House of Commons

Tuesday 15th November 2016 Commons Chamber

Tuesday 15 November 2016

The House met at half-past Eleven o’clock

Prayers

Tuesday 15th November 2016 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 15th November 2016 Commons Chamber

The Secretary of State was asked—

[Dan Jarvis (Barnsley Central) (Lab)]

1. What plans he has to prevent excess deaths in the winter of 2016-17.

[The Minister of State, Department of Health (Mr Philip Dunne)]

Last week, NHS England and Public Health England launched the Stay Well This Winter campaign, which last year reached 98% of the over 65s. This year, for the first time, children in year 3 will be offered free flu vaccine, which means that an additional 600,000 children will be protected this winter, making this the largest children’s flu vaccination programme to date. The Government also provide practical support for those most at risk, including winter fuel payments and the warm home discount scheme. We are also working with the NHS and local authorities to implement our cold weather plan, which is poised to respond to pressures on vital health and social care services this winter.

[Dan Jarvis]

It is a national disgrace that so many people die needlessly in this country as a result of the cold each year—43,900 people died over the winter of 2014-15. When will somebody in Government accept some responsibility, show some leadership and act decisively to reduce the appalling number of people who die each winter as a result of the cold?

[Mr Dunne]

I congratulate the hon. Gentleman on the interest that he takes in this subject. I know that he has a petition currently running in his local area. We do take very seriously the additional pressures placed on the NHS primarily by the winter weather but also by disease prevalence, particularly flu. We started winter planning for this coming winter early in the summer. We have regular updates, which I run, and I report to the Secretary of State on how those plans are going. I can assure him that we are taking as many steps as we can to ensure that we are on top of this issue this winter.

[Sir Simon Burns (Chelmsford) (Con)]

As part of the plans to reduce and prevent deaths during the winter, what changes have been made with regard to the winter fuel payments for those eligible residents living in the Mediterranean?

[Mr Dunne]

My right hon. Friend refers to the changes that we introduced under this Government with effect from last year, 2015-16, to reduce the eligibility for those British citizens living in warmer climates around the Mediterranean, which I know caused him considerable concern. I am pleased to be able to tell him that the change in policy last year reduced the amount paid under the winter fuel payments by 70% compared with the previous year to those people living in the European economic area.

[Ian Austin (Dudley North) (Lab)]

One way of preventing excess winter deaths would be to ensure that people can go to their local pharmacy for advice, essential medicines and flu vaccines. Plans to cut pharmacy budgets will hit Dudley hard, with just 1%—one out of Dudley’s 100 pharmacies—getting extra support, compared with 40% in places such as Chesham and Hampshire. Of the thousands of local residents who completed my survey, 97% said that they opposed these cuts. Why will the Minister not listen to the people of Dudley and sort this out?

[Mr Dunne]

I wonder whether the hon. Gentleman included in his survey the fact that the reduction in the establishment payment to each pharmacy will be of the order of £200 a week from 1 December, and £400 a week from 1 April. How many of those pharmacies in Dudley will not be able to sustain that reduction in Government subsidy? We use community pharmacies to undertake flu vaccinations for which they will be paid.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

What can be done to reduce the effect of winter pressures on the bed state of our acute hospitals and thus reduce the awful phenomenon of bed blocking this winter?

[Mr Dunne]

As my hon. Friend knows, we are taking steps, in particular through the sustainable transformation plans, to increase the integration of social care and the health sector. For this winter, we are working hard on delayed transfers of care, to try to ensure that there is more rapid patient flow through our hospitals. That involves closer integration with social care professionals to encourage quicker discharges from the hospitals.

[Mr Dennis Skinner (Bolsover) (Lab)]

One way of making sure that people do not die in the winter or at any other time is for this Government to concentrate on keeping hospitals open, thereby saving the beds. In that context, why does the Secretary of State refuse to answer the question why hospitals such as Bolsover and another half a dozen in Derbyshire are secretly being closed and Ministers are doing nothing about it?

[Mr Dunne]

The question is about flu vaccinations and I strongly encourage the hon. Gentleman to join me in having a flu vaccination, as I believe he is one of the eligible individuals. In relation to Derbyshire, the local health services there are working together to identify the best pattern of provision for a sustainable health service for the future.

[Mr Speaker]

The question was about the prevention of excess deaths, so the hon. Member for Bolsover (Mr Skinner) was entirely in order in his interpretation of the question. It was not about flu vaccinations, and nobody should mislead the House, however inadvertently.

[Mr Philip Hollobone (Kettering) (Con)]

Kettering general hospital would be better able to deal with winter pressures were it given permission to develop its urgent care hub. The hospital tells me that its application has been with NHS Improvement for nine months now. Will the Minister prod NHS Improvement to get a move on in approving this application?

[Mr Dunne]

My hon. Friend held an Adjournment debate recently which I was pleased to respond to. We discussed the status of Kettering general hospital and the foundation trust that runs it. He is correct that it is discussing with NHS Improvement the development of a business case for an urgent care hub, and this is being considered in the context of the wider sustainability and transformation plan. Mr Speaker, I accept your admonishment in respect of my answer to the previous question. Of course, one of the primary solutions to winter excess deaths is the flu vaccination programme.

[Mr Speaker]

Or even admonition.

[Sir Henry Bellingham (North West Norfolk) (Con)]

2. What progress has been made on turning around hospitals in special measures.

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

In the past four years, 31 trusts have been put into special measures, more than one in 10 of all NHS trusts. Of those, 15 have now come out and I particularly congratulate the staff of Sherwood Forest, Wye Valley, and Norfolk and Suffolk trusts which have come out of special measures in the past month.

[Sir Henry Bellingham]

Does the Secretary of State agree that the sustainability and transformation plan for Norfolk and Waveney is a vital part of the Queen Elizabeth hospital’s future as it successfully moves out of special measures? Although there is overwhelming support for integrating health and social care, will he confirm that there will be full consultation with different patient groups on the STP?

[Mr Hunt]

I can absolutely give that assurance. Through my hon. Friend I congratulate the staff of King’s Lynn hospital who have turned things around there. It was a great privilege for me to visit it and see the work that they have done. My hon. Friend is right—the next step is to integrate the work done in acute hospitals with what happens in the community and the social care system. That is why the open and transparent STP process is so important.

[Heidi Alexander (Lewisham East) (Lab)]

I do listen carefully to the Health Secretary and sometimes I end up wondering what planet he is living on. There are as many trusts in special measures now as there are trusts that have come out of special measures. Just because different people in different places are experiencing poor care does not make the overall picture any better. When will the right hon. Gentleman accept that the overall amount of resource going into the system is simply inadequate if he wishes to provide high quality, timely care for all?

[Mr Hunt]

Let me tell the hon. Lady that what is different now is that we have a special measures regime. When Labour was in power, the problems were swept under the carpet and not dealt with. Now they are being dealt with because we want every NHS patient to have confidence that we will not have another Mid Staffs. That is why we are making very good progress. With respect to funding, may I respectfully tell her that had we followed her party’s spending plans, the NHS would have £1.3 billion less this year?

[Mr Ben Bradshaw (Exeter) (Lab)]

The Secretary of State will know that with depressing regularity the same hospitals come up on that list that he has just referred to. Sustainability and transformation plans provide the opportunity to address some of the unsustainable elements of local health economies, but only, as my hon. Friend the Member for Lewisham East (Heidi Alexander) says, if the money is there. With the health service facing its tightest financial settlement in its history, these plans are just not deliverable.

[Mr Hunt]

The right hon. Gentleman understands health extremely well, both from his ministerial position and from being on the Select Committee. If he looks at the hospitals going into special measures, he will see that we are beginning to succeed in moving hospitals out of special measures, but because we have an independent inspection regime, sometimes other ones go in. That is how it should be. That is what works very well in the education sector and is beginning to work well in driving up standards in health care as well.

To go back to my answer to the hon. Member for Lewisham East (Heidi Alexander), £1.3 billion more in the NHS this year compared with what would have been put into the NHS if Labour had won the last election means 30,000 nurses, 13,000 doctors or 200,000 hip replacements that we are able to do because of this Government’s funding of the NHS.

[Peter Dowd (Bootle) (Lab)]

3. How much his Department spent on healthcare as a proportion of GDP in (a) 2009-10 and (b) 2015-16; and what estimate he has made of the amount that will be spent on healthcare as a proportion of GDP in 2020-21.

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

Because of the 2008 financial crisis, all political parties committed to reducing the proportion of GDP spent on health in 2010, but because this Government chose to protect the NHS, the proportion fell from 6.4% to 6.2%, a drop of just 0.2% of GDP.

[Peter Dowd]

While welcome, that creative response does not answer the question. The fall in GDP spent on health is worrying. To mitigate that fall, when can my constituency expect its share of the Brexit NHS bonus to be injected into its health economy, which would bring in £30 million a year?

[Mr Hunt]

No one would be more delighted than the Health Secretary if we had a Brexit bonus for the NHS, which is why we are getting on with negotiating the best possible Brexit deal for this country, including by invoking article 50 as soon as possible.

[Mr Stewart Jackson (Peterborough) (Con)]

I thank the Secretary of State for taking time last week to visit the Peterborough City hospital and to praise the magnificent staff there, who are labouring under a £35 million annual private finance initiative millstone. Is the wider context not that we would have a lot more money to spend on front-line care if we did not have to deal with a poisonous legacy from Labour of £64 billion of appalling PFI contracts in the NHS?

[Mr Hunt]

My hon. Friend is absolutely right. I was incredibly impressed with the staff I met at Peterborough hospital—there was incredible commitment to patients and some fantastic work going on in the oncology and renal departments, which I visited. He is right: PFI was a disastrous mistake, saddling hospitals up and down the country with huge amounts of debt, which cannot now be put into front-line patient care. We are doing everything we can to sort that out and not repeat those mistakes.

[David Tredinnick (Bosworth) (Con)]

My right hon. Friend will be aware that the NHS spends only about £400 million a year on homeopathic medicine and treatments through the 400 doctors who have trained in homeopathy and are members of the faculty. If he wants to reduce antibiotic prescribing, may I suggest that he increases that budget, because there are very good scientific trials now showing that upper respiratory tract infections can be treated using homeopathic medicine? May I write to him about that?

[Mr Hunt]

May I commend my hon. Friend for his great persistence in flying the flag for homeopathic medicine? While we must always follow the science in the way we spend our money on medicines, as I know he agrees, he is right to highlight the threat of antibiotic resistance and the need to be open to every possible way of reducing it.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Today I publish my first annual report as Chair of the Public Accounts Committee, in which I conclude that there is a sustainability crisis in the funding of the NHS. Surely the Secretary of State will agree—he has made some comments in the media that suggest he is becoming aware of this—that he will need to lobby the Chancellor for a better settlement in the autumn statement. Will he update the House on his negotiations?

[Mr Hunt]

I am sorry to disappoint the hon. Lady but I do not update the House on Government discussions which happen in the run-up to every Budget and autumn statement. What I would say to the hon. Lady is that I am not someone who believes that the financial pressures that undoubtedly exist in the NHS and social care system threaten the fundamental model of the NHS. What they remind us all of is that what we need in this country is a strong economy that will allow us to continue funding the NHS and social care systems as we cope with the pressures of an elderly population. That, for me, is the most important challenge—the economic challenge that will allow us to fund the NHS.

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

Will my right hon. Friend confirm that, under his tenure as the Minister, there has been a real-terms increase in spending on the NHS in England, unlike in Wales, where, over the last few years, we have seen real-terms cuts under the Labour party?

[Mr Hunt]

As ever, my hon. Friend speaks wisely. Thanks to this Government, health spending in England is up by 10.1% in cash terms—4.6% in real terms—since 2010. That is double the cash increase in Scotland and three times the cash increase in Wales. Other parties talk about funding the NHS, but Conservatives say that actions speak louder than words.

[Jonathan Ashworth (Leicester South) (Lab)]

But we have seen public health budgets cut and social care budgets cut, and I can now tell the House that the maintenance budgets have been cut. In fact, the backlog of high-risk maintenance facing the NHS has soared by 69% in the past year. In London alone, the high-risk backlog has grown by £338 million; across the country the figure is nearly £5 billion. NHS finances are so stretched that even the most urgent repairs are being left undone. Is this what the Secretary of State meant when he said that he is giving the NHS the money it asked for?

[Mr Hunt]

I know that the hon. Gentleman has only been shadow Health Secretary for a while, but may I ask him to cast his mind back to 2010, when the party that wanted to cut the NHS budget was not the Conservative party but Labour? In 2015, his party turned its back on the five year forward view and said it would increase funding not by £8 billion but by just £2.5 billion. It is not enough to found the NHS—you have got to fund it.

[Mr Speaker]

Order. These exchanges, not untypically, are taking far too long, and part of the reason for that is that the Secretary of State keeps dilating on the policies of the Labour party. If he does so again, I will sit him down straight away. [Interruption.] Order. There are a lot of colleagues who want to ask questions. We want to hear about Government policy, not that of the Opposition. I have said it, it is clear— please heed it.

[Jonathan Ashworth]

Thank you, Mr Speaker.

If everything is so rosy with the NHS’s finances, why did Simon Stevens say just a couple of weeks ago that

“2018-19 will be the most pressurised year for us, where we will actually have negative per-person NHS funding growth in England”—

in other words, that NHS spending per head will be falling? The number of patients waiting longer than four hours in A&Es has increased. The number of days lost to delayed discharge has increased. The number of people waiting more than 62 days to start cancer treatment following referral has increased. Should not the Secretary of State do his job and make sure that next week’s autumn statement delivers the money that the NHS urgently needs?

[Mr Hunt]

Unlike other parties in this House, we have been increasing funding for the NHS. Thanks to that, we are now funding the NHS in England at a 10% higher proportion of GDP than the OECD average, and we are in line with the western European average because of our commitment. These are difficult financial times and there is financial pressure, but this Government have been saying that despite that financial pressure we must make sure that the NHS continues to offer safe, high-quality care—and that is our focus.

[Fiona Mactaggart (Slough) (Lab)]

4. What the average time taken is between referral and treatment for patients with (a) ovarian and (b) bowel cancer; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

The figures for times between referral and treatment are published against the standard whereby 85% of patients should begin treatment within 62 days of GP referral. The September 2016 figures were 69% for bowel cancer and 75% for ovarian cancer.

[Fiona Mactaggart]

Is it not the case that only skin cancer and breast cancer referrals are meeting that 62-day target? Is it not unsurprising that the survival rate over 10 years is 78% for breast cancer and 89% for skin cancer, whereas it is 35% for ovarian cancer and 57% for bowel cancer? How does the Minister feel about these excess deaths, and what is he going to do to ensure that people with these cancers are treated in time?

[David Mowat]

There are eight cancer standards for waiting times and we are consistently meeting seven of them, as we did in September. The right hon. Lady is right to say that the 62-day waiting time has been challenging, and that has an impact on bowel cancer and ovarian cancer. It is also true, though, that one-year, five-year and 10-year survival rates for bowel and ovarian cancer are improving significantly. However, we do need to go further. That is why all 96 recommendations of the Cancer Taskforce have been accepted—we are investing up to £300 million to make that happen—and there is going to be a new test whereby all patients will be either diagnosed or given the all-clear within 28 days.

[Simon Hoare (North Dorset) (Con)]

I refer to my entry in the register. Does my hon. Friend agree that research will defeat bowel and gastrointestinal tract cancer, and may I invite him to congratulate Bowel and Cancer Research on its fundraising and support for the cancer research community?

[David Mowat]

My hon. Friend is quite right: research, in the end, is the way we will beat cancer. This country is ahead of all countries in the world in terms of the number of trials going on, including the US. The voluntary sector, including the charity to which he refers, makes a big impact and I congratulate it.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I lost my mum to ovarian cancer just a few years ago. She received outstanding treatment at the Rosemere centre in Preston. That is the centre that my constituents need to travel to for radiotherapy for all forms of cancer, but an average round trip to receive treatment takes about two hours. Does the Minister agree that that is not acceptable, and will he support the Rosemere centre in setting up a satellite unit at Kendal hospital, so that people in south Cumbria can get treatment quickly?

[David Mowat]

I certainly agree with the hon. Gentleman that two hours is a long time. His is a large constituency and I am very happy to look at his specific point and to revert to the House.

[Mr Peter Bone (Wellingborough) (Con)]

Like the hon. Member for Westmorland and Lonsdale (Tim Farron), I lost my mother to ovarian cancer. One of the reasons is late diagnosis and it has been suggested that cervical smear results should state that it is not a test for ovarian cancer. Will the excellent Minister update the House on his research on that proposal?

[David Mowat]

My hon. Friend is right to say that one of the big issues with ovarian cancer—we talked about this earlier—is that early diagnosis does not happen as quickly as it should. It is true that the cervical cancer test could raise awareness of ovarian cancer. We are looking at the issue and will revert to the House.

[Jim Shannon (Strangford) (DUP)]

Ovarian cancer accounts for some 12% of all new cases, and early diagnosis is critical. What discussions has the Minister had with the devolved Assemblies to co-ordinate and make available better treatment options, to provide a truly UK-wide NHS?

[David Mowat]

This is a reserved matter, but the hon. Gentleman is right to say that early diagnosis is the single most important thing that we need to do better in order to improve our cancer out-turn rates, and that dialogue continues.

[Michael Fabricant (Lichfield) (Con)]

Is it not rather unfair to compare outcome rates for skin cancer, with which I was diagnosed, with those for other types of cancer, because it is easier to diagnose skin cancer at an early stage, which means that the outcomes are usually very good?

[Fiona Mactaggart]

If it is treated in time.

[Michael Fabricant]

Yes, because it is easier to diagnose at an early stage—that is the point I am making. Compared with 2010, are we not seeing more than 26,000 extra outpatients a day?

[David Mowat]

Compared with 2010, we are referring an average of 800,000 more people urgently for cancer treatment. My hon. Friend is also right to say that both skin and lung cancer have more straightforward pathways than ovarian and bowel cancer, but that is not to say that we should not focus on continually improving in relation to the points made by the right hon. Member for Slough (Fiona Mactaggart).

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

5. What steps he is taking to implement his Department’s childhood obesity strategy.

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

8. What steps he is taking to implement his Department’s childhood obesity strategy.

[The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)]

The Department is working closely with Public Health England, the national health service, local authorities, schools and other partners as we implement the childhood obesity strategy. We have already taken firm action, including consulting on the soft drinks industry levy and launching a broad sugar reduction programme.

[Stuart C. McDonald]

Channel 4’s “Dispatches” programme has comprehensively demonstrated how the former Prime Minister’s obesity strategy was drastically watered down by the time of the final publication. Both Public Health England and the Health Committee agree that control of in-store promotions of unhealthy food is absolutely vital. Why was regulation of such promotions ditched from the Government strategy?

[Nicola Blackwood]

We have made no secret of the fact that we considered a range of policies before publishing the childhood obesity strategy, which is a world-leading strategy and one of the most ambitious in the world. It will cut childhood obesity by one fifth in the next 10 years, and I am determined that we do not get lost in a debate about what it could or should have been, but instead get on with implementing it. Our children deserve no less.

[Gavin Newlands]

A few weeks ago, I hosted a Westminster forum on the implementation of the strategy, at which there was much consternation about why another important recommendation—the creation of a 9 pm watershed to reduce children’s exposure to junk food advertising—was cut. Does the Minister not realise the seriousness of the obesity crisis, and can she explain why that important measure was dumped?

[Nicola Blackwood]

Current restrictions on the advertising of less healthy food and drink in the UK are among the toughest in the world, so I am pleased to reassure the hon. Gentleman and his constituents on that fact.

[Mr Mark Harper (Forest of Dean) (Con)]

May I draw the Minister’s attention to some excellent leadership from the private sector? Lucozade Ribena Suntory, which is based in my constituency, announced last week —rather buried in the news from the United States of America, I am afraid—that it was going to take 50% of sugar out of its soft drinks by reformulating all its new and existing products. That demonstrates really good leadership and is an example to other companies.

[Nicola Blackwood]

I welcome my right hon. Friend’s question. He is absolutely right. We very much welcome the actions of not only Lucozade but Tesco in cutting the sugar in their drinks. It is proof that doing so is possible and meets the expectations of many consumers.

[Maggie Throup (Erewash) (Con)]

Recent data from the national childhood measurement programme shows that obesity rates have risen for the second consecutive year. With that in mind, will the Minister outline what further steps she has taken to make the childhood obesity plan for action into a true strategy?

[Nicola Blackwood]

As I have been saying during this Question Time, I am absolutely determined to focus on implementing the plan that we have. It is one of the most ambitious in the world, and it will deliver a reduction of a fifth in childhood obesity over the next decade. However, we have been clear that this is not the final word; it is just the beginning of the conversation. I would welcome contributions from my hon. Friend, who is a dogged campaigner on this issue.

[Keith Vaz (Leicester East) (Lab)]

Yesterday, on World Diabetes Day, the Prime Minister opened the new headquarters of Diabetes UK and said that the number of cases of diabetes increased by 75% in the last decade. The Minister and I attended the launch of the Food Foundation’s declaration on how to tackle obesity. Which of the 10 measures put forward by the foundation has she decided to accept?

[Nicola Blackwood]

The right hon. Gentleman is absolutely right to raise this issue, and we are considering the contributions from the Food Foundation, which are very important. He is right about the role that obesity plays in triggering diabetes. That is why we are focusing on preventing type 2 diabetes through the world’s first national diabetes prevention programme, which aims to deliver at-scale, evidence-based behavioural change to support people to reduce their risk of developing type 2 diabetes.

[Philip Davies (Shipley) (Con)]

May I urge the Minister, in tackling childhood obesity, not to go down the line of nanny-state proposal after nanny-state proposal, but instead to look at Active Movement, which is in operation in a number of areas around the country? It builds exercise into the average day of children in schools, and it is already making a great difference to childhood obesity levels.

[Nicola Blackwood]

I very much welcome the hon. Gentleman’s support for a key plank of the childhood obesity strategy, which is helping all children to enjoy an hour of physical activity every day and which will include physical movement as well as specific physical education.

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

Another target that “Dispatches” uncovered was to be scrapped was the target to halve childhood obesity by 2026. This was compounded by recent national childhood measurement data showing that obesity is on the rise and that obesity rates are more than double in deprived areas compared with more affluent ones. Instead of squandering this opportunity, the Government should be pushing ahead with a comprehensive and preventive strategy. Can the Minister explain, therefore, why this significant target was dropped from the Government’s plans to tackle childhood obesity?

[Nicola Blackwood]

The hon. Lady is right to say that the childhood obesity strategy is one of our key priorities for tackling health inequalities in the UK. Obesity prevalence for children living in the most deprived areas is double that for those living in the least deprived areas, and the gap continues to widen. That is exactly why we will press ahead with the plan, but, as she has said, this is just the beginning of the conversation and we will continue to fight obesity as a government priority.

[Ms Angela Eagle (Wallasey) (Lab)]

6. What discussions he has had with local government representatives on the sustainability and transformation plan process.

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

The STPs are a collaborative local effort, involving providers and commissioners coming together with other stakeholders to produce place-based plans. The vast majority of plans have been developed jointly between the health sector and local authorities. Several plans have been led by local government.

[Ms Eagle]

Yesterday, the King’s Fund rightly characterised what is euphemistically called the sustainability and transformation project as being planned in secret, behind the backs of patients and the public. In Merseyside and Wirral, we know from leaks that the Government are going to cut £1 billion from our local national health service, which, despite rising demand, will close hospitals, downgrade many accident and emergency departments and possibly leave the whole of Wirral without an acute hospital. Will the Minister now come clean and publish these plans in full, and will he undertake to visit Wirral so that my constituents in Wallasey can come and have a word with him about his plans for their NHS?

[David Mowat]

To be clear, every single STP will be published by Christmas. About 12 have been published so far, and the Cheshire and Merseyside STP will be published tomorrow. When the hon. Lady has access to it, she will see that some of the statements she is making are just scaremongering. She mentioned the King’s Fund, so let me quote it:

“The King’s Fund continues to believe that STPs offer the best hope of delivering long term improvements to health and care services.”

That is what the King’s Fund says.

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

20. Will the Minister ensure that NHS managers undertaking the STP process affecting North Devon are fully aware of my constituents’ concerns, especially in relation to our geographical isolation? In particular, will he ensure that they are aware of their concerns in Ilfracombe, which has suffered from decades of health inequality because of its location?

[David Mowat]

It is vital that every STP engages with all stakeholders, and that includes North Devon. The public and, indeed, MPs should engage in the process as critical friends to try to make these plans better.

[Norman Lamb (North Norfolk) (LD)]

Despite reassurances, there are still concerns that mental health remains peripheral to STPs in many areas. Will the Minister provide some further reassurance, because unless the Government absolutely insist that mental health is central and that resources are focused on prevention in mental health, these plans will simply fail?

[David Mowat]

I give the right hon. Gentleman the categorical assurance that better mental health is a fundamental part of what the STPs are trying to achieve, as are better cancer outcomes and better integration of adult social care. If an STP does not include those things, it will have to continue to evolve until it does.

[Richard Fuller (Bedford) (Con)]

The Mayor of Bedford, Dave Hodgson, and I have a common approach to the STP in Bedford—it is ably led by Pauline Philip, the chief executive officer of Luton and Dunstable hospital—but he is frustrated that he is not being involved and that his voice is not being heard in the process. Will my hon. Friend ensure, when he reviews all the STPs, that he gets a guarantee in every single case that the local authorities have bought into the plan, and, if not, that they will not proceed?

[David Mowat]

I give my hon. Friend the categorical assurance that if local authorities and the NHS managers doing the planning work have not engaged properly, the plan will not be considered to be complete. That does not mean that every local authority has a veto on its STP.

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

Following on from that point, the Minister has previously said that STPs will

“not go ahead if councils believe they have been marginalised.”

Given that seven councils in London and west Yorkshire have already rejected their STPs and, as we have heard, that council leaders from both main parties have expressed concerns about the Cheshire and Merseyside proposals, does the Minister have a plan B when it comes to rejected STPs?

[David Mowat]

In a previous answer, I made the point that every local authority should be engaging with its STP, and the NHS must ensure that that happens. That is not the same as saying that every local authority has a veto on the STP, which was the implication of the hon. Gentleman’s point.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

7. What assessment he has made of the effect of changes to local authority social care budgets on the level of delayed discharges from hospital.

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

The Government are giving councils access to a further £3.5 billion for social care by 2019, which will mean a real-terms increase over the lifetime of this Parliament. The causes of delayed transfers of care are complex and, frankly, vary considerably by local council.

[Tom Blenkinsop]

The Care Quality Commission has commented that social care is on the verge of collapse. The Government have had six years of warnings in relation to this matter, yet they have cut £4 billion from the social care budget. Will the Secretary of State for Health be talking to his colleague the Chancellor of the Exchequer to ensure that the £4 billion is replaced in the autumn statement?

[David Mowat]

The system is under pressure but we also know that the best way to achieve the best results is faster integration, and not just money. I will give the hon. Gentleman an example. There is a massive disparity between councils. The best 10% of councils have 20 times fewer delayed transfers of care than the worst 10%. It is not just about money, as the budgets are not 20 times different. Indeed, many councils have been able to increase their budgets, including Middlesbrough.

[Dr Sarah Wollaston (Totnes) (Con)]

The Minister is aware of the Health Committee’s concerns about the effect of underfunding of social care on the NHS. He may also be aware that there are particular concerns in my area and in the constituency of my hon. Friend the Member for Torbay (Kevin Foster) because of the recent Care Quality Commission rating of Mears Care as inadequate. Coming on the back of community hospital closures in Paignton, that gives grave concern to all our constituents. Will the Minister meet me and my hon. Friend the Member for Torbay to discuss this further?

[David Mowat]

My hon. Friend is right that there was an inadequate CQC rating for that care home. It is therefore right that the care home must either improve or go out of business. That is what the CQC regulatory environment will ensure. She makes a point about the issue with the hospital in Paignton; that is out for consultation at the moment, and I would expect the local care situation to be part of that consultation.

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

The National Audit Office report “Discharging older patients from hospital” said that

“there are…far too many older people in hospitals who do not need to be there”.

Delayed discharges reached a record level in September. The Minister says that this is complex, but I can tell him that the main drivers for that increase were patients waiting for home care or for a nursing home place; those issues are both related to the underfunding of social care. Does he agree with NHS England chief executive Simon Stevens that any extra funding from Government should go into social care?

[David Mowat]

As I said earlier, we accept that the system is under pressure, but we also make the point that there is a massive disparity between different councils. Some 13% of local authorities cause 50% of the delayed transfers of care—DTOCs. The real point is that those local authorities that go furthest and fastest in integration, with trusted assessors, early discharge planning and discharge to assess, have the most success.

[Sir Hugo Swire (East Devon) (Con)]

Northern, Eastern and Western Devon clinical commissioning group is already consulting on the possible closure of community beds across Devon. The social care budget in East Devon, an area of elderly people, and the rest of the county is already under severe pressure. That pressure will inevitably increase if community beds are closed. Will the Secretary of State therefore commit to putting those points to the Chancellor of the Exchequer in the run-up to the autumn statement?

[David Mowat]

The Secretary of State has already made the point that we do not give a running commentary on the status of discussions with the Treasury, but I accept my right hon. Friend’s point about his local issue.

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

9. What assessment he has made of the performance of NHS England in meeting A&E waiting time targets in the last 12 months.

[The Minister of State, Department of Health (Mr Philip Dunne)]

Last year, the NHS in England handled 2.4 million more A&E attendances than when this Government took office. There has been a 4.6% increase in attendances, compared with only a 1.2% increase in Scotland. Despite that significant increase in demand the NHS has coped well, with nine out of 10 patients still seen within four hours.

[Alan Brown]

I thank the Minister for that answer, but the truth is it must do better and needs more support. In September, only 86% of patients were treated within the four hour target time in English A&E departments; by contrast, in Scotland it was 95%, for a record consecutive period. Given that winter is coming, what will the Minister do to ensure the service copes?

[Mr Dunne]

The hon. Gentleman should know that, according to figures for the most recent month available, 90.6% of A&E attendances were seen within the four hours. We are aware that the system remains under pressure, and are putting efforts into identifying steps through the A&E improvement plan, with five specific measures to improve front-door streaming, back-door discharge and patient pathways through hospitals to improve that performance.

[Anne Marie Morris (Newton Abbot) (Con)]

19. Rural areas have high demand for primary and social care that increases the pressure on A&E if it is not met. Given the relationship between primary, secondary, A&E and social care, does the Minister also measure waiting times in primary and social care in the same way? That would give him a fuller picture of the demands on the system that need addressing.

[Mr Dunne]

The short answer is that at present we do not record waiting times in the same way. Tests are being undertaken in relation to waiting times for GPs, but at this point I do not have access to the data.

[Sir Edward Leigh (Gainsborough) (Con)]

22. As we are unlikely to reach my question on the Order Paper, perhaps the Minister could now direct his attention to the east midlands where we have problems with A&E, particularly for people in rural areas. For those of us who rely completely on the NHS, this is obviously a matter of vital concern. I just wonder whether we should not have an honest debate about this and recognise that we have an ageing population. Our A&E times are stressed and we may have to either tax people more or even think the unthinkable and charge people for—[Interruption.] See, it is unthinkable, but we have to concentrate on the essentials. Let us have an honest debate about the finances of the NHS.

[Mr Dunne]

My hon. Friend will be aware that the sustainability and transformation plans discussed earlier today are designed to bring closer integration of health providers and commissioners within a health system area, such as the east midlands. The ambition is to integrate better health and social care provision to avoid some of the challenges he identifies.

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

The A&E target the Minister mentions is actually a measure of the entire acute system. Important in that is the flow of patients from admission through treatment to discharge. In Scotland, delayed discharges have fallen 9% since health and social care were integrated. In England, they have gone up 30%. Does the Minister accept the need to fund social care properly to relieve the back pressure on A&E?

[Mr Dunne]

I listen with great interest to what the hon. Lady says, but I gently remind her of two things. First, as the result of the generosity of the Barnett formula, Scotland receives £1,500 per capita more to spend on health than England. Secondly, the Auditor General for Scotland recently reported that NHS Scotland was failing to meet seven out of eight key targets, including waiting times for A&E.

[Dr Whitford]

I wonder how many targets are being missed in England. The Royal College of Emergency Medicine report demonstrates that in the 176 emergency departments in England there are only enough consultants to provide the cover of one for 16 hours a day. On top of that, rota gaps among junior doctors are causing safety concerns. What exactly is the Minister going to do this winter and will he agree to lift his ban on locum agency staff to help to keep A&Es functioning?

[Mr Dunne]

We recognise that there have been pressures on emergency departments for some years, which is why we have put particular effort into recruiting more consultants. There are, I believe, 50% more consultants working in emergency departments in England than there were in 2010, and 25% more doctors.

[Henry Smith (Crawley) (Con)]

10. What steps his Department is taking to improve the safety of maternity care.

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

Last month, I launched the safer maternity care action plan, which is part of our ambition to halve the rates of stillbirths, neonatal deaths, maternal deaths and brain injuries by 2030.

[Henry Smith]

I am grateful to my right hon. Friend for that answer. In 2001, the then Labour Government closed the maternity unit at Crawley hospital. Longer journeys to East Surrey hospital have been a safety concern. Will the Department look at reintroducing midwife services to Crawley hospital and GP surgeries in Crawley?

[Mr Hunt]

I am happy to talk further with my hon. Friend. He knows that this is a local matter. It was, I think, looked into in 2014, but if the pattern of demand changes it should be kept under review.

[Jeff Smith (Manchester, Withington) (Lab)]

11. What assessment he has made of the effect of changes to local authority social care budgets on the demand for health services.

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

Social care plays a vital role in keeping people healthy and independent, which is why the Government are making a further £3.5 billion available by 2020—a real-terms increase over the lifetime of this Parliament. There is an overlap between care and health, which is why faster integration is our major priority.

[Jeff Smith]

The Secretary of State’s Conservative predecessor, Stephen Dorrell, has said this month that we are increasingly using our acute hospitals as “unbelievably expensive care homes”, and he described this as a “grotesque waste of resources”. Is it not the case that the Government have simply outsourced the hardest decisions on social care cuts to the hardest-pressed local authorities to ensure that councils get the blame, not the Government, and that ultimately it is the NHS that suffers?

[David Mowat]

As I said earlier, we agree that the social care system is under pressure, but we also make the point that there is a massive disparity between the performance of different parts of that system. For example, Manchester, the hon. Gentleman’s own patch, has a DTOC performance seven to eight times worse, per 10,000 patients, than Salford, in spite of the 15% increase in its budget this year.

[Caroline Ansell (Eastbourne) (Con)]

A small-scale study by Professor Peter Fleming has recently made the press. It links cardiorespiratory compromise in new-borns with sleeping in car seats for prolonged periods—over 30 minutes. Given that for many Eastbourne babies, one of their first life experiences is the journey home from Hastings hospital, which is longer than 30 minutes, will the Department look at these findings, consider whether further study is required and offer reassurance to parents rightly concerned by the research?

[David Mowat]

This is a very difficult case. The Department will look at the evidence and revert to the House.

[Mr Speaker]

That was very dextrous handling of a very broad interpretation of the question on the Order Paper, but I hope that honour has been served.

[Helen Jones (Warrington North) (Lab)]

14. The Cheshire and Merseyside sustainability and transformation plan relies heavily on more care in the community. Does the hon. Gentleman accept that this will not work while local authority social care is being cut to the bone, because it will merely send people back to their own homes, where their health will deteriorate?

[David Mowat]

The Cheshire and Merseyside STP will be published tomorrow, and we will all know better then what it says. The hon. Lady is right that there is an interaction between social care and health, but she and I, as Warrington MPs, must both be pleased that Warrington is one of the top performers in terms of delayed transfers of care, and on that we should congratulate our local authorities.

[Jason McCartney (Colne Valley) (Con)]

12. What discussions he has had with NHS England on the reconfiguration of A&E units.

[The Minister of State, Department of Health (Mr Philip Dunne)]

It was this Government who first introduced key tests for service change, giving local people a say. We need an NHS that is ready for the future, and sustainability and transformation plans will help to ensure the best standards of care, with local doctors, hospitals and councils working together in conjunction with local communities for the first time. No decisions about service reconfigurations, including A&E units, will be made without local consultation, as is currently the case.

[Jason McCartney]

How can it be right that the disastrous private finance initiative deal at Calderdale is dictating that Huddersfield royal infirmary be bulldozed, leaving Huddersfield as the largest town in England without an A&E unit?

[Mr Dunne]

I am familiar with my hon. Friend’s concern for the hospital in Huddersfield. We have discussed it previously. Calderdale royal hospital was an early PFI and is halfway to paying off its liabilities. The present proposal, put forward by the local CCGs, for moving to a full outlined business case would involve an A&E trauma centre on a single site, but there would continue to be emergency care in Huddersfield 24 hours a day, seven days a week, and it would maintain the capability to assess and initiate treatment of all patients, if it were to proceed.

[Mr Speaker]

Hoping for an un-lawyerlike brevity, I call Mr Alistair Carmichael.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

13. What recent assessment his Department has made of the effect of the vote for the UK to leave the EU on future recruitment of nurses to the NHS.

[The Minister of State, Department of Health (Mr Philip Dunne)]

The NHS currently employs 21,030 nurses from the EU—6.6% of the total number of nurses in the workforce—while a further almost 90,000 EU citizens work in the social care sector across the UK. They all do a fantastic job, and we have been clear that we want them to be able to stay post-Brexit.

[Mr Carmichael]

What is the Minister going to do to achieve that then?

[Mr Dunne]

My right hon. Friend the Secretary of State has discussions with Cabinet colleagues handling the negotiations, and I am sure that his messages are being well heard across Government.

[Mr Speaker]

The right hon. Member for Orkney and Shetland (Mr Carmichael) is in line for an award.

[Paul Blomfield (Sheffield Central) (Lab)]

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

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

I am pleased to report to the House something I was not sure I would ever be able to say: last week, the British Medical Association called off its industrial action and committed to working with the Government on the implementation of new contracts for junior doctors. This will make a significant contribution to our commitment to a safer, seven-day NHS, and the Government will work constructively with junior doctors to address their concerns, because they are a vital and valued part of our NHS.

[Paul Blomfield]

The South Yorkshire and Bassetlaw STP sets out some very positive ambitions, but it warns that there will be a financial shortfall for health and social care services in our area of £571 million by 2020-21. Those ambitions are unachievable unless the Government address the shortfall. What is the Secretary of State going to do about it?

[Mr Hunt]

We are working very carefully with all STP areas to make sure that their plans are balanced so that we can live within the extra funding we are putting into the NHS—an extra £10 billion—by 2020-21. We will look at that plan and do everything we can to help to make sure that it works out.

[Andrew Selous (South West Bedfordshire) (Con)]

T3. Will the Secretary of State join me in thanking Dr Ollie O’Toole of the Kirby Road surgery in Dunstable for representing all of the very best in a family doctor? Will he also explain what more we can do to encourage people to go into general practice rather than working for locum companies, which so many seem to want to do at the moment?

[Mr Hunt]

I am happy to do that, and I would like to pass on my congratulations to Dr O’Toole, who obviously does a fantastic job for my hon. Friend’s constituents. We are investing significantly in general practice, with a 14% increase in real terms over this Parliament and our ambition to provide an extra 5,000 doctors working in general practice. This will mean that the need for locums will become much less and we can have much more continuity of care for patients.

[Julie Cooper (Burnley) (Lab)]

The Secretary of State and the Minister will be aware that Capita has wreaked havoc in GP surgeries across the land, placing extra pressures on already overstretched NHS staff, compromising patient safety and breaching confidentiality. Last week, I met a group of practice managers who told me that some patient records have been missing for months, while others have turned up apparently half-eaten by mice. Given that this contract was introduced to save the NHS money, will the Minister tell us how much it is costing to rectify the mess and what steps she is taking to compensate GPs for the expenses they have incurred as a result of ill-conceived and poorly implemented contracts?

[The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)]

The hon. Lady is right that the current delivery of this contract by Capita is unacceptable. I have met NHS England and Capita regularly to make sure that rectification plans are in place. We are assured that these steps are now in place and that the programme will improve.

[Tom Pursglove (Corby) (Con)]

T4. Across north Northamptonshire there is an enormous appetite for the new urgent care hub to be built at the site of Kettering general hospital, relieving pressure on A&E and improving services for patients. Will the Minister update us on progress?

[The Minister of State, Department of Health (Mr Philip Dunne)]

As I said to my hon. Friend’s parliamentary neighbour, my hon. Friend the Member for Kettering (Mr Hollobone), we are aware that Kettering hospital has put forward a proposal. The outline business case is due to be discussed with NHS England in the coming weeks. In the meantime, we are looking at an interim solution for relieving pressure on A&E services in the area.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

T2. Diabetes is a big problem in my constituency, and the number of unnecessary lower limb amputations due to diabetes is on the rise. Will the Minister ask clinical commissioning groups to provide fully staffed community podiatry foot protection services to avoid amputations, keep people in work and make huge cost savings?

[Nicola Blackwood]

The hon. Gentleman is absolutely right that diabetes is a major health risk in the UK. That is why we have rolled out the first ever NHS diabetes prevention programme this year on 27 sites, covering nearly half of England and referring nearly 10,000 people. Next year, the second wave of the programme will reach a further 25% of the English population. The aim is for the NDPP to be rolled out across the whole of England by 2020 to support 100,000 people at risk of diabetes each year.

[Robert Neill (Bromley and Chislehurst) (Con)]

T6. Proper integration of adult social care and health services requires co-operation on both sides. Does the Secretary of State agree that it is really not acceptable that in a borough such as Bromley, the CCG top-sliced only 3.5% of its funding to go into the better care fund—nowhere near enough to make a difference to hard-pressed local services?

[Mr Jeremy Hunt]

I thank my hon. Friend for bringing up that issue. Everyone recognises, on both sides of the House, that the health and social care sectors need to work together. That happens very well in some parts of the country, but not in others. I think all hon. Members have a job to make sure that people behave responsibly in their constituencies.

[Chris Law (Dundee West) (SNP)]

T5. Both Public Health England and Food Standards Scotland support restricted advertising of junk food to children, yet this was entirely omitted from the Government’s completely underwhelming obesity strategy. Given that we clearly cannot rely on the UK Government to take this forward, will the Secretary of State support the devolution of broadcasting powers to allow the Scottish Government to tackle the obesity crisis and its devastating impact on society?

[Nicola Blackwood]

The obesity plan is one of the most ambitious in the world. It will reduce obesity by a fifth by cutting the amount of sugar in our food, helping all children to engage in an hour of physical activity a day, and making it easier for families to make healthy choices. We already have some of the toughest advertising rules in the world, and we have consulted Scotland closely on these arrangements.

[Henry Smith (Crawley) (Con)]

T7. The anti-coagulation service at the Furnace Green general practice was recently moved to Crawley hospital, which has caused concern to some local patients. Will a member of the health ministerial team agree to meet me to discuss that further?

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

I understand that the clinical commissioning group has provided an alternative which is no more than two miles away, but I should be happy to meet my hon. Friend to discuss the matter.

[Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)]

Climbing obesity rates are expected to lead to increases in type 2 diabetes, cardiovascular disease and the need for joint replacements, which will put even greater pressure on the NHS. Given such threats to health, does the Secretary of State really think that now is the time for timidity and sucking up to business?

[Nicola Blackwood]

As I have made absolutely clear today, I am determined not to allow the House to get lost in a debate about what the plan could or should have been. Our children deserve more from us. We should not politicise this debate; we should get on with delivering the plan that we have before becoming involved in a lengthier conversation about what a long-term obesity programme should be.

[Antoinette Sandbach (Eddisbury) (Con)]

T8. General practices in Winsford are being underfunded by 3.6% in terms of the formula that should apply to them because of the slow rate of change, while nearby Merseyside practices are being overfunded by 5%. That is resulting in a £30 million loss to my local surgeries. Will the Minister commit himself to looking into it and introducing a quicker rate of change, so that local residents can benefit from the funds that they should be receiving?

[David Mowat]

In 2016, the Government implemented a new formula for allocation, which means a better deal for underfunded areas such as Winsford. As my hon. Friend has noted, however, the extra money is being phased in over a few years to prevent distortions. This year her local CCG received an increase of more than 3%, and the funding will continue to catch up as a result of the new mechanism.

[Mr George Howarth (Knowsley) (Lab)]

The Minister rightly said that greater integration between health and social care was a prize worth striving for. Why do local government leaders on Merseyside feel that they have been excluded from discussions about the STP process? If we are to make progress, they need to be part of the solution.

[David Mowat]

As I said earlier, local engagement with all stakeholders is necessary. The STP for Cheshire and Merseyside will be published tomorrow. It is essential for local authorities to engage in it as it evolves, and it is essential for MPs to engage in it—as critical friends—to make the plans better.

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

T9. According to a report published recently by the British Lung Foundation, 1.2 million people are suffering from and have been diagnosed with chronic obstructive pulmonary disease, while many more sufferers have not been diagnosed. Will the Minister support the establishment of an independent respiratory taskforce to help diagnosis and improve lung health for everyone?

[Nicola Blackwood]

I know that the British Lung Foundation has called for a taskforce on lung health. Given that a million people have been diagnosed with COPD and a further million remain undiagnosed, the Government and the NHS are keen to work with the NHS and the voluntary sector to find practical and innovative ways of improving outcomes for patients with respiratory disease, and I will consider my hon. Friend’s proposal as part of that process.

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

The number of nurses working in mental health has fallen by 15% since 2010, from 45,384 to 38,774. Why is that, and does the Secretary of State believe that it will achieve real parity of esteem for mental health in our country?

[Mr Jeremy Hunt]

What I can tell the hon. Lady—who, I know, rightly campaigns hard on mental health—is that we are treating 1,400 more people in our mental health services every day than we did in 2010, and we will be treating a million more people every year when we have implemented the taskforce report. We are investing more, and we are making good progress.

[Matt Warman (Boston and Skegness) (Con)]

Shared care allows GPs to provide complex prescriptions for drugs such as methotrexate, but in my constituency the Beacon surgery recently withdrew from those arrangements. Can the Secretary of State assure me that the Department will support not only patients who now face potentially longer round trips, but GPs themselves, so that they can continue to provide those vital services?

[David Mowat]

The arrangement my hon. Friend describes is a special relationship whereby a GP agrees with a hospital consultant to prescribe complex drugs which are normally only hospital-prescribed. This is not part of the standard GP contract and they cannot be required to provide this service. On the specific issue raised, we have asked NHS England to determine whether there are alternatives and I will revert to my hon. Friend on that.

[John Cryer (Leyton and Wanstead) (Lab)]

Is the Minister satisfied that the National Institute for Health and Care Excellence procedures for the approval of anti-cancer drugs are sufficiently speedy, because the waiting times for approvals can be months or even years, and there is a widespread feeling that that is too slow?

[Mr Jeremy Hunt]

We have tried to speed this up with the cancer drugs fund, which helped 84,000 people in the last Parliament, but we always keep the NICE procedures under review and I take on board what the hon. Gentleman says.

[Bob Blackman (Harrow East) (Con)]

We recently had an excellent debate in Westminster Hall on the Government’s tobacco control strategy. When will they publish the new strategy, which was promised for publication this summer?

[Nicola Blackwood]

The UK is a world leader in tobacco control and we have a proven record in reducing the harm caused by tobacco. We should be proud of the fact that smoking rates among adults and young people are at the lowest ever level, but my hon. Friend is right to push for the tobacco control plan because there is unacceptable variation. We are working on developing that plan, which we will be publishing shortly.

[Danny Kinahan (South Antrim) (UUP)]

In Northern Ireland in 2014-15, 870 deaths were due to the cold weather. Will the Minister engage with other Ministers to ensure that fuel poverty is looked at by all Departments, so that the pensioners who raised this in Parliament do not suffer from the health matters that are killing them off?

[Mr Dunne]

I thank the hon. Gentleman for making that point. We do of course have the cold weather payment system in force across the UK, and later this week I will attend a meeting with other Government Ministers to look at winter preparedness across the board.

[Kevin Foster (Torbay) (Con)]

The Minister will be aware of the concerns in Torbay about the impact on accident and emergency services from the potential loss of the minor injuries unit at Paignton hospital. Does he agree that it is vital that MIU services are kept within Paignton given that it is the second biggest town in Devon?

[Mr Dunne]

My hon. Friend is aware that a consultation is going on regarding services in south Devon. The point he makes has been well made and I am sure it will be taken into account by the clinical commissioning group and the local community hospital trust.

[Several hon. Members rose—]

[Mr Speaker]

Order. I am sorry but we must move on. Demand at Question Time tends to exceed supply. I recognise the intense interest in these matters, but it would help if questions and answers were shorter—or maybe the Government want to propose a larger allocation of time for Health questions. But there is much interest and only limited time in which to accommodate it.

Tuesday 15th November 2016 Commons Chamber

Prison Officers Association: Protest Action

Tuesday 15th November 2016 Commons Chamber

12:38

[Richard Burgon (Leeds East) (Lab)]

(Urgent Question): To ask the Secretary of State for Justice if she will make a statement on today’s protest action by the Prison Officers Association.

[The Lord Chancellor and Secretary of State for Justice (Elizabeth Truss)]

I am grateful to the hon. Gentleman for the chance to update the House on this important issue.

Prison officers do a tough and difficult job, and I have been clear that we need to make our prisons safer and more secure. I have announced that an extra 2,500 officers will be recruited to strengthen the frontline. We are already putting in place new measures to tackle the use of dangerous psychoactive drugs and improve security across the estate.

I met the Prison Officers Association on 2 November. Over the past two weeks, my team has been holding talks with the POA on a range of measures to improve safety. Those talks were due to continue this morning. Instead, the POA failed to respond to our proposals and called this unlawful action, without giving any notice. The chief executive of the National Offender Management Service, Michael Spurr, spoke to POA chairman Mike Rolfe this morning reiterating our desire to continue talks today. That offer was refused. The union’s position is unnecessary and unlawful, and it will make the situation in our prisons more dangerous. We are taking the necessary legal steps to end this unlawful industrial action.

The Government are absolutely committed to giving prison officers and governors the support that they need to do their job and to keep them safe from harm. In addition to recruiting an extra 2,500 prison officers, we are rolling out body-worn cameras across the prison estate and we have launched a £3 million major crimes taskforce to crack down on gangs and organised crime. In September we rolled out new tests for dangerous psychoactive substances and we have trained 300 dogs to detect these new drugs. We have set up a daily rapid response unit, led by the prisons Minister, my hon. Friend the Member for East Surrey (Mr Gyimah), to ensure that governors and staff have all the support that they need.

Taken together, these measures will have a real and swift impact on the security and stability of prisons while we recruit additional front-line staff. I urge those on the Opposition Front Bench to join me in condemning this unlawful action, and in calling on the POA to withdraw this action and get back to the negotiating table.

[Richard Burgon]

The Justice Secretary has been told repeatedly that the prisons she presides over are dangerous and volatile. Assaults on staff and prisoners are rising. In the 12 months to June 2016, there were nearly 6,000 assaults on staff, 24,000 prisoner-on-prisoner assaults, and 105 self-inflicted deaths of prisoners. There are 6,000 fewer officers on the frontline than in 2010. Staff shortages are stark and morale is low, and officers and prisoners alike feel unsafe. The Government’s White Paper does not provide the rapid action that our prison system so urgently needs and has so long asked for.

The Secretary of State has consistently failed to acknowledge that this is a service in crisis. Today’s protest action by prison officers is the clearest sign yet of the fact that this is a crisis over which she and her ministerial colleagues have lost control. Will she confirm when she last spoke personally to representatives of the POA and when she will talk to them next? What solution was put to the POA to address urgently its concerns about safety? Does she accept that the increase in violence on staff and between prisoners is a direct result of her Government’s staff cuts? Does she regret her Government’s decision to cut 6,000 prison staff, and how does she intend to increase the number of prison officers now, not in two years’ time? This is a Secretary of State in denial. She has let down our judiciary, lost the confidence of our prison staff and failed to take effective action in the face of a crisis of violence in our prisons.

[Elizabeth Truss]

It is disgraceful that the hon. Gentleman refuses to condemn illegal industrial action that is putting our hard-working front-line prison staff at risk—it is completely irresponsible. I have made it absolutely clear ever since I was appointed to this role that safety is my No. 1 priority. That is why we are rolling out new tests for psychoactive substances and making sure that all staff have body-worn cameras. It is also why we are already recruiting new staff, for which we have announced a £100 million increase in the prison budget. The hon. Gentleman needs to act more responsibly. He needs to work with me, as does the Prison Officers Association, to make sure that our prisons are safer. Sanctioning illegal industrial action in our prison estate is actively putting people at risk of harm, and I ask him to reconsider his disgraceful stance.

[Richard Fuller (Bedford) (Con)]

Following the recent disturbances at Bedford prison, I put on record my thanks to the prison officers and members of the Tornado force for restoring order so rapidly and carefully, and to the prisons Minister for keeping me in touch with affairs throughout the evening a week last Sunday. It is a great shame that prison officers have been led into unlawful action today, but does my right hon. Friend the Secretary of State not recognise that in addition to adding staff, she needs to look urgently at the retention of existing staff and the reasons for their disquiet? Please will she do so as part of her ongoing review?

[Elizabeth Truss]

I thank my hon. Friend for his question. He is absolutely right about the importance of retaining our valuable officers with experience in our prisons, which is why we have given governors extra freedoms to take the measures they need to take, and why we need to increase safety across our prison estate. I have made that a clear priority, and we have already put in place a number of measures to improve security and safety. Unlawful industrial action is not the way to improve the situation. We had been in discussions with the POA—I met its representatives on 2 November—but it has walked away from talks that were designed to deal with some of the issues. I urge the POA to come back to the negotiating table, to stop putting its members at risk and to work with us to make our prisons safer.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Given my experience on the Justice Committee over the past year, it is abundantly clear to me that this is a toxic mix of policy and resource. The policy is that we are sending far too many people to jail on shorter sentences, and the resource problem is that we have an ever-increasing ratio of inmates to prison officers. Officers are utterly demoralised. On the ground, inmates are being kept in cells for 23 hours a day because there are not enough resources in the prison estate to ensure that they have meaningful and purposeful work. Everybody agrees that meaningful and purposeful work is the way to better rehabilitation. Does the Lord Chancellor recognise the huge resource issue? If so, how many prison officers do we need to recruit to get to a 2,500 net increase, bearing in mind the retention problems that have been adequately articulated in the Chamber today? Is she inclined to look at reducing the number of young people who are sent to prison for short sentences which, quite frankly, do not achieve anything?

[Elizabeth Truss]

We are recruiting 2,500 officers across the estate, but we are also taking immediate action to stabilise the position and ensure that security measures are in place. In response to the hon. Gentleman’s question about young people, I want more early intervention to prevent those people from going into custody in the first place by dealing with issues such as mental health and substance abuse at an early stage. That is what we will be announcing shortly.

[Robert Neill (Bromley and Chislehurst) (Con)]

There can never be any excuse for unlawful industrial action, which helps no one, so I join the Secretary of State in her condemnation. Perhaps she will update us about the form and timeframe of the legal action.

Does the Secretary of State concede that underlying issues of staff morale and a lack of retention, especially of experienced officers, have been highlighted repeatedly? Did the discussions that the POA unfortunately walked away from include suggestions from the management of NOMS about to how to improve retention? When will we bring forward a comprehensive scheme to deal with retention and the loss of experienced officers?

[Elizabeth Truss]

I thank my hon. Friend, the Chairman of the Justice Committee, for joining me in condemning today’s illegal industrial action. I again urge the Labour Front-Bench team to join me in that condemnation. The Chairman is right about safety in our prisons. I can confirm that several issues were on the table in the discussions with the POA and that offers have been put forward. That is why I want the POA to come back to the negotiating table, instead of indulging in illegal industrial action, so that we can work together to make our prisons safer

[Mary Creagh (Wakefield) (Lab)]

Prison officers in my constituency do an amazing job with the most dangerous and difficult offenders at Wakefield prison and New Hall women’s prison. Action such as today’s is, thankfully, incredibly rare, but does the Secretary of State have any regrets that her Government and the previous Government have presided over a slow-burning crisis that has culminated in today’s action, riots in Bedford prison, an increase in violence and self-harm, and escapes from Pentonville?

[Elizabeth Truss]

The hon. Lady is correct to say that prison officers do a fantastic job. I want us to recruit more of them so that we strengthen the frontline and enable them to spend their time reforming offenders. That is what we all want, and it is exactly what our plans in the White Paper are about. We are facing an issue at the moment, and that is why we have taken additional measures to deal with psychoactive substances, which have been a serious problem, and with serious and organised crime. We are offering direct support to governors in prisons to make sure that we stabilise the situation in the short term.

[Maria Caulfield (Lewes) (Con)]

I am a frequent visitor to HMP Lewes in my constituency, so I know what a fantastic job the prison officers there do in difficult circumstances. One problem they are facing is a rise in the number of sexual offenders in prison, either on remand or serving a prison sentence, which makes life difficult for prison officers to manage. Will the Secretary of State update us on what work is being done to help prisons such as HMP Lewes?

[Elizabeth Truss]

I thank my hon. Friend for her question. The prisons Minister will be visiting HMP Lewes on Friday, when he will follow up some of the issues she raises.

[Karl Turner (Kingston upon Hull East) (Lab)]

We have nearly 7,000 fewer prison officers in our prisons than in 2010. The Secretary of State is now desperately trying to recruit 2,500 prison officers, yet she comes to that Dispatch Box and attacks prison officers for taking desperate measures because their safety is at risk every day. How does she think that will help with recruitment?

[Elizabeth Truss]

I support prison officers, who do a fantastic job. The people I am attacking are those in the Prison Officers Association who have called this illegal action, despite the fact that we were in talks with them and there was an offer on the table, which has not been responded to. I wholeheartedly support the good work of prison officers across the country, and I want them to benefit from the improvements we are making on the frontline and to safety. We are launching a new apprenticeship programme to recruit more people, and we have a new programme encouraging the brightest and best graduates to become prison officers. Of course these things will take time, but I have also talked today about the measures we are taking in the short term to stabilise the situation in our prisons.

[Andrew Selous (South West Bedfordshire) (Con)]

Testing for psychoactive substances has the potential to be a game changer, so has there been an increase in the number of charges for possession? Has the message finally got through to people that if they take Spice, we will know they are doing it, they will be charged and they will take the consequences?

[Elizabeth Truss]

My hon. Friend clearly has much experience in this area and what he says is absolutely right. The prisons and probation ombudsman described psychoactive substances a game changer in our prison estate, and they are one of the reasons why we face the current situation. We rolled out testing in September, and we have trained 300 sniffer dogs to detect those substances. That will have an impact, and we are already beginning to see it in some of our prisons.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The Lord Chancellor should perhaps bear in mind that questions of what is and is not legal are to be determined by the courts, not by Ministers and not by this House. I say to her gently that she cannot praise prison officers in one breath and then condemn them for being reckless in the next without trying to achieve some understanding of how things have reached this point. If she really wants the POA to come back to the negotiating table, might she think about the tone she adopts in dealing with this dispute, so that it might have some confidence that if it does return, it will be listened to?

[Elizabeth Truss]

I respectfully say to the right hon. Gentleman that I have had a number of meetings with the POA and discussed issues of safety, on which I share its concerns. I am absolutely not attacking the hard-working prison officers on our frontline, but it is a mistake for the POA to call for unlawful industrial action in the middle of talks. I urge it instead to come back to the negotiating table, because that is how we will get a safer environment for our prison officers to work in; we will not get that through unlawful industrial action.

[Victoria Prentis (Banbury) (Con)]

When I was a very junior civil servant under a Labour Government, one of my first tasks was to get an injunction to stop the POA going on strike—we did that many years ago. Will the Secretary of State tell us the effects of the current unlawful industrial action, both on those who work in our prisons and on those detained in them?

[Elizabeth Truss]

We have implemented our contingency plans across the prison estate, at local, regional and national levels, but clearly we will not be able to run full regimes and that puts people at more risk. We are managing as safely as we can, but I strongly urge the POA to come back to the table to start negotiations again, so that we can reach a solution that helps make our prisons safer.

[Caroline Flint (Don Valley) (Lab)]

I have three prisons in my constituency, two closed and one open, and a fourth prison is nearby in Doncaster. Therefore, for the past 20 years I have known only too well the stresses and strains that those working in the service are under, particularly because the people who end up in prison today are pretty nasty characters who have committed some terrible crimes. The Secretary of State has said that she wants to hear from those on the frontline about how we can make our prisons safer, so may I urge her to look at the charter of minimum safety standards produced by the Community union, which has worked with its front-line officers to identify practical ways forward to secure safer conditions in our prisons? Will she meet people from Community to discuss that document?

[Elizabeth Truss]

I visited HMP Bronzefield a couple of weeks ago, where I met members of Community and discussed these safety issues. We agreed on a great number of things, which, in the White Paper, the Government have announced are taking place, and I am keen to continue those discussions.

[Richard Drax (South Dorset) (Con)]

May I welcome the measures that my right hon. Friend announced recently? I join her in condemning the action by the POA, which is not going to help it or the prisoners it is meant to be looking after. I, too, am concerned about retention, which affects the young offenders prison in my constituency. My local officers raise with me their fear that the courts do not have the sanctions available to impose tough enough sentences on those who assault prison officers—there is no deterrence. Will she examine that?

[Elizabeth Truss]

I completely agree with my hon. Friend that crimes committed in prison against prison officers need to be treated extremely seriously, and I am working closely with the Attorney General and the Home Secretary to make sure that that is followed through.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

We all welcome the Secretary of State’s willingness to tackle violence in prisons by funding additional officers, but she must be honest with the House about how this does not extend to those people working in our prisons in the private sector. Prisoners do not choose whether they end up in a public or private establishment, and those who work in the private sector, including those from my Community union, perform a public service in guarding those prisoners, whether the contract is directly with the Government or not. What is she going to do to help ensure the safety of all in our prisons and give them the respect they deserve?

[Elizabeth Truss]

I thank the hon. Lady for her comments and I can confirm that those increases will also apply in the private sector as well as in the public sector.

[James Berry (Kingston and Surbiton) (Con)]

In response to concerns from prison officers, this Government criminalised psychoactive substances in prisons. My right hon. Friend has announced an increase in the number of prison officers, but will she inform the House what other steps have been taken to increase safety in prisons, including limiting the illegal use of mobile phones by prisoners?

[Elizabeth Truss]

My hon. Friend is absolutely right; mobile phones and drones pose a serious security threat. We are working closely with the mobile phone companies to be able to block those mobile phones in prisons. We are also rolling out the use of body-worn cameras across the estate to give officers more protection, and we are offering prison governors specific support in dealing with the issues they face in their particular establishments.

[Alex Cunningham (Stockton North) (Lab)]

Prison officers at Holme House prison in my constituency tell me that they, like others, have suffered cuts and seen increases in violence. The former Lord Chancellor and Education Secretary designated it an academy-type prison with new freedoms for the governor to do things differently. Assuming that these powers still exist, what difference are they making—or has that failed experiment also been abandoned?

[Elizabeth Truss]

I am sure that the hon. Gentleman has read the White Paper in full, where we announced that further powers are being devolved to governors right across the prison estate. This enables them to conduct their own recruitment campaigns and give special payments to retain officers, and it is working.

[John Stevenson (Carlisle) (Con)]

The Secretary of State has talked about short-term issues, but if we are truly to see long-term reform of the Prison Service we need to empower governors to manage, lead and innovate. Does she agree with that and will she proceed on that basis?

[Elizabeth Truss]

I completely agree with my hon. Friend. We are giving prison governors power over their education budgets, so that they can ensure that the offenders in their institutions are getting the skills they need to secure a job on release. We are enabling them to work with local employers and also to co-commission health services, so that there is closer work towards getting prisoners off drugs, which is a major cause of reoffending.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Parc prison in Bridgend has an enviable record of successful work in cutting intergenerational reoffending, reducing reoffending and of family intervention, which makes a difference. Does the Secretary of State understand the importance not just of staff numbers, but of appropriately skilled and trained officers, and, once we get them, of retaining them, because her record to date does not show that she does?

[Elizabeth Truss]

I completely agree that retaining staff is vital, which is why we have given these additional freedoms to governors. We are also recruiting more staff to the frontline so that staff feel safer, which is a very important part of the job. By having more staff on the frontline, we will enable more time to be spent turning offenders’ lives around, which is why the prison officers to whom I speak wanted to go into the service in the first place. What is important is getting offenders into jobs and off drugs.

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

When the former shadow Secretary of State for Justice, Lord Falconer, opened a debate on prison reform earlier this year, he rightly recognised that the problems in our prison system go back not one year or five years, but decades. Given that we have a situation in which more than half of adult males reoffend within a year of their release, should we not be focusing on rehabilitation rather than blame?

[Elizabeth Truss]

My hon. and learned Friend is absolutely right. Reoffending is a huge cost to society—£15 billion a year—but it is also a huge cost to the victims who suffer from those crimes. The prison system is not turning lives around in the way that it should, which is why our White Paper was a plan for prison safety and reform. We need to have safe prisons in order to be able to reform offenders, and by reforming offenders our prisons will become safer too.

[Jim McMahon (Oldham West and Royton) (Lab)]

The tone of the statement from the Secretary of State today has been absolutely shameful. It is no wonder that relationships are at an all-time low. Will she take this opportunity to apologise to the House and to the officers for allowing things to get this far?

[Elizabeth Truss]

In my view, it is those on the Opposition Front Bench who need to condemn unlawful industrial action. I know that that will not solve the safety problems in our prison estate, but I want a constructive relationship—I want the POA to come back to the table.

[Mr Peter Bone (Wellingborough) (Con)]

Is not the real problem that we still lock people up in Victorian prisons, which is not good for the safety of the prisoner or of the prison officer? Is not the solution to build modern new prisons such as the one the Government are building in Wellingborough? Will the Secretary of State update the House on how that programme is being developed?

[Elizabeth Truss]

My hon. Friend is absolutely right. As well as recruiting new staff and retaining our highly valued existing staff, we also need officers to be able to operate in modern, fit-for-purpose buildings, such as the one that we are putting in place in Wellingborough. I would be delighted to update him shortly on the plans for that.

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

Is the Secretary of State aware of the level of demoralisation that exists right across the criminal justice system in members of staff such as prison officers? In my respectful view, her tone today has been entirely misplaced and ill-judged. Given the current crisis that pervades our criminal justice system, is it not about time that she changed her approach and began talking to the people who have served that system for many, many years and stopped taking unilateral action against them and their terms and conditions at work?

[Elizabeth Truss]

I have had many discussions with prison officers across the prison estate, and I agree that there are issues with safety, which I am seeking to address. I want the job of prison officer to be highly respected, as it is a very important role in our society. What I am saying today is that we have been having discussions with the Prison Officers Association, and that it has failed to respond to the offer that has been put on the table and, instead, called unlawful industrial action. It is very, very poor indeed that the Opposition refuse to condemn unlawful industrial action, because that is what we are talking about.

[Wendy Morton (Aldridge-Brownhills) (Con)]

I was particularly interested to hear the Secretary of State’s comments about the measures to tackle psychoactive substances. Does she agree that the rise in psychoactive substance use in our prisons has been a contributory factor in the increased levels of violence that we are seeing today?

[Elizabeth Truss]

My hon. Friend is absolutely right that psychoactive substances have played a large part in the violence issues, which is why it was so important that we rolled out those drugs tests over the past month or so and that we have trained dogs to detect those substances. We have also seen a rise in the use of mobile phones and drones, which poses a new security threat. Again, we are dealing with that.

[Mr Philip Hollobone (Kettering) (Con)]

In order to get staff numbers up quickly before the fresh permanent recruitment kicks in, will the Government consider swallowing their pride and launch a programme to re-recruit prison officers who have recently left the service on temporary six or 12-month contracts?

[Elizabeth Truss]

We are absolutely willing to consider those people returning to the service. We want to recruit high-quality officers.

[Kevin Foster (Torbay) (Con)]

The Justice Secretary says that she wishes to recruit high-quality officers. Does she agree that veterans of our armed forces have exactly the type of skills needed to deal with challenging situations in our prisons? Will she update me on what is being done to ensure that they are recruited into the Prison Service?

[Elizabeth Truss]

We have a specific programme to recruit former armed service personnel who are highly suitable to working in the Prison Service as they bring with them values of discipline and hard work, which are so important in turning the lives of offenders around.

[Bob Blackman (Harrow East) (Con)]

Will my right hon. Friend update the House on the plans to ensure that prisoners are rehabilitated so that when they leave prison, they do not reoffend?

[Elizabeth Truss]

We are putting the role of the Secretary of State into primary legislation to ensure that we are not just housing offenders, but turning lives around, getting people the education that they perhaps have not had in the past, getting them into work once they leave prison and getting them off drugs. All those things lead to a reduction in reoffending.

[Tom Pursglove (Corby) (Con)]

I for one have enormous respect and admiration for our prison officers and for the difficult work that they do. A fortnight ago, the Secretary of State came to this House and committed to bring on stream an additional 2,500 prison officers. What reaction has she had to that announcement from the Prison Officers Association?

[Elizabeth Truss]

We did announce an additional 2,500 prison officers. That will enable every single officer to be responsible for six prisoners, which we know will achieve the results of improving safety and ensuring that we reform offenders. I would like to see the Prison Officers Association support that change.

HS2 Update

Tuesday 15th November 2016 Commons Chamber

13:08

[The Secretary of State for Transport (Chris Grayling)]

With permission, Mr Speaker, I will make a statement about HS2.

One of my first steps as the new Secretary of State for Transport was to reiterate the Government’s backing for HS2. I did so from the conviction that it is essential to delivering a modern, vibrant economy for the United Kingdom.

This is a Government who deliver the infrastructure projects that the economy needs, which is core to delivering a country that works for everyone, wherever in the country they live. Last month, we announced support for a new runway at Heathrow, showing that Britain is a dynamic country that is open to the world.

Today I am announcing the Government’s preferred route for HS2 lines from Crewe to Manchester and from the west midlands to Leeds, known as phase 2b, which will help to rebalance our economy beyond London and the south-east, ensuring that economic prosperity and opportunities are shared throughout the country. That means that following on from the 2013 consultation and work that we have done since, I am today confirming the majority of the route. There are a number of cases, including the proposed route through south Yorkshire recommended by Sir David Higgins in a report earlier this year, where I am proposing substantial refinements. I am launching a consultation to seek the views of communities and other interested parties before reaching a decision on those sections next year.

The first phase of HS2 from London to the west midlands is just over 100 miles long, but phase 2 is significantly longer at 174 miles. The route that I am confirming today represents a huge commitment to the midlands and to the north. HS2 is not just about a faster connection between the south-east, the midlands and the north. It represents a bold vision for connecting up the great cities of the north of England and of the midlands, both east and west. Connectivity is central to HS2. Poor connectivity between the cities and regions of the midlands and the north has restrained their economic growth. High-quality transport allows businesses to grow, work together and access a wide range of customers, suppliers and skilled labour markets. By improving connections between our great cities, HS2 will generate jobs, skills and economic growth and help us to build an economy that works for all.

Today, only 4% of people who travel between Birmingham and Manchester do so by train—hardly surprising, when the journey takes around 90 minutes. But on HS2, it will take less than half that time—just 41 minutes—so at a stroke, those two regional capitals are much more closely linked and can deliver increased economic prosperity. The flow of people, ideas and opportunity will follow those new connections.

Work is also progressing to see how HS2 could help to deliver parts of a fast, frequent northern powerhouse rail network for Liverpool, Manchester, Sheffield, Leeds, Hull and Newcastle. Where necessary, we will include passive provision for these services in the phase 2b hybrid Bill, subject to agreement of funding and the supporting business case. Just as important as connectivity is the uplift that HS2 will deliver to our transport system. It will not be a separate, stand-alone railway, but an integral part of our nation’s future rail network and overall transport infrastructure. It will add to the overall capacity of our congested railways. Even those who never travel on HS2 stand to feel its benefits.

By providing new routes for intercity services, HS2 will free up space on our existing railways for new commuter, regional and freight services, while also taking lorries off our roads. It will provide new options for services to towns which currently do not have a direct connection to London. Tomorrow’s HS2 and east and west coast main lines could have 48 trains per hour to Birmingham, Manchester and Leeds. That compares with 29 today.

Even those who never travel by rail at all stand to benefit from the thousands of local jobs and apprenticeships created by the better connections that HS2 will bring and by the project itself. It will generate around 25,000 jobs during construction, as well as 2,000 apprenticeships. It will support growth in the wider economy, worth an additional 100,000 jobs. I recently visited the site of the new National College for High Speed Rail in Birmingham. Together with its sister college in Doncaster, it will open its doors next year to provide Britain’s workforce with the specialist training, skills and qualifications to build HS2 and future rail projects. It will deliver highly skilled, highly motivated people who will have the opportunity of a great career in a vital industry.

Today’s announcement represents an important step forward in delivering HS2, and with it the transport infrastructure essential to the economy of 21st-century Britain. However, I am well aware that there are those with the firmly held view that HS2 should not go ahead, and those who doubt whether the case has been made satisfactorily. Indeed, I know that many Members of this House have strong convictions on this issue. I am under no illusions; this is not an easy undertaking, but I believe that it is the right thing to do. The easy thing to do would have been to keep patching the existing railways, making do and mending a railway that the Victorian pioneers themselves would still recognise, and hoping to fit ever-increasing passenger and freight growth in the same pint pot. That is not what the people of this country deserve, nor is it what our economy requires.

In addition to publishing today a Command Paper and accompanying maps, setting out the full detail of my preferred route for the HS2 phase 2b route, I have written to those Members whose constituencies are affected, and the Under-Secretary of State for Transport, my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), will make himself available to Members who wish to meet him later today.

In order to ensure that our case is robust and in line with the requirements of the Treasury’s Green Book, we have of course considered alternatives to the phase 2b scheme. We found no alternative that could deliver the same level of benefit for the country, stand the test of time and provide the same level of capacity, connectivity and service as phase 2b does. Over the past few months I have personally visited most places along the HS2 route. I have seen and heard for myself all the issues, and I remain convinced that through this project we are delivering the right solution to the country’s transport needs.

It is important to say that I recognise that building major infrastructure will always be disruptive and disturbing for those living nearby, and I am mindful of the concerns of the constituents of very many Members of this House. In proposing this route, I have listened to the views expressed in the consultation of 2013, as well as those of HS2 Ltd’s engineering and environmental specialists.

I am issuing safeguarding directions for the whole of the preferred phase 2b route today. That protects it from conflicting development, but it also means—this is extremely important—that the people who are most affected by these plans will be able to access statutory compensation straight away. In addition, I will be consulting on discretionary property schemes that will go over and above what is required by law and give assistance to those who will be adversely affected by the railway. These schemes are the same as those currently in operation for people living along the phase 1 route. I aim to be able to confirm next year the schemes on which I am consulting today.

Two of these schemes will come into operation from today. They are the express purchase scheme and the need to sell scheme. Express purchase allows owner-occupiers to apply to the Government to buy their home sooner than would be possible under statutory schemes. The Government will buy properties at their unblighted open market value, as if HS2 were not going to be being built, will provide a home loss payment of 10% of the property’s open market value up to £58,000, and will pay reasonable moving costs.

Need to sell is a purchase scheme for people who have a compelling reason to sell their property but cannot do so, other than at a significantly reduced price, because of HS2. There is no geographical boundary to this scheme. The Government will agree to buy property for 100% of the open market value if an application is successful.

As I say, I am mindful of the impacts that HS2 has on communities. I can assure every Member of this House that my Department and HS2 Ltd will continue to work with affected communities and local authorities up and down the line of route, and in that process I expect people to be treated with fairness, compassion and respect.

Today marks the end of a long period of uncertainty for communities, councils and businesses along the route of phase 2b. These have been complex and difficult decisions to take, but I make no apology for taking the time to get them right and making sure that the route we are proposing offers the best possible outcomes for passengers, communities, the environment and the economy.

I need to touch briefly on phase 1. I can report to the House that phase 1 from Birmingham to London is progressing well. Construction work is due to start early next year, subject to Royal Assent. Phase 1 will open in 2026. In a clear signal of how work is progressing, this morning I have announced the companies that have been awarded the phase 1 enabling works contracts. These works include archaeology, site clearance and the setting up of construction compounds ahead of the start of the main civil engineering work. These contracts are worth up to £900 million and cover the whole of phase 1 from London to Birmingham and the connection to the west coast main line at Handsacre. Work is due to begin in the spring.

Another aspect of the preparatory work on phase 1 is the considerable engagement with those on the line of route, some of whom have taken up our express purchase compensation scheme. We are continuing this offer of support and will be writing to those people whose homes or business may be directly affected by construction. We have a general obligation to continue to seek further reductions to adverse impacts during the design, construction and operation of the scheme. This is something that I will be watching very closely. In keeping with that obligation, HS2 Ltd has continued to look at possible mitigation measures around Euston station where existing rail lines converge. This could significantly reduce impacts on rail passengers and the local community. Any decision on the adoption of these possible mitigations would be taken closer to the letting of main contracts next year, and I will update the House at that time.

This is part of a wider design process, which will continue to add detail to our proposals for phase 1 well into next year and beyond. I would expect similar mitigations to come forward elsewhere along the route as the detailed design stage starts in earnest after Royal Assent.

HS2 is an ambitious and exciting project, and we must seize the opportunity it offers to transform our country for future generations. Local authorities and local enterprise partnerships are gearing up for HS2 and developing growth strategies, supported by UK Government growth strategy funding, to maximise the benefits of HS2 in their area. I am pleased to announce further funding today for Manchester, the northern gateway partnership, Leeds and the east Midlands, and the first tranche of funding for Sheffield, to support this important work.

This Government are planning for the future. We are taking the big decisions and investing in world-class transport infrastructure. We are ensuring that the UK can seize opportunities and compete on the global stage. But we are also aiming to deliver more capacity on our overcrowded railway, which could see a 65% increase in the number of trains on this part of the network.

The route decision I published today takes us an important step closer to realising the full potential of HS2. It means better transport connections and capacity, more jobs and more training opportunities. Just as importantly, it links centres of innovation and opportunity in the cities and regions of the midlands, the north and our knowledge economy. I commend this statement to the House.

13:21

[Andy McDonald (Middlesbrough) (Lab)]

I thank the Secretary of State for his statement and for advance sight of it, for which I am most grateful.

Labour Members are pleased to finally have a partial announcement of the HS2 route, and it is to be very much welcomed, as the delay in getting to this announcement has been immensely stressful for the communities concerned. Labour supports HS2 because we recognise the need for not only faster journey times and improved connectivity but, most importantly, extra capacity—not just for the benefit of passengers, but to transfer freight from road to rail, as the Secretary of State mentioned in his statement.

The employment, and in many cases the lifelong career opportunities, that HS2 will bring will be immense, and we very much welcome all of that, but that does not mean that our support is without qualification, as considerable concerns still remain. There are significant details of the route that have not been confirmed in today’ s announcement—most notably a decision on whether to site a station in or around Sheffield, which has been dodged, along with three decisions on the western leg and three on the eastern leg. This is not the first time we have experienced this Government dithering on key infrastructure decisions. While we welcome the consultation that is to follow, there is clearly a risk that it may cause the Government to overly delay decisions, as we have seen recently on a number of nationally important pieces of infrastructure. I ask for an assurance from the Secretary of State that that will not be the case in this instance.

During the consultation, it is imperative that the voices of local communities be heard—especially those communities that will be particularly disrupted by the route as we now know it. Among other things, we have seen the pain and anguish caused to many villages and communities in the south Yorkshire region and elsewhere, and while we need to study the detail of the proposals we must ensure that proper mitigations and comprehensive compensation schemes are in place. There will be strong arguments made to modify the alignment of the route in many cases, and those arguments will have to be given proper consideration.

Earlier this year, the National Audit Office reported that HS2 had an “unrealistic timetable” and faced major cost pressures, and that too ambitious a timetable meant that not all the intended benefits would be delivered. We have seen similar problems beset other rail projects, with the Government recently reneging on their manifesto commitment regarding electrification works on the Great Western route and refusing to commit to the already delayed timetable of electrification works on the midland main line. The Department for Transport has a track record of being unable to complete works on time or on budget, so there is understandable concern that HS2 will not be delivered to budget or on time, and I ask the Secretary of State to confirm unequivocally that the planned start dates will be met and the project delivered on the planned timescale and costings.

This is not solely about HS2. So-called HS3 has to be progressed, as do the paused and unpaused enhancement works that are essential to bring greater connectivities to communities that are not directly connected to HS2. They cannot be forgotten, and they cannot be left behind. The benefits that HS2 can bring to the country are significant, but the Government must get a grip to keep the project on track and to avoid the concerns expressed in the National Audit Office report being realised.

The Government announced that a new rail franchise, the west coast partnership, which is scheduled to start on 1 April 2019, will combine the current inter-city west coast services with HS2, meaning that HS2 will be run in the private sector from 2026 and that Virgin looks set to be granted a further uncontested 12-month contract to run inter-city west coast trains. The Government seem determined to hand over vast swathes of our public services, and what should be our public services, to Richard Branson en masse. Billions of pounds of taxpayers’ money is being invested in HS2, so it is right that the revenues go back to the Exchequer and not into the hands of train operating companies. HS2 should be run in the public sector, as a public service.

Given the concerns about the cost of HS2, the Government should be looking to get the best deal for the UK rather than the shareholders of private train companies or the taxpayers of Germany, France or Holland. It is time to take back control of our railways. Labour is committed to the public ownership and running of our railways, and that includes HS2. A future Labour Government would bring any such franchise back within public operation at the earliest possible opportunity. We support HS2, but it has to deliver for taxpayers and passengers alike, and that will be the consistent challenge for Parliament in the years ahead.

[Chris Grayling]

First, let me welcome the hon. Gentleman’s support for the principle of the project, although we obviously have one or two areas of difference.

Let me start with the issue of the route through Sheffield. The hon. Gentleman accuses us of dithering. I would simply remind him that we have a statutory duty to consult. We are bringing forward a new set of proposals. He will not, I am sure, argue that I should break the law when it comes to the consultation process that we need to go through. I clearly want to give people as much certainty as possible, as quickly as possible, but I have a statutory duty, and I intend to fulfil it.

I recognise the issue that local communities face, and part of what we will need to do through that consultation process is listen to those local communities about the things we can do, large and small, to mitigate the impacts on them. That is a very important part of the consultation process.

The hon. Gentleman talks about an unrealistic timetable. I think many people in this country would share my frustration that, actually, it will take 17 years from today to complete the whole of HS2. If that is an unrealistic timetable—if it should take much longer—heaven help us. This project has taken a long time to get to this point and will take more years than I would wish to complete—and we need it to be completed—so the idea that it is an unrealistic timetable to complete this project by 2033 seems to me a strange one.

The hon. Gentleman raised the question of electrification. I would simply remind him that, through 13 years in government, Labour electrified 10 miles of railway line. It is small wonder, when we actually started to electrify key main lines, that the expertise was no longer there. It is all very well Labour calling on us to do this, but we are the ones who are undertaking the modernisation of our railways. Through all those years when Labour was in power, the investments in our railways were pitiful by comparison with what we are doing today.

The hon. Gentleman also raised the question of HS3. He will be aware that Transport for the North is working on proposals for what is now being called northern powerhouse rail. That will be much more than a single railway line, and it will build the connectivity we need from east to west. I am waiting with interest to see Transport for the North’s proposals for the future.

The hon. Gentleman asked about the west coast partnership. He will understand that, on the day before this line opens, there will be Pendolinos running up the west coast main line, and, on the day after, there will be express trains running up HS2 to Birmingham, Manchester and Liverpool. I want that to be a smooth transition. We have to make sure the train drivers are trained. We have to make sure the staff are ready for the change. I do not envisage a situation where we sack all the staff one day and hire a new group the next. It makes sense to have a smooth transition, and that is what we are planning.

On the hon. Gentleman’s point about the private sector, let the Labour party hark back to the days of British Rail; we want a railway that is modern and progressive. Since the railways were privatised, after decades of decline, the number of passengers has doubled and new stations and railway lines have opened. This is a railway that is moving forwards, not backwards, as it would under Labour.

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

I welcome today’s announcement by the Secretary of State, not least because it gives a degree of certainty to all the poor people and businesses that are going to be affected by this project. Perhaps he will forgive me if I do not share his overexcitement about its potential, as no benefit accrues to the Chilterns. He is well aware of my criticism of how HS2 has conducted its operations. Will he therefore give me, and people beyond this Chamber, a personal undertaking that there will be generous, fair and rapid compensation, the highest environmental protection, and timely and thoughtful community engagement? I hope that there will also be a revision of the totally archaic hybrid Bill process, which has in itself added pain to the suffering that people along the line have had to experience so far. It is crucial that lessons are learned from phase 1 before we embark on phase 2a.

[Chris Grayling]

I absolutely echo the need to make sure that we do the right thing by people affected on the route. I slightly disagree with my right hon. Friend about the benefits in the Chilterns, although it is true that in her constituency, which is on a different line, the benefits are different from those a little further away on the other side of the Chilterns on the line that runs up through towns such as Tring, where there will be a benefit in extra capacity on commuter services—it is estimated that there will be twice as many seats on trains going to Euston station in the morning peak, and I think that will be very welcome to the people who use that line. Of course, I absolutely understand that we have to take great care. I share her concern about the hybrid Bill process. It is clear from the discussions we have had on this in the past that there is a widespread view in this House that we want a simplified and modernised process, and work is being done right now on how that might be achieved. However, I also believe very strongly that we need to invest in our future, and that is what this is about.

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

I thank the Secretary of State for early sight of his statement. I have studied all seven pages of it. He starts by stating that in making his decision he “did so from the conviction that it is essential to delivering a modern, vibrant economy for the United Kingdom”, and ends by saying that he is “ensuring that the UK can seize opportunities and compete on the global stage.” Yet in seven pages mentioning 34 places, including the future beneficiaries, not once does Scotland get a mention. There is nothing about connecting Scotland and there are no options for Edinburgh, Glasgow or any other Scottish city—no passing comment even. We support high-speed rail, but not just to Birmingham, Leeds or Manchester. This announcement, unless followed by a commitment to speed up links to Scotland, means, in effect, our getting further away from London, in relative terms. When did he discuss this announcement with the Scottish Government, and what guarantee did he give for high-speed rail to be connected to Scotland?

[Chris Grayling]

Let me start by reminding the hon. Gentleman that I have made two very significant transport announcements in this House in the past month, the last of which was very specifically focused on ensuring that we had better aviation links both to London and internationally via our expansion of Heathrow airport. I was particularly keen to stress the importance of protecting connectivity particularly to Scotland and Northern Ireland, because the air links are so crucial to the economies of those nations. Let nobody suggest that I am not interested in connectivity to Scotland; it is a priority for us.

Let us be clear about what this project delivers for passengers travelling down the east coast and west coast routes, who will benefit as much as anybody else from the increased speeds at which they are able to travel over most of the route to Scotland. There is therefore a benefit to Scottish passengers as well. Let us also remember that this is much more than simply a transport project: it will generate a whole set of new skills and business opportunities for this country—for this United Kingdom. Indeed, the Under-Secretary, my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), recently spoke at a suppliers’ conference in Aberdeen. I fully expect to see jobs created in Scotland and opportunities for business in Scotland. That is all part of how we seek to represent and support this entire United Kingdom.

[Mr Speaker]

The Parliamentary Under-Secretary of State is clearly a very lucky fellow indeed; I am sure that he much enjoyed orating to the said conference.

[Mrs Theresa Villiers (Chipping Barnet) (Con)]

Does the Secretary of State agree that the massive improvement programme for our railways—not just HS2 but the existing network—is a fundamental part of the Government’s programme to deliver economic success and economic rebalancing?

[Chris Grayling]

My right hon. Friend is absolutely right. It is very important to see today’s announcement in a broader context, because while we are investing in the long term we are also investing in the short term. To give just one example, £350 million is being spent on improvements to the rail network around Liverpool. There are many other examples around the country—indeed, there are improvements in Scotland and in Wales. Our Government strategy is about much more than this railway line; it is about delivering transport improvements across the whole United Kingdom.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

Those of my constituents who are affected by this will be appalled that none of their proposals on the route has been taken into account, either on the route itself or on mitigation, and will, frankly, wonder why they bothered. There is a concern that the Government and HS2 are taking seriously the concerns and interests of cities but not those of towns and smaller communities, and that there is a willingness to invest in mitigation or tunnelling for the south but not for the north. What can the Secretary of State say to my constituents to give them any good reason to carry on engaging with this process at all?

[Chris Grayling]

I would say to the right hon. Lady’s constituents that we fully intend to go through a process of detailed engagement. I am happy, as is my hon. Friend the Under-Secretary, to meet her to talk about these issues. I have travelled the route and seen for myself some of the issues and challenges. I have in mind some things that we might do to help improve the design of the route and reduce its visual impact. I will listen to her and to other Members. Fundamentally, though, she will understand, as a Yorkshire MP, the importance of this kind of connectivity to the economy of her region and the jobs it will create. We have to do this in the best possible way.

[Maggie Throup (Erewash) (Con)]

As my right hon. Friend is aware, many of my constituents have been living under a great deal of stress for three years now. I am sure that residents and businesses alike will welcome the compensation package that he outlined, especially those directly on the route through Long Eaton, but will he reassure the whole of Long Eaton that it will not be cut in half by the track that will go through it?

[Chris Grayling]

I have been particularly concerned about Long Eaton, for which we have tabled two options for consideration: a high-level viaduct and a low-level viaduct. I am well aware of the issue that the town faces; this is a complicated piece of engineering. Of course, the jobs created by the new development around Toton will be of benefit to Long Eaton. We will do our best to get this right, and that is why we have tabled more than one option for consideration by the local community.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I welcome this statement, with its promise of much-needed increased rail capacity, together with the jobs that go with that. Will the Secretary of State tell us more about how this investment will benefit the whole network, and how the economic benefits will actually be achieved? In particular, how much is he working with Rail North in bringing maximum benefit to the cities of the north, including Liverpool?

[Chris Grayling]

We awaiting the proposals of Rail North and Transport for the North on the connectivity that runs east to west, which I regard as very important. For a city such as Liverpool, there are two particular benefits. One of those will come through the part that this development has to play in that east-west connectivity, particularly with the routes around south Manchester. In addition—as the hon. Lady knows, I have been a regular user of the route to Liverpool over the years—there will be more trains to Liverpool and they will run faster from Liverpool to London than they do now. That will knock a significant amount off the journey time, making a real difference to her and her constituents when they travel not only to London but to Birmingham.

[Martin Vickers (Cleethorpes) (Con)]

Network Rail purchases much of its rail track from the Scunthorpe steelworks in the neighbouring constituency to mine. What efforts will my right hon. Friend make to ensure that British manufacturers are used in the production of most of the HS2 infrastructure?

[Chris Grayling]

I am pleased to say that the contracts announced today will involve very substantial British participation in the early works. The vast majority of steel used on our railways today comes from British plants. I do not expect that to change, nor do I want it to change. I am also very clear that the businesses that take part in this programme have to leave a skills footprint behind them. I am not interested in firms that just turn up and do not expect to invest in the next generation of skills that this country needs. We need to be very robust on that throughout the procurement process. Moreover, this will allow us to provide extra connectivity to towns that do not currently have direct services to London.

[Derek Twigg (Halton) (Lab)]

The Secretary of State should not airbrush history and the massive £8 billion upgrade to the west coast under the last Labour Government. There was a huge improvement in services and a huge increase in the number of passengers using them.

I want to ask a specific question about my constituency. The Command Paper states that there will be an additional train to Liverpool, so there will be two trains per hour. Will the Secretary of State confirm that they will also stop at Runcorn, as is currently the case?

[Chris Grayling]

I do not expect any changes to the service to Runcorn. It would be a big step in the wrong direction if that service changed. The Liverpool trains have always stopped at Runcorn and Liverpool, and I would not want that to change.

[Antoinette Sandbach (Eddisbury) (Con)]

Whole new areas in my constituency will be blighted as a result of today’s announcement, although other parts of it will benefit from the hub at Crewe. Given the blight on my constituency, will the Secretary of State agree to visit Eddisbury to speak to my local residents and hear their concerns about how it will impact on them?

[Chris Grayling]

As my hon. Friend knows, I lived very close to the route some years ago, so I had advance knowledge of how difficult it will be for many of her constituents. Of course, we are very happy to engage with her and her constituents on the issue. As I have said, there is no easy way of delivering such a big infrastructure project without consequences for some people, but we will do everything we can to mitigate its impact wherever possible.

[Sir Kevin Barron (Rother Valley) (Lab)]

HS2’s rejection of the Sheffield Meadowhall option—it said that there was a lack of consensus—is a stab in the back for the south Yorkshire economy. The reroute through the three villages of Wales, Aston and Bramley in my constituency will knock down homes and businesses. There is no consensus for that, either. Can we just have some common sense, instead of moving around all the time? If the decision was made about Meadowhall and compensation paid to householders as a result, why should there be a reroute?

[Chris Grayling]

As the right hon. Gentleman knows, Sir David Higgins did a lot of detailed work on that issue. Strong views were expressed in Sheffield about what worked best for the city. I have been to Aston and seen the potential impact. I will work to try to ensure that we get the maximum possible mitigation in such areas, but the right hon. Gentleman will understand that, if we are to deliver opportunities and prosperity for the northern part of the country, we need to make sure that it has the connectivity it needs.

[Iain Stewart (Milton Keynes South) (Con)]

Will my right hon. Friend set out in a little more detail the additional inter-city and commuter services from which places such as Milton Keynes will benefit once HS2 is operational?

[Chris Grayling]

One of the benefits that will be experienced by towns on the existing west coast main line will be the potential for a significant increase in the number of services. For example, for those who commute from Milton Keynes to London, we expect twice as many seats to be available on suburban routes to Hertfordshire and beyond to Milton Keynes, and greater opportunities for semi-fast services. The route from the town of Coventry to Birmingham is two tracks wide and constantly congested, as freight, express and passenger trains jockey for position. The proposal will create a huge additional amount of much-needed capacity for commuters to Birmingham on that very busy route.

[Andy Burnham (Leigh) (Lab)]

I welcome the fact that HS2 has listened to residents in the Lowton and Golborne area and moved the depot off a site of special scientific interest to a more appropriate location. Is it not the truth, however, that the investment in HS2 will make sense to the majority of people in the north only when it is combined with investment in new east-west, high-speed lines linking the great cities? Our roads are full and cannot take any more, so will the Secretary of State press the Chancellor to use the autumn statement to set out a clear timetable for northern powerhouse rail, including a completion date to tie in with HS2? Will the Government make that investment a higher priority for transport investment than spending billions more pounds on London with Crossrail 2?

[Chris Grayling]

The right hon. Gentleman is, of course, a powerful advocate of the city that he hopes to represent as mayor. He is also a Liverpudlian, so he will be aware of the substantial amounts of money that we are spending on improvements in both Liverpool and Manchester. One of the benefits of the arrival of HS2 in Manchester will be to create much more connectivity on the suburban routes to Manchester Piccadilly, which is much needed. We are also poised to open links between Piccadilly and Victoria, so improvements are happening today and the right hon. Gentleman is right to say that more are needed for the future.

[Jeremy Lefroy (Stafford) (Con)]

I welcome the fact that the Secretary of State is prepared to listen to pleas for mitigation. In my constituency, three or four communities are bisected by the rail. There are alternatives, such as tunnelling, and we need to continue to look at them.

[Chris Grayling]

I give my hon. Friend an assurance that that will happen. It happens, of course, as part of the consultation process for such proposals, and the hybrid Bill process that lies ahead will give his constituents every opportunity to seek change from this House, in the same way as they previously sought change from this Government.

[Helen Jones (Warrington North) (Lab)]

The original justification for the spur that goes through my constituency was the stock depot at Golborne. It has now been announced that that depot will move to north of Crewe, so why is the Secretary of State continuing with a spur that will devastate the village of Hollins Green in my constituency, have a huge environmental impact on Culcheth, even though the line has moved slightly, and does not even give Warrington a station so that it can profit from all that disruption? There are other places in the north-west besides Liverpool and Manchester, but the Secretary of State seems to have forgotten that, if we are going to have the HS2 line, they need to profit from it, to compensate for all the disruption.

[Chris Grayling]

The hon. Lady of all people should know that the last thing I would do is forget that places such as Warrington exist. The issue on the west coast main line north of Crewe is that much of the route through Warrington and up to Wigan is two-track. To try to fit the HS2 trains while meeting existing demand for freight and for passenger services from Liverpool and Manchester is almost impossible to engineer. We have, therefore, chosen the route that maximises rail capacity through Warrington. There will be HS2 services that serve Warrington and that, in addition, create the speed, connectivity and extra capacity that we need.

[Stuart Andrew (Pudsey) (Con)]

This is, indeed, good news for the city of Leeds, which is already starting to experience the economic benefits, with companies such as Burberry investing in it because of HS2. I welcome in particular the integrated approach to Leeds station. Does the Secretary of State agree that all the towns and villages across west Yorkshire have an opportunity to benefit from HS2 through a properly integrated station, and that what we really need now is a properly integrated transport system in the city of Leeds, to cope with the number of people who want to invest there?

[Chris Grayling]

My hon. Friend makes an important point. Such investment builds economic strength in cities such as Leeds, and that ripples out across the whole region by creating not only jobs in Leeds, but opportunities for businesses in west Yorkshire. This will be of huge benefit to the economy of the whole area around Leeds, permeating into the rural areas, and it will deliver real improvements to the economy of the north as a whole.

[Kelvin Hopkins (Luton North) (Lab)]

The Secretary of State will no doubt have seen last Thursday’s ITV programme supporting the powerful case against HS2. I am not alone in considering HS2 to be wholly unnecessary, and it will, indeed, be horrendously expensive. For much less than its likely eventual cost, essential modernisations, electrifications, additions and upgrades on our railways could all be funded. Would not that be a much more sensible investment?

[Chris Grayling]

The hon. Gentleman misses the central point, which is that this is a project about capacity. Whenever we have Transport questions, we hear about the pressures and congestion on, and the challenges for, our rail network. The west coast and east coast main lines, which are principal routes, are mixing together express long-distance trains, intermediate semi-fast trains, local community trains and freight trains. When things go wrong, they become congested and the trains are mixed and matched. We have to create extra capacity if we are going to be able to deliver solutions to the demands of the next generation. That is what this project is all about.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

May I start by thanking my right hon. Friend the Member for Derbyshire Dales (Sir Patrick McLoughlin), my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), the Under-Secretary of State for Transport, my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) and my right hon. Friend the Secretary of State? As one of my constituents put it to me, what has happened today, with the actioning of my proposed reroute of the branch line to Leeds at Woodlesford, shows that the political system does work. However, the main line past Swillington and Garforth in my constituency remains unchanged, so will my right hon. Friend meet me at the earliest opportunity to discuss mitigation and landscaping that will limit the impact on my constituents?

[Chris Grayling]

I am pleased that my hon. Friend’s constituents are happy with the change in his area. My hon. Friend the Minister will be happy to meet Members from across the House later today if they wish to raise specific issues, and of course we will have those discussions.

I want to mention something that I should have said in my earlier remarks. I cannot remember which Opposition Member’s constituency includes Crofton, where one of the depots is planned. I have been to the site and I am looking actively at whether we can find an alternative location for the depot. I hope to be able to bring forward an alternative, but I cannot provide guarantees today.

[Callum McCaig (Aberdeen South) (SNP)]

The Secretary of State mentioned Aberdeen. In 2013, KPMG found that the annual impact of HS2 on the economy of the north-east of Scotland would be £220 million a year. Can he update that figure, and will he tell the House what he is doing to mitigate the possible economic loss?

[Chris Grayling]

I do not have an updated figure for the hon. Gentleman, but to ensure that Aberdeen prospers, we are making sure: first, that we have a growing economy; secondly, that we continue to provide financial support to the Scottish economy from across the rest of the United Kingdom; and, thirdly, that we continue to look to create job opportunities and business opportunities in this programme for people in Aberdeen. That was why my hon. Friend the Minister went there.

[Nigel Mills (Amber Valley) (Con)]

Does the Secretary of State agree that to get the full benefit of HS2 in the east midlands, the midland mainline needs to be electrified right through to Nottingham, Derby and Sheffield? Will he therefore confirm that there will be no further delays in that project?

[Chris Grayling]

We are moving ahead now and work is being done on the next stage of electrification. I am very keen to ensure that, by 2020, we will be able to deliver improved capacity and the improved speed on trains, but we will make sure that all the benefits are delivered as quickly as possible.

[Christian Matheson (City of Chester) (Lab)]

HS2 can be justified only if its full benefits are spread across the country and it is not simply a link between major city centres. For Cheshire, that means that we must proceed with the Crewe hub to spread those benefits around. The Secretary of State has not made his decision yet, so will he tell us when we can expect to hear about the Crewe hub? Will he also confirm that investment in HS2 will not detract from further electrification along the Chester and north Wales line?

[Chris Grayling]

The improvements that we are making to the rest of the network are separate from HS2. The hon. Gentleman will be aware that we are doing a vast amount of work around the rail network—we will continue to do so. With regard to Crewe, we will have to put forward new proposals for consultation, but it is clear to me that Crewe station will have improved connectivity and will play a central part in our plans.

[Anna Soubry (Broxtowe) (Con)]

We would like a tunnel, please, at Strelley village, but HS2 enjoys widespread cross-party support in Broxtowe and beyond, because we get the east midlands hub at Toton sidings, Stapleford. HS2 delivers capacity and growth. To that end, does my right hon. Friend agree that it is important that at Toton we get a world-class business park, not just hundreds of homes and houses?

[Chris Grayling]

I have been to Toton. The site was once one of Britain’s great railway centres, so it is sad to see it overgrown, as it is at present. I fully expect that we will engender a real process of regeneration, with both residential and commercial development around the site. It will, of course, be for the local authority and Members of Parliament such as my right hon. Friend to shape exactly what that development should be. We want her region to be a major centre of economic regeneration, and the Toton site, large as it is, provides a real opportunity for that.

[Greg Mulholland (Leeds North West) (LD)]

I have long campaigned for high-speed rail for Leeds, but the HS2, HS3, and phases 2a and 2b proposals are clearly flawed. Not to have a station in Sheffield is simply ludicrous. Why will the Government still not look properly at the alternative High Speed UK proposals, which are £20 billion cheaper and far more environmentally friendly? The scheme would also provide better connectivity and would not plough through the Chilterns. Why will the Government not consider that?

[Chris Grayling]

With all respect, I think that turning the clock back and starting the process all over again—going through the process of another hybrid Bill to get this project off the ground—would delay the project further and further into the future. We have taken a project that originated from the previous Labour Government and developed it further. We have put in place a clear plan, and next spring we start construction. I, for one, am not in favour of turning the clock back.

[Amanda Solloway (Derby North) (Con)]

I welcome the Secretary of State’s statement. Does he agree that the project will have a significant impact for the midlands engine for growth, and particularly for Derby, which is known as a rail city?

[Chris Grayling]

Derby is one of the places that will benefit from the proposals. Having the new east midlands hub between Nottingham and Derby will give both cities the opportunity to benefit enormously from it. I will be surprised if the great rail industries of Derby do not play a pretty active part in the programme.

[Yasmin Qureshi (Bolton South East) (Lab)]

I extend an invitation to the Secretary of State to come to Bolton and travel with me on the trains during rush hour. He would see how my constituents are squashed like sardines, how short the trains are, and how many of my constituents miss their trains and are late for work. Why can the Government not find some investment—proper money—for Bolton and the surrounding areas?

[Chris Grayling]

I hope that the hon. Lady welcomes the new northern franchise, which includes longer and newer trains, more services and the electrification of key routes around Greater Manchester. It should deliver a much better travelling experience for the public of the north, because that experience has not been good enough for a very long time. We are taking the action that is needed to make it much better for the future.

[Jason McCartney (Colne Valley) (Con)]

May I give the Secretary of State one more opportunity to confirm the huge investment in the great north railway? That is not instead of, but as well as, investment in our local and regional services. Does he agree that to win hearts and minds, we must emphasise quality jobs and apprenticeships, connectivity between towns as well as cities, and a supercharged HS3 between Liverpool and the city of culture, Hull?

[Chris Grayling]

I agree with my hon. Friend. Part of the job of delivering the northern powerhouse is delivering connectivity that goes from east to west—or west to east, depending on which way we look at it. This is about not just rail but road improvements. In my work on how we shape the next generation of investments, I am mindful of the need to ensure that that east-west connectivity for the north is delivered.

[Mr Clive Betts (Sheffield South East) (Lab)]

I have been open-minded about the right location for the Sheffield station, but may we have a clear indication from the Secretary of State of when a decision will be made? Many of my constituents have had their homes and lives blighted for many years. Will he give us some clarification about the possible Sheffield city centre station? Is it true that the trains that run there will be shorter and narrower than the full HS2 trains? In other words, is it true that they will not be full HS2 trains? Given that it does not look as though the midland mainline electrification will happen, will HS2 now have to pick up the full bill for electrification from the HS2 line into Sheffield station?

[Chris Grayling]

The hon. Gentleman makes some assumptions on the latter point. The trains that operate off the HS2 network will be a different design from those that operate exclusively on the HS2 network—that is to do with platform widths and gauges. That does not mean that they are slower trains or that they are less good trains; they are simply trains that can operate both on HS2 and on a conventional network. Clearly, if those trains go through Sheffield midland station, which is on the conventional network, we will be using them.

[Craig Tracey (North Warwickshire) (Con)]

North Warwickshire has consistently suffered due to a lack of engagement from HS2, so I was alarmed to learn this morning that despite assurances given by HS2 to my local council just three weeks ago, there would be no changes to the line locally. The line will, in fact, move around 150 metres nearer to the village of Austrey, although that significant change was not even mentioned in the route refinement document. That the very first paper published on phase 2b directly contradicts information offered by HS2 so recently is cause for great concern. What assurances can my right hon. Friend give me that communication will actually improve? Will he meet me to discuss the impacts of the most recent changes on my constituents?

[Chris Grayling]

I absolutely give my hon. Friend that assurance. I was not aware of the situation that he describes, and the Minister and I will talk to him about how we address it.

[Phil Wilson (Sedgefield) (Lab)]

Hitachi Rail Europe in Newton Aycliffe in my constituency is well placed to manufacture the rolling stock for HS2. It has a long track record of more than 50 years of building high-speed trains, such as the bullet train in the 1960s in Tokyo. Will the Secretary of State outline the procurement timeline in the coming years, and will he tell us when the rolling stock will start to be produced?

[Chris Grayling]

I can start by letting the hon. Gentleman know in advance that I will be visiting the plant in Newton Aycliffe next month. It is a great addition to our manufacturing base, and I look forward to seeing the first trains from that plant operating on our network. The team at Hitachi is doing a great job for us.

I obviously cannot prejudge the outcome of the tender process—it will take place towards the end of this decade—but I am clear that the company that builds the trains for HS2 must leave a skills footprint in this country. We will not simply bring trains in on a ship, with no benefit for engineering skills or apprenticeships in this country. I want a genuine process that will leave behind a skills footprint with regard to not just rolling stock contracts, but the whole contract.

[Julian Sturdy (York Outer) (Con)]

Like many, I very much welcome the statement, including the link into the existing network at York. However, what assurances can my right hon. Friend give that York will not be bypassed in any future development further north beyond the second phase of HS2?

[Chris Grayling]

I cannot judge future developments, but York will be one of the places that benefits from HS2 connectivity: trains will run up the HS2 line and on through York. The extra capacity and extra speeds—the extra capacity on the east coast main line, and the extra speed and connectivity to London—will very much benefit my hon. Friend’s constituents.

[Toby Perkins (Chesterfield) (Lab)]

Having regularly buttonholed the Secretary of State’s predecessor, the right hon. Member for Derbyshire Dales (Sir Patrick McLoughlin), to ensure that Chesterfield was included in HS2, I am highly delighted with the Secretary of State’s proposal. Will he, however, confirm that passengers boarding HS2 at Chesterfield will have single-train access to Birmingham and London, as well as north to Sheffield and Leeds?

[Chris Grayling]

It is certainly our intention that people who board at Chesterfield and Sheffield will have good connections to London. I expect that there will be through trains. I cannot give the hon. Gentleman a number at the moment, but I am expecting that to happen.

[John Stevenson (Carlisle) (Con)]

I congratulate the Government on their joined-up thinking on the west coast franchise and HS2, and welcome today’s announcement. Will the Secretary of State confirm that there will, in due course, be a third stage to take the route further north—arguably to the true north—and will he take Carlisle into account as a possible station?

[Chris Grayling]

I hear my hon. Friend’s representation. I am not in a position to give him such a guarantee today, but Carlisle will benefit from faster services, and specifically from the HS2 rolling stock that will come up the west coast main line to Carlisle, which will improve connectivity for his area from north to south. I am looking forward to talking to him about the A69 connectivity from east to west.

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

If HS2 is indeed to benefit the whole of the UK, it is important that areas such as north Wales, with its important routes to Ireland, receive investment and connectivity. May I therefore press the Secretary of State on the point made by my hon. Friend the Member for City of Chester (Christian Matheson) about Crewe? Will the Secretary of State ensure that connectivity to north Wales, and beyond it to Ireland, is an essential part of any plans relating to Crewe station?

[Chris Grayling]

I am well aware of the issues about the north Wales line and its importance to the economy of north Wales. I recently discussed that with the Secretary of State for Wales and, indeed, the Welsh Assembly Government. This is very much on my to-do list as we look to the future.

[David Rutley (Macclesfield) (Con)]

I welcome my right hon. Friend’s statement. I was interested to read that high-speed rail services are being considered for rail passengers in Macclesfield and, indeed, in Stoke-on-Trent. Will he tell the House the time within which these decisions are likely to be made, and will he confirm that, whatever the outcome, passengers from Macclesfield will continue to enjoy the same speed and frequency of rail services as they do today?

[Chris Grayling]

It is certainly our intention that HS2 services should not reach Manchester exclusively by the existing route. We have talked about Stoke-on-Trent, and Macclesfield is one of the places on the same line. The other benefits to my hon. Friend’s constituents, many of whom work in Manchester, is that this will provide far more opportunity for commuter services, and far more space on those commuter services, for them and people living further north on the way into Manchester, which in my view they very much need.

