other information exchange systems.
Such co-operation is indirect—EMSA itself will have no role to play in the exchange or analysis of such information between the agencies—and there is little practical or operational benefit for the UK from this measure. The Government maintain that the effect of the measure amounts to an obligation that falls within the scope of the JHA section of the treaties and is, therefore, subject to the UK’s JHA opt-in. It is on that basis that the Government have decided not to opt in.
[HCWS215]
Ministerial Correction
(7 years, 6 months ago)
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The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)
An error has been identified in a reply to a written question given to the hon. Member for North Thanet, Official Report, 9 September 2013: Column 612W.
The reply given was:
Sir Roger Gale: To ask the Secretary of State for Work and Pensions which French tropical overseas territories were included in his Department’s average temperature calculations in respect of winter fuel payments to expatriate UK citizens living in the EU member states. [167864]
Steve Webb: From 2015-16 winter fuel payments will no longer be payable to individuals in countries where the average winter temperature is warmer than the warmest region of the UK (South-West England). The Government have worked with the Met Office to analyse comparable winter temperature data across all EEA countries. The Met Office used recognised administrative regions for each country. For France this was the 27 regions, including French Guyana, Guadeloupe, La Reunion, Martinique and Mayotte. It does not include the French overseas territories, which are not part of the EEA.
It should have said:
From 2015-16 winter fuel payments will no longer be payable to individuals in countries where the average winter temperature is warmer than the warmest region of the UK (South-West England). The Government have worked with the Met Office to analyse comparable winter temperature data across all EEA countries. The Met Office used recognised administrative regions for each country. For France this was the 27 regions, including French Guiana, Guadeloupe, La Reunion and Martinique. It does not include the French overseas territories, which are not part of the EEA.
[HCWS213]
Employment, Social Policy, Health and Consumer Affairs Council
(7 years, 6 months ago)
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The Minister for Employment (Damian Hinds)
The Employment, Social Policy, Health and Consumer Affairs Council met on 13 October 2016 in Luxembourg. Damian Hinds MP, Minister of State for Employment at the Department for Work and Pensions, represented the UK.
The Council reached a general approach on the proposal to amend the carcinogens and mutagens directive, which protects workers from the risk of exposure to carcinogens and mutagens in the work place. The UK, along with all member states and the Commission, supported the proposal.
The Council also reached political agreement on the directive to implement the social partner agreement on the ILO Work in Fishing Convention. The UK supported the proposal but also submitted a minute statement which outlined reservations on its application to the self-employed and competence.
There was a policy debate on the Commission’s New Skills agenda proposal and an endorsement of the Employment Committee (EMCO) opinion on it. The UK intervention set out the UK’s skills plan and apprenticeship reforms, emphasising the importance of putting employers at the heart of the system. The UK welcomed the EMCO opinion, including recognition that many of these issues were member state competence.
The Council endorsed the Social Protection Committee (SPC) and the EMCO reports on the European semester. The Commission noted and endorsed the streamlining of the European semester process.
There was an exchange of views, followed by a lunch time discussion, on youth employment. The Commission highlighted the tools and funding the Commission has made available to fight youth unemployment. There was then an exchange of views on long-term unemployment.
The presidency outlined the agenda for the Tripartite Social summit on 19 October.
The Council adopted Council conclusions on the Court of Auditors report on Roma integration. Introducing the item, the presidency noted that 6 million Roma living in the EU still faced discrimination and disadvantage. It would bring a second, broader, set of conclusions to Council in December.
The Council generally endorsed the joint EMCO/SPC opinion on the social pillar. The presidency and the Commission confirmed this would not pre-empt member state Government responses to the on-going Commission consultation.
Under any other business, the presidency provided information on the revision of the Blue Card directive, the action plan on integration of third country nationals, and the collaborative economy. The Greek delegation provided an update on labour market reforms in Greece.
[HCWS212]