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Oral Answers to Questions
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Mr Andrew Turner (Isle of Wight) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
The Government are committed to helping coastal communities unlock barriers to economic growth. For example, we have invested more than £125 million in more than 200 projects across the United Kingdom through the coastal communities fund. That investment is forecast to deliver more than 18,000 jobs and help to attract more than £240 million of additional funds to coastal areas. Last week, in the autumn statement, I announced the allocation of £1.8 billion from the local growth fund to all regions in England.
Mr Turner
Coastal areas face specific challenges because they do not have 360° access to trade with neighbouring areas, and the Isle of Wight faces additional challenges because we have no physical link with the mainland. Does my right hon. Friend regard the Isle of Wight as a special case that deserves extra support from the Government?
Mr Hammond
I know that every single one of my right hon. and hon. Friends will regard his or her own constituency as a special case, but I can tell my hon. Friend that the Government recognise the specific barriers to economic growth experienced by coastal areas such as the Isle of Wight. That is why we are extending the coastal communities fund by at least a further £90 million across the United Kingdom over the current Parliament. In addition, as my hon. Friend will know, through the Solent growth deal the Isle of Wight has benefited from nearly £15 million of investment to expand the skills base, support business growth and improve transport links.
Alison McGovern (Wirral South) (Lab)
Coastal areas in the north of England have been left behind for too long. We now know that the cost of Brexit to our economy will be the best part of 60 billion quid. Will the Chancellor commit himself to replacing the EU structural funding that gives coastal areas such as New Ferry, in my constituency, half a chance to make economic progress?
Mr Hammond
We have already made announcements about EU funding during the transition period, giving a Treasury guarantee to underwrite funding that is allocated to projects in the UK, so that people who bid for that funding can do so with confidence. However, as the hon. Lady suggests, after we leave the European Union we will need to review for England, and discuss with the devolved Administrations for Scotland, Wales and Northern Ireland, how we are to replace the streams of EU funding to which many regions have become accustomed. We need to have a debate in the House to ensure that that funding is used in a way that reflects the UK’s priority in the future, not the priority of the wider European Union.
Mr Andrew Tyrie (Chichester) (Con)
Selsey Bill, in my constituency, is a special case, but the best thing that can be done for coastal areas is to secure stronger growth throughout the economy. Mario Draghi has suggested that UK growth would be lower if, as a consequence of Brexit, the UK economy were less open to trade and investment. Does the Chancellor agree that both the UK and the EU benefit from an open economy, and that, if the European Central Bank is worried about a Brexit shock to the eurozone, he can and should be lobbying EU leaders to press for a high degree of mutual market access in the Brexit negotiations?
Mr Hammond
Absolutely, Mr Speaker. I agree with Mario Draghi that a reduction in openness would be very bad for the economy of Selsey Bill, and my right hon. Friend is right to draw attention to that. I entirely agree that the best way for the Government to protect the UK’s economy is to argue for the most open possible trading relationship with the European Union after we leave.
Tim Farron (Westmorland and Lonsdale) (LD)
The coastal communities of Cumbria were deeply affected by Storm Desmond last December. The River Kent, which meets the sea at Morecambe bay, is one of Britain’s fastest-flowing and shortest rivers, and when it flooded last December, untold damage was caused to communities and the economy throughout the county. In last week’s autumn statement, the Government went back on their word from last December to fund the resilience of bridges to help prevent future flooding. Will the Chancellor apologise to the flood-hit communities of Cumbria for that betrayal, and, even at this late stage, will he change his mind?
Mr Hammond
We did announce funds for flood resilience in the autumn statement, distributed from money that had already been set aside for that purpose in the spending review. I did not mention Cumbria specifically in the autumn statement, but I will look at the case that the hon. Gentleman has raised, and will write to him.
Mr Julian Brazier (Canterbury) (Con)
I welcome my right hon. Friend’s announcements of the various sums, and may I suggest that the sums the Government have put aside for coastal defence are critical for places such as Whitstable, in my constituency, for generating economic as well as social confidence among the people who live there?
Mr Hammond
My hon. Friend is absolutely right and of course flood defences are categorised as economic infrastructure precisely because they are a critical enabler of business activity and are critical to protect transport, communications, infrastructure and so on, and we will continue to invest in them.
Bill Esterson (Sefton Central) (Lab)
It is about time we heard from this Government about support for our coastal economies because we have just seen, in last week’s autumn statement, a catalogue of six and a half years of abject failure, whether on infrastructure, skills or support for businesses. The coastal communities of Formby and Crosby in my constituency need to hear a lot more from the Chancellor. They need support now and in the future.
Mr Hammond
If the hon. Gentleman had been listening, what he would have heard last week was a catalogue of 2.7 million new jobs created over the last six and a half years, a deficit inherited from Labour at a peacetime record high slashed by two-thirds, a million new jobs created in the UK, record employment levels and 865,000 fewer workless households, all of which will have made an important contribution to improving living standards and prospects in coastal communities throughout the UK.
Mr David Burrowes (Enfield, Southgate) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
The Government are committed to supporting housing supply and ensuring that the housing market works for everyone. Good progress has been made since 2010, with housing supply now at an eight-year high. In October, my right hon. Friend the Communities and Local Government Secretary launched a £3 billion home building fund to provide loans to house builders to unlock over 200,000 homes. However, the scale of the challenge requires us to go further, which is why my right hon. Friend the Chancellor announced that the Government will invest £2.3 billion in a new housing infrastructure fund that will deliver up to 100,000 homes, and will invest an additional £1.4 billion to deliver 40,000 new affordable homes.
Mr Burrowes
Will the autumn statement’s £3.15 billion boost for London housing be flexible enough to meet the aspirations of both Londoners wanting a home they can afford to rent or buy and London’s homeless, whose complex needs include the need for supported housing?
Mr Gauke
I can provide that reassurance to my hon. Friend. The Government are committed to supporting housing supply and ensuring that the housing market works for everyone, including Londoners. London’s £3.15 billion affordable housing settlement will deliver over 90,000 affordable housing starts by 2020-21 across a range of tenures, including homes for low-cost home ownership and submarket rent, as well as supporting housing for Londoners with particular needs, and of course London will also benefit from the housing infrastructure fund.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
More people in my constituency rent privately than own their own homes and for most of them ownership is a distant or impossible dream. Are the Government considering looking at the supply of private rented housing on longer tenures, perhaps with rent guarantees, and possibly using tax reliefs or other mechanisms the Treasury has in its armoury, to encourage landlords to provide those longer-term tenancies and better security for the many private rented sector tenants?
Mr Gauke
The Government are taking action to ensure that we build more homes. There is a need for flexibility in terms of tenure, which was at the heart of my answer to my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), but last week’s autumn statement included a series of measures that will help to ensure that we are building more homes in this country, which is what we need.
Mr Philip Hollobone (Kettering) (Con)
Why is there such a large gap between the number of planning permissions and the number of housing starts, and what specifically can the Government do to close that gap?
George Kerevan (East Lothian) (SNP)
In last week’s autumn statement, the Chancellor raised the tax on house insurance by 20%. How is that supposed to help first-time home buyers to get access to housing?
Mr Gauke
We were very clear that the 2% increase in insurance premium tax was a revenue-raiser that enabled us to introduce the measure on changing the taper for universal credit, which increases the incentives to work. We believe that was the right course of action, but if we look at the autumn statement, and indeed the announcement made at the Conservative party conference, what is very clear is that this Government are committed to ensuring that we build more homes, which is what the public rightly expect.
Melanie Onn (Great Grimsby) (Lab)
Robert Flello (Stoke-on-Trent South) (Lab)
The Financial Secretary to the Treasury (Jane Ellison)
The independent National Audit Office is carrying out an inquiry into the Concentrix contract and it plans to publish its report in early 2017. That is in addition to Select Committee and Public Accounts Committee scrutiny, which has been extensive to date and will no doubt be extensive in the future.
Melanie Onn
I should like to take this opportunity to congratulate my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), who is not in her place, whose hard work got this issue on to the agenda and forced HMRC to act. In July, the independent Social Security Advisory Committee said that the Concentrix contract was a
“major departure for HMRC, as decisions about a claimant’s past eligibility to a benefit are being made by a commercial organisation”,
and that
“this same organisation is then performing mandatory reconsiderations when a claimant challenges the initial decision.”
What are the Government going to do to prevent this situation from happening again?
Jane Ellison
The chief executive of HMRC addressed that particular issue in one of his evidence sessions to a Select Committee. I hope the House will be pleased to hear that HMRC has taken back and completed all 181,000 cases from Concentrix and has now cleared most of the mandatory reconsiderations. [Interruption.] There are of course issues to consider. That is why the National Audit Office is carrying out its inquiry, which is already under way, and the Government will of course respond to its report in due course.