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

As the Secretary of State is an avid Manchester United fan, may I ask him what first attracted him to extending the high-speed line from his home in the south-east to his beloved Old Trafford? Secondly, what discussions has he had with Transport for Greater Manchester about extending the light rail network out to the HS2 station at Manchester airport in my constituency?

[Chris Grayling]

On the latter point, there is an obvious logic in continuing to develop the Metrolink network. We have just announced additional routes to the west of the centre—indeed, passing pretty close to Old Trafford—so I am very open to discussing with the new mayor, when he or she is elected in the summer, the ways in which we can continue to develop the transport system in Manchester.

As for the direct route between Surrey and Old Trafford, although they say that most Manchester United supporters live in Surrey, I suspect that we might struggle to get the passenger numbers to justify a high-speed route all that way.

[Mr Speaker]

I hope I am a lot happier just after 2.30 this Saturday afternoon than the Secretary of State, who knows my allegiance in this matter.

[Mr Philip Hollobone (Kettering) (Con)]

Midland main line electrification has a better benefit-cost ratio than any other electrification scheme and a better benefit-cost ratio than HS2. For a fraction of HS2’s cost, it would deliver momentous line speed and capacity improvements for towns across the east midlands, including Kettering. Will the Secretary of State use this opportunity to commit to fulfilling the Government’s pledge to complete the electrification of the midland main line by 2023?

[Chris Grayling]

My hon. Friend will be aware that work has already started on the electrification process that will, in the next stage, go as far as Corby, as well as—this tends to be seen rather as the poor relation—on track improvements and extra tracks passing up through his constituency to Corby, which will enable us to have much faster trains and much more capacity. My goal is to deliver faster journey times and extra capacity by 2020—long before the date he mentioned.

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

In the statement of funding policy that accompanied the comprehensive spending review, Wales was allocated a 0% Barnett rating, whereas Scotland and Northern Ireland both got a 100% rating. This means that Wales will lose out on a full Barnett allocation from HS2. As expenditure increases during the construction phase, so will the impact on the Welsh Government’s budget compared with those of Scotland and Northern Ireland. Will the Secretary of State look at this issue once again and ensure that this injustice is rectified?

[Chris Grayling]

My view is that this is about transport improvements around the country. I, of course, regard improvements in Wales as extremely important. I met the Minister responsible for transport in Wales last week, and we will work together to deliver the improvements that Wales needs.

[James Heappey (Wells) (Con)]

Thank you, Mr Speaker, for indulging a west country interloper on these proceedings. I very much welcome the improved connectivity to the midlands and the north that HS2 will bring, but an awful lot of the country lies to the west, so it is regrettable that key parts of the electrification programme on the Great Western railway have been deferred. As we build an economy that works for all parts of the UK, will the Secretary of State look again at the benefits of running fully electric trains all the way from Paddington to Bristol Temple Meads, which for so many rail users is the entry point to Somerset and the whole of the south-west of England?

[Chris Grayling]

I am as frustrated as anybody by the challenges we have had on the Great Western railway route. One of the great ironies is that while the Labour party attacks us on rail issues and talks about the need for renationalisation, one of its targets is the one bit of the rail industry that is in the public sector. The fact is that Network Rail has not been involved in electrification for many years. It did virtually nothing in Labour’s years in power. This first project has developed more problems and challenges than expected, but I still want it to be completed as quickly as possible.

[Tom Pursglove (Corby) (Con)]

I very much welcome what my right hon. Friend said in response to my hon. Friend the Member for Kettering (Mr Hollobone), but I will unashamedly ask for more. I want more services, both northbound and southbound, running to Corby. Our town is growing hugely and at a rapid rate, and we need more capacity to meet growing demand and to utilise the existing lines. How will phase 2b of HS2 help to unlock opportunities through the midland main line?

[Chris Grayling]

The more that we take express trains off the existing main lines and the more we move passengers on to the new capacity, the more capacity will be created for intermediate journeys. The big difference for my hon. Friend’s constituency is the unheralded one of just building an extra track to Corby. That will make more difference to his town than almost anything else. By 2020, we need to have delivered much more capacity on the routes used by people represented by him and my hon. Friend the Member for Kettering (Mr Hollobone). That will be essential to deliver a proper, effective commuter rail network, alongside what needs to continue to be a good express system to the midlands and the north.

Defibrillators (Availability)

1st reading: House of Commons
Tuesday 15th November 2016 Commons Chamber

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

14:10

[Maria Caulfield (Lewes) (Con)]

I beg to move,

That leave be given to bring in a Bill to require the provision of defibrillators in education establishments, and in leisure, sports and certain other public facilities; to make provision for training persons to operate defibrillators; to make provision for funding the acquisition, installation, use and maintenance of defibrillators; and for connected purposes.

The purpose of the Bill is to increase the rates of survival from non-hospital cardiac arrests across the UK. Currently, our record in this country for survival from cardiac arrest is dismal. According to the British Heart Foundation, almost 30,000 cardiac arrests a year occur outside hospitals, and less than 10% of the people who suffer those cardiac arrests survive. In fact, in parts of England survival rates are close to 2%. Behind those statistics are people, families and communities.

Cardiac arrests can happen for many reasons, from trauma right through to congenital heart defects. Even more frightening than the 10% survival figure is the fact that 12 young people each week will die from arrhythmic death syndrome, a hidden condition that can strike at any time—young people such as Oliver King, who died from a cardiac arrest aged 12. A young lad from Liverpool, he was popular and very sporty, and died after winning a swimming competition. When he died, no defibrillator was available. Paramedics took just 24 minutes to get to the scene. His father, Mark, is here in the Gallery today, along with other members of the Oliver King Foundation, because they are convinced that if a defibrillator had been available at the scene Oliver would be alive now. They have campaigned week after week in this place, with many Members, for defibrillators to be made available throughout the country. Today, we are just short of two months away from what would have been Oliver’s 18th birthday.

Let us be under no illusion about the difference defibrillators could make. A defibrillator can greatly increase survival rates from cardiac arrest, by almost as much as 80%. But for them to be successful, minutes count, and quick access to a defibrillator is crucial. A defibrillator needs a shockable heart rhythm; if too much time elapses, a shockable heart rhythm will turn into a non-shockable one, and the chance of survival decreases rapidly. If a heart is not started within four minutes of cardiac arrest, a person’s chances of living are reduced by almost 80%. Even the speediest paramedic in the country would struggle to get to someone in four minutes. That is why it is crucial that defibrillators are accessible everywhere in this country. We have laws that mandate smoke alarms, fire extinguishers, seatbelts and life jackets to save lives, but not a single law mandating a simple piece of equipment that could restart the lives of 12 young people each week.

The Young Mayor of Seaford in my constituency, Jessica Batchelor—she is also here in the Gallery—at the age of 15 witnessed first hand a close family friend die suddenly from a cardiac arrest when no defibrillator was available. As Young Mayor, she has raised thousands of pounds to put in as many defibrillators across Seaford as possible. She has lobbied me, as her local MP, to do something about this, and has worked with me on the Bill. I pay tremendous tribute to her.

The aim of the Bill is not to undermine the excellent work of existing charities, such as the British Heart Foundation with Heartstart or St John Ambulance, but to support it. I want to achieve two things. The first is to improve access by using key community facilities. We know that for survival after a cardiac arrest, time matters. Making sure that people know where their nearest defibrillator is, therefore, is key. The British Heart Foundation would like a national database, so that we can ensure not only that there is adequate defibrillator coverage but that the defibrillators are maintained and replaced where necessary.

In the Bill, we have suggested schools, sports facilities and public buildings as locations, so that there is somewhere in every town and village in the country where a local defib can be installed. But that is not enough. Defibs need to be accessible 24 hours a day. In rural communities such as my constituency, many villages do not have a school. It is therefore key that somewhere is designated and, more importantly, that people know where that place is.

Currently, there is a postcode lottery—even in schools, despite the Department for Education’s efforts, as it has pursued the option of defibrillators but has not mandated them. In England, we know of 1,389 defibrillators available in schools; in Northern Ireland, we know of one, and in Scotland we do not know of any. That is not to say that they do not exist; but without a register, no one is able to check. Although it is good news that only this month the Department of Health awarded the British Heart Foundation another £1 million to make defibrillators accessible across the country and provide cardiopulmonary resuscitation training, until provision is mandatory, defibrillator access will remain hit and miss.

The Bill’s second aim is to increase the use of defibrillators—it is important not just to have them but to make sure that they are used. That is why the Bill mandates training. I have talked to residents in my local villages. Many have seen their local defibrillator, but say they would be reluctant to use it, because they think that training is needed to do so. Although nothing could be further from the truth—all a person has to do is stick the two pads on someone’s chest and press the button, as the machine will tell them what to do then—without training, people are afraid to use them. The Bill’s aim is not to state that only trained people should use defibrillators but to mandate training for local communities with every installation, so that people feel confident using them.

I wonder how many Members present know how many defibrillators there are on the parliamentary estate. There are 20 in total, in the House of Lords, House of Commons, Norman Shaw North and Portcullis House, with two in Big Ben. I am sure you know, Mr Speaker, where the nearest defibrillator is to the Chamber, in case one of us needed it in an emergency; Members will be reassured to learn that it is in Members Lobby.

I therefore move that the Bill be introduced, so that we can mandate that defibs are installed across the whole of the UK in publicly accessible places, and that training is available so that people know what to do in the event of a cardiac arrest, and are not afraid to use those defibs. It is crucial to support the work of our many charities, such as the Oliver King Foundation and the British Heart Foundation, including the request for a live register to ensure that there is adequate coverage and that that coverage is maintained.

Twelve young people will die of a cardiac arrest this week, and 28,000 people will die this year. Those lives could be saved by the Bill. I urge Members to support it.

Question put and agreed to.

Ordered,

That Maria Caulfield, Andy Burnham, Stephen Twigg, Mims Davies, Anna Soubry, Dr James Davies, Mike Wood, Mr Edward Vaizey, Dr Philippa Whitford, Douglas Chapman, Dr Lisa Cameron and Peter Aldous present the Bill.

Maria Caulfield accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 27 January 2017, and to be printed (Bill 91).

Investigatory Powers Bill

Ping Pong: House of Commons
Tuesday 15th November 2016 Commons Chamber

Consideration of Lords message

After Clause 8

14:19

[The Solicitor General (Robert Buckland)]

I beg to move,

That this House disagrees with the Lords amendments 15B, 15C, 338B, 339B and 339C.

Two weeks’ ago, we considered Lords amendments to the Investigatory Powers Bill. In accepting unopposed all amendments that relate directly to the subject matter of the Bill, this House demonstrated the value we all place on legislative scrutiny in the other place, and recognised the many improvements made by their lordships to this important legislation. We welcome the spirit of cross-party co-operation on this crucial matter. I would like to put on record again my admiration for the approach taken by all parties in both Houses in contributing to this landmark Bill.

Together, we have created a world-leading framework for the use of investigatory powers by law enforcement and the security and intelligence agencies. We have strengthened the authorisation processes and safeguards around the use of those powers, and we have created a powerful new body that is responsible for the oversight of those powers.

During that debate, however, we also gave thorough and anxious consideration to the amendments tabled by Baroness Hollins, supported by others, which sought to use the Bill as a vehicle to change the law in relation to the regulation of the press. The amendments would introduce a presumption that a court should award costs against a publisher in cases of unlawful interception if it is not part of a recognised regulator, regardless of whether or not it won a case.

[Simon Hoare (North Dorset) (Con)]

Did my hon. and learned Friend see the article in The Times last week by the noble Lord Pannick? He is not necessarily always a friend to the Government on these matters, but he very clearly said that the Lords amendments should be rejected, that this was an important and well thought out Bill, and that the sooner we got on with it, the better.

[The Solicitor General]

I am very grateful to my hon. Friend. Lord Pannick played an important part in helping to refine other parts of the Bill, most notably on legal professional privilege. Lord Pannick said that we

“should reject the Lords’ attempt to hold such an important bill hostage on issues of press regulation that are far from central to the bill’s purposes.”

The Bill does not, and never was intended to, provide for the regulation of the press. It is about providing vital tools for our law enforcement and security and intelligence agencies. The Lords amendments we are considering today differ slightly from those we debated last time. The noble Lady revised her proposal to remove the link to clause 8 in order to avoid any risk that it could have an impact on the provisions already in the Bill. She also added a six-year sunset, which she suggests means that the change could be allowed to fall away after the process of reform of press self-regulation is complete. I thank the noble Lady for her efforts to minimise the collateral impact of her amendments and I recognise the goodwill she is showing in doing so, but I am afraid that the fundamental problem remains. The amendments are simply not appropriate at this time, or in this legislation.

The public consultation announced by the Secretary of State for Culture, Media and Sport, who is on the Front Bench today, speaks directly to the concerns of those supporting the amendments. It provides everyone—whether a publisher or a victim of phone hacking, a parliamentarian, journalist, police officer or a member of the public—with their rightful opportunity to contribute to the debate on the issue of press self-regulation, which affects each and every one of us in this country. The consultation document not only sets out the position but asks a series of questions to consultees. The questions are wide-ranging and allow a number of options to be explored. As is proper with a consultation, they allow consultees to express their views fully and to provide evidence to support their contentions. A number of options are set out. It is not simply a question of commencement, but whether part of section 40 should be commenced to afford protection to members of a recognised regulator, whether to not apply the particular provisions to publishers outside a recognised regulator, and to consider whether section 40 should be fully commenced, repealed or kept under review. This is an important consultation. It allows adequate time for people who are either well versed in the issues relating to the Leveson process, which occupied this House some years ago, or come new to the issue and want to have their say, bearing in mind the passage of time since the introduction of section 40 pursuant to the Crime and Courts Act 2013.

The Government have been absolutely clear that they recognise the very serious intrusion and anxiety suffered by victims of press misconduct.

[Pauline Latham (Mid Derbyshire) (Con)]

Will my hon. and learned Friend tell the House what the double lock for the most intrusive warrants will achieve, and why it is so very important?

[The Solicitor General]

My hon. Friend is right to remind the House about one of the truly innovative parts of the Bill. The mechanism proposed by Government was refined in Committee by representatives from other parties, as well as the Government. It allows for not only a politician, a Secretary of State, to make a decision about authorisation, but for that decision to be then reviewed by a judge who will apply principles of judicial review—not just Wednesbury unreasonableness, but principles relating to proportionality and human rights matters that are properly engaged in considering what we accept are serious intrusions when it comes to this type of warrantry.

The Bill is unprecedented and world leading. The double lock represents the Government’s commitment to maintaining the balance between the need for the security and intelligence agencies and other investigative agencies to be fleet of foot when it comes to investigating serious crime. It will ensure that, with judicial input, the interests of privacy and human rights are kept very much to the forefront of these decisions.

On press misconduct, we must ensure that victims have appropriate means of redress. The situation, however, is complex and the overall solution is far from clear. We must do our utmost to avoid unintended consequences of what I accept are well-intentioned actions.

[Joanna Cherry (Edinburgh South West) (SNP)]

The hon. and learned Gentleman was referred earlier by the hon. Member for North Dorset (Simon Hoare) to the words of Lord Pannick. Does the Minister also agree with Lord Pannick that there can be no doubt that the amendments are within the scope of the Bill, which was one of the Government’s previous objections?

[The Solicitor General]

The hon. and learned Lady will know that the interpretation of scope taken in the other place is somewhat different from the one both she and I understand in this place, having both served on the Public Bill Committee. I pay tribute to her for the considerable number of amendments she tabled in this House. I think we have to accept that the Lords’ interpretation allowed for the introduction of these amendments. The Government rightly had issues with some of the technical deficiencies in them. I paid tribute to the efforts made by Baroness Hollins to amend the provisions to meet some of the Government’s concerns. However—this is why we seek to reject the amendments—they have no place in a Bill that relates to the regulation of investigative powers. This is all about national security and dealing with crime, whether that be child abuse, trafficking, drug dealing or any other criminality we want to deal with in society. That is why the amendments are not only out of place but pre-empt the outcome of the consultation launched by my right hon. Friend the Secretary of State.

14:30

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

Would my hon. and learned Friend not go further and say that a Bill on national security is precisely the wrong place for restrictions on the press, as it would make it look as if we were really trying to hit them hard?

[The Solicitor General]

My hon. Friend makes an important point. The Bill is all about balance and the importance the Executive attach to the way they seek to interfere or intrude into the private lives of individuals and to setting out clearly the criteria that must be met before they can act. It would be wrong to take any measure that sends a message that the Government wish to ride roughshod over the interests of individuals and freedom of speech. He knows that the consultation launched two weeks ago will deal with the very issues that have caused him concern over a number of years, although it would be wrong for me to pre-empt the outcome of that open process.

[Richard Drax (South Dorset) (Con)]

Does my hon. and learned Friend agree that phone hacking, which we hear so much about, particularly from those who support these press rules, is already a criminal offence for which people can go to jail? In addition, we have the libel laws, so anything the press does, in a major regard, is already very much covered.

[The Solicitor General]

My hon. Friend is absolutely right to remind us that where we have existing mechanisms —and the criminal law is, of course, there—they must be used. To be fair to both sides of the argument, the issues about redress of grievance and the mechanism of press regulation, which he knows from his experience as a journalist has existed for years, are important ones. I know that he would be as anxious as anybody in the House to make sure that, rather than the focus being on celebrities and the like, ordinary people who end up as victims—chiefly of inaccuracies reported in the media—have a reasonable and cost-effective means of redress. He is absolutely right, however, to talk about existing mechanisms and the criminal law, and of course the criminal law was used in a significant investigation by the Metropolitan police that resulted in several convictions.

[Damian Collins (Folkestone and Hythe) (Con)]

Does my hon. and learned Friend agree that, in respect of the consultation that the Secretary of State for Culture, Media and Sport has set out, we have to get the balance right between respecting the freedoms of the press and the rights of innocent people who have never sought publicity but who find themselves on the wrong side of an investigation and need a low-cost method of arbitration to bring their grievances forward?

[The Solicitor General]

My hon. Friend the Chair of the Culture, Media and Sport Committee puts it more succinctly than I did, and he is absolutely right about the balance to be struck and the need for ordinary people who might be the victims of misconduct to have access to meaningful redress of grievance, so I am grateful to him. Having been here in the previous Parliament, he and I will remember debating the Leveson process and the aftermath of the findings of Sir Brian Leveson.

Turning back to the consultation to which my hon. Friend referred, the Government have set out a clear timetable, and we have committed to responding to that consultation in a timely manner.

[Mr Jim Cunningham (Coventry South) (Lab)]

Who exactly is going to be consulted?

[The Solicitor General]

It is a public consultation and invites comment from all members of the public, from whatever corner of the country they might come and whatever interest—it might be no interest—they represent. I am grateful to the hon. Gentleman for giving me the opportunity to emphasise the important point that the Government would welcome as many responses as possible to the questions posed in the consultation—and not just responses but evidence to support the contentions made by those who take part.

[Damian Collins]

I should note that the Select Committee will be taking evidence from victims of phone hacking and press representatives and will makes its own representations to the Government through the consultation process.

[The Solicitor General]

The Government warmly welcome that approach. The work of the Select Committee—indeed all Select Committees—is invaluable and carries real weight, and the Government will consider it carefully when the consultation responses are assessed by the Secretary of State and those who serve her in the Department.

After the Government’s response, there will be ample opportunity for the House and the other place to consider and debate it in due course. As I said earlier, however, now is not the time to do so. The Bill, which we have all recognised is so important to our collective security, should not, with the greatest of respect, be used to force that debate.

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

I am glad to rise in support, once again, of these very important amendments. I believe that any member of the public who just heard the Solicitor General’s speech will be puzzled about the Government’s resistance to implementing an aspect of Leveson that they agreed to in principle some time ago.

Labour fully supports the Lords amendments and has consistently and genuinely called for the Leveson recommendations to be implemented in full. A new system of independent self-regulation was agreed by the three main political parties in 2013, following extensive consultation with victims of press intrusion, and Labour believes that the promises made to them should be honoured. If the best that the Government can come up with is that hoary old doctrine of unripe time—“It’s a good idea but not now”—they must be a little desperate. It is disappointing that we have to speak to the amendments yet again to get the Government to honour their agreements. It is a breach of the cross-party agreement, and breaks promises made by the House to the victims.

Lords amendment 15B would not be necessary had the Government fulfilled their stated commitment to implement section 40 of the Crime and Courts Act 2013, which they have promised to do innumerable times. Happily, the amendment goes further than section 40 and would not require ministerial approval, meaning that it would automatically implement section 40 in relation to phone hacking claims. This would restate the clear intention of Parliament as previously expressed in 2013. Ministers have talked about riding roughshod. The Society of Editors, the National Union of Journalists, with the backing of the TUC, and many others concerned with the freedom of the press, have said that there is the potential to ride roughshod over freedoms.

[Mr Rees-Mogg]

Will the hon. Lady explain one point about the amendment? Why should the press be punished if it is not in fact guilty of phone hacking?

[Ms Abbott]

If the hon. Gentleman will forgive me, I will complete my next paragraph and then address his point.

The ability of journalists to protect their sources is a vital part of a functioning democracy. It means whistleblowers, important sources and others can divulge matters sometimes of the utmost public interest—there is a host of whistleblowers in the NHS, to take just one example, and there have been important whistleblowers in almost every area of public life. However, we have to once again flag up the powers in the Bill—although it is a Bill we support—and say that simply being able to identify internet records without ever examining the content would potentially allow the identification of whistleblowers in many cases. This represents a potential infringement of civil liberties, a riding roughshod over civil liberties and a riding roughshod over the freedom that ultimately benefits us all.

As for the point raised by the hon. Member for North East Somerset (Mr Rees-Mogg), if the Government do not want to implement this aspect of Leveson and if they do not think it necessary, why have they on so many occasions, including to the victims themselves, promised to do so?

The claim that these measures will impinge on the freedom of the press is factually inaccurate. Instead, they would allow for a low-cost and timely mechanism for redress on behalf of those who have been or believe themselves to have been mistreated or maligned by the press. I repeat the point that was made earlier: this is not about celebrities, but about ordinary people who through no fault of their own get caught up in the maw of the tabloid press and have to put up with seeing their picture appearing on the front page of tabloid newspapers day after day—often on the basis of misinterpreted tips from the police force. These people need to be able to get redress. That is why we support the amendments.

This amendment 15B, which the Government intend to vote down, was proposed and improved in the House of Lords by the Cross Bencher Baroness Hollins and overwhelmingly passed. It would implement the same provisions as are contained in section 40 of the Crime and Courts Act 2013 in respect of claims against media organisations over phone hacking and other unlawful interception of communications. While there is a free-for-all by ignoring Leveson and a failure to implement section 40, the most irresponsible practices of the press, which can ruin the lives of ordinary people, will go unchecked without any recourse—except for celebrities and the ultra-rich, who can afford libel lawyers.

It was always envisaged that as soon as pending legal proceedings were complete, we would see the second phase of the Leveson inquiry. The Minister had a lot to say about the consultation. Does he remember that Leveson lasted over two years and cost £5.4 million in total? Having spent so much money and so much time—and particularly the time of so many distinguished lawyers—why on earth do we need another consultation? Opposition Members believe that this is merely a stalling mechanism, and we think that the Government’s continuing to stall on this issue is disrespectful of, and inappropriate for, the ordinary victims of phone hacking.

[Richard Drax]

The hon. Lady mentions phone hacking again, so let me remind her that phone hacking is an illegal act. People go to jail for it. Will she acknowledge that this is already a criminal offence?

[Ms Abbott]

It may be a criminal offence, but the entire House knows that time after time, tabloid editors and their staff engaged in phone hacking, betting that the people whose privacy was being infringed would not have the money or the knowledge or the social capital to take them to court.

This consultation is the Government’s most recent attempt to kick this issue into the long grass. The victims of phone hacking—many of whose lives have been ruined—are being forced to relive the traumatic experiences of Leveson. The understanding was that so many millions of pounds were spent and so many top-flight lawyers engaged in order to arrive at a conclusion on these issues—not so that the Government could continue to stall.

[Joanna Cherry]

Does the hon. Lady agree that the virtue of Leveson was that it was an inquiry held in public with an independent judge in the chair? The problem with the Government’s consultation is that it will effectively put politicians—and Government politicians—in the chair to re-run these issues in private?

[Ms Abbott]

I am grateful to the hon. and learned Lady for that very important point. Leveson was public and engaged, and it expressed widespread concern. With millions spent on Leveson, the Government now propose a private, secret consultation.

14:45

The Minister said that this set of amendments was inappropriate. He has said that he opposes them because of the doctrine of unripe time. I put it to Members that it is for the House to decide whether these amendments are appropriate and timely. I support the Lords amendments.

[Sir Edward Garnier (Harborough) (Con)]

I rise to support my hon. and learned Friend the Solicitor General in his resistance to the Lords amendments, which was based on principle rather than over-excitement or hyperbole. It seems to me that the motion put forward in the other place—no doubt well intentioned—does not entirely cover the justice of the case. Before I move on to the main part of my argument, I would like to declare an interest, in that I have some 40 or 45 years’ experience as a member of the media and libel Bar.

The first Lords amendment proposes a new clause to be inserted after clause 8, and I am particularly disturbed by one or two aspects of it. I fully appreciate that as a matter of policy and politics, we in the House, the Government and Parliament generally frequently make use of what I would call the nudge system of trying to encourage people to be of better behaviour. We introduce laws that seek to persuade people not to behave in an antisocial or criminal manner. Broadly, it is the use of incentives to encourage better behaviour, and I have a suspicion that that is what is behind the Leveson report and their lordships’ proposed new clause.

In some respects, the provision is in the wrong place. The Bill is about investigatory powers and although I accept and applaud the ingenuity of those who introduced the new clause in the other place, I believe that introducing it into this important Bill, though understandable, is not the best place for them to have done so. They risk imperilling the policy behind the Investigatory Powers Bill without advancing their own cause in respect of those grievously and adversely affected by phone hacking.

While the proposed new clause is, on the face of it, of course related to phone hacking, it seems to me that it is not limited to phone hacking. If we look at subsection (1)(b), we see that the defendant in question needs to be “a relevant publisher”—that is fair enough—but if we look at subsection (1)(c), we find that it deals with claims

“related to the publication of news-related material.”

It may be that the news-related material has come as a consequence of phone hacking, and as my hon. Friend the Member for South Dorset (Richard Drax) has correctly pointed out, phone hacking is already a crime and the criminal justice system is already able to get a grip on it. When it comes to the consequences of hacking someone’s phone, there could be a public interest defence to the criminal charge of phone hacking. The newspaper might publish material that a claimant says is in breach of his rights of privacy or a misuse of private information or a breach of confidence, or it could amount to a defamation. None of those additional civil claims is covered by this nudge or incentive proposal. I think that we need to be wary lest a legitimate exposure of misconduct on the part of, say, a public authority or a person in the public sphere might be inhibited by this no doubt well-intentioned new clause.

The first point that I would make to my hon. and learned Friend the Solicitor General is that subsection (1) of the new clause does not limit the nudging or the incentives to the misdemeanour of phone hacking. It goes beyond that, and in doing so, it seems to me, could put a defendant newspaper or publisher in danger of being penalised for doing what might turn out to have been the right thing. As I said a moment ago, it might well be that the initial phone hacking was on the face of it criminal, but there might be a defence for it, and, moreover, the product—the fruit—of that phone hacking, legitimised because it was in the public interest, might lead to a further claim in a cause of action under civil law.

The defendant publisher might win the case, because what had been written might be true, and it might not be against the public interest to publish the confidential information because it had exposed iniquity or something of that nature. The defendant newspaper—if it is a newspaper—should therefore be entitled to win the case and defeat the claim. Under the new clause, however, although the claim had been defeated and the publishing defendant had won the case, the defendant would be required to pay the undeserving claimant’s costs as well as its own because the defendant might not be a member of some approved regulator.

[Joanna Cherry]

I am listening with great care to what the right hon. and learned Gentleman is saying. May I suggest to him that the situation that he has just described is covered by the proviso in subsection (3)(b) of the new clause proposed in Lords amendment 15C, which states that the court may take account of whether

“it is just and equitable in all the circumstances of the case”

to make a different award of costs? May I suggest that in the circumstances that he has described, the “just and equitable” exception would kick in, and a newspaper that had a valid defence and had revealed iniquity as a result of hacking could pray it in aid?

[Sir Edward Garnier]

It might if both new clauses became law, but it might not if the new clause to which the hon. and learned Lady has referred did not become law, and we were left with only the one with which I am dealing.

My second point is this. Why should a well-intentioned and successful defendant publisher have to risk the expense of successfully defending a claim and then having to pay the costs of the unsuccessful claimant? That strikes me as unjust. The House is famous for passing laws that are laden—replete—with unintended consequences. It seems to me, however, that when an amendment paper contains a proposal that will clearly lead to a problem—although I am not suggesting that it would be an insoluble problem—we would be foolish not to warn the Government against it. I am delighted to see that the Government seem to have mustered their forces and thinking processes in such a way that an unjust law will not be passed.

When I spoke in the House following the publication of the Leveson report, I was sufficiently pompous and self-confident to rebuke Members who thought that the inquiry, and the report that followed it, meant that there would be state regulation of the press. There will be no such thing as a consequence of the Leveson inquiry. However, I feel that I am entitled to warn Members who, like me, thoroughly disapprove of illegal phone hacking not to assume that once the words “phone hacking” have been uttered, that permits the House, the Government and the courts to rain down on successful, innocent and well-intentioned defendant publishers the burden of the costs of successfully defending a claim.

It should be borne in mind that defendants do not choose to be defendants. Of course they choose to publish the material that they have got hold of, but it is the claimant who feels obliged, or makes the choice, to sue the defendant. To be sued as a defendant is tedious enough, but to be sued as a defendant, to win, and then to be required to pay the costs of the unmeritorious claim must surely constitute even more of a punishment.

[Sir Oliver Letwin (West Dorset) (Con)]

Is there not another choice that the media can make? Can they not choose to subscribe to a compliant regulator and thereby avoid the need for all the regulation and legislation that we do not want to see in the Bill?

[Sir Edward Garnier]

Of course I understand what my right hon. Friend has said. He is one of the most sophisticated proponents of the “nudge” or incentive system of lawmaking, and I salute him for that. I sometimes wonder, however, whether it is a good idea to use the force of what are essentially the punitive elements of the legal system to encourage innocent defendants to pay the costs of unmeritorious claims. Yes, in a perfect world we would all settle our disputes, and people would not even provoke disputes in the first place; but to be compelled, on penalty of having to pay out large sums in legal costs, to join an organisation of which one either does not approve for one reason or another, or does not wish to join for one reason or another, strikes me as unjust.

I have been a victim of, shall we say, stupid conduct by the press. It is very annoying. I have seen others, not only my friends and colleagues but people for whom I have acted, having to deal with the misconduct of the media. But I would rather have a system which recognised justice—

[Lyn Brown (West Ham) (Lab)]

Does the right hon. and learned Gentleman not see a difference between himself—as he has already told us, he is a leading advocate at the criminal Bar dealing with these matters on a day-to-day basis to earn his crust—and someone who does not have those advantages and who is caught in the same snare?

[Sir Edward Garnier]

I do not wish to be rude to the hon. Lady, but I did not say any of those things. I am not a leading member of the criminal Bar. I happened for some little while to be a member of the media and defamation Bar, which may be a distinction without a difference as far as she is concerned. [Interruption.] She may disagree with me—she may disagree with me vehemently—but what we are trying to do is to pass good law. If my colleagues on the Front Bench, and those around me, disagree with me, fine: go ahead and disagree with me.

[Bill Wiggin (North Herefordshire) (Con)]

We do.

[Sir Edward Garnier]

My hon. Friend clearly does.

[Bill Wiggin]

I absolutely disagree with my right hon. and learned Friend. I have been sitting here listening to him carefully, but I cannot think of any other industry that does not offer any sort of guarantee. If people make faulty washing machines, they replace them, but if they publish stories about people, they have already made their money by the time they end up being sued, and that is why the papers have to bear some of the cost.

[Sir Edward Garnier]

My hon. Friend’s intervention demonstrates to me that I have not made myself clear. What I am suggesting is that it is wrong for a claimant who has lost his case to demand the costs from the successful defendant. I am not suggesting that if I make a faulty washing machine, I should not be liable, under law or morally, to put the matter right. However, if I have made a good washing machine, the fact that my hon. Friend does not like the colour of it, or the fact that it revolves in any number of ways—[Interruption.] I am in danger, Madam Deputy Speaker, of reducing the level of the debate to something that it should not be. I will stop now, because I think I have made the points that I wish to make with sufficient clarity. Some will agree with me and some will not, but I urge the Government to be very wary about passing unjust laws for very well-motivated purposes.

[Several hon. Members rose—]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Before I call the hon. and learned Member for Edinburgh South West (Joanna Cherry) on behalf of the Scottish National party, let me say that we have 19 minutes left in this very important debate and I have noticed several accomplished and learned colleagues attempting to catch my eye. I know they are as capable of making a good argument in three minutes as in 15 minutes, and I implore them to take the former course.

15:00

[Joanna Cherry]

I rise to support the shadow Home Secretary and her motion to accept these amendments. I will keep my comments brief. I will not go into the Scottish angle because I covered that in some detail last time.

The other place is clearly seeking to use these amendments to bring pressure on the UK Government to bring section 40 into force. The SNP is happy to lend its support to that effort, particularly as these amendments would afford protection and legal redress for those who suffer as a result of the most egregious sort of interception without legal authority when phone hacking is carried out by newspapers. Those who have not hacked, do not hack and do not intend to hack have nothing to fear from these provisions. Contrary to what has been said in the newspapers by many who advocate on behalf of wealthy newspaper proprietors and contrary to what has been said by some Government Members, there is a get-out clause in these provisions where a newspaper is sued unfairly and unjustly, and that is the just and equitable exception. We have to trust that the courts will implement that properly, as we trust them daily to implement justice and equity.

In the other place Baroness Hollins pointed out what this is really about. A widespread criminal conspiracy involving more than one newspaper group lasted, and was covered up, for many years. It was combined with unexplained failures in police and prosecution action and allegations of political involvement in a cover-up. As a result, there was a public inquiry, which came to conclusions that were supported cross-party in this House. The Government committed to implementing them; they are now failing to do so. As I said in an intervention, they are seeking to replace the public semi-judicial inquiry that was Leveson with a consultation in which the Government will consider proposals behind closed doors without the benefit of submissions and evidence being given in public, and that is not right.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Does the hon. and learned Lady recall that the reason we reached the agreement we did was a determination that politicians should have no role in this, so does she share my frustration that we are here again in November 2016 still discussing this?

[Joanna Cherry]

I agree. I was not here when these matters were previously discussed in this House but I followed that closely and it was all about taking politicians out of the mix. The Government’s consultation is putting politicians into the driving seat—and Government politicians at that. That is exactly what many of us did not want to happen, and it is what Leveson said should not happen.

I support these amendments because they now stand alone and do not impinge on the other provisions of the Bill. As Lord Pannick said in the House of Lords, these amendments are now in scope. They are supplementary to what is there already and they do not detract from the security issues in the Bill. I believe these two points meet many of the objections put forward by Ministers.

The amendments are on point and relate to the subject matter of the Bill because they deal with the consequences of unlawful interceptions of communications. At the risk of tooting the SNP’s trumpet too often, I simply remind the House again that new clause 8 came into the Bill as a result of a suggestion made by me and my colleague in the Bill Committee, my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands).

These amendments will apply to new and old phone hacking claims alike, but they are not objectionable, as being retrospective, because in considering how to deal with costs the court must look to the issue of whether the defendant was registered with an approved regulator at the time when the claim was commenced.

I believe the remaining objections to the amendments are misplaced. If the Government are concerned about these amendments causing delay to the passage of this important Bill, all they need to do is bite the bullet and implement section 40 and then we can forget about the amendments, and I invite them to do that.

[Bill Wiggin]

In all the years I have been here, I have never before found myself in agreement with the hon. Member for Hackney North and Stoke Newington (Ms Abbott), so I am deeply unhappy about this debate and the fact that I have been put in this position.

I also feel very uncomfortable with some of the things my hon. and learned Friend the Solicitor General has said, because I know that in his heart he, like me, would like to see low-cost arbitration. That is why I am so pleased with the Culture Secretary and the wonderful steps she has taken to keep people like me onside—people who passionately care about redress for ordinary people. This is the 21st century; it is the age of information and that is why the quality of information is so critical. We as a Government cannot police the media, and I believe my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) understood that when he put forward his royal commission proposals, but we must do our bit to ensure that the quality of information is good enough, and at the moment it is not.

[Richard Drax]

What plans does my hon. Friend have for the internet, which is not governed by these measures and on which reprehensible things are said every second of every day?

[Bill Wiggin]

The internet is not policed and that is as it should be, but my hon. Friend has to understand why people have stopped reading newspapers and take their news from the internet now. There is a choice, and the choice they can make is to favour the sources they believe in. That presents a different set of challenges to the individual than having a quality media.

I absolutely believe in the freedom of the press, but not in the irresponsibility of the press. That is why I welcomed the conclusions to the Leveson inquiry and why I welcome the Secretary of State’s inquiries. We have to get the balance right between policing and responsibility, and while this Bill is about security and information, I do not agree that it is an inappropriate place to bring forward this debate. Given what the Government have agreed to do, I think we should take full advantage of that, but we must remember that the people who are most likely to contribute are those who write for a living and are therefore most likely to be journalists. It will be difficult for the Government to maintain that balance of common sense, but I have absolute confidence that they will achieve it.

[Damian Collins]

First, I echo what Members have said across the House about the importance of a free press and a press both acting freely and speaking with confidence to the powerful. We have seen the role of British investigative journalism in taking on corruption in international sport, where it could without fear or favour pursue its investigations and therefore brought down powerful and mighty people. We do not want that to be jeopardised in any way. At the same time we should be conscious that if we just implement the section 40 provisions as they currently stand, some of the biggest victims would be small newspapers and magazines that have never been part of these bigger things. We should also at this time reflect on the nature and purpose of section 40. That is why I believe the Secretary of State is right to have a further consultation.

The idea was not necessarily that the section would be required; the hope was that the press would seek recognition through a recognised authority and have a proper, robust system of self-regulation recognised by the press recognition panel. The press have decided not to do go down that path. Many of them have set up the Independent Press Standards Organisation as their own regulator. They do not wish to see recognition, which in itself would solve the problem; if IPSO had sought recognition we would not be having this debate about costs and extra damages, but it has not sought that. So this should be a time to see whether IPSO can become recognised, with public confidence, as being Leveson-compliant, meeting the standards and providing, as my hon. Friend the Member for North Herefordshire (Bill Wiggin) said, the right level of proper low-cost arbitration. Section 40 is really about saying there must be a robust system of self-regulation and low-cost arbitration. If that cannot be put in place, the alternative is someone going to court and the industry having to pick up the costs in the courts, rather than paying for the arbitration system.

[Sir Oliver Letwin]

Does my hon. Friend agree that the demands that the nation puts on the media would be satisfied if IPSO were to establish the low-cost arbitration, even if it did not formally seek recognition? Does he agree that most Members would be satisfied with that as an answer?

[Damian Collins]

My right hon. Friend makes an incredibly important point. If such an accessible arbitration system were to be established—which would involve going further than the pilot scheme—it would be churlish of the House to ignore that progress and to insist on the point of principle involving going before the recognition panel. This matter should be pursued, and that is why it is right to use the consultation process to explore what more can be done to ensure that IPSO is compliant, that it offers the access to low-cost arbitration that the public want, and that it can win public respect as an effective means of self-regulation for the press.

[Edward Argar (Charnwood) (Con)]

I rise briefly to express my agreement with the Solicitor General and particularly with my hon. Friend the Member for Folkestone and Hythe (Damian Collins). A vibrant, responsible local press that is able to speak freely and report stories within the law is a pillar of our democracy. It is something we should be proud of and always strive to protect. What concerns me, and the press, is the potential for the press to have done nothing wrong—having not misreported a story or wronged an individual—and yet to find itself on the receiving end of costs that threaten its existence.

As my hon. Friend the Member for Folkestone and Hythe has eloquently set out, no one disputes that there should be a way for people who have been genuinely wronged by the press to have access to affordable and effective redress. It is beyond doubt that this must be addressed. To that end, I fully support the approach put forward by the Solicitor General and my right hon. Friend the Secretary of State in undertaking a further consultation to see whether a way forward can be found that strikes the right balance. The Secretary of State has adopted an open, measured, sensible and appropriate approach to implementing our clear determination to provide redress while safeguarding the freedoms and viability of our hugely precious local press.

[Mr Rees-Mogg]

This is an absolutely dreadful amendment and it should be thrown out, rejected and sent back to the House of Lords. It is fundamentally wrong. It seeks to punish those who might be innocent and to fine them for telling the truth and for saying things that people in power do not like. This amendment goes to the heart of our free press, and it should be thrown in the bin. IMPRESS is already an organisation of ill repute, founded, funded and paid for by somebody who is known to us only because of his misdeeds. A degenerate libertine has provided all the money for IMPRESS, which only the most junior newspapers will sign up to. It is a dreadful body.

We should maintain the freedom of our press to help us with our liberties. We have only to look at the policeman who went to prison a few weeks ago. He successfully sued the press in the 1990s, but it turned out that he was in fact a child molester. Whenever we put constraints on the press, we help the powerful to get away with misdeeds. This House should stand up for freedom. It should stand up for liberty and it should reject the unelected House of Lords trying to prevent scandal from being reported freely.

[Richard Drax]

It is a pleasure to follow my hon. Friend the Member for North East Somerset (Mr Rees-Mogg), who was most eloquent. I have a disadvantage in following such eloquence with a short speech. I believe that I have just a few minutes left. I must declare an interest in that I was a journalist for 17 years. Perhaps I saw a little bit of the worst, but most of it was good. It is the local and regional press—the majority of our press today—that I am concerned about. It simply will not be able to take the risk of reporting at local level, albeit accurately and fairly, lest it should incur a costly exercise in court, and that is not acceptable.

In the first week of my career, the editor called me in and said, “Richard, you cannot go far wrong if you report fairly and accurately.” I agree with other hon. Members who have said that the message to the editors must be that they should report fairly, accurately and truthfully. Truth is the biggest sword of defence for the press. As my editor said: if in doubt, leave it out. I implore all editors who want a free press, as I and many other hon. Members do, to behave honourably, truthfully and in good faith. If they cannot report something that they long to report because they know it will result in a huge sale of newspapers, I suggest that they delay publication until they have the facts.

15:15

I am here to defend the press, because the press in this country is one of the cornerstones of our democracy. I do not want IPSO to sign up to the royal charter, which represents state intrusion, not through the back door but quite openly. As I understand it—I hope that I am reporting the facts correctly here—IPSO is considering a system of low-cost arbitration. But what is low-cost arbitration? I suspect that local newspapers and those taking cases against them often employ expensive QCs. How do we cap the cost? I am not quite sure what “low-cost arbitration” means.

I agree that if a grievance is found to be justified, and the press is found to have got its facts wrong, it has a duty to publish that inaccuracy on its front page and to give it the same prominence as it gave to the original story on its inside pages or perhaps its front page. Any editor worth his salt should drag in the journalist responsible and say, “Enough is enough.” The free press: that is what we are here for and that is what I am fighting for. I totally back the Government in not supporting this Lords amendment.

[The Solicitor General]

We have heard many heartfelt contributions to this debate from Members on both sides of the House and I recognise the strength of feeling on this issue. Time does not permit me—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I think the hon. and learned Gentleman is seeking the leave of the House to respond to the debate.

[The Solicitor General]

I certainly am. I seek the leave of the House to respond to the debate, but time does not permit me to say much more.

[Madam Deputy Speaker]

I congratulate the hon. and learned Gentleman on his excellent brevity.

Question put,

15:17

Division 78

Ayes: 295

---

Conservative: 287
Democratic Unionist Party: 4
Ulster Unionist Party: 2
Labour: 1

Noes: 245

---

Labour: 184
Scottish National Party: 47
Liberal Democrat: 6
Independent: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Green Party: 1

Resolved,

That this House disagrees with Lords amendments 15B, 15C, 338B, 339B and 339C.

15:31

More than one hour having elapsed since the commencement of proceedings on consideration of the Lords message, the proceedings were interrupted (Programme Order, 1 November).

The Deputy Speaker put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments;

That Ms Diane Abbott, Robert Buckland, Joanna Cherry, Nic Dakin, Andrew Griffiths, Andrew Stephenson and Matt Warman be members of the Committee;

That Robert Buckland be the Chair of the Committee;

That three be the quorum of the Committee;

That the Committee do withdraw immediately.—(Andrew Griffiths.)

Question agreed to.

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. If Members are leaving the Chamber following the previous business, I hope that they will have the courtesy to be quiet while we begin the next business.

Small Charitable Donations and Childcare Payments Bill

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 15th November 2016 Commons Chamber

Consideration of Bill, not amended in the Public Bill Committee.

New Clause 1

Prevention of fraud and abuse of small donations scheme

‘(1) The Small Charitable Donations Act 2012 is amended as follows.

(2) After section 16, insert the following—

“16A Prevention of fraud and abuse of small donations scheme

(1) Her Majesty’s Revenue and Customs must, in respect of each tax year beginning with 2017-18, prepare an annual report specifying—

(a) the number of penalties imposed under this Act,

(b) the circumstances giving rise to the imposition of such penalties,

(c) its assessment of the extent to which charities have been established or operated for the primary purpose of securing benefits from the small donations scheme, and

(d) its assessment of the evidence available on the role of the gift aid matching rule in preventing fraud and abuse.

(2) A report prepared under subsection (1) must be laid before each House of Parliament by the Chancellor of the Exchequer.

(3) In this section, “the gift aid matching rule” has the same meaning as in section 14(3).” —(Rebecca Long Bailey.)

This new clause requires HMRC to indicate how, each tax year, it has exercised its powers to impose penalties and in what circumstances and to provide an assessment of evidence on the role of the gift aid matching rule in preventing fraud and abuse.

Brought up, and read the First time.

15:34

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

New clause 2— Review of operation of gift aid matching rule—

‘(1) The Small Charitable Donations Act 2012 is amended as follows.

(2) After section 16, insert the following—

“16A Review of operation of gift aid matching rule

(1) The Chancellor of the Exchequer shall, no later than the end of the 2017-18 tax year, undertake a review of the operation of the gift aid matching rule.

(2) As part of the review of under subsection (1), the Chancellor of the Exchequer shall consult charities and other organisations that he considers relevant about—

(a) the role of the gift aid matching rule in preventing fraud and abuse, and

(b) the appropriateness of the Treasury exercising its order-making powers under section 14(2).

(3) A report of the review undertaken in accordance with this section must be laid before each House of Parliament by the Chancellor of the Exchequer.

(4) In this section, “the gift aid matching rule” has the same meaning as in section 14(3).”

This new clause requires the Chancellor of the Exchequer to review the gift aid matching rule and to consult charities and other organisations on the appropriateness of exercising the Treasury’s powers to amend or abolish that rule which limits the amount of top-up payments to which a charity is entitled by reference to the amount of gifts made to the charity in respect of which it has made successful gift aid exemption claims.

New clause 3—Regulations on local branches and groups—

‘(1) The Small Charitable Donations Act 2012 is amended as set out in subsections (2) and (3).

(2) After section 5(1) (general provisions on meaning of “connected”), insert—

“(1A) This section is subject to the provisions of regulations made under section 5A (regulations on local branches and groups).”

(3) After section 5, insert the following—

“5A Regulations on local branches and groups

(1) The Treasury shall by regulations prescribe organisations in which local or regional branches or groups may not be considered to be connected for the purposes of sections 4 and 5.

(2) The Treasury shall publish the first set of draft regulations made under subsection (1) no later than 31 October 2017.

(3) Before publishing draft regulations under this section, the Treasury shall consult—

(a) the Scout Association;

(b) the Guide Association;

(c) the Combined Cadet Force Association; and

(d) such other organisations as appear to the Treasury to be relevant.”

This new clause requires the Treasury to identify organisations with local or regional branch or group structures in order that those local and regional branches or groups can be separately eligible under the scheme, and to consult certain organisations about the regulations in draft.

New clause 4—Abolition of Gift Aid donations threshold—

‘(1) The Chancellor of the Exchequer must carry out an assessment of the impact on charities and Community Amateur Sports Clubs of amending the Gift Aid Small Donations Scheme so as to remove the 10% Gift Aid donations threshold that must be met in order to access the Gift Aid Small Donations Scheme, including an assessment of the differential impact on different sizes of charities and Community Amateur Sports Clubs concerned.

(2) The Chancellor of the Exchequer must lay a report of the assessment before the House of Commons within six months of the passing of this Act.”

Charities and CASCs must give gift aid exemption claims on donations received in order to make a claim under the Gift Aid Small Donations Scheme. The total gift aid donations must be at least 10% of the amount of the small donations on which top-up payments are claimed. This new clause would require the Chancellor to assess the impact of abolishing this requirement.

[Rebecca Long Bailey]

New clause 1 would require Her Majesty’s Revenue and Customs to publish in each tax year a report detailing the number of penalties imposed under the Small Charitable Donations Act 2012 and the circumstances giving rise to the imposition of such penalties; HMRC’s assessment of the extent to which charities have been established or have operated for the primary purpose of securing benefits from the small donations scheme; and an assessment of the evidence available on the role of the gift aid matching rule in preventing fraud and abuse. New clause 2 would require the Government to conduct a review of the operation of the gift aid matching rule, which is the rule that the total gift aid donations operation for a charity must be 10% or more of the amount of small donations on which top-up payments are made. The new clause stipulates that the Chancellor should consult charities and other relevant organisations about the role of the matching rule in preventing fraud and abuse, and the appropriateness of exercising the Treasury’s powers to amend or abolish the rule. New clause 4, which was tabled by the Scottish National party, would also require the Chancellor to assess the impact of abolishing the matching requirement.

During the Bill’s passage through the House, we have had extensive debates about the matching requirement—rightly so, because it is the biggest issue affecting the efficacy of the scheme, according to the charities that use it. The sector thinks broadly that the requirement is arbitrary and is a significant barrier to charities being eligible for the scheme. A consultation with members of the National Council for Voluntary Organisations showed that it is the most significant barrier to access for smaller organisations. The survey found that 50% of respondents with an income under £10,000 wanted the removal or reduction of the matching requirement.

Ahead of Second Reading, the NCVO argued that the Government have presented no evidence to demonstrate the extent to which the matching requirement is a necessary mechanism to prevent fraud and error, or that the matching ratio of 1:10 is the minimum necessary to achieve this objective. Despite considerable debate on this matter, we have got all the way to Report and the Government have still failed to provide any evidence that the matching requirement works. I would welcome the Minister’s comments on that today.

New clause 2 would force the Government to produce evidence in the form of a review and report on the operation of the gift aid matching rule, and whether it should be changed or removed entirely. New clause 4 would require a similar review, so we will be happy to support that measure. I would rather not have to press our new clauses 1 and 2 to a Division unless we have to. They call for a review of something that the charity sector says is hindering the scheme. I hope for some movement from the Minister on the issue today, but if the SNP’s new clause is pressed to a Division, we will support it wholeheartedly, as it reflects many of the principles that we have outlined in new clauses 1 and 2.

I am sure that the Minister will repeat her argument that the matching requirement is necessary to prevent fraud. I agree that we need measures to safeguard against such abuses. The Charity Commission has provided figures showing the extent of fraud in the charity sector. In 2014-15, 417 serious incidents involving fraud and/or theft or the misapplication of funds were reported by charities to the commission, and 255 operational compliance cases were completed. As Members are aware, just last week the commission announced in a press release that it was investigating the charity Our Local Heroes Foundation. According to the commission, it had received information about a proposed disposal of land owned by the charity, concerns regarding the founder of the charity receiving significant personal benefit through the charity, and a complaint that the charity was receiving only 20% of funds raised through a fundraising company.

This is just one case, but it is a sad example of charities being used as vehicles for tax avoidance and fraud. It is therefore incumbent on us to make it as hard as possible to abuse charitable status. That is why we have tabled new clause 1, which would require a review of the prevention of fraud and abuse in the small donations scheme. As I said, the review would need to address the number of penalties imposed under the Small Charitable Donations Act 2012 and the circumstances giving rise to the imposition of such penalties. It should include Her Majesty’s Revenue and Customs’ assessment of the extent to which charities have been established or have operated for the primary purpose of securing benefits from the small donations scheme, and HMRC’s assessment of the evidence available on the role of the gift aid matching rule in preventing fraud and abuse.

The Government’s guidance on the scheme explains that if a charity or community amateur sports club

“incurs a penalty in respect of an incorrect Gift Aid claim or GASDS”—

gift aid small donations scheme—

“claim, it won’t be eligible for the scheme both for the tax year in which the incorrect claim was made and in the following tax year.”

I would argue that the link between gift aid and the scheme is stronger than the matching requirement. Charities claiming gift aid can still be, and indeed have been, fraudulent organisations, so simply having a monetary link to the gift aid is not enough. This provision—that if a gift aid claim is wrong, a charity cannot claim through the scheme for that tax year and the following tax year—seems to be a stronger safeguard against fraudulent organisations than the matching requirement. Things might be more complex than that, but a review would clearly be beneficial, because we could assess where the matching requirement actually works effectively. In that way, the Government and the charities sector would be able to see clearly which anti-fraud measures were most effective.

New clause 3 deals with a different matter. Members and the Minister will remember that we made the case in Committee that certain groups—the girl guides, the scouts, and the Army, Navy and Air Force cadet groups—were not able to get the full benefit of the small donations scheme. That was after feedback from the respective charities’ representatives that, because of the structure of the groups, they were able to make only one claim for the entirety of the group, even though individual groups within them fund themselves.

The Minister responded that the measure proposed in Committee was unnecessary because the Bill allowed for what it proposed. She neatly illustrated why she would reject it—because, at the time, it carved out a few selected charities—but we want provisions to benefit a broad range of charities, some of which were not named in the original new clause tabled in Committee.

New clause 3 attempts to address the Minister’s points by allowing the Treasury to make regulations to exempt certain organisations from the connected charities rules. The Government would have to consult the Scout Association, the Guide Association and the Combined Cadet Force Association, in particular, before publishing those regulations. The Minister said she would reflect on the points raised in Committee, so I hope that she will accept the new clause today. It would not carve out a few selected charities, but give the Government the power to consult organisations that are mistakenly affected by the connected charities rules. It would, therefore, make the scheme run more smoothly, which is, after all, the point of the Bill.

I hope that the Minister has listened carefully to the rationale behind the new clauses and recognises that we are genuinely trying to achieve the same end: to make the gift aid small donations scheme work as well as possible for as many charities as possible. I hope that the new clauses will be accepted. We will not press new clauses 1 and 2 to a vote, but we will divide the House on new clause 3, and we will support new clause 4 should the SNP choose to press it to a Division.

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

I speak in support of the points made by our shadow Minister about new clauses 1 and 2, which deal practically with the issue of fraud and put the onus very simply on HMRC to establish the extent of the problem. The difficulty facing the voluntary sector is that even with the £15 million of additional support in the Bill, the gift aid small donations scheme will distribute roughly £40 million, which is only about a third of the £115 million that was, according to Government opinion, projected to be distributed next year. This scheme could and should be growing. It is important because it helps and develops the smallest charities, and that must continue.

15:44

In speaking to new clause 2, my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) referred to the matching arrangements. I stand here with a certain amount of hope, because I remember that four years ago, when the first version of this Bill was born, the Government proposed 1:1 matching, and now we see matching of 1:10. All we—and, more significantly, many charities and charitable bodies’ organisations—respectfully ask is that the Government consider how sacrosanct that 1:10 matching rule is. That is well put in our new clause 2 and in new clause 4, which was tabled by the SNP.

I hope that the Minister will consider these points. A few years ago in this Chamber, we were told that such provisions could not possibly include contactless payments. The Government moved on that, and they moved on the rate of matching. To be optimistic, as we all want this Bill to work, I very much hope that the Government will shift a little on these issues too.

[Kirsty Blackman (Aberdeen North) (SNP)]

I rise to speak to new clause 4, which stands in my name and that of my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin), although I shall touch on the other new clauses in the group.

New clause 1, which would require HMRC to present an annual report, is reasonable and sensible. I was surprised by the amount of discussion we had in Committee and elsewhere about the possibility of charities using such a scheme for fraudulent purposes. Perhaps I was being naive as that had not crossed my mind a great deal, but apparently people are genuinely concerned about it. If the Government were to take on board Labour’s proposal in new clause 1, it would help to allay the fears of the general public about how charities are acting. I think that only a very small minority of charities are set up to act fraudulently, and the publication of such information would help to ensure that the public are aware of that.

New clause 2, not dissimilarly from a number of measures that we discussed in Committee, deals with the matching requirement. I will come on to that later. I understand why Labour Members have tabled new clause 3, which addresses local organisations that, unfortunately, are caught by some aspects of the way in which the Bill is written. I appreciate that that is an issue, so my colleagues and I will support Labour Members if they press it to a vote.

New clause 4 relates to the matching requirement and the associated threshold. When the first draft of the Bill was introduced in the previous Parliament, the Government supported a different matching requirement from what was eventually approved. During the consideration of that Bill, they also changed the proposals on the matching requirement so that they could edit it in the future, if necessary. That was a result of pressure by charities and organisations that had raised concerns about the arbitrary nature of the level that was chosen for the matching requirement.

I appreciate that the Government have moved on this in the past, but charities are now asking them to move further. As the hon. Member for Salford and Eccles (Rebecca Long Bailey) said, the National Council for Voluntary Organisations, the Charity Finance Group, the Institute of Fundraising and the Small Charities Coalition produced a paper saying that it was vital that the matching requirement was changed or removed. That is why we have brought the proposal before the House. Although we discussed this in Committee, we still feel that the Government need to look at it, while appreciating that they have the power to do so outwith this Bill.

If the Government do not accept the new clause, I would very much appreciate it if they considered the proposal in the future. This is not just about the SNP; our proposal is widely supported, including by the Labour party and by charities across the UK such as the Churches Legislation Advisory Service and the Charity Tax Group. If fears can be allayed about fraud, in particular, it would be reasonable for the Government to take some steps towards change. I do not want to talk for long, but I would appreciate it if the Government would seriously consider taking up this proposal. If they do not agree to the new clause, I hope that they will at least commit to looking at it at some point in the future.

[The Financial Secretary to the Treasury (Jane Ellison)]

I appreciate the spirit in which the new clauses have been spoken to, because we are all here for one purpose, which is to make sure that the Bill works as well as possible for the benefit of as many charities as possible. In responding to this short debate, I will try to offer evidence of the reasons why we cannot, or do not think that it is right to, accept the new clauses.

New clause 1 would require Her Majesty’s Revenue and Customs to publish every year an analysis of the number of penalties imposed; the circumstances giving rise to the imposition of those penalties; an assessment of the number of charities set up with the primary purpose of accessing the small donations scheme; and an assessment of the efficacy of the matching rule in preventing fraud. That relates to the general debate that we have had throughout the Bill’s progress about how we prevent fraud and a minority of people from exploiting the rules.

New clause 2 would require the Chancellor to undertake a review of the matching rule—the same is true, as we have just heard, of new clause 4—in consultation with the charity sector, and to lay a copy of the report by the end of the 2017-18 tax year.

New clause 3 seeks a power to prescribe by regulations an exemption for certain charities from the connected charities provision. The shadow Minister, the hon. Member for Salford and Eccles (Rebecca Long Bailey), is right to say that we debated that proposal in Committee and that I undertook to reflect on it. I will tell her where I have got to shortly. The new clause would require the Treasury to consult the scouts, guides, military cadet groups and other organisations before publishing draft regulations on or before 31 October 2017.

[Mr Jim Cunningham (Coventry South) (Lab)]

On consultation, the Minister has mentioned the scouts and a number of other organisations, but has she considered consulting the Brethren? I am sure that she will recall that, during the last Parliament, the Brethren lost its charity status for a while and there was a large number of debates on it.

[Jane Ellison]

Obviously, I was not in this post at the time, but I recall someone in my constituency drawing my attention to that. As I will come on to say, the consultation process leading up to the Bill was exhaustive, but I also hope to reassure the House that the ongoing consultation with people who have an interest in the issue is significant on the part of HMRC and the departmental team led by the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), who has responsibility for civil society. It is fair to say that we have a good, constructive and ongoing dialogue with the charity sector and those affected by the provisions, but I acknowledge that there was a slightly different concern in relation to the group mentioned by the hon. Gentleman.

New clause 4 proposes that an assessment be put before the House within six months of the passing of the Bill, and it centres on the gift aid matching requirement and its impact on charities of different sizes. We debated similar amendments in Committee and, although I accepted that they were well intended, I decided that they were unnecessary, so it will probably not surprise the hon. Member for Salford and Eccles and the hon. Member for Aberdeen North (Kirsty Blackman), who spoke on behalf of the SNP, that I will make some of the same points again today, but I hope to build on what I said in Committee.

New clause 1 concerns fraud—a vital issue that we have discussed a number of times and that we take very seriously. I am grateful to Opposition Members for giving us the opportunity to return to this important subject. I welcome, as I did in Committee, the fact that we have a cross-party consensus on protecting the gift aid small donations scheme from fraudulent attack. Opposition Members have raised on several occasions the efficacy of the matching scheme as a deterrent against fraud, and they asked us on Second Reading and in Committee to prove that the matching rule prevents fraud. At each stage, particularly in the debate on the matter in Committee, I drew the House’s attention to a few examples of the shocking abuses of charitable status that have resulted in criminal convictions this year alone. Sadly, I have a reasonably extensive list of quite recent events, but I sense that I do not need to persuade people that fraud does happen in a minority of cases.

I am not sure exactly what further evidence Opposition Members would like me to provide. As I said in Committee, the Government are, in essence, being asked to prove a negative. That is a risky proposition, and I will illustrate why. If the suggestion is that the Government should adopt a wait-and-see approach, remove all the protections and then attempt to close the loopholes when fraudulent attacks take place, I cannot agree that that is the right approach. Opening up the scheme to abuse would be irresponsible, could waste a large amount of public money and—probably most importantly—could cause untold damage to the reputation of our fantastic charity sector. I cannot recommend that course of action to the House.

To be clear, we know that the majority of charities are honest. They are run by dedicated and trustworthy people—the sort of people whom we all know in our constituencies. For the fraudsters, however, nothing is sacred. It is a sad fact that if they are presented with an opportunity, they do not hesitate to exploit it. I gave examples on Second Reading and in Committee of fraudulent activity seen by HMRC, and I am sorry to say that, as I have mentioned, further examples are easily provided. It is not just HMRC and the Treasury that recognise that fraud in the charity sector is a problem; there is wide acknowledgment in the sector that fraud is a costly issue, particularly because of the reputational damage it causes. Some Members may be aware that last month saw Charity Fraud Awareness Week and the launch of a new “Charities against fraud” website, which is a joint initiative between the Charity Commission and the Fraud Advisory Panel to help trustees and volunteers to recognise the risks and take action to prevent fraud in charities.

There is also recognition from charity umbrella bodies that charity fraud can be incredibly damaging. The Charity Finance Group noted in its guide “Countering Fraud”, which was published during Fraud Awareness Week:

“Fraud is a problem that can affect any charity from the very large to the very small. Falling victim to fraud can undermine a charity’s reputation, damage donor confidence and reduce a charity’s ability to help its beneficiaries. On occasion fraud has even led to the forced closure of a charity.”

The Government will not tolerate the abuse of charitable status, for the reasons so eloquently expressed by the Charity Finance Group. The Government will continue to take action to tackle and disrupt the dishonest minority who attempt such fraud.

I am simply not convinced that it would be helpful to publish an annual report detailing the compliance activity that HMRC has undertaken. Indeed, I fear that doing so could have the unintended consequence of assisting the very people whom HMRC is attempting to weed out. HMRC’s operational performance in this and every other respect is, quite rightly, the subject of independent scrutiny by the National Audit Office and Parliament, through the Treasury Committee and the Public Accounts Committee. For that reason, I believe that new clause 1 is unnecessary, and I hope that the hon. Member for Salford and Eccles might consider withdrawing it.

[Kirsty Blackman]

None of us has suggested, at any stage of the proceedings on the Bill, removing all the anti-fraud measures. In fact, we were quite clear and measured in everything that we moved; it was about an assessment. New clause 1 is about responding to our concerns about the actual level of fraud and providing us with the relevant information to enable us to have a much more knowledgeable debate next time the matter comes up—specifically around the level, the percentage and the money that is involved—rather than about removing the measure entirely.

[Jane Ellison]

I understand that point, but my real concern is that the matching rule is the only remaining condition on this particular scheme. Obviously, there are other aspects to wider gift aid, but on the scheme that is the subject of this Bill, we are down to a simple last remaining condition that we believe helps to avoid the scheme being exploited fraudulently. I just do not accept the premise that it is sensible to remove it, to see what happens and then to come back to Parliament and say, “We removed it and, as we thought, it was exploited, so now we have to close that loophole again, but in the meantime we have lost public money and, more importantly, charities have lost their reputations.”

15:59

[Susan Elan Jones]

I accept that the Minister may want to keep the matching rule to some extent, but what is so sacred about 1:10?

[Jane Ellison]

I will say a little about that. As other hon. Members have said, there was movement on this during the passage of the original legislation. The figure is reasonable and strikes a sensible balance. A ratio of 1:10 is an easy one for those administering this to remember. If hon. Members accept that the matching rule is sensible in principle, I am prepared to say that it is something we would anyway keep under review in the normal course of events. The civil society Minister and I were saying to each other on the Front Bench a moment ago that, given hon. Members’ interest in this, we will keep an eye on it in particular and draw it out in the ongoing dialogue that we naturally have with charities. However, I cannot accept that removing it entirely is a good idea. These things are kept under constant review, and both the Treasury and the civil society parts of Government have a very good relationship with the charities sector, so we will have plenty of opportunities to continue to have such a dialogue with charities and to understand where this comes in. In a few moments, I will say a little more to demonstrate that it is not the barrier that some hon. Members have suggested it is.

Let me turn to new clauses 2 and 4. New clause 2 is a request for a review of the matching rule in consultation with the charity sector. As I have said, the Government have already undertaken a full review of all aspects of the gift aid small donations scheme, including the matching rule, and the Bill is a result of that review. However, I will always be happy to keep an eye on this issue. The Government’s review was comprehensive and open, and it was carried out in full consultation with the charities sector and, indeed, with anyone with an interest in the scheme or in charity tax reliefs more generally. Some hon. Members will recall that, as I have said, back in 2012, the Government committed to reviewing the operation of the scheme after three years, so the Government have made good on that promise.

We recognise how important the scheme and the promised review were to charities. We listened to the sector, and that is why we announced in the autumn statement last year that we would bring forward the review of the scheme to December 2015. To inform the review, HMRC published a call for evidence in December, seeking charities’ views about the operation of the scheme, including its eligibility rules and processes. The call for evidence asked five questions about the scheme’s eligibility criteria, including two questions specifically about the gift aid matching requirement. The call for evidence closed on 2 March. HMRC received 197 responses from charities, representative bodies and other interested parties. The Government reviewed all the submissions and published a response on 20 April.

In the responses document, which is available on the Government’s website, we explain that the vast majority of—indeed, almost all—the respondents to the call for evidence did not identify the matching rule as a major barrier to accessing the scheme. The Government recognise that many of the responses reflected the experience of charities already successfully using the scheme and may not therefore be representative of the sector as a whole. We take that point, so HMRC has supplemented the data provided by charities with an analysis of its own data. As I explained in Committee, the data showed that 92% of charities claiming gift aid for the tax year 2014-15 claimed on donations of £500 or more, entitling them to the maximum small donations allowance at that time of £5,000. HMRC’s analysis also showed that 98% of charities claiming gift aid in 2014-15 claimed sufficient amounts to receive a small donations allowance of at least £1,000.

The Government also considered data produced by the charity sector. A survey carried out by the National Council for Voluntary Organisations, the Charity Finance Group, the Institute of Fundraising, the Small Charities Coalition and the Association of Independent Museums found that just 5% of respondents claimed no gift aid at all, and only 10% did not feel that their charity claimed enough gift aid to make the small donations scheme worthwhile.

Following the call for evidence, HMRC published a further consultation on reform options on 20 April, which was yet another opportunity for stakeholders to put forward reform ideas for consideration. That consultation closed on 1 July this year. It received 46 responses. Again, interestingly, the matching rule was not raised as an issue by the vast majority of respondents.

Quite simply, none of the available data, whether produced by the Government or the sector itself, support the assertion that the gift aid matching rule is a significant barrier to accessing the small donations scheme. The Government have already collected data on the matching rule, carried out a full objective review of the whole scheme and consulted the charity sector. That is why we believe that repeating the consultation process again, so soon after the last consultation, would not produce a different outcome, and why, therefore, I urge the hon. Member for Salford and Eccles not to press new clause 2 to a Division.

As I have said, given the clear interest in the House, we will continue to take a keen interest in this matter, and will listen to the views of the charity sector. The civil society Minister and I are already talking about how we can do more to publicise some aspects of the scheme, and in particular how to get those that do not take advantage of the small donations scheme at the moment to do so. There is a charities day on 16 November, about which we will say a little more later; that will be an opportunity to say and do more to promote the scheme to that small minority not already using it.

I appreciate that in tabling new clause 4 the hon. Members for Aberdeen North and for Kirkcaldy and Cowdenbeath (Roger Mullin) are seeking to understand the differential impact that abolishing the matching rule would have on charities of different sizes. I have already set out why we do not support the removal of the gift aid matching rule, but I have to tell Opposition Members that it is simply not possible to provide them with the level of analysis that they are seeking. Although HMRC holds data on charitable tax reliefs, it quite rightly collects and retains only those data that are necessary to support its function of administering gift aid and other reliefs. Size and turnover are not relevant for gift aid purposes; HMRC therefore does not routinely collect data on the size or types of charities claiming gift aid or small donations top-ups.

As I explained in Committee, HMRC is transparent with the data it holds, and publishes a national statistics package every year that provides a wealth of information about the take-up and use of charitable tax reliefs, including the gift aid small donations scheme. Hon. Members may also be interested to know that HMRC makes many of its datasets, including those relating to charitable reliefs, available—suitably anonymised, of course—to academics and other individuals who approach it with a suitable research proposal. I can tell the House that a number of organisations have recently made use of HMRC’s charities data for research purposes. That is a good example of open government and open data being put to good use.

I hope I have reassured the hon. Member for Aberdeen North that where HMRC possesses data, those data are transparent and, where appropriate, open to outside scrutiny. New clause 4 is not appropriate, because it would require, in legislation, the Government to do something that we simply cannot do. On that basis, I hope the hon. Lady will consider not pressing the new clause to a Division.

Let me turn finally to new clause 3. As I have explained in previous debates, the connected charities rules are intended to protect the gift aid small donations scheme from abuse. They work in conjunction with the community buildings rules to deliver fair and broadly equal outcomes for charities structured in different ways. Without the connected charities rules, larger charities would be faced with a perverse incentive to splinter into artificial groups of smaller charities to increase their entitlement to small donations allowances. New clause 3 would grant the Treasury the power to exempt specific named charities from the connected charities rules. It would also require the Treasury to publish draft regulations, following consultation with the scouts, the guides and others.

The new clause is unnecessary. As we have heard, the Government have just concluded a full and open review of all aspects of the gift aid small donations scheme. That review included the gift aid matching rule and the connected charities rules. In that very open consultation, many representations included the scouts and other uniformed groups. The Government listened to the representations from the uniformed groups. They told us that they welcomed the gift aid small donations scheme, but were unable to benefit fully from the current community buildings rules because most of their fundraising, as Members will know, takes place outside in their local community. The Bill will therefore relax the community buildings rules to allow donations collected outside the building to be counted for community buildings purposes. As discussed on Second Reading and in Committee, this will help bob-a-job work and so on that is done outside the scout hut or other building.

The intention is to allow groups such as the scouts to benefit more fully from the scheme without the need to specifically exclude them from the connected charities provision. We debated a similar amendment in Committee and had a thorough and thoughtful debate on the implications of the Bill for the youth groups in question. The shadow Chief Secretary raised a number of good points and I undertook to reflect on them and look at them more closely. Having done so, I confirm to the House that a scout hut is an eligible community building and there is no requirement for the building to be rented out or for access to be granted to other community groups. That means that the scouts and other similar uniformed groups will benefit from the changes contained in the Bill. Whether it is bag-packing at the local supermarket or bucket collections at the local fete, donations in the local community will count for the small donations scheme. The Bill’s provisions already deliver the outcome Opposition Members seek. I therefore suggest that new clause 3 is unnecessary and I hope the hon. Lady will withdraw it.

[Rebecca Long Bailey]

With the leave of the House, I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 3

Regulations on local branches and groups

‘(1) The Small Charitable Donations Act 2012 is amended as set out in subsections (2) and (3).

(2) After section 5(1) (general provisions on meaning of “connected”), insert—

“(1A) This section is subject to the provisions of regulations made under section 5A (regulations on local branches and groups).”

(3) After section 5, insert the following—

“5A Regulations on local branches and groups

(1) The Treasury shall by regulations prescribe organisations in which local or regional branches or groups may not be considered to be connected for the purposes of sections 4 and 5.

(2) The Treasury shall publish the first set of draft regulations made under subsection (1) no later than 31 October 2017.

(3) Before publishing draft regulations under this section, the Treasury shall consult—

(a) the Scout Association;

(b) the Guide Association;

(c) the Combined Cadet Force Association; and

(d) such other organisations as appear to the Treasury to be relevant.”—(Rebecca Long Bailey.)

This new clause requires the Treasury to identify organisations with local or regional branch or group structures in order that those local and regional branches or groups can be separately eligible under the scheme, and to consult certain organisations about the regulations in draft.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:11

Division 79

Ayes: 254

---

Labour: 183
Scottish National Party: 50
Liberal Democrat: 7
Democratic Unionist Party: 5
Plaid Cymru: 3
Independent: 2
Social Democratic & Labour Party: 2
Ulster Unionist Party: 2
Green Party: 1

Noes: 287

---

Conservative: 286

New Clause 4

Abolition of Gift Aid donations threshold

‘(1) The Chancellor of the Exchequer must carry out an assessment of the impact on charities and Community Amateur Sports Clubs of amending the Gift Aid Small Donations Scheme so as to remove the 10% Gift Aid donations threshold that must be met in order to access the Gift Aid Small Donations Scheme, including an assessment of the differential impact on different sizes of charities and Community Amateur Sports Clubs concerned.

(2) The Chancellor of the Exchequer must lay a report of the assessment before the House of Commons within six months of the passing of this Act.’ —(Kirsty Blackman.)

Charities and CASCs must give gift aid exemption claims on donations received in order to make a claim under the Gift Aid Small Donations Scheme. The total gift aid donations must be at least 10% of the amount of the small donations on which top-up payments are claimed. This new clause would require the Chancellor to assess the impact of abolishing this requirement.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:25

Division 80

Ayes: 256

---

Labour: 186
Scottish National Party: 48
Liberal Democrat: 8
Democratic Unionist Party: 5
Independent: 3
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Conservative: 1
Green Party: 1

Noes: 287

---

Conservative: 284
Ulster Unionist Party: 2

Clause 2

Meaning of "Small Donation"

[Rebecca Long Bailey]

I beg to move amendment 1, page 2, leave out lines 1 to 6 and insert—

“(a) in the heading after “small”, delete “cash payment” and insert “donation”;

(b) in sub-paragraph (1) omit the words “in cash”;

(c) after that sub-paragraph insert—

“(1A) The gift must be made—

(b) by cheque;

(c) by electronic communication; or

(d) by a contactless payment.”

(d) in sub-paragraph (3) after the definition of “cash” insert—

“cheque” means a written order instructing a bank to pay upon its presentation to the person designated in it, or the to the person possessing it, a certain sum of money from the account of the person who draws it; “electronic communication” means a payment made via the internet or text message.”

This amendment would extend the range of methods by which payments can be made under the Gift Aid Small Donations Scheme.

[Madam Deputy Speaker (Natascha Engel)]

With this it will be convenient to discuss amendment 2, page 2, line 6, at end insert—

“or

(c) by a comparable method prescribed by the Treasury by regulations.”

This amendment would give the Treasury a power to prescribe by regulations other methods of payment comparable to contactless payment in the future.

[Rebecca Long Bailey]

Opposition amendments 1 and 2 relate to the types of payment eligible for the gift aid small donations scheme. Amendment 1 would extend the range of payment methods to include cheques and electronic communications—that is, texts. The Bill itself extends the methods to include contactless payments. Amendment 2 would give the Treasury powers to prescribe by regulations other methods of payment comparable to contactless payments in the future. I will keep my remarks on these two amendments relatively brief as we had an extensive debate on this issue in Committee, although I did not push it to a vote.

Currently, cash donations under £20 are considered eligible for the scheme. The Bill brings contactless payments into the scheme, and we support that measure. However, the charity sector has said that it would be more beneficial for other types of payment, particularly cheques, to be eligible as well. When this was discussed in Committee, the Minister said that amending the Bill in such a way was

“contrary to the stated policy intention of the scheme.”––[Official Report, Small Charitable Donations and Childcare Payments Public Bill Committee, 18 October 2016; c. 10.]

I want to take this opportunity to disagree.

The intention of the scheme is to allow charities to get a gift aid-style top-up on donations made in situations where it is infeasible, but not impossible, to get a gift aid declaration. I would argue that donations made by text are a prime example of such a situation. The Minister has said that receiving gift aid declarations on donations via SMS is a straightforward process: the donor simply needs to reply to a follow-up text message giving their name and address and confirming that they are a taxpayer. It might be straightforward, but people tend to be wary of disclosing personal information. I certainly would not feel comfortable sending my address and other details to an unknown number.

The hon. Member for Amber Valley (Nigel Mills) helpfully alerted us to paragraph 1.8 of the Treasury consultation “Gift Aid and Digital Giving”. I am sure that the Minister has had time to check it out, but I can remind her that the document states:

“Individual donations online or by text are often small. In these cases for the donor it may not seem worthwhile to go to the trouble of filling out a Gift Aid declaration for a small additional amount to go to the recipient charity.”

It is therefore clear that getting a gift aid declaration via text is not as straightforward as the Minister would have us believe.

Similar situations can arise with cheques, as detailed in Committee by my hon. Friend the Member for Redcar (Anna Turley). Elderly people in particular often send cheques in the post, making it impossible for charities to track them down and get a gift aid declaration—it is probably not worth it if it is a small amount. Amendment 1 would simply allow such donations to be eligible for the scheme. I hope the Minister will offer some movement on this area as I simply cannot see the logic in saying that extending payments in that way would somehow encourage charities to move away from traditional gift aid claims.

Amendment 2 would allow the Treasury to make regulations to tweak the legislation to allow types of payments similar to contactless payment to come under the scope of the scheme. It was argued in Committee that technology is moving forward at an incredibly fast pace and that next year people might be using a new type of card or gadget to donate to charity. The Opposition are convinced by that line of reasoning and the amendment would simply give the Government the power to make changes to allow Oyster cards, for example, to come within the scope of the legislation without having to create a brand-new Bill. It is not often the Opposition’s desire to give the Government more powers, but it would be worthwhile in this scenario.

In conclusion, the Opposition strongly support the move to include contactless payment, but we do not see the logic in singling it out when the sector is saying that other payment methods would provide a greater boost to the scheme. I look forward to the Minister’s response. I will be pushing amendment 1 to a vote should she not see fit to accept it.

[Jane Ellison]

As we have just heard, amendment 1 would extend the gift aid small donations scheme to include donations made via cheque, online or SMS. Amendment 2 would give the Treasury the power to amend the Small Charitable Donations Act 2012 through secondary legislation to include other unspecified methods of payment in future. As the shadow Minister said, we debated this area in some detail both on Second Reading and in Committee, so I am afraid that I will be making many of the same points.

When I opened the Second Reading debate, I told the House that it is a Government priority to maximise the gift aid claimed by charities on eligible donations. It is worth reflecting on that because during the Bill’s passage through the House we have quite rightly focused on the gift aid small donations scheme, but the scheme—important though it is—forms just one part of the package of generous tax reliefs the Government use to support our charity sector. Gift aid was worth over £1.3 billion to the charity sector last year—a significant amount—but we want to see gift aid claimed on even more eligible donations, and we want charities to claim gift aid because it is a much more beneficial scheme and has many advantages for charities over the longer term. The shadow Minister said that she was not seeking to undermine gift aid, but it is worth reminding ourselves that it is the more beneficial scheme, so we want to encourage people to take it up.

One reason is that gift aid is not capped—relief can be claimed on individual donations worth hundreds or thousands of pounds. There is no annual limit—charities can claim on as many eligible donations as they are able to solicit. The act of obtaining a gift aid declaration provides charities with the opportunity to build a relationship with their donors, leading to a more sustainable and resilient funding stream.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Rob Wilson)]

Exactly.

[Jane Ellison]

As the Minister for civil society indicates from a sedentary position, that is absolutely key to the long-term health of many charities.

We fully accept that there are situations in which, with the best will in the world, charity fundraisers cannot stop donors to ask them to complete a gift aid declaration. The gift aid small donations scheme is therefore intended to be used for those small, low-value, spur of the moment donations when contact between donor and charity is fleeting and it is not practical or feasible to solicit a gift aid declaration. Those will primarily be the small cash donations that the small donations scheme was originally designed to cover, but we also accept, following discussions with the sector, that this should also apply to contactless donations. However, the Government are not persuaded that this is the case with other methods of donations such as those made by text, online or by cheque, and I set out reasons for that on Second Reading and in Committee.

16:45

I have listened with interest to the arguments advanced by right hon. and hon. Members, including the shadow Minister, and I completely understand the points they are making. However, if the argument is that the process for claiming gift aid on electronic donations, such as those by SMS, is too onerous, that is a separate issue and the solution is not to try to shoehorn methods of donation into the gift aid small donations scheme which it was never intended to cover.

The Government completely agree that the process for claiming gift aid on SMS and online donations made through digital intermediaries should be simpler. We have discussed this issue in detail with the sector and have published several consultation documents. Indeed, my hon. Friend the Member for Amber Valley (Nigel Mills) made reference to one such document in Committee, and it has been referred to again today. I am pleased to tell him, the shadow Minister and other hon. Members that we have made progress on this issue. Primary legislation was included in the Finance Act 2015 and the Finance Act 2016, and draft regulations were published for technical consultation earlier this year. The Government intend to lay those regulations shortly, and they will simplify the process of gift aiding donations through digital intermediaries. Instead of completing a gift aid declaration for every donation made, donors will be able to sign a one-off authorisation allowing the intermediary to create gift aid declarations and claim gift aid on the donor’s behalf for all subsequent donations made in that tax year.

[James Duddridge (Rochford and Southend East) (Con)]

I was about to rise to congratulate the Minister, as this seems like a really good initiative, but why apply this for only just that tax year? Given that someone is able to donate to an organisation and do it within a tax year, why not roll this over into future tax years to extend this provision? Perhaps I am being uncharitable to her, as this is a good provision, but it could be even better.

[Jane Ellison]

I strongly suspect that there are technical reasons why that would be difficult, but I am happy to take my hon. Friend’s suggestion away, look at it and respond properly to him. In the spirit of simplification, he seeks to make it ever easier to make these donations. As a result of the way Her Majesty’s Revenue and Customs operates—within tax years—I could foresee difficulties with this approach, but I will look at it and write to him with a bit more detail.

There are more things we can do to make things easier for charities, and the Government are constantly looking at ways of achieving that—we have just heard another suggestion from my hon. Friend. I am pleased to tell the House that we have a very good track record of simplifying gift aid processes for charities. For example, in 2013 we introduced Charities Online to help charities to claim gift aid even faster, and 95% of charities now use this service. Instead of having to fill in paper forms and post them back to HMRC, charities can claim their repayments online and have them paid directly into their bank account. Under the old paper system it could take up to three working weeks for charities to receive their repayments, whereas most claims are now paid within five working days. I am sure hon. Members would agree that that is a welcome boost for charities. Just last year, HMRC introduced a new, shorter model gift aid declaration to make it easier for donors to understand their obligations under the scheme, and it worked in close collaboration with the Charity Retail Association to simplify and clarify the Government’s guidance on the retail gift aid scheme. Earlier this summer, the Treasury published a consultation exploring ways of simplifying the gift aid donor benefits rules, and we looked carefully at the responses received before publishing a response.

Of course, we will keep looking for ways to simplify and improve gift aid, but these are questions about the wider gift aid scheme, not the gift aid small donations scheme. My hon. Friend might be pleased to note that one reason I foresaw difficulties with his proposal is that people’s tax status can change from year to year—for example, when they move from work into retirement—and this would make things difficult. I hope that that response is helpful, but I will follow up with him in more detail.

Amendment 2 would grant the Treasury the power to amend the Small Charitable Donations Act 2012 in the future in the event that new donation technology develops. Members who were present at the original Bill discussion reminded us in Committee that they had made points about future-proofing the scheme in terms of technology at that time. My hon. Friend the Member for Amber Valley and the hon. Member for Clwyd South (Susan Elan Jones) are nodding. It is an interesting point, which we have debated.

The Government have consulted fully on the changes to the scheme, and as part of the consultation that we have just undertaken, the extensive nature of which I outlined earlier, HMRC officials went out and met charities and other groups to discuss contactless donations and other technological developments. They considered methods of donation that are not currently in use but might be in the pipeline. I understand that there was no suggestion from the stakeholders that there are other imminent technological developments in the pipeline that would be suitable for the small donations scheme. In any event, we have deliberately drafted the definition of “contactless payment” quite widely.

As I explained to my hon. Friend the Member for Amber Valley in Committee, the definition in the Bill would cover donations from, for example, Oyster cards, as the shadow Minister mentioned, or other smart cards. It would also cover new payment services similar to Apple Pay and Android Pay. We believe that the definition in the Bill is sufficient to cover most of the technological developments that we are likely to see in the reasonably foreseeable future.

[James Duddridge]

My hon. Friend will not be surprised that I expressed some degree of sympathy with amendment 2, given that I raised some of these points. I am reassured about the extension of contactless payments, particularly to Oyster cards, as was mentioned from the Opposition Front Bench. However, I do not support the amendment because of its wording. It refers to “comparable method”. The shadow Minister used the word “similar”, and my hon. Friend the Minister used the term “unspecified”. That is all unclear. There will be further technological changes and we will probably look back and say, “Wasn’t there a formulation that we could have used to include this new technology?” The wording of the amendment is not satisfactory and unfortunately I cannot offer a suggestion to improve it.

[Jane Ellison]

My hon. Friend makes a fair point. Learning, perhaps, from the time when the predecessor Bill was before the House, we have tried to look ahead, consult widely, and future-proof this Bill against forms of payment that are not yet widely used. It is sensible to try to provide a definition of those, rather than leaving the Bill overly vague. We have done a sound job of future-proofing the Bill as much as is reasonably possible.

I fully accept that at some future stage, perhaps some years from now, a new donation method could be developed which would not be covered by the current definition. We cannot know whether that future method might have implications for other parts of the Bill. That is why I am nervous about writing a woolly definition into the Bill. If and when there is a new donation method not foreseen or covered by the Bill, it is important that the Government come before the House with primary legislation, explain their decision and allow Parliament to scrutinise the proposed changes properly. As this Bill has proceeded relatively uncontroversially through the House, it would be hard to argue that the scrutiny of it and the attention that it has allowed us to focus on the scheme and on gift aid more widely have not been a good thing. The Bill demonstrates that we keep matters under review and that, when there is a case for change, we come back before Parliament and engage in a full and proper debate.

Gift aid is hugely beneficial for charities and we want as many charities as possible to benefit from gift aid on the eligible donations that they receive. I have given an undertaking that the Treasury will work with the Minister for civil society to publicise the charities day on 16 December and to look more widely at what we can do to make sure that take-up continues to grow. The small donations scheme is a separate scheme intended to bridge the gap caused by small, fleeting donations. It is not a replacement for or an alternative to gift aid, and if charities can obtain a gift aid declaration, they should do so because it is in their best interests, for reasons that I have touched on.

This Bill will improve the gift aid small donations scheme. Separately the Government are taking action to improve the wider scheme, and I hope that that action will address a number of the concerns raised in the debate by hon. Members. The small donations scheme is not the right vehicle to bring about the changes that have been suggested and that the shadow Minister is seeking. I hope that, having heard these reassurances, she will withdraw her amendments.

Question put, That the amendment be made.

16:55

Division 81

Ayes: 248

---

Labour: 179
Scottish National Party: 49
Liberal Democrat: 6
Democratic Unionist Party: 5
Independent: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Ulster Unionist Party: 2

Noes: 279

---

Conservative: 278

Third Reading

17:08

[Jane Ellison]

I beg to move, That the Bill be now read the Third time.

It is a pleasure to move the Bill’s Third Reading. I thank all right hon. and hon. Members who have taken the time to scrutinise and engage with the Bill so constructively during its passage through this House. It is a short and technical Bill, but it is nevertheless important and it delivers real benefits to our vibrant charity sector and for working families.

I am very pleased that during its passage through this House, the Bill has received broad cross-party support and provided an opportunity for Members on both sides of the House to highlight and champion the wonderful work that local charities do right across the country. On Second Reading, we heard from the hon. Member for Aberdeen North (Kirsty Blackman) about the volunteers in her constituency shovelling snow to keep the pavements clear in winter. My hon. Friend the Member for Rochford and Southend East (James Duddridge) spoke of the work done by a charity in his constituency to help people living with HIV/AIDS. We heard about the work of animal welfare charities, including Waggy Tails Rescue in Mid Dorset and North Poole, and of course I took the opportunity to mention Battersea Dogs and Cats home in my constituency.

It is not just charities that will benefit from the reforms to the gift aid small donations scheme. As several hon. Members pointed out, community amateur sports clubs will also be able to access top-up payments sooner, and we heard examples of local sports clubs in Taunton Deane, Chippenham and Congleton that could benefit. The small donations scheme is a good thing for charities. It allows them to claim a gift aid-style top-up payment of 25p in the pound when it is not practical or feasible to obtain a gift aid declaration from a donor.

The Small Charitable Donations and Childcare Payments Bill will make it even easier for charities to access those top-up payments by removing entirely two of the existing eligibility criteria. The Bill will also simplify and clarify the rules, ensuring that the scheme remains fair and delivers broad parity of treatment for charities structured in different ways. We are reforming the community buildings rules to make the scheme much more generous for local charities that operate out of community buildings. I sought to reassure the shadow Chief Secretary to the Treasury, the hon. Member for Salford and Eccles (Rebecca Long Bailey) about organisations such as scouts and guides by confirming the eligibility in their case. In Committee and again on Report the Opposition Front-Bench team tabled probing amendments on that point and others, and we have had a couple of thorough debates. I reiterate what I said earlier to the House: a scout hut is an eligible community building, so scouts and other uniformed groups will benefit from the changes in the Bill. I hope that all Members here will join me in supporting this enabling reform. We have heard from some Members about their yesteryears in the scouts, and anything that helps scouts to continue with “bob a job” and all their other community fundraising schemes can only be a good thing.

We are also taking action through this Bill to future-proof the gift aid small donations scheme by extending eligibility to contactless donations, so that charities can continue to benefit from the scheme for many years to come. The message that the Bill sends is clear: the Government want a strong, vibrant and resilient charity sector and we will do all we can to support it through the tax system.

In addition to celebrating the work of our charities and sports clubs, the Bill’s passage through the House provoked an important wider debate about the threats that the sector faces, and particularly the importance of a robust regulatory regime to protect the reputation of charities from the dishonest minority who seek to abuse charitable status. It is not necessarily a pleasant issue to have to contemplate, but we have had an important debate. It is good that we are continually pushed to think about how we can protect our charities further. The sector is one of our great assets. It is very important, and we need to do all we can to protect it. I have argued consistently that the Bill strikes the right balance between simplifying the gift aid small donations scheme, making it easier for charities to claim top-up payments and protecting the Exchequer from abuse and charities from reputational damage.

During the Bill’s passage through this House, hon. and right hon. Members have expressed some concern about take-up of the gift aid small donations scheme. As my hon. Friend the Member for Reading East (Mr Wilson), the civil society Minister, told the House on Second Reading, last year 21,300 charities benefited from the small donations scheme, claiming a total of £26 million of Government support. That is a lot of charities, but we accept that it is fewer than forecast. That is why we are simplifying the scheme by removing two of the main eligibility criteria and relaxing the community buildings rules.

I can also tell the House today that once the new rules take effect, HMRC will undertake a broad communications exercise to promote greater awareness of the gift aid small donations scheme. I have also asked what targeted activity can be undertaken. I encourage charity sector bodies and representative groups to work with the Treasury and HMRC to make the reformed scheme a success. I thank them and the officials concerned for the constructive approach that they take and the work that is done to bring this legislation to the House.

Let me say a quick word about the tax-free childcare portion of the Bill, which makes a small number of minor and technical, but important, amendments to the tax-free childcare scheme. That fact has not limited the interest shown in the scheme during the debates, and tax-free childcare continues to enjoy cross-party support. A number of speakers have looked forward to being able to use the scheme for their own children, and such a prospect draws ever closer as the scheme is set to commence next year.

For many, this will be the first time they will be able to access Government support with childcare costs as tax-free childcare will be available to all working parents, regardless of whether they are employed or self-employed. HMRC is about to begin inviting parents to test the new service in trials. As in bringing forward these changes, HMRC will again listen to parents to ensure that it provides the best possible service. The responses made in the Bill, with the minor and technical changes, will help HMRC to ensure that it is quick and easy for working parents to access the support they need with their childcare costs.

The Small Charitable Donations and Childcare Payments Bill is a short and, it is fair to say, uncontroversial, yet important Bill. Its passage through the House has seen thoughtful and constructive challenge that has allowed us to debate a number of important principles, as well as to praise some of the vital charities that are forces for good in our communities and our wider society. The Bill is therefore a positive Bill. We are making life easier for small charities and for working parents, and I commend it to the House.

17:15

[Rebecca Long Bailey]

Hon. Members will be pleased to hear that I will keep my comments very brief in this stage in the proceedings. The Small Charitable Donations and Childcare Payments Bill as a whole makes positive changes to the gift aid small donations scheme and very minor changes to the tax-free childcare scheme.

The Opposition have welcomed the Government’s aim throughout the passage of the Bill to make sure that the gift aid small donations scheme is more accessible and to encourage charities to take part. The scheme has not been as successful as the Government had hoped, and the Bill certainly makes changes to improve that situation. In particular, the abolition of the two-year eligibility rule and the two-in-four years claims rule will open up the scheme to new charities, while bringing contactless payments into the definition of a small payment will bring the scheme into line with how donations can be made in the modern day.

However, as the Minister is aware, the Opposition think the Bill could have gone further, as do representatives of the charity sector. Indeed, the Charity Finance Group has said that the Government were “locking in future failure” by not introducing wider reforms. We have tried to improve the Bill after receiving feedback from the sector. Along with SNP Members, we have tried to address the key issue coming out of the feedback, which is the matching requirement. Our amendments in Committee and on Report would have forced the Government to conduct a specific review of the rule and of how the scheme fits within the framework of anti-fraud measures in the scheme. Unfortunately, the Government have not made any movement on this issue, which is a barrier to entry to the scheme, according to charity representatives. However, I note the comments that the Minister made earlier, and I look forward to receiving any further updates from her on this matter in due course.

We have also tried to widen the payment methods eligible for the scheme beyond cash and contactless payments. Our amendments would have included cheques and donations via text and online. Again, unfortunately, the Government have not seen fit to work with us on this part of the Bill, simply using flawed logic, as it were, to prevent the changes that the charity sector wants from happening. I hope that the Minister will reflect on the comments made during the passage of the Bill, and consider whether amendments can be made in due course to make the use of cheques and, in particular, of text messages more accessible to the gift aid sector.

Finally, we have tried to address what appeared to be a flaw in the original legislation, preventing the scouts, guides and cadet groups from gaining the full benefits of the scheme. For the benefit of hon. Members who are not aware of the issue, the connected charities rule means that the scouts, guides and cadet groups are each treated as one charity, despite the fact that local groups are individual and self-financing, and that means only one top-up payment can be received. As I highlighted when we discussed this amendment in the Public Bill Committee, the Charity Finance Group has suggested that such treatment means they receive only 17p per individual group a year.

The Minister had a few issues with our amendment, as drafted, and we listened to her concerns and modified it to reflect them. I particularly appreciate the comments she has made in relation to scout groups and their bases. However, she will recognise that the comments made in Committee related to the need for the scope of our amendment to go further to include groups beyond the scouts and girl guides. I hope she will consider that very carefully and see whether she can put in place any future amendments or provisions to deal with any other groups in a similar position that are not, as it were, mopped up by the Bill.

To conclude, perhaps once the Government have reviewed the scheme’s effectiveness in the light of the changes the Bill makes we may have an opportunity to come back to some of those changes, as I have said. Overall, however, the Opposition support the Bill and its aims. I hope it will succeed in making the small donations scheme more accessible and in supporting smaller and new charities. I look forward to an update on the impact of the revised legislation in due course.

17:20

[Kirsty Blackman]

It is nice to speak on Third Reading of a Bill when there has largely been agreement on many of the measures it contains.

The Government’s measures on the gift aid small donations scheme are sensible and logical steps forward, and it is good that more charities will be able to benefit from the scheme as a result. We were very clear that we would have liked the Government to go further, but we appreciate the steps they have taken, and the wide-ranging consultation they have undertaken.

We raised the matching requirement a number of times. My understanding is that the Government have the power to make changes to that requirement without the need for primary legislation anyway. It is useful to know that the Government can consider that if they receive future representations on the matter. Our concerns related in particular to volunteer-led charities—the very smallest charities, which perhaps do not have the administrative capacity to access some of these schemes. But I appreciate that the Government have committed to undertake a wider publicity effort on the gift aid small donations scheme and on how charities can access tax reliefs. I hope that charities across the UK will benefit from those changes.

The changes to the way that people will access childcare payments are sensible and seem more accessible than the current system. Having used the current system and struggled with some of its administrative impacts, I think the new scheme will iron out some of those flaws, and am pleased that even before the new scheme comes in the Government are re-evaluating it and looking to make it as accessible and as easy for parents to navigate as possible. I understand that a pilot will take place and that, by the end of next year, pretty much everyone should have moved over to the new scheme. I hope the Government will commit to re-evaluating the scheme as it goes forward, to ensure that it is as accessible as possible.

On that re-evaluation, in Scotland we are making changes to the early learning and childcare system, and are looking at a mass expansion so that as many families as possible can access free, good quality childcare that is easily accessible in local communities. In my local community, at Manor Park Primary School, 20 two-year-olds will take part in a trial that is taking place in my area and in a number of other places across Scotland. I am sure that the UK Government will be keen to learn from Scotland’s experience of the expansion of free childcare and will be looking at it for the future.

Thank you, Mr Speaker, for the opportunity to speak on Third Reading. As I have said, we are broadly supportive of the Bill but would have liked it to go further in some areas. However, we will not oppose its Third Reading.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Business without Debate

Tuesday 15th November 2016 Commons Chamber

Public Accounts Commission

Ordered,

That Deirdre Brock be discharged as a member of the Public Accounts Commission under section 2(2)(c) of the National Audit Act 1983, and that Philip Boswell be appointed.—(Heather Wheeler.)

Delegated Legislation

Tuesday 15th November 2016 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Environmental Protection

That the draft Environmental Permitting (England and Wales) Regulations 2016, which were laid before this House on 10 October, be approved.—(Graham Stuart.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Electricity

That the draft Contracts for Difference (Allocation) (Excluded Sites) Amendment Regulations 2016, which were laid before this House on 11 October, be approved.—(Graham Stuart.)

Question agreed to.

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Establishing a European Union Agency for Asylum, Allocating Responsibility for Asylum Claims within the EU (Reform of the Dublin Rules) and Fingerprinting of Asylum Applicants and Irregular Migrants (The EURODAC System) (Opt-in Decisions)

That this House takes note of European Union Document No. 8742/16, a Proposal for a Regulation of the European Parliament and of the Council on the European Union Agency for Asylum and repealing Regulation (EU) No. 439/2010, endorses the Government’s decision not to opt in under Protocol 21 on the Position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice annexed to the EU Treaties (Protocol 21), notes that the Government is able to opt in post-adoption and supports the Government’s intention to continue supporting other Member States on asylum matters; further takes note of European Union Document No. 8715/16, a Proposal for a Regulation of the European Parliament and of the Council on establishing the criteria and mechanisms for determining the Member State responsible for examining an application for international protection lodged in one of the Member States by a third-country national or a stateless person (recast), also known as the Dublin Regulation and endorses the Government’s decision not to opt in under Protocol 21; and further takes note of European Union Document No. 8765/16, a Proposal for a Regulation of the European Parliament and of the Council on the establishment of Eurodac for the comparison of fingerprints for the effective application of Dublin Regulation (EU) No 604/2013 and endorses the Government’s decision to opt in under Protocol 21.—(Graham Stuart.)

Question agreed to.

Leaving the EU: NHS Funding

Tuesday 15th November 2016 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Graham Stuart.)

17:25

[Mr Chuka Umunna (Streatham) (Lab)]

On 23 June, our country voted to leave the European Union. The result was not a landslide: 48% voted to remain; 52% voted to leave. London, Scotland and Northern Ireland voted to remain; the majority of England and Wales voted to leave. The young overwhelmingly voted to stay; older voters opted to go. Socioeconomic classes and ethnic groups also voted in different ways.

I was immensely proud to play a leading role in the “Labour In for Britain” and “Britain Stronger in Europe” campaigns during the EU referendum. To my core, I still believe that by the strength of our common endeavour we achieve more together than we do alone, not only as individuals but as a nation state, as we seek to amplify Britain’s role in the world and achieve as much for our community of nations around the world as possible. However, I accept the result. Before the vote, remain campaigners accepted the rules under which the referendum was fought. I do not think that, having had a referendum conducted under those rules, which we debated in the House, we can now reject them because we do not like the outcome. Either you are a democrat or you are not, Mr Speaker, and I am a democrat.

Various promises were made by each side in that referendum campaign. Now it is over, it is important that we hold to account the winning side for the policies and claims that were made and upon which people voted. I say “hold to account” deliberately. We on the remain side would not want all of Vote Leave’s promises to be delivered, but it is right and proper, for the sake of our shared values of democracy, accountability and transparency—the foundations upon which this House is built—that Vote Leave campaigners who are Members of the House should be tested on whether they deliver what they pledged to the people. If they do not, they should explain why not to their constituents and the nation in this House. Thousands of people agree—they have joined the Vote Leave Watch campaign because they care about this, too. I chair that campaign, and I draw the attention of the House to my entry in the Register of Members’ Financial Interests.

One promise that the overwhelming majority of people—both the 16 million who voted remain and the 17 million who voted leave—want to see kept is the Vote Leave campaign’s pledge to put £350 million extra per week into the NHS. That was the key pledge of the Vote Leave campaign. Prominent members of the current Cabinet—the Foreign, Environment, International Development, International Trade, and Transport Secretaries—went around the country in a big red bus that said, “We send the EU £350 million a week. Let’s fund our NHS instead”. They gave speeches in front of a sign saying, “Let’s give our NHS the £350 million the EU takes every week”. None of them disowned that pledge during the campaign—not a single one. The clear message they sought to give to the people was that if we leave the EU, £350 million a week extra will be put into our national health service. No qualification was given to that pledge.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

My hon. Friend is making a powerful case. This is such an important point for our economy, as we know in my part of London, where the Barts trust has the largest predicted overspend in NHS history. Does he agree that it is vital that those who campaigned on the pledge that this money would be provided are held to account, because communities such as mine are suffering without investment in the NHS?

[Mr Umunna]

I agree absolutely with my hon. Friend. When I had the pleasure of visiting her constituency the other week, I saw for myself the situation that she describes.

[Wes Streeting (Ilford North) (Lab)]

My hon. Friend is absolutely right that the claim of £350 million a week for the NHS was at the centre of Vote Leave’s campaign. Leave campaigners were given a number of opportunities to review, qualify or disown the claim, including following strident criticism from all members—remainers and leavers—of the Treasury Committee. The fact they chose not to distance themselves from the claim surely demonstrates that this is a promise that ought to be delivered. If it is not delivered, they will have some explaining to do.

[Mr Umunna]

I completely agree with my hon. Friend. As he said, it was significant that the Treasury Committee came to its conclusion, since it is a cross-party Committee whose members include leavers and remainers.

As my hon. Friend the Member for Walthamstow (Stella Creasy) said, we know that the NHS needs extra cash. The Minister also knows this. As members of the Health Committee pointed out last month, the deficit in NHS trusts and foundation trusts in 2015-16 was more than £3.5 billion.

[Lilian Greenwood (Nottingham South) (Lab)]

My hon. Friend makes a powerful argument for extra NHS funding, but does he share my concern that our NHS could actually be worse off as a result of the decision to leave the EU, given that the reduction in our exchange rate will make it more expensive to purchase products from abroad? Does he also share my concern that, when I asked the Secretary of State for Health how much and what proportion of the total NHS budget was spent on imports, the Department was unaware and therefore unable to give me that information?

[Mr Umunna]

It is outrageous that Ministers were unable to give my hon. Friend those figures. Ministers themselves exacerbated the knock-on impact on the economy of the depreciation of the pound. It depreciated in value by 6% before October, and then by a further 15% because of uncertainty around our trading arrangements that was triggered by comments made by the International Trade Secretary that differed from those of the Chancellor to the Treasury Committee and in other forums. The knock-on effect is not, however, just on household budgets. As the cost of things increases, of course the NHS will take a big hit. Public services in general will be affected if growth reduces and Exchequer receipts fall.

Ministers’ claimed increases in NHS funding, which the Under-Secretary of State for Health, the hon. Member for Warrington South (David Mowat), might mention, are actually being funded by reductions in other areas of health spending that fall outside NHS England’s budget. Reductions in spending on social care are having a serious impact on the NHS, and that is translating into increased accident and emergency attendances, emergency admissions and delays to people leaving hospital. I have talked about what Select Committees, Ministers and Members of Parliament are saying, but we have also heard from third parties. The King’s Fund, the Nuffield Trust and the Health Foundation are clear that current Government spending plans through to 2019-20 will not be enough to maintain standards of care, to meet rising demand from patients and to deliver the transformation in services outlined in the NHS five year forward view.

I and more than 40 Members from different parties, including all my hon. Friends in the Chamber for the debate, have written to the Chancellor asking that when he presents his first autumn statement on 23 November, he sets out how he will put the Government on a path to increasing national NHS spending by that promised £350 million extra a week once we have left the EU. To be clear, that additional funding must be over and above the amount currently planned to be spent on the NHS. The British Medical Association has made the same demand.

[Anna Soubry (Broxtowe) (Con)]

Is the hon. Gentleman saying that the Government have to honour a promise made by others to the tune of £350 million a week extra for the NHS? My hon. Friend the Member for North East Somerset (Mr Rees-Mogg) and other notable leavers have now conceded that the actual figure was £120 million. Would it not be unfair to say that the Government have to deliver that pledge, given that they never made any such promise to the British people?

[Mr Umunna]

I am grateful for the right hon. Lady’s intervention; I shall come on to those precise points shortly. I note, however, the public statements she herself made when she was a member of the Government. She criticised the way in which her fellow Ministers were going around making these big promises, perhaps on her behalf.

[Anna Soubry]

We must be very clear about this. During the referendum, we campaigned individually, not as Ministers on behalf of the Government. The hon. Gentleman is right that some Ministers campaigned for leave and made this promise—and indeed many other promises that I do not think they will be able to deliver—but there is a distinction to be made between the promises of the Government and those of people who now happen to be in government. It is really the leave campaign that must be held to account, not the Government.

[Mr Umunna]

The right hon. Lady pre-empts what I am about to say; I shall come on to that precise point.

To be clear, I want the Minister, on behalf of his Department, to give the same commitment that we are asking the Treasury to make, and to outline how his Department will make good on this pledge. I shall explain why this is a pledge that the Government should deliver. The Minister might give a number of reasons, perhaps echoing the right hon. Member for Broxtowe (Anna Soubry), to explain why the promise given by his ministerial colleagues during the referendum should not be treated as such. I will deal with each of the main possible reasons in turn.

First, there are those who claim that this was not a pledge at all. Nigel Farage, the interim leader of the UK Independence party, said that it was one of the mistakes that he thought the leave campaign made. The current Transport Secretary, who was also a member of the Government at the time of the referendum, has said that Vote Leave’s specific proposal was, in fact, to spend £100 million a week of the £350 million for the NHS that was originally hoped for, commenting that that would be an “aspiration” to be met. Let me tell the Transport Secretary that the poster that the Vote Leave supporters all stood next to did not say that this was an “aspiration”; it was a pledge—pure and simple. There was no qualification on the poster or on the big red bus. This statement was made, and the people who made it should be held to account for it.

Secondly, many leave campaigners deny ever using the £350 million figure. One of them said:

“I always referred to Britain’s net contribution of nearly £10 billion—some £200 million a week…rather than £350 million.”—[Official Report, 5 September 2016; Vol. 614, c. 20WH.]

It is true—my hon. Friend the Member for Ilford North (Wes Streeting) touched on this—that the Office for National Statistics said that the £350 million figure was misleading, but the head of the Vote Leave campaign said:

“the £350 million figure is correct and we stand by it.”

Vote Leave, whose banner Government Ministers campaigned under, carried on citing the figure, as my hon. Friend said, and those Ministers must now be held to account.

[Stella Creasy]

I take my lead from the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), who sadly does not appear to be in this Chamber. He was one of the most prominent members of the Vote Leave campaign and said that Brexit must give the NHS a boost. In my part of town, a boost to the NHS is the vital funding that we need to get our NHS back on track. Does my hon. Friend agree that we should listen to the right hon. Member for Uxbridge and South Ruislip about that point?

[Mr Umunna]

I shall come on to him shortly.

A further thing that is said—again, I think this has been touched on—is that not all the people who made these pledges were members of the then Conservative Government. Perhaps that could be said of the right hon. Member for Uxbridge and South Ruislip (Boris Johnson). Well, of the five current members of the Cabinet whom I mentioned, three were members of the then Government and one—the right hon. Member for Uxbridge and South Ruislip—attended the political Cabinet at the time. Yes, the Secretary of State for International Trade was sitting on the Back Benches, but countless other Ministers from outside the Cabinet at the time who are now serving more than make up for that—for instance, the hon. Members for Portsmouth North (Penny Mordaunt), for Camborne and Redruth (George Eustice) and for Stockton South (James Wharton). I could go on. Those are just a few of the people who posed by those posters and next to that big red bus, and they must be held to account.

Finally, it is said—this is the crux of the argument advanced by the right hon. Member for Broxtowe—that the commitment was given by one side in a referendum campaign, not by a Government. I am sorry but that simply will not wash. Many of those people were put up to appear in the media and to campaign on Vote Leave’s behalf precisely because they carried the authority that attaches to Government Ministers. That was why they were used. That was why they were asked to stand by that red bus, and to stand by those posters.

All those key Vote Leave campaigners, whether they were Ministers or not, were Members of this House. If our democracy is to mean anything, it must mean that Members are answerable to the electorate for their policies, and held to account in the House for the things that they say. People cannot go around the country casually promising the world and betraying people by failing to deliver, but then expect to get away with it. We will not forget; we will not let up. It was in the name of parliamentary sovereignty that those Ministers campaigned, and it is time that the House, on behalf of the people whom we are elected to represent, took back control, if we want to use that phrase, and made those Ministers answer.

[Lilian Greenwood]

I thank my hon. Friend for giving way again. He is being very generous with his time.

Is this not dangerous and damaging not only to parliamentary democracy, but to the morale of workers in our national health service? I was told by the chair and chief executive of my local NHS trust, Nottingham University Hospitals NHS Trust, that they are frequently stopped by members of staff who ask, “When are we going to get the extra money?” Those people will surely be not just incredibly disappointed but doubly disappointed, given the difficulties that they are facing because the trust has a huge deficit and is struggling to provide the services that they know that patients require.

[Mr Umunna]

My hon. Friend is absolutely right. I am very grateful for all the interventions that Members have made today.

Either those Ministers made this pledge to the people in the expectation of delivering on it, in which case they must now show us the money, or they made it in the sure knowledge that their promise would never be fulfilled, in which case they will never be forgiven for their betrayal of those who, in good faith, relied on them. Perhaps the Minister can tell us which it will be.

17:42

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

I congratulate the hon. Member for Streatham (Mr Umunna) on securing the debate, and on the points that he made. Like him, I voted and campaigned for the remain side, and, like him, I accept the result. I am now part of a Government who are responsible for delivering what was democratically decided by the British people. I should say at the outset, however, that I am speaking today for the Government and not for the leave campaign. If the hon. Gentleman feels that he is taking part in the wrong debate, I apologise for that in advance.

I will, however, address some of the points that have been made about the impact of Brexit on the NHS, because valid points were made about staff morale, the level of funding and the exchange rate. All those are variables, and I think it is good for us to spend a bit of time talking about them this evening. I will also talk about what stage I think we have reached on the pledge and the amount of money that we will no longer be giving to the European Union when we leave—although, as the hon. Gentleman knows, that depends on how we leave, and on the nature of the agreement that we eventually reach.

Let us begin by agreeing on one point. The single most important thing that the NHS needs to be properly funded is a strong economy. To the extent that Brexit may have positives and negatives, that fact is relevant, but the NHS is properly funded at the moment. We have heard some stuff about budgets and all the rest of it, but let me tell the hon. Gentleman that the OECD’s analysis of health and social care spending in every OECD country shows that we are now above average, although that has not always been the case. We are possibly 1% lower than the best of class, including France and Germany. That figure was for 2014, and the gap is likely to have been filled because this year we gave an increase to NHS spending of three times the rate of inflation and we have pledged that NHS England’s budget will increase in real terms by £10 billion between now and 2021. I do not believe Brexit will make any difference to that; indeed it is a commitment and priority of this Government that it will not.

We do know, however, that there are issues in how that money is allocated within the NHS. We are broadly at the average point of the OECD, and we do and could spend that money more efficiently and effectively. We could spend more on primary care, cancer and mental health than we do, and those are Government priorities, and we hope the sustainability and transformation plan process will help to deliver that because at the moment we spend too much on acute care.

Of course we can find efficiencies, too. Agency staffing is too high and we need to address that. There is a lot we can do on procurement—Carter and new care models and all that go with that.

[Stella Creasy]

The Minister could also work to renegotiate the private finance initiative loans that are crippling our NHS, and not use PF2 to do that. In order to do that, we need money in the NHS to be able to renegotiate. Surely the £350 million would help get us to that place; it would help us to renegotiate our debt, get our constituents back into work and get our NHS fit for purpose in the 21st century?

[David Mowat]

Nobody in this House would be more pleased than me if we did not have the PFI millstone around our neck. The hon. Lady talks of renegotiation; this is real money, and these are real contracts that were signed more or less entirely by the last Labour Government. There is no magic wand that enables us just to set those PFI contracts aside, although I wish there was; that is not how the commercial world works.

[Mr Umunna]

I am sure the Minister will be aware that the £10 billion figure for increased funding he has just cited is rejected by the cross-party Select Committee on Health. It is also very well him referring to what he alleges are increases in NHS funding, but the other cuts his Government have made over the last five to six years, in particular to local authority budgets, have put huge pressure on social care, which has led to a knock-on impact on the NHS and its funding.

[David Mowat]

The hon. Gentleman mentions social care, and that is fair. It is funded separately to the NHS, and the budgets are separate. During the course of this Parliament the social care budget will increase in real terms. I do accept that the social care system is under pressure, but there is a massive disparity in performance in social care between councils. The top 10% of councils are about 20 to 25 times better in terms of outcomes for delayed transfers of care and so forth than the bottom 10%. There are many facets to this, therefore, but I accept the basic point. I think that, all other things being equal, Members on both sides of the House would like the NHS to have more money; let us agree on that and see how we make progress on it.

Brexit introduced a number of variables that may not have been there before. What will be the impact of Brexit on our economy? Our GDP in three or four years could be higher, but also could be lower, because of Brexit. The truth is that neither the hon. Gentleman nor I knows the answer to that. There are different views on that in this House, too, although some with other views may not be here today. This is important and relevant because if the economy were to have a significant difficulty, that could impact on spending commitments.

The second variable is a very substantive one and was mentioned earlier: the exchange rate. Our exchange rate went down about 15%, principally, it would seem reasonable to say, as a consequence of Brexit. That is a good and a bad thing for the economy. Many countries in the world are trying to get their exchange rate down. I represent a constituency in the north of our country where we have a more manufacturing-based economy. Frankly, a lower exchange rate will help the economy there. That may not be the case in other parts of the country and in the City.

The exchange rate has an impact on the NHS. In fact, it has two impacts. As the hon. Member for Nottingham South (Lilian Greenwood) mentioned, it will be more expensive to import products such as scanners and, potentially, to import drugs. She asked what the figure was, but I cannot give her an exact figure. My understanding is that it is considerably less than 5% of the total NHS expenditure of about £100 billion. Nevertheless, this is a relevant factor and it makes a difference.

The other impact of the exchange rate, which the hon. Lady did not mention, is that it will affect the attractiveness to overseas workers of the UK economy in general and the NHS in particular. If someone comes in from the EU to work in our economy and the value of the pound is 15% lower than it was a year ago, they will be earning 15% less in their home currency. That will have an impact on the margin in relation to staffing, and that is an issue that we need to manage.

The third variable is the one that we have spent so much time talking about—namely, the payment that we make to the EU. I am not going to get bogged down in the numbers, but I believe that we pay the EU about £20 billion a year, of which we get roughly £10 billion back. Leaving the EU would therefore create a bonus. The hon. Member for Streatham mentioned a letter. Even if that bonus were to materialise, as I expect it to, it will not happen until after we have left the EU, so his writing a letter to the Chancellor now strikes me as somewhat symbolic.

[Mr Umunna]

To be absolutely clear to the Minister, the ask was that the Chancellor should set out the path for achieving this payment after we have left. I want to ask the Minister two questions. First, given his view that the pledge to make a payment to the NHS was made not by the Government but by the campaign, would he say that it was wrong for people to go around giving the impression that the Government would dish out that money? Secondly, for the record, is he saying that this Government will not meet that pledge?

[David Mowat]

Just for the record, I am not saying that this Government will not meet it. All I can say is that this Government have yet to decide how they will spend any bonus that comes from any rebate we get. This will all depend on the precise negotiations that take place and the precise type of exit that we make from the EU. Nobody in this Chamber knows the answers to those questions. For example, we could get a Norwegian-type deal that could entail paying money to the EU. I am not a member of the Department for Exiting the European Union and I do not know where the current thinking is on that, but this is of course a variable.

[Mr Umunna]

Given what the Minister is saying, does he believe that it was wrong to go around giving people the impression that all they needed to do was vote to leave the European Union in order for £350 million a week to be dished out to the NHS?

[David Mowat]

Had I been writing something on the side of the bus, and had I been campaigning on that cause in the referendum, I might have been more circumspect. I might have said that £350 million could become available and could be spent on whatever the Government’s priorities were, one of which was very likely to be the NHS. I hope that that satisfies the hon. Gentleman.

[Mr Stewart Jackson (Peterborough) (Con)]

I regret that I seem to have stumbled into a sort of elongated primal scream therapy session involving refighting last June’s referendum. The hon. Member for Streatham (Mr Umunna) would have a more persuasive and cogent argument if he saw the other side of the equation. Yes, EU workers have a massive impact on and are committed to the NHS, but unrestricted EU migration over a number of years has put massive strains on the delivery of our health services. He has never conceded that point.

[Mr Umunna]

That is not what I am talking about.

[David Mowat]

I want to make some progress in the debate, although I understand that I have until 7.30.

We have mentioned the payments to the EU, and there is also the point about staff. Another point that has not been mentioned—I shall mention it for completeness—is that there will be an impact on EU institutions. For example, the European Medicines Agency is located in London, which is of benefit to our pharmaceuticals industry. Where it ends up should be an issue for the people negotiating this deal, because of the potential impact involved. From my point of view, we talk too often about the conditions in relation to the EU for the City of London and passporting and all that goes with it, but not enough about other world-class industries, one of which is pharmaceuticals. I hope that those responsible will listen to that.

We have talked about the economy, which is a big variable. To be frank, neither I nor the hon. Member for Streatham knows whether the economy will be better or worse as consequence of leaving the EU, but it is true that the 15% fall in the value of the pound is helping manufacturing firms in the north and will have an effect on GDP, but it will also have some effect on imports of, for example, scanners, accelerators and drugs.

The NHS is hugely reliant on staff from the EU. Some 58,000 people from EU countries work in the NHS, and another 90,000 work in social care. I want to take this opportunity to reiterate the Government’s position that we understand that massive contribution and know that it is important to our NHS that it continues. The Secretary of State said exactly that to the Health Committee and the Prime Minister has said that she hopes and expects citizens from the EU to stay in our vital services. I would like—perhaps the hon. Gentleman and the group he is speaking for today can help with this—some of our EU colleagues and friends to make a similar commitment about people from this country who are working in EU countries, because that has not yet happened.

[Mr Umunna]

I speak for my constituents above all others whenever I speak on such issues in this House. On that specific point, will the Minister explain why the Government do not simply guarantee the right to stay of EU citizens working in our health service? I understand the demand for the reciprocal right to be given to UK citizens living in other EU countries, but they should not be used as a bargaining chip. When the Immigration Minister appeared before the Home Affairs Committee, he admitted that we do not know where most of the EU citizens are in this country or who they are, so if we were not to deliver on the promise to guarantee them the right to stay we would have no way of removing them.

[David Mowat]

It is not for me to make that specific guarantee. The Prime Minister clearly said that she hopes and expects them to remain. It is disappointing that a similarly strong statement has not been made by any Head of State in any other European country.

It is also right that we do more to train more of our own nurses and doctors—not because we need to replace people from the EU, but because it is the right thing to do. We should try to become self-sufficient in these matters, and that will happen.

We have knocked around this point quite a lot during the debate and have talked about variables such as the exchange rate, GDP and the EU bonus or payment that we will get, but there is one thing that is not a variable and it is probably the single most important constant: the extent to which this Government give priority to the health service in their spending commitments. That constant is absolutely clear. The previous Prime Minister treated the NHS as his No. 1 commitment, as does the current Prime Minister. Many of the points we have discussed this evening are things that should properly form part of the negotiation that we are going to have after we trigger article 50, as we hope to do by the end of March, and I am certain that that will be the case. What is not negotiable is that our commitments to NHS funding and social care funding are unmoved by any of these things; this is the No. 1 priority for this Government.

[Mr Jackson]

Is it not the case that in the future dispensation after Brexit we might have a fairer system of recruitment and retention of NHS staff? In all our constituencies, we have staff from outside the EU—my constituency has Nigerian, Ghanaian and, in particular, Filipino nursing staff—who have hitherto been discriminated against inadvertently vis-à-vis those from the European Union, and we will have a much fairer system in reaching out and getting the brightest and best to work in our NHS in the future.

[David Mowat]

My hon. Friend uses the word “fairer”, and of course we do have staff from other parts of the world. I will be honest and say that part of me has difficulty with this country taking large numbers of doctors and nurses from places such as Nigeria and others parts of Africa that need them more than we do. So it is right that we try to train more of the people that we need in these vital public services, but it is also right that we make it absolutely clear how important the people who currently work in our NHS and in social care are—those from the EU and from outside it, as my hon. Friend reminded us. That is important.

I make the point again, because I will not go on until 7.30 pm, that the NHS is this Government’s No.1 spending priority and it will continue to be so.

Question put and agreed to.

18:00

House adjourned.

Draft Inquiries into Fatal Accidents and Sudden Deaths etc. (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016

Tuesday 15th November 2016 General Committees

The Committee consisted of the following Members:

Chair: Mr Nigel Evans

† Campbell, Mr Alan (Tynemouth) (Lab)

Chapman, Douglas (Dunfermline and West Fife) (SNP)

† Costa, Alberto (South Leicestershire) (Con)

Cruddas, Jon (Dagenham and Rainham) (Lab)

† Davies, Chris (Brecon and Radnorshire) (Con)

† Ellis, Michael (Deputy Leader of the House of Commons)

† Fernandes, Suella (Fareham) (Con)

Gove, Michael (Surrey Heath) (Con)

Jones, Mr Kevan (North Durham) (Lab)

† Morris, Anne Marie (Newton Abbot) (Con)

† Morris, David (Morecambe and Lunesdale) (Con)

Murray, Ian (Edinburgh South) (Lab)

O'Hara, Brendan (Argyll and Bute) (SNP)

Onn, Melanie (Great Grimsby) (Lab)

† Opperman, Guy (Lord Commissioner of Her Majesty's Treasury)

† Pound, Stephen (Ealing North) (Lab)

† Stevenson, John (Carlisle) (Con)

† Whittingdale, Mr John (Maldon) (Con)

Clementine Brown, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 15 November 2016

[Mr Nigel Evans in the Chair]

Draft Inquiries into Fatal Accidents and Sudden Deaths etc. (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016

14:29

[The Deputy Leader of the House of Commons (Michael Ellis)]

I beg to move,

That the Committee has considered the draft Inquiries into Fatal Accidents and Sudden Deaths etc. (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016.

It is a pleasure to serve under your chairmanship, Mr Evans. The order was laid before the House on 13 October 2016 and is made under section 104 of the Scotland Act 1998, which allows for necessary or expedient legislative provision in consequence of an Act of the Scottish Parliament. The order is made in consequence of the Inquiries into Fatal Accidents and Sudden Deaths etc. (Scotland) Act 2016, which I will refer to as the 2016 Act. The Act was passed by the Scottish Parliament and received Royal Assent on 14 January.

The purpose of the 2016 Act is to modernise the system of fatal accident inquiries in Scotland in line with the recommendations of Lord Cullen of Whitekirk, following his independent review of fatal accident inquiry legislation in 2009. The order will enable the 2016 Act to be implemented in full by making the necessary consequential amendments to reserved legislation. It gives certain provisions in the 2016 Act effect in the rest of the UK where that is required, and makes expedient substantive legislative provision in relation to matters reserved to Westminster.

Members will be aware that FAIs are held to establish the circumstances surrounding certain deaths. Mandatory fatal accident inquiries must be held when, for example, someone dies in legal custody or in relation to their work. Among the changes brought forward by the 2016 Act is the extension of the categories of death for which it is mandatory to hold a fatal accident inquiry in Scotland to include the deaths of children in secure accommodation and deaths in police detention. The changes relate to devolved matters, so it is right that the Scottish Parliament has legislated for them.

This section 104 order, on the other hand, will enact changes to reserved matters to ensure that there is consistency with the 2016 Act of the Scottish Parliament and make some substantive provisions. Perhaps the most significant of those is to make clear that it will become mandatory for a fatal accident inquiry to be held into deaths of military service personnel in the course of active duty in Scotland. Up to this point, under legislation reserved to the UK Government, that has been at the discretion of the Lord Advocate. The order also proposes that a military death in the offshore area of the continental shelf adjacent to Scotland would require a mandatory FAI.

[Alberto Costa (South Leicestershire) (Con)]

I declare that I am a non-practising Scottish solicitor. I welcome the order on behalf of those of us who have practised in both jurisdictions. Does the Minister agree that the order is an example of the UK Government being cognisant of the needs of Scotland and respecting Scottish devolution?

[Michael Ellis]

I am grateful to my hon. Friend for his intervention. The order is an example of Westminster working well with the Scottish Parliament. It is a most appropriate measure.

The proposed change has become of some relevance in recent days following the tragic death of Lance Corporal Joe Spencer of 3rd Battalion The Rifles. The death occurred at Royal Air Force Tain, near Inverness, on Tuesday 1 November. I take this opportunity to offer my sincere condolences to Lance Corporal Spencer’s family and friends. In legal terms, the mandatory requirement for a fatal accident inquiry proposed in the order is not retrospective, so even if the death is found to have been in the circumstances provided for, it will not apply to the death of Lance Corporal Spencer. Instead, the arrangements that have existed for some time under the Fatal Accidents and Sudden Deaths Inquiry (Scotland) Act 1976 will apply, and it will therefore be within the discretion of the Lord Advocate to rule on whether a fatal accident inquiry is held in that case.

That sad incident none the less highlights the relevance and importance of the order. It highlights why the UK and Scottish Governments, Ministers of the Crown and officials have worked closely together to ensure that the order makes reserved legislative provision in consequence of the 2016 Act of the Scottish Parliament, the aim of which is to ensure that the fatal accident inquiry legislation in Scotland is fit for purpose. That collaboration represents another example of the Westminster Government’s commitment to working with the Scottish Government to make the devolution settlement work. I commend the order to the Committee.

14:36

[Stephen Pound (Ealing North) (Lab)]

There is no one I would rather spend an afternoon with than yourself, Mr Evans, but may I disappoint you on this occasion, as I will not detain the Committee for long. I apologise for the absence of my hon. Friend the Member for Blaydon (Mr Anderson). He would normally be in my place, but has been unavoidably detained in his constituency. I notified the Speaker’s Office and the Government Whips Office that I would be attempting to fill his shoes, but you will have noticed that I am not him.

I associate the Opposition most strongly with the sentiments expressed in respect of Lance Corporal Spencer. Any death in military service is a tragedy—any death is a tragedy—but in some ways this piece of legislation will make life a little easier. The bespoke provisions of article 6(3) will go a long way towards assisting people in that position.

Having read through the order—in view of my long-standing interest in Scottish legal matters, I obviously spent a fairly long time studying it—I have come to the conclusion that there are one or two very minor points, but that they all seem to be covered within the substance of the order. There is therefore very little that the Opposition will do to object to it. With the House’s permission, I say that we thoroughly support and endorse this piece of legislation. We lend our support to it, timely and appropriate as it is.

Question put and agreed to.

14:38

Committee rose.

European Union Agency for Asylum

Tuesday 15th November 2016 General Committees

The Committee consisted of the following Members:

Chair: Andrew Rosindell

† Abbott, Ms Diane (Hackney North and Stoke Newington) (Lab)

† Arkless, Richard (Dumfries and Galloway) (SNP)

† Brine, Steve (Winchester) (Con)

† Costa, Alberto (South Leicestershire) (Con)

† Fabricant, Michael (Lichfield) (Con)

† Ghani, Nusrat (Wealden) (Con)

† Goodwill, Mr Robert (Minister for Immigration)

Green, Kate (Stretford and Urmston) (Lab)

† McDonald, Stuart C. (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)

† Pursglove, Tom (Corby) (Con)

† Rees-Mogg, Mr Jacob (North East Somerset) (Con)

† Shah, Naz (Bradford West) (Lab)

† Turner, Karl (Kingston upon Hull East) (Lab)

Martyn Atkins, Leoni Kurt, Committee Clerks

† attended the Committee

The following also attended (Standing Order No. 119(6)):

Double, Steve (St Austell and Newquay) (Con)

European Committee B

Tuesday 15 November 2016

[Andrew Rosindell in the Chair]

European Union Agency for Asylum

08:55

[The Chair]

Does a member of the European Scrutiny Committee wish to make a brief explanatory statement?

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

Mr Rosindell, it is a pleasure to serve under your chairmanship bright and early on this Tuesday morning.

The documents are at the heart of the EU’s response to the migration and refugee crisis. According to the EU treaties, EU asylum polices should be governed by the principle of solidarity and fair sharing of responsibility. In practice, the so-called Dublin rules, which allocate responsibility for examining asylum applications made within the EU, place a heavy burden on a small number of front-line member states. The inability of those states to cope has resulted in large-scale secondary movements, prompting some member states to build fences while others have brought back internal border controls to stem the flow of irregular migrants.

The reforms proposed by the Commission are intended to ensure quicker access to an asylum procedure and to discourage secondary movements. They are also intended to make the Dublin system fairer through the introduction of a new corrective allocation or fairness mechanism, which would redistribute asylum seekers from overburdened member states. Participation in the new fairness mechanism is optional, but opting out comes at a price—€250,000 for each relocated asylum seeker that a member state refuses to accept.

Other elements of the reform package are the EU’s asylum database, Eurodac, and the proposed transformation of the existing European Asylum Support Office into a new EU asylum agency. Under the Commission’s proposals, Eurodac would be developed into a broader migration management tool to assist with the return of irregular migrants, while the EU asylum agency would have a stronger mandate to monitor the application of EU asylum rules and provide operational and technical assistance to members whose asylum and reception systems were experiencing disproportionate pressure.

The UK participates in all the measures that the proposals would replace, but will be bound by only the latest proposals if the Government decide to opt in. The Government have the option to wait and see how negotiations progress and, if they are happy with the outcome, to seek to opt in at the end of the process, once the regulations have been formally adopted. But if the UK wants to have a direct influence on the negotiations and to vote on the outcome, it has to opt in during the initial three-month opt-in period.

The Government appear to have agonised over the opt-in decision. Today’s debate was initially scheduled for 7 December and then postponed. The Government submitted their debate motion to the Public Bill Office only last Friday, giving the House minimal notice of their intentions. The delay has meant that the opt-in deadline of 30 September for the EU asylum agency regulation has already passed, pre-empting any opportunity for Parliament to debate and inform the Government’s position. The Government have taken us to the wire on the proposed Dublin and Eurodac regulations, the opt-in deadline for both of which is 18 November. The European Scrutiny Committee recommended that the proposals be debated on the Floor of the House, because they raise important questions about the functioning of the UK’s asylum system.

The Government support the principles underpinning the Dublin system and consider the system to be of significant benefit to the UK. Responding to an urgent question on the Dublin system in May, the former Immigration Minister, my right hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), made it clear that the Government would oppose any new redistribution mechanism, but he also indicated that there was no risk that we would lose our existing powers to return people to other EU member states, as the Commission has stated explicitly that we can continue to uphold and operate the existing Dublin arrangements if we decide not to opt in to the new measures.

Can the Minister give a categorical assurance that the UK will be able to remain part of the current Dublin system if it does not opt in to the Commission’s Dublin reforms? Is there not a real possibility that the UK could be thrown out of Dublin altogether and, if it were, how could the UK remain in Eurodac, given that that is an integral part of the Dublin system? The Government have decided not to opt in to the proposed new EU asylum agency, so can the Minister tell us whether the UK will continue to participate in the European Asylum Support Office and whether the office will cease to exist once the new agency is created? Do the Government intend, as the motion hints, to participate in negotiations on the new agency with a view to opting in post-adoption? Given the importance of those questions, perhaps the Minister will explain why they do not merit the exposure and scrutiny of a debate on the Floor of the House.

Finally, the Government’s opt-in decisions have also to be considered in light of the referendum outcome. Do the Government want the UK to continue to participate in the Dublin system once it has left the EU? Would the UK still be able to participate in Eurodac following its withdrawal from the EU, and at what cost? Once the UK has left the EU, how will its co-operation with the new EU asylum agency differ from when it was a member?

I look forward to a lively debate and to the Minister’s full response.

[The Chair]

I call the Minister to make an opening statement.

09:00

[The Minister for Immigration (Mr Robert Goodwill)]

I am pleased to serve under your chairmanship, Mr Rosindell. For the record, I want to say how pleased we are on this side of the Committee that the shadow Home Secretary has graced us with her presence—it obviously underlines the importance of the measures.

[Michael Fabricant (Lichfield) (Con)]

My hon. Friend is, as ever, very courteous, but does he not suspect that it might be because no one else is available to do the job?

[Mr Goodwill]

I could not be so uncharitable, I am sure.

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

I can assure the hon. Gentleman that I volunteered to do this because I think the immigration challenge that Europe faces is no laughing matter. I have more junior colleagues in my Home Office team who were available to do it. Our constituents want to see us take the issue seriously.

[Mr Goodwill]

When the hon. Lady started her career in the Home Office she was involved in this particular area, as a fast-streamer, so I am sure that her expertise will be useful as she brings it to bear during the debate.

I thank my hon. Friend the Member for North East Somerset for his opening words. I can reassure him that I did not feel any need to agonise over the decision—it was a fairly simple one—and I apologise for any part I may have played in any delays. I am sure he is aware that a lot has been going on, both in the Government and in Europe, since 23 June.

I thank the European Scrutiny Committee for selecting these important measures for debate and apologise for the late tabling of the motion and any inconvenience caused to the Committee by the change in date. The three measures under consideration—the reform of the Dublin regulations, the reform of the Eurodac regulation, and a proposal for a new EU asylum agency—represent the first wave of a package of proposals to reform the Common European Asylum System, or CEAS.

A wide-ranging package of reforms to CEAS was proposed by the European Commission in a communication published in April of this year. The migration crisis led to the Commission identifying priorities for addressing perceived structural shortcomings in CEAS: Dublin reform; reinforcing the Eurodac fingerprint database, which supports the operation of the Dublin mechanism; providing a stronger mandate to the European Asylum Support Office, or EASO; and further harmonising asylum systems. The proposals on harmonisation are not before us today.

It is undoubtedly necessary to develop an asylum and migration framework in the European Union that works to control illegal migration, deter abuse and prevent unwarranted secondary movement. That does not mean, however, that the Government agree with all the policy options that the Commission suggests. The Government have already decided not to opt in to the proposed EU agency for asylum. I apologise that the Committee did not have the chance to debate the proposal before the opt-in deadline, but I suspect it would have supported our opt-out.

The UK participates in the European Asylum Support Office, but there were several problematic areas in the proposal for a new agency which, in my view, would outweigh any benefits to the UK. The Government’s key consideration was the significant oversight that the agency could have had of the UK asylum system if the UK had decided to participate. Although we respect that our European partners may wish to pursue greater commonality in their asylum systems, we remain firmly of the view that the functioning of national asylum systems is a sovereign issue. The Government are, of course, committed to running a high-quality, effective asylum system. We will continue to support EASO and member states that face particular pressures, as well as to share our expertise widely within the EU.

Turning to the Commission’s proposal to reform the Dublin regulation, Dublin IV maintains the traditional, recognisable “Dublin” concepts to determine responsibility for examining an asylum claim. That includes provisions on family unity and the best interests of the child. The proposal introduces some procedural changes—for example, to time limits—and increases obligations on applicants to co-operate with asylum authorities by claiming in the first member state. The Government strongly support the “first safe country” principle, but within the proposal lies a corrective fairness mechanism based on a distribution key that allows for adjustments in the allocation of responsibility in certain circumstances. Essentially, it is a mandatory relocation mechanism.

The Government remain opposed to the use of relocation to address the migration situation in the EU. We have been crystal clear in all our engagement with European partners—both before and since the publication of the Dublin IV proposal—that we see no reason why a mandatory redistribution, relocation or corrective mechanism should be part of a single proposal under the Dublin regulation.

In that context, it is worth noting that the Commission was very clear when it published the proposal that should the United Kingdom not opt into the revised Dublin IV regulation, the Dublin III regulation would continue to apply between the UK and member states—a direct result of our engagement—so I hope that reassures my hon. Friend the Member for North East Somerset. As such, we believe that there is no risk that we would lose our current powers to return people to other EU member states as a result of this proposal. There is a clear precedent for two Dublin regimes operating in parallel, as seen with regard to relations with Denmark between 2003 and 2006, when different rules applied between states. Finally on Dublin reform, it is obvious that the legislative proposal will require significant negotiation, given the well-known divergence of views across the EU towards mandatory burden-sharing schemes.

Turning to Eurodac—the fingerprint database that supports the application of the Dublin regulation—we agree with the Commission that member states must be provided with appropriate fingerprint evidence to facilitate the operation of the responsibility mechanism and to enhance its role into other areas to address illegal migration and facilitate returns. The Eurodac III proposal includes new provisions to store data on persons found illegally present and to store facial images in addition to fingerprints. It enhances the personal data associated with the biometrics to include, for the first time, the name, nationality, date and place of birth of the data subjects and it stores the details of any travel documents held. It also lowers the age threshold for the transmission of data from 14 years of age to six to enhance the safeguarding of children.

By increasing the capture of data on illegal migrants, Eurodac III will become more of a tool for managing illegal migration, and we welcome that. Its enriched data sets are also of significant value in terms of law enforcement access. I welcome the endorsement of the Government’s position on Eurodac and Dublin.

[The Chair]

We now have until 9.55 am for questions to the Minister. I remind Members that those should be brief. It is open to a Member, subject to my discretion, to ask related supplementary questions. I call Jacob Rees-Mogg.

[Mr Rees-Mogg]

I have three questions. First, will the Government continue to participate in the European Asylum Support Office or will it cease to exist once the agency is created? Secondly, will the Government seek to participate in Eurodac once we have left the European Union? Thirdly, what will happen to the Dublin system once we have left, and are there existing international treaties that provide the same effect of returning asylum seekers to the first safe country of entry?

[Mr Goodwill]

I thank my hon. Friend for his questions. The first—on whether the UK will continue to participate in EASO when we exit the EU—is one I can provide an answer to. How the UK supports the EU on asylum and wider migration matters will be considered in due course. However, we remain committed to supporting member states as necessary. Member states participating in EASO who do not participate in the EU agency for asylum would remain bound by the current EASO regulations, unless ejected in line with article 4 of protocol 21 of the treaty. EASO will continue to exist when the agency is set up, so as long as we are a member of the EU, we will be able to participate in the two in parallel.

My hon. Friend also asked about the continuation of the Dublin III regulations and Eurodac when we leave. The operation of a system whereby people can be identified through their biometrics will be important post-Brexit. No doubt that will be part of those negotiations, about which I will not speculate. Countries that are not currently members of the European Union can participate in Dublin III, so a precedent may well be set there. It would not be helpful to speculate on any of our negotiating positions or on what may be the concluding position of negotiations. Be in no doubt, though, that we see these as very important issues that should be addressed during our negotiations once article 50 has been triggered, which I am told will be before the end of March.

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

The Minister has outlined again the Government’s opposition to any form of relocation mechanism. That takes us to the crux of the matter. As the European Scrutiny Committee has asked in some of the supporting papers, if the Government do not have this model in mind, what alternative model do they have to share responsibility more equitably at times of intense migratory pressures? Is it the Government’s position that, instead of solidarity, we are just to leave matters to the frontline states?

[Mr Goodwill]

We certainly stand by our record of stepping up to the mark in helping with the unprecedented wave of migration across the European Union. Home Office officials, as well as other officials, are operating in Italy and Greece. As the hon. Gentleman will know, the situation in Greece has not yet been normalised. Of course, operating through the Dublin mechanism, not only have we been able to bring children across from countries such as Italy, Greece and, in particular, France in recent days and weeks, but children whose needs are best served by being in another EU member state have been moved to join family elsewhere. The system is voluntary: we have been offering technical and practical support, including funding for particular needs, as well as the support we have been giving in the Mediterranean, using vessels commissioned to help to rescue life and deter migration there.

[Michael Fabricant]

Although I am not a great lover of simplistic phrases, does my hon. Friend still stand by the precept adopted by our former leader, William Hague, who is now in another place, that this country should be a safe haven but not a soft touch?

[Mr Goodwill]

Of course that is a commendable concept; it is how it is practically delivered. That is why we have regulation such as Dublin III, which enables a mechanism to be put in place to help where we can. As we have seen following the dismantlement of the camp in Calais, through the Dublin III regulation and, indeed, section 67 of the Immigration Act 2016—the so-called Dubs amendment —we have been able to play our part in giving care and help to unaccompanied asylum-seeking children whom we saw in such dreadful conditions in Calais.

[Stuart C. McDonald]

Just one supplementary question, if I may. I welcome some of what the Minister said about work that has been undertaken in frontline states. To press that a little further, I remember reading a situational briefing about Home Office staff who had been sent to Greece. If I recall correctly, at that stage 75 staff were involved in implementing the deal to return people to Turkey, but only two people were involved in implementing the Dublin process. Does that suggest that we have not got our priorities right and should be increasing support for reuniting families across Europe?

[Mr Goodwill]

It is certainly a priority to make sure that the Dublin regulation operates. We offered 75 staff to help in Greece and have dedicated teams working on the Dublin system as well. However, I must underline the importance of the Turkey deal, because one of the most harrowing images that we all saw, following that dreadful number of shipwrecks and drownings, was the poor child washed up on the beach. The Turkey deal was there to deter and prevent people from making that hazardous journey, to stop us playing into the hands of the people smugglers. That deal is saving lives every single day. If only we could have a similar deal for people making the hazardous trip from north Africa, where in some cases we are still seeing dozens of drownings at a time. It is important that we support our EU partners in Greece and Italy through the practical mechanisms and the practical support we put in place, but we also need to ensure that the Dublin regulation operates. Returns to Greece are not possible currently because of some problems that I hope the Commission and the Greek Government will be able to work through.

[Stuart C. McDonald]

I have one final set of questions on Eurodac. I broadly share the Minister’s views—the proposals are welcome—but these questions come from the Committee papers. Are the Government satisfied with the safeguards that will be put in place and the rationale for the significant reduction in the age when migrants will be documented? What did the Information Commissioner say when consulted about the Eurodac proposals, if they were consulted at all?

[Mr Goodwill]

I very much support the reduction in age. We have seen younger children being trafficked into Europe. In many cases, we have been able to take younger children from France and other EU countries because of the Dublin regulation. It is important that we can identify who those children are, if at all possible.

The Commission’s rationale is clear from the memorandum accompanying the proposal. The migration crisis has raised profound questions about how to safeguard and protect unaccompanied children. Child protection, and missing children from third countries in particular, is a concern ensuing from the crisis in the EU. The Commission argues, and we agree, that the apparent increase in the smuggling of minors below the age of 14 means that there is a stronger need to collect biometrics from a lower age for the purposes of Eurodac. That will help with the identification of children and may assist in establishing family links or links with travelling companions. Many member states collect biometrics from minors at a younger age than 14 for visas, passports, biometric residence permits and general immigration control. Indeed, I was in Jordan last week, and the United Nations High Commissioner for Refugees was collecting iris scans from children younger than 14 to enable identification.

When children go into the asylum system, whether in the UK, Europe or the region where the conflict is, it is important that we can be sure exactly who those people are. The taking of fingerprints for Eurodac from minors from the age of six has been proposed based on research that shows that fingerprint recognition of children can be achieved with a satisfactory level of accuracy at that age, although the fingers of younger children are not sufficiently developed to enable that to be a useful tool.

[The Chair]

If no more Members wish to ask questions, we will now proceed to the debate on the motion.

Motion made, and Question proposed,

That the Committee takes note of European Union Document No. 8742/16, a Proposal for a Regulation of the European Parliament and of the Council on the European Union Agency for Asylum and repealing Regulation (EU) No 439/2010, endorses the Government’s decision not to opt in under Protocol 21 on the Position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice annexed to the EU Treaties (Protocol 21), notes that the Government is able to opt in post-adoption and supports the Government’s intention to continue supporting other Member States on asylum matters; further takes note of European Union Document No. 8715/16, a Proposal for a Regulation of the European Parliament and of the Council on establishing the criteria and mechanisms for determining the Member State responsible for examining an application for international protection lodged in one of the Member States by a third-country national or a stateless person (recast), also known as the Dublin Regulation and endorses the Government’s decision not to opt in under Protocol 21; further takes note of European Union Document No. 8765/16, a Proposal for a Regulation of the European Parliament and of the Council on the establishment of ‘Eurodac’ for the comparison of fingerprints for the effective application of Dublin Regulation (EU) No 604/2013 and endorses the Government’s decision to opt in under Protocol 21.—(Mr Goodwill.)

09:17

[Ms Abbott]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I am glad to be able to speak in this important debate. We know, because the polling tells us, that immigration is very high up our constituents’ list of concerns. Whether it is the people in contact with me daily who are frightened by the tenor of the immigration debate—a fear that has been reinforced by the election of Donald Trump in the United States—or whether it is the people who believe that immigration is the source of many of their problems, we can all agree that this subject should be taken seriously.

The Opposition argue for an immigration policy that is based on the facts, which puts the good of the economy and our GDP first, and which emphasises the kind of society we want to be—an immigration policy that speaks to the historical values of the British people. We welcome the draft regulations in principle. We believe they are long overdue. More than 1 million refugees arrived in southern Europe last year. In the first six weeks of this year, the rate increased tenfold on the same period in 2015. Sadly, the number of missing children in Europe has far exceeded 10,000.

Earlier in the year I visited Lesbos, which is the first port of call for tens of thousands of refugees who have crossed the Mediterranean. From meeting the people who run the facilities for refugees and from meeting the refugees themselves, I was struck by what a huge burden the issue is on a country such as Greece, which has many economic problems. I was struck that even in the middle of what is obviously a crisis for the people of Lesbos, they were trying to do their best to welcome the refugees: many residents of Lesbos are people who sought refuge in Greece from other parts of the Mediterranean and other parts of the middle east.

I was struck by the inadequacy of Europe’s response to the refugee issue. It cannot be right that a country such as Greece, which, rightly or wrongly, has been through so much economically in recent years, is taking such a huge burden of our response to the refugee challenge. The Minister has said that the Government have sent half a dozen or a dozen Home Office officials over there. I was on Lesbos and I saw no evidence of a substantive British response or substantive British support for the challenge the Greeks are facing. I was also struck—on Lesbos and while visiting other refugee camps in Lebanon and, of course, Calais—by how ruthless the people smugglers are. I therefore welcome the regulations, the aims of which are to achieve an organised and humane response, and to tackle the people smugglers.

As hon. Members might imagine from a former Home Office civil servant, I believe in the Dublin III regulation. I believe that refugees should be processed at their first point of contact with Europe. However, it is grossly unfair to expect Greece and Italy to struggle on as they have been doing. The Dublin III regulation has been very difficult to enforce, yet if we do not enforce it, it will be not the countries of Europe but the people smugglers who decide where refugees and economic migrants go. That is why we must have a level of European co-operation and a framework that will work in a way it has not up to now. I hope that we all agree that the Dublin regulation is in need of update and reform to fit our current reality.

The UK has long benefited from the arrangements, as one of the few member states that transports more asylum seekers across its borders than are received under the Dublin regulation. I believe, and I think that Opposition Members strongly believe, that whether or not we are in Schengen and whether or not we are formally in the EU, we are part of the European family of nations. We must take our fair share of the responsibility. We should be opting in to a regulation that makes sharing the burden as equal as possible. On Eurodac, it is clearly important that we have a robust system of processing asylum seekers and determining their entitlement to be refugees. The regulation to improve and expand Eurodac goes some way towards meeting that need.

[Michael Fabricant]

I am following the hon. Lady’s speech with great interest and I agree with much of it, but she began by saying, quite rightly, that she is aware that immigration is a major issue in the minds of many of our constituents. She also said—and I have some sympathy with this—that the United Kingdom must take its fair share and should remain a part of the scheme after leaving the European Union. How does she reconcile those two concepts when, as she will know, of the 52% of the population who voted for Brexit, many are believed to have done so because of overall net immigration to the UK?

[Ms Abbott]

I am well aware of what the hon. Gentleman is saying. I can only repeat what I said at the outset. Our immigration policy should be based on the facts, not on urban myth. It should be based on what is good for the economy and good for society, and it should be based on our values as a country. If that means that we have to go out and argue and campaign for that position, I for one am willing to do so. Anything else leads to a downward spiral of anti-immigration rhetoric, and we can see the consequence of that downward spiral in the result of the recent presidential election in the United States. The US electoral college has spoken, and of course the American people are entitled to elect the President of their choice, but we should never legitimise Donald Trump’s anti-immigrant, anti-Muslim and anti-women rhetoric, and we should be aware that one of his first appointments was of Steve Bannon, who runs the website Breitbart, which is largely regarded as anti-Semitic. We must work with our oldest ally as we have always done, but we cannot legitimise a political narrative of that kind.

[Mr Goodwill]

Would the hon. Lady clarify something? From what she said earlier, she appears to support a mandatory relocation measure in the EU. Is that indeed the position of the Labour party?

[Ms Abbott]

Broadly, we support these regulations in principle, and specifically we believe in much more genuine European co-operation. That is the position of the Labour party.

[Michael Fabricant]

The hon. Lady said just now that she would wish that after we leave the European Union we continue within this scheme—or is she now saying that she does not wish that to be the case?

[Ms Abbott]

If I knew what the Government’s plan on these matters was, I could respond to what the hon. Gentleman said. [Interruption.]

[The Chair]

Order.

[Ms Abbott]

If I knew what the Government’s plan was in relation to Brexit, I could respond to what the hon. Gentleman said. I can only say that the first principle, which is an important principle, is the maximum amount of European co-operation, whether that takes place formally within the EU or just on the basis that we are part of the European family of nations. Anything else, anything other than the maximum European co-operation, leaves literally hundreds of thousands of people across Europe and in the middle east in appalling conditions, hopeless and helpless.

To return to the question of Eurodac, in extending its capabilities we must note that in recent years member states have developed a habit of putting “anti-terror” in front of legislation and sometimes using that as a licence to implement unnecessarily draconian measures or surveillance practices. We must protect our security. Our constituents expect us to do that; it is probably the first responsibility of any Member of Parliament. However, we can do it while respecting our commitment to all human rights and civil liberties. We must also take into account the sensitivity of minors when considering fingerprinting from the age of six.

On the European Union agency for asylum, Labour Members agree with the European Commissioner for Migration and Home Affairs, who said in May:

“The time has come for a reformed and more equitable system, based on common rules and a fairer sharing of responsibility.”

It is not clear to me who would argue with that. There are no walls, there is no barbed wire and there is no militarisation of the police that can in the end halt the weight of migration that we are seeing in the current era. Only fair regulations, properly implemented, and European co-operation can bring some order to the situation, which has hitherto been characterised by a high degree of disorder, which feeds public fears but also leads to the very tragic plight of the refugees whom we see, and I have seen, in refugee camps all over Europe.

I note that there is much debate about the manner in which we should make these arrangements, given our imminent departure from the European Union. As I said, the plan is not clear. Recent papers that have been leaked from Government emphasise even more a lack of clarity about the plan. However, even if we leave the EU—that was the democratic vote of the British people—the British Government must work with the European family of nations on a sustainable migration policy that remains in place, as other arrangements in relation to security will have to remain in place. We need mechanisms by which legitimate asylum applicants can ask for protection without having to pay with their lives or their life savings. Those routes need to be not only safe and legal, but efficient and effective.

Europe’s refugee crisis will not end overnight, and our moral obligation does not end when we leave the European Union. With the lack of transparency in the Government’s Brexit plans, it is difficult, in closing, to be more specific than I have been. However, I can set out the broad principles with which I will approach the immigration debate: to take it seriously, not to use it as a weapon for short-term party political advantage, to always have the interests of the country and society at heart, and also to always, whatever the pressures and whatever the international context, speak for an immigration policy that speaks for the values of British people.

09:30

[Stuart C. McDonald]

I will be mercifully brief. The humanitarian crisis that has reached Europe would at any other time have been quite upsetting enough, but the debates going on here in the United Kingdom have meant—with no disrespect—that the issue has unfortunately been sent off to a European Committee when a debate on the Floor was what was recommended. I share the concerns outlined at the start of the debate about one of the opt-out deadlines already having passed.

[Ms Abbott]

I agree with the hon. Gentleman. This is a subject of great importance, and this is why I have spoken on it this morning. It should have been debated on the Floor of the House.

[Stuart C. McDonald]

I absolutely agree. My party also supports the broad thrust of the proposals outlined in the documents, although not entirely and without qualification. A supranational crisis like this requires a supranational response, and solidarity with the front-line states is essential. That is why my party supported the Commission’s proposals for relocation, and we voted for them back in December when we did have a debate on the Floor of the House. We regret how ineffective member states have been in implementing them.

This is another attempt at fairly sharing responsibility in times of emergency. I return to the question that I posed during our question session: if not this model, then what alternative do the Government have in mind to share responsibility more equitably at times of intense migratory pressures? I am not convinced that the Government have offered a realistic alternative. The most recent situational briefings from the likes of the International Rescue Committee and others remind of us how grim the situation is in Greece and around there. The simple fact is that the situation is far more readily dealt with if we share responsibility rather than leaving a handful of frontline states to face responsibility themselves.

09:33

[Mr Goodwill]

There can be no doubt that migration and immigration are very contentious issues, not only in this country but worldwide. It is important that we have a grown-up debate on the issue, one in which xenophobia or racism should play no part whatsoever. The Government’s position is well known, which is that we should control net immigration to sustainable levels—that is, the tens of thousands rather than the hundreds of thousands. At the same time I must make it clear that the UK has a proud history of providing help for those in genuine need. The objectives of reducing net migration should not be confused with our international obligations towards those claiming asylum and the mechanisms within the Dublin regulation for family reunification, which are supported by Eurodac. Indeed, in 2015, 130 children came to the UK under the Dublin regulation.

We have also unilaterally implemented measures such as the Syrian vulnerable persons relocation mechanism, through which we are on track to bring 20,000 vulnerable people to the UK before the end of this Parliament. The latest figures on that will be published on 1 December. I am optimistic that they will show that we are on track to deliver it. In addition, we have the scheme to bring 3,000 vulnerable children and their families from the wider region to the UK. This process is just starting to get into gear.

[Stuart C. McDonald]

All these schemes are very welcome—for the children, the relocation of Syrians and so on—but what strikes me as the Minister is speaking is whether these people coming into the UK will be counted towards the net migration target. Is that not a perfect example of why refugees and asylum seekers should be removed from any net migration target?

[Mr Goodwill]

They will be part of the figures. That is how the net migration figures are gleaned. They are based on a survey. As I said, we should not hear any suggestion that we are not stepping up to the mark as regards our international obligations on asylum. That should not be affected by the target to reduce net migration. Indeed, we have unilaterally put the schemes I have just described into place to bring people across from the region and reduce one of those big pull factors. One of the big problems with people drowning on that perilous journey across to Greece or Italy is that the people smugglers see their customers—if you can call them that—being able to get to Europe and be looked after there. We need to make sure we help people in the region, removing that pull factor.

This is over and above our long-standing obligations through the gateway and mandate systems. In terms of our wider help, from the financial point of view, the UK remains one of the largest member state contributors to Greece’s efforts to implement the EU-Turkey agreement, offering 75 personnel, of whom 58 are on station. The UK has deployed a Border Force search and rescue cutter in the Aegean, as well as contributing assets to the NATO mission. HMS Mersey, our offshore patrol vessel, is on station too.

Funding of £2 million was made available for the assisted voluntary returns project through the International Organisation for Migration in Greece from January 2014 to May 2016. The UK has also allocated up to £34 million to the humanitarian response in Greece, including £8 million to the UNHCR.

[Mr Rees-Mogg]

Are these figures part of our overall net contribution to the EU budget or are they supplementary to it?

[Mr Goodwill]

These figures have come from the UK as part of our overseas development budget. I can give my hon. Friend some clarification on whether any of that money has been channelled via the EU, but as far as I am aware, this is money from the UK Exchequer, not European money.

Start Network non-governmental organisations were given £11.5 million, £1 million was given to the IOM and more than £1.8 million of essential supplies were provided. They included 3,100 tents for over 15,600 people, 60,000 blankets, 8,000 sleeping bags and other basic items, including direct support for the German Government with returns and donating 40 ex-Ministry of Defence Land Rovers to the Bulgarian border police to help them patrol the green border with Turkey.

The key message on Dublin is that the Government maintain their position: we support the existing principles of the Dublin regulations, but do not agree to a mandatory redistribution mechanism as part of a revised Dublin regulation. I am still slightly confused about the Labour party’s position on that. Indeed, Dublin is important, as it prevents asylum shopping and reinforces the first safe country principle; redistribution does not.

[Ms Abbott]

The Minister may be confused about some things, but he is not half as confused as I am about what this Government’s response is to Brexit.

[Mr Goodwill]

As I have shown, our response to this crisis has been to step up to our obligations as part of Dublin, to go over and above our obligations by incorporating the Dubs amendment into the Immigration Act 2016, and to give the humanitarian and practical help that I have just listed. Given all the ways we are helping people in the region—I was in Jordan last week to see how that money was being spent, putting clean water into some of the refugee camps, helping with the registration of refugees and helping with the education of children in those camps—I think the Government can be proud of our record in that regard.

I have followed the debate with great interest and I thank those who have contributed. It is the Government’s position that it is necessary to develop an asylum and migration framework in Europe that works to control illegal migration, deters abuse and prevents secondary movement. That does not mean, however, that the Government agree with all the policy options suggested by the Commission or that they are right for the UK. These opt-in decisions will be fully in line with the national interest.

Question put and agreed to.

09:39

Committee rose.

Implementation of the 1995 and 2011 Pension Acts

Tuesday 15th November 2016 Petitions

The petition of residents of Dumfriesshire, Clydesdale and Tweeddale,

Declares that as a result of the way in which the 1995 Pension Act and the 2011 Pension 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 on 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.

[P001980]

Cultural Property (Armed Conflicts) Bill [ Lords ] (First sitting)

Committee Debate: 1st sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: † Ms Karen Buck, Mr Andrew Turner

† Allin-Khan, Dr Rosena (Tooting) (Lab)

† Borwick, Victoria (Kensington) (Con)

† Brennan, Kevin (Cardiff West) (Lab)

† Bryant, Chris (Rhondda) (Lab)

† Burrowes, Mr David (Enfield, Southgate) (Con)

† Crouch, Tracey (Parliamentary Under-Secretary of State for Culture, Media and Sport)

† Davies, Mims (Eastleigh) (Con)

† Djanogly, Mr Jonathan (Huntingdon) (Con)

† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)

† Nicolson, John (East Dunbartonshire) (SNP)

† Offord, Dr Matthew (Hendon) (Con)

† O’Hara, Brendan (Argyll and Bute) (SNP)

Smeeth, Ruth (Stoke-on-Trent North) (Lab)

† Smith, Jeff (Manchester, Withington) (Lab)

† Stuart, Graham (Beverley and Holderness) (Con)

† Sturdy, Julian (York Outer) (Con)

† Thomas, Derek (St Ives) (Con)

† Warburton, David (Somerton and Frome) (Con)

Katy Stout, Committee Clerk

† attended the Committee

Public Bill Committee

Tuesday 15 November 2016

(Morning)

[Ms Karen Buck in the Chair]

Cultural Property (Armed Conflicts) Bill [Lords]

09:25

Ordered,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 15 November) meet—

(a) at 2.00 pm on Tuesday 15 November;

(b) at 11.30 am and 2.00 pm on Thursday 17 November;

(2) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 17 November. —(Tracey Crouch.)

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication—(Tracey Crouch.)

[The Chair]

Before we begin, could everyone ensure that their phones are switched off? The selection list for today’s sitting is available in the room and online, and it shows how the amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. I am aware that there are very experienced Members in the room, but there are also some who are not so experienced, so I will spend a moment running through the process.

A Member who has put their name to the lead amendment in a group is called first. Other Members are then free to catch my eye to speak on any or all of the amendments within that group. A Member may speak more than once in a single debate. At the end of a debate on a group of amendments, I shall call the Member who moved the lead amendment again. Before they sit down, they need to indicate whether they wish to withdraw the amendment or seek a decision. If any Member wishes to press any other amendment or new clause in a group to a vote, they need to let me know. I will work on the assumption that the Minister wishes the Committee to reach a decision on all Government amendments tabled.

Please note that decisions on amendments take place not in the order in which they are debated, but in the order in which they appear on the amendment paper. In other words, debate occurs according to the selection and grouping list, but decisions are taken when we come to the clause that the amendment affects. New clauses are decided after we have finished with the existing text—that is, after considering schedule 4 to the Bill. I shall use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debates on the relevant amendments. I hope that explanation is helpful.

Clause 1 ordered to stand part of the Bill.

Clause 2

“Cultural property”

[Kevin Brennan (Cardiff West) (Lab)]

I beg to move amendment 2, in clause 2, page 1, line 18, at end add

“and shall be taken to include cultural property in digital form.”

[The Chair]

With this it will be convenient to discuss amendment 6, in clause 8, page 5, line 5, at end insert—

‘( ) Where cultural property is in a digital form, the cultural emblem may be displayed in a digital format.”

I call Kevin Barron.

[Kevin Brennan]

We are very good friends, Ms Buck, so I do not need to remind you that I am Kevin Brennan, not Kevin Barron, although that mistake has been made previously; the Daily Mail online accidentally knighted me, briefly—

[Mims Davies (Eastleigh) (Con)]

Very accidentally.

[Kevin Brennan]

The hon. Lady is quite right. Like her, I am much more shovelry than chivalry.

Amendment 2 stands in my name and that of my hon. Friend the Member for Tooting. As with all the Opposition’s amendments to the Bill, it is a probing amendment. Having closely looked at what was said on Second Reading, Members will realise that we merely seek to scrutinise and stress test the Bill a little. The Bill has completed its stages in the House of Lords, but some outstanding issues remain that we need to explore in Committee, particularly through the amendments that my hon. Friend and I have tabled. An amendment has also been tabled by a Government Back Bencher.

We made it clear on Second Reading that we very much support the Bill, which has been a long time coming. It brings into UK law the 1954 Hague convention, which the UK did not ratify at the time and which has been hanging around waiting for ratification for some considerable time, including after the second protocol was added in 1999. Indeed, it was the Labour Government in 2004 that announced their intention to legislate in this way. They introduced a draft Bill in 2008, which was then scrutinised by a Select Committee but unfortunately ran out of time prior to the 2010 general election and then went into a deep sleep under the coalition Government. It has been revived by this Government, which we think is a good thing, although it is now 62 years since the convention was originally passed.

We are not seeking to challenge the spirit of the convention or the principles of the Bill. In fact, we understand that it is in many ways a different kind of Bill. As the Minister reminded us yesterday in the Programming Sub-Committee, the schedules are in effect there to give the Committee information, rather than to be debated or amended. They actually represent the wording of the convention and the subsequent protocols to it. The first six parts of the Bill are very much for us to debate and amend. As I have said, our amendments will, for the most part, be probing amendments, as this one is. I agree with what the Secretary of State said on Second Reading:

“We want to get on with it”.—[Official Report, 31 October 2016; Vol. 616, c. 700.]

That is why we are here today. I hope that we will be able to conclude our proceedings in the plenty of time given by the programme motion that was agreed by the Government and the Opposition.

We would like the Government to clarify some aspects of the Bill that could create difficulties in future for those who have to interpret and implement it when it becomes law. Amendment 2, which we are considering in conjunction with amendment 6, speaks to one such difficulty. An inevitable consequence of the Bill’s 62-year gestation is that certain aspects of it may well have become outdated. The convention was written in the light of the cultural destruction of the second world war, but quite a lot has happened in the intervening period. The descriptions of the types of cultural property that are in need of protection, which can be found in schedule 1 to the Bill, show their age in the way they refer to physical artefacts and the buildings that house them, with no mention of, for example, those objects that take a digital, rather than physical, form.

The convention, as it is worded, covers cultural property that is “movable or immovable”, but the question that was quite reasonably raised in the other place is whether it covers digital cultural artefacts. For example, would it cover moving images as well as movable or immovable images? I understand that the list in schedule 1 is illustrative and not necessarily exclusive, and that the omission might be seen in some ways as a natural consequence of technological developments rather than any particular negligence at the time, but I still think that it would be useful for the Minister to set out the Government’s position on that.

Having said that it is because of technological developments, it may also reflect a change in mindset since 1954 with regard to what are regarded as cultural objects. It is quite telling that the wording of schedule 1 and the definition of cultural property under article 1 of the convention do not seem to say or to imply that, for example, film would be included as cultural property in that regard. Perhaps people in 1954 did not envisage that film, which was still a relatively new form of artistic expression, albeit more than half a century old, would fall into the category of a cultural object. Lord Stevenson spoke quite eloquently in the other place about the growing and indisputable importance of film, and subsequently television, and the way that they are woven into everyday life, and the way that they reflect, reproduce and challenge the worlds that we inhabit. Therefore, the national film archives in England, Wales, Scotland and Northern Ireland, as well as regional archives, are all of critical importance.

In fact, a couple of years ago I was fortunate enough to visit the British Film Institute’s archives, which are located near Milton Keynes—if the Minister gets an opportunity in her busy life, I recommend she visits them at some stage—to see the work being done to preserve the cultural heritage of the British film industry. In recent years we had the fantastic discovery of the very early Mitchell and Kenyon films, which catalogue life in the Edwardian era in an incredibly moving and powerful way. They reveal the cultural life of ordinary people in this country, not just so-called high culture, showing how they lived and spent their leisure time and their working lives more than 100 years ago with an amazingly vivid quality. While I was there, I was given a DVD of some of the early colour films of Claude Friese-Greene, who developed an early technique for making colour films but was largely forgotten for many years. There are amazingly vivid images of life in the UK from a tour he took in the 1920s.

To confirm that “cultural property” can be interpreted to include that which takes a digital form would clarify that items do not need to be ancient to be covered by the Bill and by the convention. Our creative industries are thriving, dynamic and constantly changing, producing precious commodities that deserve our protection. I therefore hope that the Minister will assure us that they will be granted the protection outlined in the Bill in the event of armed conflict.

The Minister may argue that the Bill, once passed, will take its place among other UK laws on the protection of cultural property and that we would be better off ensuring that digital culture is covered by those Acts, rather than risk amending the Bill. I understand that argument, which is why I outlined that this is a probing amendment to ensure that we have the Government’s position on the record. However, to ensure that we have informed the future interpretation of the Bill, we want to ensure that UK law is as consistent as possible and that there can be no doubt about the importance of digital cultural property or the severity or importance of anything done to destroy it. I hope that the concerns raised are remembered when we decide which items of cultural property are to be safeguarded by the cultural protection fund.

When this topic was debated in the House of Lords, the Minister, Baroness Neville-Rolfe, said that the wording of schedule 1—in other words, the 1954 convention—was

“flexible enough to meet the concerns expressed about what sort of cultural property might be covered.”

However, earlier in the same speech she responded to Labour’s amendment on the topic by saying

“the noble Lord’s amendment risks allowing the development of an interpretation of the definition in the United Kingdom which is not consistent with its internationally accepted interpretation. That would be undesirable. It would create uncertainty and inconsistency in the application of the convention and its protocols and could result in the UK failing to comply with its obligations under them.”—[Official Report, House of Lords, 28 June 2016; Vol. 773, c. 1478-1479.]

In those two statements there is some possibility of misunderstanding. Is interpreting cultural property so as to include that which takes a digital form a fair interpretation of flexible wording, as the Minister seemed to hint at one point in her remarks? Alternatively, is that interpretation—as expressed in a probing amendment in the House of Lords—a threat to the ratification of the convention? She seems to be suggesting that, and both those things cannot be true. We would be most grateful if the Minister clarified the Government’s exact position on that point. The more strongly she expresses the Government’s view that digital property is covered under the wording of the convention, and therefore by the Bill, the better.

Amendment 6 probes how part 3 of the Bill, which relates to the cultural emblem, fits into the digital age. Hon. Members will have noted that the Bill is unusual in another way, besides the fact that we are not debating the schedules, because it contains a picture. That is unusual in a parliamentary Bill.

[Chris Bryant (Rhondda) (Lab)]

The Red Cross symbol.

[Kevin Brennan]

As my hon. Friend the Member for Rhondda notes from a sedentary position, there is an analogy with the Red Cross symbol, in the sense that we are dealing with an international emblem recognised in law. The picture is not in colour, but the Bill tells us that the colours of the emblem, which is intended to indicate cultural property protected under the convention, should be royal blue and white.

As I mentioned earlier, it is inevitable that a Bill based on a convention written more than six decades ago will be framed partly in ways that are outdated. I have discussed that in relation to the definition of cultural property, but it may be equally applicable to the form of the emblem. There has been broad cross-party agreement on the importance of protecting cultural property. The cultural emblem is crucial to that process, making the protected status of an item known to all those surrounding it, and reducing the chances of it being damaged because that status was not known.

On Second Reading mention was made of the famous use of the cultural emblem in recent years, during the second Iraq war—perhaps in the first Iraq war as well—when it was painted on the roof of a museum in Iraq so that those flying above would know that it was under the convention’s protection. However, there is the potential for that to backfire, as it could signal to looters where cultural property is being stored—we know what happened in Iraq after the invasion.

Leaving that aside, the blue shield is often described as the cultural equivalent of the Red Cross symbol, as my hon. Friend the Member for Rhondda noted. I reiterate the point, made on Second Reading, that the Red Cross supports the Bill. That is a testament to the fact that culture is recognised as important to identity, even by those such as the Red Cross whose first responsibility is the protection of life. Given the importance of the blue shield, we have tabled the amendment to clarify the potential scope of its use.

We welcome the measures that protect against unauthorised use of the blue shield. Its impact should not be diluted. However, the wording in schedule 2 about its authorised uses may be slightly outdated. My concern is to ensure consistency as to formats and the protection available.

I appreciate that the wording of schedule 2 is flexible in the sense that the regulations on the execution of the convention specify that the cultural emblem

“may be displayed on flags or armlets; it may be painted on an object or represented in any other appropriate form.”

The Government have previously said that there is nothing to preclude the emblem being displayed in digital form, for example on a screen or by projection. There could be clear benefits to being able to use the blue shield in digital form; in certain circumstances, for example, it could be projected to prevent the need for it to be painted or physically fixed on protected objects. When this issue was discussed in the Lords, the Government said that digital property such as recorded music could be marked as protected by the emblem if it were added to the physical object containing the digital data.

09:45

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Tracey Crouch)]

MP4.

[Kevin Brennan]

The Minister refers from a sedentary positon to MP4. I do not think we would meet the high bar required for cultural property.

I remain concerned that the Government’s previous statements on the importance of consistent interpretation could prohibit such an understanding on digital data being implemented in practice. Will the Minister reiterate and expand on the assurance that the emblem could take a digital form? Could the wording of the schedule be interpreted as allowing the emblem to be included in digital format—in a digital file which is protected—as well as on its casing?

[Tracey Crouch]

It is a pleasure to take my first Bill through Committee under your chairmanship, Ms Buck. I look forward to receiving wise counsel and guidance if I get anything procedurally incorrect.

I am grateful to the hon. Member for Cardiff West and the Opposition for their support for the Bill on Second Reading and in Committee, here and in the other place. Members should always feel honoured to be on a Bill Committee, but I am sure colleagues share my pride in being on this particular Bill Committee ratifying The Hague convention and both protocols, which will make us the first permanent member of the UN Security Council to do so. That will give us great gravitas and status around the world and ensure that we protect cultural property in the future.

I am grateful to the hon. Gentleman and to Lord Stevenson for the amendments. It is important to recognise Members’ concerns that the Bill should enable appropriate protection of all forms of cultural property, including those which have been created using modern digital technology. The tabling of these probing amendments enables us to reassure hon. Members and to reiterate that we do believe that that is the case, and that the amendments are therefore not necessary.

On amendment 2, the definition of cultural property set out in article 1 of the convention and incorporated into clause 2 of the Bill as

“movable or immovable property of great importance to the cultural heritage of every people”

is broad and flexible. It is not limited to those things that are specifically mentioned in article 1 of the convention, which are presented as examples of the sorts of cultural property that are protected by the convention. Other cultural property can also be protected under the convention if it is

“of great importance to the cultural heritage of every people”.

We consider that the definition is already sufficiently broad and flexible and can accommodate modern forms of cultural property such as digital material.

As Members will have seen, Professor Roger O’Keefe of University College London states in his written evidence to the Committee:

“There is no ground for concern and no cause for doubt on this point.”

We also received support on this point from Michael Meyer, the head of international law at the British Red Cross. In his view:

“The examples set out under Article 1 are extensive, but not exhaustive”

and the definition in the convention is

“able to apply to a very broad range of items, which may well include those of a digital nature, such as rare and/or important film and music.”

I reiterate the statement made in the other place that using the definition from the convention does not mean that it is not flexible enough to include modern types of cultural property.

As we stated in the other place, there is also a risk that the amendment would allow the development of an interpretation of the definition in the United Kingdom that is not consistent with its internationally accepted interpretation. That would be undesirable. It would create uncertainty and inconsistency in the application of the convention and the protocols, and it could result in the UK failing to comply with its obligations under them. I must therefore oppose amendment 2.

On amendment 6, the Bill specifies not the format in which the cultural emblem should be displayed, but only the design. The regulations to the convention provide that the emblem may be represented in any appropriate form. The emblem was devised in the ’50s, and although at the time there may have been an expectation that it would be fixed to or painted on objects, there is nothing to preclude it being displayed in a digital format—for example, on screen or by projection. For modern, born-digital material, such as films and music, in practice we would expect the emblem to be displayed on the physical object on which the material is stored or on the building in which the physical storage object is kept, rather than being displayed digitally. That would help to ensure that the emblem is readily visible. That is not to say that it cannot also be depicted in digital form. Next month, we will be holding a roundtable on particular aspects of the implementation of the convention, which will provide a further opportunity to discuss implementation measures. This issue will be on the agenda.

The Government are not aware of any other state parties that have raised concerns about the definition or the rules for displaying the emblem. When the second protocol was agreed in 1999, the definition and the rules relating to the emblem were still considered to be appropriate at a time when digital culture was already well developed.

In conclusion, the amendment is unnecessary and I oppose it. I thank the hon. Member for Cardiff West for giving us the opportunity to clarify that we believe that that issue is included within the wider definition of the convention.

[Kevin Brennan]

I thank the Minister for her response and for giving the Opposition access to her officials before Second Reading. For a Bill of this kind, it is very helpful to be able to have such discussions and to clarify things in advance.

In a sense, the Minister did not address my point about the potential conflict between Baroness Neville-Rolfe’s remarks in the House of Lords that clarifying the Bill by amending it to include the words “in digital form” would damage the international interpretation of what is meant by cultural property and that the wording of the convention effectively includes digital cultural property. I am not going to press that point, because the Minister and the Government have made it clear that they believe that the definition should be flexible enough to include digital property. It is useful for her to put that on the record and repeat it to the Committee today.

Later in the Bill we will get on to the very interesting subject—hon. Members from both sides of the Committee might want to contemplate this—of which cultural objects and what cultural property in this country, and indeed in each of our constituencies, are regarded as being of sufficient importance to all the people of the world, not just to us and our constituents, to be worthy of protection under the convention. I am sure everybody will spring to life later to give examples from their constituencies, because every hon. Member has in their constituency a cultural treasure that is important to all the people of the world. I look forward to hearing about the cultural richness of this country, including Queen’s Park and north London—your part of the world, Ms Buck, although you are not allowed to talk about it. I accept the Minister’s assurances on amendment 6. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[Victoria Borwick (Kensington) (Con)]

It is a pleasure to serve under your chairmanship, Ms Buck. I would like to declare that I am the president of the British Antique Dealers’ Association, and I have been advised by the British Art Market Federation, the Antiquities Dealers’ Association and LAPADA, all of which have made written representations to this Committee.

I wish to draw the Committee’s attention to the art and antique market’s concerns about the definition of cultural property in the clause, which draws on the convention. I am grateful to the Minister for her clarification. A number of representative bodies of the art and antiques market, which is the second largest such market in the world, have made written submissions to the Committee. I draw Members’ attention to the submissions from the British Art Market Federation, the Antiquities Dealers’ Association, Professor Janet Ulph and LAPADA, among others. They all make clear that they are fully supportive of the Bill.

It is particularly important that honest and well-intentioned dealers and auction houses do not risk criminal prosecution when conducting reasonable due diligence. As the Committee will have read in those submissions, the three aspects of the Bill that concern the trade relate to avoiding uncertainty in the art market and ensuring clarity in the practical operation of the law. There is no doubt that uncertainty hampers the successful operation of any market, and it is reassuring that my right hon. Friend the Secretary of State made it clear on the Floor of the House that she does not want the market to be hampered.

The clause 17 offence that we will come to later of dealing in unlawfully exported property depends directly on clarity and understanding of what is meant in the Bill by the term “cultural property”. As it stands, the punctuation used in sub-paragraph (a) of article 1 of the convention, which is reproduced in schedule 1 to the Bill, means that cultural property is not limited to property of great importance to the cultural heritage of every people, although the Minister has just clarified that cultural property can be protected if it is of great importance to every people. The market seeks absolute clarification of those points. Other categories of property are covered in the definition, regardless of their cultural significance, including works of art, manuscripts, books and other objects of artistic, historical or archaeological interest.

It has been drawn to my attention that the original—and, as article 29 states, equally authoritative—French and Spanish texts of the convention, which I have to hand, are not worded in that way. They use commas, not semi-colons. On account of that, in the French and Spanish versions a work of art must be of great importance to the cultural heritage of every people for the convention to apply to it. I was delighted that the Minister confirmed in the House on 31 October that the Government intend to take the same restricted approach to the definition of cultural property and that the clause 17 offence of dealing in unlawfully exported property will apply only to a very small but very special category of cultural objects—those which are of great importance to the cultural heritage of every people. I thank the Minister for her clarification on that point this morning.

Given what we know about the other versions of the convention and the Government’s intention that the Bill should apply only to objects that are of great importance to the cultural heritage of every people, it cannot surely be right for the wording of the law to be at odds with its intention. I have not tabled an amendment on this important point, but the Government might consider a little clarification on it.

[Kevin Brennan]

The hon. Lady is making an important point. Given the benefit of her expertise, will she give an example of a cultural object located in the UK that she believes would pass the test in the convention, under the wording as she and the Government interpret it, and perhaps one that she thinks might not pass the test but that some might regard as an object of importance?

[Victoria Borwick]

I cannot think of something instantly, but the important point is whether the restricted view should apply that the object should be

“of great importance to…every people”.

We are making sure that we do not by mistake include things that are not covered in the convention—in other words, that we do not, through loose punctuation, fail to make it absolutely clear which objects are covered.

09:59

To remove uncertainty, I want confirmation in the Bill that the convention will be interpreted as per the French and Spanish texts, which are of equal validity—in other words, that the phrase,

“property of great importance to the cultural heritage of every people”,

which I hope covers the hon. Gentleman’s comment, relates to the categories of objects listed in article 1 of the convention. I appreciate that the Minister has clarified this morning that cultural property can be protected if it is of great importance to every people.

[Tracey Crouch]

I am grateful to my hon. Friend the Member for Kensington for her contribution. The clause defines cultural property by reference to the definition in article 1 of the convention, as we discussed in the debate on the amendments. This is a broad definition, covering a wide range of movable and immovable property of great importance to the cultural heritage of every people.

The convention provides a non-exhaustive list of examples, simply mentioning monuments, buildings, historical and archaeological sites, books, objects and scientific collections. We are clear that all cultural property must be of the greatest importance to all people to be covered by the definition; the punctuation should not be seen as limiting the definition to only the first items listed.

The definition includes buildings where cultural property is preserved or exhibited, such as museums, major libraries and archives, but is sufficiently broad and flexible, as has been said, to accommodate modern forms of cultural property, such as rare or unique film or recorded music, because the list of objects covered is not exhaustive.

Although the definition was drafted some time ago, it is sufficiently flexible to deal with the developments of the digital age. Changing it would risk the development of a definition in the UK that is inconsistent with the current international interpretation. However, I confirm and reiterate that the definition will cover only a very small and special category of objects.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Offence of serious violation of Second Protocol

[Kevin Brennan]

I beg to move amendment 3, in clause 3, page 2, line 16, leave out “or”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 4, in clause 3, page 2, line 17, at end insert

“, or

(c) a foreign national serving under the military command of the UK Armed Forces.”

Amendment 5, in clause 3, page 2, line 17, at end insert

“or if the act was committed by a private military contractor or an individual employed by a private military contractor, including persons contracted to the UK armed forces.”

[Kevin Brennan]

These are probing amendments in my name and that of my hon. Friend the Member for Tooting. Amendment 3 is a technical drafting amendment that allows amendments 4 and 5 to make sense. We are exploring which military personnel are bound by the second protocol, specifically in relation to foreign nationals embedded in UK armed forces. At the heart of this debate is the question: who is classed as being subject to UK jurisdiction, for the purposes of the convention and the Bill, and who is not?

I said earlier that it is inevitable when ratifying a convention that was written more than six decades ago that some elements will no longer chime with modern reality and practice, and we are limited in how we can amend the Bill because it forms part of an international convention. The hon. Member for Kensington illustrated the complications when referring to whether the difference between a comma and a semicolon could lead to misinterpretation. She said that she had the Spanish translation available; I am sure that my hon. Friend the Member for Rhondda could cast his eye over that. Although I am tempting him, he is not contributing with his fluent Spanish.

The passage of time provides less of an excuse for uncertainty regarding those parts of the Bill that were written more recently, so gaining clarity is all the more important. On amendment 4, which refers to embedded soldiers, I welcome the fact that the Minister, Baroness Neville-Rolfe, said in the Lords that under the Armed Forces Act 2006,

“regular members of the Armed Forces remain subject to UK service law”—[Official Report, House of Lords, 28 June 2016; Vol. 773, c. 1488.]

even when they are embedded within another army. They remain under the UK’s jurisdiction, and so would remain bound by the second protocol. It is also important to note that the UK armed forces already behave, and are instructed to behave, as if they were bound by the convention and its protocols, and that the impact assessment for the Bill showed that their conduct will have to change very little when the Bill becomes law.

However, the Government have not quite clarified the reverse, which is how the convention and its protocols apply when a foreign national is embedded in UK armed forces, particularly if that other nation is not a state party to the convention or its second protocol. That concern is particularly pressing as the use of embedded forces has become much more prevalent since the convention was originally passed in 1954. The Armed Forces Deployment (Royal Prerogative) Bill, which is awaiting its Committee stage in the other place, is testament to the growing concern about how, when and where the UK armed forces use embedded forces.

The uncertainty that amendments 4 and 5 aim to clarify points to one of the Bill’s vague points: while it is clear about which institutions will be affected, it does not address their internal nuances, or how those institutions interact with each other. That is particularly obvious in clause 5; its interpretation and implementation is complicated by the frequency of use of coalition forces, and the rise in the use of private security firms.

During line-by-line scrutiny of the Bill in the House of Lords, Lord Howarth of Newport recalled that private military contractors had participated in terrible destruction of cultural property at crucial archaeological sites during the Iraq war. However, when asked whether such contractors and the individuals in them would be bound by the Bill, Baroness Neville-Rolfe concluded her remarks by saying:

“I think they are covered.”—[Official Report, House of Lords, 28 June 2016; Vol. 773, c. 1489.]

It is not enough, for our purposes, for a Minister to say “I think”, so I look to the Minister to confirm that they are most certainly covered. Given that we all agree on the severity of the crimes listed in the Bill, it is absolutely right and only fair that we ask for more certainty on who exactly is considered to be under UK jurisdiction—and so criminally liable if they commit such crimes.

I appreciate that the Government have previously referred to clause 29, which states that senior managers of private military contractors are criminally liable for actions committed by their company if they were involved in making those decisions. Our amendments are intended to clarify the remaining ambiguity surrounding the criminal liability of individuals who are under the command of UK armed forces without being members of them, and are not necessarily UK nationals.

In the same debate, Baroness Neville-Rolfe went on to say:

“By making explicit reference to embedded forces and private military contractors in the Bill, we could risk creating doubt and confusion in the interpretation of both the Bill and other legislation.”—[Official Report, House of Lords, 28 June 2016; Vol. 773, c. 1489.]

In my experience, doubt and confusion are created by a lack of clarity, not an abundance of it, so clarity is what we need from the Minister in responding to our amendments. Will she provide us with that? Will foreign nationals embedded in the UK armed forces, private military contractors and the individuals in those contractors, including those contracted by the UK armed forces, be bound by the second protocol and the provisions of the Bill?

[Tracey Crouch]

I thank the hon. Gentleman for tabling the amendments; that allows the Government to reassure the Committee on this important issue. It also allows me to pay tribute to the UK armed forces, which, as he said, already apply the convention in their actions and behaviours. We should take a moment to thank them for doing so. In addition, it allows me to pay tribute to the excellent monuments men and women, who have done a great deal to protect cultural heritage in conflict zones. We cannot praise them enough for what they have done.

The amendments seek to extend the UK’s jurisdiction over the offences described in article 15(1)(d) and (e) of the second protocol. Under the second protocol, the UK is required to establish jurisdiction over such acts only when they are committed on UK territory or by UK nationals. Extending that to foreign nationals committing these acts abroad would be exceeding our obligations under the convention and protocols.

The amendments would mean that foreign nationals committing such offences abroad would come under our jurisdiction if they were serving under the military command of the UK armed forces, or were private military contractors or their employees. To deal with embedded forces first, when any foreign military personnel are embedded in UK forces, a bespoke status of forces agreement or memorandum of understanding is drawn up that sets out responsibility for the individual involved. That will normally outline that the embedded individual continues to be subject to the jurisdiction of their home state. We would expect that same principle to apply to UK military personnel embedded in overseas militaries.

Therefore, if a foreign soldier were to commit an act set out in article 15(1)(d) or (e) while embedded in a UK unit, we would dismiss them and send them back to their home state to be dealt with for disobeying orders. The individual would face the consequences of their actions on their return home, and there is no loophole for embedded forces; that would apply whether or not a foreign state had ratified the convention or protocols, as the individual would be disobeying an order. Similarly, if a UK soldier embedded in the armed forces of another state broke military rules, we would expect them to be dealt with under the UK’s jurisdiction.

Our concern in the Bill must be to focus on protecting cultural property in the UK and to set clear rules for how UK military personnel and UK nationals operate abroad. We should not be extending our jurisdiction to police foreign nationals committing crimes abroad; that is beyond what is required by the convention and protocols. Private military contractors and their staff are already covered and would be criminally liable in the same way as any other legal or natural person. That means that if an employee of a private military contractor who is a UK national or subject to UK service jurisdiction vandalised or looted cultural property, they would be potentially criminally liable under clause 3 on the same basis as any other person.

Clause 29 also ensures that the senior management of private military contractors are personally liable for offences committed by their organisations if they consented to or connived in the offence. That ensures that senior managers cannot escape the consequences of the actions of their organisations if they were personally involved in them. However, in accordance with our obligations under the protocol, that is limited to UK nationals and those subject to UK service jurisdiction for the offences in article 15(1)(d) and (e) of the second protocol.

To extend our jurisdiction to non-UK nationals for all offences committed abroad would be to go beyond what is required to become party to the convention and protocols. It should be remembered that jurisdiction over the acts in article 15(1)(a) to (c) already extends to foreign nationals committing the most grave offences abroad, as required by the convention and protocols. We would be extremely concerned if amendments to the Bill were to lead the UK to extend our jurisdiction beyond what is necessary to become party to the convention and protocols.

I am sure that we all agree that the UK should not attempt to exceed the boundaries set out in this internationally agreed approach, or become a world policeman in going beyond that. I hope that I have clarified the Government’s thinking on this matter, and that the hon. Gentleman will feel able to withdraw the amendment.

10:15

[Kevin Brennan]

I thank the Minister for her response. On amendment 4, I think she was saying that the answer is no—that foreign nationals serving with the UK armed forces will not be covered, and that the Government do not wish them to be included, because that would go beyond the requirement in the convention. We could debate at some length whether it would be desirable for the UK to seek to do that, but given that we accept that the purpose of the Bill is to bring the convention, as written, into UK law, I will not seek to extend our debate and press the amendment to a vote.

On amendment 5, the Minister has made it clear that as far as the UK Government are concerned, contractors are covered by the Bill and the schedules to it. She gave a clearer explanation than her colleague in the House of Lords, Baroness Neville-Rolfe, who said:

“so I think they are covered.”—[Official Report, House of Lords, 28 June 2016; Vol. 773, c. 1489.]

I thank the Minister for being clear on that point.

That raises an interesting question. Prior to this Committee, I asked the Secretary of State for Defence in parliamentary question 52310 how many members of foreign armed forces have been embedded in the UK armed forces in each year since 2010. I thought that information might be of use to colleagues on both sides of the House in understanding how our armed forces operate. I got back an answer from the Minister for the Armed Forces on 14 November at 5 pm saying:

“This information is not held centrally and could be provided only at disproportionate cost.”

I say gently that that is a good example of how Governments—of all colours, before the Government Whip, the hon. Member for Beverley and Holderness, does his usual chunter at me for saying this sort of thing—fail to answer parliamentary questions. That annoys me, as it should annoy us all, whatever side of the House we are on. Lloyd George, when driving in north Wales, once stopped to ask directions from a local farmer—in Welsh. He said, “Where am I?” and the local farmer said, “You’re in your car.” Lloyd George said that was a perfect example of how civil servants draft and Ministers answer parliamentary questions: the answer was short, accurate and told him absolutely nothing he did not know already.

It would be helpful, if we are properly to scrutinise and understand the Bill, if the Minister’s colleagues in the Ministry of Defence made an effort to tell us how many members of foreign armed forces have been embedded in the UK armed forces in recent years. I understand the point that she made about how they would be disciplined in the event of them breaching the Bill, but it would be useful to all of us in the House to know the answer to that question. I do not know whether the Defence Committee is interested in pursuing that. I may pursue it further, depending on my other priorities, but I would certainly like to know the answer to that question. Perhaps the Minister could pass on our concerns to her colleagues in the Ministry of Defence. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.

Clause 4

Ancillary offences

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

[Kevin Brennan]

Although we have not tabled amendments to the clauses in this part of the Bill, it would be useful if the Minister briefly explained this clause and some of the others as we go along.

[Tracey Crouch]

I am delighted to respond to the hon. Gentleman’s request to explain the clause, which contains one of my favourite subsections of all time. I am one of those Members of Parliament who likes to read the legislation that we pass, alongside the explanatory notes. I know that is a terribly quaint thing to do these days. I draw hon. Members’ attention to the wonderfully worded subsection (7), which states that

“an offence that is ancillary to an offence under section 3 includes a reference to an offence that is ancillary to such an ancillary offence, and so on.”

It is an infinite provision, and I thoroughly enjoyed trying to work it out.

[Kevin Brennan]

On that point, will the Minister explain subsection (7) to the Committee?

[Tracey Crouch]

I need not do so, because the explanatory notes do it absolutely brilliantly. The lesson for anybody reading legislation is that they should do so alongside the explanatory notes, because that is what they are there for. May I instead recommend that the hon. Gentleman read paragraph 37 on page 10 of the explanatory notes, which gives an absolutely excellent explanation? When I took a picture of the clause and put it up on my personal Facebook page, a lot of my friends who have nothing to do with politics found it as interesting as I did.

Turning to the clause itself, the second protocol requires parties to extend criminal responsibility to persons other than those who directly commit an act outlined in article 15, paragraph 1, of the protocol. It also obliges parties to assert extraterritorial jurisdiction in specified circumstances. The clause ensures that those obligations are fully implemented. Its purpose is to ensure that the UK has extraterritorial jurisdiction to try all ancillary offences in the same circumstances in which clause 3 establishes jurisdiction to try the substantive defence. It does not itself establish the ancillary offences, which already exist under other legislation and apply automatically to offences under clause 3. It applies only to ancillary offences if there is uncertainty about their extraterritorial application. Where the existing law is clear about extraterritorial application, as it is in relation to aiding and abetting and offences under the Serious Crime Act 2007, no provision is made. To make such express provision unnecessarily would be bad drafting practice and could create doubt about other situations for which no express provision is made.

Subsections (1) to (3) set out provisions about jurisdiction that mirror those for the principal offence set out in clause 3. In relation to any of the acts listed in article 15, paragraph 1, sub-paragraphs (a) to (c) of the second protocol, a person can be prosecuted for an ancillary offence committed abroad, regardless of their nationality. In contrast, in relation to ancillary offences concerned with the other acts set out in the article, only a UK national or a person subject to UK service jurisdiction can be prosecuted for an offence committed abroad.

Subsections (4), (5) and (6) take into account the differences in the criminal law in the different legal systems of the UK with regard to the definition of ancillary offences. The intention is to produce the same effect in each legal system. On Report in the other place, an amendment was made to subsection (6) to ensure that the Bill’s provision relating to ancillary offences has the intended effect in Scotland. The amendment was tabled by the Government following consultation with the Crown Office and the Scottish Government. I am grateful to the devolved Administrations for their help and support in drafting the Bill.

Subsection (7) ensures that offences that are ancillary to ancillary offences are also provided for.

I hope that, following that explanation, the Committee is fully appraised of the intention of the clause.

[Kevin Brennan]

I thank the Minister for a thorough explanation. As I understand it, an example of an offence ancillary to an ancillary offence under subsection (7) might be when someone involved in the theft of an item of cultural property decides to destroy evidence in relation to the theft, and the clause provides for such an offence to be covered.

[Tracey Crouch]

indicated assent.

[Kevin Brennan]

The Minister is nodding, so I take it that that is also her understanding. Although she is right that we should always read the Bill and the explanatory notes, the explanatory notes—I intend no particular criticism here—do not always tell us much more than the clause. They sometimes seem just to paraphrase rather than attempt to elucidate or give a figurative example. However, on the basis of what she has said, we shall not oppose the clause.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

Responsibility of commanders and other superiors

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

[Kevin Brennan]

As previously, I would be grateful if the Minister outlined the meaning of the clause for the Committee.

[Tracey Crouch]

The clause provides an additional form of individual criminal responsibility—that of commanders and superiors for the actions of their subordinates. That concept is one of the recognised principles of international law referred to in article 15, paragraph 2, of the second protocol, which parties to the protocol are obliged to implement.

The wording of the clause is based on article 28 of the statute of the International Criminal Court, which is regarded as an authoritative statement of the general principles of international law in relation to criminal liability. It mirrors the UK’s implementation of other international law, in particular the International Criminal Court Act 2001.

Subsection (1) provides that liability under the provision is to be treated as aiding and abetting in England, Wales and Northern Ireland, and being art and part in Scotland. That takes into account the different criminal law in Scotland. A distinction is drawn between the standards expected of military commanders in relation to the military forces under their command, and other superiors, such as Government officials. That distinction is made to recognise that the latter may not have the same degree of control over their subordinates.

In the case of a military commander, liability will arise only if he or she knew, or owing to the circumstances should have known, that his or her forces were committing or about to commit an offence. In contrast, a superior who is not a military commander will commit an offence only if they knew or consciously disregarded information clearly indicating that the subordinate was committing or about to commit an offence. Importantly, subsection (7) makes it clear that liability under the clause does not preclude any other criminal liability in relation to the same event, so a commander can still be prosecuted as a principal offender under clause 3 as well as under this clause.

The clause ensures that the UK adheres to the requirements of article 15, paragraph 2, of the second protocol, and complies with the general principles of international law in relation to criminal liability.

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

It is a pleasure to serve under your chairmanship, Ms Buck. I apologise for my late arrival in Committee this morning; I was at a Select Committee meeting.

I have some specific questions for the Minister about how the clause will be put into practice. I have had the pleasure of seeing UK armed forces being trained, at very close quarters. I saw infantry, artillery and tank training, and I have always been impressed by the teaching in practice of compliance with international law, including the Geneva conventions. I was in Canada last year at the BATUS training area—British Army Training Unit Suffield—where much of our heavy armour training is done. The Bill will clearly be very much applicable to conduct with respect to artillery, tanks and other vehicles capable of seriously damaging cultural property, so will the Minister say a little about how it will be incorporated into training and what plans the Ministry of Defence has to bring that about?

A point has been made about embedded forces, and situations when UK forces are in command of forces from other countries. The clause states that

“references to a military commander include a reference to a person effectively acting as a military commander”.

There have been circumstances where civilians from the Department for International Development and the Foreign Office have held senior command roles—for example, in the provincial reconstruction teams in Afghanistan. Will the Minister say a little about the practical arrangements for ensuring that personnel, whether they be military, foreign military or civilians acting in a military capacity, comply with the terms of the Bill?

10:30

[Tracey Crouch]

I am grateful for the hon. Gentleman’s contribution. He will of course understand and appreciate that I am not an expert on all things military, but I can tell him that the Bill applies equally to all the armed forces. No distinction is made for the specific services.

Cultural property protection is included in the annual training of all services of the UK armed forces. Specific cultural protection training is not tailored to the RAF, Army or Navy, but is provided for individuals across all three services when a certain deployment determines it necessary. For example, specific cultural property protection issues are covered on the joint targeting course run at RAF Cranwell and the Royal School of Artillery. Those courses are held for all three services and are attended by personnel who have responsibility for target selection and planning. The graduates of those courses have to demonstrate an awareness of cultural property protection issues in various planning exercises throughout the course.

As the hon. Gentleman pointed out, we should recognise that such training is already heavily embedded in our armed forces and we should be incredibly proud of that. There is a great deal of co-operation between the Department for Culture, Media and Sport and the Ministry of Defence in ensuring the ratification of the convention through the Bill, and work is being done to ensure the continued expansion of that. Members will be aware of the specific unit being set up in the Ministry of Defence. That is well under way and a great deal of progress is being made. Everybody, right from the very top of the Ministry of Defence down to the early recruits undergoing training, is certainly 100% behind making sure that we protect cultural property.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

Penalties

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

[Kevin Brennan]

The clause refers to the penalties that could be handed out to someone guilty of an offence under section 3, or, as discussed earlier, an offence ancillary to such an offence, or indeed an offence ancillary to an offence that is ancillary to the offence under section 3, although that is not specifically mentioned in this clause.

[Tracey Crouch]

And so on.

[Kevin Brennan]

And so on, ad infinitum—and perhaps reductio ad absurdum. The penalty envisaged in clause 6 includes

“imprisonment for a term not exceeding 30 years.”

That is a lengthy term of imprisonment. We know that we are talking about some potentially serious offences, but it would be helpful to the Committee and to those observing our proceedings if the Minister clarified the severity of offence that would be likely to attract a sentence of that length. Clearly, that would not apply to all offences that might be committed under the Bill, although these are offences that, as we heard earlier, relate to cultural property of importance to all people, so an offence committed under the Bill would be a serious offence against all peoples of the world.

If the Minister clarified the thinking on the term of imprisonment and on the kinds of offence that might attract that length of sentence, I am sure the Committee would be enlightened.

[Tracey Crouch]

The clause sets the maximum penalty for section 3 offences and the associated ancillary offences. The second protocol obliges parties to make the criminal offences established in their domestic law to meet the obligations of paragraph 1 of article 15 “punishable by appropriate penalties”. A person found guilty of an offence under section 3, or a related ancillary offence, is liable on conviction on indictment to a prison term not exceeding 30 years. The maximum penalty introduced by the clause aligns with related provisions in both the International Criminal Court Act 2001 and its Scottish equivalent, and the Geneva Conventions Act 1957.

At first sight, it may seem surprising that offences of that nature, and ancillary offences, attract the same maximum penalty as war crimes covered by the relevant provisions of the 2001 Act, but that flows naturally from the seriousness with which those offences are considered under international law. It is worth noting and stressing that that is a maximum penalty. In practice, the sentence may be much shorter, or even a fine. The maximum sentence is likely to be reserved for only the most heinous crimes against cultural property. Each sentence must be considered case by case, and the Government believe that it should be left to the courts to determine the appropriate penalty based on the facts of the individual case.

The offence in clause 3 could be committed in a wide range of scenarios, with an equally wide variety of possible ancillary offences. I do not think it would be right for us to attempt to address that variety of scenarios by setting different penalties in the Bill. If an individual was responsible for deliberately destroying one of our national cultural landmarks during an armed conflict, I am sure we would wish to see the severest punishment. Likewise, we would want a similar sentence to be available for an individual who masterminded such destruction, or an army commander who ordered it as part of a campaign in full knowledge that the object in question was protected cultural property. That should also apply to UK nationals taking part in cultural destruction of a similar nature during an armed conflict overseas. Accordingly, the maximum penalty is considered appropriate for ancillary offences, as well as for the principal offence.

The clause reflects the seriousness with which the UK views serious violations of the second protocol. It is consistent with existing UK legislation and allows the UK successfully to meet its obligations under that protocol.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7

Consent to prosecutions

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

[Stephen Doughty]

I will ask a simple question; I am not an expert on these matters when it comes to Scottish law. Why does the clause make no reference to consent for prosecutions with regard to Scotland? It references only the Attorney General in England and Wales and, for Northern Ireland, the consent of the Director of Public Prosecutions for Northern Ireland. Is that particular quirk due to the way the Scottish legal system works or something else?

[Tracey Crouch]

I am not an expert on Scottish law, but I can answer that question. There is no equivalent provision in relation to Scotland as the position of the Lord Advocate, as master of the instance in relation to all prosecutions in Scotland, means that such a provision is unnecessary.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8

The cultural emblem

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

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

It is a great pleasure and a privilege to take part in the proceedings of the Committee, not least as I am co-chair of the all-party parliamentary group for the protection of cultural heritage. I will not say too much, not least because I do not have much a voice, but I will say that this a particularly uncontentious part of a relatively uncontentious Bill.

I draw particular attention to the emblem of the blue shield, which is, as we know and as has already been mentioned by the hon. Member for Cardiff West, a symbol used to identify cultural sites protected by the convention and the personnel engaged in protecting such property. I also draw attention to the work of the Blue Shield network, which provides support in the promotion of the ratification of the convention and its protocols, as we are doing today. It is also part of the International Committee of the Blue Shield, which is a voluntary NGO, but one that has already been said to be the equivalent of the International Red Cross and Red Crescent Movement, and it needs to be given proper status and support.

The International Committee of the Blue Shield provides an unrivalled body of expertise, which allows the organisation to collect and share information on threats to cultural property worldwide. This is a hugely significant organisation that encourages the safeguarding and restoration of cultural property and raises national and international awareness of cultural heritage. It also provides an important focus for the promotion of not only the ratification but the implementation of the convention, and its work with the Government and with other countries, in terms of the protocols and the convention, is no doubt ongoing. It is worth noting in the submissions to the Committee the support for the Bill from the International Committee of the Red Cross and the offer to support the Government in the promotion of the blue shield emblem, which it has done so admirably with the red cross. I would be interested to hear from the Government on the progress of that in terms of social media and other forms of media that have developed in the 60 years since the introduction of the convention.

[Kevin Brennan]

The hon. Gentleman’s contribution and expertise in this area are welcome in Committee. When reading the Bill, one issue of interest is the threshold for a cultural object to pass muster under the convention and the Bill, and therefore presumably be covered by the cultural emblem. In the UK, what sorts of object or building will be covered, or, of just as much interest, might not be covered? If we are to raise awareness among the general public of what the Bill means, it is important that there is some idea of how and where that line is drawn.

[Mr Burrowes]

The hon. Gentleman is generous to call me an expert; I do not think I am a great expert at all. My interest in the subject arose not least from a background of concern around trafficking and the links to trade of human beings within property and a concern about the human value, which is aligned with the property value when we get the destruction we have seen by Daesh and other organisations in occupied lands.

I am encouraged by the Minister’s response to a question already raised that we will no doubt return to: there will be proper engagement with stakeholders and consideration of experts’ views around how we ensure there is proper focus. In one sense, that needs to be wide, as the definition in the convention is, and the purpose of the Bill is to ratify the convention and the definition in article 1, which is properly wide and recognises such categories, while providing sufficient reassurance to the trade and others around the practical implementation of that not just in the Blue Shield committee but beyond, with the Government engaging actively to ensure that proper guidance on implementation is set out. I will return to the clause before I get called out of order by the Chair.

I also want to refer in particular to the UK part of the network, the UK Committee of the Blue Shield, ably chaired by Professor Peter Stone, who is also the 2016 UNESCO chair in cultural property protection and peace. We are well placed in this country to help take the lead on the blue shield programme and provide that important conduit of expertise that draws in the military, Red Cross and UNESCO as observers for that committee. Along with charities and heritage protection organisations across the UK, we are helping to provide a lead in this area.

It is important to recognise that the UK committee has been on the case for some years. Since 2003, Peter Stone has been urging successive Ministers and Committees to do what we are doing today to ratify the convention and both protocols. I draw attention to his submission, in which he makes a pitch for the UK to take a lead internationally, certainly among the permanent members of the Security Council, in ratifying the second protocol and in

“funding a small, permanent office for the Blue Shield”,

which, despite its huge significance, is a voluntary, unfunded international non-governmental organisation.

To achieve cultural equivalence with the red cross, the blue shield needs money and resources. Will the Minister respond on how we will provide that further support and partnership work with Peter Stone’s Blue Shield committee, and recognise the added momentum given to Blue Shield’s work by this Committee’s process of ratification, not least of the second protocol? The easy answer she can give is to join us in commending the great work of Blue Shield.

10:45

[Tracey Crouch]

I am grateful to my hon. Friend the Member for Enfield, Southgate for his contribution. He is an expert, and he should not understate the work he has done on the issue over a number of years. He should be congratulated on his commitment and dedication to the protection of cultural property. I am very grateful for the advice he has given me and my Department in recent months.

My hon. Friend’s contribution allows me to pay tribute to the UK Committee of the Blue Shield and put on the record my gratitude to Professor Peter Stone for the work he has done in advising on the Bill and beyond. My hon. Friend mentioned Professor Stone’s plans for a Blue Shield centre, which I and my Department will continue to work with him on. I agree with my hon. Friend that it will allow us to take an international lead on the issue.

Clause 8 relates to the cultural emblem. The hon. Member for Cardiff West said that the Bill is a piece of legislation with a picture in it. I humbly suggest that if there were more pictures in Bills, more people outside this place might read them.

[Chris Bryant]

It is not a very beautiful picture.

[Tracey Crouch]

If it protects beautiful heritage and culture, one might suggest otherwise.

The cultural emblem takes the form of a blue and white shield and allows cultural property protected under the convention to be marked to facilitate its recognition. In introducing the emblem, we will recognise for the first time in the United Kingdom the only symbol in international law for the protection of cultural property during armed conflict. It will act as a means of identification for this country’s most important cultural property and safeguard it in the event of an armed conflict.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Offence of unauthorised use

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

[Kevin Brennan]

I am not sure whether this will meet with your agreement, Ms Buck, but it seems to me that, as we debate clause 9 stand part, the Minister might go a little further and discuss how the clause relates to clauses 10, 11 and 12, which are about the authorised uses. The offence is created by clause 9. If that is convenient to the Committee, it might be a sensible way of discussing those clauses.

[Tracey Crouch]

indicated assent.

[The Chair]

The Minister is indicating that she is happy to do that.

[Tracey Crouch]

Clause 9 introduces a new criminal offence of the unauthorised use of the cultural emblem, or any other design capable of being mistaken for it. That offence will meet our obligations under the convention, which sets out rules for the emblem’s use. It also requires parties to prosecute or impose sanctions on unauthorised use.

This will be the first time that the UK legally recognises this important symbol. Our policy is to afford the cultural emblem equivalent protection to that afforded the Red Cross and other distinctive emblems under section 6 of the Geneva Conventions Act 1957. As with the Red Cross, the breadth of the offence reflects the need to protect the potency of the emblem by forbidding its unauthorised use. An offence under this clause will be punishable by a fine. As with prosecutions under clause 3, prosecution under this clause can take place only with the appropriate consent in England, Wales and Northern Ireland. The position of the Lord Advocate makes a consent provision for Scotland unnecessary.

Clause 10 gives the appropriate national authority the power to give general or specific permission for particular uses of the cultural emblem to be authorised. It also enables the national authority to withdraw permission, for example when it is no longer necessary or appropriate. This will ensure protection for the cultural emblem and allow for urgent authorisation of cultural property, which can display the emblem, as may be required in the event of war or armed conflict. Subsection (2) imposes an additional requirement, as required by the convention, that the distinctive emblem may not be placed on any immovable cultural property unless a copy of the authorisation is displayed.

Clause 11 authorises the use of the cultural emblem for moveable cultural property in the circumstances permitted by the convention and regulations. It authorises the use of the cultural emblem when it is used to identify moveable cultural property and the use of three cultural emblems in a triangle to identify cultural property undergoing protected transportation. Finally, it outlines what is meant by cultural property undergoing protected transportation. That meaning is provided for in the convention. For example, should an armed conflict occur in one part of the United Kingdom, the cultural emblem triangle could be displayed on moveable cultural property during its transportation under special protection to a refuge in an area of the United Kingdom not affected by the armed conflict. That will help to ensure that cultural property is not exposed to damage and destruction during its transportation out of a conflict zone. I hope that clarifies the three clauses—10, 11 and 12 —and that they will stand part of the Bill.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clauses 10 to 12 ordered to stand part of the Bill.

Clause 13

Defences

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

[Kevin Brennan]

Again, it might be useful if the Minister outlined the circumstances in which use of the emblem would be subject to a reasonable defence against a prosecution.

[Tracey Crouch]

Clause 13 sets out three defences to the offence of unauthorised use of the cultural emblem. This is to ensure that any person who already legally uses the emblem, or a sign that so nearly resembles the emblem that it could be mistaken for it, is not disadvantaged and criminalised as a result of the new clause 9 offence. Under subsection (2) it will be a defence to show that use of the cultural emblem is for a purpose for which it had previously been lawfully used before clause 9 came into force. Under subsection (3) it will be a defence to show that the emblem forms part of a trademark registered before clause 9 came into force, and that the trademark was being used lawfully in relation to the goods and services for which it was registered.

Under subsections (4) and (5) it will be a defence for a person to show that a design used on goods was: first, applied to the goods by their manufacturer or someone trading in those goods before they came into the possession of the accused; and secondly, that the person applying the design was using it lawfully in relation to the same type of goods before the clause came into force. The defence in those subsections is intended to protect purchasers of goods already bearing the emblem, or a design closely resembling it. Subsection (6) makes it clear that where the defendant can provide evidence that a defence exists, the burden to prove the offence still lies with the prosecution.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

Clause 15

“Appropriate national authority”

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

[Kevin Brennan]

I think that it would be useful, in this age of devolution, if the Minister outlined the reasoning behind the way in which the appropriate national authorities have been set out in the Bill.

[Tracey Crouch]

I am very happy to do so. Clause 15 defines the appropriate national authority for each part of the United Kingdom. This explains the term that is used in clauses 10 and 12. For the purposes of part 3, the appropriate national authorities are: for England, the Secretary of State; for Wales, the Welsh Ministers; for Scotland, the Scottish Ministers; and for Northern Ireland, the Department for Communities. I reassure the Committee that these definitions, as set out in the Bill, were agreed with the devolved Administrations.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Clause 16

“Unlawfully exported cultural property” etc

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

[Tracey Crouch]

I thought it would be particularly helpful for the Committee to discuss clause 16, because it sets the scene for the discussion on clause 17, which I know we are due to have because amendments have been tabled. Part 4 of the Bill deals with cultural property that has been unlawfully exported from occupied territory. Clause 16 defines what is meant by “unlawfully exported cultural property” and sets out how it is determined whether territory is occupied.

Unlawfully exported cultural property is defined as cultural property that has been exported from an occupied territory contrary to either the laws of that territory or international law. At the time of the export, the territory concerned must have been occupied by another state. Either the occupying state or the state of which the occupied territory is a part must have been a party to the first or second protocol. That means that the earliest date on which cultural property could have been unlawfully exported for the purposes of the Bill is 7 August 1956, which is when the first protocol came into force. If neither of the states concerned became a party to the first or second protocol until a later date, that will be the date from which cultural property can fall within the definition.

The clause sets out what is meant by “occupied territory”. The test for that is based on article 42 of the regulations concerning the laws and customs of war on land, which were agreed at The Hague on 18 October 1907. The article states:

“Territory is considered occupied when it is actually placed under the authority of the hostile army. The occupation applies only to territory where such authority is established and in a position to assert itself.”

Whether a territory is occupied now, or was occupied at a particular time, is a matter that must be determined on a case-by-case basis. The clause provides that a certificate issued by the Secretary of State shall be conclusive evidence as to whether, at a particular time, territory was occupied. That is standard procedure for determining such matters that concern international relations and are considered to be matters of state.

[Kevin Brennan]

The Minister may not have this information available, and may want to write to the Committee with it, but do the Government have a list of territories that they currently consider to be occupied under that definition?

[Tracey Crouch]

I do not have that information to hand now, but I do not think we have an official list, because this is often a controversial point. May I suggest that if we are still on clause 16 when we return this afternoon, we perhaps clarify or confirm that point then?

[Kevin Brennan]

I am grateful. I understand her not having the information now. It might be useful to clarify, for example, whether the Government consider Crimea to be an occupied territory.

[Tracey Crouch]

Again, if we are still debating clause 16 this afternoon—or perhaps even when we debate clause 17 —if the hon. Gentleman wants to raise the point then, I may be able to give him more information. However, as he can imagine, the definition of occupied territories is sometimes controversial, and it is often open for discussion.

A certificate may not be issued in all cases. Alternative evidence may be used to prove the status of a particular territory. Before I conclude, I have been reliably informed that, yes, Crimea is considered an occupied territory; that at least covers one of the questions that the hon. Gentleman might have wanted to return to this afternoon, allowing us more time for other matters.

[Victoria Borwick]

I thank the Minister for that clarification, because we all seek greater clarity about what is in the Bill.

I have previously mentioned the uncertainty inherent in clause 2 and how our art market is keen to avoid uncertainty. Another area of uncertainty is an auctioneer’s or dealer’s ability to identify the occupied territories to which the law applies, particularly if an item may have been here previously; of course there is a lot of trading going on all the time, which is why the points about certainty and dates need to be clarified.

Clause 16(6) states that the Secretary of State’s confirmation that a territory was occupied is conclusive evidence of that status once legal proceedings have begun. If the Secretary of State’s word may be provided after the beginning of proceedings, cannot a list of the occupied territories, together with the relevant dates of occupation, be drawn up for all to see? Alternatively, could the criteria that a Secretary of State would apply when determining whether and when a territory is considered to have been occupied be clarified? Examples have already been given, but I could add East Jerusalem, the west bank, northern Iraq, Libya or southern Sudan and I am sure others could add alternatives. For the avoidance of doubt, dealers will need to know at what points since 1954 a particular territory is covered by the legislation.

11:00

Even if those operating in the art market can identify territories and the periods when they were considered to be occupied, there is the added issue of determining whether objects left those territories during the period of occupation or at another time, and whether those objects were here before, during or after that period. We need that clarity. The precise historical date or year when an object left a territory could well be difficult to ascertain. Concerns about clarity in the Bill have already been mentioned and this is yet another factor that contributes to the uncertainty engendered by the clause 17 mens rea provision, which we will come to later.

In 2008, the then Government’s response to the territory list question was that a dealer who had carried out proper due diligence checks would be unlikely to be convicted of a criminal offence. We would like that response clarified and brought up to date. The Government added that they were unaware of any other parties to the convention having drawn up such a list. I struggle to understand how a law concerned solely with objects unlawfully exported from occupied territories can be expected to operate effectively when there is no means by which anyone is able to identify those territories. Do the Government expect a dealer or auction house to submit requests for confirmation of a territory’s status to a Secretary of State on a case-by-case basis, prior to handling an antique, as part of their due diligence? I ask the Government to prepare a list of the territories covered and the relevant dates. As the application is retrospective to 1954, that information must presumably already be available.

[Kevin Brennan]

The hon. Lady raises a valid point. I accept that this was discussed when the draft Bill was considered in 2008, but that Bill did not come before the House in a final form. It is very reasonable to explore whether the Government will consider publishing a list of the territories that they consider occupied during the relevant period since 1954. It would be extremely useful.

Clearly, it is not always going to be easy to ascertain when an object left a particular territory, although we have already clarified that we are talking about a very small number of very important movable objects that might have been removed from a territory, and that in itself should set off alarm bells with any dealer. If it was an object of such cultural importance that it would be covered by the legislation, people would naturally take extra precautions to ensure that the object had not been removed illegally from a territory during a period of armed conflict and occupation. However, it is perfectly valid to ask why the Government are unable or unwilling to produce a definitive list of territories that have been under occupation during the relevant period. Perhaps the Minister could enlighten the Committee further on the Government’s thinking.

[Mr Burrowes]

I want to raise an issue brought up on Second Reading and in the other place, about the Bill’s applicability to non-state actors, particularly in relation to Daesh, which has prompted a huge wave of concern about cultural property destruction and added an extra dimension to the process that we are in of ratifying the convention and protocols. I am particularly grateful to the Secretary of State for clarifying the categories in the Bill that are applicable and for clarifying where the UK can prosecute.

The Hague convention already extends to non-state actors, and the offences in article 15 of the second protocol may be committed by non-state actors in non-international armed conflicts. The question is how that will be prosecuted. As Syria is not party to the second protocol, there is no possibility of prosecuting the most serious offences in article 15. However, there is scope to prosecute UK nationals involved in Daesh under clause 3 of the Bill.

Is there evidence of UK nationals being involved in such damage or in stealing cultural property in Syria? If there is, we will be able to prosecute them for those heinous crimes after the enactment of the Bill. Many of us, including the UNESCO chair, consider such acts to be on the same level as a war crime, and they need to be dealt with appropriately and punitively.

[Tracey Crouch]

I am grateful to colleagues for raising a number of important issues. I will respond as best I can.

First, I remind the Committee that this law is not solely concerned with dealing in cultural property; it is about protecting cultural property at home and abroad. We need to keep reminding ourselves of what we are trying to achieve with this Bill. That said, some important issues have been raised.