Robert Flello
The Concentrix scandal left huge numbers of people in hardship, and some of them are still paying off the debts to loan sharks that they took out to see them through. Ministers must have seen the complaints letters, and they must have seen what was in the media. Were they asleep at their desks? Were they just caught napping? Concentrix, HMRC and the Minister at the time need to be held responsible for this, and we need a proper inquiry.
Jane Ellison
I would make the point to the hon. Gentleman that a proper inquiry is exactly what the National Audit Office will be undertaking, and I am sure that the hon. Member for Hackney South and Shoreditch (Meg Hillier) and her Committee will have that report in front of them in due course. This matter will be properly looked at in some detail. Over the course of the contract, considerable savings were made for the taxpayer in relation to fraud and error, but it is true that things went badly wrong towards the end of the contract, which is why swift action was taken.
Richard Graham (Gloucester) (Con)
While recognising the points made by the hon. Members for Great Grimsby (Melanie Onn) and for Stoke-on-Trent South (Robert Flello) on the Concentrix contract, which will be covered in the Select Committee’s report, I would like to congratulate Treasury Ministers on responding very fast when these issues really came to a climax in August and on being extremely prompt in looking after constituents who contacted their MPs about this matter.
Jane Ellison
I thank my hon. Friend for those words. Having looked carefully at the profile of complaints from Members over the period of the contract, it is clear that there was sharp increase in their number right at the end of the contract, when it became apparent that a number of Members were contacting us on behalf of their constituents. As I have said, it was the sharp decline in service that led to the actions that we took. It is also worth noting that all the 181,000 cases that were taken back have now been resolved and that, where appropriate, compensation has been paid. Most importantly, when claims have needed to be renewed and reinstated, this has been done.
Kevin Foster (Torbay) (Con)
Given the issues in my constituency that I have raised, I am pleased that the Concentrix contract has now been brought to an end. Does the Minister agree that an inquiry by the National Audit Office, which works for and answers to this House, will be far more effective in getting lessons learned than a long-winded public inquiry that could become a lawyer-fest?
Jane Ellison
My hon. Friend is exactly right to say that the National Audit Office inquiry is the way to go. This is an area in which it is deeply experienced and the work is already under way. The report will be produced in the new year. In order to draw conclusions and to find these reports helpful, that speed of inquiry is important. We will have the report early in the new year, and the House will have further chances to scrutinise it at that time.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
The Financial Secretary to the Treasury (Jane Ellison)
Ultimately, the Government want to collect the right tax at the right time, not charge penalties. As it happens, we are currently reviewing ideas for how we charge penalties. A discussion document was published last year, and we recently consulted on a new approach to sanctions for late submissions of returns and late payment of taxes. We are currently considering all the comments received and if my hon. Friend wants to contribute to that process, I will be happy to look at any detailed points.
Gordon Henderson
I am more than happy to contribute. A small building company in my constituency has paid large VAT bills on time since 1972. However, on one occasion, because of a mistake by a member of staff, the company’s VAT return was one day late and the company was hit with a totally unfair £12,000 penalty charge. During the review, will Ministers consider changing the penalty charge system so that they are levied only on businesses that repeatedly fail to pay their VAT on time? “Three strikes and you’re fined” might be a good system.
Jane Ellison
I note what my hon. Friend says with interest. It is worth clarifying that the VAT default surcharge system already contains safeguards to help businesses avoid penalties and that no business incurs a surcharge the first time it makes a late payment. My hon. Friend may want to write to me about that individual case because I cannot address it here in the House. The current system of surcharges is structured in a way that allows the smallest businesses up to four late payments without incurring a surcharge, so I suggest that he writes to me with the details, which I will pass on to HMRC.
Sammy Wilson (East Antrim) (DUP)
The new “Making tax digital” arrangements, which will require businesses to submit quarterly returns, increase the likelihood of sanctions being imposed following late returns or non-submission. How does that fit in with the Government’s promises to make it easier to start a business, to cut red tape and to make businesses more competitive?
Jane Ellison
I do not recognise the hon. Gentleman’s description of “Making tax digital”—an important reform that we will consider carefully. We said in the autumn statement that we will respond in the new year, but it is not right to say that there will be four returns; information will be digitally uploaded to the system more regularly. It is also the case that one of the driving forces behind “Making tax digital” is to help small businesses to get things right first time, because there is an awful lot of error that often costs businesses money that they would otherwise be owed.
Mrs Theresa Villiers (Chipping Barnet) (Con)
I must press the Financial Secretary on that point. I appreciate that the “Making tax digital” programme does have advantages, but many small businesses are worried about quarterly reporting. Will she consider making it voluntary rather than mandatory?
Jane Ellison
I reiterate to my right hon. Friend that it is envisaged that people will upload information quarterly, but that is not the same as four tax returns a year, something which got some currency at the time. Several significant concessions regarding the number of small businesses that were exempt from the system were announced over the summer, but I am listening carefully to the points being made both by colleagues in the House and by some of the important stakeholders with whom we have been engaging. That is why we said that we will respond in the new year. We do not want to rush our response; we want to consider all the points carefully.
Rebecca Pow (Taunton Deane) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
Investment and skills are front and centre in our plans to raise productivity across the country, including in the south-west. The autumn statement announced a new £23 billion national productivity investment fund that will be targeted at four areas that are critical to improving productivity: housing; transport; digital communications; and research and development. We also announced in the autumn statement that the south-west will receive £191 million from the local growth fund to back local priorities and support new jobs and £19.5 million extra investment to bolster the area’s resilience to flooding.
Rebecca Pow
I welcome the Chancellor’s words and appreciate that he is keen for funding to be granted and attached to infrastructure projects that will bring a positive economic effect. With that in mind, will he consider supporting road improvements on the Toneway-Creech Castle corridor that leads into Somerset’s county town of Taunton, which will unlock 3,000 housing units?
Mr Hammond
I understand that the Heart of the South West local enterprise partnership bid for this scheme is part of its local growth fund submission; as I said, £191 million has been allocated to the south-west, and details of the individual LEP allocations will be announced in the near future. The Government are very supportive of using infrastructure to open up house building and employment opportunities, and from what she has said about this road, it sounds as though the project in question would fit very well with Government priorities.
Kerry McCarthy (Bristol East) (Lab)
As the Chancellor will know, Bristol is making a real contribution to productive growth, not just in the south-west, but across the country. But as the mayor of Bristol said in his response to the autumn statement,
“if the government wants a ‘watertight’ UK economy it needs to stop punching holes in local government’s hull.”
Will the Government commit to giving Bristol and cities like it the devolved powers, infrastructure investment and funding they need to deliver on productive growth locally?
Mr Hammond
The Government remain committed to the devolution agenda and, in particular, to supporting mayoral authorities, to ensure that economic growth and productivity are driven from the bottom up. We will continue to work with those authorities to make sure we deliver the funding available in the most effective way to get the result the national economy needs.
Neil Parish (Tiverton and Honiton) (Con)
I very much welcome the Chancellor’s commitment to road, rail and broadband. Openreach should be broken away from BT to deliver proper competition, because in the hardest-to-reach areas for broadband in my constituency and across the west country, we need some greater players and greater competition.
Mr Hammond
I appreciate what my hon. Friend is saying. He will know that there has been a long and heated debate about the best way of delivering our broadband infrastructure in the future, and Ofcom is at the heart of reviewing this issue. I shall continue to have meetings with Ofcom, and with representatives of BT and others, over the coming days, as will my right hon. Friend the Culture Secretary.
Peter Dowd (Bootle) (Lab)
The south-west’s productivity has drifted down since 2010 and, according to the House of Commons Library, the UK overall has seen the widest productivity gap with the G7 since 1991, when the data series began. What plans, if any, does the Chancellor have to pursue his predecessor’s so-called “Fixing the foundations” productivity plan? Or is that another failed policy that this Chancellor is trying quietly to jettison?
Mr Hammond
No, and if the hon. Gentleman looks at the document we published last Wednesday, he will see that it contained a specific reference to “Fixing the foundations”, which is the base document setting out the Government’s agenda for addressing productivity issues. Of course, the key announcement in last week’s autumn statement was an additional £23 billion of borrowing specifically targeted at the highest-return investment projects; this is designed to raise Britain’s productivity by raising the productivity performance of our regional cities, in particular, and our regions more generally, to that of London and the south-west.
Peter Dowd
It is six years late. The productivity gap has widened for both the south-west and the country, and so has the gap in earnings and wages. According to the Institute for Fiscal Studies, the outlook for wages is “dreadful”, with workers likely to earn less in real terms in 2021 than they did in 2008, and with the biggest losers being lower-income families, with the poorest third likely to see incomes drop. So in tandem with action on the productivity crisis, what are the Chancellor’s plans for action on the wages crisis?
Mr Hammond
First, if the hon. Gentleman that if he looks at real household disposable incomes, he will see that the picture is rather brighter, and they present a much more real picture of what people in the economy are experiencing. He is right to say that real wages are a reflection of productivity performance, and the only way sustainably to raise real wages is to raise the productivity performance of this economy. So rather than whinging about whether something was done this year, last year or six years ago, and perhaps with a careful eye on the performance of the previous Labour Government in this area, he might care to welcome the announcement made last week as an appropriate initiative to try to raise the UK’s productivity performance, and raise real wages and living standards over the long term.
Sir Henry Bellingham (North West Norfolk) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
The Government are taking significant steps to encourage business investment in East Anglia and in all regions of the UK by cutting corporation tax to the lowest rate in the G20, delivering a £6.7 billion business rates package and allocating the £23 billion of public investment through the national productivity investment fund to ensure increasing and improved productivity. The autumn statement also announced £27 million for the Oxford to Cambridge expressway road link, as well as funding for the east-west rail link, and local enterprise partnerships in the east of England will also receive up to £151 million of local growth funding.
Sir Henry Bellingham
I welcome the Chancellor’s reply and the announcement of investment in the Oxford to Cambridge corridor and the transformational effect that that could have. Will he also ensure that other schemes to the east of Cambridge, such as the vital Ely North rail junction and improvements to the A47, also go ahead on time? He will be aware that they are crucial to the future economy of west Norfolk and other parts of Norfolk.
Mr Hammond
I will certainly pass on my hon. Friend’s comments about that particular rail scheme to my right hon. Friend the Transport Secretary. My hon. Friend will know that we have a large programme of rail infrastructure in place and that the additional funding for the east-west rail link that was announced last week was outside that core rail programme. I hope that he will agree that the Oxford to Cambridge corridor represents a real growth opportunity for the south and the east of England to exploit Britain’s two best known universities and their world-class research reputations to enhance the productive capacity of our economy.
Kelvin Hopkins (Luton North) (Lab)
Since 23 June, there has been a significant depreciation of sterling and two announcements of major investments in UK motor manufacturing. The prospects for investment in UK manufacturing more widely are now much improved. Will the Chancellor be seeking to ensure that the more sensible exchange rate welcomed by Lord Mervyn King, among others, is sustained?
Mr Hammond
No. It is not the Government’s business to sustain or manage the exchange rate in any way, as the hon. Gentleman very well knows. We have an inflation target, but exchange rates are set by markets and reflect market views about the economy and expectations of the trajectory of the economy in the future. He is absolutely right to observe that, over the past six months, we have seen some remarkable endorsements of the British economy through large inward investment decisions made by foreign inward investors.
Anna Soubry (Broxtowe) (Con)
May I congratulate the Chancellor on the £23 billion of extra money for this national productivity investment fund, which will confer huge benefits on the whole of the United Kingdom? Although I do not expect him to comment on the considerable merits of the A610 growth corridor and the improvements to the road at Giltbrook, I am very happy to meet him to persuade him of them. On a serious note, will he do everything he can to ensure that excellent schemes such as those are expedited and not caught up in what can sometimes be bureaucratic tangles?
Mr Hammond
It is an excellent scheme indeed. My right hon. Friend will know that it is not only the £23 billion of additional funding for economically productive infrastructure that was announced on Wednesday last week, but a core £150 billion of funding for the same defined purposes over the remainder of this Parliament and the Government’s commitment, repeated last Wednesday, to move to a roads fund from 2020, funded by the revenues from vehicle excise duty, all of which adds up to a sustained commitment to investment in our roads.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Brexit is putting business investment on hold at the expense of job losses. This comes after a long period of escalating debt and slumping growth. Furthermore, quantitative easing has failed to raise confidence and stimulate business investment in the real economy. The autumn statement measures announced are simply insufficient. What else will the Chancellor do?
Mr Hammond
I simply do not recognise the picture that the hon. Gentleman paints. The Bank of England’s monetary actions have undoubtedly had a positive effect in stimulating the economy. The performance of consumer demand over the past few weeks has demonstrated that very clearly. We have the key elements in place, both monetary and fiscal, for our current circumstance, which is the potential for a more difficult period ahead. We need to muster our resources, make sure that we are able to support the economy through this period, and, at the same time, address the fundamental challenges, such as the productivity problem, to ensure that Britain is match fit to meet the challenges that it will face as it leaves the European Union.
Roger Mullin
In that regard, I am sure that the Chancellor would agree that research and development investment is critical to obtaining a high skill, high wage economy and one that increases productivity, as he has recognised. It is therefore disappointing that the autumn statement has failed to match R and D investment as a percentage of GDP in line with other major economies. What will the Chancellor do to fill that gap?
Mr Hammond
What I will do over the medium to long term is get the British economy back on to a firm footing, so that we can fund all those investment needs—which we do have, as the hon. Gentleman points out. Let me turn the question around. Scotland will receive £800 million of additional capital funding through Barnett consequentials as a result of the announcement made last week. From the tone of the hon. Gentleman’s question, I feel sure that the Scottish National party will want to confirm that that money will be used in Scotland, as it will in England, to target productivity-raising capital investment, so that the Scottish economy can perform more strongly in the future.
Chris Elmore (Ogmore) (Lab/Co-op)
The Economic Secretary to the Treasury (Simon Kirby)
The UK remains very much open for business and the Government are committed to supporting SMEs to access the capital they need to grow, as demonstrated by the £400 million increase in funding for the British Business Bank announced at the autumn statement, unlocking £1 billion of funding.
Chris Elmore
The Minister will be aware that more than £10 billion of EU structural funds is invested annually in the UK, particularly in Wales. Indeed, in my constituency of Ogmore, many small and medium-sized businesses have benefited from Jobs Growth Wales, which is a success of the Welsh Labour Government. Will the Minister give a cast-iron guarantee to the people of Wales that structural funding will continue, pound for pound, after we leave the European Union?
Simon Kirby
We want to see the economy benefit every part of the UK. It is interesting to note that there are almost 1 million new businesses in our country since 2010, and I note the Prime Minister’s announcement at the CBI conference about the new patient capital review, which will be interesting, I am sure.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
Does my hon. Friend agree that Brexit is essentially a red herring for SMEs in this context, that what matters is that the Government create the right conditions for businesses to do business and that the banks are in a sufficiently capitalised position to lend money?
Simon Kirby
I agree absolutely with my hon. Friend. It is about creating an economic environment in which businesses can grow and thrive. The British economy is strong and will continue to be strong as we prepare for our departure from the EU.
Emma Reynolds (Wolverhampton North East) (Lab)
What would be the impact on SMEs, particularly those in the supply chain of big manufacturing firms such as Jaguar Land Rover or Airbus, if we were to leave the EU without full access to the single market or a free trade deal with the rest of the EU and if we were forced to fall back on World Trade Organisation rules and tariffs?
Simon Kirby
The Government have been clear that we will not comment on every turn of the negotiations. Indeed, the negotiations have yet to start. However, we are absolutely committed to getting the best possible deal we can.
Chris Philp (Croydon South) (Con)
Does the Minister agree that the City of London plays a very important part in helping businesses to raise capital and that maintaining clearing in euros in the City of London will be an important way to ensure that the City retains that status?
Simon Kirby
The City of London is a very important financial centre and we fully intend it to remain as such. Clearing is an important element of the negotiations, and we will do all we can to retain London and the UK as a financial centre of excellence.
Jo Churchill (Bury St Edmunds) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
In the autumn statement, we prioritised additional high-value investments, specifically in infrastructure and innovation, that will directly contribute to raising Britain’s productivity. The Chancellor announced a new national productivity investment fund of £23 billion to be spent on housing, transport, digital communications and research and development over the next five years. Local enterprise partnerships will receive £1.8 billion of growth deal funding. This will go towards the projects needed to bring about economic growth in local areas, including new homes, transport improvements and supporting businesses and people to access the skills they need.
Jo Churchill
I welcome all those measures to boost productivity and particularly to turn attention to infrastructure and the specifics for the east of England given yesterday. However, given the strategic importance of the A14 trunk road linking Felixstowe port with Cambridge and the rest of the country, as well as its significance to 80% of businesses in Suffolk, does the Minister agree that further improvements to a road that he knows well are vital to productivity?
Mr Gauke
My hon. Friend is right—it is a road that I know well. We certainly agree that the A14 is a critically important part of the network. We are investing £1.5 billion for a major upgrade to cut congestion on the A14, including a new 21-mile road between Huntingdon and Cambridge, and only yesterday my right hon. Friend the Transport Secretary was able to go there to witness the start of the work.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Mr Gauke
No, that is not true. There is a balanced package and all parts of England will benefit from the transport measures. The Barnett consequentials should mean that Scotland, Wales and Northern Ireland can also benefit in this area. A specific announcement about the midlands hub was made in the autumn statement and there is more to be said about the midlands engine. This is a Government who are determined to ensure that the whole country benefits from economic growth.