Colleagues will appreciate that extremely sensitive foreign relations issues are in play when drawing up a list. It is important to reiterate the point made by my hon. Friend the Member for Kensington that the Government are not aware that any of the other 127 state parties to the convention have produced a list of territories that they consider to be or to have been occupied since the convention came into force in 1956. In practice, very few territories are likely to be deemed to be or to have been occupied within the meaning of the Bill. The amount of cultural property from such territories that dealers are likely to come across is expected to be extremely small. That said, I realise that there are concerns.

Legal advice will be available to those who have concerns. If in doubt, dealers can seek appropriate legal advice from a solicitor or barrister who is familiar with public international law. The Bill does not impose any requirements on those who deal in cultural property beyond the normal due diligence that they should carry out in accordance with industry standards, such as the code of practice for the control of international trading in works of art. In the event of legal proceedings, the burden of proof will be on the prosecution to show that the person knew, or had reason to suspect, that the cultural property had been unlawfully exported from an occupied territory.

We will discuss the wording later, but I remind the Committee that the Government will not be publishing a list of occupied territories. It will be determined on a case-by-case basis. Anyone who has a question or any doubt can seek appropriate legal advice. Like the other 127 state parties to the convention, we have no intention of publishing a list.

[Victoria Borwick]

I am concerned on behalf of traders that there will inevitably be a great deal of cost. As you and the Secretary of State have been kind enough to say that you do not wish to place additional burdens, I am concerned that you are appearing—

[Kevin Brennan]

She.

[The Chair]

I remind the hon. Lady about addressing the Chair.

[Victoria Borwick]

I apologise, Ms Buck. High legal costs might be incurred, but I do not understand that to be the Minister’s intention.

[Tracey Crouch]

I repeat that I do not think that the clause imposes any more requirements on those who deal in cultural property beyond the normal due diligence that they undertake now in accordance with industry standards, so I am not convinced that there will be additional costs. We need to remind ourselves that the offence is not retrospective; it applies only to cultural property unlawfully exported from occupied territories after the date that the convention and protocol came into force for those countries that are party to it, and cultural property needs to be imported into the UK after the Bill comes into force to be an offence.

To clarify exactly what sort of cultural property we are talking about and the dating of that property, I will briefly repeat messages back to my hon. Friend the Member for Enfield, Southgate about Syria. It is important to take this opportunity to clarify how the Bill applies to the situation in Syria. The Bill’s application to the situation in Syria is limited for two reasons: first, while Syria is party to the convention and the first protocol, it has not ratified the second protocol; secondly, the UK does not recognise Daesh as a state.

With regard to the first point, the current conflict in Syria is defined as a non-international armed conflict—a civil war, in other words—and the offences listed in article 15 of the second protocol may be committed during civil wars. However, the application of clause 3 is complicated as it varies depending on whether the state experiencing civil war is a party to the convention and/or the second protocol. The Bill’s application to Syria is limited to the offence set out in article 15(1)(e) of the second protocol, which is

“theft, pillage or misappropriation of, or acts of vandalism directed against cultural property protected under the Convention.”

Because Syria is party to the convention, its cultural property is protected against that offence. The Bill’s application is limited in some respect because Syria is not yet party to the second protocol, which means that the UK cannot prosecute for any of the other four offences set out in article 15 of the second protocol.

[Kevin Brennan]

I saw the Secretary of State’s letter, together with an explanatory note, that she provided following Second Reading. It made it clear that the Bill could, in effect, apply in civil wars, although that is not the phrase that she used; I think the Minister has confirmed that with what she just said. I am just trying to understand exactly what the Minister meant in relation to the first and second protocols. Is it that Daesh could not be covered by the Bill because it is not a state party or a recognised state, or is it because the second protocol to the convention has not been ratified by Syria?

[Tracey Crouch]

It is probably both, actually. First, Daesh is not a recognised state, and secondly, not all parts of article 15 apply because Syria has only signed up to the convention. Article 15(1)(e) applies because Syria has ratified the convention, but articles 15(1)(a), (b), (c) and (d) do not apply because Syria has not signed up to the second protocol.

[Kevin Brennan]

To be clear, does that mean that the Bill could apply to only one side in a civil war—namely, to a recognised Government who were signatories to the convention—while the other side, despite committing identical actions, was not covered because it was not a recognised state under the convention?

[Tracey Crouch]

We ae going beyond the specific purpose of this legislation. I can tell the hon. Gentleman that the Bill will apply if there is evidence that a UK national has joined Daesh and damaged or stolen cultural property while in Syria. The UK could seek to prosecute that individual under clause 3 on their return to the UK. As I stated, article 15(1)(e) applies to

“theft, pillage or misappropriation of, or acts of vandalism directed against cultural property protected under the Convention.”

Article 15(1)(e) is broad enough to take into account everything protected under the convention, which Syria has signed, but article 15(1)(a), (b), (c) and (d) all refer to aspects that are in the second protocol, to which Syria is not a signatory. I hope that clarifies the point. I appreciate that this is incredibly complicated, but we are limited to talking about some issues relating to UK nationals in Syria.

On the question raised by my hon. Friend the Member for Enfield, Southgate, we are not aware of any UK nationals who have been involved in cultural destruction in Syria. On the second point in relation to Syria, clause 17 creates the criminal offence of dealing with cultural property that has been unlawfully exported from occupied territory. Territory belonging to one country can only be occupied by another state. The UK does not recognise terrorist groups such as Daesh as states, so Syria cannot be classed as an occupied territory, and the dealing offence is not engaged. There is no loophole in our approach to dealing in Syrian cultural property, as sanctions already exist for the sorts of objects that have been illegally removed from Syria. I can confirm that the second protocol would apply to both sides in a civil war if the state had ratified the second protocol, which Syria has not.

11:15

[Kevin Brennan]

That is very interesting. I am still slightly struggling to understand how the second protocol could apply to both sides in a civil war if one of the sides was not a recognised state, Government or signatory to the protocol, but I will let that lie for now; it might be something that we cogitate on, and there might be a way of discussing that when we come to later amendments and new clauses.

I understand what the Minister was saying about clause 16: that the Government will not produce a list because no one else has produced one. That is not necessarily a good argument for a country that is seeking to be a leader in this field. The Minister quite rightly boasted that we will become the first permanent member of the Security Council of the United Nations to ratify both protocols, although we will be the last to bring in the convention overall, so that is not entirely something to boast about—and that goes for Governments of all kinds. Saying that we should not produce a list because no one else has produced seems to be not an argument, but a simple statement of our position and that of other countries.

The Minister hinted that the reason why the Government were reluctant to produce such a list was because it is sensitive—she used that terminology—to talk about whether a country has been occupied since 7 August 1956, which is the date that she mentioned. We are not producing a list because no one else has, and because it might be sensitive to do so, but she said, without feeling too sensitive about doing so—I welcome that very much—that the UK Government considered Crimea to be occupied. That is what I do not understand. If it is possible to say clearly that Crimea is considered an occupied territory, why is it not possible to say whether the UK Government consider other territories to have been occupied since 1956? That makes no sense whatever, unless we are engaged in some kind of history seminar, which we are not; we are talking about the UK Government’s position on whether territories have been occupied since 1956. The Government are happy to say that Crimea is occupied, but not whether they consider other countries or territories to have been occupied in that period.

[Victoria Borwick]

I think the point is that if a Security Council resolution regards a territory as being occupied, surely that is on the record.

[Kevin Brennan]

It may well be on the record, but the hon. Lady herself made the point that clause 16(6) says that territory is considered occupied if, once proceedings have begun, a certificate is issued by the Secretary of State, whatever the UN has said. The Bill says:

“a certificate by the Secretary of State is conclusive evidence as to whether, at a particular time, territory was occupied by a party to the First or Second Protocol or by any other state.”

Can the Minister add further clarity to that? We have not really had a full explanation as to why the Government are reluctant to produce that list. There may be reasons, but I am not sure that we have teased them out yet.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

This is an interesting discussion, but I wonder whether the reason goes more towards the effectiveness of the convention. If states have not been producing lists, could it be that some countries are bringing prosecutions that other countries would not, because they view what should go on the list differently? If so—this is perhaps one for the Minister—perhaps this should be looked at internationally, so that an agreed list is formed.

[Kevin Brennan]

The hon. Gentleman is an eminent lawyer and understands these matters much better than I do. I am sure that he is correct to say that that is part of the problem, but I imagine that agreeing on a list internationally will be much more difficult than the UK Government drawing up their own list of territories that they consider to be occupied. After all, we are bringing these provisions into UK law, so it would be during proceedings in the UK when this would be a matter of importance. I do not think that there is any great logic in why the Government have said that they are not prepared to produce a list. We will not vote against the clause, but if the Minister has anything further to add, I am sure it will be helpful.

[Tracey Crouch]

The only thing that I would like to add is that the hon. Member for Cardiff West is a very experienced and somewhat naughty man for leading me down a garden path; I will now no doubt get a smacked bottom from the Foreign Secretary for declaring, on the record, that comment about Crimea. It is important to stress that this is an incredibly complex area, involving sensitive issues relating to foreign affairs. No other state that is part of the convention has produced a list. I appreciate that the hon. Gentleman does not think that a reliable or worthy response to the issue. We want to make sure that we introduce the Bill and ratify The Hague convention properly, so that we protect cultural property in the United Kingdom and abroad.

We firmly believe that the Bill does not place any further burdens or restrictions on the art market. There is nothing in the Bill that those in the art market do not already do, in terms of due diligence. Where they have concerns, we would expect them to seek appropriate legal advice, as they currently do. There is a whole wealth of people out there who are able to provide that.

[Victoria Borwick]

I want to take the Minister up on the due diligence point, if I may. Inevitably, there are different levels of due diligence, and different categories. There is no accepted level of due diligence. This goes back to the point made about getting absolute clarity in the Bill, because nobody wants there to be confusion later. We all have the right spirit here; we are just making sure that things are absolutely clear. There are inevitably different levels of due diligence for different categories of objects, with the risk of forfeiture and potentially a prison term.

[Tracey Crouch]

I hope that those in our art market, with all their expertise and with the market’s worldwide reputation for being one of the best, have the highest standards of due diligence, and that when it comes to these specific cultural objects of great importance to all people, as defined by the convention, they take particular care with due diligence, as set out by their own industry codes and standards of ethics. They are self-regulated, and they provide a gold standard of best practice for the rest of the world, and I hope that they will continue to do so.

I reiterate that we do not think it is necessary to produce a list; we do not think that it would be helpful in a wider sense. A certificate from the Secretary of State would only be used during a dispute on an issue. We believe that this is the right way forward, and I hope that the clause will stand part of the Bill.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

11:25

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

Cultural Property (Armed Conflicts) Bill [ Lords ] (Second sitting)

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: Ms Karen Buck, † Mr Andrew Turner

† Allin-Khan, Dr Rosena (Tooting) (Lab)

† Borwick, Victoria (Kensington) (Con)

† Brennan, Kevin (Cardiff West) (Lab)

† Bryant, Chris (Rhondda) (Lab)

† Burrowes, Mr David (Enfield, Southgate) (Con)

† Crouch, Tracey (Parliamentary Under-Secretary of State for Culture, Media and Sport)

† Davies, Mims (Eastleigh) (Con)

† Djanogly, Mr Jonathan (Huntingdon) (Con)

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

† Nicolson, John (East Dunbartonshire) (SNP)

† Offord, Dr Matthew (Hendon) (Con)

† O’Hara, Brendan (Argyll and Bute) (SNP)

Smeeth, Ruth (Stoke-on-Trent North) (Lab)

† Smith, Jeff (Manchester, Withington) (Lab)

† Stuart, Graham (Beverley and Holderness) (Con)

† Sturdy, Julian (York Outer) (Con)

† Thomas, Derek (St Ives) (Con)

† Warburton, David (Somerton and Frome) (Con)

Katy Stout, Committee Clerk

† attended the Committee

Public Bill Committee

Tuesday 15 November 2016

(Afternoon)

[Mr Andrew Turner in the Chair]

Cultural Property (Armed Conflicts) Bill [Lords]

Clause 17

Offence of dealing in unlawfully exported cultural property

14:00

[Kevin Brennan (Cardiff West) (Lab)]

I beg to move amendment 7, in clause 17, page 8, line 12, leave out

“or having reason to suspect”.

[The Chair]

With this it will be convenient to discuss amendment 1, in clause 17, page 8, line 12, leave out “having reason to suspect” and insert “believing”.

[Kevin Brennan]

It is a great pleasure to serve under your chairmanship, Mr Turner. You missed an exciting sitting this morning, when the Committee Room was fizzing with debate on all sides—I am sure that it will be the same this afternoon. It is appropriate that you should be in the Chair, because I know that, as well as representing the Isle of Wight and its great cultural treasures, as you do so assiduously, you are originally from Coventry. The subject of the Bill was initially born of the experiences of world war two, when the cultural treasures of cities across Europe, such as Coventry and Dresden, were destroyed terribly by bombing. I am sure that the Bill will be close to your heart, and it is therefore appropriate that you should be chairing proceedings this afternoon.

Along with amendment 7, which was tabled by my hon. Friend the Member for Tooting and me, we are discussing amendment 1, which was tabled by the hon. Member for Kensington, who I am sure will want to speak to it in due course. We are all trying to tease out from the Government exactly what they are trying to achieve with this part of the Bill and what the practical effect of clause 17 will be on people who are dealing in cultural items when they have to operate under the Bill’s provisions.

Amendment 7 is another probing amendment, because we want further clarity on the Government’s intention. It proposes removing the phrase

“or having reason to suspect”

from the clause, which is on the offence of dealing in unlawfully exported cultural property. Some concern has been expressed about that particular phrase because of the so-called mens rea—I understand that is what lawyers call it—meaning the intention of someone accused of committing a criminal act of some sort. Would having that phrase in the clause affect honest people who are simply trying to do their job? Will the clause achieve what the Government undoubtedly intend it to achieve, which is to unambiguously target those with criminal intent?

Labour Members are supportive of the Bill, but as it stands the clause creates concerns that there would be a risk that a dealer or auction house might face a criminal prosecution when conducting what they would describe as honest due diligence.

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

As I am a lawyer, anyone who mentions mens rea will make my ears prick up and get me excited after lunch. The shadow Minister mentioned the need to consider the practical effect, which is the important issue. Will he give an example of the practical effect that goes to the heart of both his amendment and that tabled by my hon. Friend the Member for Kensington and that would not be dealt with already, not least under the sanctions orders that cover Iraq and Syria, which are already having practical implications?

[Kevin Brennan]

I am very interested to hear what gets the hon. Gentleman excited after lunch, or indeed at any time of the day. To answer his point, I am sure he is anticipating what the Minister might say in response, but I shall rehearse the issues a little as I go through my remarks. It is important that we get these points on the record and air the concerns of those outside the Committee so that the Minister has an opportunity to respond. As I said, this is a probing amendment. At the end of our debate we will withdraw it, because we have sympathy with the point that the hon. Member for Enfield, Southgate makes. However, I want to ensure that the concerns expressed to us in representations are on the record and have been rehearsed.

Although a conviction might ultimately be avoided, no one wants to take a chance on the possibility of people being prosecuted, with all the reputational damage and cost that could be involved. Concerns have been expressed that the result could be to turn legitimate sales away from the UK, impacting upon the future success of the art market, which is a large industry in this country. It depends, crucially, on persuading sellers throughout the world to use the UK’s services. The British Art Market Federation states that its members

“are committed to conducting due diligence on artworks before they are sold. This may involve written evidence of provenance, consultation where necessary with external bodies, including databases of stolen objects and inquiries of the vendor.”

It goes on to argue:

“It is rare, however, that an artwork, particularly an older one, has an unbroken chain of provenance going back to the time it was created. It is also rare that there is comprehensive documentary evidence to support provenance, particularly the further back in time it goes.”

Often that evidence has been lost or perhaps never existed in the first place, as it may have been considered unnecessary at the time.

The retention of documents or records has assumed greater importance in recent years, as more and more claims have been made for the restitution of works of art that were looted during the second world war. Until relatively recently, owners rarely retained copies of export licences. As I understand it, the practice was that they were surrendered to customs authorities at the time of export. Even the authorities themselves did not retain such records beyond a limited time. I am told that objects that were legitimately exported many years ago, even from the UK, routinely lack such documentary evidence that might prove the provenance.

The argument has been put to the Committee that the absence or paucity of documentary evidence does not necessarily indicate that an object is of illicit origin. Due diligence, in practice, can therefore usually come down to trying to make judgments on the legality of an object and therefore whether or not it can be legally sold. As I am sure the hon. Member for Kensington will remind us, the BAMF is not the only body with a behavioural code. The Antiquities Dealers’ Association also has a code of practice that is meant to ensure that dealers buy and sell in good faith. Against that backdrop, it argues that clause 17, as drafted, could present its members with some difficulties.

It was pointed out on Second Reading that other offences dealing with crimes of dishonesty—for example, offences under the Dealing in Cultural Objects (Offences) Act 2003—opt for the phrase “knowing or believing”. Some argue that that phrase would be superior to the one used in the Bill, as there is a difference between having knowledge and acting in spite of it, and not having sought out that knowledge in the first place. Current principles indicate that under current law the former would be a criminal offence and the latter, although it would be frowned upon, probably would not meet the bar of being a criminal offence.

The BAMF argues that changing the phrasing of mens rea in the Bill to include the phrase “having reason to suspect” muddles the legal principle and could create ambiguity, and therefore the opposite outcome to the one we all want. It suggests that those who have acted criminally could be emboldened to exploit the muddled language to avoid conviction, while legitimate operators would be put off buying and selling by the potential of a criminal conviction. The issue has been raised many times during the passage of the Bill, so this is a probing amendment to understand fully why the Government have not responded and changed the wording.

From memory, the Secretary of State said on Second Reading—I will check the record when I sit down—that she would go away and consult the Minister and others to see whether the Government should take on board the concerns expressed on the Floor of the House and in the other place and then offer an amendment. I would be grateful if the Minister, when she responds, could indicate whether the Secretary of State has fulfilled that commitment and what the outcome of those discussions was.

[Victoria Borwick (Kensington) (Con)]

It is a pleasure to serve under your chairmanship, Mr Turner. I declare an interest as president of the British Antique Dealers’ Association. I have also been advised by the British Art Market Federation, the Antiquities Dealers’ Association and LAPADA, all of which have made written representation to the Committee.

Amendment 1, which stands in my name, relates to the most important point made in the submissions from the art and antiques trade, including from the British Art Market Federation, the Antiquities Dealers’ Association and LAPADA, and from Professor Janet Ulph. I have spoken before of the need for certainty in law—a point that other colleagues have made—so that well intentioned and honest dealers and auction houses are clear as to what is permitted. That is even more important when there is the possibility of a criminal conviction. The concern is over the level of knowledge of wrongdoing required before a dealer or auctioneer can be judged to have committed a criminal offence—what I understand the lawyers call mens rea—and whether that has been expressed to an appropriate level in the Bill.

Clearly no one objects to the word “knowing” in the relevant subsection. If a dealer knows that cultural property was unlawfully exported from an occupied territory, they are guilty of an offence. The problem lies with the additional criterion for committing an offence when someone has “reason to suspect” that an item was unlawfully exported. Despite carrying out appropriate provenance checks on an item of cultural property, a dealer or auctioneer might, just prior to exhibiting it at an antiques fair or auction, receive an unsubstantiated allegation that it was illegally removed from an occupied territory, or a request for evidence that it was legally exported. The allegation might be totally groundless, but the seller, despite genuinely believing that the item had not been illegally exported, would fear that the allegation could be deemed “a reason to suspect”, and that could lead them to withdraw the item from sale. The time-dependent opportunity to sell it would be lost, and the very act of withdrawal could well damage the artwork’s future saleability.

My right hon. and learned Friend the Member for Harborough (Sir Edward Gamier), a former Solicitor General, made that point succinctly in an article in The Times on 3 November—it has been appended to the submission from the Antiquities Dealers’ Association. He wrote:

“The mere making of an unfounded allegation that an item was unlawfully exported from an occupied territory after 1954 may place in the mind of the potential dealer or auctioneer a reason to suspect that it has been unlawfully exported; and although it may later turn out to be untainted, he will not go near it.”

14:00

I also draw Members’ attention to the submission from the British Art Market Federation, which gives current examples of the issue, particularly at paragraphs 14 and 15. It states:

“An example may serve to illustrate the uncertainties created by this Bill. An old master picture that has changed hands on the legitimate open market in Europe in the past few years is sent to London for sale by auction. Due diligence is carried out and its known provenance is investigated, as is its sale history, and checks are made that it has not been stolen. The picture is then included in an auction catalogue which is published several days before the sale. An allegation is then made that it was removed from an occupied eastern European country in the 1960s. Time is necessarily short to investigate whether this is true or not. Attempts to resolve the matter beyond doubt before the auction do not succeed and even though it may well prove groundless the allegation itself represents a reason for suspicion under the terms of the Bill, as currently drafted.

Not wishing to run any risk of prosecution, the auction house has no alternative but to withdraw the picture from the auction, to the disadvantage of its owner, who at best will have to wait for another auction and, at worst, will face financial loss, as marketing it for a second time may adversely affect its value.

The rarer and more valuable a picture is, the greater risk that its successful sale will be prejudiced by a withdrawal from an auction. In time, the allegation may prove groundless but the damage will have been done.

How is the auction house or dealer to respond if an assertion is made on social media or a blog that an object may be in breach of this new law? The allegation may subsequently be proved to have no foundation, but no auction house is likely to run the risk of possible criminal prosecution, and if, as in this example, there is no time to investigate its veracity, there will be no choice but to remove it from the sale.”

I recall the Secretary of State saying on the Floor of the House on 31 October:

“It is important that we are clear that the Bill will not hamper the way in which the art market operates.”––[Official Report, 31 October 2016; Vol. 616, c. 700.]

The closest existing legislation to the current Bill is the Dealing in Cultural Objects (Offences) Act 2003, which is concerned with illegally removed archaeological material and objects illegally taken from monuments or historical structures. However, unlike the current Bill, in which the types of cultural property covered are extensive and could even include cultural property in people’s family collections, the 2003 Act does not cover works of purely artistic interest. In that Act, a person commits an offence if they deal in such cultural objects “knowing or believing” them to be tainted. For good measure, that offence also requires the dealer to have acted “dishonestly”. I understand that the Theft Act 1968 also requires the mental element of dishonesty.

As the BAMF has stated, both those existing statutes mean that a dealer with honest intent and conducting reasonable due diligence is highly unlikely to run the risk of prosecution, unless it is shown that they wilfully acted dishonestly. Although I understand that the Government have cited article 21 of the second protocol of the convention as justification for a lower level of mens rea, I draw my hon. Friend the Minister’s attention to article 15 of the protocol, which indicates that an offence has occurred if a person intentionally commits an act of theft or misappropriation against cultural property protected under the convention. Surely that suggests that an element of dishonest criminal intent is required by the convention.

For the Bill to introduce a lower threshold of mens rea would amount to gold-plating, which appears to run counter to Baroness Neville-Rolfe’s assurances in the other place that the Government intend

“to do only what is necessary to meet our obligations under the convention and its protocols.”—[Official Report, House of Lords, 6 June 2016; Vol. 773, c. 586.]

I also understand that the Government have cited the Syria and Iraq sanctions orders as examples where “having reason to suspect” is the required level of mens rea. I am not a lawyer, but I have been told that this level of mens rea is unusual as a basis for establishing criminal intent. The Syria and Iraq orders relate to clearly identified geographical locations and, by their very nature, are likely to be short-term. As Orders in Council, they were not subject to consultation and parliamentary scrutiny. They have little in common with the Bill.

For all those reasons, the words “having reason to suspect” are inappropriate. Terms such as “believing” or even “suspecting” carry greater certainty and clarity. I emphasise that this is a point of law; it does not weaken or water down the Bill. We all understand that the objective is to squarely target those with criminal intent. My hon. Friend the Member for Enfield, Southgate said that sufficient reassurance should be given to the trade in the guidance on the Bill. I do not wish to divide the Committee, so I will not press my amendment. However, I would be grateful if the Minister took those points of law into account.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

Although I have no interest in any bodies that sell art, I appreciate the importance of art sales to this country. I would therefore like to say a few words. I have read the Second Reading debate, along with subsequent briefings from various parties. This has clearly become a contentious issue for a number of right hon. and hon. Members, and indeed for a significant section of the art market. My hon. Friend the Member for Kensington and the hon. Member for Cardiff West have set out those concerns very effectively, and I do not intend to rerun them. I note the Government’s position that this offence and the change in the criminal intent required will not in practice make a difference to the operation of the art market in the UK. I am sure that the Minister will elaborate on that point.

I appreciate the practical reality of the change in legal approach. Whatever the Minister says today, nothing will be able to stop a prosecuting lawyer advising that this is new law and that it is therefore open to be tested in the courts. Furthermore, because of the nature of the changes, there are those in the auction market and wider art market who would have concerns that the existing, accepted levels of due diligence will be threatened by the legislation, and uncertainty is always the enemy of business. The art sellers’ fear is that, as a result, Britain could lose its international pre-eminence in the art sales arena—a scenario that none of us would want to see.

I have a suggestion. When I was a shadow Minister, I scrutinised the previous Labour Government’s Bribery Act 2010, which mostly had cross-party consensus. The Act also addressed corruption. As with this Bill, we had to persuade large sections of the business community that its practical application would not disrupt their operations. The route devised to address those concerns was for the relevant Department to publish guidance. There was significant and wide consultation on that guidance, which addressed the more day-to-day, process-type decisions and due diligence considerations that could not realistically have been included in the legislation.

For example, if the famous picture to which my hon. Friend the Member for Kensington referred had been removed from a Soviet-occupied country in the 1970s—a country that is no longer occupied, of course—would it come within the Bill’s scope? Or if the same picture had been shown in a widely distributed sale catalogue for a certain period of time, would it be acceptable for an allegation of dodgy provenance to be made on social media half an hour before the sale, so that the auctioneer would stop the sale, possibly affecting the picture’s value and a possible future sale, even if the allegation was subsequently disproved? If so, under what conditions would that be acceptable? Those concerns also apply to clause 2 and what constitutes property that is important to all peoples.

By using guidance that is properly consulted on, acceptable practice norms could be established and generally supported with the buy-in of our art selling and auctioneer communities. That could address many of the practical concerns raised on this clause. I would be grateful to hear the Minister’s views on what I hope she will take as a positive suggestion.

[Mr Burrowes]

It is a pleasure to take part in the debate on clause 17, which drew a lot of attention from both Government and Opposition Members on Second Reading, as well as in the other place and among the all-party group on the protection of cultural heritage. I welcome the involvement and contributions of the Antiquities Dealers’ Association, the British Art Market Federation and others, which have drawn their expertise to the Committee’s attention in their submissions. I very much respect their concerns, amplified by my hon. Friend the Member for Kensington, about mens rea, which, as I said earlier, gets me interested.

Were one to have a blank canvas—I suppose this is an appropriate forum in which to discuss canvases—there would be an even greater weight to the argument. As a criminal lawyer, when I look across the family of dishonesty-type offences, I will plainly be looking at the state of mind. In the normal course of dishonesty-type cases, one would look to ensure that there is a subjective test that is consistent not only in terms of enabling a prosecution, but with an eye to how the judge would distinguish between or collate the subjective and objective elements in the summing up to the jury. I appreciate that everyone wants to ensure that prosecutions under the Bill are successful.

Having said all that, although I accept that there is genuine concern about the potential effect on the market, I say, respectfully, that it has been somewhat overstated. Given that we do not have a blank canvas, the idea that the implementation of the Bill will cause such repercussions on the market has been overstated. Elements of the canvas are relevant and show things working, albeit in a slightly different form. The Syria sanctions order and the UN’s Iraq sanctions order are relevant and give some texture to enable us to recognise that a precedent has been followed in relation to this particular element of the subjective and objective tests.

One can also look further afield. We can have our own views, but to give a sense of balance, if one looks at the recent written submissions to the Committee, some significant views have been brought to our attention. Mr Michael Meyer is head of international law at the British Red Cross, a respected body of international import when one is dealing with issues of international humanitarian law. In his written evidence, he makes the point that the British Red Cross is a neutral body that is keen to maintain its neutrality—the commonality of that view was shown in both this House and the other place.

In paragraph 5 of his submission, he outlines some concerns that have also been raised in this debate. He then says:

“However, it appears that, in practice, the clause should place no greater burden on dealers than already exists to conduct appropriate due diligence. In other words, the threshold of ‘reason to suspect’ is not so low as to have an adverse impact on the legitimate market, while at the same time acting as a necessary and suitable deterrent for those who may be less scrupulous. The wording is somewhat similar to that used in the existing Iraq and Syria sanctions orders. There is also very similar wording found in section 17 of New Zealand’s Cultural Property (Protection in Armed Conflict) Act 2012.”

Interestingly, the latter Act also dealt with the ratification of The Hague convention.

The written evidence from Peter Stone, the UNESCO chair in cultural property protection and peace, to whom I have referred previously, asks the Committee not to amend the Bill. He draws attention to clause 17 and prays in aid the note submitted by Professor Roger O’Keefe of University College London law school, who was involved in scrutinising the draft Bill before the Culture, Media and Sport Committee. He, too, very much supports the current wording and suggests that appropriate due diligence and legal advice can deal with concerns.

14:29

The Council for British Archaeology has already recommended to the Committee that the Bill’s drafting is adequate, as has the UK National Committee of the Blue Shield. I say that to show that there is a balance of opinion. One way of properly dealing with the suggestion that the amendments will not be pressed is by recognising that this issue is important. I recognise and value the pre-eminence of the market here, not least in London. We need to ensure that there is proper confidence, assurance and guidance, and appropriate clarity and transparency, to ensure that any chill factor or fear of a knock on the door, seizure of any artefacts and so on, will not be there. We need real clarity, so that there will not be the cost of having to get expensive lawyers on the case—I know about those. Perhaps the Minister can give some assurance on that, and recognise that there is a balance of opinion that wants to move forward and keep the drafting as it is, given that we do not have that blank canvas in place.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Tracey Crouch)]

As always, it is a pleasure to serve under your chairmanship, Mr Turner. Welcome to the afternoon session. As the hon. Member for Cardiff West pointed out, the morning’s session was full of consensus and we moved quite swiftly through the Bill. It is a pleasure to continue this morning’s work.

Before I get into the detail of clause 17, allow me—for the second time—to answer directly the hon. Gentleman’s question, this time on consultation, which he raised about the Secretary of State and I holding further meetings. I can confirm that the Secretary of State and I have both had further meetings with stakeholders, as have officials. I am grateful for the time that others have afforded us to have further discussion on this clause.

[Kevin Brennan]

The Minister also said on Second Reading—it is in column 700 of Hansard—that she would meet concerned parliamentarians. Was she able to do so, as part of that process?

[Tracey Crouch]

I am pleased to confirm that I have had meetings with concerned parliamentarians since Second Reading, and I am sure that I will continue to do so before Report, if necessary.

The debate this afternoon has been interesting. I am grateful to colleagues for raising these issues, because it allows me as Minister to try to reassure them and other stakeholders who are concerned about clause 17.

Clause 17 creates the offence of dealing in cultural property that has been unlawfully exported from occupied territory. An offence is committed if a person deals in unlawfully exported cultural property when they do so knowing or having reason to suspect that it has been unlawfully exported. The amendments tabled to clause 17 seek to modify or remove the “reason to suspect” element. It is therefore important to explain our approach to the mental element of the dealing offence.

First, we did not develop this approach in a vacuum. The wording was developed following discussions with the police, who felt that this threshold was appropriate. Crucially, I understand that the national policing lead for cultural heritage crime remains content with our approach. Secondly, the mental element of the offence created by clause 17 is comparable to similar offences concerning cultural property implemented by the Iraq and Syria sanctions orders, which use “reason to suppose” and “reasonable grounds to suspect”. The offences created by those sanctions orders are the most appropriate comparators, as they deal with cultural objects which have come from situations of conflict. Thirdly, we know that the Bill sets a lower threshold for criminal intention—or mens rea—than other existing legislation, including the Dealing in Cultural Objects (Offences) Act 2003. However, the Government consider this to be appropriate, given that it is designed to protect a very special and limited class of cultural property that is of great importance to all people, as defined by article 1 of the convention.

As part of my discussions with concerned stakeholders in the House, I have taken representation from those with close connections to the art market. When they have been discussing issues around the difference between the mens rea in the 2003 Act and in this Bill, there was a suggestion that perhaps we should review the 2003 Act when the opportunity arises. If there is continued concern about the differences between the mens rea in this Bill and that in the 2003 Act, we will certainly look to increase the mens rea in the 2003 Act, rather than watering down the mens rea in the Bill.

To be clear, we arrived at our approach for three main reasons: first, following consultation with the police; secondly, due to the close analogy with the Syria and Iraq sanctions; and thirdly, because we are looking to protect such a small and special class of objects. We are pleased to note from the written evidence the support we have for that approach, including positive statements from academics, the British Museum and the Council for British Archaeology. I draw Members’ attention to the views set out in the British Museum’s written contribution:

“We feel it is particularly important that there is no watering down of responsibilities or requirements in the Bill. Specifically we feel that in regard to the Clause 17...it is imperative that the wording should remain ‘knowing or having reason to suspect that it has been unlawfully exported’”.

I find the museum’s views particularly compelling as its officials regularly offer their expert advice to the art market as part of the due diligence process.

My hon. Friend the Member for Enfield, Southgate stole my quotation from the British Red Cross, but it is worth repeating that it said that

“it appears that, in practice, the clause should place no greater burden on dealers than already exists to conduct appropriate due diligence. In other words, the threshold of ‘reason to suspect’ is not so low as to have an adverse impact on the legitimate market, while at the same time acting as a necessary and suitable deterrent for those who may be less scrupulous.”

I want to move on to consider the impact of our approach and explain how it will work in the real world. Reason to suspect is primarily an objective test, in that the prosecution need not show that the defendant personally suspected that cultural property was unlawfully exported—only that a reasonable person would have suspected that it was. However, the prosecution must be able to point to something that would or should have caused a reasonable person to suspect. It therefore has to be shown that the defendant was personally in possession of the knowledge that would cause a reasonable person to suspect.

A dealer who took possession of an object merely for the purpose of carrying out due diligence would not be committing an offence, as that would not be classed as dealing. They would commit an offence only if, having been through the due diligence process, they went on to deal with the object after discovering or having had reason to suspect that it was unlawfully exported. The Bill will not require art dealers to change how they operate. The art market is a self-regulated industry and the trade associations already have clear due diligence guidance and checklists in place, which they expect dealers to follow before putting an object forward for sale.

My hon. Friend the Member for Kensington and others raised concerns in the consultation in the run-up to the Bill that a phone call received or accusations published in a blog post shortly ahead of a sale could stop it from proceeding. However, those are already issues for the market, and they will not be solved by watering down our Bill. If new, convincing evidence is presented about the provenance of an object shortly before an auction, we would already expect dealers to pause and consider whether they need to undertake further due diligence. If, however, the claim is a completely false accusation with no evidence to back it up, it may be perfectly legitimate for a dealer to ignore it. Such accusations are unlikely to be considered a reason to suspect that an object has been unlawfully exported. We have listened to the concerns of the art market, but it has not provided any compelling evidence to support the idea that the Bill would create insurmountable problems for the market, or increase the amount of due diligence that it needs to undertake.

The hon. Member for Cardiff West has suggested removing “reason to suspect” altogether, which would mean that an offence would be committed only if it could be proved beyond reasonable doubt that a defendant knew that they were dealing in unlawfully exported cultural objects. That sets the bar far higher than for either handling stolen goods under the Theft Act 1968 or dealing in tainted cultural objects under the 2003 Act. I am concerned that requiring proof of actual knowledge on the part of the dealer, as opposed to reason to suspect, could actually discourage less scrupulous dealers from carrying out due diligence, and enable them to turn a blind eye to things that would cause a legitimate dealer to ask more questions.

I appreciate that the Opposition’s amendment is probing, but I was a little surprised by it, given that on Second Reading the hon. Member for Sheffield, Heeley (Louise Haigh) criticised the threshold of the 2003 Act for being too high and seemed content with the level of mens rea proposed in the Bill. She hoped that on that point

“the Minister will stick to her guns”——[Official Report, 31 October 2016; Vol. 616, c. 736.]

The amendment would make it much harder to prosecute dealers who deal unlawfully in cultural property. That seems to me to be an extraordinary change in position; but fortunately the amendment is merely probing.

My hon. Friend the Member for Kensington has proposed amending “reason to suspect” to “believing”. Her amendment would raise the threshold for criminal liability so that proof was required of the dealer’s belief that the object was unlawfully exported. That would be seen in a number of quarters as a watering down of the Bill. The offence created by clause 17 will not have an adverse impact on legitimate dealers who have continued to operate since the Iraq and Syria sanctions came into force, but it will cause unscrupulous ones to think twice. Dealers should always be concerned to establish that any cultural object that they are asked to deal with has good and lawful provenance. The argument that this new offence will stifle the art market seems to imply that dealers are happy to risk dealing in unlawfully exported objects as long as they cannot be prosecuted. Dealers should not be taking such risks in any event; where there are question marks over provenance, they should simply not deal in those cultural objects. I would like to stress once more that the Bill should not require changes to the due diligence processes that the art market already follows.

I refer to the wise counsel of my hon. Friend the Member for Huntingdon and his experience of the issue with regard to the Bribery Act 2010. I confirm that the Government are committed to updating the guidance available to all stakeholders in this Bill. We stand ready to work co-operatively with the art market to ensure that all dealers understand their roles and responsibilities. That could if necessary include consultation before the guidance is issued, if that is helpful. I hope that reassures hon. Members and that the hon. Member for Cardiff West feels able to withdraw the amendment.

[Kevin Brennan]

I thank the Minister for her response. I confirm that amendment 7 is a probing amendment. She quite rightly picked up on the summing up that my hon. Friend the Member for Sheffield, Heeley made on Second Reading. This is an important issue and the debate has been useful, and a probing amendment is a useful vehicle for a debate. The Minister just mentioned the hon. Member for Huntingdon, and it is useful to have on the record her commitment on the guidance.

Several extended metaphors have been used during our debate. The hon. Member for Kensington talked about gold-plating. I do not think anything that is gold-plated is covered in the Bill; it might not be of sufficient cultural importance. [Interruption.] I have at last provoked a reaction from my hon. Friend the Member for Rhondda, who insisted that he would take no part in today’s proceedings. He did comment from a sedentary position that it was a rather extended metaphor about the blank canvas. Of course, we want to make sure that nobody gets framed.

One of the many interesting things that the Minister said was that the Government are considering increasing, or strengthening, or decreasing the mens rea, whichever way round it is. I do not know the correct phrase; I am not a lawyer.

[Tracey Crouch]

I said that we would be happy to consider doing that, if the art market and stakeholders were interested in making sure that the Bill and the 2003 Act were more aligned.

[Kevin Brennan]

I will not get into a discussion on the difference between being happy to consider something and considering something, much though I would enjoy that. I will rephrase: the Minister confirmed that she would be happy to consider changing the threshold in relation to the 2003 Act.

The Government’s position is quite interesting. There has been only one successful prosecution and conviction under the 2003 Act, in May this year; somebody was convicted after having gone around historical churches across the country and stolen Bibles, statues, friezes and even two 15th century oak panels in Devon. They pleaded guilty to 37 offences of theft under the 2003 Act and received a three-year sentence. However, the Government were keen to say on Second Reading—this is how I understand their position—that that in no way reflects the Act having too high a threshold for prosecution, and that it might in fact be a result of the Act acting as a deterrent. I do not believe that. I think that if people are being prosecuted, it is under the Theft Act 1968 or other Acts relating to these sorts of offences.

14:45

The Minister is right to consider looking at the 2003 Act again in conjunction with the market, because if there is a bumpy playing field, it may well create perverse incentives when it comes to which laws are used to prosecute people who carry out these offences. It has been helpful to discuss the issue. This was a probing amendment, and I beg to ask leave to withdraw it.

Amendment, by leave, withdrawn.

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

[The Chair]

With this it will be convenient to discuss new clause 3—Cultural property: duty to provide information—

‘(1) Auctioneers and traders within the United Kingdom shall have a duty to provide buyers and potential buyers of items of cultural property (including antiques, cultural artefacts and artworks) with information to enable buyers and potential buyers to decide whether the item has been unlawfully exported within the meaning of section 17 of this Act.

(2) The Secretary of State may make regulations specifying the nature of the information to be provided under subsection (1).

(3) Regulations under this section—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’

[Kevin Brennan]

It is me again, I’m afraid, Mr Turner. Hopefully we will be able to get through our proceedings fairly expeditiously this afternoon. I will make some brief remarks on the clause before I turn to new clause 3.

To return to what we were just discussing, the Bill’s focus on preventing the illegal exportation of cultural property from occupied territories is certainly vital, and we very much welcome that. Daesh, which sometimes calls itself ISIS, has set up a so-called ministry of antiquities. If ever there was a perverse use of that terminology or an example of Orwellian newspeak on stilts, that is it, because that body exists simply to turn cultural property into income streams for that terrorist organisation by exporting and selling stolen precious items abroad. We have discussed the concerns regarding the phrase “reason to suspect” in clause 17(1), so I do not intend to rehearse those points.

New clause 3, which stands in my name and that of my hon. Friend the Member for Tooting, aims to ensure that the art market produces and keeps records necessary to determine whether an item has been illegally exported. Once again, it is a probing amendment, but we want to hear the Government’s response to our suggestion. We have heard that there is not always a good paper trail in the arts market for objects of the kind that we are discussing, so the new clause is an attempt to look at the problem of ineffective accountability from a different angle. It is no use punishing legitimate operators for a lack of knowledge when there is little reliable paperwork. That could divert resources away from stopping criminals carrying out the activities that the Bill intends to deter people from doing. If we ensure that reliable paperwork is produced and kept, perhaps we can hold the market to account more effectively.

I mentioned on Second Reading that cultural property is important in at least two ways. The first is through its monetary value, and the second is through its importance culturally and to the morale of a particular country—or, indeed, the world. We have heard much about the importance of heritage to morale, in terms of cultural, national and personal identity. We have also heard how groups such as Daesh mobilise cultural property for money by illegally exporting artefacts and selling them on the international market. UNESCO found that looting is happening on an industrial scale in the middle east, and that is what we are trying to discuss and seek a way of tackling with the new clause.

I have outlined the challenges that the art market faces in trying to assert provenance. Paperwork stretches back only so far, and that which existed before the 1990s was not always kept by owners or authorities. That has resulted in what some have seen as a culture of non-disclosure in the art market. With our earlier amendment 7, I was keen to show that we do not in any way oppose the art market. Rather, we want to support those who work to make it exemplary, by providing a legal backstop to their codes of practice and due diligence. As I have mentioned, this is a very valuable industry, worth many billions of pounds under some estimates, and London’s art market is the second largest in the world. We want to support those who work to ensure that its reputation remains high, and that it therefore continues to hold a pre-eminent role in the world.

Of course, an object’s entire paper trail cannot be retroactively reconstructed, but we can put in place robust measures to ensure that records are reliable from this point. We should aim for the transparency that we demand in other industries because, as in every industry, there are activities and actions of individuals within it that have to be deterred and prevented. A lot of investigative work was done by both Channel 4’s “Dispatches” and The Guardian into some of those activities. I understand that the Metropolitan police have stated that the market has improved recently, largely due to the due diligence practices that we have discussed. Building on that, it is not unreasonable to expect, as a minimum, that the identity of an item’s owner and buyer should be made known, as referred to in subsection (1) of the new clause.

Subsection (2) would have the Secretary of State bring forward regulations regarding specific requirements for transparency. I think that a similar amendment was proposed in the House of Lords, to which the Government objected because it would have put too much detail in the Bill. That is always an objection that Governments, often reasonably, but at other times unreasonably, bring forward. In this version, we have allowed the Secretary of State the opportunity to bring forward those regulations on what would be specifically required for transparency. That is so that there can be appropriate consultation with the market, and an opportunity for others to make representations on the exact detail of what that transparency would consist of. It is not possible to trace the entire provenance of every item, but if the Secretary of State were to ask, or require, that an effort be made to identify owners since 1970—the date of the UNESCO convention—that would go a long way towards helping to improve the market.

I have outlined that there are self-regulatory codes of practice in place in the art market. I am happy to praise the industry for putting those in place and for the improvements in recent years. However, the Government have acknowledged that that is partly due to the effect the 2003 Act had in incentivising due diligence, so legislation can have an impact on improving due diligence. With this new clause, we are suggesting that we should not be complacent. The Bill is an opportunity to incentivise further transparency and deter further fraudulent behaviour. Does the Minister agree with that? We are approaching the same issue of criminality from a different angle, and our aim is to establish effective enforcement and deterrents. I look forward to hearing the Minister’s response on new clause 3.

[Victoria Borwick]

I wish to comment on new clause 3 on behalf of the art and antiques trade, because I believe that it is entirely inappropriate. I believe that there is considerable misunderstanding about the information available for millions of works of art, antiques and antiquities owned by citizens and institutions in this country. The submissions from the trade make it clear that the vast majority of cultural objects, whether held privately, in museums, or being bought or sold on a daily basis, are not supported by historical or documentary evidence of previous ownership, or the dates and locations of their previous whereabouts—what the art market calls provenance.

That is inevitable when you consider that works of art have been entering and leaving this country for hundreds of years. Documentary evidence may never have existed, may have been lost with the passage of time, or may never have been considered necessary. Until very recently, owners of objects rarely retained copies of export licences, and the originals would have been surrendered to the authorities. Although it would now be considered good practice to retain such information, it is not possible retrospectively to create a paper trail for the majority of objects where none exists.

The absence of such documentary evidence by no means necessarily indicates that an object is of illicit origin. On a daily basis those in the trade have to make honest judgments for the majority of objects for which no documentary evidence exists. Taking that into account, when a dealer is in possession of information demonstrating that an object was legally exported, then all is well and good. If they have information to suggest that it was illegally exported, they would be breaking the law if they sold it.

As I have mentioned, the vast majority of cultural works of art on sale in this country are, for historical reasons, not accompanied by such information. Although specialists will often be able to identify the date of manufacture and country of origin from the style, condition and craftsmanship exhibited by an item, in the case of an item likely to have been made abroad, the date it left the country of origin and the date it arrived in Britain will often simply not be known.

My final comment about new clause 3 concerns client confidentiality. The Minister in the other place, Baroness Neville-Rolfe, expressed concerns that passports containing details of previous owners would infringe article 8 of the European convention on human rights. The retention of the names and addresses of previous owners would interfere with the right to respect for private and family life.

[Kevin Brennan]

Does the hon. Lady acknowledge that the detail proposed in the amendment that was tabled in the Lords is not included in this new clause, and that any such detail would be outlined in regulation after discussion with industry?

[Victoria Borwick]

Although I accept that, it is also an important briefing point today as to why the art and antiquities associations feel so strongly about this. The Government’s opinion is that such a level of interference could not be justified as necessary for the aim of protecting cultural objects. I maintain that the same considerations would apply to the proposals contained in the new clause, and I therefore ask my colleagues to reject it.

[Tracey Crouch]

I actually agree that it is important that dealers in cultural property provide appropriate information on the provenance of the items they sell, but I am unable to support new clause 3, for the following reasons. First, it would introduce a statutory requirement for the art market to provide information about provenance for the first time. As I have said before, I believe that it is appropriate to allow the art and antiquities trade to regulate itself. The established trade associations possess codes of ethics that they expect their members to abide by, and we expect them to enforce those codes strictly.

Furthermore, we believe that the existing legal framework, along with the new offence we are creating, provides a sufficient incentive for legitimate dealers to ensure that they do their due diligence and pass on relevant information concerning an object’s provenance. The Government are not in the business of imposing disproportionate regulatory burdens on well functioning markets. Indeed, we have a manifesto commitment to cut red tape further. We believe that the current self-regulatory approach to the art market works well and that there is no need to add an additional statutory burden.

Secondly, new clause 3 appears to be an attempt—I am not sure whether this was the Opposition’s intention—to shift responsibility for making decisions about whether a cultural object has lawful provenance to the buyer. It seems strange to put the focus on the buyer in this way. It could result in buyers being far more cautious about purchases, which would genuinely risk slowing down the art market. Our expectation is that dealers should carry out due diligence, seeking advice as appropriate and taking a view on an object’s provenance before offering it for sale. If there is a question mark over provenance, it simply should not be for sale.

Thirdly, we cannot understand the Opposition’s motivation in tabling both new clause 3 and amendment 7, which I appreciate has now been withdrawn. Raising the threshold of the mens rea to such a high level and putting the onus on buyers to make decisions about whether or not an object has lawful provenance would significantly water down clause 17, while at the same time putting additional burdens on both buyer and seller. I must therefore strongly resist new clause 3.

15:00

[Kevin Brennan]

I thank the Minister for her response. She will understand that, in tabling probing amendments, we sometimes have to probe from one direction and sometimes from another in order to find out whether the Bill is sound.

[Chris Bryant (Rhondda) (Lab)]

What’s wrong with One Direction?

[Kevin Brennan]

I am certainly not going to be the one to probe.

[Chris Bryant]

Don’t.

[Kevin Brennan]

I will not go any further.

It is not entirely illogical if, as the Minister has said, auctioneers and traders should have a duty to determine provenance. They should have a duty to tell the person to whom they are selling the item what its provenance is, and that is what is envisaged in new clause 3; it would require nothing more than passing on information. I take the point that those matters could be covered in industry codes of practice, but the problem with such codes is that it is usually only the good guys who sign up to them, whatever field we are talking about. The purpose of regulation is to cover everybody, not just members of industry bodies who pay their subscriptions and obey codes of practice that they have signed up to. However, the new clause was a probing amendment and I will therefore not seek to press it.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Clauses 18 to 27 ordered to stand part of the Bill.

Clause 28

Immunity from seizure or forfeiture

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

[Kevin Brennan]

We now come to part 5, which is on property removed for safekeeping. It would be helpful if the Minister outlined the Government’s approach.

[Tracey Crouch]

Clause 28 provides immunity from seizure and forfeiture for cultural property that is protected under article 12 of the convention—that is, property being transported to the United Kingdom for safekeeping, or en route through the UK to another destination for that purpose. The protection rightly extends to any vehicle in which such cultural property is being transported. Immunity from seizure and forfeiture is also provided for cultural property for which the UK has agreed to act as a depository under article 18 of the regulations. In that case, the property is protected while it is in the control of the Secretary of State or any other person or institution to whom the Secretary of State has entrusted it for safekeeping. However, if the property leaves the custody of that person or institution—for example, because it is stolen—it is no longer protected and may be seized by the police in order to return it.

The clause provides wide immunity from seizure and forfeiture for the cultural property to which it applies. The clause fulfils an important role in implementing our obligations under the convention and its regulations: it ensures that property entrusted to the UK for protection during a war is guaranteed to be returned. Although existing legislation already provides protection for some cultural property, most notably for state-owned property, it is not sufficiently comprehensive to meet our obligations.

Question put and agreed to.

Clause 28 accordingly ordered to stand part of the Bill.

Clauses 29 to 33 ordered to stand part of the Bill.

Schedules 1 to 4 agreed to.

New Clause 1

Enforcement: costs

‘(1) The Secretary of State shall lay before Parliament each year a report setting out the costs incurred by the following bodies in fulfilling the requirements of this Act—

(a) the cultural property protection unit within the Ministry of Defence,

(b) Border Force,

(c) the Arts and Antiquities Unit of the Metropolitan Police,

(d) UK police authorities, and

(e) any other publicly funded body carrying out functions for the purposes of cultural protection under this Act.

(2) The first report under subsection (1) shall be laid within 12 months of this Act being passed.

(3) Reports laid under this section shall include an account of how bodies specified under subsection (1) communicate and cooperate with each other in protecting cultural property in compliance with this Act.’.—(Kevin Brennan.)

Brought up, and read the First time.

[Kevin Brennan]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss the following:

New clause 4—Safeguarding cultural property—

‘At the end of the period of one year following the passing of this Act, the Secretary of State shall lay a report before each House of Parliament on which cultural properties situated within the UK have been listed as protected by this Act, and how the Government has safeguarded them against the foreseeable effect of an armed conflict, in accordance with Article 3 of the Convention.’

New clause 5—Cultural Protection Fund—

‘At the end of the period of one year following the passing of this Act, and every two years thereafter, the Secretary of State shall lay a report before both Houses of Parliament on the work of the Cultural Protection Fund in supporting the implementation of the Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict of 1954 and the Protocols to that Convention of 1954 and 1999.’

[Kevin Brennan]

New clauses 1, 4 and 5 stand in my name and that of my hon. Friend the Member for Tooting. New clause 1 is designed to facilitate discussion on how much the cultural protection outlined in the Bill will cost the publicly funded bodies involved in its implementation, how the Government propose those costs should be met and how those bodies will be joined up in that effort. For the sake of clarity, I will go through each of the bodies specified in the new clause in turn.

Will the Minister indicate how much funding the cultural property unit within the Ministry of Defence will receive, what its size and resourcing will be and how each of those factors are projected to look in future? I am aware that the Ministry of Defence, like all Government Departments, is operating on a tight budget. I am also interested in the funding that will be available for training. We understand that the MOD will be looking for members of the armed forces who are knowledgeable about archaeology and other historical subjects, as was discussed on Second Reading. I pointed out then—I was backed up by the hon. Member for East Worthing and Shoreham (Tim Loughton)—that, with regard to joined-up Government, talking about having more members of our armed forces who are experts in those fields while simultaneously cutting so-called soft subjects in our schools, such as archaeology, art history and classical civilisation at A-level, seems to me to send out an extremely mixed message.

Nevertheless, will the Minister indicate what funding will be made available to try to compensate for the knowledge gap that will create in future, and to ensure that membership of the so-called monuments squad—I will call them that rather than monuments men—will not be limited to those fortunate enough to have been offered those now-rare subjects in school or as an enrichment to their school activities? The impact assessment seems to suggest zero cost to the Ministry of Defence. We are always interested to know how something can be delivered at zero cost, so perhaps the Minister could clarify that.

[Tracey Crouch]

Tory Government.

[Kevin Brennan]

The Minister says “Tory Government” from a sedentary position. I hope that she is not saying that they are not paying the people in the monuments squad for their work. We in the Opposition certainly believe in the rate for the job when somebody is working. I am sure that she will clarify that in her response.

The second body mentioned in our new clause is the Border Force, which we all know has been subject to large budget cuts—more than £300 million in the run-up to 2015 by the coalition Government—and simultaneously came under the increasing pressure of public expectation in relation to preventing illegal immigration. As we see with every public service, expectations are high, but it is difficult for those expectations always to be met if funding is continuously cut. That said, I understand from the Government’s assurances in the Lords that any new costs incurred by the Border Force in enforcing the Bill will not be significant, and that its new responsibilities will not differ greatly from its current day-to-day business.

The Government have stated that the Border Force already carries out the functions required by the Bill in relation to the 2003 Iraq and Syria sanctions. Will the Minister assure us that that is indeed the case? Furthermore, while the work derived from the Bill may not differ significantly from the current everyday business, is there likely to be an increase in workload in relation to the Bill? If so, what provisions are the Government making?

It has been stated that, in regard to a code of practice, resources on cultural goods are available on the Border Force intranet site, and I understand that the Border Force will be expected to seize goods when instructed to do so, rather than be expected to discover the goods’ illegally-exported status itself. As I mentioned, many duties under the Bill are already performed by the Border Force. Does the Minister think that the passage of the Bill will require further robust training in the handling of cultural goods?

Baroness Neville-Rolfe stated:

“Enforcement practices relating to combating smuggling are often the same regardless of the type of goods.”—[Official Report, House of Lords, 28 June 2016; Vol. 773, c. 1529.]

While that may be true, there are also unique sensitivities when dealing with often antiquated and fragile items of cultural property, which, as all parties have agreed, are of immeasurable value. This question is particularly relevant in the light of comments made by the former director of the unit within the Metropolitan police, Dick Ellis, who said:

“These pieces are moving through customs, they’re moving through our ports all the time. And yet not a single item is seized in this country… these sorts of objects when they’re looted in Syria, when they’re looted in Iraq, are helping to fund terrorism, why on earth aren’t we doing more to stop them coming on to the market?”

That is not just a question for the Border Force, because, as the new clause specifies, institutions need to communicate and co-operate with each other to protect cultural property. The Government have clarified the fact that the Border Force would not be expected to identify illegal goods, so the matter of how those separate institutions, with their separate but related functions, will be joined up is therefore crucial.

Does the Minister feel that a dedicated unit within the Border Force, with a close communication link to the equivalent unit within the Metropolitan police, is necessary properly to enforce the Bill and, crucially, to provide a robust and credible deterrent with respect to those who would attempt to bring illegally exported cultural property into the UK?

I turn now to the arts and antiquities unit of the Metropolitan police, which is composed—

[Victoria Borwick]

As a point of record, because it keeps coming up as an error, it is the art and antiques unit. I believe that point has been made before. It is not art and antiquities; it is the art and antiques unit.

[Kevin Brennan]

I stand corrected.

[Victoria Borwick]

I have visited it.

[Kevin Brennan]

I am pleased to have that correction, because my notes say “antiquities” so I shall correct myself as I go along. I turn to the arts and antiques unit of the Metropolitan police, which I understand is composed of three people. As the hon. Lady has visited, perhaps she can tell me whether I am right in that.

[Victoria Borwick]

indicated assent.

[Kevin Brennan]

The hon. Lady is nodding, so at least I got that right.

For now, suffice it to say that regulating this industry—which, particularly in relation to the auction market, is sometimes lacking in information regarding who owns what, as we have heard already—poses a rather large challenge for this team of three people.

Indeed, Dick Ellis, the aforementioned founder of the unit, has acknowledged that the team is not big enough—again, the hon. Lady is nodding—to solve the problems in the industry. Furthermore, it seems that, apart from an evidence room, this team does not have any special resources or equipment.

Does the Minister foresee this unit’s workload, and of course the subsequent cost, increasing in any way following the passage of the Bill, given the lack of special resources for the long-term storage of cultural property during legal proceedings? Will the Metropolitan police unit receive more resources or will items be kept elsewhere— [Interruption.]

15:18

Sitting suspended for a Division in the House.

15:30

On resuming—

[Kevin Brennan]

We were discussing new clauses 1, 4 and 5. Before the Division bell rang, I was saying that the Metropolitan police does not have many special resources for the long-term storage of cultural property during legal proceedings and asking the Minister whether any more resources will be provided to the Metropolitan police unit, or whether it is intended that, should items need to be stored, they will be stored somewhere else in a specialist environment, such as the British Museum.

That brings me to museums, galleries and archives, some of which receive public funding. Baroness Neville-Rolfe stated that while she was slightly open-minded on the topic, she thought it generally inappropriate for establishments to display artefacts deposited there for safekeeping. Does the Minister feel that that rules out the possibility of museums, galleries, archives and the like covering the costs of safekeeping, if they want to put items on display, by charging for entry to see them? Again, I am not advocating that, but I wondered if that was a point that the Government had in mind. How should these sorts of institution be funded if they have to perform that task?

Furthermore, the question of joined-up governance returns. How will information pass between the agencies involved in enforcing the Bill? That is especially relevant in relation to the private military contractors and embedded soldiers mentioned previously. Institutions are not as homogeneous as one might think. In essence, the new clause asks how the Government plan to facilitate giving already fairly thinly stretched institutions more to do without any additional resources.

New clause 4 aims to probe the Government on the methods and criteria used to determine which items of cultural property are chosen for protection under the Bill. We have heard in previous debates how the value of cultural property is bound up in both money and morale. Its destruction is therefore used as a weapon of war; it is an attack on people’s pride and identity, and a method of funding further warfare.

There has been cross-party agreement that the importance of cultural property and heritage is a holistic matter. That understanding is crucial to the success of the Bill, but it also poses a challenge when designing criteria. We already have systems of classification for our heritage worldwide, such as designated world heritage sites, and in the UK, such as grade I listed buildings. Can the Minister explain how these criteria in various fields will be joined up, how objects in fields that do not necessarily have an internal ranking system will be incorporated, and which heritage bodies will be consulted in the process?

We said earlier that these cultural objects have to be of great importance and significance, but how one judges that is perhaps ultimately a matter of taste. For example, there are some—I am not necessarily among them—who think that Buckingham Palace is a particularly bad example of botched architecture, and that the way that it was converted to give it its current façade was the 19th-century equivalent of using concrete cladding on a house. However, one would expect a building of such eminence—it also contains significant artworks—to be a cultural object of significant importance, and to be covered by the provisions of the Bill. I mentioned grade I listed buildings. How far down the grades of buildings are the Government willing to offer protection under this legislation? In other words, can they give us some idea of how limited the protection is likely to be under the Bill?

Laying before Parliament a report that outlined a list of properties protected by the Bill would allow for crucial debate and discussion. As I mentioned at the outset, perhaps MPs could bid for the inclusion of an item of cultural property in their constituency that is of great importance to not just them and their constituents, but all peoples of the world. I would say that Llandaff cathedral in my constituency, which was bombed and badly damaged in the second world war, and which has an extremely beautiful and important modern statue by Epstein, is a piece of cultural property that should be of importance to all people. It is difficult to know where the threshold will be in the Bill, so I am interested to know how the Government will liaise with experts from various fields to ensure that adequate measures are taken. Preparing this report will ensure that the public and their elected representatives feel content that their precious heritage is covered. Can the Minister explain how the qualifying artefacts will be determined and what say, if any, the public would have in that process?

New clause 5, which is in my name and that of my hon. Friend the Member for Tooting, seeks to ensure the transparency and accountability of the cultural protection fund. We want to probe how the Government plan to provide for this fund, how it will be resourced and how its different parts will be joined up. We are happy that the Government have committed to giving the fund £30 million over four years, and have set out a timetable for bids and consultation on the fund. Do they have a view on the level of their commitment to the fund following the initial four years? Though the £30 million is welcome as a start, the fund’s aims are ambitious. Are there plans to enhance that level of funding?

The fund will

“support projects involved in cultural heritage protection; training and capacity building; and advocacy and education, primarily focused in the Middle East and north Africa.”—[Official Report, House of Lords, 6 June 2016; Vol. 773, c. 584.]

The proposed report would allow Parliament to monitor whether more funding was required to fulfil those ambitions, as I suspect it might well be.

We certainly welcome the co-operation between the Department for Culture, Media and Sport and the British Council, and agree with the consultation’s conclusion that the British Council’s network and management experience excellently complement the expertise of the heritage industry, and that this collaboration is important to the fund’s success. Can the Minister tell us more about that, and especially about training and resource sharing between those institutions? I understand that the Government have indicated that they are involved with the British Council in developing a long-term strategy. With regard to the long term, the report proposed in the new clause could facilitate debate about the future resource needs of the fund; what countries and technologies should be focused on; and striking a productive balance between providing emergency support for cultural property in areas of armed conflict and supporting the safeguarding of items in peacetime.

There are, of course, many parties that those running the fund will need to liaise with in order to accomplish this, including non-governmental organisations, the military, police, Border Force, museums, archives and galleries—all those bodies that I mentioned previously. I reiterate the proposal made by Lord Collins of Highbury, who argued that the fund’s work, especially on supporting economic and social opportunities through cultural heritage, should be carried out in collaboration with the Department for International Development. Will the Minister indicate whether that will be the case, and outline how the cultural protection fund will relate to the voluntary fund established under the second protocol and run by UNESCO? Again, that is a matter of joined-up government and ensuring good value for money.

As I understand it, the Government have pledged to make sure that the cultural protection fund will be included in their yearly report on this Bill if it is of direct relevance, and that its spending will be scrutinised biannually by the OECD. That commitment is appreciated, but this fund deserves scrutiny in itself, not conditionally depending on its relevance to the Bill. This new clause would provide a mechanism by which the fund’s resourcing and operating could be scrutinised by Parliament, and its impact could thereby be maximised. I look forward to the Minister’s response on new clauses 1, 4 and 5.

[Mr Burrowes]

I want to comment on two aspects of the new clauses. First, I commend Detective Sergeant Claire Hutcheon, who has led the Metropolitan police’s art and antiques unit so admirably, and who is retiring in January. She has done admirable work and gained from experience over many years. Although the unit is small in number, it certainly has the quality. She has spread her expertise around forces across the country, pulled in support and expertise, and shared good practice so that forces do what they can on illegal trade. She has also built up a good partnership with the trade, and there is good understanding and confidence there that needs to be continued. There is some concern that the new office holder may have to start again at zero. There needs to be proper good practice, which might perhaps benefit from the guidance that we might hear about in relation to this Bill. It would be good to hear from the Minister that there is continued support for that unit and for the resources; it has not been up to full strength for some time—I think it is pretty much up to a full strength of about three—but it certainly punches above its weight.

I also want to draw attention to the excellent cultural protection fund, which is in its early stages and has £30 million. I know that the Minister is competitive, and recognises that if we are in competition with France on the ratification of the protocols, we need to get there first, but there is also an issue of money, because François Hollande has announced $100 million as part of the global endeavour to protect cultural heritage. I ask the Minister whether there is support for the global endeavours. The second protocol provides for a voluntary fund for cultural heritage; I understand that that is distinct from our cultural protection fund. Nevertheless, there is an indication, and I hope an intention, that there will be a contribution to UNESCO. It takes its hits and criticisms but, particularly in this regard, we must recognise UNESCO’s pre-eminence and the support for it. I hope that there will be a mechanism that allows for support, particularly from ill-gotten gains, through the recycling of money into the fund. When these crimes are prosecuted, the proceeds could go into a global pot.

15:45

I know that the Minister gets around; she goes to global sporting events to fly the British flag. There is a conference in Abu Dhabi on 2 and 3 December looking at the cultural threats in the region, and it would be useful to ensure that we were well represented by a Minister. She will be able to go there and not feel embarrassed that we have not ratified the second protocol of The Hague convention, because we have introduced the Bill and taken our rightful place in a lead role.

Going back to France and our competitive nature, it is worth noting that France has announced that the Louvre is being put forward as a shelter for world treasures recovered from war zones—the shadow Minister spoke about where those homes could be. There has been talk, not least within the all-party parliamentary group for the protection of cultural heritage, about whether London, given its pre-eminence in this regard, could also be a good place to provide a respectful and appropriate home for lost treasures. It will be interesting to see how the Government could support that mechanism. There may be a digital way of doing it, too. We could work with organisations such as the Wellcome Trust, which is looking at providing such an approach.

[Tracey Crouch]

Before I turn to the specific aspects of the new clauses, it might be helpful if I addressed a number of wider issues raised by the hon. Member for Cardiff West. He asked a specific question about the Ministry of Defence; I am sure that he and members of the Committee will respect that the matter is obviously one for the Ministry of Defence, but I will do my best to answer as much as I possibly can on the specifics of the unit to which he referred.

The joint military cultural property protection working group was established in early 2014 to develop the concept of a unit of cultural property protection specialists, in accordance with our obligations under article 7.2 of the convention. The MOD is currently tasking Army command with looking at plans for the creation of the cultural protection unit. Some preliminary work has already been completed, and it is expected that the unit will be able to form up 12 to 18 months after formal approval.

The convention for the protection of cultural property places a number of commitments on the MOD, most of which we already comply with. Article 7.2, however, obliges states to plan or establish specialist cultural property units to secure respect for cultural property and to co-operate with the civilian authorities responsible for safeguarding it. There is flexibility on the size and composition of such units, and other nations’ solutions vary from six to 360 people.

The MOD has tasked the Army with examining the best means of providing this capability, and the Army’s initial thoughts suggest a relatively small unit, at least in peacetime, of 10 to 20 personnel from across all three services. They will be predominantly or even exclusively reservists, with command at lieutenant-colonel level, although expertise will be more important than rank. Although planning is at an early stage, the Army is expected to respond to the Ministry of Defence in the next few months on how such a unit could be established. My hon. Friend the Member for Enfield, Southgate, recently asked the Secretary of State for Defence at Question Time to update the House on that matter, and I am sure that interested Members will continue to press the Ministry of Defence.

The three new clauses proposed by the hon. Member for Cardiff West deal with important matters in which I know members of the Committee have a keen interest. Alas, I cannot support their inclusion in the Bill. New clause 1 deals with the cost of implementing and enforcing the provisions in the Bill. We have already clearly set out our forecast of the costs in the impact assessment. Where there are ongoing costs, for example for the Border Force, the police and the armed forces, it is likely to be extremely difficult to disaggregate the costs associated specifically with the Bill from those incurred in other related cultural protection work.

For law enforcement agencies, it would be extremely difficult—if not impossible—to separate the cost of enforcement related to cultural property from ordinary enforcement costs. Even if it is possible to do so, the costs involved are likely to be disproportionate to the costs that the new clause requires us to identify and report. It is for the Border Force, the Metropolitan police and other police authorities to decide how best to allocate and use their resources, in the light of the priorities and the legislation that they are required to implement and enforce.

[Kevin Brennan]

When the Minister referred to the impact assessment, I took a glance at it and noted that, under the section outlining the Metropolitan police arts and antiquities unit—

[Victoria Borwick]

Antiques!

[Kevin Brennan]

It says “antiquities” in the Government’s own impact assessment, I am afraid.

[Victoria Borwick]

rose—

[Kevin Brennan]

The hon. Lady cannot intervene on me because I am intervening on the Minister. The number of personnel to be trained from that unit is four. We heard earlier that there were only three people in that unit, so I hope that is a helpful sign that the Government anticipate that the unit will expand.

[Tracey Crouch]

May I put an audible “tut” on the record at our mistake in the impact assessment? I know that people have concerns about the size of the Metropolitan police art and antiques unit, but the nature of its work—for example, it works collaboratively, including with international partners—means that its size is not a real reflection of its impact. A significant proportion of its work is from international law enforcement agency requests for assistance. I hope that responds in part to the hon. Gentleman’s question about the size of the unit.

With regard to the Border Force and the expertise required in identifying cultural property unlawfully exported from occupied territories, we do not foresee the Border Force playing a major role in discovering such objects unless specific intelligence has been received that objects from an occupied territory may be coming into the country. We think that it will be a rare event for a Border Force officer to be faced with something that they can clearly identify as having been illegally exported.

[Kevin Brennan]

I have a point relating to prosecution that the Committee will be interested in: I understand from the impact assessment that it is envisaged that there will be only one prosecution every 30 years under the Bill. Will the Minister confirm that my interpretation is correct?

[Tracey Crouch]

I am sure that if it says that in the impact assessment, that is indeed the correct interpretation, but I am happy to provide further information on that on Report if that helps.

I will go back to the points on policing that the hon. Gentleman raised with regard to new clause 1. He will, of course, be aware that we have created elected police and crime commissioners to give strategic direction and to hold police forces to account for operational policing decisions, including how resources are directed between different units and functions. In London, the Mayor of London has that responsibility. We do not think it is necessary or desirable for the Government to cut across that democratic approach to accountability in policing by requiring the Secretary of State to take a specific interest in the funding of individual police units or functions. Moreover, it does not seem to me to be particularly helpful to isolate the implementation and enforcement of the Bill from the excellent wider work being done by so many bodies to protect cultural property.

That also applies to the provision in subsection (3) of the new clause, relating to communication and co-operation between public bodies. As with the costs, I do not think it is helpful to treat that separately from the regular contacts between public bodies on wider cultural protection work. Public bodies are required to report on their work costs and spending, and hon. Members are always extremely assiduous in holding them to account for their use of public money and the way in which they implement and enforce legislation. I am sure that the Bill will be no exception. A separate statutory obligation on the Government to report to Parliament on the costs associated with the Bill therefore seem unnecessary, which is why we oppose new clause 1.

New clause 4 deals with matters of an administrative nature that are not specifically covered by the Bill. We are already considering the administrative measures that will be needed to implement the convention and its protocols once the Bill is passed into law. We will reflect on issues raised during the passage of the Bill as part of that process. The hon. Gentleman mentioned specific items. We do not think it is appropriate to confirm whether a specific cultural object will be afforded protection.

We want to ensure that the views of stakeholders are heard. Next month we are holding a round table discussion with key stakeholders to discuss the categories of cultural property that will be afforded general protection under the convention, and what additional safeguarding measures might be required. The hon. Gentleman might be interested to know that our provisional thinking is that general protection status would extend to buildings, historical gardens or parks of grade I or category A status; cultural world heritage sites; and nationally important collections in museums, galleries and universities, as well as in the national record offices and our five legal deposit libraries. However, we are still determining our categories, and discussions with key stakeholders are ongoing.

[Victoria Borwick]

Will the Minister consider inviting members of the trade and those who deal in cultural objects to participate in the consultation, to ensure that we have effective legislation?

[Tracey Crouch]

I will certainly take that away, discuss it with officials and report back to my hon. Friend.

In practice, a range of safeguarding measures will already be in place for most cultural property under general protection in the UK. Existing listing, designation and accreditation schemes generally require certain measures to be in place to protect cultural property from, for example, fire, flood and other emergencies and natural disasters. Article 5 of the second protocol expands on the meaning of “safeguarding cultural property” by giving some examples of the kind of preparatory measures that should be taken in peacetime. Those include the preparation of inventories, the planning of emergency measures for protection against fire or structural collapse, the preparation for the removal of movable cultural property or the provision for adequate in situ protection of such property, and the designation of competent authorities responsible for the safeguarding of cultural property. The first three measures all represent common-sense precautions and are likely to be covered by existing contingency planning for an emergency or natural disaster.

Once we have decided which cultural property will receive general protection, we will be in a position to decide which are the most appropriate competent authorities for safeguarding that cultural property in the event of armed conflict. Our current thinking is that the most appropriate body to undertake the peacetime safeguarding measures is the existing owner, guardian or trustees of a cultural property.

It is also important to note that article 26 of the convention requires state parties to report at least every four years to the director general of UNESCO on their implementation of the convention. In practice, UNESCO asks state parties to provide information on the measures they have undertaken in relation to relevant peacetime safeguarding provisions as part of the periodic reporting, and those reports are published on the UNESCO website. The UK Government will therefore already be reporting on the safeguarding of cultural property as a matter of good practice, in line with the reporting obligation in article 26. A separate statutory obligation to report to Parliament on matters that are administrative and not part of the Bill appears to be unnecessary.

On new clause 5, I know that many hon. Members are interested in the cultural protection fund and wish to be kept informed about it. However, the cultural protection fund is not part of the Bill, and the new clause therefore introduces a new subject that is beyond the scope of the Bill. It is also unnecessary. The British Council, which is responsible for administering the cultural protection fund, will publish an annual report on the work of the fund. That report will be publicly available. If the fund supports projects with direct relevance to the Bill and to the convention and its protocols, we will work with the British Council to ensure that the annual report includes appropriate mention of them. Our priority is to work with the British Council on the first round of bids, but we cannot make future funding commitments at this stage. I hope the hon. Member for Cardiff West is reassured that information about the cultural protection fund will be made available.

With regard to a point made by my hon. Friend the Member for Enfield, Southgate, parties to the second protocol are not obliged to contribute to the fund for the protection of cultural property in the event of armed conflict, but once the UK has ratified the convention and its protocols, we will begin to consider our role as an active state party. It would not be appropriate—certainly not on the face of the Bill—for the Government to commit to any funding prior to becoming a party to the convention or its protocols. However, I assure him, not just as a consequence of my own competitiveness but because it is morally right to do so, that we will continue to play, or wish to continue to play, a leading role in the the world on this issue. Those are the reasons why I oppose new clauses 1, 3 and 5, but I hope the hon. Member for Cardiff West is reassured by my comments.

16:00

[Kevin Brennan]

It is new clauses 1, 4 and 5. The Minister did have to shuffle through a number of papers so it is understandable that the numbers became confused. We are discussing new clauses 1, 4 and 5.

I thank the Minister for a very thorough response to the new clauses. I take issue with one thing she said—that our new clause 5 is beyond the scope of the Bill. Had it been beyond the scope of the Bill, Mr Turner, you would have ruled it out of order and the Committee would not have been able to discuss it. Because it was completely in order and within scope when we tabled it, we have been able to debate it at considerable length and had the benefit of the Minister’s very thorough and helpful response to new clause 4, notwithstanding her view that it was beyond scope. She did give a very thorough response and I am grateful to her for that. It has been very useful to get all of that on the record and it gives clarity on a number of points.

The impact assessment does indeed make interesting reading, not least the point about the Government’s assumption that a prosecution under the Bill will take place only once in every 30 years. The Minister did say that she might take the opportunity to respond on and confirm that point on Report. If such an opportunity does not arise, I am sure that a letter to members of the Committee to clarify the point would suffice. On that basis, I will not press the new clauses and I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 2

Report on topics for updated Protocol

‘Within 12 months of the passing of this Act, the Secretary of State shall publish a report setting out the UK’s priorities for topics to be included in an updated protocol to the 1954 Hague Convention.’.—(Kevin Brennan.)

Brought up, and read the First time.

[Kevin Brennan (Cardiff West) (Lab)]

I beg to move, That the clause be read a Second time.

Having made remarkable progress during the day, we have reached our final debate on the Bill and amendments to it. New clause 2, which stands in my name and that of my hon. Friend the Member for Tooting, calls on the Government to set out what its priorities will be in the event that a third protocol to the convention becomes the subject of international discussion. Inevitably, this Bill does look back as we are ratifying The Hague convention of 1954, but as the first two protocols show there certainly is an appetite to ensure that the convention remains up to date, relevant and effective.

One could make many suggestions regarding what a third protocol could specify. During our discussions, two specific questions have been raised repeatedly and would benefit from being marked as UK priorities in the report proposed in the new clause. They are, first, the application of the convention to cultural property in digital form, and secondly, the applicability of the convention to conflicts such as the one in Syria. These are both areas where the age of the convention has started to show and which could be updated in a third protocol.

On Second Reading, I raised a question that many across the House have also asked about how the ratification of the convention would apply to conflicts such as those in Syria and Iraq. The Minister kindly circulated a note—actually, I think it was the Secretary of State rather than the Minister—using Syria as a case study and outlining how the convention and its protocols relate to conflicts not of an international character. I appreciate that, as it helped to clarify a few issues. I welcome the assurance that a UK national involved in the destruction of cultural property in a country that has signed the convention would be criminally liable. That is very important, not least in the light of recent developments. To be absolutely clear—I think we rehearsed this somewhat earlier on—I believe the Secretary of State’s note means the convention does apply during a civil war. The Minister also said earlier that it would apply to both parties in a civil war, even when one of them is not a recognised state. Clarity on that is important.

Ideally, we would need a ministerial note or clarification to explain whether or not and to what extent the convention applies to a certain type of conflict. A third protocol would be an opportunity to aim for a more standardised safeguarding strategy for cultural property worldwide where it is involved in any kind of armed conflict. I think this idea has some cross-party support. The hon. Member for Enfield, Southgate asked in Hansard in column 698—I am trying to remember whether it was on Second Reading or whether it was a question—

[Mr Burrowes]

I cannot remember the column, but it was on Second Reading.

[Kevin Brennan]

It was. The hon. Gentleman asked:

“are the Government supportive of looking at future conventions to try to make sure that Daesh comes within the provisions, although the Iraqi and Syrian sanction orders cover the gap?”—[Official Report, 31 October 2016; Vol. 616, c. 698.]

That is a very good question. A third protocol could offer an opportunity to streamline the law. Instead of plugging the gaps with new legislation, there could be a consistent and indubitable catch-all that would assure the necessary protections for the property most valuable to nations and their identities.

The destruction of cultural property in the middle east has been mentioned many times as one of the motivations for the passage of this Bill, yet the Bill does not apply to so many of those situations. In the light of the work carried out involving the cultural protection fund in that same region, it seems that protecting artefacts in Syria and its surroundings is a priority for us all. The Government acknowledge that too. A report would not only provide a platform to express that, but it could kick-start action to bolster protections and provisions where they are currently most needed.

I and my hon. Friends have highlighted the matter of digital content falling within the definition of cultural property. The Government indicated there should be a certain level of consistency with regard to an internationally accepted interpretation of what cultural property means. They said at the same time that amending the Bill to specifically include digital content could jeopardise that consistency. It seems to me that formalising an internationally accepted interpretation of cultural property that includes things such as digital content would be a crucial component of a third protocol, bringing the legislation firmly into the digital age.

The more consistency there is in both the wording and the interpretation of our international laws, the greater the chance of holding those who violate them to account. Our support of current and developing technologies should be unambiguous and undeniable. Given the importance of our national and regional film archives and that of the precious cultural property currently being created, I hope the Government agree that the protection of digital property should be championed by the UK on the international stage.

We cannot as a country unilaterally decide on the priorities and the announcement of any third protocol to the 1954 convention, but a report on the topics the UK would like to focus on allows for a productive and constructive dialogue on key issues, potentially putting such a protocol on the agenda of the international community. It would also provide the UK with an opportunity to demonstrate its desire both for international co-operation and to show leadership in this area, which I think we should be doing.

Internationally, the UK is in a position in which we are choosing to leave the European Union rather than, as some of us would have hoped, to be a leading player. With the sorts of turmoil we see going on in the world, including on the other side of the Atlantic, this would indicate that the UK can and will continue to work productively and co-operatively with other nations. We may be late in ratifying the convention, after 62 years, but we can show that this is not due to a lack of commitment to its ideals and ambitions.

Does the Minister agree that the two topics we have just discussed, and perhaps others, would be among UK priorities for a third protocol? What other topics might she consider? Do the Government have any plans to work towards developing a third protocol?

[Tracey Crouch]

I thank the hon. Member for Cardiff West for raising the issue of updating the protocols to the convention to reflect the need to protect cultural property from destruction by, for example, terrorist groups such as Daesh. We covered Syria and digital cultural property in some detail earlier, and I am sure that we will return to those issues, so I do not intend to go over those arguments again. We are, however, absolutely united in our condemnation of the terrible damage to cultural heritage that Daesh has wrought at sites such as Palmyra and the destruction and looting of cultural heritage as a tactic of war and terror more generally.

That said, the new clause seems to assume that an updated protocol is inevitable. We are not aware that UNESCO is considering that. It is not included in the organisation’s medium-term strategy, which sets outs its priorities until 2021. We are also unaware of calls from other state parties for the protocols to be reconsidered at this time. Indeed, I understand that the process to reopen discussion on protocols or propose a new one is not as easy as the Opposition might believe. I am told that it would take a minimum of eight years to agree a new text or protocol.

[Kevin Brennan]

Is that not all the more reason to get on with it?

[Tracey Crouch]

If the hon. Gentleman will hold his horses for a second, given the delay in the UK’s ratification, publishing a list of our future demands within a year of Royal Assent may not be the wisest way to win support for that. Once the UK has ratified the convention and current protocols, we will be closely involved in the related UNESCO discussions, and that will be the best way to influence any future work.

16:12

Sitting suspended for Divisions in the House.

16:38

On resuming—

[Tracey Crouch]

Before the Divisions, we were talking about a third protocol, in the light of the Opposition’s new clause 2. We do not feel that it would be appropriate to include that new clause in the Bill. Rather than focusing on how an additional protocol might better address the specific issue, our priority must be ratifying the convention and acceding to its two protocols. That will be a significant milestone for the UK that has not been achieved by other permanent members of the UN Security Council. It will send the strongest message about the UK’s commitment to protecting the world’s cultural property and signal our condemnation of the recent abhorrent cultural destruction. Although I recognise the good intention behind the new clause, I hope that the hon. Member for Cardiff West will appreciate that it is beyond the scope of the Bill and therefore withdraw it.

[Kevin Brennan]

It is not beyond the scope of the Bill, as I have pointed out already, but I will not labour the point—although that is my wont. We have discussed the third protocol, which is not the title of the latest book by my hon. Friend the Member for Rhondda, although it would be a very good title for a parliamentary thriller, if that is what he has been composing during our deliberations—that might explain his uncharacteristic reticence.

It is difficult to say on the one hand that we should pat ourselves on the back for being the first in the Security Council to ratify both protocols, and on the other hand that we should not pat ourselves on the back by suggesting a third protocol, because it has taken us 62 years to ratify the convention. There might be a slight circularity to that argument.

The purpose of new clause 2 is to encourage the Government to take the lead in this area, which we should do internationally, and to think about how we can update our international agreements on the protection of cultural property in armed conflicts to ensure that they move with the times and cover the new types of cultural property being developed as a result of the digital revolution and the new types of threat, warfare and armed conflict we face with the rise of entities such as Daesh. Having said that, in the interests of us completing our proceedings, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

[Tracey Crouch]

On a point of order, Mr Turner. I am grateful to you for allowing me this opportunity to thank everyone for participating in the Committee. This is the first piece of legislation that I have taken through the House, and I believe that it is your first chairing of a Committee in this House, so it is a first for both of us. Hopefully we have managed to muddle our way through it correctly and in order.

I want to pay tribute to all those who have helped to make the Committee happen. I am grateful that my first piece of legislation is, by and large, full of consensus. Although there are issues that I am sure many will raise on Report and seek further clarification on, it is a tribute to what we are discussing that we have managed to get through the Bill in the way we have. I would like to thank you, Mr Turner, and Ms Buck for chairing the Committee, as well as the Clerks, the Hansard reporters and the Doorkeepers.

I would like to thank my excellent Bill team of officials from the Department for Culture, Media and Sport and other Departments, including the Ministry of Defence and the Foreign Office, all of whom not only have been brilliant advisers to myself as Minister, but have been open and accessible to other Members, including Opposition Members, for discussion.

I would like to thank those who have submitted written evidence and participated in the development of the Bill over a number of years. The hon. Member for Cardiff West pointed out in his opening remarks that the Bill has been a long time coming, since the second protocol in 1999. We should pay tribute to those in the previous Labour Government who started this process. I am pleased that it was this Government—under the former Secretary of State, my right hon. Friend the Member for Maldon (Mr Whittingdale), and my right hon. Friend the Member for Wantage (Mr Vaizey)—who managed to introduce the Bill in Government time during this Session.

Finally, I would like to thank all members of the Committee. I thank the Opposition for their amendments, which allowed us to have a full debate on many aspects of the Bill. Despite gentle probing from many directions, the record will show that we have managed to discuss a great many issues that people both inside and outside this place really do care about.

[Kevin Brennan]

Further to that point of order, Mr Turner. May I echo everything the Minister has said? She is quite right that it is important to probe Government legislation from every direction, and that is what we have sought to do in the course of our proceedings. Thank you, Mr Turner, for chairing our proceedings and keeping us in order—including on new clause 5, which of course was in order all along. I also thank Ms Buck for chairing our proceedings so ably this morning; perhaps you could pass that on, Mr Turner, on our behalf.

I would like to thank all members of the Committee. I know that for a number of Members it was their first time serving on a Bill Committee. It is not always this consensual when we discuss legislation. Nevertheless, this has been a useful example of the importance of Committee stage in teasing out and putting on the record the Government’s intentions and so on. I would also like to thank the Whips for keeping us in order and enabling us to get through proceedings in an expeditious fashion.

I also thank the Clerks, the Hansard reporters, all those from the sector who have made submissions, the civil servants, the Doorkeepers, the police and everyone else, including my researcher, Haf Davies, who has been very helpful in preparing for today. It may have taken us 62 years, but we are engaged in an extremely important process. We can all take some pride in the fact that finally, after Report and once the Bill gets Royal Assent, we will have ratified The Hague convention, albeit 62 years after it was originally brought about.

Bill to be reported, without amendment.

16:46

Committee rose.

Written evidence reported to the House

CPB 01 Professor David Gill, Director of Heritage Futures and Professor of Archaeological Heritage, University of Suffolk

CPB 02 Mr Michael Meyer OBE, Head of International Law, British Red Cross

CPB 02A Mr Michael Meyer OBE, Head of International Law, British Red Cross: Annex A: Protecting the emblems leaflet

CPB 03 Mark Dunkley FSA MCIfA

CPB 04 Professor Roger O’Keefe

CPB 05 UK National Committee of the Blue Shield

CPB 06 BAMF

CPB 07 Council for British Archaeology

CPB 08 Professor Janet Ulph

CPB 09 Antiquities Dealers’ Association

CPB 10 Association of Art and Antiques Dealers

CPB 12 Peter Stone, UNESCO Chair in Cultural Property Protection and Peace, Newcastle University

CPB 13 Fiona Macalister, Independent Preventive Conservator

CPB 14 Historic England

CPB 15 Stephenson Harwood LLP

CPB 16 Dr Sophie Vigneron, Kent Law School, University of Kent

CPB 17 The Heritage Alliance

CPB 18 Dr Emma Cunliffe

Health Service Medical Supplies (Costs) Bill (Second sitting)

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: Mike Gapes, † Mark Pritchard

† Berry, James (Kingston and Surbiton) (Con)

† Churchill, Jo (Bury St Edmunds) (Con)

† Cooper, Julie (Burnley) (Lab)

† Cummins, Judith (Bradford South) (Lab)

† Davies, Dr James (Vale of Clwyd) (Con)

† Day, Martyn (Linlithgow and East Falkirk) (SNP)

† Dunne, Mr Philip (Minister of State, Department of Health)

† Foster, Kevin (Torbay) (Con)

Glen, John (Salisbury) (Con)

† Jones, Graham (Hyndburn) (Lab)

† Kendall, Liz (Leicester West) (Lab)

† McCartney, Karl (Lincoln) (Con)

† Madders, Justin (Ellesmere Port and Neston) (Lab)

† Marris, Rob (Wolverhampton South West) (Lab)

† Selous, Andrew (South West Bedfordshire) (Con)

† Spencer, Mark (Sherwood) (Con)

† Throup, Maggie (Erewash) (Con)

† Whitford, Dr Philippa (Central Ayrshire) (SNP)

Marek Kubala, Kenneth Fox, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 15 November 2016

(Morning)

[Mark Pritchard in the Chair]

Health Service Medical Supplies (Costs) Bill

09:24

[The Chair]

Today we begin line-by-line consideration of the Health Service Medical Supplies (Costs) Bill. Before we begin, if Members wish to remove their jackets, they may do so. Even though it is winter, it is very warm in here, so I have asked for the windows to be opened at some point. I want people to feel comfortable and relaxed. Will Members and, indeed, members of the public make sure that their mobiles are switched to silent, so that we are not disturbed during our proceedings?

On the table to my left, the selection list of today’s amendments—the order of business—is available for colleagues. It shows how the selected amendments have been grouped together for debate. Grouped amendments are generally on the same or a similar issue, as colleagues know, and the Member who puts his or her name to the lead amendment in a group is called first. Other Members are then free to catch my eye—to do so, please will you rise from your chair by more than one inch? That would be helpful. If called, Members may speak on any of the amendments in the group. A Member may speak more than once in a single debate.

I will work on the assumption that the Minister wishes the Committee to reach a decision on all Government amendments. Please note that decisions on amendments do not necessarily take place in the order in which they are debated; they take place in the order in which they appear on the amendment paper. In other words, debate occurs according to the selection and grouping list, but decisions are taken when we come to the clause that the amendment affects. I hope that that explanation is helpful to Members. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debate on the relevant amendments.

Clause 1

Voluntary schemes

[Julie Cooper (Burnley) (Lab)]

I beg to move amendment 44, in clause 1, page 1, line 14, at end insert—

“for the purpose of investing in access to new and innovative medicines and treatments.”

[The Chair]

With this it will be convenient to discuss amendment 46, in clause 4, page 3, line 22, at end insert—

“(c) the NHS’s duty to promote innovation.”

This amendment would introduce a requirement for the Secretary of State to take account of the NHS’s legal duty to promote innovation, as set out in the Health and Social Care Act 2012.

[Julie Cooper]

It is a pleasure to serve under your chairmanship, Mr Pritchard.

I will begin by outlining our overall priority for the Bill and, in particular, this clause. Our priority is to ensure that the Bill effectively controls the cost of medicines and medical supplies to the national health service while ensuring the best possible patient access to existing products and to new and innovative treatments. In that spirit, I would like to make some observations in support of amendments 44 and 46.

The clause will amend section 261 of the National Health Service Act 2006 and it is concerned with the powers related to the control of voluntary schemes. The stated aim of the clause is to give the Government new powers to require manufacturers or suppliers to pay the Secretary of State an amount that will be calculated on the basis of sales or estimated sales. The Opposition support the move to curtail excessive profits, thereby ensuring that the NHS achieves maximum value for money. Having said that we welcome saving vital NHS funds, we also wish to ensure that those funds are retained within the portion of the health budget that relates specifically to the supply of medicines and medical supplies. We do not wish to see the savings lost in an NHS deficit black hole.

On Second Reading, the Secretary of State confirmed that £1.24 billion had been returned to the Department of Health through the rebate scheme. That is a considerable amount of money, and the figure will increase when this Bill is enacted. However, we were not reassured by his vague statement that the money returned to the Department would be reinvested in the NHS.

Also on Second Reading, the Secretary of State mentioned the considerable pressures facing the NHS and he suggested that one consequence of the Bill would be to transfer funding from the drugs bill to the frontline. I hope that the Minister present recognises that medication is often the frontline and that ensuring the timely access of appropriate medication often prevents hospitalisation and thus saves the NHS money. It is very much a case of a stitch in time.

In addition, it is a fact that community pharmacists the length and breadth of the country have offered to work with the Government to eradicate waste and to cut costs. As the experts on all medication matters, they are best placed to work with GPs and patients to achieve maximum efficiency. Sadly, the Government have responded by taking steps that are likely to lead to a reduction in the number of community pharmacies. This is a missed opportunity and that is regrettable.

Amendment 44 would provide assurance by ensuring that rebates reclaimed against purchases of medicines were reinvested specifically in improving patient access to medicines. In Scotland, rebates collected by means of the voluntary prescription pricing regulation scheme are already specifically earmarked to fund new medicines. In essence, the Bill, which we support in principle, is to ensure that the NHS can procure medicines and medical supplies cost-effectively. I am sure that the intention is not to reduce funding to the NHS, so we cannot have a situation in which every pound repaid from the suppliers and manufacturers equates to £1 less of Treasury funding allocated to the NHS. We are concerned that, too often, budget constraints limit access to new and innovative medicines and treatments.

Recently, I have devoted a lot of time to supporting the campaign to achieve treatment for children suffering from the potentially life-threatening genetic condition of tuberous sclerosis. It is extremely distressing for parents to be informed that their child has been diagnosed with that incurable condition; it is even more distressing to learn that an effective pharmaceutical drug has been developed and licensed—Everolimus, marketed as Votubia —but is not available from the NHS for children in England. The drug is able to shrink the multitude of benign tumours that characterise that serious condition, thereby saving lives, improving quality of life for those affected and often removing the necessity for potentially damaging surgery.

That is one example, and there are many others. James Barrow from the Cystic Fibrosis Trust, speaking in support of the new medicine fund in Scotland, has said that using any reclaimed moneys in that way provides improved access and much needed transparency. Labour’s amendment to the clause would introduce a duty to reinvest any rebates to improve access to new and innovative medicines and treatments, as I have outlined.

Further to that, amendment 46 refers specifically to the duty of the NHS to promote innovation under the Health and Social Care Act 2012. The UK is a world leader in the field of life sciences, and the British pharmaceutical industry is at the forefront of global research and development. In 2014, 20% of all the world’s research and development into new medicines was carried out in the UK.

We have hitherto enjoyed significant benefits from European Union research funding. Given the outcome of the referendum, that is now at risk, and it is essential to ensure that we maintain our dominance in the sector, not least because the pharmaceutical industry employs close to 75,000 people. The promotion of innovation in the field is important not only for the health of the British people, but for the health needs of people worldwide. It is extremely important to the British economy, so it is vital that we do not take our eye off the ball. We need to put on record our continued commitment to research and to develop new treatments.

We face competition not only in Europe, but from emerging nations such as Brazil and China. We also need to ensure that the NHS does not trail in the take-up of those new drugs. Worryingly, the Office of Health Economics studied 14 high-income countries and found that the UK ranked ninth out of 14 across all the medicines studied. Successive studies have demonstrated relatively low take-up of new medicines in the UK compared with other countries. That is bad for patients and bad for our pharmaceutical industry.

The Bill therefore needs to achieve a balance. We need to ensure the best possible patient access to medication at the fairest price, and we need to encourage the pharmaceutical industry to continue to invest in research and development. Therefore, it is right that the Bill should outline our commitment to promote innovation. We look forward to hearing the Minister’s comments, but we are minded to press amendment 44 to a Division.

[The Minister of State, Department of Health (Mr Philip Dunne)]

Mr Pritchard, thank you for calling me and, more particularly, for taking time out of your schedule to chair this important sitting.

On amendment 44, I was interested in the comments of the hon. Lady about the motivation behind it, with which I have some sympathy. I hope that what I say will reassure her that her amendment is unnecessary.

The amendment would require income from the pharmaceutical price regulation scheme and the statutory scheme to be ring-fenced to fund and increase access to new and innovative medicines and treatments. As a Government, we are committed to ensuring that patients have faster access to new and innovative medicines and treatments—I mention briefly the accelerated access scheme that we have introduced.

The hon. Lady touched on the compelling and sometimes tragic cases of individual constituents, friends and relatives seeking to get access to innovative drugs, in particular once those drugs have become authorised. Between 1 March 2000 and 30 June 2016, NICE, the National Institute for Health and Care Excellence, made individual recommendations for 646 separate propositions, 81% of which were recommended or optimised, so there is a steady track record of introducing innovative treatments and, in particular, drugs into our health service. That is done, properly, through the independent NICE structure. I am sure we will talk more about that in Committee.

[Rob Marris (Wolverhampton South West) (Lab)]

On the number of drugs to which the Minister referred, will he give an indication now or later of how many, if any, of those drugs were repurposed? I am thinking, for example, of a drug that has recently had a lot of publicity; it is primarily used for osteoporosis, but there are indications that it may be very helpful with breast cancer. What about such repurposed drugs, as opposed to brand new drugs?

[Mr Dunne]

I do not have that figure in my head, as the hon. Gentleman might expect. I hope to get inspiration during the sitting and will try to address that question later.

We know that investing in new and innovative medicines and treatments, where they are proven to work and are a clinical priority, has the potential to transform the care of patients and to improve outcomes, which is what we all want. However, it is a fundamental principle of NHS funding that it should be allocated according to clinical priorities based on the judgment of clinical commissioners. That may include new treatments, but it may include scaling up older effective treatments—through repurposing, as indicated by the hon. Gentleman—or investing in more staff.

We understand the intention behind the amendment, but it is for NHS England and clinical commissioning groups to determine clinical priorities and to spend that money on what is clinically most important. It is also important to point out to the hon. Lady that income from the voluntary and statutory schemes can fluctuate from year to year, so allocating such income by means of a ring fence to a specific area, such as new medicines, brings risk because in some years the income received may go down. The perverse consequence of the amendment’s ring-fencing may therefore mean less money being spent in a subsequent year, in the event of the scheme not generating an increase in income. That would disadvantage patients by making treatment dependent on income from medicine pricing schemes, which we do not think should be the determinant of available medicine.

[Rob Marris]

The Minister was talking about such decisions being clinically led. Will he therefore assure the Committee that the decision to cut spending on public health in England, to put the money into frontline medical services, was a clinical decision?

[Mr Dunne]

As the hon. Gentleman knows, decisions to allocate spending across the responsibilities of the Health Department were determined as a result of the spending review last year. The decisions within the NHS that I am talking about, on treatments, rather than preventive public health, are determined by clinicians.

Separate to the Bill, Government are taking action to secure the UK’s future as an attractive place for the life sciences sector and to support faster patient access to medical innovations. For example, the recently published accelerated access review sets out ways to increase the speed at which 21st century innovations in medicines, medical technologies and digital products get to NHS patients and their families. Recommendations included bringing together organisations from across the system in an accelerated access partnership and creating a strategic commercial unit within NHS England that can work with industry to develop commercial access arrangements. We are considering those recommendations with partners and will respond in due course.

NHS England and NICE are jointly consulting on a number of proposed changes to NICE standard technology appraisals and highly specialised technology appraisals, including around speeding up the appraisal process. The Department of Health continues to work closely with NHS England and other stakeholders to improve uptake of new medicines. A key element of that is the innovation scorecard, published quarterly. It is designed to help users—clinicians, patients, commissioning groups, Government and other stakeholders—to understand and monitor the uptake of innovations in the NHS and should ultimately be used to promote an equitable spread of clinically effective, cost-effective innovations.

I hope that having heard in particular what I said about the way in which income from these schemes does not rise in a continuum but fluctuates, the hon. Member for Burnley will recognise that the amendment could have the adverse consequence of leading to a reduction in funding available for medicines.

[Julie Cooper]

Will the Minister give way on that point?

[Mr Dunne]

I was about to ask the hon. Lady to withdraw her amendment, but if she has something to add, I am happy to give way.

[Julie Cooper]

Is the Minister aware of problems with the administration of the scheme in Scotland? Is he aware of what the experience has been in Scotland?

[Mr Dunne]

Fortunately, the Committee has the benefit of the Scottish National party’s spokesperson on health, the hon. Member for Central Ayrshire, who I am sure would be happy to give us her experience. The fact is that we have had some experience in England of fluctuating income from these schemes, which is the primary basis for our position.

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

I am grateful to the Minister for his explanation. On the money that is received from the rebate from PPRS, responses I have had to written questions suggest that that is considered part of the baseline budget. With respect to the debate we have had recently about the £10 billion extra, or the £4.5 billion extra—whichever version we prefer—could he advise whether the rebate is included within that extra money, or is it part of the baseline funding?

[Mr Dunne]

The Department of Health receives income from a number of different sources. It mostly deals with expenditure but also receives income from activities conducted through the NHS. One source of income is the rebate through these schemes, which forms part of the funding available to the Department. We have committed that funds available out of the scheme will go into the NHS. The hon. Gentleman raised the issue of the £10 billion. I gently remind him that, in 2014-15, the funds available to the NHS from the Department of Health were £98.1 billion, and by 2021 that figure will be £119.9 billion, which in cash terms is a £20 billion increase and in real terms is a £10 billion increase.

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

As the hon. Member for Burnley said, the system functions quite differently in Scotland. We have a new medicines and rare diseases fund, rather than a cancer drugs fund, which means that the use of funding to access new medicines is not limited to one cohort of patients. Our fund is £90 million, which, given that we are less than 10% of the UK population, means it is proportionately almost three times the size of the cancer drugs fund. As was mentioned, this is very much funded by the PPRS. It is committed to that. The pharmaceutical industry expects the rebates to be used to enable access to new medicines. One problem here is that the rebate goes into base funding, which means it disappears like water in the sand.

We have so many debates in this House about patients who are struggling to access new treatments. Amendment 46 talks about innovation and research, which we support in Scotland. We are quite a research-oriented country. Our research funding to our universities is 30% higher, in proportion to our population. The NHS in Scotland commissions research, particularly on things like informatics and data management around health and social care, which are the big challenges we face in the future.

The Scottish Medicines Consortium, which makes our decisions in the same way as NICE, was reformed in 2013. Since then, we have had a 40% increase in drugs being passed. What we see in England is that even if a drug is passed at the level of NICE, it sometimes does not come into use in the NHS, because the funding is simply not earmarked to make it available.

09:45

We talk a lot in this country about being a research-orientated nation and wanting to support that, for economic and science benefits, but the problem is that if, at the end of the day, patients cannot access a drug and clinicians cannot use it, that is very undermining. Having been involved with drug trialling for breast cancer, I can tell hon. Members that clinicians may spend a couple of years doing huge amounts of paperwork to take part in a trial, which means that their patients can get the drug, and then suddenly, when the trial is finished and they start to go through the process, they find that they cannot use it any more. In those circumstances, many clinicians will think, “Well, what was the point in all that work?”.

The two have to go together: if we are to support innovation, we have to think of a pathway that goes all the way to the patient. At the moment, that is not the case. Just putting the money into base funding means that the long-term gain is to the Treasury rather than the NHS, so I recommend looking at how the system works in Scotland. That has increased our access to drugs. We do face challenges, as we leave the European Union, with the loss of Horizon 2020 and the European Medicines Agency. It is therefore important to have a partnership approach among academia, the pharmaceutical industry and the NHS to ensure that we push new drugs, but can then access them as well.

[The Chair]

Before we move on, I have a couple of housekeeping points. First, I thank the Doorkeeper for his tenacity and the engineers for getting the windows open. I think that we are all happier for that. Secondly, because we have Health questions today, we will seek to adjourn at about 11.10 am. I will allow the Government Whip to suggest the appropriate minute at which to do that. I now ask the Opposition whether they want to press the amendment.

[Mr Dunne]

I would like your guidance, Mr Pritchard, on whether I can comment on the second amendment in the group now or whether you would like to take the—

[The Chair]

You can comment on it now. I understand that there will not be a vote on amendment 46, but if there is, it will be later. We will be taking amendment 44, but you can comment on amendment 46 now, Minister.

[Mr Dunne]

Thank you, Mr Pritchard. Amendment 46 was also raised by the hon. Member for Burnley, for which I thank her.

We agree that the promotion of innovation, as the hon. Member for Central Ayrshire said, is an important part of what we like to do in this country. The role that we see for the Government is in sustaining the UK not just industrially, but by generating innovation to make our population healthier. That is vital in securing the best possible, evidence-based care and treatment for patients. I am talking about the rapid progress that is being made and technological advance through innovation. That is why the duty to promote innovation was placed not only on NHS England but on clinical commissioning groups and NICE through the Health and Social Care Act 2012.

Supporting innovation brings in many factors beyond the scope of the Bill, as is set out in the accelerated access review, which I have touched on. Supporting innovation is much more about better horizon scanning, faster licensing and assessment, and cutting-edge clinical practice than it is about pricing. It is precisely because this is such a broad area that it is not appropriate for the NHS duty to be linked to the provisions in the Bill. As drafted, the provisions in the Bill focus on the specific issue of the cost of medicines and medical supplies, but in doing so, they take account of the need to balance access to a product, which may be supported by lower prices, and the need for companies to support the costs of research and development.

To attempt to link these measures to the much wider duty on the NHS would be to distort the objectives of the cost control scheme. The Bill has an important role to play in securing the best possible care for patients, but I would like to assure the Committee that the Government, together with NHS England and others, place a very high priority on supporting innovation.

[The Chair]

We have the privilege of having two shadow Ministers. I do not know whether either of them wants to respond on amendment 44 or amendment 46, or whether the hon. Lady wants to press amendment 44.

[Julie Cooper]

I am grateful to the Minister for his comments, but I am still keen to press amendment 44 to a Division. The lack of transparency in what is currently available is unacceptable, and there is a danger that the Bill will be contrary to what I am sure is its real intention and cut funding to front-line medication. The amendment would prevent that.

I take the Minister’s point about fluctuation in funding, but I am sure he will agree that if this can be made to work in Scotland, it can be made to work here. I do not want us to fall behind on that. We are all aware of the massive deficit within the NHS. It is very important that funding recouped from pharmaceutical profits is not lost for the NHS and for the real purpose of providing new medicines, and that people in England do not lose because of the Bill. I thank the Minister for his comments, but I will press the amendment to a Division.

Question put, That the amendment be made.

Division 1

Ayes: 8

---

Labour: 6
Scottish National Party: 2

Noes: 9

---

Conservative: 9

[Julie Cooper]

I beg to move amendment 45, in clause 1, page 1, line 14, at end insert—

“(2A) After subsection (1) insert—

‘(1A) In exercising functions in relation to the controls on the costs of health service medicines, the Secretary of State must ensure that any medicine covered by a voluntary or statutory scheme that requires payments calculated by reference to sales of that medicine shall be made available to all NHS patients if recommended by a qualified NHS clinician.’”

The amendment continues in the vein of amendment 44, given our concern to ensure the best access to medicines. We are very much aware of the barriers that exist and are keen that every piece of legislation takes the opportunity to remove those barriers and make medicines more accessible to patients. It is important that the Bill does not inadvertently become a way of restricting that access. Where a clinician deems medicines necessary and desirable, patients should have access to them.

I was worried on Second Reading to hear the Secretary of State’s comment that the prescribing of some medicines is “not strictly necessary”. That questioning of the clinical judgment of the medical profession is not just inappropriate but could be suggestive of a dangerous precedent. We must never reach a stage where politicians decide which medication is appropriate and when. I assume that that was not the Secretary of State’s intention, but we would like to ensure that drugs approved by the National Institute for Health and Care Excellence are made available to patients if so desired by a qualified NHS practitioner.

There is already an agreed fixed limit on NHS spend on branded medicines, with any additional expenditure above that level paid for by the pharmaceutical companies via the clawback by the Department of Health. Currently, NICE assesses new medicines for cost-effectiveness, which provides a further restraint on pricing. There is therefore no reason for the NHS to deny patients any treatment covered by the scheme. We would like the Minister to look favourably on the amendment. We will not press it to a Division, but we are very concerned about the issues I have outlined.

[Mr Dunne]

Again, I understand the hon. Lady’s intent. I was a little confused by her interpretation of the Secretary of State’s remarks on Second Reading as meaning that politicians are involved in making decisions on prescribing. I assure her that, although I have been in the Department for a short amount of time, there has been no suggestion at any point that any politician should get involved in making decisions about which drugs should be prescribed.

[Julie Cooper]

I thought it inappropriate that the Secretary of State for Health expressed an opinion on which medications are necessary and which are not. I question his qualification to make that comment.

[Mr Dunne]

I do not have complete recollection of what the Secretary of State said, but he may have been referring to things such as the over-prescription of antibiotics, which we know is a problem globally. A great deal of work is being undertaken right across the NHS and with other health bodies around the world to reduce the scale of antibiotic prescription.

[Dr Whitford]

Is it not the case, however, that we seem to be developing this additional rationing system between NICE and patients of the NHS? I am talking about NICE’s recommendations being accepted but not funded. The hepatitis C drugs are basically being rationed to a certain number of patients per month, even though they have been passed by NICE and trying to eliminate the viral load in the community can be more effective in the long term.

[Mr Dunne]

Inevitably, some decisions have to be taken when introducing new drugs as to the extent to which they are applicable. Those are clinically-led decisions. There is not a completely bottomless funding pot for the prescription of medicine, so those decisions have to be taken by ordinary clinicians within their practices and within the infrastructure of approvals, which is entirely independent and led by NICE in England.

[Dr Whitford]

With respect to the Minister, that is not what I am hearing from clinicians who work in the field of HIV and hepatitis C. They are being told, “You can have”—for example—“50 patients a month,” and they are having to pick who gets the drugs and who does not.