Antoinette Sandbach (Eddisbury) (Con)
Mr Gauke
My hon. Friend highlights the fact that digital must be key to improving productivity. That is why a £1 billion package was announced in the autumn statement. There was also specific help for rural areas through rural rates relief. Our ambition is clear: to provide the best digital infrastructure we can for urban and rural areas.
Rachel Reeves (Leeds West) (Lab)
In table 4.21 of the report Office for Budget Responsibility’s it forecast that the Government will underspend on infrastructure by £15 billion in the next five years—two thirds of the additional money announced by the Chancellor last week. Why should the public have any confidence in the ability of the Government to deliver on their promises when their own watchdog clearly does not?
Mr Gauke
The OBR has always taken a cautious view on delivery of infrastructure, but let us remember that we have already delivered 3,000 projects. We have set out an ambitious plan for delivery of infrastructure improvements in the course of this Parliament, and that is exactly what we will deliver.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
The Economic Secretary to the Treasury (Simon Kirby)
The Government are committed to ensuring that exporters receive world-class support. That is why the autumn statement announced the doubling of UK export finance capacity.
Ms Ahmed-Sheikh
Last week, the OBR reduced its trade forecast, stating that this is
“due to the loss of trade that the OBR judges will result from the UK leaving the EU.”
We all know that this Government would like to have their cake and eat it, but changes to export finance alone will not bridge the gap between ambition and reality. Do the Government seriously expect to meet their own target of doubling exports without continued membership of the single market and without a comprehensive plan to do so? Do the Government stand by their exports target?
Simon Kirby
We do, and it is interesting to note that the Federation of Small Businesses, for example, welcomed the doubling of export finance because it felt that it would help small and medium-sized enterprises reach new markets. It is also interesting to note that the Scotch Whisky Association highlights the importance of exports, and it has seen an increase of 3.1%, to 531 million bottles. Perhaps the hon. Lady might remove uncertainty in Scotland by stopping banging on about a second referendum.
Mr David Nuttall (Bury North) (Con)
Does my hon. Friend agree that the best thing the Treasury can do to help British business export is to allow it to keep more of the profits it earns by continuing to cut corporation tax?
Simon Kirby
We have legislated for corporation tax to be reduced to 17% by the end of this Parliament—one of the lowest rates in the G7—and we will do all we can to help businesses grow and thrive in this country.
John McDonnell (Hayes and Harlington) (Lab)
Last week’s autumn statement should have been about providing answers to meet the challenges of Brexit and at least information on the options available. Instead, it appears that the only information we can glean is from photos snatched of the notes of a senior Conservative official in Downing Street. We know now, in the light of that leak, that many of the Chancellor’s senior colleagues in the Government are reluctant to pursue the transitional deal being called for by businesses when we leave the EU. Will the Minister now provide some clarity by inviting the Treasury and the Office for Budget Responsibility to undertake a full assessment of the public finance implications of the range of policy options associated with Brexit, including access—or not—to the single market, being in or out of the customs union and the potential for transitional arrangements?
Simon Kirby
I have to tell the right hon. Gentleman that that is a normal part of what we do on a very regular basis, and he really should not believe all he reads in newspapers from researchers or Back Benchers—it is hardly Government policy.
John McDonnell
I take that as a no.
Last week, we learned in the OBR report that the OBR was denied any information in respect of assurances provided to Nissan. The OBR said:
“On this occasion we asked specifically whether any contingent liabilities had been created in respect of assurances provided to Nissan and the Treasury declined to say.”
This level of opaqueness on an existing deal undermines the certainty businesses need to invest in any future deals. Will the Chancellor now provide the OBR with the information it has requested, so that it can provide a more accurate forecast, rather than being left in the dark or, as it put it, “none the wiser”?
Simon Kirby
Perhaps we should welcome the jobs to start with. However, in answer to the right hon. Gentleman’s question, it was, unfortunately, not possible to confirm this to the OBR in time to feed into the drafting process. Her Majesty’s Treasury therefore provided the same answer as it would to any query on contingent liability.
Kirsten Oswald (East Renfrewshire) (SNP)
The Chancellor of the Exchequer (Mr Philip Hammond)
In the autumn statement, as I have said already, I announced the creation of a new national productivity investment fund to provide £23 billion of additional investment. That is on top of the £150 billion that is already baked into the baseline, and it is focused on the key areas for boosting productivity—housing, infrastructure and research and development.
Kirsten Oswald
I welcome the £800 million in Barnett consequentials, which the Scottish Government will invest on top of the £100 million they have already announced for capital projects, but what further steps will the Chancellor take to address the almost 10% cut to the Scottish capital budget since the Tories came to office?
Mr Hammond
The Scottish Government will have a full share of infrastructure spending through the Barnett formula, and we will work with the Scottish Government and all other devolved Administrations and regional entities, as we work to raise the UK’s productivity game. That is about infrastructure investment—both public and private. It is about raising skills. It is about raising management capability, and we announced that we would fund the Charlie Mayfield initiative to disseminate best management practice across small and medium-sized enterprises. It is about doing all these things to ensure the UK is match fit to prosper in the global economy in the future.
Philip Davies (Shipley) (Con)
May I ask the Chancellor not to blindly hand over any extra infrastructure spending in West Yorkshire to the Labour-dominated West Yorkshire Combined Authority for it just to pump money into the Labour heartlands, and instead make sure that money can be spent in other parts of West Yorkshire, including on a Shipley eastern bypass, which would benefit the local economy and the economies of my hon. Friends the Members for Pudsey (Stuart Andrew) and for Keighley (Kris Hopkins), too?
Mr Hammond
I am grateful to my hon. Friend. I did not know that Labour had any heartlands left, so that is an interesting comment. I will pass on his concerns to my right hon. Friend the Transport Secretary and ask him to take them into consideration when he makes his allocations.
Several hon. Members rose—
Mr Speaker
Order. I remind colleagues that topical questions are supposed to be sharply shorter, and the same goes for the replies. We made remarkably slow progress in the first session this morning, and we really need to do rather better.
Mary Glindon (North Tyneside) (Lab)
The Chancellor of the Exchequer (Mr Philip Hammond)
My principal responsibility is to ensure the stability and prosperity of the economy. In the current circumstances, I judge that that requires a combination of near-term measures to ensure resilience and longer-term measures to manage the structural adjustment, as the UK transitions out of the EU, and to address the UK’s long-term productivity challenge. The package announced in the autumn statement last week delivered on both requirements.
Mary Glindon
So far the Chancellor has disregarded Members’ requests to give justice to the WASPI—Women Against State Pension Inequality Campaign—women. Will he now listen to bodies such as North Tyneside Council, which, under our elected mayor, Norma Redfearn, has written to the Government to ask for a fair transition of the state pension right for all these women?
Mr Hammond
I understand the concerns, but this issue was debated extensively during the passage of the Pensions Act 2011, when the Government made concessions to this group of individuals worth £1.1 billion.
Ben Howlett (Bath) (Con)
Mr Speaker
I am sure the hon. Gentleman will be wearing that excellent pullover as he does so.
Mr Hammond
This is year four of Small Business Saturday, and the campaign continues to get bigger each year. Small businesses and entrepreneurs are the backbone of the British economy. The Government will continue to support Small Business Saturday this year with events across the country. I encourage right hon. and hon. Members in all parts of the House to be in touch with their local enterprise partnerships and their local branch of the Federation of Small Businesses to find out what is going on locally and to get out there and support it.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Last week, we saw the accumulation of six wasted years of failed economic policies supported by both the Chancellor and the Prime Minister. Following last week’s autumn statement and the publication of the Office for Budget Responsibility forecasts, can the Chancellor confirm how much worse off a pensioner on the state pension will be by 2019-20 as a result of the OBR’s downgrades to wage forecasts?
Mr Hammond
I am slightly mystified by the hon. Lady’s question, because the downgrades to wage forecasts will not be the driver of the circumstances of a pensioner on the state pension, given that we have introduced a triple lock that guarantees pensioners an increase in line with inflation, in line with earnings, or 2.5% as a minimum. However, I am happy to look at the specific question and to write to the hon. Lady with a calculation.
Rebecca Long Bailey
Let me inform the House that the forecast is this: a pensioner on the state pension will be £429 worse off by 2019-20, with only the triple lock preventing an even worse decline. After claiming in the autumn statement that the triple lock will now be subject to review, will the Chancellor end the uncertainty and worry he has caused older people and join me in committing to preserve the triple lock throughout the lifetime of the next Parliament?
Mr Hammond
Well, this was worth waiting for: we have a firm commitment by the Opposition to run the triple lock through the lifetime of the next Parliament. I wonder whether the hon. Lady knows how much money she has just spent, without knowing the fiscal circumstances the country will face. What we have said, and the only responsible thing to say, is that all the commitments we have made for the duration of this Parliament we will review at the spending review before the end of the Parliament, and we will decide then which ones we can afford to renew and which ones are appropriate to renew. I think this tells us everything we need to know about the Opposition: three and a half years out, they are willing to spray around commitments without any idea of what it is going to cost them.
Mr Steve Baker (Wycombe) (Con)
The Financial Secretary to the Treasury (Jane Ellison)
My hon. Friend is right to point to the fact that we inherited a complex system in that regard. Her Majesty’s Revenue and Customs has enhanced its online services. There will be an online service, for example, for people making new claims for tax credits starting in April 2017. The use of real time information through pay-as-you-earn has really helped to pick up potential errors in claimants’ income, and it is making a difference.
Christian Matheson (City of Chester) (Lab)
The Chief Secretary to the Treasury (Mr David Gauke)
I will take that as a representation and make sure that my right hon. Friend the Transport Secretary is aware of it. The hon. Gentleman will be aware that we are already setting out an ambitious programme for road spending over this Parliament. In addition, my right hon. Friend the Chancellor of the Exchequer made announcements last week about putting in more funding to improve our road network across the country. I am happy to look at the case that the hon. Gentleman raises.
Suella Fernandes (Fareham) (Con)
I recently visited ASV Global in Portchester, an innovator in unmanned and autonomous marine technologies. In just six years, ASV has designed 70 new products, which it has delivered to 10 countries and 40 customers. What further support for research and development is available to companies such as ASV to boost job creation and wealth?
Mr Philip Hammond
We have done two things. Within the £23 billion that I announced last week to raise the UK’s productivity game is a significant increase in public R and D investment. We also said—we will do this before the Budget—that we would carry out a review of the way that tax support for privately funded R and D works, with the objective of ensuring that the UK is the most attractive place in Europe to do private R and D work. I will report at Budget 2017.
Patrick Grady (Glasgow North) (SNP)
Mr Hammond
No, not necessarily at all. We spend our ODA in different ways, and different Departments have relatively small pools of ODA. Of course, the great majority of it goes through DFID. Where GNI contracts and the ODA budget needs to be trimmed accordingly, we will look to take away the lowest-value ODA spending. I think that that is the way the taxpayer would expect it to be done.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
Further to the Chancellor’s answer to my hon. Friend the Member for Fareham (Suella Fernandes), could he set out how QuestUAV in Amble, a manufacturer of mapping and survey drones, and other high-tech north-east businesses will be able to access the R and D funding that he talks about?
Mr Hammond
Public R and D funding will take two principal forms. There will be further funding to the science base in our universities, and there will be funding through Innovate UK, which is accessible by companies to support innovation. We already have an excellent base in basic science. What we need to do now is to up our game in innovation and the application of that science.
Fiona Mactaggart (Slough) (Lab)
Jane Ellison
The right hon. Lady and I have recently spoken about this issue, and as she knows, there has been some work done to look at the broader issue. It is complicated, but I undertake to look at it again and respond to her. Of course, some of the broader aspects of the gig economy will be covered during the Taylor review.
Kevin Hollinrake (Thirsk and Malton) (Con)
According to the Library, infrastructure spending per head is 2.5 times greater in London and the south-east than in the regions. Does the Chancellor agree that now is the time for a fairer distribution of investment spending across the UK?
Mr Philip Hammond
The Government are committed to investment in all the regions of the UK. We have delivered more than 500 infrastructure schemes in the north since 2010, and more than £13 billion of spending is planned on transport in the north during this Parliament. In Yorkshire, this includes new trains on the east coast main line, the trans-Pennine railway upgrade and bringing the A1(M) up to motorway standard for its full length. I would just say to my hon. Friend that figures for London and the south-east are distorted by the effect of the strategic Crossrail project, with a cost of £14.8 billion.
Martyn Day (Linlithgow and East Falkirk) (SNP)
Mr Hammond
I cannot give the hon. Gentleman a precise date, but I have discussed this with the business managers. The rules of the House mean that 28 days must elapse before the charter is laid. I think that that will put it in the second half of January, but we will have the debate as soon as we can after the statutory period.
Kit Malthouse (North West Hampshire) (Con)
As other Members have mentioned, there is growing alarm about the impact of making tax digital on small business people, of whom I am one. Will the Chancellor confirm that, in time, quarterly tax returns will also apply to Members of Parliament?
Jane Ellison
As my hon. Friend mentioned, we touched on this earlier. Making tax digital is an important reform. I have mentioned already that some important concessions were made during the summer, by taking many very small businesses out of making tax digital, but it has much to offer small businesses. I am looking carefully at all the responses that have been made, and as he knows, I have listened carefully to the points that he has made on a number of occasions.
Ms Margaret Ritchie (South Down) (SDLP)
Mr Gauke
It is not a vehicle to interfere, but we have been clear from the very beginning that if the Northern Ireland Executive wish to reduce corporation tax rates in Northern Ireland, they need to do so in an environment in which we can be confident that the public finances are on a sound footing in Northern Ireland.
Martin Vickers (Cleethorpes) (Con)
When I met the leader of North East Lincolnshire Council yesterday, he emphasised to me that one of the major challenges facing our coastal community is that many people retire there and put additional strains on the adult social care budget. Will Ministers assure me that that will be considered when allocating departmental budgets?
Mr Philip Hammond
Yes, demographic trends are of course at the heart of our considerations when budgets are allocated.
Marie Rimmer (St Helens South and Whiston) (Lab)
With just one in six people with autism in employment, would it not have been better to invest in improving the Work and Health programme, rather than cutting it, to assist people to gain employment and thereby save on benefits? They want to work.
Mr Gauke
The reforms that we have announced will enable us to spend £330 million on practical support to ensure that people in the work-related activity group can work. May I point out that, over the past three years, the number of disabled people in employment has increased by nearly 600,000?
Richard Fuller (Bedford) (Con)
The key insight of the Government’s productivity plan is that value can be unlocked through more timely implementation, so will the Chancellor have a word with the Transport Secretary to see how he can speed up the completion of the final part of the Oxford to Cambridge link from Bedford to Cambridge?
Mr Philip Hammond
I will certainly have a word with my right hon. Friend. This is partly about smart delivery, but it is also about having certainty and a pipeline that allows contractors in the supply chain to plan ahead.
Dame Rosie Winterton (Doncaster Central) (Lab)
Does the Chancellor realise that if he tries to push the funding gap in social care on to local councils, it will be grossly unfair for areas such as Doncaster, where a 1% increase in council tax would raise 21% less than it would for the council in the Prime Minister’s constituency? Will he commit to funding social care fully?
Mr Hammond
As I said on Wednesday, with the additional social care precept and the better care fund, we have measures in place that will make £3.5 billion of additional funding per annum available for social care by the end of this Parliament. But we recognise that local authorities have a challenge in the profiling of that money. My right hon. Friends the Health Secretary and the Communities Secretary are very much aware of that and are in discussions about it with health bodies and local authorities.
Scott Mann (North Cornwall) (Con)
I welcome my right hon. Friend’s announcement in the autumn statement of £1.7 million of LIBOR money going to Sea Sanctuary to help with mental health provision in Cornwall. Does he agree that that will be a huge help for people all over Cornwall who in the past have had to travel many hundreds of miles to access such services?
Mr Hammond
I am very pleased that the money will deliver that effect in Cornwall. It is always good to see fines levied on the appalling behaviour of the few making such a positive difference to the many.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
To follow on from the question from my right hon. Friend the Member for Doncaster Central (Dame Rosie Winterton), the demand for social care services in my constituency is set to rise by 10% in just one year, so will the Chancellor take the opportunity today to commit to additional funding for social care?
Mr Hammond
No, these are not the occasions when we commit to additional funding. We have a funding settlement in place and substantial increases in social care funding will become available by the end of the Parliament. But as I have said, we recognise that some authorities are facing some challenges on the profiling of that funding, and my right hon. Friends the Health Secretary and Communities Secretary are discussing that issue with local authority leaders.
James Morris (Halesowen and Rowley Regis) (Con)
Does the Chancellor agree that one way to improve productivity in the west midlands economy is to agree a more ambitious second devolution settlement, building on the success of the devolved settlement agreed with the West Midlands Combined Authority?
Mr Hammond
I agree with my hon. Friend. As I said on Wednesday, the Government continue to discuss with west midlands authorities the possibilities for further devolution in the west midlands. The other way to get the west midlands economy motoring is to elect a mayor with genuine business experience, like Andy Street.