[Mr Dunne]

I will not be drawn into the detail on a specific drug, because the hon. Lady may have access to information that I do not, but in relation to hepatitis C, as she has raised it, there has been a discussion between the trust and NICE. As I understand it, the trust is continuing to work with NHS England collaboratively to discuss the issue of access to the new hepatitis C drugs. We will always have some discussions about applicability when a new treatment is introduced, to see whether it is appropriate for all conditions; it may be that only some benefit from the drug. I think that that is as far as I can go on this issue.

To return to the Government’s view of the amendment, we are concerned that it would in effect circumvent the critical system of checks and balances around clinicians’ prescribing freedoms. That would present a danger to patients and the sustainability of the NHS. It is also not the purpose of the Bill to address matters other than the cost of medicines and medical supplies.

Treatments that do not demonstrate efficacy, safety and value for money should not be routinely available on the NHS. The National Institute for Health and Care Excellence, an internationally respected organisation that provides evidence-based guidance to the NHS, ensures that the treatments recommended for patients deliver value for money and improved patient outcomes. NICE’s recommendations are developed free from political interference and help NHS organisations to design services that are in line with the best available evidence and that meet the needs of their local populations.

[Rob Marris]

The Minister read out what I understood to be the role of NICE. May I focus for a moment on the words “value for money”? My understanding is that if NICE in England says that a particular medicine—perhaps a new medicine or a repurposed medicine—is value for money, then because that cost-benefit analysis has taken place, the drug should be freely available to clinicians to prescribe in medically appropriate cases. However, we are hearing quite a lot of stories, particularly about the prophylactic HIV drug or hepatitis C drugs, of when that is not the case. In other words, NICE says that a drug is value for money, but clinicians are blocked from prescribing it, even when they think it would be medically efficacious for their patient. Why is that?

10:00

[Mr Dunne]

From time to time, local circumstances may mean that clinicians do not have access to the drugs. They may be newly innovated, and given the scale of the NHS in this country, not all clinicians will get the information they need to provide new drugs as rapidly as some patients may like. It can take time to introduce a new drug, as the hon. Gentleman will understand. I recognise that it is the role of clinicians to prescribe in the best interests of their patients, and I know that local or national commissioning policies or technology assessments by NICE will mean that in some cases patients are unable to access the treatment that their clinician has recommended, but it is important to recognise that local and national scrutiny and the independent assessments of NICE are essential to promote evidence-based prescribing, protect patients and secure value for money. Undermining that system of checks and balances, as I am afraid the amendment tabled by the hon. Member for Burnley would, could endanger patients and result in significant variation in prescribing practices. I ask her to withdraw the amendment, since she has indicated that she does not intend to press it to a vote.

[Julie Cooper]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[Mr Dunne]

Clause 1 will amend the powers relating to voluntary schemes in section 261 of the National Health Service Act 2006. The voluntary scheme referred to in that section is the pharmaceutical price regulation scheme. Although the scheme itself is voluntary, there are statutory powers that can be used in relation to its operation. Other than with respect to the entry and exit mechanisms, the Government do not currently use those powers for the 2014 PPRS, but we wish to retain the option of making regulations or directions with respect to those powers in future. The Government do not intend the amendments to the 2006 Act to affect the operation of the current 2014 voluntary scheme.

The amendments to the 2006 Act will put it beyond doubt that the Secretary of State’s existing powers can apply for the purposes of operating a voluntary scheme that includes only a payment system. They are part of our policy to align the powers relating to voluntary and statutory schemes, which we will come on to when we consider later clauses of the Bill. They will also ensure that when a company leaves the voluntary scheme, it is still able to make payments covering the period in which it was a member. That will clarify the requirements and ensure that there will be no loophole that companies can exploit to avoid making payments that are due after they have left the scheme.

It may also be helpful if I clarify a point that arose on Second Reading. In response to a question from my hon. Friend the Member for South West Wiltshire (Dr Murrison), the Secretary of State inadvertently indicated that the Bill would prevent companies that are part of the current voluntary pharmaceutical price regulation scheme from parallel importing of medicines. I would like to clarify that statement, because it did not completely accurately reflect our intent. Parallel imports made in accordance with the EU single market rules are a legitimate part of the medicines market, and the Government have no intention of taking action to prevent such trade. The Bill does not exclude the possibility of parallel import prices being controlled; they could be covered through regulation at a later date if the evidence warranted action. I hope that helps the Committee in its consideration. I commend the clause to the Committee.

[The Chair]

I thank the Minister for correcting the record.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Power to control prices

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

[Mr Dunne]

Clause 2 will amend the power to control prices in section 262 of the National Health Service Act 2006. That section already allows the Secretary of State to limit the price of any health service medicines except when the manufacturer or supplier is in the voluntary scheme, the PPRS. Section 266 of the 2006 Act allows the prices of health service medicines to be controlled by way of regulation or directions. Clause 2’s amendments to the 2006 Act will enable us to address unreasonably high-priced unbranded generic medicines. Most manufacturers of unbranded generic medicines are members of the PPRS for their branded medicines, and we therefore cannot currently limit the prices of their unbranded generic medicines if they charge excessive prices. We rely on competition in the market to keep the prices of those medicines down. It generally works well and, in combination with high levels of generic prescribing, has led to significant savings for the NHS.

I am grateful for the contributions made on Second Reading by almost everyone who spoke. The intent behind the clause was widely recognised across the House as appropriate and desirable. Members were aware from their own experience, and particularly from a Times article in the summer, that in some instances where there has been no competition to keep prices down, a small number of companies have raised their prices to what look like unreasonable and unjustifiable levels.

There are some clear examples of price increases. The most egregious was one product whose price increased by 12,000% between 2008 and 2016. If the price had stayed the same, the NHS would have spent £58 million less on that medicine last year alone. Another medicine increased in price by 3,600% between 2011 and 2016; the NHS would have spent £2.1 million less on that single medicine had the price stayed the same.

[Justin Madders]

I am grateful for the Minister’s explanation. As he said, we support the broad thrust of the aims behind the clause. Has he engaged in any research or discussions with the developers to understand the reason for those rapid price rises?

[Mr Dunne]

We have had discussions with the trade association for the generic manufacturers. The trade association, which gave evidence to the Committee on a day when I was, unfortunately, not able to attend, made it clear that the generic medicine producers industry as a whole thinks it appropriate that we take this action. We are grateful for that support. Discussions are under way through other bodies. In particular, the Competition and Markets Authority has indicated that it is in discussions with some companies, one of which voluntarily issued a press release last month to tell the market that the Competition and Markets Authority is investigating it.

[Justin Madders]

What I was trying to elicit was whether anything had been put forward to explain any specific price increases. We are concerned that the clause will have the unintended consequence of limiting supply.

[Mr Dunne]

We are anxious to ensure that we do not inadvertently introduce a regime that might cause difficulty when there might be a valid reason for increasing a drug’s price significantly. That was the justification in the past for not addressing the issue, because abuses were seen to be pretty isolated. However, in the past two or three years, the prices of more drugs have risen seemingly unjustifiably. That is the justification for introducing these measures.

I recognise that there may be occasions when a manufacturer incurs some additional costs: for instance, if a production run or line has finished and the manufacturer must start a new line or restart an old one, that would lead to a justifiable price increase. The clause allows us to take action where we suspect a price has risen excessively. The rest of the Bill provides opportunities for the Department to gain information about the cost of supplies, which allows us to get a better handle on when we think an increase has been unjustifiable, and identify that more rapidly. [Interruption.] Does the hon. Member for Wolverhampton South West want to intervene, or is he just poised in an energetic way?

[Rob Marris]

I am always ready.

[Mr Dunne]

Then I will continue.

Certain companies appear to have made it their business model to buy the marketing authorisations for medicines without any patents outstanding. They then de-brand the medicines and abuse the existing freedom of pricing for unbranded generic medicines. Although the practice is not widespread, it must be addressed, which is the reason for the clause.

Currently, our only recourse is to refer such cases to the Competition and Markets Authority, as I mentioned. When the CMA investigates, we must wait for the outcome, and in the meantime the NHS continues to have to pay high prices. The Department consulted on the issue as part of the consultation on the statutory scheme that was launched in December 2015. The Department has been working closely with the Competition and Markets Authority and has referred cases to it. The CMA is about to issue a decision in a case on a high-priced unbranded generic medicine. As I have just said, it has also recently opened another investigation.

The powers under section 262 of the 2006 Act to limit prices of health service medicines can be exercised through directions or regulations. The Government’s intent is to work with directions, which will enable us to limit the price of a specific medicine from a specific manufacturer. The Government are obliged to consult the industry representative body when we want to direct the price of a medicine. In the case of high-priced generics it would be the representative body of the unbranded industry—currently the British Generic Manufacturers Association, which appeared before the Committee last week.

The Government would of course also engage with the company involved before issuing a direction that limited the price of a medicine. As I have indicated, there may be good reasons for a price increase, and it is important that the Government understand the reason behind a price increase before issuing a direction. As I said, the new information powers will help us with that.

My officials have initiated talks with the unbranded generic medicines industry representative body and the CMA to explore how in practice we would determine what should be considered a reasonable price. Any decision by the CMA in the cases that I highlighted earlier could help set a useful precedent. I can reassure the Committee that companies charging unreasonably high prices for unbranded generic medicines is not a common practice. The Government do not intend to use the power where competition in the market for unbranded generic medicines is working. However, the Government need the right legislative tool to be able to address unreasonably high prices of unbranded generic medicines. The clause will give us that tool, and I ask the Committee to agree to it.

[Dr Whitford]

Basically, we welcome the measures in clause 2 to try to close the specific loophole whereby companies that are part of the PPRS voluntary scheme and that also produce generic medicines are able to increase the prices of generic medicines. However, the Minister talked about the British Generic Manufacturers Association—largely companies that focus on generic medicines—which would be more to do with clause 3. My understanding is that the change will close the specific loophole relating to large pharmaceutical companies that also produce generic medicines, rather than companies that focus only on generic medicines, which we will come on to in clause 3. We welcome the closing of that loophole, but those two things are quite different and we should therefore not conflate them. It is not the competition authority that would tackle them. That is much more related to purely generic companies.

[Mr Dunne]

We will obviously come on to clause 3 shortly. The primary intent behind clause 3 is to modernise the statutory scheme, rather than to address the difference between one type of company that produces only generics and another that produces generics and branded medicines. I am not sure that I agree with the hon. Lady’s distinction.

[Dr Whitford]

My point is just that what the Minister has described applies more to clause 3, on companies that produce purely generic medicines, so the attempt would be to strengthen the statutory scheme that they might be part of. It is the production of generics by the group of companies under the PPRS scheme, the big pharmaceutical companies, that is getting under the wire. That is covered by clause 2(2). The Minister was talking about the Competition and Markets Authority and the British Generic Manufacturers Association, and I think clause 3 is more relevant to that. Clause 2 is more of a surgical change, which we absolutely support.

[The Chair]

The Minister can respond either now or later.

[Mr Dunne]

I am grateful for your guidance, Mr Pritchard —I will respond now. The current statutory scheme does not capture generics, so amendments to the statutory scheme to allow generics to be brought into it are appropriate. If I am giving the Committee information that covers two clauses, rather than just one, I hope that is helpful.

[The Chair]

Very good added value from the Minister, I am sure.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Statutory schemes

10:15

[Julie Cooper]

I beg to move amendment 43, in clause 3, page 2, line 27, at end insert—

‘(2A) An amount calculated under subsection (2) may only be calculated using the same methodology as an amount payable by any member of a scheme made under Section 261 of the National Health Service Act 2006 (voluntary schemes for controlling the cost of health service medicines) is calculated.”

We support clause 3 in principle and the amendment aims to clarify that. Under the current system, following the National Health Service Act 2006, two schemes operate to control prices of medicines: the statutory scheme and the PPRS voluntary scheme. It is important to align those two schemes, because since 2014 there has been a significant movement of companies deciding to shift from the PPRS scheme to the statutory scheme to reduce the level of rebate payable. That has reduced savings to the NHS, so it requires urgent revision.

We agree with the principles of the Bill on ensuring that both schemes achieve the same level of savings and that the system is not open to abuse. We are concerned, however, that the Bill is not specific about how payments would be calculated under the statutory scheme. We agree with the Secretary of State that the purpose of the Bill is to clarify and modernise provisions to control the cost of health service medicines.

The amendment seeks to clarify beyond doubt that the Bill is in line with the stated aim of achieving equivalence between the two price-control schemes, by ensuring that under the statutory scheme members' rebates are calculated using the same methodology as for PPRS members. We commend the amendment, but will not push it to a Division. I am interested to hear the Minister’s comments.

[Dr Whitford]

One issue arises because the statutory scheme was based on prices in December 2013. The further on in time we are, the less proportional the return. Whether it is the same or a similar mechanism, we should avoid having a price rebate to the NHS stuck in time, which might be five years ago, and does not reflect the actual costs of the drugs.

[Mr Dunne]

The voluntary schemes are introduced and refreshed every five years. The current scheme was negotiated in 2014, so we are two years into that. One reason for having a time limit on the scheme, from the Government and NHS perspective, is that companies like to find ways during the course of time to adjust their commercial behaviour for their benefit. Having the opportunity to renegotiate the voluntary scheme every few years enables us to try to avoid the circumstances referred to by the hon. Lady.

[Dr Whitford]

If I could clarify, the voluntary scheme runs for five years but what I was talking about, with regard to clause 3, is the statutory scheme and the price rebate related to a requirement for a percentage reduction from the price in December 2013. That is how the rebate in the statutory scheme is defined. The further one gets away from that date point, the less one gains. It is the statutory scheme I am talking about rather than the voluntary one.

[Mr Dunne]

My understanding is that under the statutory scheme, the percentage applies based on sales achieved in the previous year. Therefore, the percentage reduction that we seek for the statutory scheme can be adjusted year by year. That is the intent of what we seek to do. I will seek further inspiration to ensure that I have exactly addressed the point that the hon. Lady makes.

Amendment 43 would have the effect of linking the payment mechanisms of the statutory and voluntary schemes. I understand why that might appear a desirable objective, so I understand the intention behind the amendment. We think there is merit in aligning the two schemes in some respects. However, to require them to be the same is inappropriate, because it removes some flexibility that the Government have, and from which the NHS benefits, in being able to negotiate the voluntary scheme on a periodic basis. The voluntary scheme has other aspects beyond pure price. Aligning the two in what will become a statutory scheme would restrict the scope for the two schemes to operate in a complementary manner.

The voluntary scheme is a matter for negotiation with industry on a periodic basis. As such, there is scope to include a range of measures. Those measures may change with each iteration of the scheme, to reflect the priorities of each side at the time of renegotiation. To illustrate that, the current voluntary scheme includes a range of provisions developed through negotiation with industry that sit alongside the payment mechanism. That includes price modulation, which enables companies to put prices up and down as long as the overall effect across their portfolio is neutral. That may have benefits for them, not only for their sales to the NHS but in the pricing references used by selling to the NHS in jurisdictions in other countries. That is of potential commercial value to companies, which may be willing to accept a higher payment percentage as a result—in other words, a higher discount to the NHS.

There are also provisions on the uptake of new medicines by the NHS, such as making NICE-approved medicines available within 90 days of a NICE decision. We are keen to encourage that. By contrast, the statutory scheme is intended to be a more straightforward approach. As such, the payment percentage applied may be slightly different from that applied to any voluntary scheme, in order to achieve a broadly similar level of savings once all elements of the schemes are taken into account.

As we heard in oral evidence last week, the freedom to negotiate the voluntary scheme is greatly valued by both industry and Government. We intend that any future voluntary scheme should be established through such negotiation, but linking the payment mechanisms would inevitably restrict that flexibility and freedom for both sides. In addition, while the Government welcome the collaborative approach of a voluntary scheme, we cannot guarantee that Government will always want two schemes in future. The amendment would constrain the Government’s discretion to run a single scheme if they and the House thought it best to do so. For those reasons, I urge the hon. Member for Burnley to withdraw her amendment.

[Julie Cooper]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[Mr Dunne]

The clause amends the provisions relating to statutory schemes in section 263 of the National Health Service Act 2006, which describes the purposes for which the Secretary of State can make statutory schemes. The amendments make it clear that a statutory scheme may require companies to make payments to the Government, based on their health service sales. For those companies not in the voluntary scheme, the Government operate a statutory scheme. That is currently based on a cut to the list price of products, rather than a payment mechanism on company sales, as in the voluntary scheme. The cut to the list price has delivered fewer savings to date than the payment mechanism under the voluntary scheme.

[Dr Whitford]

That was the point I was trying to make earlier. One is a percentage return on sales and profits, and the other is a cut in price. The further we are from the time set, which was December 2013, the less value we have from that in proportion to current prices.

[Mr Dunne]

I am grateful to the hon. Lady for making that clear to the Committee. The different approaches to price control between the voluntary and statutory schemes have led to some companies making commercial decisions to divest products from the voluntary scheme and sell them through the statutory scheme, thereby reducing the effectiveness of the voluntary scheme and savings to the NHS. The introduction of a payment mechanism in the statutory scheme would save the health services across the UK an estimated £90 million a year, as set out in the impact assessment.

In response to the Government’s consultation on introducing a payment mechanism in the statutory scheme, the pharmaceutical industry queried whether the Government had the powers to introduce a statutory payment system. The clause clarifies the existing powers to make it clear that the Government have the power to introduce a payment mechanism in the statutory scheme. The ability to make the statutory scheme by way of regulations rather than setting out the detail in primary legislation provides us with the flexibility to respond to changes in the wider economy, the medicines market and patient needs. We have provided illustrative regulations to support scrutiny of this delegated power.

The clause makes a further amendment to section 263 of the National Health Service Act 2006. Currently, the power to make a statutory scheme cannot be applied to members of a voluntary scheme, which means that if the Government introduced a statutory scheme for unbranded generic medicines—although we have no current plans to do so—we would be unable to apply the scheme to manufacturers of unbranded generic medicines that have a mixed portfolio of branded and unbranded generic medicines, and are members of the voluntary scheme. The clause therefore amends the Act in such a way that the power to make a statutory scheme cannot be applied to products covered by the voluntary scheme rather than member companies of the voluntary schemes.

The Government’s view is that, for the most part, competition works well to keep down the price of unbranded generic medicines. Should that situation change, this amendment would enable the Government to use their clause 2 powers to take action beyond individual products or companies. I hope that is clear to the Committee. If so, I ask the Committee to agree that clause 3 should stand part of the Bill.

[Rob Marris]

What a pleasure to appear before you for the first time, Mr Pritchard. As you know, my mother is one of your constituents and was quite a frequent correspondent. She is now in quite frail health so I suspect that you have not heard from her recently, but I thank you for your courtesy in your replies to her over the years. It is a particular pleasure to appear opposite a fellow west midlands MP, the Minister, who represents Ludlow, the constituency in which my mother used to live. She is still in the same house, but the constituency boundaries have changed.

[Mr Dunne]

She may move back again.

[Rob Marris]

Indeed. I very much welcome clause 3 because it is to do with extending the statutory scheme. The helpful library briefing cites the Department of Health consultation from December 2015, which points out:

“In 2014 the statutory scheme covered around 6% of branded medicines sales in the UK”,

in contrast to the voluntary scheme, which covered about 75%. Those are the relative sizes of the schemes.

The Minister said—forgive me that this is not an exact quote, but I do not write that fast—that one of the effects of the clause 3 changes will be to broaden the statutory scheme to cover companies that have a mixed portfolio of branded and unbranded drugs, and are members of the voluntary scheme. As he pointed out, the clause clarifies the power of the Secretary of State to make the statutory scheme—something that was debated or contested by some companies.

In particular, I welcome the clause philosophically or ideologically because it amends section 263 of the National Health Service Act 2006—a Labour Act for which I voted proudly. Section 263(1) of that Act provides the Secretary of State with the power to make a statutory scheme for the purposes of “limiting the prices” or, as in section 263(1)(b) “limiting the profits”. This is something of a damascene conversion for this Government.

I hope, Mr Pritchard, that you will give me a bit of latitude, as I am about to read a quotation from this morning’s edition of The Times. An article entitled “Energy companies face caps on ‘rip-off’ tariffs” says:

“Measures designed to cap the household energy bills of millions of British families on ‘rip-off’ standard variable tariffs are being considered by ministers.”

I think we heard about that in my party’s manifesto at the general election; there has been a damascene conversion by the Government. That article also says:

“Greg Clark, the business and energy secretary, said: ‘I have made clear to the big firms that they must treat customers properly or be made to do so.’”

10:30

That is a big step forward for the Government. It is almost Churchillian for the Minister and the Secretary of State to say that the Conservative Government are going to embrace price controls—something I am not sure any Conservative Government has done since 1945 when we had price controls during the war. I warmly commend the Government on the Bill, particularly as crystallised in the design of, and powers under, clause 3, which ensures that the Secretary of State has the power to make a statutory scheme, which can limit not only prices but profits.

[Andrew Selous (South West Bedfordshire) (Con)]

Many Conservative Members may see the Bill as limiting the ability of drug companies to rip off the Government in a wholly unacceptable way, rather than as introducing price controls in the manner to which the hon. Gentleman refers.

[Rob Marris]

With respect to the hon. Gentleman, that is precisely what price controls do: they stop rip-offs. If one has price controls for other reasons, that is a separate debate. The price controls discussed in the Bill and in the 2006 Act are, as I understand it, precisely to stop rip offs. It appears that the Secretary of State for Business, Energy and Industrial Strategy is now looking at the same thing, as the newspaper quote suggested. It may be an incorrect quote—I give that caveat—but it is a direct quote from the Secretary of State to say that the Government are looking at these things. That does not necessarily mean that they will do them, but it is an ideological watershed for a Conservative Government to look quite rightly at legislating to stop rip-off Britain with regard to prices, but also with regard to limiting profits.

That is what a statutory scheme has the power to do under section 263(1) of the 2006 Act. As I understand it—the Minister can correct me if I am wrong—clause 3, which is at the heart of this provision, does not say, “There has been a debate about whether we can have a statutory scheme or not”. For the sake of certainty, we are saying in clause 3 that the Government will have the power to make a statutory scheme, but I do not hear the Minister going on to say, “But that statutory scheme will have nothing to do with limiting profits.”

In the absence of the Minister’s saying that, he appears ideologically to encompass the concept that I embrace, which is that, in certain circumstances in capitalism, it is incumbent and right for a Government to intervene in the market to limit not only prices—rip-off Britain and so on—but profits. On certain occasions, the Government should have that power, and I think a pharmaceutical supplier to the NHS is one such example. There is a very narrow range of things I could see this happening in, but in pharmaceuticals it is possible.

I congratulate the Government on coming over to a socialist perspective, not only on pharmaceuticals but apparently, if The Times report is right, coming our way on energy companies. Long may that continue. Perhaps we can look at rail fares next. Will the Minister have a word with his fellow Ministers on that?

[The Chair]

If the Minister is in Churchillian mode—I do not take a view on that; I am completely neutral as Chair—that is something I have always wanted to see. In fact, we have two Churchills in the debate, as Members will recognise. That is probably a first, which is great.

[Mr Dunne]

Thank you very much indeed, Mr Pritchard. I hope I am not going to disappoint you, given that build-up.

As ever, I am delighted to see the hon. Member for Wolverhampton South West, who is almost my parliamentary neighbour and with whom I served on countless Finance Bill Committees when he was previously in this place. He always entertained the Committee with his interventions, some of which were occasionally on the subject of the Bill, rather like on this occasion. He has craved your indulgence, Mr Pritchard, and I am glad that you allowed him to point out what I am going to take a stage further, if you will indulge me a little.

The Conservative party is the party of the working man in Britain in 2016. As the hon. Gentleman may have heard, because he is a keen student of these things and because the Conservative party conference was held in Birmingham this year, which is not too far from his constituency, the Home Secretary made it clear that she regards the Conservative party as the party of the consumer in 2016. I will take that one step further.

[Rob Marris]

Do you mean the Prime Minister?

[Mr Dunne]

No, I mean the Home Secretary.

We believe that competition is the best way to drive prices of medicines down for the NHS, and generally speaking that works well. In the case of the specific unbranded generics where there is a single supplier, we have seen that there is an opportunity for market abuse, and I agree with my hon. Friend the Member for South West Bedfordshire that the clauses are designed to use the device of price controls to avoid excess profit abuse by individuals in British companies, which we have seen.

I gently remind the hon. Member for Wolverhampton South West that successive Governments since 1957, including the Government whom he proudly supported for many years, had price controls in place for the cost of medicines.

[Dr Whitford]

The Minister was obviously not happy with the amendment on aligning the two schemes, but he talks about a mechanism of price control under clause 4. Will he give us even the broad principle of what he thinks the price control mechanism in the statutory scheme will be?

[Mr Dunne]

The mechanism in the statutory scheme will be to allow the discount to be changed periodically. That will be determined through consultation with industry in the same way as applies in the voluntary scheme.

[Dr Whitford]

To clarify, therefore will the situation continue to be that the statutory scheme is based on a price reduction as opposed to a percentage above a mark being returned to the NHS, as in the voluntary scheme? Will it be a similar mechanism to what we have today?

[Mr Dunne]

I believe that that is the case, but if I have misunderstood the hon. Lady’s question I shall clarify that later in the sitting, if I may. Our intention is to consult on the matter, so the precise mechanism has not yet been finalised; hence there is some uncertainty.

[Rob Marris]

On the detail, while the Minister is pondering, we talked about the date of December 2013 for the 15% price reduction—the questioning of the hon. Member for Central Ayrshire particularly related to that—but I understand that medicines launched after that date are not in the statutory scheme.

At some point—perhaps later in the sitting—will the Minister clarify whether the Government intend that medicines launched after December 2013 could be in the statutory scheme? Might it be altered in that way to encompass that possibility?

[Mr Dunne]

Companies are free to join the voluntary scheme. If they choose not to, but they want to sell unbranded generics into the NHS, they will be caught within the statutory scheme. The statutory scheme is the default scheme under which unbranded generics are sold into the NHS. It will pick up new unbranded generics as they come forward, unless their manufacturers are in the voluntary scheme and choose to have them dealt with through it.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Enforcement

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

[Mr Dunne]

The clause amends sections 265 and 266 of the 2006 Act in relation to enforcement. It ensures that the existing enforcement provisions in the Act apply to the contravention of any of the new powers in clauses 1, 2, 3 and 5. The maximum penalties are a single penalty of £100,000 or £10,000 per day for the duration of the contravention. The Secretary of State has the power under the 2006 Act to increase or further increase, by order, those maximum penalties.

The clause also ensures that provision can be made in regulations for companies to appeal any enforcement decisions under the new information powers in clause 6. That simply extends the possibility of appealing any enforcement decision under the information powers. Furthermore, clause 4 clarifies the fact that payments or penalties can be recovered as a civil debt through the courts.

In light of the Secretary of State’s flexibility to amend the penalty amounts in future, I hope the Committee will recognise that the proposed penalties are appropriate, but in the event they are deemed not to be appropriate, there is sufficient flexibility in the clause to allow the Government of the day to amend the penalties to whatever they deem appropriate.

On that basis, I ask the Committee to agree that the clause stand part of the Bill.

[Rob Marris]

Will the Minister—if not now, later—give other examples of where a Secretary of State has such apparently wide-ranging powers to set a penalty? In any judicial system there is often discretion among the judiciary as to the penalty imposed on a wrongdoer, but this is not a judicial system. It is a quasi-judicial system, at best. The Government seem to be taking broad powers, and it may be that Governments, including Governments under which I served, have done so in the past, but I cannot think of any examples.

I hope the Minister can provide clarity, because the Secretary of State will be able to exercise the new powers not only by making regulations—such regulations, of course, would come before the House—but by giving directions, which is a much more elastic and broader term. A little clarity on that would be helpful.

[Mr Dunne]

I can help the hon. Gentleman directly with a specific example. The Secretary of State already has those powers under the 2006 Act, which the hon. Gentleman’s Government enacted.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

Control of maximum price of other medical supplies

[Dr Whitford]

I beg to move amendment 47, in clause 5, page 3, line 39, at end insert—

‘(7) Before making regulations under Clause 5 the Secretary of State must conduct a consultation on the potential effect of this clause on the maintenance of quality of those medical supplies, and seek representations from manufactures, suppliers and distributors of medical supplies as part of the consultation.”.

This is a probing amendment on an issue of concern. The Secretary of State has obviously had powers since 2006, and perhaps earlier, to seek to control the price of medical supplies. That power has not really been utilised, and neither have the informatics of that. When controlling the price of drugs, the quality of those drugs is controlled by the Medicines and Healthcare Products Regulatory Agency so that pushing down the price does not result in loss of quality.

My concern is that, beyond a kitemark or a CE mark, we do not have anything in the United Kingdom that controls quality, particularly of consumables such as swabs and gloves. As a surgeon for 30-odd years, I can tell the Committee that the range in quality of things such as surgical gloves can be immense. A surgeon might use two or three pairs of gloves during an operation. If there is a leak in those gloves that is not visible, it might be only when the surgeon washes their hands afterwards that they see they have blood on their finger, which means that staff are exposed to blood contamination. Poor-quality swabs might result in thread or fluff coming off inside a patient, which can contribute to sepsis. There is no quality controller specific to medical supplies, so if we just drive down the price, we may drive down the quality.

We use a lot of central procurement in Scotland, and NHS National Procurement has helped us to control our prices for everything from consumables through to major machine purchases, which is already saving money for the NHS in Scotland. If there were a reduction in quality, our concern is that it would be UK-wide. It would be something that producers were doing, which would in turn undermine what the devolved Government were trying to do. Procurement remains devolved, but if the quality started to drop overall, that would affect all the devolved health services, as well as NHS England.

The amendment calls for consultation and for consideration of some form of quality regulation or control that would mean those items having to be way above the very basic CE level, at a point considered high enough quality for NHS use.

10:45

[Justin Madders]

I support the hon. Lady’s amendment. She spoke with great personal experience, which we all appreciate, about the importance of maintaining the quality and reliability of products in the NHS. Over the weekend, there were reports of the vast sums paid out by the NHS in clinical negligence costs. I am sure we all agree that that money would be better spent on patient care. Of course, many of those claims are down to human error, or to events that were in some other way avoidable. However, one obvious example of an area where we need to be reassured that the Bill will not have unintended consequences is infection control. About 300,000 people a year—about one in every 16 patients—get an infection while being cared for in the NHS. That causes additional suffering, inconvenience and, sometimes, serious illness or death. It also has a wider impact on the NHS, because patients with hospital-acquired infections spend two and a half times longer in hospital than uninfected patients, on average: they are usually admitted for approximately 11 days.

As well as the devastating impact on the patients affected, there is a significant financial impact on the NHS. I have referred to the costs incurred from clinical negligence claims. The most recent reliable estimate of costs from infections, which appeared in the Plowman report, put the figure at £1 billion a year. According to Professor Briggs’s report “Getting It Right First Time”, if someone gets an infection from an orthopaedic operation, it costs the NHS an extra £100,000 to put it right. We need to be confident that the Bill poses no risk of any reduction in quality, but we would have been more confident about that if there had been a proper consultation on that element in the first place.

[Mr Dunne]

Rather unusually, I start by thanking the hon. Lady for proposing the amendment. She has raised an issue for which we have considerable sympathy. She touched on the way in which medical products are procured in Scotland. I can confirm that we are looking to introduce more centralised purchasing across the NHS under the efficiency proposals made by Lord Carter in the other place. One of the areas of focus was the variability, in purchasing terms, of standard commodity items. She mentioned surgical gloves—I will not go into detail on those with her, because she has obviously used them considerably more than I can conceive of and is therefore very experienced when it comes to the variability not just in price but in quality of such commodity products. We are looking to introduce closer central purchasing—I think 12 items are currently being trialled or introduced in parts of NHS England.

We recognise that, as currently drafted, the Bill does not explicitly state in relation to section 260 that the Government are obliged to consult industry. I am aware that the 2006 Act, in relation to controlling the cost of medicines, does explicitly state that there is an obligation on the Government to consult. The hon. Lady’s amendment is appropriate in its intent. I invite her to withdraw it at this stage, but I undertake to work with her. My officials will consider how to amend the amendment to give it the effect that she seeks, but in a way that works in the context of the Bill. There are technical drafting issues with the amendment that mean that it would give us some unintended difficulties. That is the Government’s position on the amendment; I hope she is happy with that.

The hon. Lady referred to the effect of any pricing controls for medical supplies on the maintenance of those products’ quality. I can assure the Committee that the Government will take into account all relevant factors, including any concerns raised by industry about the quality of medical supplies, when making and consulting on price controls if they were to apply to medical supplies. The Government would not be in favour of putting any of those many factors in the Bill, because it may unnecessarily constrain the conduct of future Governments or the NHS.

[Dr Whitford]

If there is a move to more central procurement, will the Minister consider some form of quality control regulation or power at that point, so that central procurement is not just driven to accept the lowest price and there is some safety mechanism, in the same way we have the MHRA for drugs?

[Mr Dunne]

We will consult with industry on the impact of the Bill on medical supplies. Although I am not going to give the hon. Lady an absolute assurance that we can introduce a threshold for quality, which is quite hard to prescribe given the immense variety of supplies we are talking about, there is a clear intent that, if we are centralising procurement of equipment, that equipment has to meet a quality threshold in order to be acceptable to the clinician. I understand the point she makes. The intent is not to buy substandard equipment to treat patients, but to remove variability in pricing for the same equipment depending on different purchasers, which is inappropriate and means effectively the taxpayer is the funder of all these different entities.

[Rob Marris]

rose—

[Mr Dunne]

I think the hon. Gentleman is looking to intervene—or is he stretching again?

[Rob Marris]

I urge the Minister to have a greater familiarity with the quality of surgical gloves, which are great for delivering leaflets. They give a bit of weather protection. You don’t have to lick your finger to get the next leaflet, you don’t get letterbox knuckle, and—best of all—the dog gets latex, not flesh.

[Mr Dunne]

Again the hon. Gentleman strays, but not too far beyond his brief, because surgical gloves have been raised now by three members of the Committee. I am grateful for that tip. With the onset of winter weather, that could be quite useful for those of us who will be going to Sleaford and North Hykeham over the next few weeks to leaflet. I will take it upon myself to bring a box of surgical gloves when I visit.

With your indulgence, Mr Pritchard, I will take this opportunity to pick up the points made by the hon. Member for Central Ayrshire about the way the statutory scheme is intended to operate. To be crystal clear, clause 2 relates to unbranded generics and allows us to make regulations and directions to specific companies, while clause 3 relates currently only to branded medicines but could, if we wanted it to, also relate to unbranded medicines in future. The statutory scheme will be used where a company is not a member of the voluntary scheme, as I indicated to the hon. Member for Wolverhampton South West. The statutory scheme is intended to operate through setting a percentage of sales to be paid to the Government. Details of the scheme’s operation will be set out in regulations. A draft of the illustrative regulations is available to the Committee.

I will revert to the hon. Lady’s amendment 47. The Government do not currently control prices of medical supplies. As was referred to earlier, the MHRA is responsible for the safety, efficacy and quality of medical supplies. That provides some check of quality in relation to not only medicines but medical supplies.

[Rob Marris]

The Minister has lost me there. It is probably my ignorance, but I thought he just said that the Government do not currently control the cost of medical supplies. If that is what he said, is that because they do not use the power they already have under section 260(1) of a 10-year-old Act?

[Mr Dunne]

Yes, I think that is the correct answer. We do have those powers under the 2006 Act, but they have not been used, partly because generally speaking medical supplies is a competitive market. We have not seen the kind of abusive price behaviour that we are trying to address elsewhere in the Bill.

[Dr Whitford]

Will the Minister give way?

[Mr Dunne]

I am about to conclude but I will happily give way.

[Dr Whitford]

I would like to clarify the reason for introducing this, if there has not been a problem in the market, as we have seen with the price hikes in generics, and it is much harder to do. Why are the Government extending a power they have had for 10 years but never used?

[Mr Dunne]

In essence, we are trying to bring the regimes for medical supplies and drugs into the same environment, so that we are able in future to use the powers, which we are introducing for the first time for drugs, for medical supplies on the same basis, so that we do not have to treat one thing under one Act and the other under another. I hope that is clear.

[Justin Madders]

I am sorry to push this point, but are there any examples? We obviously have clear examples, for example, in the pharmaceutical sector. Is there anything in the supplies sector that would be equivalent?

[Mr Dunne]

I am not aware of any particular examples of medical supplies that we are concerned about at this point. However, I am sure that, if there are people outside watching who have good examples, they will let the Committee know before we conclude our deliberations.

Reverting to the hon. Lady’s amendment 47, we understand the intent behind it. We are not fully convinced that the current drafting would have precisely the effect that she is hoping. I invite her to work with me and my officials between now and Report. The Government will be happy to consider how we could best introduce the requirement to consult in relation to section 260. On that basis, I invite her to withdraw the amendment.

[Dr Whitford]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[Mr Dunne]

Clause 5 amends section 260 of the 2006 Act, which enables the Secretary of State to control the maximum prices of medical supplies other than health service medicines. As we have just discussed, the Government have powers to control prices of medical supplies and we are not currently using those powers. It is important that we continue to have those powers, should we decide it is necessary to control prices of medical supplies in the event of market abuse.

With an increasing spend on healthcare products, the Government need the tools to be able to control prices, if there is any indication that medical suppliers do not provide value for money to the NHS and the taxpayer. The measures would ensure that the same enforcement and territorial extent provisions apply to controlling the cost of medical supplies and health service medicines.

Existing enforcement provisions in relation to medical supplies are draconian compared with those for medicines. Currently, a contravention or a failure to comply is in fact a criminal offence in relation to medical supplies, whereas it is not in relation to medicines. We are aligning the enforcement provisions to those for medicines and making them much more proportionate. That is done through clause 7, through consequential amendments. On that basis, I ask the Committee to agree that clause 5 stand part of the Bill.

[Rob Marris]

May I again congratulate the Government? This appears to be the only piece of criminal legislation I have ever heard of that apparently has a 100% deterrence rate. That is, the Government have the power to penalise a course of action and, as far as the Government are aware, no company is pursuing such a course of action, meaning that Government do not have to exercise their powers, criminal or otherwise. What a great piece of legislation passed by the Labour Government in 2006.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mark Spencer.)

11:00

Adjourned till this day at Two o’clock.

Health Service Medical Supplies (Costs) Bill (Third sitting)

Committee Debate: 3rd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: Mike Gapes, † Mark Pritchard

† Berry, James (Kingston and Surbiton) (Con)

† Churchill, Jo (Bury St Edmunds) (Con)

† Cooper, Julie (Burnley) (Lab)

† Cummins, Judith (Bradford South) (Lab)

† Davies, Dr James (Vale of Clwyd) (Con)

† Day, Martyn (Linlithgow and East Falkirk) (SNP)

† Dunne, Mr Philip (Minister of State, Department of Health)

† Foster, Kevin (Torbay) (Con)

Glen, John (Salisbury) (Con)

Jones, Graham (Hyndburn) (Lab)

† Kendall, Liz (Leicester West) (Lab)

† McCartney, Karl (Lincoln) (Con)

† Madders, Justin (Ellesmere Port and Neston) (Lab)

† Marris, Rob (Wolverhampton South West) (Lab)

† Selous, Andrew (South West Bedfordshire) (Con)

† Spencer, Mark (Sherwood) (Con)

† Throup, Maggie (Erewash) (Con)

† Whitford, Dr Philippa (Central Ayrshire) (SNP)

Marek Kubala, Kenneth Fox, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 15 November 2016

(Afternoon)

[Mark Pritchard in the Chair]

Health Service Medical Supplies (Costs) Bill

Clause 6

Provision and disclosure of information

14:00

[The Minister of State, Department of Health (Mr Philip Dunne)]

I beg to move amendment 1, in clause 6, page 4, line 4, at end insert—

“( ) References in this section to a UK producer are to a person who—

(a) manufacturers, distributes or supplies any UK health service products, and

(b) is not an excepted person.”

This amendment is linked to amendments 2 to 16 and 19 to 35. It provides a definition of the term “UK producer” to be used in sections 264A to 265 of the National Health Service Act 2006.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 2 to 19.

Amendment 48, in clause 6, page 5, line 41, at end insert—

“(1A) Information provided by virtue of section 264A must be disclosed by the Secretary of State to any person listed in subsection (1) at that person’s request.”

Government amendments 20 to 36 and 38.

[Mr Dunne]

I apologise to the Committee for introducing quite so many amendments at this stage of our deliberations. As I explained in our pre-meeting before we went into line-by-line scrutiny, the amendments were tabled entirely to reflect the request from the devolved Administrations, with which we entirely agree, on how they want to apply this power in their territories. As a result of things beyond the control of the Committee, including elections in the devolved Administrations this spring, the European Union referendum and the summer recess, all of which interfered with the normal process of discussion between the Department and the devolved Administrations, we were not able to get instructions from them before the introduction of the Bill, which is why the amendments have only now been tabled.

I recognise that this is a large number of amendments, but they are all driving at the same objective. Some of the information requirements in the Bill that apply to England only could also apply to the territories of the devolved Administrations. The Government amendments therefore reflect the instructions of the devolved Administrations in that area. We have had constructive discussions with each Administration, and we have agreed that the UK Government will collect information from wholesalers and manufacturers for the whole of the UK. It would not make sense for each nation to collect its own information from wholesalers and manufacturers, because that would lead to duplication of effort to no apparent purpose. We have also agreed that each nation will collect information from its own pharmacies and GPs, to the extent that that is requested.

Amendments 1 to 36 and 38 therefore enable the Secretary of State to collect information from UK producers for devolved purposes, with the exception of pharmacies and GPs in the devolved territories. The amendments will enable the Secretary of State to share the information with the devolved Administrations and other bodies in the devolved Administrations, and enable them all to use the information for devolved purposes: reimbursement of pharmacies and GPs; and to assess value for money in relation to the supplies. I hope that the Committee will therefore accept those Government amendments.

While I am on my feet, I take the opportunity to clarify again the comments I made towards the end of our previous sitting, to ensure that they are properly on the record. They related to the distinctions between clauses 2 and 3. The Bill, as everyone in Committee knows, is concerned with the cost of health service medicines. We negotiated a voluntary scheme with industry that controls the cost of branded health service medicines. Any company that has branded medicines in its portfolio and chooses not to be a member of the voluntary scheme will automatically become a member of the statutory scheme.

The existing statutory scheme, which also applies only to branded health service medicines, is based on a price-cut mechanism. The Bill makes it clear that the Secretary of State may make regulations for a statutory scheme that is based on a payment mechanism, whereby a percentage of sales income is paid to the Government. Illustrative regulations, to which I referred this morning, and which include the payment mechanism alongside a price-freeze mechanism, have been provided to Committee members. Even though the Bill would not prevent us from applying the statutory scheme to unbranded generic medicines, that is not the Government’s current intent.

I have some comments to make on Opposition amendment 48. Perhaps you would like me to do that after the amendment has been spoken to, Mr Pritchard.

[The Chair]

I think later would be helpful, thank you, Minister.

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

I want to raise a small, perhaps technical, issue on amendment 11, which it seems would insert the rules and definitions with respect to excepted persons for Scotland, Northern Ireland and Wales under a new subsection defining health service products for England. It seems out of place, and there is no definition of English excepted persons.

The amendment would insert new subsection (8A) into new section 264A, which clause 6 inserts into the National Health Service Act 2006. It seems out of place because the provision would deal with English health service products, then the definition of the excepted persons in the devolved nations, and then Scottish, Irish and Welsh health service products. It may just be a technical issue, but I wanted to raise it.

[Mr Dunne]

I am grateful to the hon. Lady for raising that issue. If we have time during the sitting, I shall respond more formally to her.

[The Chair]

I am sure that the hon. Lady knows, but if she wants to speak to amendment 48 now, she can do so.

[Dr Whitford]

My colleague will speak to that amendment.

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

It is a pleasure to serve under your chairmanship today, Mr Pritchard. I am somewhat reassured by many of the Minister’s comments, and I thank him for his explanations. Much of this stuff is technical, and I hope he sees amendment 48 in a similar light. I think it would improve and strengthen the measure.

The clause does not currently set out a mechanism for the disclosure of information to devolved Administrations or bodies. For example, how will the information be disclosed, and by what means? Will it be only the Secretary of State who can disclose? In short, will the devolved Administrations be able to get the information when they want and need it, so that it ties in with the figures and statistics they are seeing and they can see patterns? It is about flexibility.

The amendment is fairly straightforward and we think it would help to strengthen and improve the Bill. I hope that the Minister agrees. We would like him to clarify whether the Government intend to leave disclosure to the discretion of the Secretary of State, on an ad hoc basis. Otherwise, what would the terms of disclosure be?

[Rob Marris (Wolverhampton South West) (Lab)]

To tease out the amendment a little more, proposed new section 264B(1)(h) relates to the provision of information to

“any person who provides services to any person falling within any of paragraphs (a) to (g)”.

Is the hon. Gentleman concerned that under his amendment there might be disclosure to other private providers; or is that covered because only paragraphs (a) to (g) are specified?

[Martyn Day]

I thank the hon. Gentleman for his intervention, and I hope that I can clarify my clarification. It is about timing—when the information is disclosed, not to whom it is disclosed. The Bill covers that and we are quite comfortable with that.

I was saying that we think our amendment would strengthen the clause. I am reminded that on Second Reading the Secretary of State referred to fact that there would be amendments—we are grateful to see many of them today—

“to reflect the agreement between the Government and the devolved Administrations, so that information from wholesalers and manufacturers can be collected by the Government for the whole of the UK and shared with the devolved Administrations.”——[Official Report, 24 October 2016; Vol. 626, c. 80.]

We think our amendment would enable him to get his wish and provide a mechanism in the Bill.

We feel strongly about the matter and want to push it to a vote if we do not receive the necessary assurances from the Minister. I hope that he can provide them.

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

I want to comment generally on the Minister’s amendments. I agree that it would have been helpful if they had been published earlier, but reasons why that was not possible have been given, and the Committee will be pleased to hear that I do not intend to go through each of them. I take the Minister’s assurances that there has been extensive dialogue with the devolved Administrations. I intend to direct my remarks not so much at those Administrations that have been taking responsibility for their health service for some time, but at those areas in England where they have embarked upon ambitious devolution arrangements that encompass health—Manchester is the most obvious and probably most advanced example. It is not at all clear to me how, if at all, the Bill will impact on them.

The Greater Manchester area has now been given a delegated budget of £6 billion per annum. I am sure that people there have made various representations about how that is short of the figure that they need, and a significant proportion of the annual budget will certainly be spent on pharmaceutical costs. Would it not be reasonable for the relevant proportion of the rebate to be returned to Manchester and such areas in the same manner as the initial funding is devolved down to them? Simon Wootton, who was the chief operating officer at the North Manchester clinical commissioning group, said that we have not had the PPRS money back into the local NHS in North Manchester.

I am not aware of any specific agreements as part of the devolution settlement for Greater Manchester, and nothing is in the Bill, so I would be grateful if the Minister, when he responds, set out whether there have been any discussions with local representatives in Manchester on the issue, and whether his intention is to ensure that, in common with other devolved Administrations, appropriate arrangements are put in place for the relevant proportion of the rebate to be paid directly to them.

[Mr Dunne]

First, in relation to amendment 11 and what the hon. Member for Central Ayrshire said, I think she made a perfectly reasonable point. As a lay reader of parliamentary drafting, if I may say so, it would be easy to be perplexed by the sequencing that she highlighted and brought to the attention of the Committee. I am advised, however, that the purpose of the amendment is to ensure that the UK Government collect information from English pharmacies and GP practices, but not from pharmacies in the areas of the devolved Administrations. Therefore, the reference to “Excepted person” includes pharmacies and GP practices in the devolved Administrations, but specifically does not include those in England, because their information is already collected by the UK Government. The terminology relates to where the GPs and pharmacies are and who is doing the collecting. I hope that helps.

[Dr Whitford]

I understand that, but I could not find reference to that in the National Health Service Act 2006, and I thought that the aim was to bring everything together in this Bill, so it seemed odd that there was no mention of English excepted persons. That is fine—that information is already being collected—but the Bill still separates the definition of English health service products from the definition of the health service products of the devolved nations. It seems an odd place to insert the amendment; it seems it is being attached to the definition of English health service products.

I totally accept that I am a complete novice, so there may be something I am not understanding, but to me, reading it logically, it does not seem to make total sense, and I thought that the aim of the Bill was to bring all the powers into one place. It seemed odd for there to be no definition of English excepted persons, even from an old Act, because what is happening here is that different things are being brought from the 2006 Act and from the Scotland Act 1978 into one place.

[Mr Dunne]

I thank the hon. Lady for that clarification. I hope that inspiration will arrive before I sit down.

To address the specific point made by the hon. Member for Ellesmere Port and Neston on devolution to Manchester, it is an interesting idea, which reflects some of the challenges arising from the increasing use of devolution of powers across our country. I can see why he might seek to secure a carve-out of income for Manchester. I would say, “Nice try”, but at present the funding arrangements for Manchester and other devolved areas in England are agreed via NHS England. That applies to the totality of funding available for health provision within the Manchester area, so the allocation already includes income derived from the voluntary scheme, and it will not be ring-fenced as a subset of the funds, because there chaos would lie.

14:14

[Justin Madders]

I appreciate that the Minister is not going to embark on a new area of debate and dialogue with Greater Manchester on this point, but will he advise whether future allocations intend to deal with the increased income from the rebate that is anticipated as a result of the Bill?

[Mr Dunne]

Each year, when NHS England agrees its commissioning budgets and tariffs with providers, an allocation is made. That is based on the overall sum received by NHS England. Increases in revenues that derive from the Bill will help to swell that pot relatively modestly, although every penny counts, and that will therefore be taken into account when determining allocations to all CCGs, including those in Manchester.

I will give the Government’s response in relation to amendment 48; I do not have many comments to make. I sincerely hope that, before I reach the end of these remarks, I will be able to address the further point, on English exclusion, made by the hon. Member for Central Ayrshire.

Proposed new section 264B in clause 6 enables the Secretary of State to disclose the information collected to a range of bodies, which includes Government bodies such as NHS England, special health authorities, NHS Digital, other Departments and the devolved Administrations. It also enables the Secretary of State to prescribe representative bodies, or other persons in prescribed regulations, to whom he can disclose information in the future. For example, that might include certain information going to trade associations or other bodies that it might be appropriate to provide information to in future, with respect to the operations of the Bill.

The effect of the amendment tabled by the hon. Members for Central Ayrshire and for Linlithgow and East Falkirk would be that any of those bodies could in future access any information that the Government have collected. We do not believe that it would be right for representative bodies to be able to access information that the Secretary of State collects, primarily for purposes of commercial confidentiality. There are examples in other legislation in which we have taken specific steps to protect commercially sensitive information. I am not suggesting that one company would directly get access to information on another company’s profitability, but third-party advisers, for example, might get access to that information.

We do not want to provide opportunities for risking breaches of commercial confidentiality, because that would undermine confidence in the information gathering for all the companies, which includes major multinational companies. We think that the amendment might open us up to criticism from the major suppliers that there was greater risk of that intervention, which we would not want to see.

[Dr Whitford]

If the Minister looks at our amendment, which is incredibly short, he will see that all it says is “at that person’s request.” We do not want to widen the list in any way at all; we are not looking to add to the list. All we are saying is that, if it is accepted that a devolved Government should be able to access this information, it should be at the request of that devolved Government. It should not be, “We will tell you every April how you’re doing.” If a devolved country sees a pattern emerging, it should be able to say, “Can we request our data?” The issue is that data are to be collected centrally but not belong to the devolved nations to which they pertain. We are not trying to add anyone; we are just trying to give the devolved countries the power to request.

[Mr Dunne]

I completely understand that that is the intent of the hon. Lady’s amendment, and I think I have another way of addressing it, which I am now going to come on to. We think it entirely appropriate that at some point the devolved Administration might wish to change their information requirements. They might wish to add requests for information that they are not initially getting, which is a reasonable request.

We think that the right way to address that, rather than putting something in the Bill that might inadvertently allow other representative bodies access to information—I am sure the hon. Lady agrees that that might not be appropriate—is for a memorandum of understanding to be agreed between the Department of Health and each of the devolved Administrations that would allow requests for information to be submitted and dealt with in a manner agreeable to both parties. In the consultation process that will follow, we intend to enter into a memorandum of understanding that will include the procedures for requesting and sharing information.

I assure the Committee that the Government intend to continue to work constructively with the devolved Administrations to ensure that they have access to the relevant information collected in a format convenient to both sides, so that we do not end up with special data sets that are hard for an Administration to create because the data are not readily available from the information provided. Aside from that, we would honour the reasonable requests of any devolved Administration to be able to get access to the data, which I acknowledge the Administration may not own if the information has been gathered by the Department of Health.

On that basis, I hope that the hon. Lady and the hon. Member for Linlithgow and East Falkirk will not press their amendment.

[The Chair]

If the SNP Front-Bench spokespersons want to press the amendment to a vote, that will happen later, but it would be helpful to the flow of the proceedings if they confirmed now whether they intended to do so.

[Martyn Day]

We are satisfied with the Minister’s answer.

[The Chair]

I am grateful to the hon. Gentleman.

Amendment 1 agreed to.

Amendments made: 2, in clause 6, page 4, line 5, leave out from “any” to “to” in line 6 and insert “UK producer”.

This amendment is linked to amendments 1, 3 to 16 and 19 to 35. It allows regulations to require the provision of information by a person who manufactures, distributes or supplies Welsh health service products, Scottish health service products or Northern Ireland health service products.

Amendment 3, in clause 6, page 4, line 19, at end insert—

“(d) the determination of the payments to be made to any persons who provide primary medical services under Part 4 of the National Health Service (Wales) Act 2006;

(e) the determination of the remuneration to be paid to any persons who provide pharmaceutical services under Part 7 of that Act;

(f) the consideration by the Welsh Ministers of whether—

(i) adequate supplies of Welsh health service products are available, and

(ii) the terms on which those products are available represent value for money;

(g) the determination of the payments to be made to any persons who provide primary medical services under section 2C(1) of the National Health Service (Scotland) Act 1978 (“the 1978 Act”);

(h) the determination of the remuneration to be paid to any persons who provide pharmaceutical care services under section 2CA(1) of the 1978 Act;

(i) the consideration by the Scottish Ministers of whether—

(i) adequate supplies of Scottish health service products are available, and

(ii) the terms on which those products are available represent value for money;

(j) the determination of the remuneration to be paid to any persons who provide primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14));

(k) the consideration by a Northern Ireland department of whether—

(i) adequate supplies of Northern Ireland health service products are available, and

(ii) the terms on which those products are available represent value for money;

(l) the exercise by the Secretary of State of any powers under sections 260 to 264 and 265;

(m) the operation of a voluntary scheme.”.

This amendment is linked to amendments 1, 2, 4 to 16 and 19 to 35. It sets out the purposes for which a person may be required to record and provide information to the Secretary of State by virtue of regulations under section 264A(1) of the National Health Service Act 2006.

Amendment 4, in clause 6, page 4, leave out lines 20 to 29.

This amendment is linked to amendments 1 to 3, 5 to 16 and 19 to 35. It removes subsections (3) and (4) of section 264A of the National Health Service Act 2006 because the provision made by those subsections now appears in amendment 3.

Amendment 5, in clause 6, page 4, line 30, leave out

“an English producer or other”

and insert “a”.

This amendment is linked to amendments 1 to 4, 6 to 16 and 19 to 35. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 6, in clause 6, page 4, line 33, leave out from “for” to end of line 35 and insert “UK health service products”.

This amendment is linked to amendments 1 to 5, 7 to 16 and 19 to 35. It is a consequential amendment. A reference to English health service products is no longer needed as those products will fall within the definition of “UK health service products” inserted by amendment 14.

Amendment 7, in clause 6, page 4, line 38, leave out “the” and insert “UK health service”.

This amendment is linked to amendments 1 to 6, 8 to 16 and 19 to 35. It is a consequential amendment.

Amendment 8, in clause 6, page 4, line 41, leave out “the” and insert “UK health service”.

This amendment is linked to amendments 1 to 7, 9 to 16 and 19 to 35. It is a consequential amendment.

Amendment 9, in clause 6, page 4, line 43, leave out second “the” and insert “UK health service”.

This amendment is linked to amendments 1 to 8, 10 to 16 and 19 to 35. It is a consequential amendment.

Amendment 10, in clause 6, page 5, line 1, leave out from “whether” to “health” in line 2 and insert

“they are UK health service products and, if so, which of the following they are—

(i) English health service products;

(ii) Welsh health service products;

(iii) Scottish health service products;

(iv) Northern Ireland”.

This amendment is linked to amendments 1 to 9, 11 to 16 and 19 to 35. It is a consequential amendment. It enables regulations to require a UK producer to provide information about products for verifying whether they are Welsh, Scottish or Northern Ireland health service products.

Amendment 11, in clause 6, page 5, line 14, at end insert—

“(8A) “Excepted person” means any of the following—

(a) a person who provides primary medical services under Part 4 of the National Health Service (Wales) Act 2006;

(b) a person who provides pharmaceutical services under Part 7 of that Act;

(c) a person who provides primary medical services under section 2C(1) of the 1978 Act;

(d) a person who provides pharmaceutical care services under section 2CA(1) of the 1978 Act;

(e) a person who provides primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14)).”.

This amendment is linked to amendments 1 to 10, 12 to 16 and 19 to 35. It lists the persons who are excepted from being a “UK producer” for the purposes of the definition inserted by amendment 1.

Amendment 12, in clause 6, page 5, line 15, at end insert—

“( ) “Northern Ireland health service products” means any medicinal products used to any extent for the purposes of health care provided by virtue of the Health and Social Care (Reform) Act (Northern Ireland) 2009 and any other medical supplies, or other related products, required for the purposes of health care provided by virtue of that Act.”.

This amendment is linked to amendments 1 to 11, 13 to 16 and 19 to 35. It provides a definition of “Northern Ireland health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 13, in clause 6, page 5, line 15, at end insert—

“( ) “Scottish health service products” means any medicinal products used to any extent for the purposes of the health service within the meaning of the 1978 Act and any other medical supplies, or other related products, required for the purposes of that health service.”.

This amendment is linked to amendments 1 to 12, 14 to 16 and 19 to 35. It provides a definition of “Scottish health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 14, in clause 6, page 5, leave out lines 16 to 26 and insert—

“( ) “UK health service products” means any English health service products, Welsh health service products, Scottish health service products or Northern Ireland health service products.”.

This amendment is linked to amendments 1 to 13, 15, 16 and 19 to 35. It provides a definition of “UK health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 15, in clause 6, page 5, line 26, at end insert—

“( ) “Welsh health service products” means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) of the National Health Service (Wales) Act 2006 and any other medical supplies, or other related products, required for the purposes of that health service.”

This amendment is linked to amendments 1 to 14, 16 and 19 to 35. It provides a definition of “Welsh health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 16, in clause 6, page 5, line 26, at end insert—

“( ) Until the coming into force of the repeal of section 27 of the 1978 Act by schedule 3 to the Smoking, Health and Social Care (Scotland) Act 2005 the references in subsections (2)(h) and (8A)(d) to pharmaceutical care services under section 2CA(1) of the 1978 Act are to be read as references to pharmaceutical services under section 27(1) of that Act.”.

This amendment is linked to amendments 1 to 15 and 19 to 35. It makes transitional provision in relation to references to pharmaceutical care services under section 2CA(1) of the National Health Service (Scotland) Act 1978.

Amendment 17, in clause 6, page 5, line 35, at end insert—

“(fa) the Common Services Agency for the Scottish Health Service constituted under section 10 of the 1978 Act;”.

This amendment adds the Common Services Agency for the Scottish Health Service to the persons listed in section 264B(1) of the National Health Service Act 2006. This means that information provided by virtue of section 264A of that Act may be disclosed to that Agency.

Amendment 18, in clause 6, page 5, line 36, at end insert—

“(ga) the Regional Business Services Organisation established under section 14 of the Health and Social Care (Reform) Act (Northern Ireland) 2009;”.

This amendment adds the Regional Business Services Organisation to the persons listed in section 264B(1) of the National Health Service Act 2006. This means that information provided by virtue of section 264A of that Act may be disclosed to that Organisation.

Amendment 19, in clause 6, page 5, line 40, leave out “English producers or other”.

This amendment is linked to amendments 1 to 16 and 20 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 20, in clause 6, page 5, line 46, at end insert “(subject to subsection (4))”.

This amendment is linked to amendments 1 to 16, 19 and 21 to 35. It flags the provision made by amendment 29.

Amendment 21, in clause 6, page 6, line 4, leave out “or (4)” and insert

“(a) to (c), (l) or (m)”.

This amendment is linked to amendments 1 to 16, 19, 20 and 22 to 35. It is consequential on amendments 3 and 4.

Amendment 22, in clause 6, page 6, line 8, leave out “or (4)” and insert

“(a) to (c), (l) or (m)”.

This amendment is linked to amendments 1 to 16, 19 to 21 and 23 to 35. It is consequential on amendments 3 and 4.

Amendment 23, in clause 6, page 6, line 11, leave out “to (g)”.

This amendment is linked to amendments 1 to 16, 19 to 22 and 24 to 35. It is consequential on amendments 25 and 26.

Amendment 24, in clause 6, page 6, line 12, leave out

“either of the matters specified in section 264A(4)”

and insert

“any of the matters specified in section 264A(2)(d) to (f), (l) or (m)”.

This amendment is linked to amendments 1 to 16, 19 to 23 and 25 to 35. It is consequential on amendments 3 and 4.

Amendment 25, in clause 6, page 6, line 13, at end insert—

“(ca) in relation to a person falling within subsection (1)(f) or (fa), the purpose is that of exercising functions connected with any of the matters specified in section 264A(2)(g) to (i), (l) or (m);”.

This amendment is linked to amendments 1 to 17, 19 to 24 and 26 to 35. It is consequential on amendments 3, 4 and 17.

Amendment 26, in clause 6, page 6, line 13, at end insert—

“(cb) in relation to a person falling within subsection (1)(g) or (ga), the purpose is that of exercising functions connected with any of the matters specified in section 264A(2)(j) to (m);”.

This amendment is linked to amendments 1 to 16, 18 to 25 and 27 to 35. It is consequential on amendments 3, 4 and 18.

Amendment 27, in clause 6, page 6, line 17, leave out “(c)” and insert “(cb)”.

This amendment is linked to amendments 1 to 16, 19 to 26 and 28 to 35. It is mainly consequential on amendments 25 and 26.

Amendment 28, in clause 6, page 6, line 20, leave out “or (4)”.

This amendment is linked to amendments 1 to 16, 19 to 27 and 29 to 35. It is consequential on amendments 3 and 4.

Amendment 29, in clause 6, page 6, line 20, at end insert—

“(4) The Welsh Ministers may disclose any confidential or commercially sensitive information disclosed to them under subsection (1) to any of the following persons—

(a) a Local Health Board or other person appointed under section 88(3)(b) of the National Health Service (Wales) Act 2006 to exercise the functions of a determining authority under Part 7 of that Act;

(b) a National Health Service trust established under section 18 of the National Health Service (Wales) Act 2006;

(c) any person who provides services to the Welsh Ministers or to any person falling within paragraph (a) or (b).

(5) A person to whom any confidential or commercially sensitive information is disclosed under subsection (4) may not—

(a) use the information for any purpose other than the purpose of exercising functions connected with any of the matters specified in section 264A(2)(d) to (f), (l) or (m), or

(b) disclose the information to another person.”.

This amendment is linked to amendments 1 to 16, 19 to 28 and 30 to 35. It allows the Welsh Ministers to disclose information to other persons including Local Health Boards, National Health Service trusts and persons providing services to those persons.

Amendment 30, in clause 6, page 6, line 24, leave out “English producers or other”.—(Mr Dunne.)

This amendment is linked to amendments 1 to 16, 19 to 29 and 31 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

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

[Mr Dunne]

Before I go into the clause as a whole, I would like to respond in further detail to the hon. Member for Central Ayrshire about excepted persons. Clause 6 will add a new section to the National Health Service Act 2006. It brings together information collection practices, both statutory and voluntary. The Secretary of State collects information from a sample group in England from time to time, but not from GPs and pharmacies in the devolved Administrations. Therefore, the definition of “excepted persons” covers those persons whom the Secretary of State does not intend to collect information from directly, because he would be relying on the devolved Administrations to do so. The terminology used in proposed new section 264B is new; it is not based on the 2006 Act, which the hon. Lady has read so diligently. I thank her for bringing the matter to the Committee’s attention and I hope that that explanation meets her concern.

[Dr Whitford]

To clarify, is there a rational reason for the positioning of the section as between English health service products and the other health service products? I am sorry if, as a novice, I am creating extra work.

[Mr Dunne]

I think that is to do with parliamentary drafting on which I stand to become an expert; I look forward to seeing whether there is a clear explanation for that, which I can give to the hon. Lady as we debate the clause.

The clause enables the Secretary of State to make regulations that require any person who manufactures, distributes or supplies health service products, which includes health service medicines, medical supplies and other related products, to keep, record and provide on request information on prices and costs.

The clause brings together and consolidates existing information requirements related to controlling the costs of health service medicines, as well as medical supplies, in one place in the Act, as we discussed this morning. It also allows the information to be used for the purposes set out in the clause.

The clause also expands and strengthens our information collection. It enables the Government to make regulations to put current voluntary information provision arrangements on a statutory footing. For example, we collect information from manufacturers and wholesalers of unbranded generic medicines and specials to inform reimbursement arrangements for community pharmacies. The Bill will enable us to make regulations to get information on more products and from more companies. That is necessary to ensure that reimbursement prices for pharmacies reflect market prices of the whole market, rather than just of those companies that currently supply data to us. As in any industry, there are new market entrants and participants leave the market; this is a dynamic market and we need the flexibility to bring in new products from new companies.

The clause will also enable the Government to collect information to assure us that adequate supplies of health service products are available, and that the terms on which they are available represent value for money. If we were to have concerns about the supply chain or parts of it, or about specific products, we could obtain information from companies in the supply chain to assure us that the products, or the supply chain, provided value for money to the NHS and the taxpayer. Although the Government are generally not the purchaser of health service products, they do pay for them and therefore transparency and value for money of the supply chain are important. For example, if we were to consider limiting the price of a high-priced generic, the power to obtain information would be crucial to determine whether excess profits were being made. We could obtain information from a manufacturer, which would help us to determine whether the price it was charging the NHS was unreasonably high. That information would also inform our decision on what the right price should be.

The purposes for which the Government can collect information are limited and involve three areas: cost and pricing schemes, reimbursement of pharmacies and GPs, and assessing value for money. The clause provides the Secretary of State with the power to request any information for the purposes set out in the Bill. It also provides an indicative list of the type of information that the Secretary of State may request. Most of the types of information listed are already collected by the Government under statutory or voluntary arrangements.

The clause will also enable the Government to share information with a range of bodies, including Ministers in the devolved Administrations, the NHS, other Departments and persons providing services to those prescribed bodies.

[Rob Marris]

In the Minister’s helpful letter to the hon. Member for Vale of Clwyd, sent yesterday, he said:

“At this moment the Government does not foresee any routine collections for those involved in the manufacture, distribution or supply of medical supplies”.

I just understood the Minister to say—he will correct me if I misunderstood—that in certain non-routine circumstances in relation to medical supplies, the Government may wish to have information. I understand that, but I must say to him that that might create a problem for those medical suppliers that are not routinely supplying information, but feel that they still have to keep all the information as outlined in the clause just in case a little way down the road the Government decide that the circumstances are exceptional. Will he clarify that?

14:29

[Mr Dunne]

I am grateful to the hon. Gentleman for raising some of the practical requirements of collecting and retaining data. Particularly in relation to medical supplies, where we have this power already but have not exercised it, I can understand a potential anxiety that we may be changing the basis on which companies are requested to retain information. We will be consulting industry on the regulations, and a draft is available in the pack. Our intent is not to add to the burden, particularly on small companies, of retaining extra data that may never be called upon.

We will use the consultation to try to be as pragmatic as possible but, in the event of information becoming apparent to us within a reasonable period, we may wish to be able to go back and look at the data. The natural place to start the data gathering is the information that companies are obliged to retain for other Government purposes, such as HMRC requirements to retain information for six years. That will be our starting point in identifying the duration, the type of information and the manner of retention. We are not, in the first instance, looking to add an additional burden.

During the consultation, we may decide that there is some information that is routinely kept by companies that supply the NHS that it would be desirable for them to continue retaining for the same period but, as I stand here today, I do not have examples. I am sure an ingenious mind could come up with a devilishly clever example of information that would be useful, but I hope the hon. Gentleman will not be tempted by me to do so.

[Maggie Throup (Erewash) (Con)]

The Minister says that he will continue to consult industry bodies, and there are some obvious bodies that I am sure he will have around the table. Can he reassure us that it will not just be the large bodies and that he will invite some of the smaller trade organisations to the consultation, too?

[Mr Dunne]

Yes. I am grateful to my hon. Friend for that intervention. We intend to consult the trade associations that we have already been consulting. As I said to the hon. Member for Wolverhampton South West, we do not intend to add unduly burdensome information requirements. One issue that we have agreed to consider in the consultation is the suggested size of business that should be capable of providing information. We have an SME definition in the regulations that is not precisely the same as other SME definitions elsewhere across Government, and we need to consider that carefully in the consultation so that we are not unduly burdening small companies.

Having said that, there are examples of pharmaceutical providers that may be large companies in other countries but are supplying through a UK subsidiary or a non-UK EU subsidiary that maintains a very small number of employees in this country, that therefore may fall within the more widely used SME definition but that nevertheless is a relatively large supplier of pharmaceutical products to the UK. There is a balance to be struck in ensuring that the universe of companies that we ask to retain data is big enough to capture reasonably large suppliers, even if technically those suppliers may fall within an SME definition.

[The Chair]

Order. The TV cameras are broadcasting this debate live, and I am sure the public want to see more of the Minister than our colleagues. It would be good if he faced inwards.

[Mr Dunne]

Mr Pritchard, your alertness to the media never leaves the forefront of your mind. I am grateful to you for drawing to my attention the fact that others are potentially listening to our proceedings.

It will be a public consultation, so companies that feel they have an interest will have every opportunity to participate. We have already engaged with a wide range of industry bodies in both medical supplies and medicines to draft the regulations.

Fortunately, inspiration has arrived to address the persistent comment from the hon. Member for Central Ayrshire about drafting. I hope that what I am about to say will satisfy her. She referred to amendment 11, which we have agreed. The Bill currently refers to purposes that are England-only and those that are reserved. The amendments refer to purposes that are England-only, Welsh-only, Scottish-only, Northern Irish-only and reserved. It is therefore necessary to make a distinction between products supplied to the health services in each of the different nations. If that leads to some disorder in how the measure has been written, I can but apologise to the hon. Lady. She has done a good service to the Committee in pointing that out, but that is as far as I am able to go on the matter today.

Clause 6 enables the Government to share information with representative bodies providing services, in addition to the bodies I have referred to. It restricts the use of information that is confidential or commercially sensitive to the defined purposes in the Bill. That is deliberate. It is important to provide commercial suppliers to the NHS with some confidence that any information they supply which may be commercially sensitive—of course, margin information is commercially sensitive—will not be capable of being disseminated beyond the prescribed bodies. The clause also enables the Government to prescribe in regulations representative bodies with which they may share information. In the illustrative regulations, we have prescribed a number of those bodies. There is also the possibility to prescribe other persons in regulations in due course, should suitable bodies emerge.

The illustrative regulations that the Government have provided to help the Committee scrutinise the clause demonstrate our intentions in this area. The regulations distinguish between routine collection and non-routine collection of information. Routine collections mostly include information that we are already collecting under voluntary arrangements. On a non-routine basis, we would collect information to satisfy ourselves that the supply chain provides value for money. We do that at present through sampling collections from time to time, particularly among the smaller providers and pharmacies. We will consult with stakeholders to determine whether the obligation to keep and record information will be any more burdensome than the existing obligation to keep these data for tax purposes, as I have said.

Committee members will see that we have made provision for SMEs in the illustrative regulations, which I touched on in response to my hon. Friend the Member for Erewash. For the purposes of the illustrative information regulations, SMEs can, where appropriate, provide the Government with the information requested by providing us with invoices. That is how we currently collect information from pharmacies, which we believe places a proportionate and modest burden on them.

The clause covers medical supplies and other related products, streamlines existing provisions for medical supplies and aligns them with those for medicines. Medical supplies and other related products are wide-ranging, and there are tens of thousands of items. In regulations, the Government will prescribe for which medical supplies information is required to be kept, recorded and provided on request.

The illustrative regulations set out the type of products that may be affected. The Government will consult publicly on that. The Government have tabled amendments to the clause to reflect the instructions of the devolved Administrations in this area. The Department already collects a considerable amount of information from across the supply chain. The clause streamlines existing statutory requirements, puts existing voluntary arrangements on a statutory footing and strengthens the collections. It also enables the Department to use the information collected for multiple but defined purposes. If hon. Members are satisfied with my explanation, I ask the Committee to accept that clause 6 stand part of the Bill.

Question put and agreed to.

Clause 6, as amended, accordingly ordered to stand part of the Bill.

Clause 7

Consequential amendments

Amendments made: 31, in clause 7, page 6, line 32, at end insert—

“(A1) Omit the following provisions of the National Health Service (Scotland) Act 1978—

(a) section 49 (control of maximum prices for medical supplies other than health service medicines), and

(b) Schedule 10 (additional provisions as to control of maximum prices for medical supplies other than health service medicines).”

This amendment is linked to amendments 1 to 16, 19 to 30, 32 to 35 and 38. The provision made by section 49 of, and Schedule 10 to, the National Health Service (Scotland) Act 1978 is superseded by the provision made in the amendments.

Amendment 32, in clause 7, page 7, line 7, leave out “English producers and other”.

This amendment is linked to amendments 1 to 16, 19 to 31 and 33 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 33, in clause 7, page 7, line 11, leave out “an English producer or other” and insert “a”.

This amendment is linked to amendments 1 to 16, 19 to 32 and 34 and 35. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 34, in clause 7, page 7, line 17, leave out “English producers or other”.

This amendment is linked to amendments 1 to 16, 19 to 33 and 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 35, in clause 7, page 7, line 20, leave out ““English producer” and “other UK producer” are” and insert ““UK producer” is”.—(Mr Dunne.)

This amendment is linked to amendments 1 to 16 and 19 to 34. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

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

[Mr Dunne]

You will be pleased to hear, Mr Pritchard, that I have nothing to add in the clause 7 stand part debate, and I commend the clause to the Committee.

[Rob Marris]

I hope the Minister does have a bit more to add. Clause 7 is very much the twin, or the other side of the coin, of clause 6. Clause 6 introduces big changes to the information supply regime, which we have just discussed. Clause 7 is getting rid of bits of the hitherto existing supply regime—not all of it, but bits. I want to probe him a little bit on that.

On page 7 of the Bill, clause 7(16) states:

“In Schedule 22 (provisions in relation to section 260) omit paragraphs 2 to 11.”

Schedule 22, paragraphs 2 to 11, of the National Health Service Act 2006 is about enforcement. I am probing the Minister, given our discussion this morning when I said, in relation to some parts of the Bill and this area of human endeavour, that it was the only area I am aware of where a criminal penalty regime appeared to have been 100% successful and there had been no such prosecutions—intimating, although not proving, that that wrongdoing had been dissuaded by the legislation. We then come to clause 7, and the enforcement regulations and regime are altered. I want to be reassured by the Minister that the alterations do not weaken the enforcement regime. I am applying the Marris test to it; I cannot read absolutely every word of the 2006 Act, which I was involved in 10 years ago and runs to 258 pages—I will not do that—but what is being removed is a whole lot longer than what is being substituted in. That may be a welcome shortening, clarification and simplification of the law, or it may be a weakening of enforcement. I hope that the Minister can elucidate to the Committee, in broad terms, whether it is the former or the latter.

[Mr Dunne]

I am astonished that the hon. Gentleman does not have complete recall of everything that was involved in the 2006 Act, given the assiduous way in which he approaches legislative scrutiny. Accepting that uncharacteristic lapse in his memory, I should perhaps have said that the subsections in clause 7 merely bring forward the relevant consequential amendments, following on from the earlier clauses, to the National Health Service Act.

This morning, we discussed the one material change in enforcement that we are introducing through the Bill: reducing the criminal penalty currently available under the 2006 Act for bad practice uncovered in the supply of medical supplies, so that it is in line with the enforcement regime for medicines. To that extent, if the threat of criminal sanction were—as hinted at by the hon. Gentleman—the primary reason for the lack of convictions of a criminal nature for the supply of medical supplies, he might have a legitimate concern that we are watering down an enforcement regime that had worked so effectively that there had been no prosecutions. I would gently say to him that, as far as I am aware, not only have there been no convictions, but there have been few if any—I hesitate to say none, because I might not be able to prove that—prosecutions under those sections in the 2006 Act against suppliers of medical supplies. That is as much because it has not been brought to the attention of the Department that there is abusive pricing behaviour happening in the medical supplies marketplace. For that reason, there have been no prosecutions and, therefore, no convictions. That is why we think it appropriate to remove the criminal sanction, so we may bring it into conformity with enforcement actions for medicines.

To put it in ideological terms, this is part of reducing the burden on business, because the power has proved to be one that is unnecessary for the Government to have—the power to introduce a criminal enforcement regime has not been used since its introduction by the hon. Gentleman in 2006.

14:45

[Rob Marris]

I understand what the Minister is saying. I am not in any way suggesting that the overwhelming majority of medical suppliers are on the straight and narrow only because they know what the penalties would be for going off the straight and narrow. However, he needs to be a little careful about the direction of his argument, because—I think he would agree, but he can say if he does not—if crime in the United Kingdom fell to zero, I would not suggest getting rid of all police officers. I would say, “They are doing a fantastic job and it’s great that we have all these law-abiding citizens. Let’s just encourage them to carry on being law-abiding by making it clear that there are enforcement mechanisms and penalties for not being so.” That is the philosophical, if not ideological, approach.

[Mr Dunne]

I agree with the hon. Gentleman. Neither he nor I is suggesting that there is cause and effect here in the element of the enforcement penalty element—

[Rob Marris]

I don’t know.

[Mr Dunne]

Well, we do not believe so. What we do believe is that it is more important for us to have a consistent approach to enforcement when it comes to any future breaches or alleged breaches in respect of supply to the NHS. Frankly, it will be easier for the NHS to manage and easier for the industry supplying us to operate if they are all operating within the same enforcement regime. Therefore, I commend the clause to the Committee.

Question put and agreed to.

Clause 7, as amended, accordingly ordered to stand part of the Bill.

Clause 8

Extent

Amendments made: 36, in clause 8, page 7, line 29, at beginning insert “Subject as follows,”.

This amendment is linked to amendments 37 and 38.

Amendment 37, in clause 8, page 7, line 29, at end insert—

“( ) Section (Provision of information to Welsh Ministers) extends to England and Wales only.”

This amendment is linked to amendments 36 and NC1. Its effect is that the provision made by NC1 will extend to England and Wales only.

Amendment 38, in clause 8, page 7, line 29, at end insert—

“( ) Section 7(A1) extends to Scotland only.”—(Mr Dunne.)

This amendment is linked to amendments 31 and 36. Its effect is that the provision made by amendment 31 will extend to Scotland only.

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

[Mr Dunne]

This clause is the shortest in the Bill and it confirms the extent of the Bill as covering England and Wales, Scotland and Northern Ireland. I am sure we can all reach common accord in supporting the clause.

Question put and agreed to.

Clause 8, as amended, accordingly ordered to stand part of the Bill.

Clause 9

Commencement

Amendments made: 39, in clause 9, page 7, line 32, at end insert—

“( ) Section (Provision of information to Welsh Ministers) comes into force on such day as the Welsh Ministers may by order appoint.”.

This amendment is linked to amendments 40 to 42 and NC1. It makes provision for the Welsh Ministers to bring clause (Provision of information to Welsh Ministers) into force.

Amendment 40, in clause 9, page 7, line 35, at beginning insert “An order or”.

This amendment is linked to amendments 39, 41, 42 and NC1.

Amendment 41, in clause 9, page 7, line 38, at beginning insert “An order or”.

This amendment is linked to amendments 39, 40, 42 and NC1.

Amendment 42, in clause 9, page 7, line 38, after “section” insert “is or”.—(Mr Dunne.)

This amendment is linked to amendments 39 to 41 and NC1.

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

[Mr Dunne]

Briefly, clause 9 deals with the commencement of the Bill and ensures that clauses 1 to 8 come into force as determined by regulations. As I have indicated, there will be a public consultation on the regulations. It is the Government’s intent that that consultation take place over the winter and it will conclude to enable the Bill to receive Royal Assent, following its passage through the House of Lords, by the end of the current Parliament.

[Rob Marris]

That is half of what I wanted to know—the Bill will have Royal Assent by then. Will the Minister say when it might come into force, pursuant to clause 9(2)?

[Mr Dunne]

The Department’s intent is for it to come into force as soon as is practicable. The timetable for their lordships’ House in determining legislation is way above my pay grade and, I would suggest, the hon. Gentleman’s. We are therefore in the hands of the parliamentary authorities, but it is certainly our hope and expectation that, with effect from 1 April, the regulations— [Interruption.] I am seeking inspiration from the Department.

[The Chair]

I think the Committee will allow that.

[Mr Dunne]

I have had some extremely expert inspiration. In the event that their lordships choose to amend the Bill during its passage, it would be inappropriate to consult on the regulations finally until the Bill emerged from the other place. The consultation will therefore start as soon as we have Royal Assent, and the implementation of the proposals is therefore expected in the autumn.

Question put and agreed to.

Clause 9, as amended, accordingly ordered to stand part of the Bill.

Clause 10 ordered to stand part of the Bill.

New Clause 1

Provision of information to Welsh Ministers

“After section 201 of the National Health Service (Wales) Act 2006 insert—

“Provision of information about medical supplies etc

201A Provision of information by persons providing primary medical services or pharmaceutical services

(1) Regulations may make provision requiring any Part 4 provider or Part 7 provider to—

(a) record and keep information, or information of a description, specified in the regulations, and

(b) provide that information to the Welsh Ministers.

(2) Information, or a description of information, may not be specified in the regulations by virtue of subsection (1) unless the Welsh Ministers consider that the information may be required for the purpose of enabling or facilitating any of the following—

(a) the determination of the payments to be made to any Part 4 providers;

(b) the determination of the remuneration to be paid to any Part 7 providers;

(c) the consideration by the Welsh Ministers of whether—

(i) adequate supplies of health service products are available, and

(ii) the terms on which those products are available represent value for money.

(3) The information which the Welsh Ministers may require from a Part 4 provider or Part 7 provider by virtue of this section includes the following—

(a) the price charged or paid by the provider for health service products;

(b) the price paid by the provider for delivery or other services in connection with health service products;

(c) the discounts or rebates or other payments given or received by the provider in connection with the supply of health service products;

(d) the revenue or profits accrued to the provider in connection with the supply of health service products;

(e) such information about medicinal products, other medical supplies or other related products as is necessary to verify whether or not they are health service products.

(4) Regulations under this section may require information to be provided in such form and manner, and at such time or within such period, as may be prescribed.

(5) Regulations under this section may provide for a person who contravenes any provision of the regulations to be liable to pay a penalty to the Welsh Ministers.

(6) If regulations under this section make provision by virtue of subsection (5) they must include provision conferring on Part 4 providers and Part 7 providers a right of appeal against a decision of the Welsh Ministers to impose a penalty.

(7) The provision of information by virtue of this section does not breach—

(a) any obligation of confidence owed by the person providing it, or

(b) any other restriction on the provision of information (however imposed).

(8) In this section—

“health service products” means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) and any other medical supplies, or other related products, required for the purposes of that health service;

“medical supplies” includes surgical, dental and optical materials and equipment;

“medicinal product” has the meaning given by section 130 of the Medicines Act 1968;

“Part 4 provider” means a person who provides primary medical services under Part 4;

“Part 7 provider” means a person who provides pharmaceutical services under Part 7.

201B Disclosure of information

(1) Information provided by virtue of section 201A may be disclosed by the Welsh Ministers to any prescribed person or person of a prescribed description.

(2) A person to whom any confidential or commercially sensitive information is disclosed under subsection (1) may not—

(a) use the information for a purpose other than a purpose specified in section 201A(2), or

(b) disclose the information to another person.

201C Sections 201A and 201B: supplementary

(1) Before making regulations under section 201A or 201B the Welsh Ministers must consult any body which appears to the Welsh Ministers appropriate to represent Part 4 providers or Part 7 providers.

(2) Nothing in section 201A or 201B requires information to be provided, or authorises information to be disclosed or used, in contravention of the Data Protection Act 1998.

(3) Nothing in section 201A or 201B affects any duties, obligations or powers to require or authorise information to be provided, disclosed or used which exist apart from that section.””.—(Mr Dunne.)

This new clause is linked to amendments 36, 37 and 39 to 42. Inserted after clause 6, the new clause allows Welsh Ministers to require the provision of information by providers of primary medical or pharmaceutical services under Part 4 or 7 of the National Health Service (Wales) Act 2006.

Brought up, read the First and Second time, and added to the Bill.

New Clause 2

Reporting requirements of the Secretary of State

“(1) Within 12 months of this Act coming into force, the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act and must lay a copy of the report before Parliament.

(2) The report under subsection (1) shall include an assessment of the impact of the use of the Secretary of State’s powers on—

(a) the availability and cost of medicines and other medical supplies to the health service and the terms upon which they are made available;

(b) research and development;

(c) the NHS’s duty to promote innovation.

(3) Subsequent to the publication of the report in subsection (1), as soon as is reasonably practicable after the end of each financial year the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act during the preceding financial year and the impact of the use of those powers on the matters under subsection (2), and must lay a copy of the report before Parliament.”.—(Justin Madders.)

This new clause would place a duty upon the Secretary of State to place a report before Parliament on an annual basis on the impact of the Act on the pricing and availability of medicines and other medical supplies, research and development and the NHS’s legal duty to promote innovation.

Brought up, and read the First time.

[Justin Madders]

I beg to move, That the clause be read a Second time.

As is explained in the explanatory note, the new clause would put a duty on the Secretary of State to place before Parliament an annual report on the impact of the Act and, in particular, on the pricing and availability of medicines and other medical supplies, research and development, and the NHS’s legal duty to promote innovation. I think we all agree that there are examples of unreasonable behaviour, but there may be occasions when there is a difference of opinion as to what amounts to unreasonable pricing practices, not least between the producers and the NHS.

We would be more assured if the consultation on the regulations had been completed by this stage. We are obviously not going to be in a position to know what that consultation has to say for some considerable time, so we believe the implementation of such a requirement would allow Parliament to scrutinise the impact of the legislation.

There has been some unease in the sector about the impact of the legislation and there is a certain amount of uncertainty, particularly around the future of the European Medicines Agency and the medium-term implications of Brexit not only for that agency, but for the research and development sector and the pharmaceutical industry as a whole.

We are one of the foremost countries in the world for drugs development, and our share of sales of the top 100 prescription medicines is 14%. The UK pharma industry employs 73,000 people, with very high-quality jobs in academia and science, but we cannot be complacent about the state of UK pharma, particularly as investment decisions are often made by parent companies in other parts of the world. That concern is compounded by the small volume of sales in the UK compared with other countries. We face increasing competition from emerging economies for R and D investment, with rapid growth in areas such as Brazil and China. That is not a new problem.

A report for the Secretary of State for Health by Professor Sir Mike Richards in 2010 on the extent and causes of international variations in drug usage explored levels of medicines uptake for 14 categories of drug in 14 high-income countries during 2008-09. The study showed that the UK ranked eighth out of the 14 countries. A follow-up study by the Office of Health Economics updated the quantitative analyses and ranked the UK ninth across all the medicines studied.

Apart from disadvantaging patients, the relatively low take-up of new medicines may put at threat R and D investment in the UK. We need some assurance on that and an ability to monitor and engage with the Government on it. We know many other countries are queuing up to take the European Medicines Agency off our hands, and there are real concerns about the knock-on impact of that.

The impact assessment for the Bill says there will be a reduction in revenue for the pharma sector, unsurprisingly. It also says:

“Reduced pharmaceutical company revenues are also expected to lead to a reduction in investment in research and development… and consequent losses of spill-over benefits for the UK economy, valued at £1.0m pa.”

While we agree that it is vital that those who abuse the system to drive obscene profits for themselves are dealt with, we do not wish to find the UK becoming a less attractive place for research and investment because other countries have made themselves more attractive.

We ask that the report become an annual feature of the Secretary of State’s duties to ensure that we can judge the effectiveness of the Bill. The converse point is that if we continue to see price increases, we want to be assured that the regulations are effective in driving best value for the NHS.

[Dr Whitford]

I rise to echo some of the points raised. We have discussed a lot of issues around the decision to leave the EU, including the loss of the EMA. As well as possibly losing international and multinational pharmaceutical companies—particularly those from the London area, which have based themselves here because of the EMA—it is clear that drugs may end up going through a licensing process for the UK later than is currently the case. They are likely to go through the American market and then the EU market, which will still have 450 million people, and we are likely to slide down to be more like Canada and some other countries. This is a very unstable time for research, because of the loss of Horizon 2020 and the EMA, and for our pharmaceutical industry, which is a major player in the UK. It is incumbent upon Government to ensure that the Bill has no unintended consequences that exacerbate that.

14:59

[Mr Dunne]

I thank the hon. Member for Ellesmere Port and Neston for raising the issue of reporting requirements, which is very important. I will come on to explain what is currently proposed through regulation. The hon. Gentleman and the hon. Member for Central Ayrshire mentioned the risks to investment in this country for our critical life sciences and pharma industries, which is a legitimate concern that the Government share. Irrespective of the manner in which Brexit takes place, it is important that we maintain the UK as a vibrant centre for such investment. We are aware of concerns from industry about the wider landscape, including Brexit, but the Bill is about getting value for money for the NHS and the taxpayer. It is just one element of the action that the Government are taking in the field of medicine and life sciences. Key industry stakeholders have indicated their support for many of the provisions in the Bill, as we heard in last week’s oral evidence session, and for the broad principles of aligning the voluntary and statutory schemes and taking action against those companies that have made unjustified price hikes.

Separate from the Bill, the Government are taking action to secure the UK’s future as an attractive place for the life sciences sector. We are clear in our commitment to life sciences, and to building a long-term partnership with industry. As an example, I draw Members’ attention to the accelerated access review, which made recommendations on reforms to accelerate access to innovative medicines and medical technologies for NHS patients. The Government and our partners are considering those recommendations, and we will respond in due course. We want to make the UK the best place in the world to design, develop and deploy life sciences products. We do not believe that the Bill will have any material impact on that effort, other than the minor impact noted in the impact assessment, which was referred to by the hon. Gentleman.

I point Committee members to the illustrative regulations for both the statutory scheme and the information provisions. First, the final regulation—regulation 32 on page 16 of the draft regulations—refers to the publishing of an annual report on the impact of the regulations. I think that is what the new clause is calling for, but it is already intended in the regulations. Secondly, the final regulation of the information provisions—regulation 14 on page 8—refers to the publication of a review of the information requirements we are proposing.

I accept that reporting is an important principle, but we believe that setting out the requirement to do so in primary legislation is too restrictive. It is expected that, over time, both the statutory scheme and the information requirements will be amended through their respective regulations to reflect changing circumstances. It is essential that the review and reporting arrangements can be similarly flexible so that they remain appropriate to the schemes in operation. Were the new clause introduced as the hon. Gentleman proposes, there would be a lot of prescription in primary legislation. Given the pressures on legislative time, we do not believe that that is the right way to do it.

I reassure Opposition Members that our illustrative regulations require an annual review to set out the scheme’s objectives, and to assess the extent to which our objectives have been achieved and whether they remain appropriate. Those requirements will be tested through the consultation on the regulations. We will of course take account of the views expressed. Much of the information provided to the Secretary of State will be commercially confidential. I am sure that suppliers have every confidence that the Government will maintain that confidentiality in anything they publish, but I want to take this opportunity to reinforce that principle.

[Rob Marris]

If the draft regulations are to pass into legislation as currently drafted, I congratulate the Government on the annual review in draft regulation 32 and its Doppelgänger in draft regulation 14. They are excellent, because they actually talk about assessing the effectiveness, or otherwise, of a particular piece of legislation. That is often sorely lacking in this place, so I offer my congratulations.

[Mr Dunne]

Rare praise indeed from the hon. Gentleman. That is definitely going to go down in the annals of the Wolverhampton Echo, which I am sure will attribute an appropriate front page to that praise for the Government from the Member of Parliament.

To revert to where I had got to, I am sure hon. Members appreciate that there is clearly a limit to the level of detail we are able to publish, and I am sure that hon. Members appreciate that. Any information that we publish will be at a consolidated level, protecting suppliers’ confidentiality, which I have touched on several times, but will allow the Secretary of State to be clear on the basis of the conclusions to his review. We will, of course, be able to use supporting information to evidence our conclusions.

Turning for a moment to the detail of the proposed new clause, while the requirements set out in it reflect the duties placed on the Secretary of State in the Bill, I must be clear that the content of such a report should not be restricted. It must be able to address key issues arising during the course of the year, in the case of the annual report, and during the seven-year duration of the information regulations, in the event that such implications might have an impact on the operation of the schemes. Flexibility is at the heart of our proposals to address the issue through regulations. It would not be appropriate for such a report to address matters relating to the NHS duty to promote innovation. That is the one point of more substantive difference that we have with the drafting proposed by the hon. Member for Ellesmere Port and Neston.

We have already discussed the Government’s position on innovation. We are very clear that we are for it, as is the hon. Gentleman. However, we do not think it is appropriate to link measures in the Bill to that issue, which is a wholly different and much more wide-ranging issue than the narrower one of pricing and the cost of the medicines and medical supplies.

[Julie Cooper (Burnley) (Lab)]

Does the Minister agree that there is a direct connection between control of the price of medicines and innovation, and that, if we do not achieve the correct balance, pharmaceutical companies will lack the motivation to invest in the extensive research and development that we all want to see?

[Mr Dunne]

I do not actually agree that there is a direct link. There is no question but that, in order to stimulate continued investment in R and D, it is appropriate for the industry to see a stable marketplace in a country as significant and important as the UK, and throughout the nations of the UK, for medicines and medical supplies. We are a large market. We spend more than £15 billion a year on pharmaceutical products, and we are also acknowledged by those companies to be a reference market for many other countries that do not have such a large or well-organised supply chain as we do. I accept that, in principle, it might be rather different if this were an emergent market.

Individual drugs are emerging through R and D programmes, but I do not think that is the same as the measures we are introducing, which are primarily designed to limit excessive abuses of pricing position, in which a company may be a monopoly supplier, in the case of the unbranded generics. For the branded products, we have a long-established procedure for recognising the recovery of R and D costs through the pricing mechanisms, and while we may not like paying for some of those branded products at the rate that we have to, we recognise that it is a competitive marketplace and, because of the cost of innovation—the cost of conducting clinical trials and so on—it is necessary to stimulate that innovation to ensure that those companies make a reasonable profit.

Promoting innovation is a high priority, not only for the Government and the NHS but for many other stakeholders in the industry. In our view, it would not be possible to quantify the contribution of the schemes in the Bill to that endeavour, for the reasons I have discussed. Trying to assess the impact on innovation is a much wider endeavour that does not just rely on price. For those reasons, I urge members of the Committee to reject the new clause.

[Justin Madders]

I hear the Minister, but I have to say that I respectfully disagree with some of what he said. I think there is a direct connection between the effects of the Bill and the impact on research and innovation. That is what the impact assessment clearly states. I feel that having draft regulations that have not yet been consulted on is not an adequate substitute for the assurances that we are seeking.

[Mr Dunne]

I am grateful to the hon. Gentleman for letting me intervene. We are not saying ourselves that there is no such direct relationship between innovation and the cost of drugs; we are taking evidence from a report on “Key Factors in Attracting Internationally Mobile Investments by the Research-Based Pharmaceutical Industry”, which was undertaken by NERA Economic Consulting, and from a publication specifically on the voluntary scheme by the Office of Fair Trading. Both those documents date from 2007, when the hon. Gentleman’s party was in office. The impact assessment, as he pointed out, refers to an impact of £1 million, which needs to be set against the benefit of close to £90 million that the high-value generic clauses impact. We therefore think, relatively speaking, that it is not significant.

[Justin Madders]

We will have to see whether those figures and estimates become reality, in particular in the light of the fact that the industry has not yet seen the regulations proposed. The approach is a wider one, based not only on the impact on research and development but on the continued duty of the NHS to promote innovation and the way in which the powers will affect the availability and cost of medicines and medical supplies. I will press this to a vote.

Question put, That the clause be read a Second time.

Division 2

Ayes: 5

---

Labour: 5

Noes: 9

---

Conservative: 9

New Clause 3

Review of powers to control prices of unlicensed medicinal products for human use

“(1) Within six months of the passing of this Act, the Secretary of State shall commission a review of the adequacy of existing powers to control prices of unlicensed medicinal products for human use, including the enactment and enforcement of those powers, and shall lay the report of the review before the House of Commons.”—(Dr Whitford.)

This new clause seeks to explore whether existing powers provided under the NHS Act 2006 regarding price control of “specials” are adequate.

Brought up, and read the First time.

[Dr Whitford]

I beg to move, That the clause be read a Second time.

The point of the new clause is to explore a particular problem with what the Minister referred to earlier as “specials”. They are unlicensed preparations, often topical medicines, often used for severe skin conditions such as hard-to-control psoriasis. The British Association of Dermatologists reports that patients in England, Wales and Northern Ireland are struggling to get them prescribed, because the costs have spiralled out of control.

In Scotland, until last September, three quotes had to be obtained and one of them had to be from an NHS manufacturer. That has been streamlined, and a single quote, provided it is from an NHS manufacturer, is now acceptable. The British Association of Dermatologists looked at the 12 top specials that its members prescribe and estimated that if an NHS manufacturer had been used, instead of £845,000, the cost would have been £162,000. The association also reported that several private manufacturers are keeping two price lists—one for Scotland and one for England—and some of the dermatology items in England are eight times the price in Scotland.

That is literally holding people to ransom, and the result, because CCGs are hard pressed for cash, is that they are not comfortable funding specials and GPs are not allowed to prescribe them. Anyone who has ever had a dermatological condition of any kind, or knows someone who has, knows how unpleasant and utterly dominating of one’s life it can be. It is awful that patients, in particular in England, are not able to access such medicines. The new clause is looking at whether specials will be covered and whether enough attention is to be paid to them. The number of patients is small—hence the top 12 still come to less than £1 million—but for those patients this is a major issue.

15:15

[Mr Dunne]

Again, I am grateful to the hon. Lady for drawing the Committee’s attention to the issue. I confirm, for the benefit of the Committee, what the specials are—she has characterised them well.

From our perspective, unlicensed medicines or specials can be manufactured or imported to meet a patient’s individual needs when no licensed product is available. By their nature, specials are bespoke, and costs need to be balanced against the availability of treatment for an individual. I am aware of concerns that some specials, especially those not listed in the drug tariff, are not being prescribed because of their cost—the hon. Lady highlighted those for dermatological treatment. It must be recognised, however, that with specials, because of their bespoke nature, there are few if any economies of scale and they can be expensive to manufacture.

Under section 262 of the 2006 Act, the Government have the power to limit the price of any health service medicine, as long as the manufacturer is not in the voluntary scheme. Manufacturers or importers of specials are generally not in the voluntary scheme. Specials are health service medicines and we can therefore limit their prices. At the moment, the Government do not use their power to control the prices of specials. The hon. Lady gave an example, without naming the product, of a significant price differential between Scotland and England; if she is willing to write me a note after the Committee, I am interested in exploring why we have chosen not to take advantage of the power that we already have in that case, because on the face of it, it would appear to be an example of where the power perhaps ought to be used.

[Dr Whitford]

While there are not major economies of scale, if national health manufacturers are used, it is possible at least on a regional basis to pool some together. As things are at the moment, a pharmacy can simply approach its sister or mother company and ask for a price, which creates a vested interest in making the price high. I think that things can be done, which seem to be working in Scotland, so they are worth trying.

[Mr Dunne]

Again, I am grateful to the hon. Lady—

[The Chair]

Order. We have a Division in the House, so I will suspend the sitting. If there is one vote, may I ask Members not to take longer than 15 minutes to return and, for every subsequent vote, no more than 10 minutes? The Committee will sit after 15 minutes.

15:18

Sitting suspended for a Division in the House.

15:30

On resuming—

[Mr Dunne]

As we broke—literally, I was saved by the bell—I was describing how setting prices as suggested by the new clause could have unintended consequences. We are concerned that it may lead to manufacturers stopping the production of some specials if they are no longer profitable and patients facing adverse consequences.

By setting reimbursement prices in the drug tariff in primary care, the Government encourage pharmacy contractors to source specials as cheaply as possibly, which in turn creates competition in the market and, as a result, reimbursement prices decrease. For those specials not listed in the drug tariff, pharmacy contractors have no incentive to lower the list price. Currently, less than 1% of the total expenditure on medicines in primary care is on specials. Nevertheless, I believe those products, like all other products destined for the health service, should provide value for money to the NHS and the taxpayer. The information power in the Bill will help the Government to determine whether the products provide value for money and the illustrative regulations include an obligation to review those provisions.

The new clause would require the Secretary of State to commission a review of the adequacy of existing powers to control prices of specials, including the enactment and enforcement of those powers. The Government keep their power to control prices under review all the time; it was a review of those powers that led to the Bill in the first place. The Government believe that we have sufficient powers to limit the prices of specials if need be. The hon. Member for Central Ayrshire appears to have evidence of specials being priced to Scotland materially more advantageously than to England. If she would be willing to make that information available to us, we would be delighted to consider it.

[Dr Whitford]

I wonder whether the Government have given any consideration to having NHS manufacturers provide these products or to including some of the topical specials in the drug tariff, so that the price is kept down. Otherwise, despite the Bill, these drugs will be left outside its provisions. They are going to be too expensive and patients will suffer from that.

[Mr Dunne]

For the reasons that I have said, we have the power to look at the pricing of the specials already and we have not had evidence that the pricing has been abusive. We already have that power. We will keep prices and specific drugs under review. The best way to take that forward is to leave the powers as they are and not to proceed with the new clause, but to invite hon. Members to highlight specific examples that they are aware of.

[Rob Marris]

The Minister says that the Government have the power. He may well be right, but for us lay people these are quite complex issues. The power to which he adverted is section 262 of the 2006 Act, which, as far as I can see, is not amended by clause 7 of the Bill. As I understand it, section 262 continues unamended. Section 262(2) says:

“The powers conferred by this section are not exercisable at any time in relation to a manufacturer or supplier to whom at that time a voluntary scheme applies.”

This may well be my ignorance when it comes to topical medicines, specials and so on. Perhaps all specials are produced by manufacturers or suppliers that are not in the voluntary scheme. I can see the possibility. If the Minister can confirm that, I will see that section 262 does not apply.

[Mr Dunne]

The hon. Gentleman has again surprised me by apparently not being as attentive as usual to the comments that I made earlier. I said while introducing the new clause that manufacturers or importers of specials are generally not in the voluntary scheme. There may be some exceptions, but by and large, they are not. Therefore, we are in a position to limit the price of specials, but as a rule we have not adopted that power.

[Rob Marris]

That is helpful of the Minister, but it still confuses me a bit, and I hope that he can help to elucidate. He said that manufacturers and suppliers are not generally in the scheme; that is the adverb that he used a moment ago. That suggests to me that some of them might be, and would therefore not be subject to the section 262 price controls, which he prays in aid when he says, as I understood him to say to the hon. Member for Central Ayrshire, “Nice try, but no cigar. We’re not going to accept this.” One reason that he gave—not the only reason—was that we already have the power. The adverb “generally” suggests to me that in relation to some companies, we do not.

[Mr Dunne]

But this applies to all companies in the voluntary scheme. There is no particular difference between a special and a non-special. If a company is supplying products in the voluntary scheme, it is in the voluntary scheme. Therefore, it is at the negotiating table when it comes to considering the circumstances in which it supplies those products. If the company is in the scheme, that includes the specials.

[Rob Marris]

I thank the Minister; that is helpful. He is on top of his brief, as ever, and needed no inspiration to tell me that. It is helpful. The power does exist. I would like to ask the hon. Member for Central Ayrshire, because she has considerable expertise in the field. My expertise, such as it is, is as a lawyer. I see in her new clause the words

“ unlicensed medicinal products for human use”.

She may be able to tell me, because it is her new clause and she may have been looking at this issue. Where in the 2006 Act, or indeed in the Bill, although I think not, can we find what that phrase means? It may well be understood by medics—the topicals, the specials and so on—but it may not be understood by judges, for example. Can she help me on that when she winds up this debate? Otherwise, it seems to me as a layperson that the phrase

“ unlicensed medicinal products for human use”

could cover homeopathic so-called remedies. I do not think that the Secretary of State should be reviewing the pricing of homeopathic remedies.

To make my position clear, I think that homeopathy is bad science and a load of nonsense except for the placebo effect, but I use it as an example of unlicensed products that claim to be medicinal. I suspect that the hon. Member for Central Ayrshire would agree with my broad characterisation of homeopathic so-called medicines, apart from the placebo effect. What does that phrase in her new clause mean, and is it defined anywhere in law, or is it so obvious to medics that they and everybody in the pharmaceuticals business know what it means?

[Dr Whitford]

The phrase is the standard definition of specials. I cannot remember off the top of my head where exactly it comes from, but it is the recognised definition. It would not usually mean things such as homeopathic medicines. It is often things that are quite old and that have been around a long time that are not worth licensing, because they are not new and nobody will make any money out of them. We have a lot of products like that, but they are recognised within the practice of medicine. They are particularly common within dermatology, because of different topicals and the need to make different strengths of topical depending on the condition being treated.

I wanted to try to draw attention to this matter. The Minister has said that the Government have had the power all of this time and not used it. In part it is about bringing powers into line and creating consistency. I call on him to use those powers. Even though only a relatively small percentage of drugs are affected, the impact on patients from not being able to access them is significant. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 4

Review of extending provisions to repurposed off-patent drugs

‘(1) Within six months of the passing of this Act, the Secretary of State shall commission a review on whether the provisions of this Act shall extend to the regulation of the prices of repurposed off-patent drugs and shall lay the report of the review before the House of Commons.’—(Dr Whitford.)

Brought up, and read the First time.

[Dr Whitford]

I beg to move, That the clause be read a Second time.

The new clause seeks to explore one of the other anomalies that was challenged through a private Member’s Bill last November but unfortunately was talked out by the Minister at that time: repurposed off-patent drugs. Those are drugs designed for a particular use that, often during their use for that condition, contribute in relation to another condition.

Today, we have had considerable talk about the need to support pharmaceutical industries and encourage research and development, but the finding of a new purpose for a drug rarely comes from the pharmaceutical industry; it is usually done at a clinical or academic level through noticing patterns in clinical practice and following those up with trials. It is therefore not really something for which the pharmaceutical industry should receive a major award financially, although naturally if more of a company’s drugs sell and it is still producing them, it will see a benefit, which is totally fair enough.

One of the concerns is that, for a medic under the General Medical Council, there is a hierarchy of what we can prescribe, and at the top of that is licensed drugs for the purpose of the licence. Below that come repurposed drugs, which are therefore not licensed for that purpose. It is specifically stated that “they do the same” is not a sufficient excuse for using an off-patent generic drug.

With some of the drugs we have, new purposes are being discovered. Some statins can reduce brain atrophy in progressive multiple sclerosis. We have, as was referred to earlier, the use of bisphosphonates to prevent metastatic breast cancer and the use of tamoxifen to try to prevent breast cancer. That Bill was partly about trying to promote the use of those drugs, because they are off-patent and cheap, but one of the concerns among the medical profession is about a drug company buying a drug, tweaking it ever so slightly and then suddenly re-releasing it as a drug for multiple sclerosis at 10 grand a day instead of sixpence. What I do not see in this Bill is a recognition of the ability of people to come back and license a drug and totally change the price or to manufacture that drug simply as a generic with a massive price.

There was a case with the drug Lyrica, which is also known as pregabalin. The commonest use of that is for neuropathic pain: people who have had nerve damage from surgery or trauma and have difficult-to-control pain. The drug was originally designed for epilepsy, and Pfizer, which makes it, managed to get a court order saying that the patent on its use for neuropathic pain would continue to 2017 and that it would sue general practitioners who prescribed it as generic. That case has run for quite a long time, and I am proud to say that GPs basically ignored that order and have used the generic, but the advice of NHS England, which still sits on the website, says that GPs must prescribe Lyrica as Lyrica, which is obviously much more expensive. Therefore, over the last year GPs have had to be sitting out there exposed, open to the threat of litigation.

That is a real concern with repurposed drugs. That profit has been earned not by pharma’s research but by the research of other people usually in the public sphere: academics and in the NHS. Again, the new clause is to raise an issue that is not covered in the Bill and to see whether it has been considered at all by the Government.

15:44

[Mr Dunne]

I am grateful to the hon. Lady for raising this issue by tabling her new clause, because it gives us an opportunity to discuss an issue of considerable interest across the House. I am delighted to be able to inform the Committee that we do not believe we need to review whether the Bill’s provisions should be extended to repurposed off-patent drugs, because they will apply to those drugs whether they are licensed branded medicines or generic medicines. The new clause is therefore not necessary, because those drugs are already included.

Any licensed branded medicines that are developed may be included in either the voluntary or statutory scheme and be subject to all the provisions of those schemes. Unbranded generic medicines are subject to competition in the market, which keeps prices competitive and secures value for money. As we know, and have already debated today, there are examples of unscrupulous companies making unjustified price hikes for unbranded generic medicines when there is no competition in the market. As we have said, both today and on Second Reading, the Bill provides the Secretary of State with powers to intervene in such cases, in addition to the powers that the Competition and Markets Authority can exercise.

Having once again explained the specifics of how repurposed medicines will be affected by the Bill’s provisions, it might be helpful if I outline for the Committee some of the progress that has recently been made in supporting repurposing. For the reasons the hon. Lady identified, repurposing has benefits for patients in allowing drugs to be introduced as quickly as possible to provide alternative treatments to those originally intended by their manufacturers, where there is robust clinical evidence for new uses of existing medicines. Since November last year, a range of organisations have come together to work collaboratively to examine the issues at play in drug repurposing and to develop positive ways of handling those issues to ensure that patients benefit from robust research outcomes.