Ian Murray (Edinburgh South) (Lab)
The Scotch whisky industry is the largest net contributor to the UK’s balance of trade and goods. In the light of Brexit, what options is the Chancellor examining to make sure the industry can keep that privileged position of exporting?
Mr Hammond
We will have discussions with the Scotch Whisky Association, as we do with many trade associations. Without getting into a technical discussion, I should say that dutiable goods are less likely to be adversely affected by a change in the way we trade with our European neighbours than many other goods, because there is already a specific regime for dealing with them that is unlikely to have to change as a result of Brexit.
Several hon. Members rose—
Mr Speaker
Order. I am sorry to disappoint remaining colleagues, but I have extended the envelope as far as I felt it in any way reasonable to extend it.
People of Syria
(7 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ms Margaret Ritchie (South Down) (SDLP)
I present the petition on behalf of my constituents from the coastal town of Newcastle who are deeply concerned by the humanitarian crisis in Syria. The petition is supported by the hon. Member for Strangford (Jim Shannon).
The petition states:
The petition of residents of Newcastle, County Down,
Declares that the humanitarian crisis in Syria has already resulted in thousands of deaths and shows no sign of a resolution; further that men, women and children are targeted by air strikes and, if lucky to survive, are being forced to leave their homes, tearing families apart and often resulting in further deaths; further that these people do not ask and do not deserve to be in this situation; and further that a peaceful means to end the war should be sought, rather than the continuation of air strikes.
The petitioners therefore request that the House of Commons urges the Government to help protect the rights and lives of those affected by the war in Syria through the administration of aid, food and medical care to those who remain in the country as well as those who have been displaced; and further that the Government is encouraged to find a peaceful means to end the war rather than the continuation of air strikes.
And the petitioners remain, etc.
[P001985]
Visa fees for Pilgrimage to Hajj and Umrah by Saudi Arabia
(7 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Keith Vaz (Leicester East) (Lab)
I rise to present a petition signed by local residents. The signatures were collected by a volunteer in Leicester East, Sayeed Askari. Hajj is the fifth pillar of Islam, and travelling to participate is a vital tenet of the Islamic faith. Furthermore, Umrah is a holy passage of Muslims across to Mecca and has immense religious value. Mecca is regarded as the holiest city in the religion of Islam and is of course in Saudi Arabia. Travelling to Saudi Arabia for Hajj or Umrah for the first time is free, but visitors will now have to pay an additional surcharge of 2,000 Saudi riyals, equivalent to £450, for any subsequent visit. This represents a very large increase. Quite simply, any restriction to participating in either pilgrimages is of great concern to the Muslim community in my constituency and elsewhere, and I hope that the Saudi Arabian Government will reconsider the increase.
The petition states:
The petition of residents of Leicester East,
Declares that the Ministry of Hajj of Saudi Arabia has decided to increase the visa fees for foreign visitors to visit the country in order to complete the Islamic pilgrimage for a second time. Hajj is one the Pillars of Islam that every Muslim must complete once in their life time by visiting Mecca in Saudi Arabia. The increase in visa fees will cause hardship to many people who wish to perform this pilgrimage for a second time, which is sometimes carried out on behalf of a family member who is unable to carry out the pilgrimage due to ill health or age.
The petitioners therefore request that Her Majesty’s Government makes representations to the Council of Ministers of Saudi Arabia which is chaired by the Crown Prince Mohammad Bin Naif to reconsider the decision to increase the visa fees.
And the petitioners remain, etc.
[P001984]
Historical Sexual Abuse (Football)
(7 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Dr Rosena Allin-Khan (Tooting) (Lab)
(Urgent Question): To ask the Secretary of State for Culture, Media and Sport what the Government are doing to support victims of historical sexual abuse in football, and what steps are being taken to help to ensure that there is no repeat of it.
The Secretary of State for Culture, Media and Sport (Karen Bradley)
Nothing is more important than keeping children safe. Child sex abuse is an exceptionally vile crime, and all of Government take it very seriously indeed, as I know this House does.
Children up and down the country are able to play football thanks to the dedication of thousands of adults, many of them volunteers. The vast majority have no stain on their character. However, where people who work with children betray their trust, the effect is devastating.
I pay tribute to those who have summoned up the courage to speak out. It is vital that they know that their voices will be heard, whether they are speaking about historical crimes or about anything that is happening currently. Coaches and parents have a duty of care to children—indeed, everyone does—and must also speak out where they suspect abuse.
My Department, the Home Office, the Department for Education and the Ministry of Justice all have responsibilities in this area. Recent allegations of sex abuse are currently an operational police matter, so Members will understand that I cannot comment in detail.
As soon as this news broke, I spoke to the chair of the Football Association, Greg Clarke, and the chief executive of the Professional Footballers Association, Gordon Taylor. I made it very clear that the Government will support them in addressing these issues head-on.
The National Society for the Prevention of Cruelty to Children has set up a hotline, supported by the FA, which anyone can call if they want to talk to someone in confidence. That will help to build a picture of the potential scale of both historical and more recent abuse to inform next steps. The number is 0800 0232642.
The FA has instructed independent leading counsel Kate Gallafent QC, an expert in child protection, to deal with its review of the allegations. The internal review will look at what the FA and clubs knew, and when, and what action was or should have been taken. Alongside that, the child protection in sport unit, which assists the FA in relation to its safeguarding procedures, will carry out an independent audit of the FA’s practices. Today, the Minister with responsibility for sport, the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), will write to all national governing bodies to ask them to redouble their efforts to protect children who play their sports. Additionally, I have spoken to Chief Constable Simon Bailey this morning, the national police lead on child abuse. We have agreed that I will convene a meeting with him, the FA and others to discuss the situation.
It is important to say what measures we have in place today to prevent abuse. The child protection in sport unit was founded in 2001 to work with UK Sports Councils, national governing bodies, county sports partnerships and other organisations to help them to minimise the risk of child abuse during sporting activities. The unit helps organisations to identify adults who are a threat to children and young people, and to develop safeguarding knowledge and skills among all staff and volunteers. Since 2002, the Disclosure and Barring Service, previously the Criminal Records Bureau, has provided a mechanism to request criminal record information relating to people working or volunteering with children.
The first duty of any Government is to protect its citizens, and the first duty of all of us is to protect children.
Dr Allin-Khan
I thank the Secretary of State for her response. I begin by paying tribute to the members of the Chapecoense football team and all those who lost their lives in the tragic plane crash earlier today. Our thoughts and prayers are with them and their families.
We must pay tribute today to former footballers who have shown unparalleled bravery in sharing their stories and in bringing this issue into the public light. I met some of them on Friday morning and expressed that in person. In the light of recent allegations of historical sexual abuse in football, the Professional Footballers Association has said that six football clubs have been named by victims; that more than 20 former players have now come forward; that five police forces across the country are opening up investigations; and that FIFA is monitoring the situation closely.
I welcome the NSPCC opening up its hotline. It received more than 50 phone calls in the first two hours of opening. What else are the Government doing to ensure that victims have a safe place where they can speak out confidentially, which is vital?
The FA, in conjunction with regional associations, needs to ensure that the message goes right through our game, from Sunday league to premier league. What are the Government doing to reassure parents, who will no doubt be worried about these claims? This situation has the potential to seriously damage the reputation of football in our country. I welcome the FA announcement that Kate Gallafent QC will lead the investigation. Let us remember that 99.9% of coaches and volunteers have children’s best interests at heart—an overwhelming majority want the best for them.
We need representatives from the FA, the Government, schools and relevant organisations to work with the police not only to ensure that any historical claims are fully investigated, but to ensure that abuse is stamped out and that our young players have a safe and confidential way to report incidents. Will the Secretary of State tell the House what steps the Government are taking to ensure that all the relevant bodies work in conjunction to ensure that victims are supported? As more victims come forward, and as the number of named clubs grows, the police investigation will undoubtedly get bigger. Is there a plan in place to ensure that the police have all the resources they need, and how is the DCMS team looking across the sports sector to ensure that such cases do not happen again in any sporting environment? We have a cross-party duty to protect our children and young adults. Upon this I am sure we can all agree.
Karen Bradley
I join the hon. Lady in sending my condolences to the victims of the plane crash today. Such events remind us how fragile human life is and how important sport is to people. This tragedy has affected people greatly.
I concur with what the hon. Lady said about the unparalleled bravery of the victims and survivors. In my previous role in the Home Office, I met many survivors of child sexual abuse, as the Under-Secretary of State for the Home Department, my hon. Friend the Member for Truro and Falmouth (Sarah Newton), who is here today, continues to do. It never ceases to amaze me how brave and profound somebody is who comes forward and talks with such honesty about their experiences.
The hon. Lady asked about the support available, and of course we have talked about the NSPCC helpline. The NSPCC and its helplines stand ready to support any victims of child abuse from whatever walk of life. The PFA also reassured me last week that it stood ready to support victims. It is happy to take calls from victims of historical and non-recent abuse, so that it can support them and make sure that appropriate measures are taken.
The hon. Lady is right that the vast majority of coaches and volunteers are honourable and working in the best interests of children, but it is true that parents and others must remain vigilant, as in any walk of life, and make sure that our children are not left vulnerable to abuse. We must take those necessary steps and remain vigilant, no matter what the activity, be it sport, music, dance, creativity or anywhere children might be with people who might wish to hurt them.
The hon. Lady is right that we need to work together, and I welcome her cross-party support for what we are doing. As I said, I spoke to Chief Constable Simon Bailey prior to coming to the Chamber, and he reassured me about the work of Operation Hydrant, the long-standing cross-force police investigation into all allegations of non-recent abuse. He has assured me that there will be a single policing lead for each of the investigations to make sure that all the information coming in is treated appropriately and that all intelligence is shared. It is incredibly important that we bring perpetrators to justice.
Finally, the hon. Lady asked about other sports. As I said, my hon. Friend the sports Minister is writing today to all national governing bodies and regularly meets them, as do I, to make sure that the safeguarding measures in place are as robust as possible. We need to learn all lessons and continue to be vigilant.
Damian Collins (Folkestone and Hythe) (Con)
Does the Secretary of State agree that the FA’s internal review must be a properly resourced investigation looking at the culture within football that allowed abuse to take place for so long and to go unreported and un-investigated for so long? Furthermore, does she agree that if the report is to have credibility, it must be published in full and in public, so that we can all learn the lessons of football’s problems and make sure that children are safeguarded properly in the future?
Karen Bradley
My hon. Friend is right that the review needs to be properly resourced, and the FA has assured me that that will be the case. When I spoke to Greg Clarke, he made it absolutely clear that it would be transparent in every way. No good will come from anybody trying to cover anything up. We need to know exactly what happened, how it happened and what went wrong, and to make sure that those mistakes are not made again.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
On my behalf and that of the SNP, I echo the comments by the Secretary of State and the shadow Minister about the tragic plane crash in Colombia this morning.
The allegations of sexual abuse are abhorrent and deeply tragic. Anyone who abuses a position of trust to prey on young people and children must be brought to justice. Stereotypes of masculinity in football and society in general can make it extremely difficult for men and boys to come forward and speak out as victims of abuse. The players that have come forward have shown immense courage in doing so, and we hope any other victims will be able to do the same.
The Scottish Football Association has backed the dedicated NSPCC helpline, and remains in contact with the NSPCC and is working with it to respond appropriately if more victims come forward. The SFA has also set up a dedicated email address—childrenswellbeing@scottishfa. co.uk—for people to get in touch confidentially. If anyone in Scotland has been affected, we urge victims to come forward and seek help and support using this email address or the NSPCC helpline. May I ask the Secretary of State what structures her Department will put in place to ensure a joined-up approach across the UK in supporting any victims who come forward?
Karen Bradley
I start by congratulating the Scottish Football Association, which has done joint safeguarding work with UNICEF. I believe that to be a very positive step and I offer my congratulations on it. My hon. Friend the Minister for Sport has been in contact with the SFA this morning, as she has been with other football governing bodies from other parts of the United Kingdom. We want to make sure that we work together on this matter. I congratulate the hon. Gentleman on wearing his white ribbon. I am fiddling in my pocket, but I do not seem to have mine there. The white ribbon campaign is a fantastic one, demonstrating that we all stand against abuse. I appreciate that the white ribbon campaign deals specifically with violence against women and girls, but the fact that men are standing up against that abuse as well is incredibly important.
The hon. Gentleman mentioned the bravery of the individuals coming forward in a very masculine world, and I think we live in a changed environment in this respect. I think there is more opportunity for people to come forward nowadays. I listened to an interview on Radio 5 “Sportsweek” on Sunday, and I was impressed by the honesty with which an individual victim spoke. It was incredibly brave. It is very difficult, but I urge all victims and survivors to come forward.
Andrew Bingham (High Peak) (Con)
The revelations about football are shocking, and I applaud the fact that the Minister for Sport is going to write to the governing bodies of other sports. When it comes to the monsters who perpetrate these disgusting acts, in times gone by there was a chance that they would have looked at the possibilities in other sports as well. What else, then, are we going to do, other than write to the governing bodies, to ensure that there is a proper investigation into other sports to make sure that this was not going on elsewhere?
Karen Bradley
I understand that my hon. Friend is particularly concerned about this issue. He, like me, represents a constituency that is close to where the allegations took place. As a constituency MP, I pay particular attention to what has happened to my constituents. I urge both my and my hon. Friend’s constituents to come forward in this respect. The Minister for Sport will write to all governing bodies, as I have said, but this is an ongoing process, and we continue to work with all sports to make sure that safeguarding efforts are as robust as they possibly can be.
Clive Efford (Eltham) (Lab)
We have to pay tribute to Andy Woodward for starting this process. He took an extremely brave step. I concur with the Secretary of State that we need to encourage others to come forward and speak in confidence in the first instance to the helplines that are available. Simon Bailey has said that he expects other institutions to be brought into this, which might result in other sports’ governing bodies having in effect to investigate themselves. There must be some sort of independent oversight, so will the right hon. Lady tell us what discussions she has had with colleagues in other Departments? What are the Government going to do to ensure that this House and the public can be reassured that there is independent oversight of the investigations into these sports’ governing bodies?
Karen Bradley
I agree with the hon. Gentleman about the bravery of Andy Woodward. I understand that during the time I have been on my feet, over 250 reports have been made to the NSPCC helpline, of which 51 are in Cheshire alone.[Official Report, 30 November 2016, Vol. 617, c. 5-6MC.] It is also important to make sure that the police have the time and space they need to carry out proper investigations and inquiries, ensuring that they obtain all the evidence. We want to see perpetrators brought to justice wherever possible, and we need to make sure that the police have time to do that. I understand from the Under-Secretary of State for the Home Department, my hon. Friend the Member for Truro and Falmouth, who has safeguarding responsibilities, that the independent inquiry into child sexual abuse will look to establish whether it is appropriate for this issue to be covered as part of its overarching work to understand what happened with historical child abuse and the failings in the system.
Anna Soubry (Broxtowe) (Con)
Before I was elected to this place, I worked as a criminal barrister for 16 years, so I have defended more than my fair share of paedophiles. It undoubtedly takes huge courage for someone to come forward and explain how they were abused as a child. It is also an unfortunate part of the particular wicked perversion of a paedophile that they should be cunning and deceitful. Does my right hon. Friend agree that, although we do not want a witch hunt, we do need to be sure that everybody involved with children in sport understands the nature of these wicked, horrible people? That is why it is so important to put in place rigorous measures to safeguard our children and keep them safe.
Karen Bradley
I agree absolutely with my right hon. Friend, who has huge experience of the criminal law and of this particular area. In my previous Home Office role, I met a number of sporting bodies regarding DBS and other checks, and this included the FA, which I know takes this matter incredibly seriously.
Tim Farron (Westmorland and Lonsdale) (LD)
I associate myself with the remarks of others about the hideous and tragic crash in Colombia earlier today.
I pay tribute to those who have come forward and initiated the national discussion that we are now having. It takes immense courage, but the impact on others who might have suffered is huge, encouraging them and strengthening their resolve to come forward. Last weekend, I stood on the touchline watching my son play for Milnthorpe Corinthians against Kendal Wattsfield. Tens or even hundreds of thousands of children play football every weekend. It is our national game. I thoroughly respect what the FA is doing with its investigation. What I am saying is in no way an attempt to undermine or criticise the FA, but given that this is the national game and the potential scale of the problem, will the Secretary of State ensure that there is independence in the investigation and that resources are put into it? We must not simply allow the sport to investigate itself.
Karen Bradley
The hon. Gentleman speaks about the huge enjoyment that children get from grassroots sport. In common with him, I enjoy seeing my children play in grassroots sport. I do not think any of us should ever forget the massive benefits that come from children’s involvement in sport—being part of a team, being outdoors, getting into the routine of turning up for practice and the general camaraderie of it all. That is incredibly important. When it comes to grassroots sport, we should take the same approach as parents as we do with any other situation that we put our children into. We make sure that we are confident that we trust the people whom we allow to make contact with our children. We must trust and respect them, and ensure that they go through the appropriate safeguarding checks.
On the issue of an independent inquiry, it is important to remember that the inquiry led by Professor Alexis Jay is looking at a variety of matters. For example, it has taken the reports of Dame Janet Smith from the BBC, and it is important that the inquiry is given the time to look at institutional failings. Even more importantly, we must allow the police the time and space they need to carry out their investigation.