Officials in the Department have been working on the issue with the Association of Medical Research Charities and many of its members, as well as with NHS England, NICE, the publishers of the “British National Formulary” and the Medicines and Healthcare Products Regulatory Agency. All are committed to taking non-legislative measures to make sure that there is a clear and accessible pathway to ensuring that robust evidence showing new uses for existing drugs can be brought more systematically into clinical practice to benefit patients. That working group has made significant progress, and I would like to thank the organisations that have come together in a true spirit of co-operation to achieve rapid progress.

The General Medical Council has provided better advice for doctors about prescribing drugs outside their licensed indications, when that is clinically indicated. The “British National Formulary” has introduced new processes to ensure that information about repurposed drugs is captured more systematically and is therefore much more readily available for the clinical prescribers whom the hon. Lady referred to as the people at the forefront of this innovation. The Committee has heard from Dr Keith Ridge about the role that regional medicines optimisation committees will be asked to take in supporting prescribers to take up and use new evidence, particularly about unlicensed medicine use. Significant work has also been done on the development of a pathway that maps the routes from research result into clinical practice, which will help researchers and clinicians ensure safe and timely implementation.

NICE has published more than 50 evidence summaries for unlicensed and off-label uses of medicines. Although I said I did not want to go into detail, there are a couple of examples that the hon. Lady will be familiar with but other members of the Committee might be less so. NICE has made recommendations and guidelines on the use of tamoxifen to prevent familial breast cancer, and on the use of antidepressants—selective serotonin reuptake inhibitors—to treat irritable bowel syndrome.

I hope that with that explanation, hon. Members will agree not only that repurposed medicines are included within the Bill’s provisions, but that robust action is being taken by the Department and across the medical establishment to support repurposing for the benefit of patients. I ask the hon. Lady to withdraw her new clause.

[Dr Whitford]

I welcome the Minister’s explanation of what has been happening behind the scenes since the Off-patent Drugs Bill last year. The Bill Committee, of which I was a member, had a lot of discussion about the need to have a system for recognising the drugs, giving doctors and other prescribers the reassurance they needed to use them, and using the “British National Formulary” as a tool. We have heard nothing for a long time, so I really welcome the update that the issue is being taken forward. Prescribers are not all doctors now, and it is important that everyone who prescribes has the reassurance of knowing that they can safely prescribe and not be open either to making an error or to litigation. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 5

Extending price control to other medical supplies

‘In section 260(5) of the National Health Service Act 2006, after first “includes” insert “, but is not limited to, investigative,”’—(Rob Marris.)

This new clause is to ensure that the Bill’s provisions on price control apply to other capital equipment such as MRI scanners by including such items within the definition of “medical supplies”.

Brought up, and read the First time.

[Rob Marris]

I beg to move, That the clause be read a Second time.

I am glad that the Committee has generously left me sufficient time to deal with the new clause, which involves a tweak in the wording of the Bill. Clause 6 inserts section 264A into the 2006 Act, and section 264A(9) states:

“‘Medical supplies’ is to be read in accordance with section 260(5)”

of that Act. There is a synopsis of the subsection in paragraph 66 on page 14 of the explanatory notes, which hon. Members may have in front of them.

Page 162 of the 2006 Act states, in section 260(5):

“In this section and Schedule 22—

‘medical supplies’ includes surgical, dental and optical materials and equipment…and ‘equipment’ includes any machinery, apparatus or appliance whether fixed or not, and any vehicle.”

That definition is fairly clear but not sufficiently wide, hence my new clause, which would clarify it. Regarding medical supplies, there are, to my mind, three adjectives there qualifying two nouns, the three adjectives being “surgical”, “dental” and “optical”, and the two nouns being “materials” and “equipment”. There is considerable NHS expenditure on equipment—and materials, but particularly on equipment—that is not, as I understand it, surgical, dental or optical. A particularly expensive form of such equipment, as I outline in the explanatory note, which is helpfully on the amendment paper, is MRI scanners. They vary, obviously, but in round terms they cost about £2 million a throw and the NHS, understandably, has an awful lot of them—they are a magnificent diagnostic tool. There may well be other pieces of equipment that are perhaps not quite as expensive but which would not come under the rubric of surgical, dental or optical.

It seems, therefore, that there is a gap in the 2006 Act, and the new clause, which I am sure the Government will accept, is intended to plug that gap by indicating that those three adjectives are descriptive of the two nouns, but other adjectives could also be applied. For example, “investigative” is included in the new clause. The new clause would therefore simply ensure that there is no misunderstanding of the intent of section 260(5) of the 2006 Act. It is a helpful clarification to the Government.

[Mr Dunne]

I am sure that you share, Mr Pritchard, my pleasure that the Committee has had the benefit of the hon. Gentleman’s forensic scrutiny and his particular facility for not only the English language but its parliamentary use. If we had not had a new clause tabled by him we would have all gone away deeply disappointed. I am grateful to him for taking such trouble to table the new clause and to explain its intent.

I can assure the hon. Gentleman and the Committee that MRI scanners, by way of example, and all other investigative medical supplies are covered by the current definition of “medical supplies” in the 2006 Act. When looking at the definitions in the first draft of the Bill, I had a concern that we were describing products too widely. My concern was not that we would exclude specialist medical equipment but that we might include other materials used in the construction of buildings used by the health service—for example, bricks—as an object for price control, which clearly is not the intent. We looked carefully at the definitions, which is why I can say with some confidence that the hon. Gentleman’s new clause is unnecessary.

I will explain that more specifically. Section 260 of the 2006 Act makes it clear that “medical supplies” should be read in the context of medical supplies required for the purposes of the health service. That excludes all medical supplies not destined for the health service. MRI scanners clearly are destined for and used in the health service. Secondly, section 260 provides examples of products that would be included by the term “medical supplies” and does not limit it to those products.

The Government consider that the current definition of “medical supplies” already includes the examples given by the hon. Gentleman and other investigative products and that there is no need to make the proposed amendment. We are concerned that by including further examples and trying to provide a definition that meets the hon. Gentleman’s intent, we might inadvertently find ourselves excluding other things that are in fact included within the more general description of medical supplies. The current definition is sufficiently broad to cover all medical supplies required for the purpose of the health service. Notwithstanding the hon. Gentleman’s enthusiasm, I encourage him to withdraw the new clause.

[Rob Marris]

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Question proposed, That the Chair do report the Bill, as amended, to the House.

[Mr Dunne]

We are now at the conclusion of our deliberations. Thank you very much indeed, Mr Pritchard, for using your new-found experience in chairing Bill Committees to such good effect. You have conducted our affairs in a characteristically skilful way, and I am grateful to you, the Clerks and the Doorkeepers for managing the Divisions. I am grateful to the Front-Bench spokesmen from both the official Opposition and the SNP, as well as to all Back Benchers who have contributed to our deliberations. We have given this short Bill adequate and appropriate scrutiny, and I hope it will proceed to consideration on Report, where it will get continued consensual support across the House, which is, frankly, a joy to participate in.

[Justin Madders]

I echo the Minister’s words of thanks, including to you, Mr Pritchard, for the sensitive way you have handled our discussions. We have made good time today, while enabling everyone to contribute who wished to. I am grateful to the Minister for his clarification on a number of points. There are issues we will have to continue to discuss, but in the main he has been able to put our mind at rest on a number of issues. I also thank the SNP Members for their contributions, as well as all Back Benchers.

[The Chair]

I thank the Clerks, officials, Doorkeepers, the Minister of State, shadow Ministers and all colleagues.

Question put and agreed to.

Bill, as amended, accordingly to be reported.

15:59

Committee rose.

Written evidence reported to the House

HSMSB 05 British Healthcare Trades Association

HSMSB 06 RFW Associates

HSMSB 07 British Association of Dermatologists

Criminal Finances Bill (First sitting)

Committee Debate: 1st sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: Mrs Anne Main, †Sir Alan Meale

† Arkless, Richard (Dumfries and Galloway) (SNP)

† Atkins, Victoria (Louth and Horncastle) (Con)

† Dakin, Nic (Scunthorpe) (Lab)

† Davies, Byron (Gower) (Con)

† Dowd, Peter (Bootle) (Lab)

† Drummond, Mrs Flick (Portsmouth South) (Con)

Elphicke, Charlie (Dover) (Con)

† Ghani, Nusrat (Wealden) (Con)

† Griffiths, Andrew (Lord Commissioner of Her Majesty's Treasury)

† Harris, Carolyn (Swansea East) (Lab)

† Hunt, Tristram (Stoke-on-Trent Central) (Lab)

† Huq, Dr Rupa (Ealing Central and Acton) (Lab)

† Mann, Scott (North Cornwall) (Con)

† Mullin, Roger (Kirkcaldy and Cowdenbeath) (SNP)

† Sandbach, Antoinette (Eddisbury) (Con)

Vaz, Keith (Leicester East) (Lab)

† Wallace, Mr Ben (Minister for Security)

† Wood, Mike (Dudley South) (Con)

Colin Lee, Ben Williams, Committee Clerks

† attended the Committee

Witnesses

Donald Toon, Director of Economic Crime, National Crime Agency, Mick Beattie, National Co-ordinator, Financial Crime Portfolio, National Police Chiefs Council, Detective Superintendent James Harman, Head of the National Terrorism Finance Unit, Met Police

Simon York, Head of the Fraud Investigation Service, Her Majesty’s Revenue and Customs, Mark Thompson, Chief Operating Officer, Serious Fraud Office, Nick Price, head of Proceeds of Crime, Crown Prosecution Service

Alex Cobham, Chief Executive Officer, Tax Justice Network, Professor Richard Murphy, Director, Tax Research UK

Public Bill Committee

Tuesday 15 November 2016

(Morning)

[Sir Alan Meale in the Chair]

Criminal Finances Bill

09:25

[The Chair]

We are now sitting in public and the proceedings are being broadcast. Before we begin, I have a few preliminary announcements to make. First, can everyone switch off their electronic devices or move them to silent, if that is possible? As you all know, the rules of the House are clear that no teas or coffees are allowed during sittings. We will first consider the programme motion on the amendment paper. We will then consider a motion to allow us to deliberate in private about our questions before the oral evidence sessions and a motion to enable the reporting of written evidence for publication. In view of the time available, I hope we can take those matters formally, without debate.

Ordered,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 15 November) meet—

(a) at 2.30 pm on Tuesday 15 November;

(b) at 11.30 am and 2.00 pm on Thursday 17 November;

(c) at 9.25 am and 2.00 pm on Tuesday 22 November;

(d) at 11.30 am and 2.00 pm on Thursday 24 November;

(2) the Committee shall hear oral evidence in accordance with the following Table:

[The Chair]

Therefore, the deadline for amendments to be considered at the first two line-by-line sittings has passed.

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.—(Mr Wallace.)

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Mr Wallace.)

[The Chair]

Copies of the written evidence that the Committee has received will be made available in the Committee room. We will now go into private session to discuss lines of questioning.

09:27

The Committee deliberated in private.

Examination of Witnesses

Donald Toon, Mick Beattie and Detective Superintendent James Harman gave evidence.

09:29

[The Chair]

We are now sitting in public again and the proceedings are being broadcast. Before we start hearing from the witnesses, do any Members wish to make any declarations of interest?

[Victoria Atkins (Louth and Horncastle) (Con)]

I used to practise as a criminal barrister and prosecute for many of the agencies that would use these powers.

[The Chair]

I think there are many in this place who are guilty of the same thing. We will list that.

[Byron Davies (Gower) (Con)]

I am a former Metropolitan police officer and member of the National Crime Squad.

[The Chair]

We will now hear oral evidence from the National Crime Agency, the National Police Chiefs Council and the Metropolitan police. Before calling the first Member to ask questions, I remind Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has agreed for this section, which will end at 10.20 am. Will the witnesses please introduce themselves for the record?

Donald Toon: Good morning, Chair. I am the prosperity director for the National Crime Agency. As part of my role I am responsible for the agency’s response to financial crime, including the operation of the UK Financial Intelligence Unit and, therefore, the suspicious activity reporting system. I am also responsible for our work on money laundering and asset recovery. As part of the agency, we have a responsibility to co-ordinate the law enforcement response to serious and organised crime, in this case in respect of money laundering and criminal finances.

Mick Beattie: Good morning. I work for the National Police Chiefs Council, which is the governing body of chief officers for the policing forces of the UK. I report directly to Mick Creedon, the national lead for financial investigation asset recovery. I am also the subject-matter lead for the regional organised crime units, which is the serious organised crime response from UK policing.

Detective Superintendent Harman: Good morning. I am a detective superintendent with the Metropolitan Police Service, specifically the SO15 counter-terrorism command. I head up the national terrorist financial investigation unit. Our responsibility is the investigation and prosecution of terrorist financing offences and financial investigation more generally within a counter-terrorism context.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

Q Thanks very much for coming in today. I have an easy question first. Because you all enforce this every day, what are the current difficulties with the legislation that we have in recovering assets from individuals who are suspected of involvement in criminal activity overseas?

Donald Toon: One issue is the ability to have an effective overseas end to the investigation. A particular problem around international corruption has been the need to have evidence from overseas, often from a difficult jurisdiction if we are talking about political-level corruption, that is capable of being used in a UK court to take action to recover assets. From our perspective, the introduction of the unexplained wealth order is a particularly important step in response to that.

The other issue, perhaps, has been very much the ability to have sufficient time to be able to get evidence from overseas in standing up a law enforcement response to a suspicious activity report, where that report may be looking for a defence against money laundering, commonly known as a consent SAR. The difficulty there is that we run against a 31-day moratorium period. Essentially, if we cannot have a law enforcement case in front of a court within 31 days for restraint of the assets, there will be a deemed consent and transactions will continue. That is acutely difficult when we are looking for information from overseas. In some jurisdictions that can take an extended period.

Another piece in the Bill that is particularly useful is the extension of the moratorium period, subject to court order, of up to 186 days. In terms of references to the legislative position, it is very much that ability either to get evidence or find a mechanism by which we do not need to rely on overseas evidence, particularly when we are talking about difficult jurisdictions.

The other area that is particularly difficult for us has been very much around the ability to access beneficial ownership information overseas. Although not strictly part of this Bill, that has been a recent focus for legislative change. That is a particular issue for Crown dependencies and overseas territories. I can expand on that as necessary.

Mick Beattie: Yes, I echo those sentiments. Over the past 13 years, operational use of the Proceeds of Crime Act 2002 has thrown up some operational challenges, many of which have been addressed in the Bill. In terms of investigative resources, an example of that would be disclosure orders. The current system operates as follows: if you have a suspect A identified as having accounts in bank B, then an investigator investigating that person for money laundering would go to the court for a production order. If the court approves the order and it is then served on a financial institution that subsequently gives over the information required that identifies yet another account at bank C, then the investigator has to go back to the court to obtain another production order, and go through the same process of serving an order on the second bank.

If that bank again identifies another account at another bank, then the process is repeated. When awarded, a disclosure order, or something like it, lasts for the lifetime of the investigation, and can be served on anybody with an interest in or information relating to the matter. The resource implications could be massively improved from something like a disclosure order.

As far as items of portable wealth are concerned, legislation exists that refers to cash seizure. We have civil legislation that caters for anything over £1,000 that is deemed to be identified as resulting from criminal conduct or being used in criminal activity, but criminals are adaptive. They can transfer that cash into items of wealth such as watches and jewellery, which are easy to transport. The new legislation relating to that gives us more opportunities to search and seize those kinds of items.

[Dr Huq]

Q In relation to what you said about portable wealth, do you think the £100,000 limit is about right, or can people convert money into things worth £95,000 by buying paintings up to that value?

Mick Beattie: They can, and obviously they can collaborate among themselves to do that. Getting through that is an operational challenge for us. We have to try and investigate that as part of the investigation, and we have to look for those kinds of things. Anybody who facilitates that is potentially committing money laundering offences themselves, and can be brought into the investigative chain.

[Dr Huq]

Q Is £100,000 a good figure or is it an arbitrary figure plucked from the air?

Mick Beattie: I do not know how the figure came about. It is a high figure, but we are talking about serious and organised crime and criminals here, and they operate in those kinds of areas of value. I would not know the origin of the £100,000 figure.

Detective Superintendent Harman: There are a great deal of positives around international co-operation in the counter-terrorism area, as you might expect. There are strong relationships across the world for the purposes of sharing intelligence, and doing so quickly. As with our colleagues, what can slow us down is when we are looking for evidence that we can use in a court during a criminal prosecution. That can take a bit more time, so the first challenge is the time that it can take.

There is also the issue of the visibility of what money is used for. We may very well be able to show that money was sent out to Syria, for example, and we may have a strong case for believing that that money was used for terrorist purposes in theatre, but to follow that money into the hands of a terrorist and show what is was actually used for is and probably always will be a challenge for us. Where this Bill may help us is in the fact that the more that banks—they often have an international visibility and reach—can tell us about transactions, the more they can share information with each other and build up that picture. That will help us in our international anti-terrorism efforts.

The other point I would make is that in terrorism we are often talking about smaller amounts of money. Sadly, it does not cost a great deal of money to commit a terrorist attack, depending on its scale. Spotting those smaller amounts within the financial system and dealing with those smaller amounts moving overseas is again more challenging, although not impossible.

[Dr Huq]

Q The Public Accounts Committee did a report on confiscation orders. It said that there was a tension between whether the point is to disrupt crime or recover criminal assets—sometimes they are facing in two different directions. Would you three agree with that? If we enact all the clauses in the Bill, will the new version improve the mismatch between those two limbs?

Donald Toon: I am not sure I would necessarily feel that there was a tension overall. The issue from our perspective is around the roles and responsibilities of the agencies involved that are using the legislation. The statutory duty of the National Crime Agency is to secure an effective response to the threat from serious and organised crime. One aspect of that is to make use of the powers in the Proceeds of Crime Act 2002 for the disruption of criminality. From our perspective, that is the responsibility of the agency. It is about the relentless disruption of serious and organised crime, where we are able to do so, using whatever tools are available to us, rather than purely focusing on the recovery of assets. That said, to be effective in using financial disruption we will very often use either the criminal confiscation process or civil recovery, which ultimately recover assets.

One of the points to cover is that, from our perspective, it is very much about asset denial. If we are talking about overseas, large-scale corruption, the point is about denying the criminal, the corrupt individual or their representatives access to the funds. If that means the funds are ultimately dissipated, for example, through legislation, we have still denied the criminal that access. Our focus is fundamentally around the vulnerability within the system, rather than purely about getting money and assets back for the Government and the taxpayer. That is a particular point when talking about overseas criminality.

[Dr Huq]

Q Do you think £100,000 is about right as a threshold or should it be lower for the unexplained wealth order?

Donald Toon: I think it is a perfectly reasonable value. The vast majority of property involved is of high value. If we are talking about property in the UK linked, for example, to non-European economic area politically exposed persons, it is almost certainly going to be of significant value. A small case from our perspective would be somewhere a little under £1 million. The majority of the casework in that space will be multiple millions, if not much higher.

Mick Beattie: For me, anyone who enters the criminal justice system should not be leaving it with their criminal assets intact. It is all about removing those criminal assets. First, they provide the symbolism of wealth and status that money or assets can provide. Secondly, removing those assets is a good mechanism for reinforcing the compensation programme—we can compensate victims as a result of confiscation, with the enforcement capability behind it. It also stops reinvestment into crime, as mentioned by Donald. Commodity purchase is required to perpetuate the continuing criminality.

For me, it is all about removing those assets and everything associated with it and the image that is portrayed by the retention of those assets. It is well documented by some that serious and organised criminals are quite happy or quite prepared to do the time relevant to a prison custodial sentence. What really hurts them and their associates and family members is the denial and removal of the assets and the image that portrays to the public. It gets a lot of positive reception when we carry that out. From a public perception point of view, we know how much they appreciate the removal of assets.

[Dr Huq]

Q And on asset recovery?

Detective Superintendent Harman: Counter-terrorism is quite a different context for asset recovery, as you will appreciate. The people we are interested in are not looking to make a profit, and they are not looking to embark on an enterprise that is going to last for a long period of time and create a huge amount of wealth. They are looking to get money to achieve an objective. Our absolute priority is keeping the public safe and stopping a terrorist attack. Our absolute priority is therefore getting hold of that money and controlling it before it can be used. It is not much good to us to be retrospective after the fact: we are looking at stopping the attack. For us, it is about seizing assets before they can be smuggled overseas, seizing assets while they are sitting in a bank account, and interrupting and intercepting transactions that banks have hopefully reported to us as being suspicious.

Yes, of course, some of our terrorists do use crime to make money to commit terrorism, but really, we are not so much in the business of seizing huge amounts of assets. We are looking at stopping the cash before it can be used to hurt the public.

[Dr Huq]

Q What do you think of the £100,000 figure?

Detective Superintendent Harman: It sounds a reasonable figure to me when we are dealing with a higher end, it certainly does, but we operate less in that realm. We are more about the slightly smaller amounts causing a great deal of harm.

[The Minister for Security (Mr Ben Wallace)]

I want to clarify the point: the seizure threshold is £1,000 and the unexplained wealth order threshold is £100,000. I did not want members of the Committee to get confused about the two. If we are talking about taking money out of a bank account, it is at the £1,000 level; if we are talking about confiscating assets on an unexplained wealth order, it is £100,000.

[The Chair]

Order. Can I just say to the witnesses that we have only a very short period of time and there are at least five other members who want to ask questions? The Minister may also do so at the end. Your replies are very informative and welcome, but could you make them more succinct? Similarly, could Members confine themselves to instant questions that people want immediate replies to and that can be given?

[Mrs Flick Drummond (Portsmouth South) (Con)]

Q Are you confident that the enforcement agencies will have sufficient resources to make full use of the new powers in the Bill?

Detective Superintendent Harman: Yes I am. In fact, the Bill is very helpful for counter-terrorism in that one of its sections allows us to make more of the resources we have. To be brief, about 40% of our financial investigators are police staff, or “civilians”, as they used to be called. Under current legislation, you have to be a warranted police constable to conduct a lot of the financial inquiries that we need to do. The Bill offers those civilian investigators new powers similar to those of a constable, allowing us to make the most of the resources we have. We are very pleased to see that in the Bill and confident we will make good use of it.

Mick Beattie: Likewise, I gave an example of the attendance at court which can be reduced by the disclosure orders. Obviously the policing bill has been cut, as is well documented and, yes, that has been challenging, but there have been some positives. The Government have recently provided additional funding for ACE teams—asset confiscation enforcement teams—which allows us to go chasing confiscation. They have provided additional funding for section 22 where you can revisit outstanding orders—it is a little technical—and, only recently, they have announced additional funding for the regional asset recovery teams, all of which will benefit from the improvements identified in the Bill.

Donald Toon: You have already heard about the disclosure orders but I also think the power to require information for the Financial Intelligence Unit and the information sharing provisions are important in making us more efficient. The one thing I would bring out is that it is not just about resources in law enforcement. We are talking about the ability to harness resources and capability from across the regulated sector, in particular financial institutions. From that perspective, I think it is a huge strengthening of capability.

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

Q I would like to take a slightly different tack and ask about the existing powers that you have that this Bill seeks to build upon. I am concerned that the National Crime Agency has declined to deal with the Hermitage case, which has been discussed, and which involves about $30 million laundered in London. Although the evidence provided to the National Crime Agency has been sufficient in other jurisdictions to take action, there has been a refusal to take action here. Why is that the case? Is it a lack of resources or a lack of will?

Donald Toon: Frankly, it is neither. In the Hermitage case, the overwhelming majority of the actual criminality took place outside the UK. One of the key issues in terms of where we focus our attention has got to be the prospects of actually being able to bring the major criminality in front of a court, and hopefully achieve a conviction. The fact is that a number of overseas jurisdictions are investigating criminality that took place in their jurisdiction. The vast majority of the criminality did not take place in the UK, and those responsible are not in the UK. We have supported, we are supporting and we will continue to support inquiries in the UK that are designed to help to bring those people to justice in the jurisdictions where they can actually be targeted.

[Roger Mullin]

Q With all due respect, what I quoted was $30 million that was laundered in London. I am not talking about the other money laundered through Hermitage in other jurisdictions. My understanding is that they have been buying up different types of assets in London—they are not merely property assets—and that the individuals involved regularly visit London, which would seem to bring it entirely within the remit of the UK to do something about it.

Donald Toon: We have a remit in the UK to do something, as you say, but from our perspective, we have a remit to do something in support of those who are better placed to target the main criminals. My understanding of the position is that I am not at liberty at the moment to go into the detail to which you refer.

[Scott Mann (North Cornwall) (Con)]

Q I have three questions for you, Mr Toon, if I may. What have been the most significant challenges for the NCA in tackling economic crime? How will the measures in the Bill help the NCA to tackle economic crime? The third question is a small supplementary on the seizure orders and unexplained wealth orders. A small number of people make money from online gambling. Could you tell me how the Bill might affect them?

Donald Toon: I outlined earlier a couple of the biggest problems. Essentially, at the top end of money laundering, asset hiding and asset tracing, we are talking about something that is fundamentally international in scope and often involves us dealing with difficult jurisdictions. That has been an ongoing problem, notably around our ability to access sufficient information to track asset movements and identify ultimate beneficial owners. The fact that we have provision in the Bill for information sharing with the private sector is from our perspective hugely valuable. We have been working with the banks in a joint money laundering intelligence taskforce for about the past 16 or 17 months. This legislation essentially gives more cover for the banks to be able to share information effectively. Currently, they can do that only through us, through our gateway.

It is important to bring out that, with the capability that we have had so far, 58 arrests have flowed from the ability to share information with the banks. We have identified more than 2,100 suspicious accounts. Most importantly—there is something here about the shared intervention response—we have also had 730 bank-led internal investigations into customers and the use of particular accounts, which is hugely valuable to us. We are often dealing with large multinational financial institutions. They are in a very strong position to track the movement of money and see transfers between particular accounts, which enables us to identify the routes that we need to go down to track beneficial ownership. That information sharing provision, together with the work that has been done around improving transparency on beneficial ownership, is hugely valuable.

I have already mentioned the value of the unexplained wealth orders. Equally, there is the power to require provision of further information. We have an issue with suspicious activity reporting. Yes, we get a very large number of reports and that number continues to rise, but it is overwhelmingly from the banks. We have significant concerns about the quality and number of reports that we get from other parts of the regulated sector. Often, banks report suspicious transactions involving other parts of the regulated sector. It is very unusual for us to be able to see and track those transactions as they have gone through, say, the legal profession, accountants or company service providers. We should see better quality reporting in that space. The power in the Bill will give us the ability to seek additional information, either where we have a report and it lacks quality or where we have a report that leads us to want to start asking questions of other parts of the regulated sector that have been involved in the transaction. That is hugely valuable from our perspective.

The Bill as a package is really valuable, but not just because of that. I have mentioned the SARs moratorium period. That moratorium period has been so difficult, not just from our perspective, but from the perspective of law enforcement’s ability in the round to make effective use of SARs. With a seven-day turnaround and a 31-day limit, as soon as we go international, even with supportive jurisdictions, it is very hard to get information within that 31-day limit to be in a position to get a restraint order. That we can now see that go up to a maximum of just over six months—186 days—and that there is court oversight to give safety, is a hugely valuable step forward. Those are the major advantages of the Bill.

On the point about internet gambling, I confess I have not focused on that area. I would expect that, when we are in a position to be able to track those who are making particular profits, they could be targeted using the same provisions. The interesting thing is that while the information-sharing provision starts with the banks and the financial sector, the intention is to broaden that out and share information with the wider regulated sector. That would take us into things such as the gambling operators.

[The Chair]

Order. Before we proceed, I will say to the witnesses that this is your time. You have asked to appear and you have come to give evidence. This section will end at 10.20 am, no doubt whatsoever, so you are using your own time. You need to be more succinct to get more questions asked of you and replies given.

[Scott Mann]

Q Just quickly to pick up on what Mr Toon said, could you give me the timeframe for the 58 arrests?

Donald Toon: Those 58 arrests would be over a 15-month period.

[Peter Dowd (Bootle) (Lab)]

Q I want to come back to the issue of resources and capabilities. You all gave an answer but I did not get the sense that you were convinced that you have adequate resource. You told us that the capabilities in the Bill would give you just that—capability. You also said that additional resource was being put in and that other agencies, such as banks themselves, would do a lot of the investigation but you did not tell us that you believed that you were going to get sufficient resources for the proposals in the Bill and what you were being asked to do. I will ask a second time: do you believe that you will get sufficient resources to do the job that you are being asked in the Bill?

Donald Toon: From our perspective, the vast majority of our resource is not specific to criminal finances. We operate on the basis that we deploy resource against the particular problem we are dealing with at the time. We have got approximately 4,500 resources. We are capable of flexing that. Could we do more with more? That is always the case in any organisation but the Bill will make us more capable and efficient in terms of delivering results. We think we deliver decent results now and will be better at it.

Mick Beattie: Again, it is a case of competing demands. Obviously, in policing we have to refocus now with this emphasis on child exploitation and the emergence of cybercrime in recent years. That has really impacted on the limited resources that we have. There are approximately 1,800 financial investigators in and around the policing community. We could all do with more but, in terms of the balance around the competing demands, we have a very strong and productive capability.

Detective Superintendent Harman: Yes, I do think that we have sufficient resources to take advantage of what is in the Bill, a specific example being the seizing of portable items. We are expanding our teams at the ports who intercept illicit cash and goods; we are not reducing them. That is one example. As I touched on, an area of the Bill would enable us to make better use of the resources that we do have. To answer your question directly: I am content.

[Peter Dowd]

Q So it is reasonable to assume that you will not be coming back to us within, say, the length of this Parliament to ask for any more resources, all things being equal?

Detective Superintendent Harman: I would like to talk about financial investigation and that area of counter-terrorism. Obviously, counter-terrorism is a huge national issue and I would not like to speak for the assistant commissioner for national counter-terrorism. In relation to whether I can take advantages of the powers and measures in the Bill, yes, we have resources in place to do that.

Mick Beattie: I echo that. In terms of financing investigation, the Bill gives a lot of opportunities for improved efficiencies. I reiterate that only recently we have had notification of another financial injection to policing’s financial investigation capability.

[Peter Dowd]

Q That is not the question I asked. I am getting quite exercised about the response to this question. You have told us that you have the current resources, and therefore it is reasonable for me to say, on the basis of your projections of the level of crime out there and in the future, that you do not believe you will be coming back to us with any significant additional asks for at least the length of this Parliament—both in terms of legislation and, more importantly, in terms of finance.

Mick Beattie: I do not think I am in a position to answer that question.

[Peter Dowd]

It is a no, then.

Mick Beattie: For me, it is about financial investigation. In terms of policing plc, financial investigation is one capability. There are competing demands across the policing —or any law enforcement—landscape. By comparison and proportionately, I believe that we have a strong capability. Yes, we would like more financial investigators; yes, as the regime becomes more aware of the capacity and capability of financial investigation and what it can bring, there will always be requests within my organisation for more capabilities. In terms of an overall policing budget, though, that is not for me to respond to.

[Antoinette Sandbach (Eddisbury) (Con)]

Q To pick up on that last matter, is it not correct to say that proceeds of crime seizures in effect go to central funds and can be used, and there is part that is returned to the agency bringing the prosecution? To a certain extent, therefore, it is self-financing.

Mick Beattie: Of the money confiscated, 50% goes back to the Treasury and the remaining 50% is split three ways between the prosecuting element, the law enforcement agency and the court services. It is called the incentivisation fund. So yes, it goes back directly into law enforcement.

[Antoinette Sandbach]

Q So strengthening and broadening your powers will enable you potentially to seize more assets. Clearly, therefore, the aim of these measures is to deal with money laundering. How does the new criminal offence preventing the facilitation of tax evasion link in with that money laundering aspect of your investigations?

Mick Beattie: I am not a tax expert and do not represent Her Majesty’s Revenue and Customs. In terms of investigative capacity, as a senior investigating officer presented with an investigation, in determining your strategy you will look at what outcome you hope to achieve. It could be a criminal justice outcome, a disruption option or along those lines. You will look at all measures to achieve that. In some cases, the information, intelligence or evidence is such that a tax investigation may be more effective than a criminal investigation. We work with the National Crime Agency and HMRC colleagues in determining who should lead the investigation. In terms of legislation strengthening HMRC’s capability, it is clearly going to be advantageous to us in decision-making around the best strategy for a financial investigation.

[Antoinette Sandbach]

Q One criticism often levelled at law enforcement agencies is that they do not take enough steps nationally to recover assets that are the proceeds of crime. Apart from the disclosure orders and the aspect of portable goods—for example, jewellery—that you have already spoken about, what particular powers will help you with that asset recovery, and is there anything that is not in the Bill that you think should be?

Mick Beattie: The Bill contains technical amendments that, though they are not specific in themselves, tighten things up. Some of the legislation was restrictive and stopped upon a conviction; money laundering investigation powers would often stop. The Bill will nudge some of those on, to allow those powers to remain while there is a confiscation investigation. The powers in previous Bills have strengthened the investigative capability into the confiscation process, where there was a gap before in terms of what we could and could not do in serving production orders on accounts, for example. That has definitely helped.

[Antoinette Sandbach]

Q Is that the same, for example, with regard to extending the powers to revisiting orders under the Proceeds of Crime Act 2002, which was a gap that was not there previously?

Mick Beattie: The power to revisit the disparity between a benefit amount and a realisable amount is primarily the current role of the asset confiscation enforcement teams I mentioned earlier, which have been funded additionally by the Home Office directly from ARIS. The asset recovery incentivisation scheme has been top-sliced and a portion of that has been given to the three agencies to proactively do section 22 revisits.

[Antoinette Sandbach]

Q Are you therefore satisfied that the current procedures in the Bill tackle the major challenges you face in your aspect of the investigations?

Mick Beattie: It definitely improves some of the operational difficulties we have highlighted. We have been privy to the formation of the Bill, we have been invited, we have been allowed to comment and we have contributed to the drafting of the Bill. You always want more. There is more we would have liked around information sharing. But there are definitely advantages to the Bill that will help criminal investigations.

[Nic Dakin (Scunthorpe) (Lab)]

Q Thank you for your evidence. You seem to be saying there is more that perhaps could be done, Mr Beattie. What additional things should we take the opportunity to look at in the Bill, to make sure you have the powers you need to do your job?

Mick Beattie: A lot of what we would have liked, we have got. Information sharing between the private and public sectors is done through the NCA UK Financial Intelligence Unit, which is under a lot of pressure. It is a unit that services the whole of UK law enforcement. The Bill allows communication between the banking sector and the UKFIU, which would then release that information to policing. If we had a particular interest, we may have to go back through the UKFIU back into that institution. We would have liked a little bit more direct access, but it is not a problem. It is something we can overcome.

In the early stages, I can understand the reticence from the banking sector. This is a new area of business for them, piloted through the joint money laundering taskforce very successfully. I can understand the small-steps mindset in relation to that—get some understanding, some evidence and some culture. So we are very supportive of what we have got in the Bill.

Donald Toon: From our perspective, the Bill takes us forward on a range of difficult issues, but it does that in a balanced and thought-through way. From law enforcement’s perspective it is always easy to want more power, but that has got to be balanced against the fact that, for example, the financial services sector has to continue to do business.

We are satisfied that this makes the changes and we have been able to set out a clear, operational, evidenced case for the change. Do we think this will stop and it will be the panacea for the future? No, because we are involved in an arms race here. There are people on the other side—whether professionals involved in providing money laundering services or serious criminals—who will always be looking for another opportunity. That is why the Proceeds of Crime Act 2002 has had to be amended so many times since it was first introduced.

Do we think this will stop further amendment? No. Does it actually address the issues we can evidence now? Yes.

Detective Superintendent Harman: I echo that. The answer for us now lies not in more legislation. The Home Office consulted very closely with us. We are seeing the legislation in here that we asked for. The answer now for us is about co-operation with the financial sector, about sharing information. Just like we asked the public for information to help us to fight terrorism, now we are asking the regulated sector, and I think the Bill will help with that.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Q For the most part, my questions have been dealt with by colleagues previously asking about additional powers, but I will come back to one point. There is a huge array of regulatory bodies that cover money laundering in the UK. Do you think that consolidating these would make life easier for you in the pursuit of money laundering activity?

Donald Toon: The Treasury has been doing work on this space now. From our perspective, all those regulated bodies are covered by anti-money laundering regulations and are required to submit SARs. We need to see clear, consistent standards across all parts of the regulated sector. I do not care whether that is achieved through one supervisory body or a number, provided they are all operating to the same set of standards and the same commitment to ensure that SARs are produced—and produced to the necessary quality—and they are prepared to take action against those parts of the regulated sector that they supervise when they do not live up to those standards.

Mick Beattie: I support that. The police get nearly 400,000 suspicious activity reports a year. There are definitely gold nuggets in there, but some of those reports are of such a poor standard, or they are defensive reporting or a means for the bank—really, their own regulators could have a role around the quality of the SARs submitted.

Detective Superintendent Harman: I do not have anything to add to what Mr Toon said.

[Richard Arkless]

Q You make it clear that there is an urge for law enforcement to have additional powers, but a balance needs to be struck. It is for Parliament to strike that balance, so take that out of your contemplation. You are not responsible for striking that balance, so what extra powers would you like to see in the Bill?

Donald Toon: As I have said, what we have in the Bill is what we are able to stand up a sensible evidential case for. We are conscious that we will see the opposition try to adapt. How they adapt, and in particular how some of the powers bed in, is what is going to inform the next stage. It is not something we feel that we are crying out for at this point.

Mick Beattie: I would like to see the courts given the power to defer Crown ownership on assets. I can understand the reasons—third-party ownership and the issues clogging up the courts—why that was not accepted, but that would have been a bonus.

Detective Superintendent Harman: As has been said, we see the powers in the Bill that we feel we need. I do not think we are looking for more powers; we are looking to ensure that we are using the powers well and we are co-operating with all partners in delivering our aims.

[The Chair]

We have eight minutes left before we must wind up this session, and a number of Members still want to ask questions. You will have to be brief on both sides. I call Mr Davies, briefly.

[Byron Davies]

Q My question is simply this, with respect to unexplained wealth orders and politically exposed persons. It is perhaps more to you, Mr Harman, than anyone. The measures reflect the concerns about those involved in corruption overseas and laundering of the proceeds of crime. How operationally viable do you think those are from an investigation point of view, particularly with some of the more difficult countries that we have to deal with?

Detective Superintendent Harman: I think there will be challenges, as you have highlighted. The unexplained wealth orders will help us to deal with the higher end, if I can call it that, of terrorist financing, where there are perhaps sham companies or charities being exploited and it is far more complicated. Such a power will ensure that people account for the money that they have. It will be challenging. To be honest with you, it will be a small part of our casework in the terrorism financing context, but it will be helpful.

Donald Toon: From our perspective—we run the international corruption unit for the UK—we see this as a hugely valuable step forward. We have a real problem at the moment in a number of jurisdictions where we cannot get usable evidence yet we have assets that are of deeply questionable probity. We do not expect the numbers to be huge, because the cases are large and complex, but we do think this is a very useful step.

Mick Beattie: We support that. Most of our international investigations go through the NCA anyway, so we agree with that.

[Carolyn Harris (Swansea East) (Lab)]

Q I have one observation and one concern. The observation is that one of my colleagues mentioned that you would need to come back for more money, and another colleague said you would be self-funding. That means you will have to bring in far more than you cost to run, so just be aware of that.

I am really concerned that you are not concerned about money laundering in the gambling industry. You seem to have little or no evidence that that is an issue. I am very concerned that high street bookies are able to launder, and if they are not actually reporting any excessive or unusual activity, that is a great concern.

Donald Toon: Can I correct the position? The specific question I was asked was about the application of these powers to online gambling. Do we see the gambling industry as a potential risk for money laundering? Yes. Traditionally, it has been an area where money laundering has been relatively straightforward, in the sense of being able to demonstrate the source of funds. Actually, we have seen quite a lot of improvement in the way the gambling industry has targeted that, particularly through the casino structure. We work with the industry and the main industry bodies, and we work very closely with the Gambling Commission on the regulation of that, and we do see some very good reporting. Is it still an abused area? Yes. It is an ongoing risk; we do seek to target that risk. It was a specific question I was responding to.

[Carolyn Harris]

Q Is there a benchmark to which you would expect bookmakers to report high or excessive use in a high street bookmakers?

Donald Toon: We would expect them to apply an objective test for suspicion and report. That is the point where we work with the Gambling Commission on making sure that that test is right.

[Carolyn Harris]

Q But you leave it them to decide at what level they report?

Donald Toon: It is an important point. It is absolutely the decision of any part of the regulated sector, including gambling operators. It is their decision when they should report. Should they fail to report when they should have done so, there are consequences. If they could be shown to be facilitating money laundering when we had gone into a major investigation and tracked back, then there would be potential consequences. Either we would seek to take action ourselves, or we would refer them—it does not matter which part of the regulated sector we are talking about—to their supervising regulator for action.

[Carolyn Harris]

Q Would it be helpful if it was a mandatory reporting level? For excessive use of a fixed odds betting terminal, for example, if we set a level and said, “Anything in excess of £1,000 a day,” from someone who would not normally spend that money?

Donald Toon: Frankly, no, I do not think it would. Every time you set a level, all you do is encourage people to create a level of complexity that always keeps below the level.

Mick Beattie: It is about the suspicion. It is all relevant to that individual, that money laundering reporting officer, their level of suspicion and the circumstances or action that determines that suspicion.

[The Chair]

This will have to be the last question. You only have two minutes.

[Nusrat Ghani (Wealden) (Con)]

Q I apologise for being late this morning; I was at another Committee meeting. My question is to Detective Harman. I think you have already tackled funding of terrorism this morning but, as we know, terrorism has no borders nor does the funding, and with technology it becomes increasingly difficult for you to follow the flow of these funds. The Bill proposes more information sharing between the public and private sectors, which you have said will be incredibly helpful. Could you share whether there will be pushback from the banking sector and, as we seize the assets of terrorists, what might they do? What will be their next steps, so we can be ahead of the curve? Can you give us some advice on where they might end up putting their funds, so we can be a position to start seizing those funds once they come out of the mainstream?

Detective Superintendent Harman: It is a big topic. Briefly, our relationship with the financial sector—the banks and the MSBs—is fantastic. We have a very positive relationship. There are some official mechanisms for that such as the JMLT that has been mentioned. So, I do not expect any pushback, quite the opposite really. The banking sector wants to work with us, obviously respecting their client confidentiality and the rules around that, but they do want to work with us, and they do work with us. This really gives a legal gateway for the goodwill, if you like, that already exists. We look forward to working with them as the way people bank changes—becomes more digital and so forth. We will evolve with that; that is our intention.

[The Chair]

That brings us to the end of the allotted time for the Committee to ask questions. I thank the witnesses on behalf of the Committee for their excellent presentations and the queries that they have answered. We will now move on to the next panel.

Examination of Witnesses

Simon York, Mark Thompson and Nick Price gave evidence.

10:20

[The Chair]

We will now hear evidence from HMRC, the Serious Fraud Office and the Crown Prosecution Service. Gentlemen, please present yourselves and give a brief background to why you are here.

Simon York: Good morning. My name is Simon York. I am the director of Her Majesty’s Revenue and Customs fraud investigation service. We deal with criminal attacks and the most serious tax fraud against the tax system. I am here because we use a range of proceeds of crime powers alongside tax powers. We also have a specific provision in the Bill on the corporate offence of failing to prevent the facilitation of tax evasion, among a number of important provisions for us.

Nick Price: I am Nick Price. I am head of the Crown Prosecution Service proceeds of crime service. Why am I here? We have been working closely with the Home Office and partner agencies in bringing the Bill together.

Mark Thompson: I am the chief operating officer of the Serious Fraud Office. I was appointed only in September and before that I was head of the proceeds of crime division in the SFO for the previous four years. That is why I am here.

[Dr Huq]

Q Thank you for coming in. I guess to the layperson there are many bodies involved in these issues—the police, who we have just heard from, the CPS, HM Courts and Tribunals Service and the Serious Fraud Office. The natural thinking is that there should be more co-operation between different bodies. I notice that the report from the Home Affairs Committee says that one person should take the overall lead. Where do you stand on being more joined-up and having a more overall person? It said for the recovery of criminal assets it should be the National Crime Agency that co-ordinates and oversees the various different agencies operating at local levels, with the proviso of adequate resources and tools. Where do you stand on the point about an overarching person and who that should be, if we did have one?

Simon York: We all work closely across law enforcement on a whole range of issues tackling criminality including the proceeds of crime, and that co-operation is really important. What we find particularly useful in HMRC, though, is the ability to use tax powers, proceeds of crime powers and criminal investigation powers in concert. That is what we find works best. We will use whatever combination of powers gets us the right result that allows us to confiscate, recover and prevent the losses. It is important to us that we have the ability to do that in the range of other things.

[Dr Huq]

Q And you are happy with how it is at the moment with you all working in concert. Does anyone think there should be overall supervision?

Nick Price: We all work very closely together. It is worth the Committee being aware that the CPS has lawyers embedded with HMRC, the NCA and the regional organised crime units where the regional asset recovery teams work. We work very closely with the SFO. So, we already work very closely.

In terms of overall supervision, the Committee will be aware that there is a Criminal Finance Board that is ministerially chaired. Sitting beneath that are a number of sub-groups. There is a criminal finance improvement plan. Those things draw together the agencies with real strategic oversight as well.

Mark Thompson: The only thing I would add to that would be the need for integration between those tackling proceeds of crime and those who are in a criminal investigation. I actually think one lead agency would make things worse, not better. The reason these things are successful is that I have proceeds of crime people working in the Serious Fraud Office alongside our criminal investigators, and that is the best way to tackle these crimes.

[Dr Huq]

Q Part 3 of the Bill introduces the controversial criminal offence of failing to prevent the facilitation of tax evasion. Some people who have given evidence to the HMRC consultation have argued against the new corporate offence. How do you rate the risk posed to the Exchequer from illegal tax evasion, compared with tax avoidance and other activities that contribute to the tax gap? There are some really scary figures; the most shocking one I saw was that over the last 26 years, the Government have collected 26p of every £100 generated by criminal activity. What do you think of the new offence? Nobody here has a crystal ball, but could you comment on the scale of offshore tax evasion?

Simon York: We estimate the tax gap in relation to tax evasion as a whole as around £5 billion a year. That includes a range of different types of evasion, such as what is colloquially known as offshore evasion. This is certainly an important issue. Corporates can be significant facilitators of tax evasion, as we have seen on a number of occasions. There is a real public and, I think, political appetite to tackle it. We find a difficulty in attributing criminal liability to these sorts of corporate entities. We think this is an important proposal in improving corporate behaviour in this area—deterring bad behaviour and improving good behaviour. This is by no means the only provision or capability that we need to tackle tax evasion, which is a very broad issue, but it is an important one in tackling a very specific area.

Nick Price: I cannot really add a great deal to what Simon said on that topic.

Mark Thompson: Me neither. Tax is HMRC’s primary responsibility.

[Dr Huq]

Q This is modelled on section 7 of the Bribery Act 2010. Am I right in thinking that so far under that Act there have been zero prosecutions—[Interruption]—or a very low level of prosecutions, shall we say?

[Mr Wallace]

We are getting there.

[Dr Huq]

That is only from 2010, so it is not an old Act, and again, nobody here is Mystic Meg, but do you have the tools in this legislation to bring about successful prosecutions or are there too many obstacles, such as that the SFO is involved and that behavioural change would be needed, as you said? Do you foresee there being a low or high level of prosecutions when the Bill is enacted?

Simon York: A good result would be that corporates change their behaviour and that there is less facilitation of tax evasion, and consequently, less tax evasion. We certainly have the tools, through a combination of this proposed legislation and our existing capability—HMRC is a very competent and successful law enforcement agency and criminally investigates many people and convicts them successfully every year, so I think we have that capability. Do I think we will have a lot of prosecutions in this area? I hope not, but I think we will be looking for a number to act as part of this deterrent to show that the legislation has teeth and to show that we mean business.

Nick Price: I would just make a quick general observation: all prosecutions are difficult and we operate an adversarial system, which of course we are well used to. This is a really useful piece of potential legislation, with some really useful elements to it. Are we going to see a phalanx of extra prosecutions coming over the horizon? Perhaps not, but there are some really useful aspects of the Bill that we will no doubt deal with shortly.

Mark Thompson: In my experience, it is not inherently a numbers game, in terms of numbers of prosecutions. We have found that the section 7 offence of the Bribery Act is a useful tool for us as prosecutors. It focuses the corporate mind and there has been a large response from the private sector in complying with that. I would be surprised if the tax evasion offence did not have the same implications.

[The Chair]

Thank you. May I point out that we have got 30 minutes left, and eight other Members of Parliament want to ask questions? I remind both witnesses and Members that it is your time, and that witnesses are here today to answer as many questions as possible.

[Mike Wood (Dudley South) (Con)]

Q This question is directed in particular to Mr Thompson. Could you tell us more about the challenges faced by the Serious Fraud Office in investigating a suspected criminal financial activity, and how the specific measures in the Bill will help you to do that more effectively? In particular, I would like to know more about how unexplained wealth orders might be expected to help in pursuing foreign officials suspected of grand corruption.

Mark Thompson: Members of the SFO and I have been involved in consulting with the Home Office as this process has developed. Unexplained wealth orders provide an avenue for us to start civil recovery investigations effectively in a way that we cannot do at a moment. Where information is held abroad, or is in jurisdictions where co-operation is unlikely, this tool provides us with a way of kicking the process off and taking action against property in the UK that we suspect to be derived from crime. As things currently stand, the thresholds for pursuing civil recovery are, in many cases, high enough to make this difficult. That is how I would see our using the legislation in the first instance.

[Nic Dakin]

Q The new corporate offence relates only to tax evasion, which makes sense. But is there a case for extending it to dissuade companies from facilitating quite aggressive tax avoidance?

Simon York: At the moment this is a criminal offence, and tax avoidance is not a crime, which is why that would be difficult. We are currently consulting on additional legislation that would penalise the enablers of tax avoidance, so we are seeking legislation in that area too.

[Victoria Atkins]

Q Thank you, and it is a pleasure to serve under your chairmanship, Sir Alan. I want to pick up on the point about avoidance and evasion. Mr York, you said that these powers are directed at tax evasion, which is a crime. To give us an idea of the complexity of veering into the world of tax avoidance and tax efficiency, is it not right that a person simply investing in a pension can be described as being tax efficient because that prevents them from paying as much tax as they would otherwise pay?

Simon York: Certainly it can be tax efficient. We tend to use the phrase “tax planning”, so a pension or an ISA or something like that would fall into that category. Tax avoidance is typically where people are using schemes—which are often quite contrived and artificial—to do something that Parliament never intended. They are not lying to us, or being fraudulent, or misrepresenting something, but it is all artificial. We will criminally investigate the kind of situation in which people step over that line—which sometimes they do—and when they are part of something that might appear to be an avoidance scheme that actually becomes fraudulent, or where they are deliberately going out to defraud and disguise it as an avoidance scheme. We have had some significant wins over the past 12 months on big complex frauds disguised as avoidance. When it crosses that line, we will come right down on that. But if it is avoidance in the theoretical, pure sense, we will tackle that through civil litigation and take those cases to court.

On the subject of tax avoidance, the Government have done lots of work on tax avoidance over the last five or six years, and 40 loopholes have been closed down. In particular, we have brought in the accelerated payments legislation which completely changes the economics of tax avoidance, and makes people pay upfront while we wait for tribunal results. There are some really striking figures. The flow of new schemes is now down 99%. In 2006, there were 600 new schemes a year; last year there were seven. A couple of years ago, there were 2,300 new users of avoidance schemes; last year there were 410. We are really taking the bottom out of the individual market of avoidance schemes. The proposed legislation is to tackle another intractable problem, which is evasion, which is a criminal offence.

[Victoria Atkins]

Q On behalf of all the lawyers in the room, only one person may be convicted, but that conviction may mean that many hundreds of millions of pounds has been stolen from the Exchequer. With one conviction, you have solved that crime. Is that correct? In other words, one conviction does not necessarily reflect the extent of the damage that that particular defendant has inflicted on the UK economy.

Simon York: Not necessarily, no. We will use whichever approach we think is the most effective. Sometimes—for example, in relation to organised crime or groups of wealthy individuals—we will use a mixture of our civil tax powers and criminal investigation powers quite deliberately to get the biggest impact. My team recovers or protects about £5 billion a year through a combination of civil and criminal activity.

[Roger Mullin]

Q I have two short questions. First, what types of business formations are most susceptible to use by criminals?

Simon York: I think most sorts of business formations can be susceptible. Companies, partnerships, limited liability partnerships, Scottish limited partnerships and trusts are all used most widely for completely legitimate purposes but all, in the wrong hands, can be used to attempt to obscure ownership or value, or to launder profits of crime. They can all be used in different ways.

Nick Price: I am not sure that there is a specific type that lends itself to criminal activity any more than any other.

[Roger Mullin]

Q Perhaps this is for HMRC again then. How effective are we at supervising for anti-money laundering purposes all trust or company service providers that register UK companies?

Simon York: HMRC is the supervisor—TCSPs are not regulated in any other area. Our strategy is that we have teams that conduct anti-money laundering supervision, try to support that industry, particularly those that are susceptible or vulnerable to money laundering, and help them. My teams tend to get involved when we clearly suspect some of those organisations of facilitating crime, money laundering, tax fraud or whatever. Our strategy is to, again, use a combination of the money laundering supervisory regulatory powers and our tax powers. We have some really quite significant projects—I cannot go into too much detail—on the go at the moment in relation to TCSPs in particular.

[Antoinette Sandbach]

Q I want to come back, Mr York, to attributing criminal liability to corporates. You felt that that would prompt good behaviour. For example, there have been some well publicised cases of licence payments where profit will be taken out of the UK because of some form of licensing agreement or other device that removes profits from the UK. How do you see the new advisory part 3 capability in tackling that? That is tax avoidance, rather than tax evasion, is it not?

Simon York: It could only be used to tackle that sort of behaviour if that, in itself, was a criminal offence. I think what you are describing is typically the sort of tax planning or avoidance that multinationals might engage in. If that was fully presented to us and it was completely upfront, this would not be the appropriate response to that. If, however, anything was misrepresented to us and it effectively became a fraud and a criminal offence, and that was being facilitated by someone else, it could. But this is not really aimed at that at all.

[Antoinette Sandbach]

Q Can I perhaps take it to the other extreme, where, for example, single parents are trying to claim support from non-resident parents who are not declaring their income appropriately? That would be tax evasion. Would you see this offence as dealing with those people’s accountants and advisers? In other words, if professional accounts have been filed and there is then a tribunal finding that there has been an inappropriate amount declared for income tax, would you get involved?

Simon York: Our interest is in tax and tax evasion, so if we see tax evasion in whatever form, we will tackle it. We certainly could tackle scenarios like that. It is already a criminal offence for individuals to evade tax and for others to directly facilitate that evasion of tax. What is new here is that the Bill deals with a corporate body failing to take reasonable steps to prevent its representatives from facilitating the evasion of tax by someone else. It is that third stage; it is when you get to the corporate, which under current English law it is really quite difficult to attribute criminal liability to. That is what this offence is designed to address, so I do not think it would directly affect that sort of situation, but we would tackle that in other ways.

[Antoinette Sandbach]

Q Could it, for example, affect a high street accountant that was providing advice on something that may be on one or the other side of the line?

Simon York: It could if that accountant was a corporate body and its representatives or employees were facilitating or enabling tax fraud. Yes, it could help there.

[Antoinette Sandbach]

Q Mr Price, will unexplained wealth orders help the CPS make greater use of its existing civil recovery powers?

Nick Price: Unexplained wealth orders are interesting. We welcome that provision, and we have worked closely with partners in bringing it forward. The CPS is not an investigatory body, as you know. We think that these orders are likely to be used more by our partner agencies. Will it mean that we do more by way of civil recovery? As you know, the NCA already has its own capability to do that; it is likely that HMRC will get its own capability to do that as well—there are provisions in the Bill that would enable that—and the SFO likewise. We are likely to do a small additional amount of civil recovery work, and unexplained wealth orders may well be part of that, but I think the vast majority of that work is going to be done by the other agencies.

[Antoinette Sandbach]

Q Will extending the moratorium period on SARs assist you in getting the material that you need to get cases to a point where you can charge?

Nick Price: This is a very significant and welcome change for us. There are cases that we have not been able to take forward for early restraint simply because the moratorium period was far too short and the investigation simply could not be completed in the time that we had. Why is early restraint important? It is, I suppose, a trite observation in this field, but if you are unable to restrain assets at an early stage in proceedings, the likelihood of them being available later on is pretty remote. The extension of the moratorium period is critically important to us. There is considerable judicial oversight of that provision—you will have seen that in the Bill—so we very much support that.

[Peter Dowd]

Q The Chartered Institute of Taxation has expressed some concern that the new corporate offence of failure to prevent the criminal facilitation of tax evasion may lead to a string of prosecutions in relatively small cases where current civil penalties already provide enough punishment. What is your view about that?

Simon York: That is probably unfounded. Our approach here, like it is with all our criminal investigation work, would be to focus on where the behaviour is at its worst and most fraudulent, and therefore on where it is having the most impact, particularly where a corporate is having a very wide impact on a wide group of taxpayers and where the amounts involved are large. That is typically our approach. We would be equally selective with this power.

[Peter Dowd]

Q Some people suggest that HMRC has got form for not going after the big organisations—the Googles—for tax avoidance. What confidence can you give us that you will not just avoid the big ones because they are in the “too difficult to do” box?

Simon York: Our track record on this side is that, last year, we charged around 1,200 people with criminal offences, and about 12% of those were for frauds involving more than £0.5 million. You will probably have seen reported in the press some extremely big, valuable and complex frauds that have been in criminal court for over a year—that sort of thing—and that we have won. We are increasingly targeting that sort of behaviour. We have had extra investment from the Government, particularly to build our capability to tackle wealthy individuals, corporates and offshore evasion, and we are busy doing that at the moment. We have a significantly stronger pipeline of that sort of work currently.

[Peter Dowd]

Q Which brings me nicely to my last question, which is about your confidence in whether you as enforcement agencies have sufficient resources under the new provisions to do your job properly.

Simon York: In my part of HMRC, I have 4,500 people carrying out investigations into serious fraud, both criminal and civil investigations. Within that, and relevant to what we are talking about here today, I have a team of over 400 who deal with proceeds of crime in the widest sense—financial investigators, criminal taxes teams, insolvency practitioners and so on. It is something we treat as very important. We have had increasing investment over the years from Government, so the size of my team has increased quite significantly over recent years.

Nick Price: The CPS set up a proceeds of crime service just over two years ago. Operating on a national basis obviously means that we can be as efficient as we possibly can be, and we can meet the peaks and troughs in demand in terms of the various casework we are dealing with. We deal with work from the very top end at my end of the scale, down to the other end of work. As I say, that is on a national basis.

We are sufficiently resourced, and we also benefit from additional resource from the top-slice arrangements in relation to the asset recovery incentivisation scheme, or ARIS. That money is financing a specific project: we are working in conjunction with the police asset confiscation enforcement or ACE teams in the RARTs and ROCUs—regional asset recovery teams and regional organised crime units. That work is focused around section 22 revisits. You will of course be aware that there are some really important provisions in this Bill that enhance our ability to deal with revisits. I will add very quickly that we have seen a 150% increase in the number of revisit cases we are dealing with, so the provisions in the Bill are critically important to our work.

Mark Thompson: From our point of view, the proceeds of crime division has roughly doubled in size in the last two to three years. It remains a high priority for the SFO, and our funding model allows us access to additional funding from the reserve if we have cases that exceed a certain size. I make no complaint about resources at the moment.

[The Chair]

Order. We have 11 minutes left and I will stop this at 11.30 am, so help yourselves: please give yourselves more time for each other.

[Mrs Drummond]

Q I will be quick because you have touched on a lot of the stuff about which I was going to ask, particularly about the overseas corporate offence and how that works in practice. Mr York, will this actually pick up companies that operate mainly out of the overseas territories and the Crown dependencies?

Simon York: Yes if they are facilitating tax evasion in the UK or if their representatives carry out their business in the UK and are facilitating tax evasion that happens somewhere else. It catches Crown dependencies and overseas territories in the same way it catches other jurisdictions.

[Mrs Drummond]

Q Even though they have headquarters over there?

Simon York: Yes. That is precisely one of the targets of the legislation. If a company is facilitating tax evasion that is occurring in the UK—someone evading UK taxes—it would absolutely catch that. Equally, if that organisation is based overseas but its representatives are doing business in London to help someone in London to evade taxes in France, it would catch that as well.

[Richard Arkless]

Q First, to Mr York, the UK tax code has a reputation for being unnecessarily complicated. I am sure you are acutely aware of those allegations. To what extent does that complication play a role in criminality? Does it make it more susceptible to criminality? Do any specific examples arise out of the complication that would encourage, facilitate or make criminality easier?

Simon York: I am not sure that it does. Criminality is always pretty straightforward at its core. It is people lying, misrepresenting things and forging things. Sometimes that is disguised within the complexity of the tax system. I mentioned some times when people disguise a fraud as avoidance. We also get quite a lot of criminal attacks over the years that revolve around the VAT system, particularly the cross-border European stuff, known colloquially as MTIC—missing trader intra-community—fraud or carousel fraud. That can appear quite complicated but it is typically the criminal who is creating the complication to try to disguise the activity.

[Richard Arkless]

Q I am acutely aware of time. Mark and Nick, do you think that the threshold of £100,000 for unexplained wealth orders is at a fair level? Should it be lower or higher? International standards would dictate that it should be a little bit lower. What are your views?

Nick Price: From my perspective, it is a reasonable level at which to set the threshold. If you look at the two gateways into an unexplained wealth order—politically exposed persons or people suspected of involvement in serious criminality—you see that the likelihood in those cases is that the overall values will be far more than £100,000. For me, that is broadly where it needs to be.

Mark Thompson: I would agree with that. To make the criminality serious enough, I would have thought that it needs to be at a level that marks that sort of criminality. I think it is about right.

[Richard Arkless]

Q Many properties in my constituency are valued at less than £100,000 but more than £50,000, so I hope we are not basing that on London property prices.

Mr Thompson, on corporate economic crime, it is clear that the provisions in the Bill extend to employees facilitating tax evasion, and it does not go beyond that. Do you think there is a case for going beyond that? It strikes me that there is nothing in the Bill that gets at what the public understand as being the problem with corporate criminality. There is nothing that could catch the riggers of the LIBOR market, for example. There is nothing that could catch swathes of unscrupulous mortgage advisers giving 120% mortgages to dogs in kennels, which many people would argue has caused a great deal of the suffering that we are still all trying to recover from. Is there is a case for that?

Mark Thompson: There is a case for it. The SFO has made that case previously. The Attorney General has also called for consultation. My understanding is that there has not been a consultation yet on that measure, and that the Government may consider one. We have made the point before that it is inequitable that bribery and tax evasion attract these sort of corporate penalties, but that money laundering does not—it is a crime that attracts 14 years in jail. It also seems unreasonable that it is easier under the current law to prosecute small and medium-sized enterprises and not big corporates because of the way they operate. We have made that point before, but my understanding is that it was never going to be in this Bill anyway. It is a wider matter.

[Scott Mann]

Q There are information and data-sharing initiatives as part of the Bill. How would you interact with those measures and with the joint money laundering intelligence taskforce?

Mark Thompson: We do already interact with the joint money laundering intelligence taskforce, and we have a representative who attends it. We have access to that through the National Crime Agency. The data-sharing provisions are mainly for the NCA, and we would benefit from those arrangements. We entirely support them and think they would be advantageous.

[Dr Huq]

Q Are there any other changes to the existing proceeds of crime regime that you would like to see in the Bill? I was thinking of some sort of parallel enhanced supervision of the property market. Is there anything else on your wish list that you would have liked to see?

Nick Price: From a CPS perspective, we are content with the provisions in the Bill for now. It is too early at this stage to know how those will play out and the impact they will have. Inevitably, we will assess the use of these provisions as we go forward.

Mark Thompson: These are the second changes to the Proceeds of Crime Act 2002 in relatively recent succession. We still need to work out exactly how we use all these powers effectively. Like the CPS, I am content with where we are.

Simon York: We are content and very supportive.

[Dr Huq]

Q Finally, I would like to ask a question that I asked the other selection of witnesses. The Public Accounts Committee’s report on confiscation orders said that sometimes there is a bit of tension between whether the point of those orders is to disrupt crime or to recover the proceeds and collect criminal assets. What would you say to that statement?

Nick Price: From a CPS perspective, as I said earlier we deal with cases at the low end of the spectrum, and we deal with cases that are very much at the high end of the spectrum. In all those cases, there are victims. In many of those cases, there are people worthy of compensation. I do not believe there necessarily is, and I would not see it as, a tension. We deal with the full range of cases, and it is important we do that.

Mark Thompson: From our perspective, we only deal with the top end of fraud and corruption cases. Inevitably, there is a financial element, and it behoves us to consider confiscation and compensation of victims in all those cases, which is what we do.

Simon York: Our aim is to take the profit out of crime, whichever way we do that. Whether it is disrupting criminals or recovering proceeds afterwards, it is all part of that overall picture.

[The Chair]

I thank the witnesses for appearing in front of us. We are grateful for the concise and informative way in which you have helped us today. We will now move on to the next panel.

Examination of Witnesses

Alex Cobham and Professor Richard Murphy gave evidence.

10:59

[The Chair]

We will now hear evidence from Tax Research UK and the Tax Justice Network. You have until 11.25 am prompt. Even if we are not concluded by then, I will adjourn the Committee because Members have to be over in the House for other business. Would you introduce yourselves and outline the work you do?

Professor Murphy: I am Richard Murphy, the director of Tax Research UK. I am a chartered accountant and also a professor of practice in international political economy at City University.

Alex Cobham: I am Alex Cobham, chief executive of the Tax Justice Network and a visiting fellow at King’s College London.

[Dr Huq]

Q It is a pleasure to serve under your chairmanship, Sir Alan. It is good to have two academics in front of us; I am an academic trapped in an MP’s body.

Part 3 of the Bill would introduce the new criminal offence of failure to prevent facilitation of tax evasion. How do you rate the risk posed to the Exchequer by illegal tax evasion? We have just heard the figure of £5 billion a year. Is that accurate? Is it a conservative estimate? What are your thoughts on tax evasion versus tax avoidance and other activities that contribute to the tax gap? What would you say is the true scale of offshore tax evasion?

Professor Murphy: I have probably prepared the only alternative estimate to HMRC’s. My estimate is that tax evasion in the UK could be as high as £70 billion a year, in contrast to the HMRC estimate of £5 billion. Let us put that in the context of a £1.8 trillion UK economy. My estimate of tax avoidance is around £25 billion a year, as opposed to the Revenue’s, which again is around £5 billion. I believe its estimates are wrong. I think this Bill is focusing heavily on types of tax evasion that are a small part of the problem. The biggest part of the problem is the domestic economy; the biggest risk within the domestic economy is the fact that HMRC does not collect tax returns from 1 million UK domestic companies a year. The problem is with HMRC in this case.

Alex Cobham: We find Richard’s analysis rather more compelling than HMRC’s on the tax gap in general. Perhaps the difference is that we consider the international avoidance element to be particularly badly treated in the HMRC methodology. In some ways, if all your estimates are lower than they should be but in proportion, that is not a big deal, because it is not telling you to go the wrong way, but if your estimates of avoidance are significantly depressed compared with your evasion estimates, and you then put your policy emphasis according to those bad estimates, that does matter. I think we would be concerned that the tax gap is not a neutrally wrong estimate; it drives attention towards evasion rather than avoidance. We think evasion is important—certainly Richard’s numbers show that—but we are concerned that it encourages HMRC to take avoidance less seriously, and that is a risk.

[Dr Huq]

Q Several stakeholders who responded to the HMRC consultation—these clever people who know how to get around the rules—argued that a new corporate offence was unnecessary. It sounds as if you take issue with that. Do you think there is enough in the Bill to provide the significant behavioural change that is really needed to drive this out?

Alex Cobham: I think the behavioural change question is really important. There are two elements of it: one is how directly it affects the behaviour of actors involved in the process, but the second is how it affects the wider behavioural change. Over the years, we have had any number of economic models of tax behaviour, all of which have suggested that, in country after country, if we were rational economic maximisers we would be much more abusive about tax than we actually are. The reason for that is that we do not respond just to the risk of being caught and the price of being caught. Paying tax is a social act, and by and large two things drive people’s tax compliance. One is the extent to which tax revenues are redistributed and seen to be redistributed in a fair way—the more you think that, the more likely you are to contribute. The other is your perception of other people’s compliance. If you think that the people at the top—the big companies and wealthy elites—are systematically not paying their fair share, the prospects of you complying as a normal citizen are much lower. Who wants to be the only mug if the big guys are not playing the game?

There is one thing that I think is really important for the Bill. On the technical side we can have concerns about how it is framed, and on the enforcement side we might have concerns whether the resources are actually there to make it happen, but what is perhaps missing from that discussion is whether or not we have consistent reporting about the performance under this measure. If, year on year, we hear HMRC saying, “This is our estimate of the tax gap in this area. This is the amount of evasion we have stopped and the number of prosecutions, the revenue at risk in that area,” then, “This is the number of those cases where we have also gone after the facilitator, and so this is the proportion where we are consistently tracking this all the way through,” what you do, apart from giving HMRC a useful metric to demonstrate progress—if HMRC thinks this is the biggest part of the tax gap, then clearly it needs to be tracking this, showing the reduction over time—it also shows the public this is not just one more piece of tax law that may be more form than substance.

Particularly if you think about the Google tax law, for example, there is a growing sense of a lack of trust among the public that when tax laws are passed they are actually meaningful or meaningfully enforced. This is a great opportunity to go the other way, to make sure from the beginning that you will have that accountability and, to go back to your question, to have that in place in a way that is likely to drive behavioural change both of the immediate actors and facilitators but also of the wider public.

Professor Murphy: Can I make three brief points? The first one is that the law as drafted is going to be very difficult to prosecute. We have seen that from the Bribery Act 2010 on which it is based. The number of prosecutions is likely to be very low indeed. This is a strict liability offence—tax evasion triggers the potential liability. The defence that is provided is that there are systems in place. That means that the company—the corporate entity that permits the action—has a defence available to it. That defence will largely be available only to the biggest companies. They will have systems that can be easily documented. Most money laundering training systems now in place in large companies will provide an automatic defence to them: the defence is that they have the systems in place and that there was a bad apple who did the wrong act. Therefore, I think the chance of prosecutions against large companies under this Bill is remote in the extreme.

I think at most this will reinforce the impression that smaller companies are subject to penalty and larger companies are not. First, the chance of prosecution is low because the amounts of money involved will not attract SFO attention—by and large the SFO goes for high-profile cases and there will not be many here that can be prosecuted. Secondly, the behavioural change resulting from this Bill will be very low indeed. There are vastly better ways to achieve behavioural change in this Bill.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Q One of the attempts to deliver that kind of behavioural change is among the new clauses I am submitting. Will they garner your support for asking the Secretary of State, for example, to make an annual report to Parliament about unexplained wealth orders, to make it a duty to prevent corruption, and to establish quite swiftly a publicly accessible register of beneficial ownership of UK properties? Do you think the good intentions of the Bill could do with a boost to make sure the foot is on the accelerator on some of this?

Professor Murphy: I would entirely agree with a number of points you make. In fact, I would support all those measures. I do not need to comment further; they would all help.

It is clear that transparency is of enormous benefit. The biggest problem with regard to transparency in this country is that 400,000 companies a year in the UK do not file an annual return with the Registrar Of Companies and do not file accounts as required by law. We have no idea what those companies do. They are struck off. It is assumed they have no tax liability, so it is just assumed they have not traded. That is a completely unreasonable assumption for the registrar to make. HMRC does not pursue these companies. I did some research in 2014 on the recovery of penalties imposed on these companies for non-compliance. More than 99% of the penalties imposed were not paid.

In other words, we have an enormous hole in our economy, so we cannot rely upon these systems of registrars and beneficial ownership. The proposed register of beneficial ownership in the UK is simply a voluntary honesty box arrangement, because there are only four extra people being tasked to monitor it. When 400,000 companies do not even file a return, which is where they would disclose their beneficial ownership data, the chance that we will have reliable information is incredibly low indeed. We have to get down to very basic levels to get this right.

I am not saying that the Bill is wrong, but in terms of direction of effort, parliamentary time and resources, there are many more important tasks that would bring about the behavioural changes that Alex has talked about that would encourage compliance.

[Roger Mullin]

Q I have been concerned for some time about the Scottish limited partnerships and similar vehicles. To what extent do you think that there are particular types of business formations that are most susceptible to criminal activity and tax evasion?

Alex Cobham: This is one of the interesting features of the Bill. If the Government were a relevant body, I think the continuing provision of Scottish limited partnerships would make it very easy to prosecute the Government for facilitating evasion. The work of Richard Smith and David Leask, who I think will be giving evidence later, is very clear on this point. Something like one in four limited partnerships in the UK, but about two in three of Scottish limited partnerships, are structured in such a way that one of their partners is an anonymous company registered in a secrecy jurisdiction.

That is the perfect model for unaccountable business, unaccountable ownership of assets and income streams that may be criminal. The effective facilitation that the UK provides in that way is simply unacceptable. What is good about this Bill is a very clear recognition that that facilitation is unacceptable; what is missing is application to the Government themselves. I think the only consistent action would be to make impossible the use of anonymous partners for limited partnerships.

Professor Murphy: I agree with all that. I extend the concern to the limited liability partnership. I have been a partner in limited liability partnerships and they potentially have a very useful commercial role—they are tax transparent in a way that is very important, which is why I used one. The truth is that they are also used extensively by offshore agents, again using anonymous companies, to create structures that look as though they are present in the UK and give them an air of credibility. In fact, they are entirely controlled offshore and can be used for abuse. Both need a significant review. I can see no legal or commercial justification at all for limited partnerships in terms of their current use. Limited liability partnership legislation needs explicit change to make sure that it cannot be abused.

[Roger Mullin]

Q You mentioned a review, so I take it that you would support the new clause we have tabled calling on the Government to have a specific review of Scottish limited partnerships?

Professor Murphy: Yes.

[Roger Mullin]

Q You have mentioned the issue of money laundering and have given us an estimate of the tax gap. Do you have any estimates of the extent of money laundering in the UK?

Professor Murphy: The money laundering estimates that are available—for example, peer-reviewed work undertaken for the World Bank—would suggest that the UK has a shadow economy of about 10% of GDP. Curiously, that is very consistent with the data reported by HMRC with regard to VAT abuse, where the figure consistently runs at around 10%. It is absolutely impossible that you can lose 10% of VAT and end up with an overall tax gap of 6.4%, by the way. You cannot lose 10% of the top line and yet end up collecting the tax elsewhere. There is no accounting mechanism for that income to reappear in the national profit and loss account to be taxed further down the system—I say that as a chartered accountant. Therefore, absolutely on a basic methodological and logical level, HMRC’s estimates have to be wrong, but around 10% is likely. We are relatively low in that figure, by the way; as a contrast, in Germany the figure is 16%.

Alex Cobham: On the money laundering point, an informal or shadow economy of 10% is not out of line with a number of other high-income countries, but at least anecdotally, the number of times that UK vehicles crop up in foreign criminal cases seems disproportionately high. It is true that because the UK has been a leader to an extent in transparency it is easier to do some of this analysis involving UK companies, but that would also be a reason why they should not be used by people committing crimes and yet, they still seem to be. I think you would probably conclude that at the moment, although the evidence is not consistent, it is likely that the UK is disproportionately important in national money laundering. How disproportionately so is completely uncertain and, again, that makes the case for a review.

Professor Murphy: We do have a disproportionate number of companies per head in the UK compared with any other European country.

[The Chair]

Can I point out that four Members are still asking to get the floor and you have 10 minutes left?

[Antoinette Sandbach]

Q Professor Murphy, I want to come back to your evidence that the new offence of corporate liability will effectively target small or mid-range companies. In relation to the “bad apple” point you made, do you accept there is still reputational damage for a company if one of its employees is charged, and that that in itself may make big companies’ compliance far more rigorous?

Professor Murphy: That is obviously true. No company wants to appear on the front page of a newspaper and no company wants to be prosecuted. I have spent quite a lot of time in the last year or two talking to large firms of accountants—names you will be familiar with—and large companies about their response to the sea change in public attitude towards tax, and I am reasonably convinced that they have noticed that there is reputational risk to them, and that they are changing their behaviour as a result. To that extent, I feel that this legislation is a little too late, in the sense that they are trying to steer clear of some of these activities as fast as they can. Again, that is a reason why I think the impact will be on smaller businesses. The largest ones will have learnt how to get rid of the risk.

[Antoinette Sandbach]

Q If I can go back to the smaller business point, I do not know if you were here when I asked Simon York about the other end of the scale. Some tax evasion is not for the purposes of evading tax—the purpose is to evade other liabilities that follow on from declaring taxable income. That can be supported by small accountancy firms that may not apply regulations as rigorously as they should do. Do you think this offence will have a deterrent effect on the smaller and mid-range companies?

Professor Murphy: I think it will. The reason why is that it is a strict liability offence: the existence of evidence of tax evasion is sufficient to prove liability without motive being questioned. That could be important in certain cases. I can think of a very recent example—it has been in the press—where somebody has not paid tax quite deliberately, it seems, out of a company for which they were responsible. It would make it easier to prosecute in those cases. It will have a deterrent effect. I do not have a problem with strict liability offences for that reason. I know many in my profession do.

[Nic Dakin]

Q You both spoke earlier in giving evidence about the great opportunity to bring about behavioural change or improve compliance. Are there measures we ought to be looking at in this legislation that you would like to see us take the opportunity to put in?

Alex Cobham: I would say it is the reporting of it. If the Bill is seen as having made it on to the books without driving any serious change either in the way that HMRC operates and the extent to which it looks at enablers or in the ultimate prosecutions and revenue recovery, or if there is a perception of that even without that being the case, that is a missed opportunity in terms of how much impact it has. There needs to be a requirement for consistent reporting of the numbers of prosecutions, and of the transition between prosecution of evasion cases and, for each of them, whether there is a related prosecution of the enabler or not. If the second number is a very small fraction of the first number consistently, there needs to be space to come back and review, but at least having that will drive attention.

Professor Murphy: I would make the non-provision of accounts and a corporation tax return a strict liability offence for tax evasion under the terms of the Bill. I would also require a provision that is very similar to one we are demanding internationally, which is that banks simply report each year to HMRC which companies they provide services to.

We will next year be in the absurd position that HMRC will get more information on a company owned by a British person in the Cayman Islands than they will on a company owned by a British person in Stockport, because there is automatic information exchange from the Cayman Islands and there is not within the UK. If banks were required to provide information to HMRC on which companies they provide services to and the simple value of sums deposited in a bank account each year, we would know which companies were trading and therefore which were due to file accounts and which were due to submit a corporation tax return. Failure to submit would be a strict liability offence. Nothing would scare the accountancy profession or small company directors more than that. Make them personally liable for the tax not paid at the same time and you have solved the problem of tax evasion virtually overnight. It is simple.

[The Chair]

We have only five minutes left, so I will ask the three Members who want to speak to ask their questions first, and then you can reply. You will get a copy of the minutes, which will include any questions that you did not have time to answer.

[Victoria Atkins]

Q Professor Murphy, there is good precedence in the world of health and safety, where companies are prosecuted for causing workplace fatalities and accidents or bringing about an environment in which they occur. Do you agree that that success in health and safety bodes well for sending out the message to corporate entities that tax evasion is not permissible and will be prosecuted where evidence of it exists?

[Richard Arkless]

Q Professor Murphy, you have highlighted the difficulty with the Bill’s proposals on tax evasion in relation to corporate economic crime. Your solution would be a position of strict liability. Do you see any case to extend the provisions on corporate economic crime beyond tax evasion, leaving aside the problem of strict liability and enforcing it? Is there a case, for example, to extend the provisions to catch people who rig the LIBOR market, or perhaps mortgage brokers who fraudulently completed application forms that caused the mess we are in? Do you think there is a case for extending corporate economic crime beyond facilitating tax evasion?

[Peter Dowd]

Q On resources for agencies—enforcement or otherwise—in relation to prosecutions and chasing up, do you believe that the authorities have sufficient resource to do their job, or are they just misdirecting the resources that they already have?

[The Chair]

You have only two or three minutes to answer, so please be very brief. If you want to give fuller answers to Members, you can write to the Committee Clerk and we will make sure that all Members get a copy.

Professor Murphy: One brief answer—yes, it is effective. I think there are more effective mechanisms available but I am not disputing it has a behavioural consequence. I am afraid I am not expert enough to comment on the other areas. I simply am not an expert on mortgage fraud or LIBOR in that area. I am a tax specialist not a criminal finance specialist.

Does HMRC have enough resource? No, clearly, it does not. It needs to have a lot more resource and to be seen in local communities so that people realise that the threat is personal in that sense, but it is going in the wrong direction of travel at present. It is the risk of being caught that changes behaviour at the criminal end of activity, and transparency would expose that. That is why I think creating the smoking gun of information is the critical measure that needs to be taken to give HMRC a chance to identify those who are creating most risk.

Alex Cobham: We have a report out with the Public and Commercial Services Union, being launched across the road this afternoon, that says exactly that HMRC neither has enough resources and nor are they appropriately allocated to deal with the relative prioritisation that we think it should have.

[Mr Wallace]

Q The ARIS scheme allows HMRC, the investigators and the prosecutors to keep 50% of the proceeds of any confiscation. If the Bill leads to further confiscation, would you say that therein lies some of the solution that you are going to highlight across the road? If they will be able to keep what they recover, will unexplained wealth orders, for example, or seizures improve their budgets?

Alex Cobham: That seems potentially helpful, but I think you would be wise to look at the bigger question of whether HMRC is appropriately resourced given the bang per buck that it actually gets in different areas, rather than having just that one measure in mind.

Professor Murphy: I would rather have no crime and no proceeds than fund collection through increased recovery.

[Mr Wallace]

Q Unlike Corbyn economics, we live in the real world.

Professor Murphy: But it is the wrong direction of travel.

[The Chair]

I thank the witnesses for coming to answer Members’ questions. If you wish to give fuller answers, please submit them to us in correspondence.

11:25

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at half-past Two o’clock.

Criminal Finances Bill (Second sitting)

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

The Committee consisted of the following Members:

Chairs: Mrs Anne Main, †Sir Alan Meale

† Arkless, Richard (Dumfries and Galloway) (SNP)

† Atkins, Victoria (Louth and Horncastle) (Con)

† Dakin, Nic (Scunthorpe) (Lab)

† Davies, Byron (Gower) (Con)

† Dowd, Peter (Bootle) (Lab)

† Drummond, Mrs Flick (Portsmouth South) (Con)

Elphicke, Charlie (Dover) (Con)

† Ghani, Nusrat (Wealden) (Con)

† Griffiths, Andrew (Lord Commissioner of Her Majesty's Treasury)

† Harris, Carolyn (Swansea East) (Lab)

† Hunt, Tristram (Stoke-on-Trent Central) (Lab)

† Huq, Dr Rupa (Ealing Central and Acton) (Lab)

† Mann, Scott (North Cornwall) (Con)

† Mullin, Roger (Kirkcaldy and Cowdenbeath) (SNP)

† Sandbach, Antoinette (Eddisbury) (Con)

Vaz, Keith (Leicester East) (Lab)

† Wallace, Mr Ben (Minister for Security)

† Wood, Mike (Dudley South) (Con)

Colin Lee, Ben Williams, Committee Clerks

† attended the Committee

Witnesses

Anthony Browne, Chief Executive, British Banking Association, Nausicaa Delfas, Director of Specialist Supervision, Financial Conduct Authority, Amy Bell, Chair, Law Society Money Laundering Taskforce, and Head of Compliance and Training at Quality Solicitors Jackson Canter

David Leaske, Chief Reporter, The Herald, Toby Quantrill, Principal Economic Justice Adviser, Christian Aid

Right hon. Dame Margaret Hodge MP, Chair of All-party Parliamentary Group on Responsible Tax

Tom Keatinge, Director, Centre for Financial Crime and Security Studies, Royal United Services Institute, Dr Susan Hawley, Policy Director, Corruption Watch, Chido Dunn, Senior Campaigner, Global Witness, Duncan Hames, Director of Policy, Transparency International UK

Public Bill Committee

Tuesday 15 November 2016

(Afternoon)

[Sir Alan Meale in the Chair]

Criminal Finances Bill

Examination of Witnesses

Anthony Browne, Nausicaa Delfas and Amy Bell gave evidence.

14:30

[The Chair]

We will continue with oral evidence from the British Bankers Association, the Financial Conduct Authority and the Law Society. We have until 3.15. I had better warn you before we start that there were lots of questions in the session earlier today, so please try to be succinct in your answers. I must also warn you that there is likely to be a vote at 3.15, coinciding with the end of your session. We will have to adjourn, go to vote and then come back. Hopefully you will be able to escape before then. Can you please introduce yourselves and tell us about your role?

Amy Bell: I am the chair of the money laundering taskforce at the Law Society. I am a solicitor. The taskforce comprises a number of solicitors and professionals dealing with money laundering, and we provide support for the Law Society on matters of policy and interpretation of the legislation.

Nausicaa Delfas: I am Nausicaa Delfas. Until last week, I was director of specialist supervision at the FCA, responsible for financial crime supervision. I am now executive director at the FCA and acting chief operating officer.

Anthony Browne: I am Anthony Browne, chief executive of the British Bankers Association. Despite our name, we represent banks operating in Britain, rather than just British banks. That includes all the foreign banks. I am not a financial crime specialist, and I should say that if there are questions needing follow-up, we will provide written evidence afterwards.

[The Chair]

Before I call Dr Huq, I want to apologise to you; the Minister is involved in the debate in the Chamber at the present, as is the Whip, who is also on the Committee. Hopefully they will be able to attend, but perhaps not during your session.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

Q 7070 Thank you for coming to give evidence. To continue the thread, although I guess you were not here this morning, I will compare some of your answers to what we heard from the panels then. Part 3 of the Bill would create a new criminal offence to prevent the facilitation of tax evasion. Quite a few of the stakeholders who provided evidence to the HMRC consultation do not think that that is necessary. Why do you think that might be, and do you think that it is needed or not?

Nausicaa Delfas: If I can answer from the FCA’s perspective, we would be looking at systems and controls in banks in any event. Tax evasion is a predicate offence to money laundering, so that is something we would look at in any event, but we do not have a view on the provision in the Bill; it is just our perspective.

Anthony Browne: We are not convinced that it is necessary, but we are not opposed to it, and we accept it. We think it is probably better to lead as a regulatory approach with the co-operation of the regulators and the banks in a partnership way, but we accept the Government’s wishes to do it.

[Dr Huq]

Q So it is a good step up, but it was not absolutely necessary?

Anthony Browne: We think that it would be better to use regulation to enforce this, rather than creating a criminal offence for banks as such, although there are also already criminal offences for individuals.

Amy Bell: Our view is that there is already a predicate offence in relation to this, but our tax law committee has been involved, and they are generally happy with the drafting.

[Dr Huq]

Q There is also evidence that since 2009, a lot of specialist trained investigators of financial crime who were trained on the public purse have jumped ship and gone over to the commercial sector, some of them even to gambling. An amendment that we are tabling would keep people within—I cannot remember the exact wording, but they would have to repay the cost of training. Do the three of you have any thoughts on that and potential poaching?

Nausicaa Delfas: I do not have a view on poaching, but we have accredited investigators at the FCA.

Anthony Browne: I do not have any views on this, but I can ask my members about it. There is clearly circulation between law enforcement authorities generally and banks on a two-way basis, in the sense that people at banks go to work for law enforcement authorities and vice versa. If you ask the law enforcement authorities and certainly the banks, it is actually very valuable to get that exchange of information, insight and expertise across the two. This is partly a development of the fact that the battle against financial crime, to which the banks are very committed, is a lot more of a partnership now.

Law enforcement authorities see that the banks are fully committed to this and working to the same ends. We have the same goal in mind: banks do not want to handle illicit money. Bringing the expertise of law enforcement experts within the banks helps the battle against financial crime. I do not have a view on the costs of training.

Amy Bell: We do not have a view on that either. It is not something that we see very often, people coming from law enforcement into solicitors’ firms. It happens occasionally but not on a widespread basis. We prefer investigators.

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

Q A lot of research indicates that about 70% of major organisational crises are caused by culture. Why has the FCA scrapped the proposed review of the culture of banks? How is that going to assist in an attack on criminality?

Nausicaa Delfas: You are aware that the FCA is looking at culture with each individual institution. Although we would not be conducting that particular piece of work, we are doing other work. In terms of the Bill, I do not have anything further to add.

Anthony Browne: It was an investigation into the culture of retail banking and it was a decision for the FCA what it did with it. We did not ask for them not to do it at any time and would have been very happy for them to do it. As Nausicaa said, the FCA does a lot of work on culture already. The banks are doing a lot of work on culture through a lot of different means. We completely agree with your assessment of the importance of culture and of getting a better culture in banking. That is why from the chairmen and chief executives down they are spending so much time, effort and money trying to improve the culture in banks.

[Roger Mullin]

Q I will try another familiar area. There has also been removal of a proposal regarding the reverse burden of proof. How is the removal of that proposal going to assist in an attack on holding people responsible for criminal behaviour?

Nausicaa Delfas: That was a matter for the Government and legislation. There are still protections within the regulations to address senior management responsibility.

[Roger Mullin]

Q Are you content with what exists?

Nausicaa Delfas: Yes.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Q I would like to push Ms Delfas on the point about banking culture. Do you see a link between banking culture and criminality? Do you think that a bad banking culture—to put it in layman’s terms—could be a conduit for criminality, or could exacerbate the potential for criminality in the financial sector?

Nausicaa Delfas: Obviously, we regard banking culture as incredibly important. We believe that it should be driven from the top down. We have not seen connections with criminality. We actually see that a lot of the sector operates well. Where there would be any issues around crime, they would obviously need to be detected and rooted out.

[Richard Arkless]

Q Do you agree with the Government’s decision to row back from the oversight committee and the reverse burden of proof? You rightly mentioned that it was a decision by Government. Do you agree with that decision?

Nausicaa Delfas: The regulations operate well as they are. Obviously, cases need to be made but I question what this has to do with the Bill.

[Richard Arkless]

Q The inference is clear. There is a link between banking culture and a financial system with banks being susceptible to criminality. I think it would be remiss for us to ignore that dynamic.

Nausicaa Delfas: What is really important here and what the Bill really promotes is how best to detect and prevent the financial system being used for financial crime. I think that should be our focus, so that many of the Bill’s provisions such as information sharing actually help to make the system more effective, so that crime and money laundering can better be detected and better information be given to law enforcement agencies to be able to deal with the issue. I think that is the focus here and that is absolutely right.

[Richard Arkless]

Q We heard evidence earlier that the new provisions for corporate economic crime may disproportionately impact smaller organisations, the theory being that larger organisations would find it easier to demonstrate protocols and processes that they could use to rebut the allegations that employers and their systems have failed to flag it up. Is that something that your members have discussed and that you have a view on? This may well be obvious, but as a former consumer lawyer, I can tell you the amount of times that big banks used to roll out their processes and protocols in defence of various actions, which smaller companies found it hard to do. Is that something that concerns you that might impact widely and disproportionately on your membership?

Anthony Browne: I agree with the general principle of your question. I have not had discussions with my members regarding this Bill. In terms of regulation more generally, there is no doubt that it can often benefit large organisations at the expense of smaller ones for exactly the reasons that you claim. It can act as a barrier to entry for smaller banks or as a barrier to growth for exactly the reasons you say: they do not have the resources, scale or internal expertise to deal with some very complex issues. The more complex a regulation is, the more that issue will be realised, as it were.

It is important to distinguish between proportionality ––we support proportionality of regulation––on the prudential side and proportionality on the conduct side. Proportionality on the prudential side, in terms of the capital that banks have, is a more straightforward issue. On the conduct side, it is quite difficult to argue that there should be lower standards for smaller banks because then the criminals or the misconduct would all be focused at smaller banks and you would create an unintended consequence. We massively support competition in the banking sector. We have done a lot of work to try to ensure that there is a level playing field and to remove any barriers to growth or entry.

[Richard Arkless]

Q Do you think that your members are in favour of the Bill’s corporate claim provisions? How do you think your members would react to those provisions being extended beyond tax evasion?

Anthony Browne: As I said in response to the question from Dr Huq, we do not think it is necessary, but we accept it and we have worked very closely with the Government on it. We are doing tax guidance–– 60 pages of guidance for banks to help them comply. In terms of extending it to a general criminal offence in respect of facilitating economic crime more widely, I just make this observation. There are lots of different bits of regulation and legislation on different elements of financial crime. There is tax evasion, counter-terrorism finance, money laundering and bribery. They all operate in a different way, and we would like to see a more coherent view of financial crime more generally. This is a longer term aim and this Bill is part of it. They are all different aspects of financial crime, so we are not opposed to the broad principle of extending it but we would say that it would need very careful consultation. You would need to think through very carefully how it might operate in order to make sure that there are no unintended consequences because there are a lot of very detailed complexities. You need to make sure that it would work effectively in the way that you, Parliament and the Government intend.

[Antoinette Sandbach (Eddisbury) (Con)]

Q Back in 2012, Coutts was fined £8.75 million by the FCA for systemic failings that had resulted in an unacceptable risk that it had handled the proceeds of crime. Do you think part 3 of the Bill will effectively address those risks at a banking level? In the not so distant past, we had HSBC Switzerland accounts being used to evade UK tax. Are you confident that the measures in part 3 will address those systemic failings in the banking sector?

Nausicaa Delfas: The Bill’s provisions will certainly help law enforcement to address these issues and, by virtue of that, will also have an impact on the banks themselves.

[Antoinette Sandbach]

Q Will they help you as a regulator?

Nausicaa Delfas: From our perspective, the areas that will particularly help us are information sharing, which I mentioned—so greater effectiveness in the anti-money laundering regime to detect and prevent instances of money laundering—and the civil recovery powers being extended to the FCA in line with those of other law enforcement agencies, so that when we undertake investigations we are able to move forward and take the civil recovery as well. That will help the FCA.

[Antoinette Sandbach]

Q The corporate responsibility obligations are only on tax evasion. They would not pick up issues around the LIBOR scandal, for example. Do you think any other measures are needed in the Bill or are you satisfied that it provides the appropriate tools?

Nausicaa Delfas: From our perspective, it is not so much a matter of powers. To go back to information sharing, the one proposal we would make is for the threshold for sharing information to be lowered, so that institutions can share information when they see unusual activity and not just when they actually have enough information to have a suspicion, because then they have to file a SAR. I know that there would need to be safeguards and that we would need to look into the matter in more detail, but the biggest benefit from our perspective would be to enhance that and therefore get better quality, rather than quantity, of information going to law enforcement.

[Antoinette Sandbach]

Q Mr Browne, you spoke about other pieces of legislation. Those have clearly not stopped the kind of matters that I referred to, in terms of the way the law has been interpreted or applied by your members. You said that you felt your members would be willing to have the scope of the Act extended to a broader economic crime.

Anthony Browne: You raised the question of LIBOR. Legislation was brought in after LIBOR to deal specifically with that. I should say more generally that we support almost everything in the Bill to different degrees. As banks, we are totally committed to combating all forms of financial crime. We spend in excess of £5 billion a year doing it and we want to make sure that that is as effective as possible. We have thousands and thousands of staff who deal with it. We support provisions such as information sharing, undisclosed wealth orders, disclosure orders and so on—we can talk about those in more detail later, perhaps.

In terms of widening the criminal offence to prevent wider economic crime, my point was that it is very complicated when you get into the details. We would caution against introducing it suddenly without detailed consultation about how it might operate or not operate. There is a very complex constellation or jigsaw, with lots of different interlocking bits of legislation and regulation on financial crime. Putting a blanket thing on top could make it less effective and lead to unintended consequences.

[Antoinette Sandbach]

Q Ms Bell, do you think part 3 of the Bill will affect your members more, particularly the high street firms that may be caught by its provisions?

Amy Bell: I echo what the BBA said in relation to the smaller firms and their resources to implement these things. We in the Law Society provide quite a lot of support for the smaller firms—the high street firms. In relation to these kinds of offences in particular, we published a toolkit when the Bribery Act 2010 was being implemented to help our members to implement the Act.

[Antoinette Sandbach]

Q But should not your members be aware of what constitutes tax evasion?

Amy Bell: Yes, sorry—the reasonable provisions. Sorry, I am talking about the procedures that they need to put in place. That is the part that would be difficult for smaller firms that do not necessarily have compliance departments to help them with that. We are talking about practitioners on a day-to-day basis. They will absolutely understand the law but it is about what reasonable preventive provisions they need to put in place.

[Antoinette Sandbach]

Q And you are providing guidance on that, or you will do.

Amy Bell: Yes, absolutely.

[Victoria Atkins]

Q (Louth and Horncastle) (Con): Just to pick up on that point, tax evasion is tax evasion, whether it is committed by small companies or large companies.

Amy Bell: Yes, of course.

[Victoria Atkins]

It involves an element of dishonesty. So any member of your profession or any other business who is conducting tax evasion is liable to be prosecuted in the criminal courts. I am slightly concerned about that distinction, that tax evasion conducted by small companies is not quite as bad as tax evasion conducted by large companies.

Amy Bell: No, I do not mean that. I am talking about the implementation of the provisions and the requirement to have reasonable procedures in place. Absolutely, tax evasion already is a crime. Picking up on what you were saying about the implementation of measures, I am talking about whether preventing corporate tax evasion is prohibitive for smaller businesses. But that is about guidance, and it is our role at the Law Society to help our members understand what is necessary.

Anthony Browne: I would like to make it clear, lest there is any question about my response, that although we want to ensure that there is as much competition in the banking industry as possible, the point I made about proportionality in terms of conduct being problematic is exactly that. Tax evasion is tax evasion; it does not matter how large the firm is that is doing it. Mis-selling to customers is mis-selling; it does not matter how big the firm is. The sort of protections you need against misconduct apply to all sizes of firm.

[Peter Dowd (Bootle) (Lab)]

Q This question is not specifically directed at you, Ms Bell, but I notice that you are the head of compliance and training at the Jackson Canter Group. One of the new clauses we have before us relates to the National Crime Agency making a report to Parliament about the training it provides to its staff on financial investigation and the operation of the Proceeds of Crime Act 2002. In a more general sense, what is your view about the whole question of training within, let us say, the finance sector, in relation to the issues before us? Do you think there is enough training? Too much? Give me a view about that.

Amy Bell: In relation to anti-money laundering?

[Peter Dowd]

Yes, take that for a start.

Amy Bell: We are fortunate to have the Solicitors Regulation Authority recent thematic review, which looked at that in some detail in relation to the legal profession. The authority visited 250 firms of varying sizes that it considered to be high on its risk rating, either because they were very large or because they already had some identified issues. In those firms it saw good levels of training and that people understood their obligations under the regulations—that systems were in place to enable people to do that—and about suspicious activity. So we have some qualitative data from the Solicitors Regulation Authority that show that in the legal profession training is taken very seriously and is effective.

[Peter Dowd]

Q May I ask the other two witnesses their view about training in general? By training I might mean awareness and the extent of trying to prod that awareness within the industry.

Nausicaa Delfas: My observation, from our work through supervision, is that firms take the matter very seriously and devote a lot of resource to anti-money laundering controls and related training.

Anthony Browne: I have not had a direct conversation with my members about the amount of training in terms of financial crime, but they put a huge amount of time and effort into it. There is absolutely no point in having regulations on anti-money laundering or anything else unless staff are properly trained to be aware of it and know what to do and when. The banks expend a lot of effort in ensuring that their staff are competent in carrying out those roles.

[Peter Dowd]

Q Do you think that the amount of training within the system fits the Bill, so to speak? Is there enough there?

Anthony Browne: There are certainly a lot of training providers. I should declare an interest here in that the BBA provides training, although we are a tiny part of the whole. Larger banks tend to do in-house training. There are a lot of third companies, external to banks, that provide training. There could be an almost unlimited supply of training, so I do not think that that is a constraint.

Nausicaa Delfas: We have talked about training in firms but there also is training for investigators exercising the powers in the Bill and other legislation. There is accreditation and monitoring of them, so the system is robust.

[The Minister for Security (Mr Ben Wallace)]

Q Thank you very much for your input into the formation of the Bill. It helps the Government, and hopefully the Bill reflects some of that. I am keen to find out from the regulated sectors and the professions what you envisage could or would happen to any one of your members should they be convicted of the offence of corporate tax evasion or money laundering. What penalties are available to you to deal with either law firms or the individuals who could be convicted?

Amy Bell: In relation to law firms, while the Law Society is the named supervisor, we delegate enforcement responsibilities to the Solicitors Regulation Authority. Its powers are incredibly wide and include restricting or stopping a firm from practising, intervening in a firm, closing the firm down, stopping the individual solicitors involved from being able to practise and ultimately referring them to the solicitors disciplinary tribunal, where they can lose their right to practise and be removed from the role. Quite serious options are open to the SRA.

[Mr Wallace]

Q And for the banking and financial sector?

Nausicaa Delfas: From our perspective, obviously, individuals could be prohibited from the industry. In terms of firms, there are significant fines and reputational damage.

[Mr Wallace]

Q And they could potentially lose their banker’s licence, if they are a bank.

Nausicaa Delfas: Removal of permissions, yes.

[Mr Wallace]

Q Ultimately, if an international bank loses its British banker’s licence, what does it mean for that bank in the global world? Is it usually the case that if they lose their banker’s licence in a developed market, it is pretty much curtains for them in the rest of the world?

Nausicaa Delfas: It would have a significant impact, yes.

Anthony Browne: If you lost your licence to operate in London, it would clearly have a dramatic effect on an international bank.

[Mr Wallace]

Q Do you think some of the overseas offences here will have a change of behaviour effect on foreign-owned banks that operate here as well? Ones that may previously have been able to exploit their jurisdiction elsewhere will find that the stakes are higher for them.

Nausicaa Delfas: Undoubtedly so. Obviously, where controls are exercised from the UK, those powers already exist, but this certainly goes further.

Anthony Browne: One aspect of the criminal offence of failing to prevent tax evasion about which we do have concerns is its extraterritorial impact and the degree of extraterritoriality. For example, if a US citizen who is a customer of a US bank operating in the US evades tax in the US and that US bank has a branch in the UK, the entire US bank could become criminally liable for an action that has no nexus in the UK whatsoever—it is a US citizen, US tax and a bank operating in the US under US law. The same goes for Japan, and so on. Effectively, that would place us as regulators for jurisdictions overseas. The US Department of Justice, for example, does not have such authority over UK banks operating in the US. It could have a dramatic impact on the UK’s competitiveness as an international financial centre.

[Mr Wallace]

Q But the US regulator does have a say in things like foreign and corrupt practices over examples such as the one you used. You do not have to have an entity with their extraterritorial reach in their other legislation.

Anthony Browne: It has to be a nexus in the US, I think. That is my understanding of that, but we can get back to you on the detail of it. Our understanding is that there no legislation which has this impact, in the sense that it is entirely extraterritorial without any nexus. It does not involve UK taxes, UK citizens, UK banks or UK laws.

[Mr Wallace]

Q But we do not really want tax evaders anywhere, do we? We do not want to allow tax evaders to rob other countries of their wealth either. We do not want to be a permissive society.

Anthony Browne: No, but obviously, the US, Japan and other countries have very sophisticated tax evasion laws already. Getting them to comply with two different laws simultaneously on a global basis, for both the UK and other jurisdictions, would have quite big implications. I do not know whether you have spoken to other Governments about the impact of this.

[Mr Wallace]

We have not had any representations from the United States objecting to this.

[Roger Mullin]

Q I would like the panel’s views on whether there is a case for strengthening protection for whistleblowers in the financial sector.

Anthony Browne: The protection for whistleblowers has just been strengthened in the financial sector. Ms Delfas might know more about it. We have been working with the regulators to ensure that each bank has a proper independent whistleblowing regime that does exactly that: protect whistleblowers. There is a senior manager or a board director who is a champion of the whole whistleblowing regime within the bank. That is a process that we have been going through over the past 18 months or so, to strengthen it.

[Roger Mullin]

Q Are you satisfied it is working satisfactorily?

Anthony Browne: I know that, as the banking sector, we think that it is a lot stronger. It is very important to have a strong whistleblowing regime. It is an important part of improving the culture of banks and preventing wrongdoing. We have been working with the regulator on this, so you should ask the regulator.

Nausicaa Delfas: I agree that the regime has been strengthened. We regard it as very important. It feeds into work on culture in banks as well. I would be interested if you thought it should be further improved.

Amy Bell: I cannot comment, unfortunately, in relation to the financial sector. In relation to the solicitors’ profession, we do have in our regulations the obligation for people to report serious misconduct. We do not have any specific whistleblowing provisions but that is not something we have encountered an issue with.

[Nic Dakin (Scunthorpe) (Lab)]

Q From the evidence we had this morning I formed the opinion that there is a view that banks are pretty good at spotting irregularities and bringing them forward to the authorities but other parts of the regulated sector are less proactive in that way. That seemed to be what was coming through the evidence this morning. Does that ring true to you? Are the measures in this legislation likely to improve the performance of other parts of the regulated sector?

Anthony Browne: We think it is important that the Government and law enforcement authorities use all the tools that they can to combat financial crime and not just rely on banks. I would agree with the assessment that banks do an awful lot; we certainly do an awful lot. It is important that you do not underplay or pay too little attention to other sectors—not just lawyers but accountants and estate agents. There are lots of different groups that get involved with this. They can all play their part against financial crime. We should all play our full part in that way.

Nausicaa Delfas: I agree with that. I obviously cannot speak for the other professions but we are aware that there are about 400,000 suspicious activity reports filed with the NCA each year. The vast majority of those, I understand, come from the financial sector. Obviously, perhaps more could be done. I go back to the point that that is a huge number. It is a quantity issue and we would urge any changes that could be made to improve the quality of those so that there are better leads for law enforcement.

Amy Bell: We have to be careful in judging the numbers of suspicious activity reports. The Financial Action Task Force and the NCA’s predecessor, SOCA, were both clear that there is no right number of reports. It is fair to say that the vast majority of reports do come from the financial sector. They see patterns of financial activity that we do not see. I do understand that there is criticism levelled at the professions in relation to reports about clients that banks report but maybe the professions are not reporting, but that is because we see different parts of the transaction. That should not be underestimated.

Although I think we should continue to be vigilant, we need to be very careful about drawing any conclusions from the disparity in the numbers. I think the information sharing will help because that means that the bank can communicate with the regulated sector where they see things that will give data to the professions to be able identify suspicious activity.

[Peter Dowd]

Q This morning we had evidence from the National Crime Agency, the National Police Chiefs Council, the Met police SO15 counter-terrorism policing, Her Majesty’s Revenue and Customs, the Serious Fraud Office and the Crown Prosecution Service. To a man—they were all men, by the way—I would say that they looked at the Minister, gulped and said that they had enough resource to do their job. Will you give me a view from outside, so to speak, as to whether you get the sense that those agencies have sufficient resource to do their job, given that you presumably have pretty close relationships at points in the investigatory process?

Nausicaa Delfas: Every organisation has constraints around resources. The question is how best to deploy them. The more precise the information, powers and so on that can be given, the better, but there are constraints in all cases.

Anthony Browne: Clearly it is important that they are properly resourced. We submit about 80% or 90% of the SARs that are submitted—360,000 last year. One of our concerns as an industry is that they are not all followed through, and we get very little feedback about what follow-through there is. A huge amount of SARs are put in, but we have concerns about whether there is sufficient resource to follow up that suspicious activity.

As you know, there is a whole Home Office programme to reform the SARs regime to make it more intelligence-led and less of a tick-box exercise, and to improve the quality of the SARs rather than just the numbers. We totally support that but it will only work if there are enough resources to follow through. That is why one thing that we have proposed in a submission to the Government is a forfeiture for the proceeds of crime in bank accounts such that the money raised is used to add resource to the SARs regime.

Amy Bell: The well known difficulty with the SARs regime—the reporting system—is one of resource. I echo what my colleagues say in relation to the numbers of SARs that go in and the feedback we get, and I believe that is a resourcing issue.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Q This question might not quite fall within your competencies but I will ask it anyway, given your knowledge of law, finance and the City. It seems that one of the challenges in the current legal set-up is a kind of fear among statutory and investigative authorities about the cost of pursuing certain lines of inquiry, with all the legal ramifications if those who are pursued for unexplained wealth orders and so on are found innocent. How does it affect the culture of investigation within the City when there is a fear about reputational and financial impact on those pursuing those lines of inquiry? Do you have any thoughts on that either from a legal or financial stance? There is a chance to think about an amendment regarding capping the reimbursement of costs or not allowing for the costs.

Nausicaa Delfas: We are aware of the costs but I suppose we regard it as part of the discipline of litigation, so it is not exceptional. The capping idea is certainly interesting.

Amy Bell: I do not think we have a view on it, but we are happy to take it back and get in touch with the Committee if we have any views.

[Tristram Hunt]

Q I will pursue this slightly differently. Do you have any sense of the international comparisons? Is the UK behind the curve on these investigations or is it out in front?

Anthony Browne: I do not know.

[Dr Huq]

Q Can you think of anything that is not in the Bill that you would have liked to have seen in it? I was kind of thinking sideways—maybe enhanced supervision of the property market or something. I know that is not one for you three directly, but if there is anything you would like to see in the Bill, we are told that the Minister is in listening mode.

[Mr Wallace]

Always.

Anthony Browne: We broadly support this Bill and almost all the provisions in it. The one thing we would like to see changed in the Bill is the threshold for intelligence sharing, which is a point that Ms Delfas made earlier. It would be beneficial and make the regime more effective if you lowered the threshold for intelligence sharing. If there was activity that was just below the formal level of suspicion, so that banks do not deal with it as a suspicious activity report, if they could at that stage share intelligence with other banks like two pieces of a jigsaw, they could find out that something happening in bank A is also happening in bank B.

That could raise it to a suspicious activity and so enhance the intelligence sharing and make it far more useful and effective. We are worried that the way it is prescribed at the moment would actually be a lot less effective than either the Government or the banks want.

[Dr Huq]

Q Do you think that the £100,000 for an unexplained wealth order is about right as the threshold where that kicks in? Would you like to see it higher or lower?

Anthony Browne: I do not have a view on that, but I can get back to you.

Nausicaa Delfas: I do not particularly have a view but, certainly from our experience, the cases of money laundering tend to be of higher value. I do not have a view on the figure as such.

[Dr Huq]

Q Is there anything you would like to see?

Nausicaa Delfas: Yes, there are other points. I have mentioned the lower threshold on information sharing. There are other ideas that we have in terms of how the SARs regime could be improved so that it is better quality rather than quantity. One is information sharing. Other ideas would probably not be in the Bill but are for future thought. What are the incentives for people who are submitting the SARs? For example, there is criminal liability on an MLRO. Is that right? Obviously, it is a difficult question but there are certainly incentives to report defensively.

We have heard from banks other ideas in which we can see the merit, such as having a sort of centralised transaction monitoring system to be able to see how transactions are flowing through banks. That is another very big issue that would need to be looked at. Again, it would improve the effectiveness of the system.

There are other provisions such as reliance. A bank cannot rely on another bank’s due diligence of a customer, so the customer has to go through due diligence again with the second bank. There would be a question about whether legal liability on the second bank could be removed, so that it could rely on the due diligence of the first bank, provided it had done some checks.

All those things are ideas that we are happy to share, or have shared, with the Government for the future, in terms of improving the regime overall, its effectiveness and efficiency. Mr Browne mentioned that his members estimate that the current regime costs them about £5 billion. Things that can reduce the cost and relate to effectiveness are welcome.

[Richard Arkless]

Q You have made it clear that you are broadly supportive of the measures in the Bill and you have given the reasons why. I think most people in the Committee are broadly supportive. The point of contention comes when some of us do not think that the Bill goes far enough.

I am quite perturbed by some of the answers you have given in relation to what could be done to make it easier for the people you regulate or your members. I am not getting the impression that those are things that you think would make it easier to catch the criminals. Am I confused by this? It smacks of self-preservation. What I want to hear are things that we could put in the Bill to make it easier to catch the criminals, not to make your lives easier.

Nausicaa Delfas: I am not suggesting how we can make our lives, or anyone else’s, easier. I am suggesting exactly what you said: to improve effectiveness in terms of being able to produce useful intelligence that helps to prevent money laundering in the financial system. That is certainly our aim; it is not to make anything easier. I think the Bill contains good provisions that will go towards that aim. We can always think about these issues and what we can do in future. We are certainly supportive of the Bill.

[The Chair]

That brings to an end the time allotted for questions. I want to thank all the witnesses who have come forward to give evidence. At some point, copies of your evidence will be available. Thank you very much for attending.

Examination of Witnesses

David Leask and Toby Quantrill gave evidence.

15:16

[The Chair]

Thank you very much for attending. We expect a vote on the Floor of the House quite soon, so your evidence may have to be interrupted. Before we start, could I ask you to tell us about your background and some of the roles that you have in your industry?

David Leask: My name is David Leask. I am a newspaper reporter with The Herald in Scotland. I am here because I am very interested in the use of Scottish shell companies by tax avoiders and other unpleasant people in other parts of the world, particularly the former Soviet Union.

Toby Quantrill: My name is Toby Quantrill. I am the principal economic justice adviser with Christian Aid. We are here because we have been working in the area of financial transparency, especially with regard to tax, for over 10 years. We are members of a number of global coalitions of civil society—the Global Alliance for Tax Justice and the Financial Transparency Coalition—which include members from both the north and the south. Our concern is with the management of British overseas territories specifically and the problems that they cause with regard to financial secrecy and criminal activity, especially in developing countries.

[The Chair]

You informed me, Mr Leask, that you were defended earlier by one of our Scottish Members, who explained that you were the chief reporter of The Herald, not “The Glasgow Herald”. We were put right on that.

[Dr Huq]

Q Thank you for coming in, gentlemen. Part 3 of the Bill introduces a new criminal offence to prevent the facilitation of tax evasion.

15:17

Sitting suspended for a Division in the House.

15:32

On resuming—

[Dr Huq]

Before we were so rudely interrupted, Toby, because of the stuff you have published, I was going to ask you—this may also be relevant to David—about the new corporate offence, which will apply to tax evasion offences both in the UK and overseas. Will the foreign tax offence have a significant impact on developing countries?

Toby Quantrill: Potentially, yes. We very much welcome the extraterritorial nature of this. We would like to see this extended beyond tax evasion to all financial criminal activities—we are slightly puzzled as to why it is restricted in that respect.

The question will be implementation. As long as sufficient resources are put into implementation, we think this has the potential to have quite a significant impact around the world and in developing countries. So, yes, we welcome it.

[Dr Huq]

Q The same question about other jurisdictions—which Scotland might be if certain things continue going in one direction.

David Leask: The thing that we have been interested in at The Herald is the way in which some of these Scottish companies are directly marketed as a means of not paying tax. In that respect, when you have UK entities explicitly sold off the peg as a way of not paying tax, perhaps that is something that you will want to think about.

[Dr Huq]

Q How do you rate the risk posed to the Exchequer by illegal tax evasion? We heard different figures this morning: the witness from HMRC told us the tax gap was £5 billion and the professor said it was £70 billion. Do you have estimates on that?

Toby Quantrill: No, we do not take a particular view on the tax gap. It is clearly significant. There are many different ways of calculating it, but our main view is it is significant. It goes beyond pure resources and finance; this is about fairness and justice as well. It is about people everywhere in the world understanding that if they pay their taxes, so should everybody else.

[Dr Huq]

Q Christian Aid’s evidence keeps going on about the need for the beneficial registers of ownership to be made public. Will you stress again why you think it is important that it can be consulted when needed, and why it is not enough just to have it?

Toby Quantrill: As I said, we welcome the Bill overall. We very much welcome the leadership that has been shown by successive Governments. David Cameron especially at the G7 at Lough Erne put the issue of financial transparency and tax on to the global agenda, and the UK is the first of the G20 countries to create a public register of beneficial ownership, so that UK companies registered in the UK have to put on the public record who really owns them and who sits behind them.

Our concern is that this is a criminal finance Bill that does not address the question of our overseas territories and the role that they play in the global system of corruption and financial crime. That is strange and rather odd. We do not really understand why that has not been included. For us, what is really critical is that the company secrecy that is enabled in our overseas territories in places such as the BVI and Cayman Islands needs to be dealt with by doing exactly what we have done in the UK. We need to ensure that the registers of beneficial owners that are being created are put on to the public record and made public. We would like to see that done through this Bill or through some other process, but done with a clear timeline so that we know when it will happen, because that is not something that can wait. As I say, I represent civil society from across the world in many respects and there is a clear concern about the role the UK plays.

[Dr Huq]

Q Do you have a list of your investigations?

David Leask: No. Sorry.

[Dr Huq]

Q The Public Accounts Committee has raised concerns that there is not a sufficient number of successful prosecutions of offshore tax evasion for it to deter people effectively. Do you agree and do you think that the new corporate offence in part 3 will make a difference?

Toby Quantrill: I think it has the potential to make a difference. The critical thing is to avoid these things happening in the first place. It is important to have some sort of measure that creates the requirement to put in place the measures to stop this from happening. As I said, it is a measure that we welcome. We especially welcome the fact that it applies to the way that UK companies act anywhere in the world.

[Antoinette Sandbach]

Q I am not as familiar with the Scottish devolution settlement as you are, but I had always understood that Scotland had a separate legal jurisdiction.

David Leask: That is correct.

[Antoinette Sandbach]

Q Can that legal jurisdiction not regulate the Scottish companies that you refer to? Where does the ultimate responsibility for that regulation lie? Is it with the Scottish Parliament or with Westminster?

David Leask: You probably need to speak to somebody more qualified in the law than I am. I can tell you about what these companies do and why people want to own them. Obviously, the companies were created by this place more than 100 years ago and not by the Scottish Parliament. In terms of law enforcement rather than regulation, if you were to ask the police what they would do about this, I honestly think they would tell you that they would do very little, because the criminality, or sometimes the unethical behaviour, is being carried out outside the legal jurisdiction of Scotland.

[Antoinette Sandbach]

Q I accept that, but what I am asking—it may well be that you do not know the answer and we need to get that from elsewhere—is whether company law is devolved in Scotland.

[Hon. Members]

No.

[Antoinette Sandbach]

My suggestion was that, given that there is a separate legal jurisdiction, there is the power already in Scotland to deal with these matters, but I see my colleagues are shaking their heads. To that extent, would the changes, particularly in part 3 of the Bill in terms of corporate responsibility for tax evasion, largely address the concerns that you have?

David Leask: I do not think it is my job to come here and have concerns. It is my job to come and tell you what these companies are doing, why people are using them and just how many of them there are.

[Antoinette Sandbach]

Q Have you looked at the Bill and read the provisions that are in it?

David Leask: I do not feel qualified to tell you as a legislator how to legislate, I am afraid. Sorry.

[Antoinette Sandbach]

Q You cannot give us an opinion on whether you think it will tackle the abuses that you are trying to describe to us?

David Leask: There is a reasonable case for the United Kingdom authorities to take a detailed look at Scottish limited partnerships and what it is that they do. I think there is a reasonable case for you to look at what similar English companies are doing and ask yourself whether you want Britain and Scotland to be associated with that kind of activity, and whether you think that is good for your national brands.

[Antoinette Sandbach]

Q We heard the evidence of the various law enforcement authorities in earlier sessions. I do not know whether you were here for that, but they were quite clear about the additional protections the legislation will afford them in tackling illegal tax evasion.

David Leask: They would be better placed to tell you about that than I would be. However, the issue really is that right now, tens of thousands of companies and firms are operating around the world and we do not know who owns them. They are involved in things that are quite questionable, from simple matters of peddling diet pills that do not work and combs that they tell you will grow your hair back—I am sure they do not—to very serious criminality, including, for example, being used as legal intermediaries by corrupt officials in countries such as Ukraine. Prosecutions are now under way of individuals in Ukraine who are accused of using Scottish and English companies as intermediaries in arms deals. These are serious matters, and they are outwith the jurisdiction of the law enforcement officials that you saw this morning. It is within the power of Westminster to change the law in respect of Scottish limited partnerships, but you probably need to take a closer look at what they are doing.

[Roger Mullin]

Q I will direct my questions to Mr Leask, but I would be very happy if Toby decided to join in as well. If it had not been for Mr Leask’s groundbreaking research over the past year or more, I would not have been aware of the seriousness of the situation, so I would like to put that on the record. Could you give us a sense of your perception of the scale and type of criminality that is associated with Scottish limited partnerships?

David Leask: There are some 25,000 of these firms on the register at Companies House. A colleague of mine, Richard Smith, has scraped data from these and we think some 17,000 of them have entirely opaque ownership, meaning that they are owned by members—partners in partnerships—who are in some of the places that Toby has talked about, such as the British Virgin Islands, Panama and Belize. There is no way of knowing who stands behind those companies.

How do we know what they are doing? We cannot gauge the scale of criminality, tax evasion or anything else because we do not know who these companies belong to or who controls them, but some of them have started cropping up in criminal matters elsewhere. For example, we have seen a company called Fuerteventura Inter, which is registered on the high street in a small mining village in Lanarkshire, named in a prosecution in Ukraine for corruption involving the export of shells from Ukraine to the middle east. We have seen minor cases as well: for example, in what you might think are tuppenny-ha’penny corruption cases—they involve tens of thousands of pounds—officials have used them as fake intermediaries for exports of alcohol. They then take a cut, allegedly.

We have also started seeing these companies being used substantially in the world of e-commerce, both for what you might think of as being criminal, unregulated and unethical behaviours. Only yesterday, we reported that Scottish limited partnerships were being used as fronts for the kind of unregulated cash-transfer firms—sort of PayPals, only not regulated by anyone—where an anonymous sender can send an anonymous amount of money to an anonymous recipient by email. They actually guarantee that they can provide identity-masking. That may not be an illegal activity but it is unregulated, and again, we do not know who stands behind those companies.

[Roger Mullin]

Q To follow up on that, I read the article yesterday and I was taken aback, to say the least, when it alleged that there could be contacts with what used to be known as the KGB.

David Leask: There have been stories in Ukraine that have accused some of these companies of having connections—albeit tenuous ones, to some extent—with people who are connected to the security service in Russia. However, the companies concerned deny that.

[Roger Mullin]

Q You have already started to give us a sense of the type of criminality that is involved. To confirm, we are talking about financial criminality, but not just financial criminality—I think one of your investigations was into things that involved, for example, paedophile websites. Is that correct? Could you say a bit more about that?

David Leask: One of the types of companies that Scottish limited partnerships have become quite popular as fronts for are businesses that you might call cyber-lockers. They are essentially subscription services where you can access material and peer-to-peer sharing. That might include, for example, bootlegged Hollywood blockbusters. It can also be things that are quite unpleasant. People post such things to those sites and you pay a subscription to access that material. There is a lot of concern about the use of those peer-to-peer file sharing systems. Sometimes it is quite innocent—people sharing pictures of their families—and sometimes it is not. That is subject to an investigation by police in Scotland.

There is a similar issue involving the alleged theft of copyrighted material by a well-known torrent site. That is another site where people can access copyrighted material such as TV programmes and films in the United States, where the estimated value of the copyrighted material stolen is $1 billion. That involves a Scottish company as part of the payment mechanism for those services.

[Roger Mullin]

Q I will allow other Members to speak, but I want to ask one more follow-up question. I can understand why you are reticent to suggest what legislators should do but, as far as I am aware, you have been one of the leading researchers in the field. However talented you may be, Mr Leask, you are limited in your resources to research further. Would you welcome the UK Government putting their shoulder to the wheel, as it were, and conducting a detailed review of the use of SLPs for criminal purposes?

David Leask: That is a reasonable ask. As I said earlier, we are talking about companies that are trading on the brand of Scotland and the brand of Britain. When they are offering these services, they are stressing that the addresses that they are using are British. The United Kingdom’s status is part of the reason that these companies are popular. That is part of the reason that you may want to look at the matter.

One of the reasons that people in countries such as Ukraine or Russia may wish to use a Scottish or British company as a shell company is that it lends the enterprises respectability. I am not sure that our authorities will want to lend the respectability of countries such as Scotland, which have an image in the world of being stand-up places where there is the rule of law, to some of the enterprises we are talking about.

One thing I urge you to do if you are remotely interested in the issue is simply to go online and google “Scotland” and “offshore”. If you can do so in Russian, all the better. You will see the most extraordinarily explicit explanations of how these companies do not need to pay tax, report any financial findings or reveal who their owners are, because those owners will be in entirely opaque jurisdictions.

Q Toby Quantrill: So much of what Mr Leask has talked about in terms of how anonymous companies are used applies equally to our overseas territories, including the issue of respectability by connection to the UK.

I want to say a couple of things on volume, especially with respect to developing countries and the impact there. A high-level panel was put together by the United Nations economic and financial committee. It was run by Thabo Mbeki, so it is known as the Mbeki panel. That panel estimated that illicit financial flows out of Africa run at somewhere in the region of at least $15 billion a year. That is money being lost from Africa at a far greater rate than aid is going in. That money is either illegally obtained, illegally transferred or illegally utilised, so it covers a range of activities including transfer pricing—the illegal movement and transfer of finances—and criminal activities and many of the kind of things that have been described. It is worth noting that the sort of picture being painted there would apply equally and, in many respects, more so.

One little pertinent fact that I have written down is that 11% of foreign-owned companies operating in Russia are apparently registered in the British Virgin Islands, but we do not know who sits behind them.

[Mrs Flick Drummond (Portsmouth South) (Con)]

Q This question is really a supplementary to some of Dr Huq’s comments on the overseas territories. I asked a previous panel including the Serious Fraud Office, HMRC and the Crown Prosecution Service whether they thought they had the resources to go in there. They have automatic access to all the records, although I know that it is not public document. I want to know a bit more about that, Mr Quantrill, because obviously you are a great expert on it. To add to that, are you confident that the enforcement agencies have enough resources and the capability to do what is in the Bill and prosecute people in the overseas territories and Crown dependencies?

Toby Quantrill: It would be an awful lot easier if we had transparency in regard to beneficial ownership. It is true that all of the overseas territories have now agreed to share information with the UK Government and a number of other Governments on a Government-to-Government basis. However, from the perspective of a citizen in a developing country who may well not trust their Government and wants to know what is going on, they will not be happy. First, they cannot hold their Government to account to use that data even if they get it—most developing country Governments will not. As long as it is shared only between Governments, there is a limit to who will see it and who can act on the information. That is critical.

We cannot put this an awful lot better than David Cameron did when he was talking about the UK’s beneficial ownership register. He was asked, “Is it not enough for it to be available to Government officials?” and he said:

“we in government will use this data to pursue those who break the rules, and we’re going to do that relentlessly, but 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.”

Yes, there is a question of resources and availability to use the information once it is provided, but the more people who have access to it, the more likely it is first to be accurate and secondly to be utilised.

I was talking to a colleague from Global Witness just before last weekend. They spent the whole weekend with a group of data analysts sitting and looking at the information now available through the UK’s beneficial ownership register, making connections and linking that with other databases they have. This information does get utilised, and the more people utilising it, the more likely it is to be helpful. Our sense is that it is not enough just for the authorities to have access.

[Mrs Drummond]

Q As far as the Bill goes on transparency, obviously it is only for the UK. You have also been talking about other countries and it is up to them to follow our lead and have more transparency.

Toby Quantrill: The UK has legislative authority over the overseas territories.

[Mrs Drummond]

Yes, but I think Mr Leask was talking about other countries and corrupt Governments. We cannot cover that in the Bill. We can cover the overseas territories. Were you not talking about other countries outside the overseas territories when responding to Mr Mullin?

David Leask: We were talking about the use of both English limited liability partnerships and Scottish limited partnerships as shell companies. Those shell companies often provide cover and a way for people in Russia, for example, to buy a company in the British Virgin Islands. Often the shell on the outside will be British, but, when you crack it open, on the inside you get the British Virgin Islands or another Commonwealth or British overseas territory. Sometimes it is a country such as Belize or Panama.

One of the things said to me by a colleague—a lot of work is being done on these stories by colleagues in countries like Ukraine and Latvia—was, “We keep coming up with that British Commonwealth problem.” That really struck me, once you start unwrapping these shells. One final point I will make is that, in many countries, there are blacklists of offshore fiscal paradises and tax havens, and the British and Scottish companies enable you to bypass those blacklists.

Toby Quantrill: In the recent Panama papers data that were revealed, just under half of companies in the documents in Mossack Fonseca in Panama were registered in the British Virgin Islands. It was by far and away the most utilised location. It is at the heart of the system. With the ability to deal with that comes a responsibility to do so.

[Mr Wallace]

Q I thank The Herald for what you have done. I have read some of your stuff and it has been quite an eye-opener. The SNP obviously raised it in the debate and that prompted me to have a meeting with one of my business Minister counterparts to see where we can go forward with it. Some of the stuff that you have identified—well done for it—is the truest form of good investigative journalism that can be produced. It was the Glasgow Herald when my grandmother wrote for it way back 40 or 50 years ago. It is clearly a structure that has been abused, and I think we want to ensure that that does not happen.

I want to ask Mr Quantrill about a bigger issue: the Crown dependencies and overseas territories. If we stack it up, going back to the anti-corruption summit chaired by David Cameron back in May, we have got to a position now where all of them will have a central register of beneficial ownership, except the Caymans, which will have a linked register of ownership. Our law enforcement agencies will have access to them. We are the only country in the G20 to have a public one. Never mind the dependencies or anywhere else; our neighbours in Europe do not have them yet, so the trajectory is in the right direction. It seems to boil down to a call to make the Crown dependencies make them public—that we, the UK Government, impose our will on the Crown dependencies and territories, in primary legislation.

Do you recognise what that actually means? I have many constituents who, for example, have very strong feelings on abortion. Does that give this sovereign Parliament the right—technically, we are sovereign over Scotland and the Crown dependencies—to impose that very strong will on those Crown dependencies? That is the next step. The step you are suggesting is for us to ignore their own Parliaments and impose our will on them, because it is a subject that you and many other people feel passionately about. I respect that, but it is what you are proposing. Is that something that you are happy to do?

Toby Quantrill: Not happy—

[Mr Wallace]

By working with them, we have got to a position rather quickly of having central registers and getting our law enforcement automatic access to those data without long, drawn-out court cases. We have done that in the space of a year. Is Christian Aid proposing that we override the democratic expression of those countries, whether they like it or not, because it is a subject that you have decided is more important than other issues?

Toby Quantrill: I certainly recognise the difficulties. I would also very much prefer that we did not have to go down the path of legislation. I do not necessarily think that we would need to, but it ought to be available, and it ought to be made clear that it is available. There have been precedents in the past.

That is one thing, but what we are looking for is a timeline and to be really clear by when this will happen, so that we know what is happening and can see the UK using all its powers to persuade and support these places to go in that direction, primarily. However, we do not think it is acceptable for this not to happen within a timeline. The reason for that is that the impact globally is so great. The Panama papers are a game-changer in this respect. It puts these places right at the heart of the system. The damage being done globally, to our mind, overrides the very real discomfort of taking this action, but it is not an action without any precedent. The UK has gone down that route in the past, as I am sure you are aware, on a number of different issues.

Also, interestingly, I had sight of a paper recently, the Foreign Office annual report on the Cayman Islands Government from 2003; it goes back some time. In it, there was a single paragraph relating to the EU savings directive. At that time, the Caymans Government clearly did not want to implement it; it was a similar issue of making certain information available. The paragraph stated that voluntary action by the Caymans Government meant, effectively, that we did not have to legislate. It was clear that the threat of legislation had been used, and had been effective in that case. It has been done in the past, in a similar incident.

Yes, I recognise the difficulty—I honestly do—but there are potential implications of maintaining secrecy in these places. It is not just one particular place; it was, as I said, one of the most important centres of financial secrecy in the world. I think the potential impact of that staying in place is too great to ignore, but what we are looking for is a timeline, persuasion and all means possible first.

[Mr Wallace]

Q You quote the Panama papers, which was a significant leak, and there have been previous ones—Liechtenstein and others. The access that our law enforcement agencies will now get will be greater than the Panama papers. The Panama papers are not complete, and they are effectively within the control of the journalists in the sense that they were selectively leaked to them and then published. No one is able to get the full picture because we do not have open access to Panama, which is not a Crown dependency or an overseas territory; it is a place that Scotland had a bad relationship with a few hundred years ago.

What we are proposing, and what the Crown dependencies are giving our law enforcement access to, is the complete picture. In one sense, we will have a greater advantage than the Panama papers because our law enforcement agencies will be able to have full access to the full range automatically. Therefore, in one sense we are 90% there. As you said, we do not have the transparency bit, but the Government’s intention is to do that. We are doing it, first, by leadership. We are the first in the G20 to say it is our aspiration. The step that seems to be mooted is to impose the sovereign will of Parliament on them, but in 12 months we have gone 90% of the way.

Toby Quantrill: We are looking for a timeline. We must give time and support to moving in that direction and be clear about when we are going to reach it. The Panama papers demonstrated the power of making this information public, because the impact has been global. In countries all around the world, citizens have gained information about people often within their Government and judiciary, and they have been able to investigate, follow those leads and hold their Governments to account. That is the power of transparency. It should be full transparency, not just the bits and bobs. We should not have to rely on leaks to hold our Governments to account. That is the point we are making.

[Carolyn Harris (Swansea East) (Lab)]

Q Have you ever heard of the Magnitsky clause?

Toby Quantrill: No.

[Carolyn Harris]

Okay. It is not relevant, then.

Toby Quantrill: Sorry.

[Carolyn Harris]

Q This is a blank piece of paper. If you had the opportunity to write what is in the Bill, what would be on it?

Toby Quantrill: There is already an amendment—new clause 4—that we support. The critical thing is to see action, whether within the Bill or through other means, to get the outcome we are looking for. All I would write on that paper is simply a public register of beneficial owners in overseas territories by whatever means. As I said at the start, this is a Criminal Finances Bill, and it seems odd not to include that issue in it.

David Leask: I have nothing to say on that, I am afraid.

[Richard Arkless]

Q First, David, thank you for your groundbreaking work. I was very heartened to hear what Ben, the Minister, said about reading your work and taking note of it. I was encouraged to hear that. Let me be the matchmaker in the middle here. Would you be willing to work with the Government and provide them with all the evidence you have uncovered in the past few months, based on what Ben has said?

David Leask: It is entirely published in the pages of what Mr Wallace would like to call the Glasgow Herald. It is therefore up to date. I can offer you a subscription, if you like.

[Richard Arkless]

Q Perhaps that is something that the Minister could consider. He very helpfully expressed a willingness in the Chamber to have a look at the issue, and he clearly demonstrated that he is doing so, so hopefully there can be communication from here on. For lay people watching this who find it difficult to conceptualise how transparent companies can be conduits within a system that can lend itself to criminality, is there a way that you can explain very simply what it is about SLPs that makes them susceptible to criminality?

David Leask: In some ways, the way to look at that is to ask how they are being sold and marketed off the peg, and what people find attractive about them. I am sure you could find lawyers who can identify some of the weaknesses in the Scottish limited partnership, but what fascinates me is the way in which they are sold. They are companies that have legal personalities, which means that, for example, you can open up a bank account with such a company—or a firm, strictly speaking.

[Richard Arkless]

Q How do they differ from normal companies, then?

David Leask: That is normal for a company with a legal personality. I will start again. Imagine that you are sitting somewhere like Kiev, and you open up the internet to look at agencies that are offering offshore companies. You will see a menu drop down and you will be offered a limited partnership in Canada or a limited company in the Czech Republic. You will have to choose the one that best fits your bill.

In this case, the Scottish limited partnership has legal personality, like many other types of company, which means you can open a bank account. These agencies will then offer, right there on the same internet page, to open a bank account for you. That bank account is often going to be in Switzerland, or even more often in Latvia. It is almost as if you are able to pick and choose the areas of the world where they have the weakest regulation. For Britain, that is going to be corporate law. For Latvia, it is going to be banking. You had bankers in here earlier talking about what they can do in Britain against money laundering; perhaps there are other jurisdictions where it is weaker.

You have to see a Scottish limited partnership or an English limited liability partnership as part of a kit that you can buy online. It is essentially a do-it-yourself kit for tax avoidance at best and money laundering at worst. That will include all the things that certain people like about SLPs: the fact that they have legal personality, that you do not have to say who the ultimate owner of the company is, and that there are no tough reporting restrictions. As I said, we have 25,000 SLPs in Scotland; I have never seen a single one of them file accounts, and I do not think that any ever have. I am happy to be proven wrong on that, because I have not read the paperwork for all 25,000. Some of them are perfectly legitimate businesses.

The next thing is that because there is no taxation on a Scottish limited partnership that does not operate in the United Kingdom, the agencies are quite entitled to tell people who want to invest in an overseas offshore company that they can have a zero-tax company, and they are bluntly marketed in that way. There is no taxation, so there is no need to say who you are and no need to file any accounts. There is then, of course, the extra element of these companies, which is that they do not fall under the blacklists that some Governments have imposed on their citizens.

Lastly, there is the simple prestige of owning a company or a firm in the European Union, in the United Kingdom, and in Scotland. It is about that particular cocktail being of particular interest to certain types of people. Some of those people might then look around those menus and find another type of company. That might be a British company or an English company, or it might be one elsewhere, but they will pick on the weakest regulatory regime they can for any part of their kit to launder money. In the case of companies, I am sorry to say that I think that is Britain.

[Richard Arkless]

Q That is very useful, Mr Leask. Thank you very much indeed.

Mr Quantrill, it seems from the discussion today that most people around this table would agree with most of the Bill’s content. As you have rightly said, the point of contention comes with what is not in the Bill. You have mentioned overseas territories and Crown dependencies, but those aside, could you quickly run us through perhaps two or three aspects that you think ought to be included in the Bill but are not?

Toby Quantrill: There are a couple of other areas I would highlight. I think my colleagues from Transparency International and Corruption Watch UK will give evidence; we support them and work with them closely. In part 1, could the unexplained wealth orders be extended so that they also apply to assets held in, for instance, the overseas territories? That would be helpful. We welcome the fact that the “failure to prevent” legislation is extraterritorial in nature, but perhaps that could be extended to other financial crime, beyond tax evasion.

[Richard Arkless]

Q Do you have any idea of which crimes you would extend it to?

Toby Quantrill: Just broadly.

[Richard Arkless]

How about market manipulation?

Toby Quantrill: Yes, those sorts of things. I do not have a particular list in front of me, but it seems strange to limit it to just one specific type. Beyond that, our main focus has been on the one issue, as I have probably made very clear.

[Tristram Hunt]

Q I was struck by what you said about the debate in Africa about the amount of money flowing out of that continent. We obviously give a huge amount of money to different countries in Africa through development aid. Will you give us a sense of the nature of people’s frustration about some of the money leaving the continent of Africa and their analysis of where they see London and its role in all this? What kind of reforms are being urged in many of those countries on the continent that, on the one hand, we are supporting through development aid, but from which on the other hand, it seems to me, we are allowing too much wealth to leave?

Toby Quantrill: As I say, this issue has been picked up by a number of civil society coalitions—our networks of partners and organisations across Africa—as being critical. They highlight the fact that on the one hand we are providing aid and on the other, we are facilitating these losses, which may massively extend, in terms of volume, way beyond—I think this goes beyond more than money, though. The other frustration is the fact that we are talking a lot about corruption, but, through our overseas territories and other forums—property ownership and so on is being dealt with appropriately—we are perhaps helping to facilitate or not doing enough to clamp down on some of the kind of flows of corrupt money, supporting corruption and so on. It is very hard to get into a lot of detail, because a lot of this activity, by its very nature, is secret and hard to pin down.

The best example is a very real one, which has been used before. A very good investigation was run by Global Witness into a particular case in the Democratic Republic of Congo. There was the massive underselling of mining rights—as low as 5% of market value—out of the country to a company registered in the British Virgin Islands and a number of others. Today, a new press release from Global Witness also links this to companies in the Cayman Islands, at extra money. Those rights are then sold on to other companies including, for instance, Glencore, at massively inflated prices. Somewhere in the middle somebody is making a lot of money and we do not know who. It is estimated that the losses from that particular transaction could be worth as much as $1.3 billion to the DRC, so the people of the DRC are being ripped off and they do not know who to blame for that. They do not know who to point the figure at, because they cannot find out.

[The Chair]

I will now bring this session to a close. It has been very good of you to come here and we are all very grateful for your evidence, but we must finish this session. Thank you for your attendance; we will start the next session at 4.30 pm.

16:12

Sitting suspended for Divisions in the House.

Examination of Witness

Right hon. Dame Margaret Hodge MP gave evidence.

16:37

[The Chair]

Q We will now hear oral evidence from the right hon. Dame Margaret Hodge. I have known Margaret for a very long time, and I am pleased that I know her. There are new Members of Parliament who are not up to date on your background and work on the Public Accounts Committee and so on, so before we begin, could you just give us a brief summary?

Dame Margaret Hodge: First, thank you for asking me to give evidence. I was really pleased to be given the opportunity. My interest arises out of the work that we did on the Public Accounts Committee, which I chaired for five years from 2010 to 2015, and particularly our work on tax avoidance and evasion, and the links to corrupt practices. I warmly welcome the Bill, as I am sure everyone has said to you. I hope that in the brief time I have, I can say where I think there are a few gaps and where we could strengthen the Bill—there are a few omissions that the Committee could rectify as it considers the Bill.

We tend not to think about this, but we have to remember that, along with our overseas territories and Crown dependencies, the UK is probably the biggest secret jurisdiction in the world. That is why so much money gets laundered through the UK and why the Bill is so important in tackling corruption around the world. David Cameron was really strong in saying that he would lead on anti-corruption. He said quite clearly that we have to lead by example. There are certain omissions and issues in the Bill, but if we strengthen it, we could make a reality out of his statements and commitments.

[The Chair]

Thank you very much for that. We are time limited. We have until 4.52 pm, which does not leave us much time at all, so will Members please be concise with their questions?

[Dr Huq]

Q It is great to have you here, Dame Margaret. You were the Chair of the Public Accounts Committee when a landmark report came out in 2014. How much of the stuff that you recommended is reflected in this legislation? You hinted that there are some omissions that need addressing. Could you tell us about those?

Dame Margaret Hodge: Again, in the context of general welcome for the Bill, let me talk about three issues, including the overseas territories and Crown dependencies. What is missing is a clause in the Bill— I know an amendment has been tabled already and I hope the Committee will consider it carefully—that provides for registers of beneficial ownership that are open to the public. Let me just quote from somebody who made a statement about this because it is really important:

“Now some people will question whether it is right to make this register public. Surely we can get the same effect just by compiling the information and using it within government and sharing it between governments? Now of course, we in government”—

that gives it away a bit—

“will use this data to pursue those who break the rules, and we’re going to do that relentlessly, but 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.”

That was actually David Cameron when his Government launched the UK public register of beneficial ownership.

We have given the overseas territories and the Crown dependencies three years to come on board with this. It was first raised by David Cameron in 2013. I think that is long enough. I know there is a reluctance by the Government and that they feel that we have come some way, but that commitment to openness and transparency is vital. It is at the heart of ensuring that we really tackle corruption and money coming into the UK. If we cannot get the commitment in the Bill, which is what I would love, we are seeking a timeline that says that, within a certain time if the overseas territories and Crown dependencies have not come on board with public registers, we will instruct them through Order in Council to do so. We have the powers to do that.

[Dr Huq]

Q Are there examples of where that has been done before? You probably know more than me but I think there is precedent.

Dame Margaret Hodge: There are plenty of examples where we have used those powers. May I quote again from a Government White Paper? This is particularly about the overseas territories, which is a slightly different position from the Crown dependencies. This is a Government White Paper—I understand that there have been some questions about that during your consideration today. The paper says:

“As a matter of constitutional law the UK Parliament has unlimited power to legislate for the Territories.”

We do have that power. I am sure you heard examples this morning. A Conservative Government used it to outlaw capital punishment. A Labour Government used it to outlaw discrimination on the grounds of sexuality. We used it in the Turks and Caicos when there was systemic corruption and maladministration, and we should use it again. This is so much at the heart of the whole agenda. It would be a terrible missed opportunity if we did not, during the course of the Bill, go for public registers of beneficial ownership. I just cannot see an argument against it.

[Dr Huq]

Q A last question from me: the new corporate offence relates to cases of tax evasion, so is there a case for extending it to come down on companies for facilitating tax avoidance?

Dame Margaret Hodge: Or economic crimes. Can I just say again that I really welcome the Bill? This is the first time that we have tried to get at those companies and organisations that are actually responsible for devising many of the schemes that lead to aggressive tax avoidance or evasion. It is a really important toe in the water and a first step forward. The real experts on this are Edward Garnier, Nigel Mills and Catherine McKinnell—all lawyers who have been arguing strongly that the provisions ought to cover all economic crime.

Another amendment could be really helpful. If we could at least have a report to Parliament showing how the failure to prevent tax evasion power is actually being used by the enforcement authorities, I think that would really improve the Bill. I would like to see how much it is used. We could then see how effective it is, as with the unexplained wealth orders—it is important to report to Parliament once a year on the progress made on the use of unexplained wealth orders. I cannot see anything particularly controversial about that sort of amendment, so I would do it for both. Of course, I think you will find that the lawyers think we should do this for all economic crimes. I am with the lawyers on this.

[Antoinette Sandbach]

Q Dame Margaret, I am very interested by your proposal that that should apply effectively to every company’s beneficial ownership, because it was, of course, the Government that you were part of in 1998 that passed the Data Protection Act, which recognised that there should be privacy around individuals and disclosure of their data. Why, at that time, did you not—

Dame Margaret Hodge: Sorry, I am trying to think what you are getting at here. I do not quite understand what aspect of the Bill you are referring to. I am really sorry.

[Antoinette Sandbach]

You are talking about disclosure of beneficial ownership—

Dame Margaret Hodge: By companies.

[Antoinette Sandbach]

By companies, which would presumably relate to named individuals. The register looks at controlling interests—

Dame Margaret Hodge: The register of beneficial ownerships?

[Antoinette Sandbach]

Yes, of named individuals or other companies. I can see why, if it is another company, there would not be an issue, but if it is a named individual, this Parliament decided to protect data around individuals. Does your premise not assume that every company is therefore acting in a way that is, in effect, criminal, and should not the burden be the other way? In other words, having private registers allows the Government to interrogate the data where there are serious allegations of crime, but still to protect the privacy of individuals.

Dame Margaret Hodge: I am slightly muddled, so I apologise if I am answering this wrongly—if so, do come back at me. The register of beneficial ownership of companies in the UK is actually public. It is not private. In fact, I think another weakness of the Bill, and of the unexplained wealth orders, is that until we bring into legislation the George Osborne commitment that there would be a register of beneficial ownership of properties in the UK, it will be very difficult to administer the unexplained wealth order power. I hope the Committee will look at that.

Do I think it will create difficulties for individuals? I do not. Should we have done it? Yes. It is ironic, the whole issue. It gained momentum. It was not a big issue at the time. That is my only explanation. Transparency is at the heart of it. Whenever I look at any of these problems, I always find that if you have transparency, you are well on the route to tackling some of the bad behaviour, be it tax evasion, avoidance or whatever. Have I not answered properly?

[Antoinette Sandbach]

Q Clearly there is a distinction between evasion and avoidance. One is legal, and the other is illegal.

Dame Margaret Hodge: Can I come back on that?

[Antoinette Sandbach]

Certainly.

Dame Margaret Hodge: There is a distinction. I call it a spectrum, which is why I think this power is limited and why we need to think further. There is a spectrum from sensible tax planning through avoidance and into evasion. The honest truth is that people often say to me, “But we’re only acting within the law.” There is a story in The Guardian today about people being employed by companies set up to avoid national insurance and other taxes.

The reality is that when we as parliamentarians write far too complex, far too long tax law, we have an intention. If we could write it in a way that was really copper-bottomed, covered every eventuality and had no ambiguity, we would do so. I do not think this is a particularly partisan thing. We cannot do it. Therefore, you find that a lot of aggressive avoidance is unlawful when HMRC finally, if it has the resources, catches up with it, but it is difficult to call it evasion.

[Antoinette Sandbach]

Q I understand that there are now changes. We are awaiting tribunal assessments where there is doubt about whether it is legal avoidance or illegal evasion, but the law has now been changed to require individuals to pay up front.

Dame Margaret Hodge: That is an improvement.

[Antoinette Sandbach]

The burden has been reversed.

Dame Margaret Hodge: But it still assumes that HMRC catches up with them, and it does not always do so.

[Antoinette Sandbach]

Q Given that this is a really important first step, and that the Government are working with the overseas territories to get co-operation, would it not be useful, rather than going to a broader system that is more difficult to manage, to focus on the more serious cases and allow that co-operation initially? If it is then seen to be inadequate, we can perhaps broaden it out.

[The Chair]

Order. Before you answer that, Margaret, we have two Members still to ask questions and you have got two minutes. I am going to ask them to ask their questions, and then we can hopefully get some correspondence from you to answer the questions more fully.

Dame Margaret Hodge: There are lots of answers. One is that they have had three years to get on with it, and they have not done it. David Cameron said they should be public at this point. I am sure people have talked to you about the Panama papers, but so much of that went through the BVI, for example—nearly half of the corporations were established through the BVI. If we do not tackle that, it particularly impacts on the poorest countries because they do not have the resources we have for enforcement. We are bad at it, and they are even more poorly equipped. If they do not have the resources, they lose three times as much in tax avoidance and evasion as they gain through the international aid that we give. They have had their time, and this is the moment when we should get tougher. We are saying that there should be a timeline.

[The Chair]

Can the two Members—Mr Hunt and Mr Mullin—ask their brief questions? Then we will conclude.

[Tristram Hunt]

Q Our previous witness from Christian Aid proposed the idea of looking into unexplained wealth orders for overseas territories. I just want to know your views on that.

Dame Margaret Hodge: Looking at them for overseas territories—

[The Chair]

I think we will have a written reply.

Dame Margaret Hodge: Okay. I am going to think about that one. Thank you. That will save me, Sir Alan.

[Roger Mullin]

Q Is there a case for extending public registers to cover trusts?

Dame Margaret Hodge: Yes.

[The Chair]

Order. I am afraid that brings us to the end, Dame Margaret. Our allotted time has run out again. Thank you very much for coming. It was a delight to see you.

Examination of witnesses

Tom Keatinge, Dr Susan Hawley, Chido Dunn and Duncan Hames gave evidence.

16:54

[The Chair]

We are now going to hear oral evidence from the Royal United Services Institute, Corruption Watch, Global Witness and Transparency International UK. I have got to warn you before we start that we have had votes and they have put everything back. We are also restricted on time because there are Members who have got other things to go to, as do two of the panel, so we are going to conclude by 5.30 pm at the very latest. Can you briefly introduce yourself and be very concise, because Members want to ask questions?

Duncan Hames: Good afternoon. I am the director of policy at Transparency International in the UK.

Tom Keatinge: I am director of the Centre for Financial Crime and Security Studies at RUSI.

Chido Dunn: I am from Global Witness, and I work on governance and corruption issues.

Dr Hawley: I am from Corruption Watch.

[Dr Huq]

Q I have an easy question first of all. What difficulties in recovering assets from individuals suspected of involvement in criminal activities overseas have you encountered? Can we start with Susan Hawley?

Dr Hawley: I think Chido and Tom might be better placed to start off with that one.

Chido Dunn: Based on our investigation in Global Witness, the use of anonymous companies incorporated in places such as the overseas territories and Crown dependencies—[Interruption.]

[The Chair]

Order. I am afraid we have some bad news for you. We are suspended for 15 minutes for a vote.

16:55

Sitting suspended for a Division in the House.

17:06

On resuming—

[The Chair]

Q Order. I apologise to the witnesses. Members engaged in the vote will come back, but we have not got much time left and, to be fair to you, we should try to give you the time to make a statement about what you think of the Bill and where any problems may be. The time is yours and we have only until 5.30 pm. If there is time left for questions, we will use that, but if not we will receive in correspondence any more ideas you have left out or we may write to you with questions that may arise from today. Mr Hames, would you like to start?

Duncan Hames: Thank you, Sir Alan. We at Transparency International warmly welcome this piece of legislation, which we believe could be the most significant in the fight against corruption since the Bribery Act 2010. We are particularly interested in part 1 of the Bill, which introduces the new investigatory order: the unexplained wealth order.

We think that is important for two particular reasons. First, if we want to prevent corruption, we need to restrict the opportunity that corrupt individuals have to enjoy the benefits of their illicit wealth. Secondly, it is often the case that where corruption occurs it is so endemic in that society that those corrupt individuals are untouchable by the law there and they have not received a criminal conviction for their actions. To answer the question posed before the Division, at the moment it is incredibly difficult to start along the road to recovering corrupt assets without a conviction in the country of origin. So we very much hope that the unexplained wealth order will be a tool available to UK law enforcement as a result of the legislation.

We have been asked, and we have heard you ask other witnesses, about what is missing from the Bill and about other matters. The Government have a raft of commitments in the anti-money laundering action plan, which is clearly relevant to a piece of legislation on criminal finances. The Government recognise the need to reform the supervision of anti-money laundering activity and it would be welcome if they were to bring forward measures to do that. We have made a number of recommendations, which I will be happy to provide to the Committee in writing. But, principally, the No. 1 change we would like to see is the word “Bill” replaced with “Act”.

Tom Keatinge: Thank you for the opportunity, Sir Alan. As mentioned, I am from RUSI. Our research focuses on the partnership and information sharing efforts to tackle financial crime. We are particularly interested in the provision for information sharing in the private sector; what is or is not happening with regard to the SARs regime and reform thereof; and importantly, how this architecture will improve the UK’s ability to tackle financial crime. Like many others, we welcome the Bill, but it is important that we do not view it purely as a piece of legislation and that it is used and implemented by law enforcement. As Donald Toon said very honestly at the Financial Conduct Authority financial crime conference last week, we need to improve our understanding of financial crime in the UK. As I say, we need implementation and understanding.

We welcome the opportunity for private sector organisations to share information with one another. They often work in trenches and silos, and by being able to build a complete picture, they can support law enforcement in its attempts to prosecute criminals. We question the mechanism by which information can be shared. At the moment, as I understand it, it needs to be shared on the basis of suspicion; we think it should be shared on the basis of assisting to form suspicion. We also welcome the unexplained wealth orders. There are one or two other nuances about which I can perhaps write to the Committee in the interests of time.

The important point to remember is that we are on a journey. We would like to see urgent reform of the SARs regime, which the Home Affairs Committee highlighted in its inquiry earlier this year. We will be judged on our effectiveness by the Financial Action Task Force next year. Implementation of this legislation will be important to demonstrate that we are effective.

The last thing I would say is that we would like to see early and strong use of these new powers. It is no good having them if we do not see things like unexplained wealth orders used, because that will quickly add a deterrent factor. As Dame Margaret said, it is important that there is regular reporting to Parliament on the way in which the Act is being used.

Chido Dunn: I am Chido Dunn from Global Witness. We are also very supportive of the Bill. We think the UK has shown real leadership in recent years in recognising its own role in facilitating corruption overseas and providing a safe haven for corrupt people and their assets. We have conducted more than two decades of investigations, and we see some common features arising. Usually, state money is stolen by a foreign official and funnelled into places like the UK via an anonymous company, which is almost always incorporated somewhere like the UK’s tax havens. There is almost always a UK facilitator involved—a bank, an accountant or a solicitor—who, while perhaps not violating their obligation under the anti-money laundering rules, has allowed that deal to happen.

That is why we welcome the Bill: it addresses a lot of those issues. We welcome in particular the extension of the suspicious activity report period and the unexplained wealth orders, as my colleagues have mentioned. There are some practical issues that will have to be fleshed out in later versions of the Bill, and we are happy to make submissions on those later, but I would echo the points that have already been raised in terms of the biggest gaps. Given the role of the British overseas territories and Crown dependencies in all the deals and behaviour we have seen so far, it is a striking absence that they are not addressed in the Bill and that some other commitment has not been made to address the problem of there being no public registers in those overseas territories and Crown dependencies. Also, given the role of facilitators so far, we welcome my colleagues’ calls for the “failure to prevent” offence to be extended to other financial crimes, like money laundering. It is a very useful and welcome move, but it could have a real impact if it was extended.

Dr Hawley: Corruption Watch welcomes and applauds the Bill’s ambition and courage and the fantastic cross-party support for it. We think the Bill is a unique opportunity, and we are concerned that it may be the last legislative opportunity to put all financial crime on an equal footing, given the impact that Brexit will have on the legislative calendar.

The Home Secretary spoke last Friday about how the Government are committed to developing world-leading legislation to combat financial crime. We think an amendment to part 3 to include other financial offences could be a significant step towards achieving that, and we would like to see the Government give such an amendment serious attention.

One of the key issues is that business has not yet been consulted on extending part 3 to other financial crimes. I would like to quote a leading QC I was discussing this with yesterday, who said, “Well, you don’t consult burglars on burglary legislation.” The idea behind this legislation is to capture those bad actors who are not fulfilling their regulatory requirements under the Financial Conduct Authority handbook to have procedures in place to ensure that they are not used to further financial crime.

The second point that we would like to make is that this would be a very good first step, but it would only be a first step. There is urgent need for broader corporate liability reform. As I am sure some of you are aware, the current liability laws in the UK penalise small and medium-sized enterprises, which bear the brunt of prosecution; give effective impunity to large companies; and create a perverse incentive for bad corporate governance. On Second Reading, Sir Edward Garnier made an important point that we need broader corporate law reform to be on the agenda, whether that be vicarious liability or a change to the identification principle that governs substantive offences. We would like the Government to show some commitment to producing, as a priority, something on broader corporate liability reform.

Thirdly, we think that the Bill could be an important opportunity to consider something that was raised by the Select Committee on Home Affairs—the creation of specialised confiscation courts. The Serious Fraud Office has been calling for specialised economic courts for some time because it takes 18 months on average to get a court slot for some of its cases. Perhaps this would be a legislative opportunity to find some way of ring-fencing Southwark crown court for financial crimes, and to create a cadre of specialised judges who have the expertise and experience really to tackle financial crime across the board, including confiscation orders.

From our monitoring of how the Bribery Act is being implemented, we think that three key things have to happen to instil confidence that a failure-to-prevent model can work. These are all covered by various amendments that have been tabled by Members. One is to ensure that senior executives can be held to account for those failures. That is where we think an amendment to the Company Directors Disqualification Act 1986 would be important. Another is to ensure that companies that fail to prevent these offences are excluded in some form or manner from public procurement. We welcome and support the amendment to put the offence in part 3 into the Public Contracts Regulations 2015.

Finally, companies that are convicted and companies that are offered settlements need the equivalent level of scrutiny of their compliance procedures, so we welcome and support the amendment to introduce corporate probation orders. This is a unique opportunity for the Bill to set world-leading legislation on financial crime.

[The Chair]

We have around about 12 minutes left, so would all Members and witnesses be concise in their questions and replies?

[Dr Huq]

Q Are you confident that enforcement agencies will have sufficient resources to make full use of the new powers in the Bill? I am thinking of the creaking IT system, ELMER, which was designed to cope with 20,000 SARs a year, and the figure at the moment, before this legislation, is more than 300,000.

Tom Keatinge: Resourcing is clearly a major issue. Cynically, one of the reasons for involving the private sector is to harness it to do some of the work. The point that I was trying to make in my remarks was that implementation will be critical. I do not believe we have the resources that we need. For the structure as it currently exists, the question is whether we are tackling financial crime the right way or whether we can make more efficient uses of the resources we have. Do we really need to have 381,000 SARs a year, and everything that that means for resourcing? We do not have them for the structure that we have now. Is the structure we have the right one? That is the question that we need to answer.

Duncan Hames: I would not go as far as to say that we were confident, although I am sure that people make special pleading cases with every area of Government spending. Reform of the use of the consent SAR would help to give more time for law enforcement bodies to collect the information they need to know how best to respond to it. That is a welcome measure in the Bill.

Chido Dunn: One argument made for public registers in places such as the overseas territories is that there can be more eyes than just law enforcement and Government actors. People such as journalists and civil society actors like us can help the process by identifying potential crimes and alerting the authorities to them.

Dr Hawley: We would like to ensure that the National Crime Agency’s international corruption unit, which will bear the brunt of enforcing unexplained wealth orders, is adequately resourced. We have concerns that at the moment there is not enough transparency in the funding model of that unit. It is partly funded by the Department for International Development, which leaves a whole series of countries that are not DFID priority countries to be funded. We need transparency that the Home Office is putting up the matching funding to cover those countries, because UWOs are going to be global—they will not be just for DFID priority countries.

[Antoinette Sandbach]

Q Mr Keatinge, may I pick up on the point about reporting to Parliament? It is very easy to get data in the public domain about the number of requests or prosecutions under a particular Act: you can use the Freedom of Information Act, or parliamentarians can table written questions to get those data in the public domain. Why do you feel that that requires a report? Dr Hawley, in relation to the cadre of specialised financial crime judges, why do you say that judges are not capable of adequately dealing with financial cases when effectively you have juries sitting on them? If you cannot explain them to the jury, you will certainly not be able to explain them to the judge.

Tom Keatinge: Let me take your first question. The way in which we seek to tackle financial crime in the UK cuts across a number of different Departments. There are many cooks in this particular kitchen, for various reasons. As an outsider, my question is: who is ultimately accountable for ensuring that the Bill is used effectively when it is enacted? Should there be a commissioner? Ultimately, what I would like to see is someone who has to report to Parliament what has happened as a result of the new legislation. As for where that information comes from, I accept that it can be brought to light by Freedom of Information Act requests or other means, but I would like to see someone made accountable for explaining how the Act has been used.

Dr Hawley: Judges play a key role in instructing the jury how to interpret some parts of the law. These are incredibly complex cases. In a way, we are reflecting what has been expressed to us by some in the law enforcement community who are trying to put these complex cases to judges who are not specialists and so do not have the level of knowledge about the crimes that they would like.

[Antoinette Sandbach]

Q That could apply to any crime, whether it was murder or child pornography.

Dr Hawley: The difference is that these are much longer trials than for those kind of crimes. Another key issue is that cases of economic crime are often at the back of the queue for court slots, essentially because defendants are often given bail, which in murder cases they would not be. That is why it takes so long for the Serious Fraud Office to get court slots.

[Tristram Hunt]

Q Could the Committee have some examples from Global Witness of case studies of that three-way process—the extraction of wealth, often from developing nations, the facilitation via London and the hiding of that wealth in overseas territories or Crown dependencies? It would be good to have some narrative examples. Secondly, one issue that has been put to the Committee and on which I will pursue a probing amendment is the fear among enforcement agencies that, if they use unexplained wealth orders or go after those who have allegedly hidden wealth and committed crimes, they will be liable for the costs involved. That has serious ramifications for the culture of risk within an organisation. I am interested in whether you think either that those costs should not be borne by the state or that they should be capped.

Chido Dunn: I will speak briefly to the narrative examples point, but I am happy to provide more. One of the case studies we worked on, which was covered on the BBC last week in anticipation of the Bill, was a case that arose in Kyrgyzstan. The former President was overthrown in a coup and he and his family were accused of widespread corruption and violence. His son fled and arrived in the UK on a private jet and claimed asylum. At Global Witness, we identified him living—we have no proof of who owns the property—in a mansion in Surrey. It was purchased for £3.5 million six or seven years ago, so it is worth a lot more than that now. The home is owned offshore and no one can prove exactly who owns it or where the money came from.

At the time when the Bakiyevs were in power, Kyrgyzstan was ranked by Transparency International as one of the 20 most corrupt countries in the world. Since then, we have seen the Kyrgyz authorities trying to rebuild their courts and their systems and not receiving the assistance they would like from foreign powers. They are finding themselves coming up against a lot of legal hurdles around issues of mutual legal assistance, extraditions and things of that nature. That is just an illustration of the extent of plundering that can happen overseas, the fact that London in particular is seen as a safe haven by corrupt officials and their families, and some of the practical difficulties in trying to seize those assets or identify the people involved. In that case, we identified UK estate agents and lawyers involved in the deal.

That is one of the best case studies that shows how a Bill such as this could help. It would allow the police to have more time to conduct their investigations. It would lessen the burden on them in identifying who owns a property and whether the money came from legal sources. There are many, many other examples that we could give, but generally it is the same pattern of behaviour that we see time and time again.

Duncan Hames: It is not initially clear from the Bill what the degree of exposure in relation to costs for law enforcement would be. It may be that the investigatory order of the UWO is less exposed to action to recover costs than other asset recovery actions and the interim freezing order, for example. Perhaps in the course of the Committee’s consideration, you will be able to get some clarity on that. We would like you to bear in mind that there will be a great backlog of established illicit wealth already in this country for law enforcement to address when awarded this power, should the Bill become law. We would not want them to be impeded from making full use of this law because of potentially intimidatingly large costs being incurred by those against whom they are using either the unexplained wealth order or the interim freezing order.

[Peter Dowd]

Q The Home Office set out the intentions of the Bill, which are about giving

“law enforcement agencies, and partners, the capabilities and powers to recover the proceeds of crime, tackle money laundering and corruption and counter terrorist financing.”

The Bill also aims to make the UK a more hostile place for those seeking to move and hide proceeds and so on. Do you think the Bill is a game-changer in terms of that aim?

Witnesses: Yes.

Tom Keatinge: Yes, if it is implemented and if we have the resources to use the powers to make this a hostile environment.

[Peter Dowd]

Q The second thing is this: you mentioned the key element of resources, and you almost intimated earlier that you were not convinced about the capacity and resources of the enforcement agencies. Is that a fair assessment? What would you say to that? Do you think the capacity and the resources are available to the agencies to make the Bill a game-changer?

Tom Keatinge: It remains to be seen. There are resourcing issues. In theory, some of the powers—the UWOs—could be used relatively swiftly. If we use them swiftly and roll out the deterrents quickly, we have the resources.

Duncan Hames: You make the case for having strong accountability on whether the powers are being used. That may contribute to being able to understand the case in relation to your question after the powers are brought into law.

[The Chair]

Order. I am afraid that that brings us to the end of the session. We are very grateful to the witnesses for coming here. We assure you that if you want to provide any further advice, the Committee would welcome receiving it. There are no further questions, so I invite the Whip to move the Adjournment.

Ordered, That further consideration be now adjourned. —(Andrew Griffiths.)

17:30

Adjourned till Thursday 17 November at half-past 11 o’clock.

Written evidence reported to the House

CFB01 KPMG LLP

CFB02 BOND Anti-Corruption Group and the Business Integrity Network

CFB03 Transparency International

Westminster Hall

Tuesday 15th November 2016 Westminster Hall

Tuesday 15 November 2016

[Mr David Nuttall in the Chair]

Backbench Business

Tuesday 15th November 2016 Westminster Hall

State Pension Age: Women

Tuesday 15th November 2016 Westminster Hall

00:00

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I beg to move,

That this House has considered acceleration of the state pension age for women born in the 1950s.

It is a pleasure to serve under your chairmanship, Mr Nuttall, and to appear in front of the Minister. I look forward to a positive response from him to all the remarks made today.

A woman born on 6 March 1953 retired on 6 March 2016, aged 63. A woman born a month later, on 6 April 1953, retired on 6 July, aged 63 and three months. A woman born on 6 May 1953 retired a few days ago, on 6 November, aged 63 and six months. A woman born on 6 June 1953 has to wait until 6 March 2017, when she will be aged 63 and nine months. A woman born on 6 July 1953 will not receive her pension until her 64th birthday, in July 2017. We are beginning to get the picture. For each month that passes, women’s pensionable age increases by three months. Let us just dwell on that—a three-month addition to someone’s pensionable age for each month that they were born later than their neighbour, friend or colleague.

I spoke of a woman born in March 1953, who retired this year aged 63. A woman born a year later, in March 1954, will not retire until September 2019, when she will be aged 65 and a half. She will be two and a half years older than a woman born a year earlier before she receives her state pension. A woman born six months later, in September 1954, will have to wait until she is 66, in September 2020. Over an 18-month period, women’s pensionable age will have increased by a whopping three years. As we keep saying, we are not against equalisation of the state pension age. The issue is the pace of change, as well as the lack of appropriate notice.

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

I congratulate the hon. Gentleman on securing the debate and on making these compelling historical points about women. For that reason, and because of the documented evidence that he has submitted here today, does he agree that there is a compelling need—and an imperative on the Government—to bring about transitional protection and transitional payments for these women?

[Ian Blackford]

I am grateful to the hon. Lady for that intervention. She makes a telling point. The significance of having the debate today, for which I am grateful, is that next week we will have the autumn statement. That is the opportunity for the Government to respond to the injustices that women are facing and to do the right thing. We often hear about people who have been left behind. The Women Against State Pension Inequality have been left behind, and the Government must act.

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Gentleman for securing the debate. He has certainly done women a great service, because he has been working on this issue for a long time. The other dimension to the issue, which we see when we do an analysis of it, is that it affects women in different ways. There are different poverty levels involved, so things such as bus passes may not be accessible to them.

[Ian Blackford]

Absolutely. The hon. Gentleman makes a valid point. I will come later to the proposals that my party has made. We have been able to test the number of women who would be taken out of poverty as a consequence, and it is a very important point.

We should remind ourselves what a pension is. It is deferred income. Women and men have paid national insurance in the expectation of receiving a state pension. That is the deal, plain and simple: people pay in, and they get their entitlement. They do not expect the Government, without effective notice, to change the rules. What has been done to the WASPI women has undermined fairness and equity in this country.

[Christina Rees (Neath) (Lab/Co-op)]

The hon. Gentleman is certainly painting a picture. Does he agree that the impact of the changes to the state pension age cannot be seen in isolation from the impact of historical gender inequality?

[Ian Blackford]

Absolutely. The hon Lady makes a valid point, because women have faced inequality in pension entitlement, whether in the state pension or occupational pension schemes. In the past, they were even denied access to occupational pension schemes, and we are still battling for equal pay for women. It is simply not right that in addition to all the injustices that women have faced, they now face the injustice of having to wait much longer than they expected for their pension.

[Peter Aldous (Waveney) (Con)]

I congratulate the hon. Gentleman on securing the debate. He is making a compelling case and outlining the lottery of the current arrangements. The WASPI petition was signed by 2,249 of my constituents and I also received many letters. Does he agree that additional transitional arrangements are needed to support a group of women who in the past have often been working mothers and are now carers for elderly parents and sick husbands, and who have often had low-paid manual jobs and just have not been able to build up private pensions?

[Ian Blackford]

Absolutely. The hon. Gentleman makes a valid point and demonstrates, rightly, why hon. Members across the House need to unite. This is not about one party—let me make that absolutely clear.

[Ian Austin (Dudley North) (Lab)]

Will the hon. Gentleman give way?

[Ian Blackford]

I will in a second. This is about all of us recognising that, as a House, we have a responsibility to do the right thing. It is about giving encouragement to the Government, just as happened last year with tax credits when we realised that we were going to be punishing hard-working families, to do the right thing by the women affected by this issue. That is what the Government have to listen to and respond to in the autumn statement.

[Dame Caroline Spelman (Meriden) (Con)]

rose—

[Ian Blackford]

I will take another couple of interventions and then I need to move on.

[Dame Caroline Spelman]

Further to the point made by my hon. Friend the Member for Waveney (Peter Aldous), the fact that this issue kicks in at the latter stages of a woman’s career, when her caring responsibilities can increase significantly because of elderly parents and her own health may start to deteriorate, means that the level of uncertainty and anxiety is greatly increased. Suddenly, the prepared-for pension does not materialise, and women with caring responsibilities are left in limbo.

[Ian Blackford]

The right hon. Lady makes a valid point, and I will come later to the notice period because the issues are both the lack of time that women have had to prepare for the changes and the caring responsibilities that many women in particular have. She is right to raise that point. I will take one more intervention and then move on.

[Ian Austin]

This is a very important point. I have lost count of the number of women in Dudley who have told me that they have not had time to make plans for the new arrangements. They have had to take time off to bring up their children, or reduce their hours or retire early to care for ageing parents or grandchildren. Other women have told me that they have lost their husbands and have not just had to come to terms with the bereavement, but have been thrown into financial turmoil as a result.

There is an additional unfairness in former industrial areas such as the black country, where women typically left school at 15 or 16, started work and did hard work all their lives. That is very different from someone graduating in their early twenties and doing an office job. Women in the black country have done their bit, and that is why the Government should be coming up with proper transitional arrangements so that they can plan properly for their retirement now.

[Ian Blackford]

I agree with that point. Many of the 2.6 million women affected have made more than 35 years’ worth of national insurance contributions. They have paid their way. They have paid their dues. This is about us accepting our responsibility. As I mentioned, 2.6 million women are affected by the increase in pensionable age and have an entitlement to a pension that they should have had. They need to be treated fairly—no more, no less.

The Government often state that the increase in pensionable age under the Pensions Act 2011 means that no woman will have to wait more than 18 months for their pension. That is disingenuous, as it came as an addition to the changes in the Pensions Act 1995, which are still being implemented. It is a fact that women’s pensionable age is increasing by six years over a very short period. That is the issue and the reality. It is about the combined impact of the 1995 Act and the 2011 Act. The Government have a duty to be truthful about the matter.

[Several hon. Members rose—]

[Ian Blackford]

I am conscious that many Members want to speak and I do want to take interventions, but I will press on, if I may, and take interventions later.

The issue is not only the sharp acceleration of pensionable age, but that many women were unaware of the increase in pensionable age. As the Select Committee on Work and Pensions reported in March this year,

“more could…have been done”

to communicate the changes, especially between 1995 and 2009. Women have been let down not only by the rapidly increasing pensionable age, but by a failure of communication. We face the rapid acceleration of pensionable age and also the nightmare scenario for many women that they were not aware that it was coming. They have had little notice and no time to prepare for an increase in pensionable age. They have not been able to adjust accordingly, and in many cases we are talking about women and families who are struggling.

The Prime Minister talks about those who have been left behind and the duty the Government have to deal with it; the WASPI women have been left behind and it is now our responsibility to deal with it. We cannot just shrug our shoulders and blame past Governments for the failure to give women notice. We have a collective responsibility to deal with this issue and we have to show leadership. We cannot take the line that the last Parliament made a decision and there is nothing we can do; that is an abrogation of responsibility by all of us.

When the Government came forward with proposed changes to working tax credits that would have damaged millions of families in the UK, after much opposition, the Government ultimately relented and removed the proposals. We need to campaign in Parliament and throughout the United Kingdom to achieve the same objective here. We are not going away. The Government have to recognise that women should not be punished in the way that they are being by this increase of three months for every month’s difference in their age.

The Government have asked what we would do. That is why, in September, we in the Scottish National party published our own report looking at various options. We suggested a return to the timeline of the 1995 Act, which would slow down the increase to a pensionable age of 65 by 18 months, and defer the increase to a pensionable age for women of 66 years into the next decade. The cost of deferring over an additional 18-month period would be £7.9 billion. The Government estimated that the acceleration of state pensionable age in the 2011 Act for both women and men saved around £30 billion from 2016-17 to 2025-26, but that is simply not the case. That was scaremongering from the Government and, not for the first time, they got their numbers wrong. Depending on the timescale for the increase to age 66, there will be additional costs in the next decade.

I am grateful that, through the Backbench Business Committee, we have secured this debate, which is supported on an all-party basis, with a number of Conservative Members supporting the motion that was originally put forward. Of course, that happened on the back of many of us here today and in Parliament putting petitions down on behalf of the WASPI women. The WASPI women are going to be knocking on Members’ doors this week, next week and until we do the right thing.

We are often told that this is about the money. “We can’t afford it,” they say. This is not about women getting something they are not entitled to; it is about entitlement based on national insurance payments and about the Government meeting their obligations out of the national insurance fund—yes, for those who were not aware, inside Her Majesty’s Revenue and Customs there is a national insurance fund. I am grateful to the Government, or more specifically the Government Actuary’s Department, for stating that there is a projected fund surplus of £26.3 billion at the end of 2016-17, rising to £30.7 billion in 2017-18. The argument that the Government cannot do this is therefore bunkum. The money is there. These women have paid into the fund and we should meet our obligations. Women have paid their dues, the fund is in surplus and the Government can make restitution.

Next week we will have the autumn statement. If the Minister chooses, he could tell the Chancellor of the Exchequer about the strength of feeling on this issue. Next week the Chancellor could, if he is minded, deliver some good news for the WASPI women. Will the Minister demand that the Chancellor uses the surplus to do so? The money is in the national insurance fund to allow the Government to take action—to right a wrong, to reflect on the injustice of a sharp increase in pensionable age, to show leadership and to recognise that Parliament collectively got it wrong with the timetabled increases. This is, after all, about fairness. Men are seeing a one-year increase in pensionable age; for women it is six years, over too short a period. The Minister can be a hero to 1950s women by addressing the injustices that many are facing.

We are often told that there was no choice in the scale of the increase or the timing, and Europe was forcing equalisation upon us. In our report, we published the scale of increases in pensionable age in each European country. There are only two countries that are seeing such a rapid increase in pensionable age: Italy and Greece. When the Prime Minister took office, the first debate she fronted was on Trident renewal. The motion did not have a price tag, but the Chair of the Select Committee on Foreign Affairs, the hon. Member for Reigate (Crispin Blunt), informed the House that it could be as much as £205 billion. The Government effectively asked Parliament to give them a blank cheque. We can find hundreds of billions of pounds for weapons that can blow humanity to smithereens, but we cannot meet what should be a contractual obligation to 1950s-born women. Where is the fairness? Where is the humanity? Of course, the Government will be prepared to find £7 billion to renovate this place. If I had a choice, I would fund the WASPI women’s pensions first, and not spend a fortune on this place.

I know that a number of Conservative Members are here, and they are broadly supportive of the WASPI campaign. It is a pity that we do not have those who so far do not support it, but I say to the Conservatives: is there anyone on the Government Benches who is prepared to stand up and say that it is right for women’s pensionable age to increase at the rate of three months per month? How can anybody possibly think it is right that pensionable age should increase by three months per month? I would be happy to give way to anyone who wants to stand up and say that it is right, but I suspect that we will get what we always get: silence—silence and the hope that we, the Opposition, the Tories who support this and the WASPI women will go away. As I have said, we are not going away. We have given the Government an option and, unlike their Trident nuclear weapons commitment, it is costed. More importantly, not only are we not going away; the WASPI women are not going away.

The Pensions Commission that reported in 2005 suggested that at least 15 years’ notice should be given on any future increase in pensionable age. Given that, I ask the Minister: how can the Government defend the 2011 Act and some women receiving pretty negligible notice? Does the Minister think that is acceptable? There would be uproar, and no doubt legal challenges, if occupational pension schemes behaved in such a way. Can we imagine the outcry from Members of Parliament if we were told, with little notice, that our pension payments would be deferred by an additional six years?

[Ian Austin]

Will the hon. Gentleman give way?

[Ian Blackford]

I want to make a little progress, and will take interventions later.

Just as workers pay into occupational schemes, men and women pay national insurance in return for a state pension. Why should women be treated so shoddily? It is little wonder that WASPI women are considering legal action. For too long women have suffered injustices as far as equal pay is concerned. They tend to have much poorer workplace pension protection than men and are now facing state pension inequality. Why do we not stop, take stock and put in place mitigation? Let us have equalisation, but let us do so fairly. When we consider what has been done as far as communication is concerned, it is dismal. Women should have been written to at the earliest opportunity, letting them know what was changing and allowing them to consider their options. Yet in 2011, the Government said their approach was to inform women through leaflets and publicity campaigns. That was a failure of responsibility to act and inform appropriately.

It was only in 2009 that the DWP began to take responsibility and proactively write to women to tell them about the 1995 Act. They started to tell women in 2009, but it took the DWP years to issue all the letters. Last night I was given the response to a freedom of information request on the timeline of the letters—perhaps the most damning thing about this whole debate. Women born between April 1953 and December 1953 were formally told of the increased pensionable age only in January 2012. Women born between December 1953 and April 1955 were told only in February 2012. A woman born in April 1953 under the old regime of retiring at 60 would have expected to retire in April 2013. She was given just one year of formal notice of her new retirement date of July 2016. It was 17 years after the 1995 legislation before the DWP could be bothered to formally tell the women involved—too little notice; too little, too late. We should all hang our heads in shame at the way the WASPI women have been treated. If there is one issue that should force the Government to agree to change now, it is that new information and the timeline of notice given.

Why have we been able to find this out through a freedom of information request from the WASPI women? Why have the Government not come clean about this before? Who knew about this in Government? Did the Minister know? I have had many letters on this issue from the women affected. Rosina wrote to me:

“When the 2011 Pensions Bill was announced, it accelerated these changes, so that Women’s SPA would be 65 by November 2018 and then both Men’s & Women’s SPA would rise together to 66 by 5th April...Letters began to be sent out...but many never received them. I received my letter in early 2013, just before my 58th Birthday and just 2 years before my expected retirement age of 60. The letter advising me that I would now have to wait until I was 66 before I could draw my pension! How can I be expected to plan for a 6 year increase with just 2 years notice? How can this be acceptable? I had already made plans for my retirement. I will lose over £40,000 of pension because of this. I have paid into the system in good faith and the system has now failed me. I want the Government to stand up and admit that they have ‘wronged’ us Women of the 50’s by their gross mismanagement and...that they will now do the right thing and pay us what we are due.”

I cannot put it any better than Rosina. Will the Minister now accept that we have a responsibility to Rosina and the 2.6 million women who have been cheated out of their entitlement?

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

My hon. Friend has come forward with a shocking revelation today, thanks to the WASPI women who made the FOI request. Nearly half a million women had only a year’s notice to change their retirement plans. I do not think that is acceptable, particularly given everything we have heard about why women are more likely to be dependent on a state pension and likely to be in poverty in old age. Does he agree that it puts an absolute moral imperative on the Government to take responsibility for their failure to let women know before a year in advance that they were going to lose out in such a way?

[Ian Blackford]

Absolutely. My hon. Friend makes a powerful point. I know that the Minister is a decent and honourable man. I hope he listens to the evidence and will go back to his colleagues in Government and recognise that the surplus we talked about is there in the national insurance fund. He would make us all happy, but more importantly he would make the WASPI women happy, if the Government showed they were prepared to act.

[Peter Aldous]

The issue of notice is raised a great deal, and it has been said that notice was given in magazines and the like. Given the high-profile television campaign at the moment for workplace pensions, does the hon. Gentleman agree that the issue should have been on television 15 or 20 years ago?

[Ian Blackford]

Absolutely. There has been a gross failure of communication at all levels. Many of us have access to occupational pension schemes. We are members of the House of Commons scheme. We get an annual statement of our pension entitlement. That is what the DWP should have been providing, rather than waiting 17 years before communicating with the women involved.

I am conscious of time and I want to begin to wrap up. Much of what I have been talking about was picked up by the Select Committee report in March this year. It said:

“Well into this decade far too many affected women were unaware of the equalisation of state pension age at 65 legislated for in 1995.”

The National Centre for Social Research stated:

“In 2008, fewer than half...of the women who, at that point, would not be eligible for their state pension until they were 65 were aware of the...change.”

That statement referred to research carried out in 2011. Given that we knew there was a lack of appreciation of the 1995 changes, why pour oil on troubled waters by accelerating the timescales in 2011? That was simply vindictive and cruel. Today, let us correct that. Let us show compassion and deliver fairness to the WASPI women.

I have been dealing with this issue on a UK-wide basis, but I want to briefly touch on Scotland. To put this into context, there are 243,900 WASPI women in Scotland. I would dearly love for us to have responsibility for pensions in Scotland, but we do not. The commitment the SNP has given in supporting the slowdown of the increase in pensionable age is one we would legislate for if we had the powers, but we do not. The powers that Scotland has over social security are limited to 15% of such spending in Scotland. We have limited powers. Section 28 of the Scotland Act 2016 grants exceptions to reserved areas where we can top up payments, but this does not include pensions assistance or payments by reasons of age.

I mention that because the Secretary of State, responding to a question I asked about WASPI mitigation last month, said that the SNP

“now control a Government who have the power to do something about this and put their money where their mouth is.”—[Official Report, 17 October 2016; Vol. 615, c. 580.]

The Secretary of State created the impression that we hold powers in areas where we do not. I sought to be charitable to him in a point of order I raised later that day; rather incredibly, I received a letter from the Secretary of State on the 19th arguing that his statement was correct. Let me be clear: it was not. I then raised a further point of order on the 19th, when the Speaker suggested I apply for a face-to-face debate. I am grateful the Minister is here, but it is unfortunate that the Secretary of State is not. He should be dragged to this House and forced to accept that he cannot blame the Scottish Government when they do not have competency for the failures of this Government, and it must stop.

This is an important matter. We cannot have the UK Government suggesting that the Scottish Government have powers that they do not have. I wish we did have powers over pensions. If we had those powers, we would do the right thing by the WASPI women. Until such time as we have such powers we will push the Government to accept their obligations. This Tory Government have ducked their responsibility to the WASPI women for too long. It is time to face up to reality. Pensions are not a privilege; they are a contract, and the UK Government have broken that contract with the WASPI women.

[Mr David Nuttall (in the Chair)]

I am looking to start the contributions from Front Benchers at 10.30 am, so based on the number of speakers I have been notified of, that will mean about five minutes maximum per speaker. I call Tom Elliott.

10:00

[Tom Elliott (Fermanagh and South Tyrone) (UUP)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. I congratulate and thank the hon. Member for Ross, Skye and Lochaber (Ian Blackford) for securing the debate, which is very timely. The most recent changes to the women’s state pension age will have a direct impact on around half a million women across the United Kingdom. The hon. Gentleman outlined the historical issues extremely well.

It is estimated that in Northern Ireland around 80,000 women will be affected. A number of weeks ago I, like other Members, presented a petition to the House containing the signatures of hundreds of residents of my constituency who are concerned about the unfair changes to the women’s state pension age. I take this opportunity to pay tribute to Wilma Grey, who lives in my constituency and is the co-ordinator of Women Against State Pension Inequality in Northern Ireland. She tirelessly campaigns on a voluntary basis to raise awareness of this issue.

Nobody would disagree that rationalisation of pensions is necessary, but it must be sustainable and ready for an ageing population who are living longer. If pensions are not properly funded and addressed, they have the potential to be a millstone around the neck of future Governments. We accept that, but few things are so clearly deserved in life as the state pension. I reiterate the promise that if someone works hard their whole working life, the state will take care of them in their old age. That ideal has underpinned our society for more than 70 years, but the promise is precisely why I am deeply worried about the manner in which the Government have decided to equalise pension ages.

This is the key issue: women who were born in the 1950s were made a promise and the promise is now being broken. Worse still, the changes are being made with little to no notice. These women, who have rightfully been considering and planning for retirement, now face uncertainty that threatens what should be the most relaxed period of their lives. Today’s national insurance contributions pay for today’s pensions, and many of these women believed that when they started paying national insurance contributions—some of them at the age of 16—they were entering into an agreement with the Government to retire at 60.

Raising the retirement age may be a necessary evil. With life expectancy climbing, it is unavoidable that we must work longer and retire later. However, the problem is that although that principle may be sound, the reality is somewhat different. When Her Majesty’s Government introduced the Pensions Act 1995, women were supposedly given 15 years to prepare, as the women’s pension age would not begin to equalise with men’s until 2010. However, no one who was aged 44 or over would have been affected at the time. It is therefore understandable that any discussion of pension changes was viewed as irrelevant.

The Government at the time should have made a concerted effort to publicise the changes widely and to spell out the implications for the women affected, but that was glaringly absent. To compound that, the Pensions Act 2011 increased the overall state pension age to 66 by 2020, accelerating the rate of increase for women. Because they had not been notified previously, it was only at that point that many women learned of the changes to the state pension age, with some women reaching state pension age at 66 when they had anticipated drawing their pension at 60.

It is therefore no surprise that the women affected by the changes are frustrated by the implications for their post-retirement planning, both financial and otherwise, and by the fact that the Government have substantially moved the goalposts without effective communication. That unfairness must be addressed and the Government must now consider the introduction of appropriate transitional payments.

10:04

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Nuttall, and I thank my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) for securing the debate.

I find myself speaking on the Women Against State Pension Inequality women for, I think, the fourth time. Frustratingly, despite three previous debates and the launch of a UK-wide petition, which attracted 2,534 signatures in my constituency and would have attracted more had there been more time; despite legal action from the WASPI women being seriously on the table due to what has been, in effect, the mis-selling of this group of women’s pensions; and after a Work and Pensions Committee report concluded that

“more could and should have been done”

to communicate the changes, we seem to be no further forward. Everyone is feeling the frustration.

[Alison McGovern (Wirral South) (Lab)]

The situation is worse than the hon. Lady described. Five and a half years ago I stood in this Chamber with my colleague, my hon. Friend the Member for Leeds West (Rachel Reeves)—our then Front-Bench spokesperson—and challenged the Government on this issue. We did that again the year after and again the year after that. The hon. Lady described recent action, but the situation is even worse: we have been telling the Government that this is wrong since 2011.

[Patricia Gibson]

I thank the hon. Lady for that intervention, and I go back to my original point: after all this time, all this activity, all the warnings, and all the stories of hardship, we are still no further forward. When will this Government wake up to the fact that pensions are not a benefit? The hon. Member for Fermanagh and South Tyrone (Tom Elliott) described them as a promise. They are not a promise; they are a social contract, which has been cruelly and thoughtlessly broken. It is time for the Government to step up and take responsibility for the way in which this matter has been mishandled over a number of years, and stop dragging this misery out for the women caught up in this injustice.

[Liz McInnes (Heywood and Middleton) (Lab)]

Will the hon. Lady give way?

[Patricia Gibson]

I will not—I am very conscious that other people want to speak, so I apologise to the hon. Lady.

Around 2.6 million women have been affected by these changes, and in Scotland, the number of women affected is 243,900. On behalf of the Scottish National party, Landman Economics analysed the costs and distributional impacts of potential changes to pension arrangements for women born in the 1950s who are losing out, in the context of the surplus in the national insurance fund, which is projected to stand at around £30 billion at the end of 2017-18 according to the Government’s own figures. With that surplus now forecast to be larger than it was before, the £7.9 billion that it will cost to give those women relief and a delay in the rise of their pension age is very much affordable.

The Landman report costed a return to the Pensions Act 1995 by immediately restoring the timetable in that Act, raising the pension age for women from 63 in March 2016 to 65 by April 2020, with no further increase to 66 until the mid-2020s. That is the second most expensive option, costing about £7.9 billion over five years. That cost is not trivial, but as we have heard today, it is not prohibitively expensive either in the context of other Government spending plans. It has the merit of completely eliminating the problem of an accelerated increase in pension ages for women born in the 1950s by returning to a timetable set out two decades ago, giving women much more time—necessary time—to adapt to the changes. It would then be possible to increase women’s pension age to 66 at some later point in the 2020s. That measure has the benefit of being progressive and reducing relative and absolute pensioner poverty.

The UK Government’s position, even after all the mistakes in the process have been laid bare for all to see, has been characterised by intransigence and wilful stubbornness. It is time to do what is right, fair and just. It is time for the Government to stop telling us that they have no choice. It is time to make the right choices, and it is time for justice for the WASPI women.

10:09

[Jessica Morden (Newport East) (Lab)]

My thanks go to the hon. Members who secured this important debate. I want to contribute on behalf of the women in my constituency who find themselves affected by the change to the state pension age. They are angry about the pace at which the change has been accelerated, angry about the way it was done and how it was not communicated properly—many learnt about it from the media, not a Government body—and angry that the Government have not acted to help them.

[Nick Smith (Blaenau Gwent) (Lab)]

Does my hon. Friend agree that the Government are being cloth-eared, that they should listen to the cries of anger across the UK and that these women need to be heard?

[Jessica Morden]

I thank my hon. Friend for that point. As my hon. Friend the Member for Wirral South (Alison McGovern) said, clearly the Government have failed to listen over successive years when the issue has been raised. As other hon. Members have mentioned, there has been debate after debate, and question after question.

The women affected in my constituency are not just angry but anxious and worried, because they face real financial insecurity. I will focus on that. Some 3,100 women are affected in Newport East, and 135,000 are affected in Wales. Many have been hit particularly hard, with significant changes to their state pension age and, as was mentioned earlier, a lack of appropriate notification.

Last week, a new constituent—I very much welcome new constituents—contacted me. Her story illustrates the financial insecurity facing many people. She had to sell her long-term family home in Bristol and move away from her children, parents and friends in order to make ends meet and to tide her over until she is 66. This is a woman who, as a single parent, received no support when her children were small. She worked all her life and then discovered, far too late in the day, that she will have to survive for longer. She is recovering from breast cancer but does not feel able to work at the moment, and she is trying to navigate the disability benefits system. This is a woman who explained to me how she would ring the DWP every single year when she was working to check that she had paid enough contributions to get her full pension at 60. In her words:

“This is not the retirement I planned at all—I live in a constant state of worry due to the cancer and financial pressures. The goal posts have been moved twice”.

She said that this is surely discrimination against women at its worst.

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

My hon. Friend is making an important point. Is she as surprised as I am that there are no Government Back Benchers here? Could that be because there are no WASPI women in their constituencies?

[Jessica Morden]

The constituent I speak of moved, in fact, from a constituency where she was represented by—

[Mrs Hodgson]

Or not?

[Jessica Morden]

Or maybe not in that case, but I will leave that there.

Another constituent explained to me the impact of her pension date being deferred for the second time with little time to make compensatory arrangements. She has worked for 45 years and paid her way, and the changes to the pension age, which mean that she is not in receipt of her state pension at 60, will deny her more than £38,000. She, too, has cancer and is considering whether she has to give up work.

[Alison McGovern]

My hon. Friend was also in the debate with me and our hon. Friend the Member for Leeds West (Rachel Reeves) back in 2011, so we are veterans of this campaign. Does she think that the Government should look at the net cost of any transitional arrangements? As she points out, many women who are missing out on their pension are now relying on disability benefits because of the incidence of ill health among the women affected.

[Jessica Morden]

My hon. Friend makes a crucial point. The change to the state pension age is affecting people who are ill and on disability benefits, and the Government should look into that.

My constituent who has cancer and is considering giving up work tells me that instead of seeing retirement as a positive development, she is dreading the financial insecurity after having worked for 45 years. These women had a picture of what their retirement might look like and it has been cruelly taken away. They did not expect the Government to change the rules. It would be good to know whether the Minister gets just how tough it is for many trying to find work at this stage, especially those who are ill or who have a disability. What will Ministers do for that group of women?

Women who have contacted me from Newport East add their voices to the calls for more reasonable transitional arrangements that are particularly mindful of those who are ill, who depend more on the state pension in retirement and who have limits on their ability to work. We need the Government to move on this issue and ease the impact of the changes on those most affected. The Government have an opportunity in the autumn statement. There are a number of options on the table and they are all ways in which the Government could act. We need them to take responsibility for what has happened to these women.

10:15

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

It is a pleasure to serve under your chairmanship, Mr Nuttall. I congratulate my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) not just on securing the debate, but on bringing forward the report and putting on the table some real facts and figures that the Government cannot deny.

I often tell constituents that I speak from a different world from the Government, and today the Government’s attitude to the WASPI women has proven that to be the case. I come from a world where women worked, often intermittently because of family commitments that involved childcare and family caring. Those women suffered lower pay and a lack of pension contributions, often due to part-time work. However, they always had the comfort of their contract with the Government that they would receive their pension at the age of 60. That contract was broken by the Pensions Act 1995, and the women were not notified. Yet the previous Minister continued to tell us that women were generally aware of what was happening with pension changes. They may have been generally aware, but they did not know that it was happening to them in their personal circumstances. That has been proven by the lack of notification and the fact that the information that did come from DWP was often conflicting.

In the Government’s world, these women were deemed suitable for a rapid increase in pension age. Into the bargain, it was deemed necessary for them to pay more national insurance contributions than they were originally contracted to. Since then, as the proverbial has started to hit the fan, we have all become aware of the bigger picture and the implications for the women. In the past year, the Government’s Budget contained inheritance tax cuts of £2.6 billion, capital gains tax cuts of £2.9 billion, corporation tax giveaways of £8.5 billion, higher rate tax relief of £3 billion, and individual savings account and savings relief of £2.5 billion. That is nearly £20 billion of tax giveaways for the people who live in the Government’s world, but not for the people who live in our world. At the same time, the Government brought in the right-to-buy discount on social housing, which will cost something like £12 billion.

This is an alien world to the one that me and my constituents inhabit, and yet the previous Minister hid behind the stock answer that the alternative transition will cost too much money, and asked where that money will come from and what cuts we, in opposition, would make. As we have heard, our preferred option would cost £8 billion and there is no need to make cuts. I have outlined simple tweaks that could be made to the Budget. There is £30 billion of surplus in the national insurance contributions fund, so the money is clearly there, and there is an autumn statement coming up in which the Government could do something.

The name “national insurance fund” is a misnomer, given the way things are happening. This generation of women has lived through the endowment mis-selling scandal and the payment protection insurance mis-selling scandal, but to have to live through the state mis-selling pensions is something else. It is no wonder these women are going to court. This is not about where to make cuts; it is about making the correct moral decision.

Last week I went to the funeral of a former councillor colleague, Jim Buchanan. He was a great campaigner for social justice and could not believe this position, which affected his wife—and, by default, the two of them as a couple—and many others. Jim actually joked that he would need to work longer to keep bringing extra money into the household. Instead, sadly, he died at 63, leaving behind a widow who is still affected by the pension increases. There are many such cases across the country.

I say to the Minister that there are now Tory Back Benchers involved, and there is cross-party support for the campaign. Do the right thing and act. The forthcoming autumn statement is a golden opportunity to do something that these fantastic WASPI women, and the local Ayrshire WASPI campaigners in my constituency, deserve.

10:19

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate. I thank the hon. Member for Ross, Skye and Lochaber (Ian Blackford) for securing it and for giving us all a chance to speak. It was a pleasure to join him and others in going to the Backbench Business Committee—this debate is the result of a combined request from many of us here in the Chamber. It is good to see a goodly number of Opposition Members, although there are perhaps not so many Government Members.

I welcome this debate, which was secured with a great work ethic. If people do not work, they do not eat. If people pay their dues, they reap what they sow. That is the premise on which an entire generation was raised, but I have been told that the dues have been uplifted and that, for some, the harvest is not due for another three and a half years, so they have to keep slogging on.

That might seem okay. What is three and a half years in the grand scheme of things? It is not that long. I want the House to consider a lady who left school at 14, as was then permissible, to work in a local sewing factory. She worked there for the next 35 years, until the factory was closed and relocated abroad. With no education and no skills, she took on a job cleaning the floors of schools and buildings, which she has done on her hands and knees for the past 11 years. For that lady to wait another three and a half years is not a small thing—it is more years of an aching back, fingers that remain bent and knees that are worn away.

[Liz McInnes]

I have a constituent who describes herself as “June ’54 and furious.” One source of her fury, apart from having to wait for her pension, is that she is having to wait for her entitlement to winter fuel allowance and a bus pass. We need to remember that it is not just about pensions; it is about things that will help these women in their declining years as their health declines. Small things are adding to my constituent’s fury.

[Jim Shannon]

The hon. Lady is very clear. Many of my constituents are equally furious. They might not have been born in June ’54, but they are equally furious. The lady she mentions and the lady I spoke about, who worked for 35 years in a sewing factory and 11 years in a school, are representative of ladies across the United Kingdom of Great Britain and Northern Ireland.

[David Simpson (Upper Bann) (DUP)]

Will my hon. Friend join me in congratulating the Northern Ireland pensioners’ parliament, which has done tremendous work? One person in my constituency, Mr Nixon Armstrong, has been a great ambassador in getting rights for these women.

[Jim Shannon]

All Members from Northern Ireland have had a chance to meet the pensioners’ parliament, which has lobbied us on this issue. We are here today to speak on their behalf.

We all know the background to this debate. The Government changed the timetable because of the increase in life expectancy, but as we have illustrated, the numbers do not equal the human cost or the health implications. Even for women who have a job in an office and are expected to continue working for another six years, the repetitive strain of typing, and so on, has not been taken into consideration and has been ignored.

Women born in the 1950s are justified in their argument that they have been hit particularly hard by the significant changes to their state pension age, which was imposed without appropriate notification. They have not been looking to the future and thinking, “I’ll take a high-tech job at night-time and do a course to get a qualification. I can’t do this hard-labour job for the next 30 years.” The fact is that these women have been subject to the whim of Government, with no notice for them to change their future potential.

I understand how the world works. If the Government continue to borrow, the debt continues to rise. We all know the story. Changes must be made, but how we make those changes is a problem. I fully support the Women Against State Pension Inequality campaign in calling for a fair transitional state pension arrangement that translates into a bridging pension between the age of 60 and the increased state pension age.

[Stephen Pound (Ealing North) (Lab)]

Does the hon. Gentleman agree that most people accept that there has to be some change because of the increase in life expectancy? The problem is the utter confusion, the lack of clarity and the complete absence of proper, coherent information. Does he agree that one small thing the Government could do today is to be completely upfront, honest and transparent and say exactly where we are? My constituents and his constituents are in the dark on this issue.

[Jim Shannon]

Some 4.5 million people in Great Britain will have their SPA increased by less than a year, and 500,000 born between October 1953 and 5 April 1955 will have their SPA increased by more than a year. In Northern Ireland, 76,000 people face a further one-and-a-half-year wait on top of previous rises, which is simply not acceptable. Something must be done to bridge the gap, especially for those who physically cannot keep working. Is there an argument for opening the door to the personal independence payment just a little further to enable these women to have an income without working? That is unlikely, as the Government have made it clear that they are determined, by hook or by crook, to lessen the number of claimants, despite what people’s doctors say—that is a debate for another day.

Jobseeker’s allowance is restricted, and the employment and support allowance criteria ask, for example, whether a person can lift a cardboard box or move a £1 coin. If only that was all it took for a woman to work again, but it takes more than that. I am sorry to say that the Government have not understood the real issue.

We do not have a benefits system that allows us to bridge the gap, so who will help these women? They do not seek to have something for which they have not worked. They are not asking for a handout, like so many people do; they are asking for a return on their hard work over 45 years or more. Why have we let these people down? What will be done today to help those whose hard work means their bodies can no longer continue at this pace?

Individual cases do not necessarily make good law, but I have not recounted an individual case. There are many such women in my constituency and across the United Kingdom of Great Britain and Northern Ireland. It is time that the Government acknowledged the effect that the acceleration has had and is having. They should seek to do the right thing for this generation, who have worked hard in all areas to build this country and who deserve the same respect and attention that they have given to this country all their lives.

10:25

[Danny Kinahan (South Antrim) (UUP)]

I am grateful for the chance to speak in this debate. I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on his excellent, terrifically detailed speech. I will not go into great detail, but I wish to make three points. When I first got involved in politics, which was not long ago, I was shocked when an old hand said to me, “Politics isn’t fair.” I hope that we can all prove him wrong. This debate is about fairness for women who have had their pensions taken away. They are struggling at the moment, and they need the Government to be fair.

[Lady Hermon (North Down) (Ind)]

It is kind of the hon. Gentleman to allow me to intervene. Not long ago, on 13 July, the new Prime Minister stood on the steps of No. 10 and talked about all parts of the nation, including Northern Ireland, and about bringing the United Kingdom together. She said that her Government would be not for the privileged few but for the many. We need to hear from the new Minister—I welcome him to his place—the new Prime Minister and the new Government that thousands of women have suffered an injustice. I am one of those women born in the 1950s who is affected; I am one of the furious ones. This is an opportunity for the Prime Minister to meet her words with action. Does the hon. Member for South Antrim (Danny Kinahan) agree?

[Danny Kinahan]

I certainly agree. That goes to the heart of what I was saying about the world needing to be made fair for these women.

Do the Government have the will to deal with this matter? As my hon. Friend the Member for Fermanagh and South Tyrone (Tom Elliott) did, I congratulate Wilma Grey on all her work. What came home when we petitioned Stormont and others is that there is still a mass of women who do not know that this is happening—or they vaguely know. Do the Government have a complete database in Northern Ireland? If 76,000 women are affected, how many of them actually know? Are we working on a database? Will that database be used to ensure that everyone knows? We can then concentrate on whom we can help. If we cannot help everybody, can we look for those who really need help, such as those with ill husbands or ill children to look after, those who cannot get a job and those who live out in the sticks? So many different areas have been addressed today. I would rather see the Minister helping everyone, but if not, let us look at the details and make sure that we know who needs help so that we can get involved.

I have spent my life trying to get people in Northern Ireland working together. Will the Minister work with the four separate campaigns so that we get much better detail on this issue and a result that is fair to everyone?

10:29

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

It is a pleasure to serve under your chairmanship, Mr Nuttall. This is the fifth or sixth time that we have had this debate, and every single time the Government’s response and stance has been littered with absolute hypocrisy. This Government lecture the Opposition about how they are the Government of responsibility, the ones making the difficult choices and the ones who can be trusted, yet they do not even allow people the chance to be responsible for their own pensions. As my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) made clear in his speech, women were not given the slightest notice. Some of the women with the steepest hike were given a year’s notice. How does that encourage responsibility?

If anything, the Government have shown how irresponsible they are in working out solutions to problems in society. We have said for years now that people have to make 30 or 35 years’ worth of national insurance contributions to get their pensions. The generation of women that we are discussing have been paying in for 45 or 46 years now, yet they are being told, “Sorry, you still can’t get your pension.” We say that we care more about our pensioners than anybody else, and we pride ourselves on how we look after them, yet as has already been stated, the only other European country that has hiked the pension age at such an incredible pace is Greece, which a few weeks ago tear-gassed pensioners for protesting against austerity. Is that really where we want to put ourselves in terms of how we deal with constituents?

The thing that blows my mind is that if a private company were acting in this way, it would be taken to court. By the sound of things, if the Government do not act soon, they might be taken to court as well. We cannot blame individuals for being pushed to it; the Government are leaving them with no option. This is the last chance for the Government to do something right.

In every debate on this subject, we have called for transitional arrangements, and the Government’s response has always been, “What transitional arrangements are you asking for?” The Scottish National party has gone away and paid our own money to commission a report. I have printed it out, and I am happy to give it to the Minister at the end of this debate in case he does not have a copy.

Our report—I must give credit to Howard Reed of Landman Economics, which did a power of work for it—found independently that the figure of £30 billion being thrown about by the Government was nonsense. Implementing some form of transitional arrangement would cost £8 billion spread across five years. Bearing in mind that we are spending money on nuclear weapons, airstrikes in Syria and renovations to this building, I think it is about time that we got our priorities straight in terms of who needs what most. Even if we were to forget or not bother criticising the poor choices made by this Government, by the end of this year, the national insurance fund will sit at a surplus of £26.3 billion, which is expected to rise to £30.7 billion. The idea that we cannot afford it is nothing other than a bare-faced lie from the Government.

I must say, not just for the Government’s benefit but for that of any women from Women Against State Pension Inequality who might be watching, that we know that our report is not completely perfect and involves an element of compromise. We recognise that this Parliament has only a couple of months left to make an effective change to get something for these women. Therefore, we suggest delaying things for the people with the greatest hike for another two and a half years, to give them an extra chance. Also, all women benefit from the fact that the rise to 66 is pushed to the next Parliament, so the report affects every single woman affected by the changes, although in different ways. We have been reasonable and tried to be genuinely conscientious in coming up with something that the Government can support.

I am at my wits’ end to know what we need to do for this Government to act. We have proved that women in every constituency and from all backgrounds are affected, brought hundreds of petitions before Parliament with thousands upon thousands of signatures, had umpteen debates and gone away and done the Government’s homework for them, and yet we are still told that the Government will not act. What more do we need to give them in order for them to give us something?

I thought that the Government were just arrogant, but now I see that they are both arrogant and incompetent. They do not know what notice they gave women. They do not know the effect that the changes have had on people. They do not even know what powers they have given to the devolved Administrations to deal with things. As my hon. Friend the Member for Ross, Skye and Lochaber said, the Scottish Government do not have the power to top up pensions. Even if we did, I would ask why the Government should effectively ask the Scottish Government to tax Scottish people twice so that they can receive a pension they have been paying into all their lives. However, we do not have those powers. We have argued that we would quite like them; if the Minister is prepared to move on that, we are more than happy to listen.

Most of all, the Government have managed to allow a genuine problem that transcends party political leanings and affects every constituency to become a party political issue in their own minds. The Government are so adamant that they cannot give the Opposition an inch that they are prepared to put this on the backs of women who have suffered their whole lives from inequality and unjust policies. That is completely unforgivable. If this Government are so arrogant and obsessed with not giving the Opposition an inch, they should come up with their own plans to sort the issue. We have jumped through every hoop that the Government have put before us since I first raised the issue during this parliamentary term.

Surely by now the Government recognise that this issue is not going away. It is a reasonable ask, and it is doable. The Government are out of excuses, and hell mend you if you do not do anything to fix it.

10:36

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Mr Nuttall.

I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing this debate on an important issue. I am sure that ’50s-born women up and down the country will be listening eagerly to hear whether the Minister is prepared to do anything more to alleviate their plight. I also pay tribute to the many MPs across the House campaigning on the issue, particularly the all-party parliamentary group on state pension inequality for women, which is chaired by my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley).

I was never in any doubt when I took on my role as shadow Pensions Minister that this issue would be one of the biggest and most contentious, and I have been proven right. I have already had contact with groups from across the country, all campaigning on the same message: the previous Tory-Liberal Democrat coalition Government’s rapid changes to the state pension age are simply unfair.

Most of the women recognise, as others have said, that the state pension age must be increased in recognition of a workforce that is living longer and to address the gap in the retirement age between men and women. However, what cannot be accepted is the unfair and unjust approach that the previous Government took and that the current Government are not prepared to change. The policy has had failures from the start. There has been a severe lack of communication from the Government on the changes, leaving 2.6 million women in doubt about their circumstances and providing only uncertainty to potentially vulnerable people up and down the country.

The Minister has heard many Members outline the case on behalf of ’50s-born women. The hon. Member for Ross, Skye and Lochaber made a comprehensive speech that left us in no doubt about how unfair it all is and how the Government could change things. Although I do not recognise some of his financial numbers, we agree that some changes could certainly be funded if the Government had the will.

There is some Conservative support for the WASPI women. The hon. Member for Waveney (Peter Aldous), who has now left, spoke about the lottery faced by ’50s-born women when it comes to retirement age. That is hardly fair. My hon. Friend the Member for Coventry South (Mr Cunningham) spoke about the different levels of poverty created by the Government’s policy, and another Conservative, the right hon. Member for Meriden (Dame Caroline Spelman), spoke about people in the latter stage of their careers who find themselves with caring responsibilities and little income to support them.

My hon. Friend the Member for Dudley North (Ian Austin) spoke of bereaved women left with no support. My hon. Friend the Member for Wirral South (Alison McGovern) described herself as a veteran of the campaign and reminded us that we have been having this debate and talking to the Government about the issue for more than five years, yet they do nothing. My hon. Friend the Member for Newport East (Jessica Morden) spoke of angry women, but also of anxious women, one of whom has had to sell her home and move away in order to make ends meet. The hon. Member for Strangford (Jim Shannon) spoke of the hardship of a woman in her sixties forced on to her hands and knees to scrub floors to make ends meet. The hon. Member for Banff and Buchan (Dr Whiteford) spoke of the half a million women given too few years to prepare for retirement, many of whom probably have some of the lowest incomes in the country.

I know of another example: a 61-year-old woman having to live with a friend, who receives just £8 a week from a private pension and is worried how she will afford basics such as dental treatment. She is like so many others: not fit for work, but not sick enough for employment and support allowance. She walks to the jobcentre every day, even in the snow, with her walking stick. She was let down by the last Parliament, and now this Government are letting her down.

I believe the Minister to be a caring and compassionate man who is looking for answers to a problem that is not of his making but is tricky for the Government. Indeed, the absence of Conservative Members in the Chamber illustrates how tricky this issue is for the Tory Government. Sadly, some very specific ideas put forward by the shadow Secretary of State, my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), have been rejected by the Government. That has probably been driven by the Treasury’s not being prepared to invest in a better quality of life for the women most affected.

That is very disappointing, but there is still time: the Minister has an ideal opportunity to do something positive. He can go to the Treasury before the autumn statement and fight for the resources that are needed, and he can then have clauses added to the Pension Schemes Bill that is currently in the other place, to allow the necessary changes. Then again, he may feel constrained by the threat of legal action from WASPI, which has raised more than £100,000 to challenge the Government’s failures in the courts. Perhaps he can confirm whether he feels that his hands are tied.

Contrary to what the Prime Minister claimed, the Opposition have tried to help her out of this hole and laid out plenty of options for the Government. Labour set out six transitional options and we are still waiting for the Government to properly address them and their potential. We proposed delaying the state pension age increase until 2020; capping the maximum state pension age increase from the Pensions Act 2011 at 12 months; keeping the qualifying age for pension credit on the previous timetable; allowing those affected to take a reduced state pension at an earlier age during the transition; extending the timetable for increasing the overall state pension age by 18 months so that it reached 66 by April 2022; or paying those affected a lower state pension for a longer period. Sadly, the Government chose not to follow up any of Labour’s suggestions.

Of course we recognise that solutions cost money, but the Government have made vast savings as a result of the late changes to the pension age and should be able to reinvest some of them to do something to help the vulnerable women who have been ruined because of a decision that they had no say in and certainly did not vote for.

[Alan Brown]

The hon. Gentleman says, rightly, that the Labour party has presented options. Does he welcome the fact that the Scottish National party is presenting a costed option? The Government cannot argue with the figures.

[Alex Cunningham]

I do not recognise some of the numbers that the SNP is using, but believe me, we want a solution just as much as the SNP. I believe that Conservative Members do too, and we need to work together to achieve that solution.

We have had half-hearted attempts from the Government to quell the voices of women who are rightly angry about these changes and the impact they will have on them and their families, but those attempts are not good enough. An independent review into the future of the state pension age that will not even consider the existing accelerated timetable is not good enough either. Sadly, previous Pensions Ministers have chosen to bury their heads in the sand, but I hope the new Minister is as anxious to find solutions as we are. Failing to use the Pension Schemes Bill to marshal in change would be a missed opportunity by the Government to address the concerns that are being raised by hundreds of thousands of women throughout the country. The Government must think again, and they must do so urgently to cause minimum hardship.

I am well aware that past Ministers have ducked the issue, claiming that sufficient transitional arrangements are in place. The accounts we have heard today, and many others that I am sure the Minister is aware of, demonstrate that those arrangements are totally inadequate. Despite his past misgivings, the Minister can provide real hope for the women affected. I hope he will take the opportunity to do so today.

[Mr David Nuttall (in the Chair)]

Before I call the Minister, I ask him gently to allow a couple of minutes at the end, so that Mr Blackford can sum up and wind up the debate.

10:44

[The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)]

It is a great privilege to serve under your chairmanship, Mr Nuttall. It is also pleasing to see so many Members present, which shows the importance of the issue. The Westminster Hall debates that I address usually have a much smaller audience. It is also fair to say that Members from all political parties have been present at different times in the debate.

[Mr George Howarth (Knowsley) (Lab)]

The Minister studied jurisprudence at university and had a career in the retail industry, so he will recognise the concept of good faith. Does he accept that the women concerned in this matter entered into a contract with the state about their pensions in good faith and that the Government’s actions amount to bad faith? If so, what is he going to do about it?

[Richard Harrington]

I thank the right hon. Gentleman for his intervention, which I will attempt to answer in a moment, after I have thanked the hon. Member for Ross, Skye and Lochaber (Ian Blackford) for opening the debate and hon. Members from both sides who contributed.

I must say that this is the first time that my rather limited attempts at jurisprudence between 1976 and 1979 have been mentioned in the House. At least they will now be recounted in Hansard rather more than they are by my tutors of the time. The serious point that the right hon. Member for Knowsley (Mr Howarth) makes is that hon. Members feel that the Government have broken some form of contract, presumably non-written, with state pensioners generally or WASPI women specifically. I have heard that point made several times today, but the Government’s position is very clear: this was not a contract. State pensions are technically a benefit. I add no value judgments to that, but since he made a legal point, I felt I should place the answer to it on the record.

[Ian Blackford]

Will the hon. Gentleman give way?

[Richard Harrington]

I think I should continue, but the hon. Gentleman will have time at the end.

[Mr George Howarth]

I am sorry, but—

[Richard Harrington]

I am very sorry, but to allow time for the hon. Member for Ross, Skye and Lochaber to wind up, I have to continue. I am happy to discuss the matter—although not my jurisprudence degree—outside the Chamber.

I have been quite clear in public and in the House that the Government will make no further changes to the pension age of those affected by the 1995 Act and the 2011 Act, nor pay them financial redress in lieu of pension. I know that Members present do not agree with that, but I feel it is right to state our position clearly without leaving any doubt. That view has not changed.

It is important to acknowledge that state pension age increases cannot be looked at in isolation. The acceleration of the state pension age is a consequence of serious and fundamental changes that continue to affect the wider state pension system, such as the significant changes in life expectancy in recent years, the huge progress made in opening up employment opportunities for women and the wider packages of reforms that we have introduced to ensure a fair deal for pensioners.

Life expectancy, as everyone knows, has been increasing for a number of decades; people are living much longer. However, the increase in life expectancy over time has not been linear. Between 1995 and 2011—in just 16 years—remaining life expectancy at age 65 increased by 3 years for women and 4 years for men, an unprecedented increase compared with past decades. There are significant variations across council authorities and within Scotland, for instance. I could spend a lot more time going into those differences, but I feel I have made the point.

Employment prospects for women have changed dramatically since the state pension age was first set in 1940, especially for women affected by the acceleration of the state pension age. The number of older women aged 50 to 64 in work in 2016 stands at more than 4 million —a record high. Some 150,000 more older women are in work than this time last year, and 580,000 more than five years ago. In addition, independent research by the Institute for Fiscal Studies has shown that employment rates for women aged 60 and 61 have increased as a direct result of the changes in state pension age. Furthermore, to help older women remain in work, the Government have abolished the default retirement age.

[Karl Turner (Kingston upon Hull East) (Lab)]

Will the Minister give way?

[Richard Harrington]

I am really sorry but there is not enough time. Members should hear me out.

Some women may wish to continue to work but be unable to do so. The welfare system provides a safety net for those of working age, which has been ignored by many speakers, and there are a range of benefits tailored to individual circumstances. The system is designed to deal with problems ranging from difficulty in finding work to disability or ill health making work difficult, and to help those with increasing caring responsibilities.

[Alex Cunningham]

Will the Minister give way?

[Richard Harrington]

I am sorry, but there is not enough time. [Hon. Members: “Oh!”] Well, okay, out of respect for the hon. Gentleman.

[Alex Cunningham]

I am grateful to the Minister for giving way. I took eight minutes, leaving him with around 15.

I gave the example of a 61-year-old woman in dire straits, and we heard many other examples of individual women who are not being looked after by the state benefits system. What can we do together so that the most vulnerable can live a life?

[Richard Harrington]

I know about the eight and 15 minutes, but I was asked by the Chairman to leave some time for the hon. Member for Ross, Skye and Lochaber; I was not being discourteous at all.

Benefits are a complex subject that I am sure we will have plenty of time to discuss elsewhere. Suffice it to say that the range of benefits is quite wide. If the hon. Member for Stockton North (Alex Cunningham) feels that there are gaps in the benefits system, I would be pleased to discuss them with him, but obviously not now because there is not enough time. I am trying to make progress, as you requested, Mr Nuttall.

The hon. Member for Strangford (Jim Shannon) and many other MPs shared cases of hardship, and of course I am sympathetic to them.

[Ian Blackford]

Will the Minister give way?

[Richard Harrington]

indicated dissent.

[Ian Blackford]

I will be very specific.

[Richard Harrington]

Okay.

[Ian Blackford]

The new information that I provided in my introductory speech was that a woman who was born in July 1953, who would have expected to retire in July 2013, was told by the DWP only in January 2012 that she would not be retiring until 2017. When did the Government and the Minister know of those facts? Why will they not now listen on that basis? The statement is that there will be no further changes, but these women have been seriously negatively impacted. The Minister must respond.

[Richard Harrington]

I shall respond in due course. I want to finish my point about the welfare system. The Government are spending £60 billion on supporting people on low incomes, £50 billion on supporting disabled people and £15 billion on incapacity benefits for working people. According to some of the contributions we have heard, it would appear that the Government are really not spending any money at all.

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

Will the Minister give way?

[Alison McGovern]

Will the Minister give way?

[Richard Harrington]

I really cannot take any more interventions, simply because of the time. It is not in my nature, because I like interventions, but I really cannot.

The hon. Member for Paisley and Renfrewshire South (Mhairi Black) and others mentioned a notional national insurance surplus fund. The fact is that, in order to maintain the minimum work balance of the national insurance fund, a Treasury grant of £9.6 billion was made in 2015-16. Public sector finance is complicated. It is easy just to pick out one bit.

I wish to spend a little time discussing the Scottish National party’s proposals. Its independent report suggests rolling back the 2011 Act and returning to the timetable in the Pensions Acts of 1995 and 2007, but that is simply too expensive for the Government to consider. The report puts the cost at £7.9 billion, but my Department’s direct comparison for the same period is £14 billion. We can discuss it however many times, but our modelling is comprehensive and no one is trying to take advantage of anybody else. I really believe that the SNP report has underestimated the impact by somewhere in the region of 50%. It has done so by ignoring most of the costs and applying costs only to the five-year window from 2016-17. Costs beyond that horizon have simply been ignored.

The Pensions Act 2011 not only increased the female state pension age to 65 sooner, but brought forward the increase to 66 for both men and women. The increase to 66 generates significant savings of more than £25 billion, yet such an important element of the Act is omitted from the paper, along with the associated costings.

John Ralfe Consulting, which is independent, reviewed the SNP option. Mr Ralfe concluded that:

“Sadly, the SNP has not managed to pull a Rabbit out of its Hat. The real cost of Option 2”—

the SNP’s preferred option—

“is almost £30bn…The SNP can claim the cost is much lower simply because it has chosen to ignore most of the costs.”

I hope that demonstrates that that option is simply not deliverable.

In the limited time remaining, I shall address the notification issue. In answer to the hon. Member for Fermanagh and South Tyrone (Tom Elliott), between 2003 and 2006, the DWP issued 16 million unprompted products called automatic pension forecasts. People contacted the Department and it gave out all those forecasts. In 2004, the Department ran a pensions campaign that included informing people of the future equalisation of the state pension age. The Government made sure that the information was there, but I accept that it was not communicated by individual letter, as it was later when, as I am sure Members will be aware, millions of letters were sent out.

To say that nothing happened is not true. I have seen a leaflet on equality in the state pension age that was widely circulated, with many, many copies printed. A summary of the changes was issued and the general public were advised, although I accept that they were not informed by specific direct mailing in the way mentioned by some Members.

[Lady Hermon]

It is very kind of the Minister to give way. He will recall that in an earlier intervention I quoted the Prime Minister, whom he serves. Does he appreciate that his words make the Prime Minister’s words sound extremely hollow? This is not a nation in which the Prime Minister appears to care about all the people of the United Kingdom. Will the Minister please take that message back to the Prime Minister?

[Richard Harrington]

I certainly will not take that message back to the Prime Minister, because I do not accept that anything I have said today is incompatible with what the Prime Minister said on the steps of 10 Downing Street. Governments have to make difficult decisions, and the allocation of public spending is one of the most difficult.

It is not fair to say that the acceleration of the women’s state pension age has not been fully considered. It went through Parliament, there was a public call for evidence and there was extensive debate in both Houses. The Government listened during the process and made a substantial concession worth more than £1 billion. Finally, Parliament came to a clear decision. As it stands now, it would cost more than £30 billion to reverse the 2011 Act.

[Alison McGovern]

Will the Minister give way?

[Richard Harrington]

I am very sorry but I cannot give way because there are only three minutes remaining.

I conclude by reiterating what I have told the House and, indeed, the public before: we will not revisit the policy or make any further concessions. The acceleration of state pension age was necessary to ensure the system’s sustainability in the light of increasing life expectancy and increasing pressure on public resources. Mr Nuttall, I have left three minutes, as requested.

10:49

[Ian Blackford]

I thank all Members who have spoken in the debate. I have enormous respect for the Minister, as I think he knows, but I must say that I am plain disgusted with the response we have had this morning. To that end, I shall be contending that we have not considered the acceleration of the state pension age for women born in the 1950s.

This is not acceptable, because we are now looking at a cliff edge. As I explained, there is an increase in pensionable age of three months for every month that passes. The Minister talked about a leaflet—a leaflet!—that went to the women concerned. We now know that a woman born in 1953 was given just over one year’s notice in 2012 that her pension age was going to increase to July 2017. We now know that a woman born in September 1954 found out in February 2012 that, rather than retiring in 2014, she would be retiring in 2020. Where is the fairness? Where is the notice from this Government?

I have heard various figures from the Government, but this is the first time the House has been told about that £14 billion. The Minister should come with me and I will take him through the Institute for Public Policy Research model. I stand fully behind the £7.9 billion. To hear him dispute that figure is disingenuous, to say the least. The Government have failed to accept responsibility for the WASPI women. The Minister should hang his head in shame. The Government must act, and we will continue to push them.

Question put,

That this House has considered acceleration of the state pension age for women born in the 1950s.

The Chair’s opinion as to the decision of the Question was challenged.

Question not decided (Standing Order No. 10(13)).

[Mr David Nuttall (in the Chair)]

The fact that the Question is not decided shall be reported to the House. It is possible for the Question to be put to the House subsequently for a decision without further debate.

[Ian Blackford]

On a point of order, Mr Nuttall. Given that this debate was granted by the Backbench Business Committee, I understand that it is open to any Member to take this to the Committee and ask its members to push for a vote on the matter in the House. The Government must and will be held to account.

[Mr David Nuttall (in the Chair)]

As Mr Blackford will be aware, that is not a point of order for me. He is aware of the rules relating to access to the Backbench Business Committee, as all Members are.

Could Members who are not taking part in the next debate leave quietly and quickly, so we can make progress?

Yazidi Former Sex Slaves: UK

Tuesday 15th November 2016 Westminster Hall

11:00

[Brendan O'Hara (Argyll and Bute) (SNP)]

I beg to move,

That this House has considered the treatment and care of Yazidi former sex slaves of Daesh in the UK.

As always, it is a pleasure to serve under your chairmanship, Mr Nuttall. I will begin by putting on the record my thanks to Members from all parties in both Houses of Parliament for the good will and support that they have shown in the days leading up to this debate. I also thank politicians from as far afield as Canada and Germany for the support they have shown me, as well as the many UK and Irish citizens who have contacted me in recent days to thank me for securing this debate and to urge me not to forget the plight of the Yazidi women and children who are currently being held in sexual enslavement by Daesh, particularly those in the city of Mosul, which we hope will be liberated soon.

My reason for seeking this debate is very simple. While every one of us earnestly hopes that in the coming weeks or months the liberation of Mosul will be complete and that Daesh will finally be driven from the city and out of Iraq once and for all, we also recognise that, as a result of that liberation, there will be hundreds of thousands of terrified people fleeing the city, and that a massive humanitarian support operation will be required to help to rebuild Mosul, allowing its citizens to return home and resume their lives in peace. I applaud the efforts being made by the UK Government, the Iraqi Government and the international community to prepare for that operation.

However, I will concentrate today on the fate of one small, specific group of people who are being held inside Mosul—3,000 or so Yazidi women and children. Since 2014, they have been raped, tortured, brutalised, bought, sold, held in sexual slavery and even murdered by Daesh. I plead with the UK Government not to allow this group, which is arguably one of the most abused and vulnerable groups of people on this earth, simply to be subsumed into the greater refugee crisis that is being predicted for northern Iraq in the coming months.

[Jim Shannon (Strangford) (DUP)]

rose—

[Graham Jones (Hyndburn) (Lab)]

rose—

[Brendan O'Hara]

I will give way briefly to the hon. Member for Strangford (Jim Shannon).

[Jim Shannon]

I thank the hon. Gentleman for giving way. This subject is very important and I thank him for bringing it to Westminster Hall for consideration.

None of us fail to be moved by the violence and degradation that has been carried out against those who have been made sexual slaves. Does the hon. Gentleman agree that we must address not only the victims’ physical issues but their mental issues, including the trauma that they have suffered? The Foreign and Commonwealth Office and the Department for International Development should work together to ensure that they can help these Yazidi families, especially as they are in our hearts every day.

[Brendan O'Hara]

I thank the hon. Gentleman for his intervention. I know that he is a great champion of minority communities in the middle east and I entirely accept what he says. I will develop that point later in my speech.

[Graham Jones]

I thank the hon. Gentleman for giving way. It is very timely that he has brought this subject to Westminster Hall. I was fortunate enough to be on the edge of Mosul last week and I saw six of the camps for internally displaced persons, which is why I have come here today to contribute to the debate.

However, I would like to ask the hon. Gentleman a question of fundamental importance. We all want to help those people who are victims of sexual slavery. The British Government and the Ministry of Defence have provided forty 50 calibre machine guns to the Peshmerga, to try to help to relieve the situation in Iraq. In addition to wanting to help the Yazidis, does he support the position of the British Government and the MOD in helping the Peshmerga?

[Brendan O'Hara]

I thank the hon. Gentleman for that intervention, and yes I do. However, that is an entirely separate issue to the one I am considering today. While we support and will continue to support the military defeat of Daesh, I will concentrate today specifically on this tiny minority—the members of the Yazidi community—who are in desperate need of our help.

These innocent women and children—whose plight, in many ways, has become emblematic of the base depravity and callous barbarism of Daesh—need our help. These innocent women and children have witnessed the slaughter of their husbands, their sons and their brothers as Daesh has attempted genocide to try to erase all trace of the Yazidi community, and they need our help. These innocent women and children, who come from a very traditional and conservative religious community, and may well have been physically and psychologically irreparably damaged, need our help.

My motion today simply says to the Government: when Mosul is liberated and these innocent Yazidi women and children are free from the sexual enslavement of Daesh, please do not let them become lost in the throng of civilians fleeing Mosul towards the refugee camps. I ask the Government to recognise what these women and children have gone through; to see them as the unique case that they are. Together let us find a specific UK response that recognises the unspeakable atrocities that they have suffered, simply because of who they are and what they believe.

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

I am sure that we are all aware that there are British citizens among the members of Daesh in Mosul and in Syria, and that they have committed crimes of violence against Yazidi women and other women. Will the hon. Gentleman join me—I am sure he will—in urging the Government to act as an agent of justice, collecting evidence so that justice may be brought against those British citizens?

[Brendan O'Hara]

I absolutely concur, and the full force of the law must be brought against any British citizen who is in any way involved in what has been happening within Iraq and Syria.

I am sure that everyone in Westminster Hall today is very well aware of the catalogue of atrocities carried out by Daesh against the Yazidi community. I will not go into too much detail, but it is worth reminding ourselves of the level of barbarism displayed by Daesh in its genocidal assault; some of it beggars belief. At the start of this year, I arranged for a young Yazidi woman to come to the UK to speak to this Parliament. Her name was Nadia Murad and the personal testimony that she gave that evening in February will live long with everyone who heard it.

Until August 2014, Nadia lived quietly in the village of Kocho with her mother, her brothers and her sisters. Then Daesh arrived, with the sole intention of completely destroying that small community through murder, rape and kidnap.

That evening in February, Nadia told us in her own words that

“They used rape as the means of destruction for Yazidi women and girls, ensuring these women will never return to a normal life.”

Days after Nadia was taken captive, she had to watch from a school building as six of her brothers were executed. Thereafter, she was taken to Mosul, where she says she was among thousands of women and children being held in the city. It was there that she was given to a Daesh fighter. She was repeatedly tortured and raped by the man, before one night, in desperation, she tried to escape. She was caught and punished. She said, about the man,

“he beat me up, forced me to undress, and put me in a room with six militants. They continued to commit crimes to my body until I became unconscious.”

Three months later, remarkably, and showing incredible courage, she attempted another escape. This time she was successful and is now resettled in Germany.

[Graham Jones]

As I said, I was in the camps last week. What the hon. Gentleman says is very powerful and true. Just how bad the situation with the Yazidis is cannot be overstated. When I asked the people who work in the camps, “How bad is this? What is the youngest person who has been raped and abused by Daesh?”, the answer that came back was, “A two-year-old”. That is the youngest person they have had in the camps who has been raped and sold as a sex slave. I just want to put that on the record, to reinforce the hon. Gentleman’s point.

[Brendan O'Hara]

I genuinely thank the hon. Gentleman for that intervention. It is unthinkable to any normal person what the community have had to suffer. I do not want to go into too much detail because I believe it is far too upsetting, but the detail is there for people to see. But what I will say in praise of Nadia Murad, who was a teenage girl at the time, is that rather than hiding away from the world she has devoted her life to highlighting the plight of the people of her community, pleading with the world not to turn its back on them.

[Graham Jones]

I want to add that it is not just women; young boys are being sold for sexual slavery as well, and I hope that the hon. Gentleman will mention that.

[Brendan O'Hara]

Yes, absolutely. I take the hon. Gentleman’s point.

Nadia Murad is, without doubt, one of the bravest and most courageous people I have ever met or, indeed, am likely ever to meet. I am absolutely delighted that her selfless dedication to the cause of her people has been recognised internationally. As well as being nominated for a Nobel peace prize, she was recently awarded the Václav Havel human rights prize by the Council of Europe, and the highly prestigious Andrei Sakharov award along with another young Yazidi girl, Lamiya Aji Bashar.

In September, I was given the enormous honour of being asked to go to the United Nations with Nadia, where she was made a UN goodwill ambassador for the victims of people trafficking by Secretary-General Ban Ki-moon. It was while I was in New York that I met a remarkable man—Dr Michael Blume from the State Government of Baden-Württemberg in Germany. Dr Blume runs what is known as the special quota programme, a scheme that has taken approximately 1,100 Yazidi women and their children to Germany so that they can receive specialist psychological treatment as well as get the much-needed physical and emotional support that will assist them in their recovery. Working alongside Dr Blume is Dr Jan Kizilhan, who this year was the joint winner of the Geneva summit’s international women’s rights award for what was described as his “extraordinary and inspiring” work in rescuing Yazidi and other women who had been enslaved, assaulted and sexually abused by Daesh.

Together, Drs Blume and Kizilhan have taken some of the most terribly damaged and vulnerable women and children out of northern Iraq and are currently providing them with treatment they could not have had if they had stayed there. As Dr Blume explained, part of the problem is that there are only 25 psychologists in the whole of northern Iraq and the vast majority of them are male and Muslim, meaning that a heavily traumatised Yazidi woman would not want to be treated by them.

Let me be clear that I am not demanding that the UK Government adopt the Baden-Württemberg model lock, stock and barrel, but what I am saying to the Government is, “Please look at what can be done by an Administration with the desire and willingness to make things happen.” The Minister-President of Baden-Württemberg, Mr Kretschmann, said when launching the scheme:

“This is an exercise in humanity, not in politics”.

[Kirsten Oswald (East Renfrewshire) (SNP)]

How we deal with the plight of these innocent Yazidi women and children speaks to our collective attitude to supporting the rights and safety of religious minorities. Does my hon. Friend agree that more than ever we must commit to helping these poor women and children and say that we will always stand with those who are so vulnerable?

[Brendan O'Hara]

My hon. Friend is absolutely correct. We must commit to helping. We cannot stand by and leave it to others to take up what is a very challenging position.

I would like to point out briefly how the Baden-Württemberg scheme works. Dr Kizilhan, himself a German-Yazidi, and his team go to northern Iraq to identify women and children they believe they can best help. The selection is based on the following criteria: first, whether the woman or girl has escaped from Daesh captivity; secondly, whether there is clear evidence of severe abuse and psychological damage from their period of captivity; and, thirdly, whether treatment in Germany will help, beyond what is available locally. If those three criteria are met, with the approval of the Kurdish Regional Government the women and her children are offered refuge and intensive treatment in Germany. As I said, there are currently 1,100 former Daesh sex slaves, both women and children, in the Baden-Württemberg area—the youngest is eight, the oldest is 55 and the average age is about 19.

In Germany, once the women and children are sufficiently settled in shelters, they receive not only specialist trauma counselling but German language lessons, and for those who are of school age it is compulsory for them to attend school. I understand from what I have read that the results of the programme are very encouraging. Indeed, some of the women now have jobs and are able rent their own apartments. Admittedly, recovery varies considerably, and for some it will take much longer, but Dr Blume told me that in Germany they have not had a single case of suicide, whereas in the camps in Iraq suicide among traumatised women is, tragically, fairly common.

This is a programme that works and I believe that the Government would do well to look at it very closely, to see how this country can directly help those innocent victims of Daesh. When we spoke in September in New York, Dr Blume was clear that any Government or Administration wishing to establish a programme to help these women and children would be welcome to avail themselves of the tried and tested model currently in place. Germany provides a safe haven for the women and children, and I can see absolutely no reason why the United Kingdom cannot also do that.

[Graham Jones]

My experiences last week showed me that a lot of the Yazidi women are traumatised because their children have been taken from them. All of a family’s members are not located in the camps—they did not escape together. One of the psychological problems the women have is coming to terms with the fact that some of their children remained in Mosul and were sold on as sex slaves, and they do not know where they are. They do not want to be located further away from Mosul. They want to be located back there, so that they can go and find those children, who are being repeat sold on as sex slaves.

[Brendan O'Hara]

The hon. Gentleman makes a very good point. It comes down to choice. The women are given the choice to go to Germany; they are not forcibly taken there. Many women who apply do not go; likewise, many women who could go choose not to.

As I said at the start of my speech, it looks increasingly likely that the people of Mosul, having been held captive by Daesh for more than two years, could be liberated within weeks. In the immediate aftermath, there will be an urgent need to care for civilians fleeing the fighting. In that maelstrom, we must ensure that the Yazidi women and children, who have been most wickedly and cruelly affected by Daesh, are given the care they urgently require and deserve. If learning from what others have done is the best way to do it, I urge the Government to do that and to act quickly and decisively.

As I understand it—the Minister can confirm this—the Government’s policy for victims of modern slavery recognises that up to two and a half years of discretionary leave to remain can be given precisely in such cases as that of the Yazidis. If that is the case, I urge her to move quickly to ensure that the United Kingdom becomes a safe haven for those victims.

Time is running out. I hope that the liberation of Mosul is near, but let us be honest: if we do not do something now, we will not do anything. If we do not do anything, history will be our judge, and I predict it will pass a particularly harsh judgment on us.

11:20

[The Parliamentary Under-Secretary of State for the Home Department (Sarah Newton)]

This has been a wide-ranging debate, and I will not have the opportunity to answer every point in these 10 minutes. I will ensure that the Foreign and Commonwealth Office and the Department for International Development respond to some of the specific questions. I thank the hon. Member for Argyll and Bute (Brendan O'Hara) for securing this debate on an incredibly important subject. To hear about the plight of the Yazidi people at the hands of Daesh is utterly harrowing. We must do all we can to support the victims and defeat the vile perpetrators.

It is inspiring to hear about the case of Nadia Murad, who survived such appalling abuse and is now using her freedom to raise awareness about these terrible crimes. Nadia’s Initiative is working to ensure that all marginalised communities subject to mass atrocities, sexual enslavement and human trafficking can have a global voice and get the support they need. I am pleased that the hon. Gentleman invited Nadia to speak in Parliament earlier this year and attended her appointment in New York as the first United Nations goodwill ambassador for the dignity of survivors of human trafficking.

Tackling modern slavery, which includes human trafficking, is a top priority for this Government. The enforced sexual slavery of Yazidi women by Daesh is a particularly horrendous example, but sadly modern slavery is a global problem that exists all around the world, including our country. That is why just three weeks ago at the Vatican the Home Secretary announced a new modern slavery innovation fund of up to £11 million. It will be used to test innovative programmes to reduce the prevalence of modern slavery, particularly in those countries from which we see the greatest number of victims in the UK. That is also why we have announced a new child trafficking protection fund of up to £3 million, which will primarily fund work in the UK to support victims of child trafficking from aid-eligible countries.

Both funds are primarily seeking innovative ideas and are open to bids from organisations in the private, public and third sectors. Both funds form part of the £33.5-million UK aid programme that the Prime Minister announced in July. Working with our partners, that investment will help to tackle the root causes of slavery. It will support effective co-ordination among international partners and help to uncover and test new ways to tackle this horrendous crime.

[Brendan O'Hara]

rose—

[Sarah Newton]

I will just make a bit more progress.

The hon. Gentleman talked about what more we could be doing right now for the several thousand women he identified who are in Mosul. While I totally agree with him, we need to be focused on defeating Daesh and bringing lasting peace to these countries. Clearly there is more that we need to do right now. Through our human rights and democracy fund, we are supporting projects on the ground in Mosul that are particularly targeted to support those members of the Yazidi community, whether male or female, who have been exposed to the most appalling sexual violence, as the hon. Gentleman said. That work is reaching several thousand people right now.

We have a long and proud tradition of bringing people into our country who seek refuge. There will be the possibility of the victims of this awful sexual exploitation coming to our country, but our priority is to support those communities on the ground now. As Members have said, people want to stay in their communities and their homes.

[Brendan O'Hara]

rose—

[Graham Jones]

rose—

[Sarah Newton]

I will give way once I have finished this point. We are providing psychiatric help and all sorts of other help on the ground to the people who have experienced these horrendous things.

[Brendan O'Hara]

Will the Minister accept the voice of experience that says that specialist treatment for the most traumatised victims of Daesh is not available on the ground and that there has to be something more than just saying, “We can deal with this problem in northern Iraq”? We have a responsibility to ensure that we give them the best, and the best is not in northern Iraq.

[Sarah Newton]

I absolutely agree with the hon. Gentleman that we need to provide good psychological and other support for people in Mosul right now. My understanding is that the available DFID funding is being put in place. I am sure that more can be done. Because we have so little time this morning, I will ensure that the DFID Minister who is funding this work writes to the hon. Gentleman and other Members who have raised the issue this morning to ensure that we communicate exactly what is happening on the ground, including the amount of money, support and specialists we are sending over there to support local people in delivering these things.

[Graham Jones]

I concur with the hon. Member for Argyll and Bute (Brendan O'Hara). There are very few mental health services. There are also very few non-governmental organisations operating in the field of mental health services in northern Iraq, as he said. It is a huge problem. The first thing the British Government could do to try to resolve the situation is ensure that the Yazidis are kept in a Yazidi camp, with other populations, such as Arabs—the Yazidis may fear them due to the mental issues and torment they have experienced—located in a different camp. At the moment, they are in the same camp, and that is proving exceedingly destructive. The first thing the British Government and the Minister could do is ensure that Yazidis are looked after in a camp of their own.

[Sarah Newton]

I am grateful to the hon. Gentleman for his intervention. We are part of a global coalition of 67 countries working hard to support the Iraqi Government as Mosul is liberated to ensure that civilians are protected and the humanitarian impact is minimised. We are also looking at long-term programmes of reconciliation and peace in the area. Good progress is being made, with several dozen settlements already set up.

I happened to visit a fantastic NGO in my constituency on Friday, called ShelterBox, where I met someone who is a frequent visitor to Iraq. ShelterBox is part of the team of British NGOs setting up new camps literally as we speak. Its intention is to provide support in a co-ordinated way. With people flooding out of Mosul, it wants to ensure that each of those communities is properly looked after, with all the issues about their different faith backgrounds and the levels of trauma they have faced properly taken into consideration. I heard at first hand from people who are in Iraq and are going to Iraq—I hope they have arrived safely today—about the work that is going on. The best thing I can do is ask the Secretary of State for International Development to provide the quantum of the activity that is going on. Members will appreciate that it is a fast-moving, dynamic situation, but we will ensure that they get the latest information about the number of people going there, the type of support and the specialist provision that has been called for that focuses on the Yazidis.

The hon. Member for Argyll and Bute asked another important question, which was about whether we would be doing everything we can to ensure that data and evidence are being gathered so that we can secure prosecutions. I reassure him that we are doing everything to collect and preserve evidence so that it can be used by judicial bodies to make a judgment about the atrocities that have been taking place. Any UK nationals who have gone there and are participating in those atrocities can be prosecuted for crimes against humanity, war crimes and genocide in our domestic courts. Our absolute priority is to do our best to support the victims now. It is important that we send out a clear message that people cannot act with impunity. The appalling atrocities will be dealt with and people will be brought to justice. I hope that reassures Members that we take this matter extremely seriously and are doing everything we can to help the victims of the appalling situation in Iraq.

Question put and agreed to.

11:30

Sitting suspended.

Circular Economy: Leftover Paint

Tuesday 15th November 2016 Westminster Hall

[Mr Graham Brady in the Chair]

11:04

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I beg to move,

That this House has considered the circular economy for leftover paint.

It is a pleasure to serve under your chairmanship, Mr Brady. I thank those Members who have turned up for the debate on this important issue. Originally, my near neighbour and hon. Friend the Member for Huddersfield (Mr Sheerman) was to lead the debate, but was unfortunately unable to do so at the last moment and I gladly offered to take over. Had he been able to be here, my hon. Friend, whom I have known for a long time, would have been a great champion on this issue, not least because he sponsored early-day motion 300 on the remanufacturing of paints in July last year. I am pleased that that early-day motion was tabled, as it shows the widespread support in Parliament for creating a circular economy for leftover waste paint.

To create a truly circular economy takes time and co-operation and needs the backing of the Government, largely because markets cannot deliver this new concept, a circular economy—although, when I think about it, I am not always sure it is that new—through business as usual. Government support is often required to get markets aligned and to make sure that we have developed those markets to maximise the potential of the concept. Although the Waste and Resources Action Programme has helped to make progress, much more remains to be done.

[Sir Paul Beresford (Mole Valley) (Con)]

As the hon. Lady may have heard before the start of the debate, the British Coatings Federation is headquartered in my constituency and, unsurprisingly, I have been nailed to the floor several times on this issue. She is right: what we need to do is get a critical mass of sales of recycled paint, as paint, to stimulate the market and move the issue in the public’s mind. Government, particularly local government, should be able to do that. I was also interested in the briefing. As hon. Members can tell from my accent, I come from New Zealand, where, despite being an earthquake country—as people may have recognised—paint materials are being used to make a sort of porous concrete, although I hope not load-bearing.

[Angela Smith]

I thank the hon. Gentleman for that intervention. He points to the importance of society recognising the win-win situation here. Nobody likes waste, and common sense tells us that if we can reuse it, we should. The ingenuity of modern science is such that it looks as though waste paint can be used to manufacture certain types of concrete. Work on that is ongoing. One only has to look at the paper industry to see what can be done if our minds are truly focused on maximising the potential from waste products.

The hon. Gentleman mentioned that the BCF is in his constituency. I have the world-famous Ronseal in my constituency, a very old company headquartered in Chapeltown. It is now officially Sherwin-Williams, but to local people it will always be Ronseal, a famous name. I have to say this: it does exactly what it says on the tin. No doubt every hon. Member present has used one of its products at some point.

I am proud to have such a company in my constituency, not just because of its amazing slogan that is now part of the language, but because it is good in every way. It makes quality products. It has a workforce to be proud of, who are very loyal to their employer, and it has a real commitment to innovation. I had the pleasure of visiting the company once again the other week to be shown how it is changing its manufacturing processes to decrease waste wherever it possibly can, not just because that is good for the environment but because it is good for the company as well. It reduces cost and effectively improves productivity.

I do not think there will be any division here today on just how important the paint and coatings industry is to the British economy. The sector supports some 300,000 jobs and sells 675 million litres of coatings each year. If we do the maths, that works out at 21 tins of coatings sold each and every minute of the year. The sector directly contributes £180 billion per annum to the UK’s GDP and is a great exporter to the rest of the world.

Why do I and the industry believe that a circular economy is important to the sector and to consumers? Before answering that, I will first set out the scale of the problem that we as a country face with leftover paint. The best way of putting it is to relate it to everyday experience, and I do not think Members of the House will be any different from the rest of society on this one.

There is no doubt that in our garages and sheds we all have unwanted and unused paints. The average UK household has six cans of leftover paint—probably more in my case, if I am honest—taking up space somewhere on the premises. Although some of that paint is no doubt kept for repair and touch-up work in the future, some 30% of people have responded to surveys saying they over-purchased the product in the first place. It is easy to see why that might happen. People overbuy paint because they want to buy from the same batch to get the same colour, which can lead to some of the oversupply problems. Through the project PaintCare, the industry is trying to develop tools to enable customers to be more precise about what they buy, which can only help the situation. I applaud that initiative.

The cost to local government of disposing of the 55 million litres of waste each year, or 71,500 tonnes, which is equivalent to the weight of a luxury cruise ship—albeit, I admit, a fairly small luxury cruise ship nowadays—is estimated at about £20.6 million. The problem is mainly left to local authorities to deal with through general waste or at their household recycling waste centres.

Currently, only 2% of paint or other coating is reused or remanufactured. Most of the remaining 98% is lost to us as a resource, principally because it is incinerated or ends up in landfill. The reasons for that are many and varied, but in the main it is due to the fact that two-thirds of household waste recycling centres do not accept liquid paint, because the disposal of liquid waste, including liquid paint, to landfill is banned in the UK, pursuant to EU requirements. The cost to local authorities of dealing with it is very high, which means they are effectively disincentivised and feel unable to accept liquid paint as part of their waste collection service. Householders are therefore often left with no option but to dispose of paint in general waste. In other words, many residents throw away their waste paint in the normal waste collection, no doubt in black bags so that the bin men do not see it. By so doing, they pass on the problem to others to deal with.

PaintCare consumer research also indicates that 62% of households would use their household waste recycling centre to dispose of waste paint given the opportunity, which points to the importance of that network as a means of disposal for leftover paint. I therefore very much welcome the BCF PaintCare project. I pay tribute to the BCF—it is located in the constituency of the hon. Member for Mole Valley (Sir Paul Beresford)—which has been assiduous in pursuing this project for the reason I outlined earlier: it is good for society, the environment and business, so it is a win-win all around.

The PaintCare project is attempting to turn an environmental threat into an opportunity by working towards a systematic approach to collecting and sorting waste paint. It will also make the remanufacturing of paint from waste products a more viable economic process, as the hon. Gentleman pointed out. However, a remanufacturing industry needs a market—I will come to that point later. The project also involves the BCF working with local government to develop new processes to deal with the waste. At the same time, paint manufacturers are investing millions of pounds in projects to demonstrate how remanufacturing can be made more viable, with a view to developing a long-term market for it.

That innovative work is an excellent example of how a circular economy can work and secure both waste reduction and economic growth. I know that the Minister has a certain view of circular economies—at least, she said in a previous debate that she does not like the term. I also know that there can be a negative side to the concept of the circular economy, because it can be seen to trap economic growth within a certain space, but in my view it is a sophisticated way of describing a common-sense process that has the potential to make the circle bigger and encourage economic growth. There is a saying—I do not know whether it is special to the north of England—“Where there’s muck there’s money.”

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)]

Brass.

[Angela Smith]

Yes, “Where there’s muck, there’s brass”.

The important point is that, wherever possible, we should be generating economic growth from waste. It does not matter which term we use to describe the process by which we systematically embed this concept into our economy more generally; we should be committed to doing it. If we are to embed the circular economy on a national scale, it needs Government support. I therefore challenge the Minister to act and to commit to ensuring that 5% of all Government painting contracts use paint products containing a significant percentage of remanufactured content. That will help to stimulate a market for reused paint.

Paint manufacturers are doing their bit; the Government must now step up and play their part too. After all, many companies of all sizes are demonstrating their willingness to invest in this sector and in solutions. Several million pounds has already been invested in commercial ventures and in supporting social enterprises. If the Government are really going to have an industrial strategy—I believe they are serious about doing that—let us ensure that that kind of commitment is at the heart of the process. Let us ensure that the concept of making the best possible use of our resources and recycling them over and over again is embedded within the industrial strategy.

As long as we have houses to paint, and as long as consumers have a desire to protect and look after their homes, we will need a painting industry, which means that we will also have an issue with leftover paint leaking into our environment or being disposed of in general waste. We need to tackle that issue, so creating a circular economy in paint surely makes perfect sense. Not only will it benefit the environment; it will help hard-pressed councils to reduce costs and create a new industry in the remanufacturing process. Like many things, however, Government assistance is needed to help that contribution to the circular economy to grow and prosper. I therefore ask the Minister to update the House on the Government’s progress in this area. Will she commit to a 5% Government target? It is interesting to note that California in the United States—one of the more progressive elements of that continent as it stands now—has made that kind of commitment to procurement, and I think there are initiatives along those lines in New Zealand. The UK should take the lead in Europe. If we are going to leave the European Union, let us at least make the most of where we are and show a bit of leadership on this issue.

What work is the Minister doing with the industry to develop the innovative approaches we need to deal with leftover paint? What will she do to help local government to develop capacities to deal with the mountain of waste paint that we consumers leave behind each year? I look forward to her response and the responses of the other Front Benchers.

14:46

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

It is a pleasure to serve under your chairmanship, Mr Brady—I never thought I would be saying it is a pleasure to speak in a debate about paint so early in my parliamentary career. I thank the hon. Member for Penistone and Stocksbridge (Angela Smith) for introducing the debate and for being an able substitute for our colleague, the hon. Member for Huddersfield (Mr Sheerman).

What we are discussing is a very simple concept, but given the statistics that the hon. Lady outlined, it is clear that action is needed. The fact that only 2% of leftover paint is recycled and reused at the moment is startling, especially given that we have a drive towards recycling in general and that people are more aware of the issue in a wider context. As she outlined, disposal to landfill results in £20.6 million of extra costs to taxpayers, although that comes through at local level.

Another issue is the widely adopted waste management strategy of the non-acceptance of liquid paint at recycling and waste disposal centres, which runs the risk that people may dump paint, although it does not give them an excuse to do so. I always get really irritated when the public complain that dumping has happened and blame it on the local council. It is not councils’ fault, but they can sometimes allow bad behaviour to happen. As the hon. Lady outlined, people may hide paint disposal in black bags in their general refuse, which defeats the purpose of disposal. Another risk is that people seem to think that sinks, drains and toilets are a fantastic disposal mechanism. They think that liquid paint can go down there, but unfortunately it still goes into the waste disposal system. It either goes through the sewage treatment works or, worse, there is a risk that it enters the river system, which presents another hidden risk of pollution.

We need to ensure that people recycle more and buy less. We need to work with retailers, because they actually encourage us to buy more. Many of the paints and coatings at DIY shops are three for two, so our human instincts kick in and we say, “Well, I’ll just buy the extra tin to get a saving, and if I’ve got any left over I’ll keep it for the future.” We have to educate the wider public and retailers.

I double-checked the waste management strategy at the local authority where I used to be a councillor, and it has fantastic recycling rates, but it confirmed to me that it is unfortunately now in the same position as many other local authorities and does not accept liquid paint. It had a tie-up with a charitable organisation, RePaint Scotland, which folded locally due to a lack of funding, so now there is no way to recycle paint. So my local authority, too, only takes paint to landfill, once dried out or filled with sand to continue the drying-out process. We need to consider how to support such charities. We are paying for paint to go to landfill anyway, so it would be much better to support the charities instead. In the long run, they can also make a difference by supporting other community organisations, vulnerable tenants, or people in new tenancies, and giving them pride in their homes.

Without wanting to allude to typical jokes about Scotsmen, I have an instinct for recycling and reuse. Last year, I was in the States with my in-laws—I was staying there because my wife is American—and they were selling a property, which had a basement full of leftover things, including years of leftover paint. However, we cleaned out the basement and actually used a lot of the paint to paint it, brightening it up, which made a huge difference and made the house sellable. That was my instinct: not to dispose of the paint, but to reuse it.

I discovered something else with the remnants of the leftover paint. As has been outlined, we were not able to dispose of liquid paint in waste disposal, so we had to dry it out. I can tell the House that sometimes drying out paint is not an easy job, believe it or not. It was really warm in the States, we had the paint tins sitting out open and we spent days literally watching paint dry—I had to get that pun in. So we can see how, if people without patience want to dispose of paint quickly, the risk is that they will choose the wrong behaviours.

I also want to touch on the wider circular economy. We buy into the principle of it, and I will mention a couple of things that the Scottish Government are doing for the wider circular economy. They are starting to lead the way, and I hope that the UK Government will follow suit. Earlier this year, the Scottish Government published “Making Things Last”, a strategy to do with developing a circular economy strategy for Scotland. They also launched a £70 million circular economy fund, which is aimed at stimulating innovation, productivity and investment.

At the time, David Palmer-Jones, the chief executive of Suez Environnement’s UK recycling and recovery business, suggested that the UK Government should take

“a leaf out of the Scottish administration’s book”,

by incorporating circular economy principles into business, energy and industrial policy, and I hope we will hear something from the Minister on that. I also agree with the proposed challenge to achieve 5% of Government contracts using recycled paint—I am interested to hear about that as well. I again commend the hon. Member for Penistone and Stocksbridge for introducing the debate.

14:52

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Brady. I thank my hon. Friend the Member for Huddersfield (Mr Sheerman) for putting on the agenda this important issue of the circular economy—important to debate in itself, and important in the context of where leftover paint fits into that agenda. I also thank my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) for her contribution, which outlined the importance we should give to some of these niche areas, because the principles behind them then obviously expand to so many other areas.

A startling amount of paint is left over—55 million litres a year, which I understand is equivalent to 20 Olympic swimming pools-worth of paint. That is a baffling thought. I want to put on record my thanks to PaintCare and the British Coatings Federation for their interest in the subject. They are really putting an aggressive agenda forward on how we draw the reuse of leftover paint into the circular economy, and on the opportunities before us, which we are debating this afternoon. There are real opportunities in the reuse and remanufacturing of paint.

I always think that any debate on the circular economy has to begin with the issue of consumption. As the hon. Member for Kilmarnock and Loudoun (Alan Brown) said this afternoon, offers that encourage us to overbuy clearly move things in the wrong direction. We also know that there are issues around the size of containers, because they are so large. Price is not proportionate to volume in those containers, so we often buy the larger pot of paint, just in case we need it and, obviously, to see the same colour match, as opposed to buying smaller quantities, which is de-incentivised by the size of the containers. That in itself is an issue that the paint industry could look at. Again, I ask for the Minister’s comments on that, and perhaps on how the Government could help the paint industry look at how to reduce the amount of leftover paint. We know that this is an issue right across industry, and hits on so many other areas too.

We recognise the incredible work of PaintCare in trying to educate the public about the use and volume of paint. PaintCare has a calculator for use on its website, which I had a look at, to help customers make better choices about volumes of paint. We can all benefit from that, because it means a reduction in cost for ourselves as customers, and it provides very useful advice using the technology that is available.

There are other principles to look at, and this afternoon I want to focus on the opportunities we have to reuse and remanufacture paint. We all understand that too much paint is being disposed of at landfill sites or going to incineration, which clearly has a detrimental impact on the environment. Therefore, it is really important that we ask why that is happening and what steps we have to take to move the agenda forward not just in generality, but by having targets year by year.

First, many have identified the fact that far too few household waste and recycling centres accept paint. There should be a universal approach, not a postcode lottery. Will the Minister therefore look at how she may support local authorities to ensure that all centres accept paint that has not been used? Having that postcode lottery is detrimental to the whole recycling business. We know how there are different rules from local authority to local authority. We press the Minister to move forward and to have a universal system, so that we may all understand what gets recycled and how we can dispose of things in the best way possible, and so that we have that link back to reuse and remanufacturing. Everything should be collected in the best way possible, and not put into landfill or sent for incineration.

I was struck by a meeting I had recently with Tetra Pak, the manufacturer, looking at how it disposes of its materials. It is a unique manufacturing sector, and it now recycles 100% of its products through a process that begins with universal collection. Tetra Pak itself, as an industry, started to put its own banks in place for waste products. It then worked increasingly with local authorities to incorporate Tetra Pak products into kerbside collection. It continued, where kerbside collection points were not being taken up by local authorities, by having Tetra Pak’s own collection, so there is now 100% coverage of opportunity.

That seems to be a sensible way of introducing a universal approach, but clearly we want to see local authorities having the responsibility, with support from Government, to take waste products. There are of course issues about storage, but they can be addressed. What Tetra Pak does with the products, once collection is done, is carry out its own remanufacture of 100% of the materials—the aluminium, the plastics and the pulp of cardboard is remanufactured by Tetra Pak and put into other products. That just shows what can be done, and we urge the Minister to look at that.

The UK clearly needs to ensure that there is continued research into the chemical composition of paint and how it can be reused. We know that the paint that is currently remanufactured is mainly water-based paint, and therefore we need to look at the science behind paint to ensure that we can recycle an increasing amount of the material. That is an important part of this—putting money into research is so important in the whole waste sector. Likewise, there is an onus to deal with packaging for paint—the paint containers can often be appropriately recycled, but at the moment they themselves end up in landfill, which is a blight on our environment.

We have heard that only 1% of paint products are reused and 1% are remanufactured. Just 2% are reutilised; 98% go to waste. That is a very poor statistic, and having a 5% obligation on local authorities through their procurement processes would be a good way to start to move the agenda forward.

We also have to look at the opportunities for reusing paint. We have heard that there are lots of opportunities for local authorities to be in touch with local projects and voluntary sector organisations that could really benefit from that as opposed to having to budget for paint. If such projects are properly managed, they could be scaled up nationally, not just focused on locally, to support voluntary organisations and other community interest companies to reuse paint.

I observed a couple of weeks ago a fresh pot of paint being used on external boarding around a building site and thought, “Actually, that could be reused or recycled paint that has been collected from elsewhere.” We know that there is a lot of waste, and that adds to the on-costs of projects. Dialogue could therefore take place not just with the voluntary sector but with the construction trade, where there could be real opportunities in looking at how organisations could use remanufactured and leftover paint. If we are going to see an expansion in the construction industry, there is certainly an opportunity to reuse such products and ensure that they do not go to landfill.

People probably do not know much about remanufactured paint, but it is around 25% to 30% reused paint, to which new paint is added. There is an opportunity for remanufactured paint to be available on the market, perhaps at a reduced cost. That could address some issues around inequality and help to move paint on an industrial scale. There are opportunities that we can look at to address that issue.

I want to raise the issue of why paint ends up in incinerators or landfill at all. What I will say about paint applies to so many other products; this is about the whole approach that the Government need to take—whether it is about organic material or manufactured goods—to the whole issue of the circular economy, and why it is so important to mainstream the circular economy into manufacturing processes, everyday public sector use and the way we think and operate as a country.

Yesterday, in another debate, I mentioned the research that is being undertaken into how we mitigate sending anything whatever to landfill and move away from incineration. The techniques of chemically breaking down materials or autoclaving them with high-pressure steam enable waste products to be separated into raw products in different ways, so that a far higher proportion of the components of the original material can be put to alternative use. Those components can be put back into manufacturing processes or even put into energy production. I know that work is being undertaken on how paint can be reused in products such as load-bearing concrete, which was mentioned by the hon. Member for Mole Valley (Sir Paul Beresford), who I am sorry to see is no longer in his place. It is important that we look at all options for repurposing paint.

Investment in research on those processes is vital to prevent so much more from ending up in landfill. As I mentioned yesterday, the Biorenewables Development Centre just outside York, a project that has sprung from the University of York, is looking at how we can mitigate waste altogether. That is of huge interest to me, and I know that it will also interest the Minister, given her background. I urge her to look at the opportunities that are being created through the research that is being carried out and try to bring that agenda back into the mainstream.

Ahead of next week’s autumn statement, I note the call from the British Coatings Federation and PaintCare for remanufactured paint not to be subject to VAT. Not only has VAT been paid previously on part of the product, but that would result in a narrowing of price margins between remanufactured paint and new paint. That seems a sensible incentive, and I trust that the Minister will raise that with the Treasury ahead of the autumn statement.

This has been an interesting debate. I have to say that I did not know we could debate the reuse of paint in such depth, but it springs into so many other agendas. I trust that the Minister will embrace the circular economy, as the Opposition do. I know that she has some issues with it, including its name, but it is being promoted heavily and the concepts are good and right for our future. It is right for our environment, after all. I therefore trust that she can move on from that position to ensure that we see the research and long-term funding that are needed.

I make one final plea in light of the uncertainty about the future and our relationship with Europe. Many of the research projects that are currently being carried out are funded by the EU and involve relationships that have been built between academia and industry across Europe. I would like to see the Minister get behind those projects and ensure not only that they continue, even if that takes us beyond 2020, but that those relationships are sustained into the future and that we will be able to take forward many more initiatives to ensure that our environment is safe.

15:05

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)]

I thank the hon. Member for Penistone and Stocksbridge (Angela Smith) for leading this debate on the circular economy for leftover paint. I am off script now, but I also want to thank my officials for doing their best to produce an interesting speech. This issue clearly matters, but let us try to spice it up a bit with some real candour.

We have all been through the ritual when doing DIY of going to B&Q, Homebase or whatever, doing the painting and ending up with half a tin of paint that simply is not used. Being the good people that we are, we do not like to throw anything away, because we may need to touch it up again later. That has led to the situation that has already been described. The average UK household has six cans of leftover paint stored in their home, and surveys show that people buy more than they need. I agree strongly with the hon. Member for Kilmarnock and Loudoun (Alan Brown) that a lot of focus needs to be put on consumers thinking about what they actually need to paint the rooms that they are looking to decorate. I am afraid I do not think a website will particularly help with that, so there is a lot to be said for retailers and manufacturers being proactive in their discussions with customers and promotion of products.

Only a small proportion of leftover paint is remanufactured, despite the economic and environmental benefits that it is suggested that could deliver. The all-party sustainable resource group and the all-party parliamentary group on manufacturing have produced some interesting reports, including the “Triple Win” report, which the hon. Member for Huddersfield (Mr Sheerman) co-authored. PaintCare’s report “Creating a circular economy for leftover decorative paint in the UK” was launched about a year ago. Both those reports offer suggestions about how to increase the opportunity for this market.

Like others, I do not really like the phrase “circular economy”—I am more into thinking about being resource efficient—but I accept that it has become the lingua franca. There are opportunities to make money; one person’s waste can be another person’s raw materials. It is important that we do our best to make best use of materials and resources and keep them in circulation for longer, wherever that makes sense for the environment, the economy and society as a whole. I would argue that the market and businesses already get that, especially in an age when precious resources are increasingly scarce and regulatory frameworks and fiscal challenges promote the reuse of products rather than the use of virgin raw materials.

I accept that if we are to achieve the transition to a circular economy, innovation is essential—not only the development of efficient new business models but the innovations to which the hon. Member for York Central (Rachael Maskell) referred. I will bring to the attention of my hon. Friends in the Department for Business, Energy and Industrial Strategy the research project and the institute that she mentioned, but she will be aware of my right hon. Friend the Chancellor’s comments about Horizon 2020 projects and his intention for the United Kingdom to remain engaged in those—and indeed our own funding streams—on the basis of value for money.

[Rachael Maskell]

One of the concerns from both academia and from where there is applied research is that 2020 is only just round the corner. People are now looking beyond 2020, to what their futures are. Although I heard what the Chancellor said, it is important that we look to the future and give further guarantees to ensure that projects continue.

[Dr Coffey]

I recognise what the hon. Lady says, but it is not unusual for a Government to talk about the spending envelope for which they have responsibility. I am not privy to what will be in the autumn statement next week or in future Budgets, but given that my right hon. Friend the Chancellor has talked keenly about the need for future investment and having innovation as a key priority, I am sure the hon. Lady and I will both be listening with interest to what he has to say next week.

The hon. Lady also referred to VAT. She knows it goes against EU law to not charge VAT. A considerable battle was eloquently championed by her hon. Friend the Member for Dewsbury (Paula Sherriff), among others, to try to secure zero rates for certain products, but who knows what the future holds once we leave the EU or what the future of VAT will be?

[Kerry McCarthy (Bristol East) (Lab)]

I apologise for not being here at the start of the debate, Mr Brady. I was making an application to the Backbench Business Committee for another debate.

Is the Minister aware of the report by WRAP—Waste and Resources Action Programme—which claims that by 2030 the circular economy sector could require an extra 205,000 jobs, but that if we embarked on what it calls a transformational scenario, whereby we are incredibly ambitious about it, it could create more than half a million jobs? Does she feel this is something that can simply be left to the market or should we be far more proactive? It would also potentially offset about 18% of the future job losses expected in skilled employment, so it could be of real benefit.

[Dr Coffey]

The good news is that this Government have successfully created more jobs than the rest of the European Union put together over the last six years. I am not aware of the unemployment forecasts the hon. Lady is referring to. I have no doubt that new and efficient profit-making business models will create jobs. The Government are currently negotiating with the rest of the European Union on the circular economy package, so there is an element of the regulatory framework that may create incentives. However, Governments often create regulations that prevent the circular economy from functioning as effectively as the markets coming up with those opportunities. Often, regulation gets in the way.

In DEFRA we have been working constructively with organisations such as the British Coatings Federation on making better use of leftover paint, including identifying potential regulatory barriers to its recycling and remanufacture and how those might be overcome. We welcome the federation’s voluntary initiative, PaintCare, which aims to promote the reuse or remanufacturing of about 20 million litres of paint that would otherwise end up being disposed of. It is good to see the paint industry seeking to resolve this waste problem through creative thinking and working in partnership.

As the PaintCare initiative has developed, DEFRA has been looking at the regulatory barriers. As part of that, the Environment Agency is providing detailed guidance to determine the parameters within which materials such as leftover paint can meet end-of-waste criteria, through its IsItWaste tool. The agency will continue to work with such programmes and businesses to facilitate the development of operations to encourage further reuse of valuable materials.

We are aware of the challenges with many household waste recycling centres not accepting paint for recycling. The PaintCare report points out that councils face various challenges with that. DEFRA is engaged in regular discussions with the Department for Communities and Local Government about providing effective household waste and recycling services, but it is for local authorities to decide the best disposal options for paint and other materials, based on what options and facilities are available locally and what the market generates.

[Rachael Maskell]

Will the Minister give way?

[Dr Coffey]

I was about to answer the hon. Lady’s point about the postcode lottery and wanting a universal system. She gave the interesting example of how Tetra Pak, which is subject to elements of extended producer responsibility, came forward with its special process to try to make sure that as many Tetra Pak cartons as possible are collected. The EPR principle does not currently apply to paint, but perhaps it should. Instead of putting the onus on—dare I say it?— councils and central Government, perhaps the paint manufacturers themselves should think about how they start to ensure that paint is collected in every local authority area, which would then help them to reuse it in remanufacturing and similar.

On pricing, I was surprised when I suddenly detected some conservative notes from the hon. Member for York Central. She is absolutely right that one of the best ways to shift remanufactured paint would be for it to be cheaper than standard paint, and people can feel virtuous about it as well. I recognise that that is not as straightforward as it sounds, because the process needs investment and so on. Nevertheless, there are ways to encourage people to do things, often by pricing.

Through WRAP, guidance is provided to local authorities, including options for best practice when dealing with paint through reuse schemes such as Community RePaint, which I am sure hon. Members are aware of. It is a UK-wide network of more than 60 community-run paint reuse projects. However, the numbers are limited and quite a lot of them are concentrated in certain parts of the country. Perhaps we will want to consider not only encouraging manufacturers but good local schemes to come forward.

[Rachael Maskell]

I want to come back to the relationship between central Government and local authorities, because we clearly have a problem at the moment. Only 2% is reused or remanufactured, yet we know the potential in the industry is huge. What interventions will the Government make to support local authorities to be able to increase beyond the 2%?

[Dr Coffey]

To be candid, I am not sure that central Government are going to do anything apart from what I have already described in relation to the WRAP guidance and the Environment Agency. I personally believe we should try to reduce the amount of paint coming into the system in the first place. We need a better consumer understanding of how much paint is needed to paint a room. People should be able to take the room measurements to the shop and easily calculate how many litres are needed. That is the best way to prevent the problem in the first place.

[Rachael Maskell]

The circular economy is not an either/or strategy; it is both. It is about having active interventions to drive an agenda forward. We have a real problem with paint, as we have heard so eloquently put this afternoon. The Government standing back and saying they will make no further interventions means that local authorities will never have the means to move the agenda forward, so I press the Minister again about what interventions she is prepared to make to progress the circular economy around this issue.

[Dr Coffey]

I have already answered the hon. Lady. I have said what I was going to say. From what she has said, I take it she agrees that perhaps having extended producer responsibility on the paint industry might be the way to go. That is not currently being considered by the EU in the circular economy package, but perhaps we will consider it when we leave the EU. The concept of extended producer responsibility is about trying to reduce waste and recovering the cost of waste. The Government have supported a pilot paint reuse project in Cheshire. We have provided more than £30,000 in match funding through the innovation in waste prevention fund.

15:18

Sitting suspended for a Division in the House.

15:32

On resuming—

[Dr Coffey]

It is a pleasure to resume the debate. I was pointing out how the Government have supported a pilot paint reuse project in Cheshire with more than £30,000 of match funding through the innovation and waste prevention fund. That project involves local charities and work with the local recycling centres and housing associations to increase paint donation and minimise disposal. The provision of clearly marked paint collection containers, the training of recycling centre staff to sort paint and advise the public, and an awareness-raising campaign led to 23.5 tonnes of paint being collected, which is more than double the original target of 11.4 tonnes. The reuse rate was also much higher than anticipated, with 78% of the donated paint—more than 18 tonnes—being reused and only 22% needing to be disposed of.

WRAP will publish a summary of the project and lessons learnt along with a video case study next year. That shows there was an opportunity for other people to use the leftover product. In that case it was housing associations, but in other cases it could be the construction trade, to which the hon. Member for York Central referred earlier.

A question was asked about Government procurement. Government buying standards do not currently include remanufactured paint, and DEFRA and other Departments do not purchase a great deal of paint directly; contractors who undertake work on the Government’s behalf tend to purchase the paint. Overall, the Government’s policy commitment is to buy sustainably, which is set out in “Greening Government Commitments”, and Government procurement officers will take account of that when buying more sustainable and efficient products and getting suppliers to understand the need to reduce the impacts of the supply chain.

Industry-led initiatives such as PaintCare are important if we are to achieve the vision of a more resource-efficient circular economy.

[Rachael Maskell]

Will the Minister give way?

[Dr Coffey]

I will not.

We must make the best use of resources in a way that supports growth and protects the environment and human health, as has already been said. The industry’s proactive action so far should be supported by an efficient and effective regulatory framework. That is why we are working with the industry to look at regulatory barriers. As I have already indicated, the Government are undertaking some projects through WRAP or the Environment Agency to try to stimulate admittedly modest changes, but I genuinely believe that the real impetus will come from the industry, whether that is about establishing a wider network for recovering paint or helping consumers generate less waste in the first place.

This has been an important debate. The hon. Member for Penistone and Stocksbridge will be delighted to know that I have started to use the phrase “the circular economy”. I recognise what she said: it is sometimes limiting. However, I assure her and others that businesses—especially high-value businesses—are clear that recycling and recovering materials is an important part of helping the environment, and it makes sense commercially. To that end, I thank all those who participated in the debate.

15:35

[Angela Smith]

This has been an interesting opportunity to air the issues relating to paint. The Minister seemed to indicate—I am sure she did not mean it this way—that this is a rather boring topic. The old saying is that something is “like watching paint dry”, but most people use paint decoratively to make life better, not worse, to cheer themselves up and make their homes look brighter and nicer to live in. I therefore think that paint, and the paint and coverings industry, is an important part of our everyday lives and plays a significant part, too, in our economy. I contest the view that paint is a niche topic or that it is not really something that should engage the interests of parliamentarians.

The role of Government in our economy is increasingly clear—they have acknowledged it with the industrial strategy they have promised to develop—so I was surprised to an extent by the Minister’s remarks, which, in summary, were focused on a hands-off approach to the development of the circular economy and the work being done by the coatings industry in particular. I recognise that the Minister supports the work being done by the industry and that many of the efforts of Government have been delivered through WRAP and the environment agency. Nevertheless, the feeling was, “It is up to the industry and consumers, and the industry working with consumers, to deliver what the industry is looking for.”

Developing the remanufactured paint aspect of the industry is not just about supply and demand, pricing and markets. It is actually about confidence in the recycling process and the quality of what is produced. One of the reasons why the industry is keen to see Government take on a 5% target for procurement is that it would send a strong signal to consumers more generally, both commercial and domestic, that that paint is worth buying, worth using and serves a valuable purpose. I think that the Minister missed that point in her response.

I would also compare the Minister’s response with what we heard from Ministers in what was the Department for Business, Innovation and Skills, which we now call the Department for Business, Energy and Industrial Strategy or BEIS—I cannot get my head around that acronym—in relation to other manufacturing processes. In the steel industry, the message about procurement has been heard, and procurement rules have been changed not just for steel but for the benefit of manufacturing more generally. On top of that, real efforts have been made to enable the steel industry to develop extra capacity to meet future demand. For instance, in relation to shale gas, there are projects, I believe supported by Government, to ensure that UK steel can—if possible—take advantage of that developing industry. It is really disappointing to hear that kind of commitment on the one hand, and the lack of commitment we have heard today on the other.

The point about jobs is moot. We do not really know whether any extra jobs will be created in recycling and remanufacturing paint, because we do not know whether the overall demand in the UK would increase. The Government believe that exporting—building free, international trade—is our way out of Brexit and, even without Brexit, that would be the way to grow our economy. I actually believe that that is correct. On that basis, it is absolutely right that we should expand our economic activity. We should consider manufacturing more paint but, when doing so, we should maximise our resources. I do not accept the argument that there is not necessarily any job potential in that kind of initiative, because the more that we can produce and export, and the more that we can produce paint and coverings material sustainably, the better it is for UK plc.

On household waste recycling centres, I was particularly disappointed. When it comes to plastic, paper and glass, we no longer expect consumers or industry to take responsibility for the collection of those waste materials. That job is now with the local authorities, and local authorities up and down the country are working with the recycling industry—companies such as Viridor—to ensure that that material is collected properly, sorted and processed and then used for the purpose of making new materials.

[Dr Coffey]

Will the hon. Lady give way?

[Angela Smith]

In a moment. On that basis, it is absolutely inexplicable to suggest that consumers or industry should take responsibility for waste materials. I take the point entirely, and I made it myself, that paint use should be reduced wherever possible, but there will always be a quantity of leftover paint. Different people paint in different ways, believe it or not. There will always be a market for collecting paint for recycling, and on that basis it is hard to understand why the Minister seems to think that dumping waste paint in general waste, which is actually illegal, is something for the industry to think about. I accept that it is the consumers’ responsibility, but we need to make it easier for consumers to dispose of their waste paint sustainably. I give way to the Minister.

[Dr Coffey]

I cannot intervene on a closing contribution.

[Angela Smith]

Okay. Finally, I will go back to procurement. The Minister admitted that buying sustainably is at the heart of the Government’s procurement strategy. In that sense, it is really hard to understand why the Government cannot make a simple commitment to a 5% target. It is not a particularly ambitious target; it is a fairly sensible, modest target. If the Government sent out a clear signal to all of those public sector bodies that procure and use paint—prisons, schools, hospitals and so on—that they expect 5% of paint and coatings orders to be made up of remanufactured paint, that in itself would help to send out a signal to the market that this is a serious business that is capable of growing in the future.

I have to say that I have been very disappointed indeed with the Minister’s response. I would have thought that an industry that is so important to UK plc—I gave the statistics earlier—is not being given more support by the Government. We have illustrated in the debate that it is doing everything it can itself to ensure that it becomes more sustainable, that it reduces waste and that it absolutely makes the most of the resources that are wasted at the end of the day. The Government are doing very little to support that industry, and in the context of Brexit, that is very disappointing indeed.

Question put and agreed to.

Resolved,

That this House has considered the circular economy for leftover paint.

Red Wednesday Campaign

Tuesday 15th November 2016 Westminster Hall

[Robert Flello in the Chair]

15:59

[Robert Flello (in the Chair)]

We have an extra 15 minutes for this debate, given the earlier suspension.

[Chris Green (Bolton West) (Con)]

I beg to move,

That this House has considered the Red Wednesday campaign against religious persecution.

It is a pleasure to speak on this very important subject under your chairmanship, Mr Flello. All over the world, thousands of people are persecuted because of their faith, through false imprisonment, physical and mental torture, rape, slavery and, more subtly, discrimination in education and employment. For some, their faith can cost them their lives.

In partnership with the charity Aid to the Church in Need, on Wednesday 23 November Westminster abbey and Westminster cathedral will be lighting up their iconic buildings in red. Other faiths will join in that act of solidarity as a tribute to the people worldwide who are suffering injustice and risking their lives for their faith. I have written to Bolton Council to ask it to join this movement and light up Bolton’s historic town hall in red on 23 November to promote solidarity with those who are suffering. Aid to the Church in Need is also encouraging smaller, more personal acts of recognition on that day that everyone can take part in—for example, simply wearing red for Red Wednesday or using the hashtag #RedWednesday on social media to raise awareness of the plight of others. Having greater awareness and understanding will help to ensure that we never take our freedoms for granted.

This year, I joined colleagues from both sides of the House on a visit to northern Iraq to meet persecuted Christians fleeing the terrorist group Islamic State. In Mosul and elsewhere, Christians have been systematically targeted and the noon symbol, the Arabic equivalent of the Latin N for Nasara or Nazarene, has been daubed on their homes. They have been given the grim choice of paying the jizya tax, converting to Islam or being put to death. Many chose to flee, especially when their money had run out and they could no longer pay the extortion. That persecution, along with that of the Yazidi and many Muslims, led last April to the debate, granted by the Backbench Business Committee and led by my hon. Friend the Member for Congleton (Fiona Bruce), on recognition of the genocide perpetrated by ISIL in the region.

The Christian community in Iraq is one of the oldest in the world, dating back to the first century. There were thought to be 1.5 million Christians in Iraq before the invasion in 2003. However, that number is reported to have fallen now to about 230,000. Although many people have been persecuted and have fled the region, that figure shows the targeted nature of the persecution and, if it carries on in that direction, we will soon see the end of Christianity in much of the middle east.

We know that there is a civil war in Syria and Iraq, but sometimes the religious context is overlooked or obscured by more dramatic events. When we met His Holiness Ignatius Aphrem II, the Syriac Orthodox Patriarch of Antioch, he gave us a sense of how overlooked many people feel. He used the example of the protection given to eight frogs in Australia. The pond in which the frogs lived was the subject of a huge local campaign, and a small fortune was spent to save them. He said that, in comparison, many Christians in Iraq felt ignored. Of course we have to protect our natural environment, but I am sure that many colleagues would be as concerned as I am about the scarcity of letters and emails on religious persecution compared with, say, badgers and bees.

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

I congratulate the hon. Gentleman on initiating this timely debate. Is he aware of the persecution faced by the Ahmadiyya Muslim community in Pakistan? Since they faced criminalisation in 1984, hundreds of Ahmadis have been murdered in sectarian hate crimes. Does the hon. Gentleman agree that the Government must continue dialogue with countries such as Pakistan to better promote religious tolerance?

[Chris Green]

I agree wholeheartedly with what the hon. Lady has said. It is so important now to reflect on the effects of increased globalisation. What goes on in one country, especially if endorsed by the Government—I am thinking of the Ahmadiyya community no longer being recognised as Muslim and being proscribed from describing themselves as such—is transmitted around the world as an idea and does not help to foster community relations here, so the hon. Lady makes a superb point.

In October 2016, Archbishop Sebastian Shaw of Lahore, Pakistan, told a Foreign and Commonwealth Office conference about his niece’s first year at school. That Christian girl was required to memorise a lesson that she was a Muslim and all non-Muslims were infidels. He spoke about how some textbooks in Pakistan’s schools foster prejudice against members of religious minorities, including Christians, Hindus, Jews and Sikhs.

Studies of the problem have been carried out both by the Catholic Church in Pakistan’s National Commission for Justice and Peace and by the United States Commission on International Religious Freedom. The report, which covered the Punjab and Sindh provinces, noted more than 50 hate references against religious minorities in those provinces’ textbooks. That is a very important example of religious persecution not always being about death and destruction. It can be found in all kinds of other measures, including ones that normalise the sense of persecution in schools. That kind of literature or information and that kind of understanding can be developed in schools and the wider community. I would be grateful if my hon. Friend the Minister included in his reply what steps the Government are taking to stop that happening, particularly in nations that receive British aid to provide not just education but security in the region and beyond. I think that that is an aspect of what the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) was highlighting.

Oppression of religious communities is not always due to conflict between religions; it can also be part of state oppression, particularly in the remaining communist countries. North Korea is perhaps the most notorious, but we can also see the oppressive treatment of Christians in Cuba and of Muslim Uyghurs in western China.

Britain has her own problems with religious persecution, so it is not just an international problem. The case of Nissar Hussain from Bradford is a particularly shocking example and has gained widespread public attention only after 20 years of suffering following his conversion from Islam to Christianity. Violent punishment for apostasy has no place in any society.

Organisations such as Aid to the Church in Need and Christian Solidarity Worldwide have done a huge amount of work to improve the lives of the persecuted across the world, but we are looking for long-term solutions and, especially for the middle east, one that does not lead to the disappearance of Christianity or other religious groups.

I encourage colleagues and people watching the debate to take part in Red Wednesday next week, to read the report, which will be released on 24 November, or to write to their local council to turn a local monument red. The importance of raising awareness of this issue cannot be overstated.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this very important issue to Westminster Hall. The Red Wednesday campaign against religious persecution is very important. The hon. Gentleman and I were together on a trip to Iraq just in September, so we know very well about the persecution. It is good to remember such persecution on Red Wednesday, because this year 100,000 Christians will be killed because of their faith; 200 million Christians live in a persecuted neighbourhood; and 2 billion will face persecution and discrimination. If ever there was a good cause to follow and to recognise, Red Wednesday is it. Does the hon. Gentleman agree? I am sure he does, but let us see what he says.

[Chris Green]

I absolutely agree. The figures that the hon. Gentleman highlighted show how widespread concerns about persecution across the world are. On every continent, people of all religions suffer in so many different ways. I will conclude with the quotation from an Iraqi Christian, which sums up the way many Christians feel at the moment:

“The attacks on Christians continue and the world remains totally silent. It’s as if we’ve been swallowed up by the night.”

16:10

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood)]

It is a pleasure to work under your chairmanship, Mr Flello, and an honour to respond to this important debate by spelling out our approach to human rights. I am pleased to see hon. Members here in the Chamber who have gained a reputation for raising these matters and for holding the Executive to account to see what we can do to make sure we underline the values that are important to us in the United Kingdom.

After the last election, we had a rethink about how best to consolidate our international approach to promoting human rights and democracy abroad. Our manifesto commitment was:

“We will stand up for the freedom of people of all religions—and non-religious people—to practise their beliefs in peace and safety”.

Before the election, we had eight themes, which I think was a bit too cumbersome. They have been narrowed down to three core pillars. They are, first, the values, including democracy, the rule of law, freedom of the media, freedom of religion or belief and women’s rights; secondly, the rules-based international system, supporting human rights as one of the UN’s three pillars that help to provide a nominative framework for the prevention of conflict and instability; and finally, human rights for a stable world—so, managing the risks of UK engagement in countries with poor human rights records, which includes our overseas security and justice assistance framework and contributing to tackling extremism.

16:12

Sitting suspended for Divisions in the House.

16:37

On resuming—

[Mr Ellwood]

Before we were interrupted by the Divisions, I was explaining that in this House we often ask ourselves what is the value of international aid. We can contextualise the support we give and the trade we do with other countries in terms of the influence we derive when we have questions about their democratic values, concerns about how they follow the rules-based international system or, indeed, worries about whether they are following human rights. I make it clear that, where we can, our support and financial assistance go to non-governmental organisations, rather than directly to Governments. When we provide support to Governments directly, we try to ensure that they abide by our shared commitments and standards.

[Mr Jim Cunningham (Coventry South) (Lab)]

When the Minister has discussions about international trade and aid in relation to human rights, for example, what sort of response does he get? More importantly, what is the role of the United Nations? Does it make much progress?

[Mr Ellwood]

The hon. Gentleman speaks of the United Nations as if it were another organisation. We are part of the United Nations. We affect the approach of the United Nations on such matters. As a permanent member of the United Nations Security Council, we are concerned not only about security matters but about improving standards of life, democratic values, the rule of law and humanitarian rights across the world. We want to use the UN as a vehicle through which we can leverage change.

Let us look at our own history. Without going into detail, it took us time before monarchs did not have their head removed, before people were not sent up chimneys and before the slave trade was abolished. I am not making an excuse for not pushing such things but, ultimately, we have to effect cultural change at a pace that works, rather than galvanising the opposite message from the one we want to push.

[Jim Shannon]

The Minister knows, as he said earlier, that I am one of those who have spoken out many times in this House on behalf of Christians. The all-party parliamentary group on international freedom of religion or belief, which I chair, speaks out for those of the Christian religion, those of other religions and those of no religion. When it comes to human rights, we want Muslims to speak up for Christians and Christians to speak up for Muslims. Has the Minister seen much evidence of that taking place around the world, when he has had an opportunity to speak to other countries?

[Mr Ellwood]

The hon. Gentleman is absolutely right to stress that. We want believers and non-believers to allow freedom of belief. That is what we are pursuing, and it is exactly Britain’s approach when we have dialogues with other countries. The fact that we have an economic relationship with other countries allows us to have necessary frank conversations, sometimes behind closed doors; I appreciate that many hon. Members might feel that they do not hear enough of what we are saying and what pace of change we expect from other countries as they raise their game. A great example, which I know the hon. Gentleman has raised on many occasions, is the use of the death penalty. We abhor it, we ourselves have moved through it and we encourage other countries that use the death penalty to meet EU guidelines and ultimately to remove it.

If there are no further interventions, I will move on. I begin by congratulating my hon. Friend the Member for Bolton West (Chris Green) on securing this important debate. It is an opportunity to confirm the Government’s commitment to the right to freedom of religion or belief. It is understandable that his speech focused on the harrowing situation faced by Christians in parts of the middle east. I certainly share his concern. As I mentioned earlier, this Government have a manifesto commitment to support freedom of religion or belief for people of all religions and non-religious people, which is exactly the point raised by the hon. Member for Strangford (Jim Shannon). In particular, we are working internationally to deliver our commitment for Christians in the middle east.

[Fiona Bruce (Congleton) (Con)]

The Minister will recall the debate held on 20 April this year, to which my hon. Friend the Member for Bolton West (Chris Green) referred and to which the Minister responded. The House unanimously called on the Government to make an immediate referral to the UN Security Council, with a view to conferring jurisdiction on the International Criminal Court so that perpetrators could be brought to justice. I was pleased that the Minister said in that debate that the Government were

“supporting the gathering and preservation of evidence that could in future be used in a court to hold Daesh to account”

and

“will do everything we can to help gather evidence that could be used by the judicial bodies”.—[Official Report, 20 April 2016; Vol. 608, c. 996.]

I have two questions for the Minister. How have the Government been facilitating the gathering and preservation of evidence of crimes, as they promised, and what steps are they taking to ensure that members of the global coalition, united to defeat Daesh, are also gathering and preserving such evidence? Given that Daesh is now rapidly losing ground in Syria and Iraq, and with the battle of Mosul raging, does he not agree that the Government should make clear how they intend to deal with the perpetrators when they are caught, and should do so with a sense of urgency?

[Mr Ellwood]

I remember the debate well. I made it clear—I think that I was the first Minister to do so—that I believe that war crimes have been committed in Iraq and Syria and that crimes against humanity have been committed by Daesh and other extremists in that location, but it is not my opinion or the Government’s opinion that counts, because it is not a political judgment. It must be a legal judgment, and there is a process that must be approved. We cannot get a UN Security Council resolution passed until the evidence is gathered. There is a mechanism to get to the International Criminal Court, and it includes the collection and collation of evidence, as my hon. Friend highlighted.

I will not go into too much detail, other than to say that gathering the evidence, by its nature, requires people to expose themselves to dangerous circumstances. As my right hon. Friend the Foreign Secretary has said on a number of occasions, the wheels of justice grind slowly, but they grind fine. As we saw in Bosnia and the former Yugoslavia, it can take many years until those people end up in The Hague, but they are held to account. That is why the Foreign Secretary, when he visited Washington DC in July, made the case and encouraged others to support his view that we must not allow the issue to be missed. We must collect the evidence. If I may, I will speak to my hon. Friend the Member for Congleton (Fiona Bruce) outside the Chamber and familiarise her with a bit more of the detail, but I hope that she understands the sensitivities of spelling out too much, simply because of the dangers entailed.

[Fiona Bruce]

I welcome that, because evidence has come to my attention that several prominent leaders of Daesh are individuals in respect of whom the ICC has the ability to exercise its jurisdiction now, due to their nationality. I would be grateful if the Minister met with me to discuss it further.

[Mr Ellwood]

I would be delighted to do so. I simply make the case that the Foreign Secretary is extremely passionate about the issue. Indeed, it came from the voices in the Chamber saying, “What is Britain doing to hold these perpetrators to account?” We must work with the Iraqi Government, UN organisations and other members of the international community to deliver justice and promote the rights of all minorities, as well as to hold perpetrators to account.

It is also worth mentioning that we are working further afield than the middle east, as well. In Pakistan, we regularly raise concerns about the freedom of religion or belief. In March 2016, my right hon. Friend the Chancellor, the then Foreign Secretary, raised the importance of safeguarding the rights of all minorities, including religious minorities. In Nigeria, we are providing a substantial package of intelligence, military development and humanitarian support in the fight against Boko Haram, including training and advice on counter-insurgency, and £5 million in support for a regional military taskforce.

Promoting religious tolerance is critical to reconciliation and securing a lasting peace in any combat area, but particularly in Syria and Iraq. That is why we developed the Magna Carta fund, which is being used to support several projects to promote freedom of religion or belief. In Iraq, we have funded a series of grassroots meetings between religious leaders of all faiths to promote religious tolerance. Over the past year, we have supported a project promoting legal and social protection for freedom of religion or belief in Iraq. The project aims to prevent intolerance and violence towards religious communities by inspiring key leaders in Iraqi society to become defenders of freedom of religion or belief.

Our commitment to promoting freedom of religion or belief is not confined to the middle east but extends right across the piece. It is integral to our diplomatic network in promoting fundamental human rights around the globe through our conversations with host Governments and other influential actors such as faith leaders, and through our project work and organisations such as the United Nations, the European Union and the Organisation for Security and Co-operation in Europe.

[Mr Jim Cunningham]

Is the promotion of religious tolerance in Iraq being done from primary school age? I have seen some documentaries in which certain charities run schools to promote better understanding between different religions. Has there been much success with that?

[Mr Ellwood]

Yes. I can write to the hon. Gentleman with more detail, but he is absolutely right that that is the age at which messages about understanding, reconciliation and recognition of the various pressures and influences are most received. Our work involves primary and secondary schools as well.

The foreign and commonwealth conference on this matter, which took place last month, was a ground-breaking conference on how protecting freedom of religion or belief can help combat violent extremism by helping make societies more inclusive and respectful of religious diversity. The conference brought together a range of experts and high-profile speakers. All participants, including many Foreign and Commonwealth Office staff, shared and benefited from practical and innovative ideas to advance the cause. We have also updated and reprinted the Foreign and Commonwealth Office’s “Freedom of Religion or Belief” toolkit, which provides officers with guidelines on how to identify violations of the right to freedom of religion or belief and what to do about them, and with further sources of information for those who wish to examine the subject in more depth.

In conclusion, the Government will continue to fight for the freedom of religion or belief internationally. We do so not only because it is right and is enshrined in the universal declaration of human rights and in article 18 of the international covenant on civil and political rights but because extending freedom of religion or belief to more countries and more societies helps to make the world safer and more prosperous, which is in all our interests. We recognise that progress requires a response from the whole of society, so we welcome the opportunity to work with this Parliament and other Parliaments, with religious groups and with civil society partners such as Aid to the Church in Need, Open Doors and Christian Solidarity Worldwide. We believe that freedom of religion or belief is a universal human right and we will continue towards the ambitious goal of ensuring that it is enjoyed by everyone everywhere.

Question put and agreed to.

Release of Spectrum Band

Tuesday 15th November 2016 Westminster Hall

16:51

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I beg to move,

That this House has considered release of the 700 MHz spectrum band for mobile data in 2020.

It is a pleasure to serve under your chairmanship, Mr Flello. I vote that we also give you control over air conditioning. I hope that this afternoon we can provide a beacon of hope for people with poor connectivity in rural areas, but that beacon might be my face after standing here talking for more than 10 minutes.

[Robert Flello (in the Chair)]

Order. The hon. Gentleman reminds me to say that if right hon. and hon. Members wish to remove their jackets, they may do so.

[Calum Kerr]

Definitely my favourite Chair.

There can be little doubt that mobile connectivity is changing every aspect of our lives. Even in Westminster, this new way of doing things has had an impact—we need only look around this Chamber to see that. Someone somewhere in the country might be live streaming this very debate on a mobile device—I would not want to bet on that, but the appearance of the former Minister, the right hon. Member for Wantage (Mr Vaizey), may enhance the chances of it.

We can all agree on the basic truth that mobile connectivity, which was once a luxury, has become a fundamental part of the way we now live. I am sure I am not alone in being able to remember having to drive around looking for a phone box when my pager went off—I was just out of school at the time—but we now constantly carry around devices that far exceed the functionality and processing power of the desktop computers that not so long ago seemed to represent the cutting edge of what digital technology could offer.

I want to use this debate to underline the ever growing importance of mobile connectivity and to consider the specific potential of the release of the 700 MHz spectrum band, which if correctly managed could make a major contribution to a society that is more connected than ever before. Using 700 MHz mobile data could provide coverage over a wider geographical area, and the signal could effectively penetrate buildings, so it could play a pivotal role in bridging the gap between where the UK is now and the next wave of connectivity-driven innovation with the emergence of 5G. As we move towards the 5G world, we will require a mix of short-range high-frequency spectrum bands, backed up by long-range low-frequency bands such as 700 MHz.

I want the debate to demonstrate that the type of digital infrastructure that we choose to create involves fundamentally political decisions. Although this place may not be renowned for moving with the times, it must be recognised that we need frequent, better-quality debates in Parliament about connectivity. With that in mind, I want us to consider how other European countries are tackling the connectivity challenge, and how different political choices have been made on spectrum and different outcomes achieved, but let us first consider the reality today.

We already know that a major shift in consumer behaviour means that many people are switching to mobile devices for access to the internet. In 2016, 66% of adults used their mobile phones to go online, up from 61% in 2015. Some 86% of UK mobile customers currently use a smartphone. Perhaps most significantly, 92% of under-35s now view their smartphone as their primary device for accessing the internet. We can also point to a growing trend of favouring mobile data over public wi-fi. Research has found that 72% of people prefer to use their device’s 3G or 4G connection to access the internet even when they are in a public space. That demonstrates that behaviour is already straining at the leash when it comes to—

16:56

Sitting suspended for a Division in the House.

17:00

On resuming—

[Robert Flello (in the Chair)]

The debate may now continue until 6.15 pm.

[Calum Kerr]

I return to the theme of the importance of mobile connectivity. I was about to mention the transformative potential of what is generally known as the internet of things, which we see on the horizon. It is becoming more of a reality day by day, and will involve a tremendous number of devices being hooked up and the aggregate power of the internet really bearing fruit. With that, the demand for mobile connectivity is only going to increase.

Mobile data will underpin the use of new technologies such as precision farming, driverless cars, remote healthcare and smart energy grids. We are already seeing the cutting edge of the process coming into play with the increasing use of immersive augmented reality apps such as Pokémon Go, which is the reason why my phone is currently broken—thanks to my two sons, it went for an 8 km walk to hatch an egg, but that is a different story. At the same time, media companies are increasingly adapting their content for mobile users, and technology is constantly pushing the parameters of what mobile devices are capable of.

It is clear that we know why we want to transform mobile data connectivity, but I want to focus on how we can make that change happen. We know that the Government agree that connectivity represents a fourth utility, but they need to match the rhetoric with unambiguous action. I put it to them that we have moved far beyond the stage at which spectrum licensing could be seen as a cash cow for the Treasury. Previously, the 3G spectrum auction raised about £22 billion, while the 4G licence auction raised £2.34 billion. In contrast, other countries sought to raise much less, in return for operators delivering greater coverage.

Spectrum should be considered in terms of the wider economic and social benefits it can provide, particularly when considering the ongoing challenge of rural connectivity. The UK’s approach to the mobile sector has left more than a quarter of Scotland’s landmass without any voice coverage, and nearly half of it without any data coverage. Across the mobile networks, indoor coverage drops to 31% in rural areas, compared with 91% in urban areas. Those are exactly the kind of disparities that 700 MHz could be pivotal in redressing.

The problems currently facing rural mobile customers are well documented, and will be particularly familiar to rural MPs. Unless the Government tackle the problems at the outset, when they are setting the terms for spectrum licences, they will end up having to apply retrospective sticking-plaster solutions to problems ultimately of their own making. We saw that with measures such as the mobile infrastructure project, which delivered only one tenth of the 600 potential mast sites identified in its original plan.

Although we can recognise the pragmatism behind such projects and the current positive direction of travel on getting more from existing licences, the UK should be moving much further, much faster on rural connectivity. As new licences for spectrum become available, let us get things right from the outset. There is an historic opportunity to redress centuries of rural isolation and exclusion by making mobile a truly universal service, which means access to the internet on any device, any time, anywhere.

That is why we need a better picture of the Government’s thinking on spectrum policy at this crucial moment. One solution that was proposed recently—it has received a great deal of coverage, but in my view that coverage was unwarranted—is so-called national roaming. That may be attractive on the surface but it is fundamentally flawed, because on its own it will not encourage mobile network operators to improve coverage. In fact, it could end up acting as a disincentive to the improvement of coverage.

What the proposal for “national roaming” demonstrates is the basic difficulty we face when it comes to making the mobile marketplace work. Currently, mobile network operators lack the significant profit motive to roll out infrastructure and improve rural coverage. A network operator’s revenue comes from subscriptions and the consumption of content. So from a purely market-driven perspective, those companies have little incentive to invest in comprehensive rural infrastructure.

To get the best outcome from 700 MHz, we can learn a lot by looking at licensing models that are already in use throughout Europe. In Germany, coverage obligations for 700 MHz state that providers must get broadband coverage to at least 98% of households nationwide and at least 97% of households in each federal state. Indeed, across Europe we see far more comprehensive 4G coverage on offer than is the case here. If Swedish network operators can offer 99% population coverage for 4G, in a country that has a larger landmass and a lower population density than the UK, why are we lagging so far behind?

How competition works in practice is also key. The UK has gone from having an equitable distribution of spectrum holdings to having the worst spectrum imbalance in the G20 countries. With half of UK operators now constrained by small spectrum holdings, the competitive pressure that kept prices in the mobile market low is lessening. Will the Government consider a cap on spectrum allocation to redress that imbalance, and will they consider having a fundamental review, which will be needed anyway when 5G comes?

We also need to consider additional mechanisms that target market failure in areas of low population density. As with broadband, getting mobile connectivity to households that are very hard to reach will be a challenge, but not an insurmountable one. In Germany, the 800 MHz licence involved an “outside to in” approach across four stages, requiring operators to provide 90% coverage in smaller towns before moving on to the next stage. Will the Government consider using such a model?

One nation—one small nation—that has made strong progress is the Faroe Islands. With challenging topography and a population density of 91 per square mile, it now has 100% population coverage and 98% geographic coverage for 2G and 3G, including 100% coverage on roads, even in tunnels, and in a radius of about 100 kilometres in the seas around the islands. The Faroese are currently in the process of rolling out 4G, which is expected to achieve a similar level of coverage to 2G and 3G. Faroese Telecom has shown that that is the way forward, and it is keen to offer solutions for rural Scotland and engage with the challenges we face, which are similar to those it has already faced. I believe that the Minister or his officials may already have a meeting coming up with its representatives.

Such willingness only underlines the case, which I know Ofcom recognises, for a “use it or share it” solution in rural areas. Such a policy is a sensible and workable alternative to a step such as national roaming. As groups such as Faroese Telecom show, there are organisations willing to step forward to fill any gap. I look forward to hearing the Minister’s views on such a policy, which has already been put in place in other countries, including the US.

If digital connectivity is now considered a utility, a radical shift towards comprehensive mobile data coverage is required. Will the Government commit to looking at the examples I have cited as they consider the criteria for new licensees? Will the Minister also consider setting new targets of 95% landmass coverage and 99% population coverage indoors, not only for voice but for data?

I want the debate around spectrum policy to acknowledge that where there is market failure, it is incumbent on Ofcom to intervene to address the situation. Spectrum is a public asset and we must do all we can to make sure that it gets used in the public interest where possible.

There is a compelling case for fresh thinking and a longer term view of mobile connectivity from the Government. They ought to accelerate the move away from the traditional revenue-focused approach and instead consider this asset in a holistic manner factoring in all the social and economic benefits that comprehensive mobile connectivity can provide.

Before I finish, I will explain the need for universal connectivity in terms that are closer to home. I want visitors to my constituency to enjoy a rail service with world-class connectivity when they travel from Edinburgh down the Borders railway, which was recently recognised as the best tourism project in the UK. I want visitors who opt instead to take in the stunning coastal scenery along the Berwickshire coast to get constant access to mobile data throughout their visit. On arrival in my constituency, I want all visitors to have constant access to online information about local businesses and landmarks. I want them to visit hotels and restaurants that can receive electronic payments. When they take to the hills around Liddesdale, I want them to be connected when they visit remote but remarkable sites such as the imposing Hermitage castle, so that they can make use of an immersive app to enhance their experience. I want people in every corner of these islands to have the option to experience the benefits that connectivity brings, and I want them to be able to do so on any device, any time, anywhere.

17:17

[Nigel Huddleston (Mid Worcestershire) (Con)]

I, congratulate the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) on securing this important debate.

As the hon. Gentleman has already mentioned, there are obviously many benefits to releasing the 700 MHz band, but we should not lose sight of the fact that there are some current users of the spectrum who will be negatively affected. Chief among them are the UK’s programme making and special events, or PMSE, sector. It is the backbone of our creative industries, using wireless radio equipment such as microphones and in-ear monitors to stage concerts, festivals, west end musicals, sporting events and a whole host of other key cultural events in the United Kingdom.

I recently met the British Entertainment Industry Radio Group, or BEIRG, the industry body that represents the sector. It is profoundly concerned that unless adequate mitigating steps are taken, the industry faces severe problems as a result of the 700 MHz release. Most notably, without the allocation of adequate replacement spectrum for the sector’s use, standards of production will fall, as more wireless devices are forced to operate in a much smaller amount of spectrum, increasing the risk of interference.

Ofcom has allocated the 960-1164 MHz band, for which the sector is grateful, but no other Administration or regulator in the world has shown any intention of following Ofcom’s lead and allocating this band for PMSE use. That means that the market for new equipment to operate in the new spectrum will be UK-only, which means it is too small for any serious manufacturer of wireless equipment to make the business case for, or to commit to making new products for. PMSE users therefore face being forced to vacate the 700 MHz band in quarter 2 of 2020, without being able to use the new spectrum because no equipment exists that can operate within it. With lead times on equipment of around three years for most manufacturers, the UK faces a situation whereby spectrum-intensive events, such as TV broadcasts, festivals and west end theatre, will be unable to continue offering the world-leading production values that consumers have come to expect.

[Calum Kerr]

The hon. Gentleman is making an important contribution. I could not possibly have got every aspect of the matter into my own speech without talking for far too long, so I welcome what he is highlighting. Does he agree that there needs to be—there already is an element of this—a fundamental review of all parts of spectrum and a strategy for not just tomorrow but further into the future, to address those kinds of concerns, as well as looking at existing allocation across all media areas?

[Nigel Huddleston]

The hon. Gentleman makes a very good point. We need to be careful about the unintended consequences of some of these changes. Some of those consequences can, with careful consideration, be anticipated; others will probably come in time, but that needs to be carefully reviewed and monitored.

The PMSE sector comprises many small operators, which are not all in the robust financial circumstances we would like them to be. Without assistance, they face some difficult times in the future. The Government and Ofcom’s recent announcement that a compensation scheme will be introduced is hugely welcome, and I thank the Minister for that. Although the importance of increasing mobile phone and broadband coverage is clear for all to see, we must ensure that unintended consequences do not have a negative impact on our hugely successful creative sector and that PMSE operators are able to continue their world-class work. I would be grateful, therefore, to hear from the Minister whether the Government have any further plans to assist the PMSE sector with the transition.

17:19

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

It is a pleasure to serve under your chairmanship, Mr Flello. I congratulate my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) on securing this important debate. I am sure that the tens of millions of people who have heard about it will be streaming it right now on their mobile phones, to get Members’ words of wisdom.

An important set of points have been made. On the point made by the hon. Member for Mid Worcestershire (Nigel Huddleston), there is a clear need for further debate and scrutiny, and for far more attention than is given to the subject at the moment. That was laid bare in the comments of my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk, who highlighted a number of issues that are important—nay, essential—to ensuring a fair distribution of the opportunities provided by the technology in the future. He mentioned the need for rural coverage to take priority—for an outside-in approach to be applied. For far too long, people in rural or less commercial areas have found themselves stuck at the back of a queue, unable ever to get to the front because they are always overtaken by a commercial imperative. The situation in the Borders is, I think, similar to that in my own area, where some 432 miles of road are not covered by 2G, let alone 3G or 4G signals. Those issues must seriously be addressed.

I commend my hon. Friend for his suggestion about the approach taken by Germany. He pointed out that not only is there a requirement there to get to 90% coverage in smaller towns before widening access, but they managed to raise €5 billion through the licensing process, so that approach can be taken and at the same time a return made for the public purse.

[Calum Kerr]

Does my hon. Friend agree that it is also noteworthy that in Germany they have mandated minimum data speeds, with a minimum average of 10 megabits? Coincidentally, our own measly universal service obligation for fixed wired broadband stands at that same speed.

[Drew Hendry]

My hon. Friend shows just how on top of his brief he is by pointing out that anomaly and the lack of ambition we often see when it comes to broadband and wireless access.

That brings me on to the need to accelerate the process. Although it is important that there is further debate and that the considerations for manufacturers and those using the facility at the moment need to be carefully taken into account—I think we would all support that—we should not allow that to hold up the development of something that should be giving us not only a commercial edge, but a social edge for people across the whole UK.

There is rural-proofing and the need to accelerate, and I also completely agree with the “use it or share it” approach. There needs to be an acceptance that we must access all the technology as productively as possible. When we consider ambition, it is important to remember that in the United States they freed up the spectrum in 2008. That is how far behind we are. The UK already lags behind countries such as Finland, Estonia, Latvia, Lithuania and Sweden, which have all committed to accelerate the programme. There are important debates to be held, but there is also a need to pick up the pace—I hope the Minister will indicate how that will be achieved—to ensure that we can take advantage of the benefits.

My hon. Friend the Member for Berwickshire, Roxburgh and Selkirk also mentioned the need to be ready for the internet of things. That is not something we need to be ready for; it is being deployed here and now, and nowhere is it more important to rural areas than in mobile healthcare. There is an opportunity to give people the chance to improve and restore their health and get the kind of social benefit from the technology that at the moment they cannot access. Until the spectrum issues are solved, people will not, however, be able to do that.

I conclude by repeating one of my hon. Friend’s lines that we should all take away: everyone—the people in every corner of these islands—should be getting the best and fastest possible access and the best possible advantage from new technology.

17:19

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

It is a pleasure to serve under your chairmanship, Mr Flello. It is also a pleasure to follow the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), who I congratulate on securing this important debate. He has considerable experience and expertise in the area and brings a wealth of knowledge to the debate and to the House in general. He clearly set out what we can achieve if we get this right from the outset, tackling the considerable disparities across the UK.

The hon. Member for Mid Worcestershire (Nigel Huddleston) clearly laid out the unintended consequences that could arise from the changes, particularly for our creative industries and the PMSE sector. He made clear the need to determine from the outset exactly how spectrum licensing is to be used and how to mitigate any possible issues. I echo many of the comments made, some of which I will come on to.

The auctioning of an electromagnetic frequency for public use may not set pulses racing or minds whirring, but it is the quality of the debate and not the quantity of people here today that shows how important this is. It is a matter of considerable significance for the public, our businesses and our country’s economy. In fact, it is one of the public sector’s most significant assets. How it is auctioned and regulated and, crucially, how the public stand to benefit from any auction are issues of critical importance to the expansion and growth of the digital economy and the economy at large. That is why we have been pushing the Government to be so much more ambitious in this crucial area. The sector is crying out for more clarity, vision and ambition.

In an always-on world, where the demand for mobile data is increasing at almost the same rate as digital entrepreneurs can think of novel ways to use it, the provision of mobile data, both geographically and in terms of residences and businesses covered, is crucial. It should absolutely be seen as a utility in this day and age, and we should, as far as practically possible, do everything in our power to achieve near-universal coverage, regardless of any vested interests that may try to hold back progress, and to overcome the flaws and market failures that hold back investment in infrastructure.

Recent analysis by Ofcom made the future trajectory of data usage clear. It suggested that between 2015 and 2030 demand will increase forty-fivefold. Since March 2011, data traffic has increased by 710%. It is not just usage, but the way in which data are used that is transforming our economy. The next decade will see only more change—change that we cannot currently imagine.

Let us look at some recent examples from around the country and the globe. In Germany, the annual harvest is on the cusp of a digital revolution, with sensors monitoring everything from air temperature to harvesting rates in real time, increasing productivity and bearing down on food insecurity. One German company has spent more than €2 million developing ways to automatically transmit information from the harvester operating in the field to grain experts thousands of miles away who can instantly assess the yield.

For there to be a true success story in Britain, data coverage is vital. That is not just in residences and not just on one mobile network, but across all networks, on the many transport arteries that criss-cross the United Kingdom—motorways, train routes, where coverage is still abysmal, and our waterways—and in the most rural parts of the country. The 700 MHz spectrum will help in achieving coverage in hard-to-reach places, particularly due to its ability to penetrate through thick walls. It will help to provide that foundation layer of connectivity. To do that, however, the licensing conditions for auction have to be ambitious and tough. The auction cannot just be a boon for the Treasury; it has to bring substantial benefits to the public at large and to our digital economy.

[Drew Hendry]

Does the hon. Lady agree that it is possible, as we can see from the German example, to put tough conditions in place and still raise some money from the auction?

[Louise Haigh]

Absolutely. I could not agree more. The issues that have been raised today need to be seen alongside that point. The income for the Treasury should not be the first and only priority.

In our view, while Ofcom does a fantastic job of regulating and auctioning the frequencies, such decisions are in reality political. Where and how coverage targets are met matters greatly, and we in this place should be setting tough conditions for the auction. We would like the Government and Ofcom to be much more ambitious, and we would like to see clear licensing commitments to reflect that ambition. Geographical coverage is still poor, as we have heard. The targets set by the Government—to reach 90% of geographical coverage for voice and text by 2020—simply do not go far enough to meet the challenges of a data-driven world. In fact, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) mentioned, we are lagging behind many of our international competitors, who have significantly improved coverage through different and imaginative approaches to licence obligations. For example, Denmark has focused on specified postcodes, France has covered an incredible 99.6% of its population, the Netherlands has covered all main roads, waterways and airports, and Cyprus has specified rural areas and high schools as priorities.

With that in mind, I will conclude by asking the Minister a number of questions, in addition to those asked by the hon. Member for Berwickshire, Roxburgh and Selkirk.

[Calum Kerr]

Just before the hon. Lady asks her important questions—I can see the Minister is desperate to hear them—does she agree that there is a false economy here? By seeking money up front for the sale of licences, we inhibit the speeds that exist out there in the country. That holds back productivity, where we have an enormous challenge. If we show a bit more vision and foresight and plan for the longer term, we will get faster speeds and the overall benefit to the country and the public purse will be far greater.

[Louise Haigh]

That is absolutely right. The hon. Gentleman will know that we discussed that point at length in the Digital Economy Public Bill Committee. In fact, we have brought the band back together again—it is nice to be in the Chamber with all the team. He is also right that the Minister is desperate to hear my questions—he always is—so we will crack on.

Does the Minister still expect mobile data on the spectrum to be available by quarter 2 in 2020? Working with Ofcom, what conditions does he specifically expect to set to achieve much improved geographical coverage and coverage along major transport routes? In particular, what consideration has he given to outside-in licensing, as was mentioned earlier? Will he ensure that the prime focus of the auction of an enormously valuable public sector asset is on ensuring public benefit through increased and expanded coverage, rather than on raising revenue or maximising benefits for the mobile network operators? As the hon. Gentleman just mentioned, that will bring incredible benefits to productivity and our economy.

Finally, as regards the European Union, the Ofcom strategy document, which was written before Britain’s decision to leave the European Union, makes explicit reference to the importance of the EU to the 700 MHz clearance programme, in terms of consultation and technical considerations. The European Parliament and the European Council are leading the joint decision on the timing and release of the frequency. The Minister will be aware that the European Commission recently published a draft decision that includes proposals that would require member states to allow the use of the 700 MHz band for electronic communications services under harmonised technical conditions by 30 June 2020, yet the timetable laid out by the Prime Minister indicates that we will have left the European Union right in the middle of that deadline. I would be grateful if the Minister confirmed the steps he and Ofcom are taking to ensure that Brexit does not adversely impact achieving data usage on the spectrum. Finally, what contingency plans are in place?

17:34

[The Minister for Digital and Culture (Matt Hancock)]

Rarely has Westminster Hall seen a debate of such technical expertise and such unanimity on the thrust and direction that Members want to see. They were unanimous that increased connectivity is important and drives productivity; that when we clear the 700 MHz spectrum, we need to ensure that the concerns of those who currently use it are taken into account; that we need to use licence conditions for mobile operators in order to reach more people; that we must work appropriately to deliver the very best connectivity that we can; and that demand for that connectivity is going up. That is a reasonable summary of the points made on the direction of travel.

First, I will cover the current use of the 700 MHz band, why that is changing and what will happen as a result. I will then turn to the broader points raised on connectivity. This band of spectrum is an important public resource, and we will auction the use of it with the aim of getting the best benefit. It is currently used for digital terrestrial television, which is the TV we get through an aerial. Some 75% of UK households use it in some way. When TV was first launched in 1936, it used a large block of radio frequencies for which there was no competing use. Today those frequencies are in demand for mobile phones—in particular for mobile phone data—and other technologies, such as wireless microphones for the programme making and special events sector, to which my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) referred.

Demand for mobile data is growing exponentially, as Members have said. The figures I have are that in January 2011, 27% of UK adults had a smartphone and 2% had a tablet. By August 2016, that had grown to 71% and 59% respectively. That meant that demand for mobile data doubled every year from 2012 to 2015. That trend is forecast to continue, and Ofcom has decided to reassign some spectrum from DTT to mobile, namely the 700 MHz band. That will mean that there is enough spectrum for DTT services and new spectrum to carry a lot of data longer distances, making it very useful for providing coverage across the UK. The 700 MHz spectrum is important because it can carry heavy data loads over longer distances, which is particularly important to the debate about ensuring that we have rural connectivity.

Working with Ofcom, we have set up a programme to ensure that we can clear the 700 MHz band, and up to £600 million is available to support the necessary changes. The main change is to adapt the infrastructure for TV to ensure that that switchover can happen. Support is also available for that for the PMSE sector, as my hon. Friend for Mid Worcestershire mentioned. To answer his questions specifically, Ofcom is consulting on the assistance to be provided. The details of exactly how that support will flow will follow on from that consultation. I met the industry body last month to hear the concerns directly, and we will continue talking to the industry to ensure that the switchover happens effectively. Although the spectrum is essentially domestic, in that the distances it covers mean that there is not overlap, there is overlap in the fact that other countries use equipment on similar spectrums, and therefore in the manufacture of equipment. I acknowledge that, but I think that the issue can be dealt with, given the taxpayers’ money set aside for mitigation.

On the questions on rural connectivity raised by the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), I agree strongly that we have seen a positive direction of travel. It is rare that an SNP Member describes the Government thus, but I am delighted that he did. No doubt he will agree that this week’s announcement by Virgin that it will cover 360,000 more premises in Scotland, the majority with fibre to the premises, was extremely good news.

The hon. Member for Sheffield, Heeley (Louise Haigh)—I almost called her my hon. Friend, we have spent so much time together—made a very interesting speech. Both she and the hon. Gentleman raised the need to ensure that licence conditions include coverage, which is well understood by the Government. It was a mistake by the Labour Government in the early 2000s to set out licence conditions without such geographic coverage requirements. We had to reverse that after the licences had been set, in 2014, to get enforceable targets into the licence conditions, and we are strengthening that enforcement in the Digital Economy Bill that is currently before the House. There are now licence conditions for the four main providers to reach 90% geographically, which is equivalent to about 98% indoor coverage.

[Drew Hendry]

Can the Minister confirm that he is saying that the Government will adopt an outside-in approach to licensing in future rounds?

[Matt Hancock]

We have actively brought that into the existing licences, even after they were struck by the previous Administration. The hon. Gentleman can see clearly the attitude that we take to the need for high-quality, ubiquitous coverage of voice and text and then of 4G, as well as to the groundwork needed to make sure that we prepare for 5G in the years ahead as that technology comes on stream.

[Drew Hendry]

I just want to push a little further on that point, if I may. The Minister has suggested that there is an attitude and a direction of travel, and has accepted what needs to happen. Will he go a bit further and say that that will be the Government’s approach?

[Matt Hancock]

We expect to auction mobile licences for the 700 MHz band in late 2018 or 2019. It will be for Ofcom to conduct those auctions. The hon. Gentleman can see that the Government’s existing policy is to insist on licence conditions on mobile coverage. We are clear about the need for broad mobile coverage and the need to hold the mobile network operators’ feet to the fire on their licence conditions. Some licence conditions go further than 90% geographic coverage—not least those of EE, because it has the emergency services licence—and also include road coverage, to make sure that we get not simply geographical coverage but coverage of the geography where people use phones, which, along with premises, is on the roads.

The hon. Member for Berwickshire, Roxburgh and Selkirk mentioned the Faroes. I am meeting Jan Ziskasen from the Faroe Islands Government tomorrow to understand more about what they have done. Areas of sparsity with similar geographies to some parts of Scotland can always give us a greater understanding of what can be used to deliver connectivity in those geographies. I am enormously looking forward to that meeting and to hearing what more we can do.

The hon. Member for Sheffield, Heeley asked a number of specific questions. First, she asked whether we expect availability by 2020. The answer is broadly yes, we do. As I said, the auctions will take place beforehand, but we want to get on with this as soon as we make the switchover. I have answered her question on coverage being included in licence conditions; that is existing Government policy.

The hon. Lady asked a question about maximising revenue. She said that we should not maximise revenue first and foremost, but should instead look to the benefits of productivity. If only that had been the approach of the last Labour Government, perhaps the list of countries that we are behind would not be so long.

Finally, the hon. Lady asked whether we will work with EU partners. Yes, of course we will. I will be travelling to the Telecoms Council myself next month to make sure that while we are a member of the European Union, we continue to work with our European partners to get the very best connectivity for the whole country.

[Calum Kerr]

This is a happy, consensual debate, is it not? The Minister almost gave my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) a positive commitment—he managed to row back as fast as possible, but the direction was still positive. Does he support the concept of “use it or share it”, and will he consider it as another potential solution in rural areas, where existing spectrum licence holders are clearly not providing a service?

[Matt Hancock]

That is a matter for Ofcom to consider in setting the details of how the spectrum is auctioned. It will of course consult on exactly how that auction takes place, and I am sure it will have noted the hon. Gentleman’s comments.

I hope that I have answered all the questions asked today. This is a very important issue, if a rather technical one. I am grateful for the interest in it—

[Drew Hendry]

rose—

[Matt Hancock]

That interest extends to constant interruption by SNP Members while I am trying to finish my speech—I will give way to the hon. Gentleman.

[Drew Hendry]

I am extraordinarily grateful for one last opportunity to intervene on the Minister. I asked a question during my speech about the opportunities for accelerating the process. I wonder if he could give an answer on that.

[Matt Hancock]

I apologise for not answering that question. These changes are best done in an orderly way, with a clearly set timetable. In this case, there are three and a half years still to run. Having set the timetable, I think it is best to stick to it, especially because of the impact on existing spectrum users, and to make sure that the changeover happens in the most orderly way possible.

With that, unless there are any further interventions, I will finish by saying that I am grateful to Members for the broad consensus of support for what we are trying to do to improve connectivity through the use of the 700 MHz band.

17:47

[Calum Kerr]

I will just say a few words to wind up the debate. I thank hon. Members for coming and taking part in the debate.

I am concerned that because of the backgrounds of people in this place, there is not enough knowledge on this subject. The moment my colleagues saw “700 MHz” in the debate title, I got umpteen taps on the shoulder and people saying, “What is that? Is it broadband?” and I went, “Well, actually, it is mobile, but mobile broadband.” I am concerned that there is a lack of knowledge in this place. As I often say, we cannot move for tripping over a lawyer, but try finding somebody who understands technology and it is a challenge. Because of that, the danger is that we shy away from the issue, pass the buck to Ofcom and do not debate it. I say well done to the hon. Members who are here for taking part—we all have a responsibility to keep talking about this.

[Matt Warman (Boston and Skegness) (Con)]

rose—

[Robert Flello (in the Chair)]

Order. It is not usual to have interventions in the winding-up speech.

[Calum Kerr]

That is a shame. I am sure it was going to be a very good point; the hon. Gentleman is very well respected in the technology space.

We should be more conscious about what we do in that space, because there is a political dimension to policy setting on spectrum. We have talked today about the level of coverage. That is a political decision, and it is not fair to pass the buck to Ofcom. I am not saying that we are doing that fully, but we must debate and decide and be conscious of the direction of travel. The Minister has made some positive noises, but I would like to see more details firmed up. I would like to see 99% indoors coverage, 95% geographical coverage and an out-to-in approach. A fundamental review of spectrum policy is needed if we are to get the infrastructure that will deliver the access that I am sure the Minister and all of us want.

Question put and agreed to.

Resolved,

That this House has considered release of the 700 MHz spectrum band for mobile data in 2020.

17:49

Sitting adjourned.

Written Statements

Tuesday 15th November 2016 Written Statements

Tuesday 15 November 2016

Higher Education and Research Bill: EVEL

Tuesday 15th November 2016 Written Statements

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

I am pleased to announce the publication of analysis of English votes for English laws in relation to Government amendments to the Higher Education and Research Bill at Commons Report.

The English votes for English laws process applies to public Bills in the House of Commons. To support the process, the Government have agreed that they will provide information to assist the Speaker in considering whether to certify that Bill or any of its provisions for the purposes of English votes for English laws.

The memorandum provides an assessment of tabled Government amendments to the Higher Education and Research Bill, for the purposes of English votes for English laws, ahead of Commons Report. The Department’s assessment is that the amendments do not change the territorial application of the Bill.

This analysis reflects the position should all the Government amendments be accepted.

I have deposited a copy in the Library of the House of Commons.

Attachments can be viewed online at:

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2016-11-15/HCWS254/

[HCWS254]

High Speed 2

Tuesday 15th November 2016 Written Statements

[The Secretary of State for Transport (Chris Grayling)]

I would like to update the House on the progress of High Speed 2.

This Government are planning for the future and investing in world-class transport infrastructure to ensure that the UK can seize opportunities and compete on the global stage.

In a clear signal of how work is progressing on HS2 phase 1, this morning I am announcing that the following companies have been awarded the phase 1 enabling works contracts:

Area South—CS JV (Costain Group Pic, Skanska Construction UK Limited)

Area Central—Fusion JV (Morgan Sindall pic, BAM Nuttall Limited, Ferrovial Agroman (UK) Limited)

Area North-LM JV (Laing O’Rourke Construction Limited, J. Murphy & Sons Limited).

These contracts are worth up to £900 million in total and cover the whole of phase 1. The works include archaeological investigations, site clearance and the setting up of construction compounds ahead of the start of the main civil engineering work.

Today I have published a command paper, “High Speed Two: From Crewe to Manchester, the West Midlands to Leeds and beyond”, and accompanying maps setting out the detail of my preferred route for HS2 from Crewe to Manchester, and from the West Midlands to Leeds, with junctions onto the existing network. This is known as HS2 phase 2b.

This means that following on from the 2013 consultation and work we have done since, I am pleased today to be confirming the majority of the route. There are also a number of cases, including the proposed route through South Yorkshire recommended by Sir David Higgins in a report earlier this year, where I am proposing substantial refinements. I am launching a consultation to seek the views of communities and other interested parties before reaching a decision on those sections next year.

In all, there are seven refinements on which we are consulting, these are:

On the western leg:

To move the previously proposed rolling stock depot at Golborne to a site north of Crewe;

To move the approach to Manchester Piccadilly 370 metres eastwards with the northern tunnel portal in Ardwick, to avoid direct impacts on residential properties and a school at West Gorton; and,

To move the route in the Middlewich—Northwich area in Cheshire up to 800 metres westwards.

On the eastern leg:

To move the route to the east of Measham in Leicestershire, avoiding the most significant impacts on local manufacturing businesses and development sites;

To go around instead of tunnel under East Midlands airport;

To amend the alignment of the preferred route as it passes through Long Eaton to reduce severance in the local community and reduce impacts on the highway network and existing rail infrastructure; and,

To move the alignment of the route from Derbyshire to West Yorkshire to reflect a change in the proposals for serving the Sheffield city region, as recommended by Sir David Higgins in his report “Sheffield and South Yorkshire” published in July 2016.

In order to ensure our case is robust we have of course considered alternatives to the phase 2b scheme, but we have found no alternative that could deliver the same level of benefit for the country.

I am also issuing safeguarding directions for the whole of the preferred phase 2b route today. This protects the preferred route from conflicting development. But it also means that those people who are most affected by the plans to build phase 2b will now be able to access statutory compensation.

In addition, I will be consulting on discretionary property schemes. These will go over and above what is required by law and give assistance to those who will be adversely affected by the railway. These schemes are the same as those currently in operation for people living along the phase 1 route and I aim to be able to confirm the schemes on which I am consulting for phase 2b next year.

Two of these schemes will enter into operation on an interim basis, from today; these are Express Purchase and Need to Sell. Further information on property schemes can be found at: www.gov.uk/hs2.

I am placing copies of the documents in the Libraries of both Houses. Following consultation I plan to make a decision on these route refinements next year and to bring forward a hybrid Bill on phase 2b to lay before Parliament in 2019.

HS2 is an ambitious and exciting project and we must seize the opportunity it offers to transform our country for future generations. The route decision I have published today takes us an important step closer to realising the full potential of HS2.

[HCWS253]