Tom Pursglove (Corby) (Con)
All Members share a sense of horror about what we have heard in recent days. Will the Secretary of State thus confirm that all the appropriate resources are in place, so that these matters can be thoroughly investigated. Will she also undertake to ensure that this will be kept under constant review?
Karen Bradley
Yes, and I think our record as a Government stands firm. We could look at Rotherham, for example, and the extra resources that were put in there to make sure that the survivors of child abuse had the confidence to come forward, so that cases could be brought. Yes, the Government stand ready to provide support.
Diana Johnson (Kingston upon Hull North) (Lab)
Many parents might be shocked to know that, under changes brought in by the previous coalition Government, there is no requirement for volunteers, such as a football coach, to have a Disclosure and Barring Service check if they are being supervised by someone in regulated activity. This was raised many times when the Bill went through the last Parliament. Will the Secretary of State consider looking further at that to give the reassurance to parents that their children will be kept as safe as possible?
Karen Bradley
I think the hon. Lady should recognise the need to ensure that safeguarding takes place in an effective way. DBS checks are required for people who may be left alone with children. We must ensure that those checks are maintained and that the DBS is allowed to do its job. Of course, if failings are found as a result of these inquiries, I will stand ready to work with other Departments to ensure that safeguarding takes place as robustly and appropriately as possible.
Jason McCartney (Colne Valley) (Con)
These really are shocking allegations, but do not many of us here know inspirational coaches in our communities who inspire our children to play sport not just for the sake of achievement and winning medals, but to get fit and to experience that sense of team spirit, togetherness and camaraderie? I fear for the volunteers who give up their time, come rain or shine, to work with young people and encourage them to become involved in sport. Will the Secretary of State work with all sports governing bodies, including the Professional Footballers Association and the Football Association, to ensure that those who give up their time to volunteer will continue to do so?
Karen Bradley
My hon. Friend has made a point that I have been attempting to make. We must ensure that those inspirational coaches—volunteers who give up their time because they genuinely want to help and work with young people and who have no intent to hurt those young people—are allowed to do their job. We must ensure that we have appropriate, robust safeguarding that gives parents the comfort that they need and protects our children, but we must also ensure that volunteers come forward and those inspirational coaches are allowed to do their fantastic work.
Helen Goodman (Bishop Auckland) (Lab)
I have had extended conversations with the right hon. Lady’s Department, with the Department for Education and with Sport England. What my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) said is true: there is a big loophole. Indeed, there is a loophole when sports do not have governing bodies, and there is also a loophole when the people involved are self-employed. Will the Secretary of State undertake to look into that, given that it will also be affecting music tuition?
Karen Bradley
I invite the hon. Lady to meet my colleague the Minister for Sport, who would be happy to discuss those matters with her.
Mr Philip Hollobone (Kettering) (Con)
I congratulate the hon. Member for Tooting (Dr Allin-Khan) on tabling the urgent question and my right hon. Friend on the way in which she has responded to it. In a place like Kettering, football is 95% a voluntary activity for the players and coaches. Basically, the dads are the coaches and the mums wash the team kit. [Interruption.] In the vast majority of cases, the dads are the coaches and the mums wash the team kit: that is what life is like in middle England. I think that they would want me to ask the Secretary of State to ensure that the judges get the message that, when these people are caught, exemplary sentences must be handed out to make clear that such behaviour is totally unacceptable.
Karen Bradley
I think I ought to put on the record that it is quite clear that not all coaches are male. My hon. Friend the Minister for Sport is a grassroots football coach, and an extremely competent one at that. I also know of many husbands who are very good at washing the dishes and making the food. I am sure that my husband, if he is watching the debate, would be concerned if I did not put that on the record. However, my hon. Friend’s point about the sentencing of offenders is very important, and I can tell him that I work with the Ministry of Justice to ensure that appropriate sentences are available.
Graham Jones (Hyndburn) (Lab)
Given the growing number of professional clubs that are allegedly accused of being somehow involved in this affair, is it not time that the Government concentrated on football governance again? For six years we as a Parliament have dragged our feet, and the coalition and this Government have done nothing about it. Corporate governance and the “fit and proper persons” test should be involved in deciding who runs football clubs, so that those at the bottom, our children, can be assured that they are being looked after by those at the top and that there is responsibility.
Karen Bradley
As the hon. Gentleman will know, the Government published the new governance codes for sport on 31 October, and I hope that he welcomes the work we have done to ensure that all sport is subject to proper and appropriate governance. It is important for us to be certain that we can have confidence in our sports governing bodies.
Ian Murray (Edinburgh South) (Lab)
I pay tribute to the courage and bravery of those who have exposed this dreadful act. I know that we are talking about historical football abuse, but will the Secretary of State tell us what strategy she has to work with the Department for Education, the devolved Administrations and, indeed, all the governing bodies of all sports to reassure parents that their children are safe when playing sports, and also to reassure the coaches who give up their time, mainly voluntarily, to provide the sporting infrastructure that enables children to participate?
Karen Bradley
I hope the hon. Gentleman will be reassured to know that that is exactly what we are doing. We are writing to the governing bodies of all sports and working across Government to ensure that we have a co-ordinated response.
Liz McInnes (Heywood and Middleton) (Lab)
What is being done to ensure that those who are under suspicion in relation to the 1980s and 1990s are no longer involved in our national game, or indeed in any other sport?
Karen Bradley
I can reassure the hon. Lady that the police are making inquiries and that the DBS checks would ensure that those with criminal convictions would not be given disclosure certificates allowing them to work with children. They would also probably be barred from working with children.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Football, by its very nature, is a transient sport. Children move from club to club, and, obviously, professional football players move from club to club and even from country to country. Can the Secretary of State confirm that enough resources will be made available to ensure that victims are positively identified, rather than our relying on self-referral to the helpline? We need to understand how many victims there are if we are to assess the scale of the problem and offer support where it is needed.
Karen Bradley
It is important to look at patterns of behaviour to establish whether players may have been exposed to perpetrators, as would happen in any other investigation of this nature, regardless of what the background of the contact between the perpetrator and the victim might have been. It is also important for victims to come forward. While I accept the hon. Gentleman’s point about the need to go out and actively seek those victims, we will not find any unless some are prepared to come forward. Once again, I pay tribute to the bravery of the victims and survivors who have come forward and told their stories in such an honest way, allowing the police to obtain the evidence that they need, so that we can bring the perpetrators to justice.
Corporate Governance
Tuesday 29th November 2016
(7 years, 4 months ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
With permission, Mr Speaker, I shall make a statement about the Government’s corporate governance Green Paper, which we are publishing today.
Successful businesses are the backbone of our society and our economy. They are the reason why ours is the fifth largest economy in the world. They create employment opportunities, and they contribute significantly to the funding of our country’s public services. There are many reasons why Britain is a reliable place in which to do business: for instance, our legal system and framework of company law have long been admired around the world. The Government are proud of our thriving industries, and we want to build on those strengths and enhance our competitiveness even further.
One of our biggest strengths is our record on corporate governance. It is already highly regarded around the world, especially for its combination of flexibility and high standards. Despite that record, however, our strong reputation can only be maintained if the Government and business regularly review and upgrade those standards. We want to guarantee not only that Britain is an excellent place in which to do business, but that it is where business is done best.
I am privileged, in my position as Secretary of State, to meet regularly not just those who run successful businesses, but their employees and customers. I have discussed with company heads the way in which their corporate governance is an integral part of their success. It inspires confidence among investors, loyalty among employees and trust among customers. Ordinary working people who work hard for their living deserve to feel confident that businesses act responsibly and fairly. When an individual business or businesses lose the confidence of the public, faith in business generally diminishes, to the detriment of us all.
There is no conflict between good corporate governance and profitability; indeed, poor corporate governance is a prelude to financial disaster. This Government are unequivocally and unashamedly pro-business, but we also hold business to a high standard. It is right to ask business to play its part in building an economy that works for everyone. Over the last few years, there have been a number of proposals, from both the Government and those representing business, to update our corporate governance framework. In some cases these have been made in response to concerns about the actions of a very small number of businesses which have undermined the reputation of British business generally, whose standards are among the highest in the world. Today, we are launching a discussion paper on how corporate governance could be reformed. I will, as is usual, be placing a copy of the Green Paper in the Library.
The paper considers three aspects. First, it asks for opinions on shareholder influence on executive pay. Members of the House will be aware that executive pay has grown much faster over the last two decades than pay generally and at times is not in line with corporate performance. The document seeks views on this issue, and in particular on strengthening shareholder voting rights with a view to making them binding, encouraging shareholder engagement with executive pay, and promoting greater transparency over pay.
Secondly, the document asks whether there are measures that could increase the connection between boards of directors of companies and their employees and customers. It asks whether the establishment of advisory panels and the appointment of designated non-executive directors to take formal responsibility for articulating employee, customer and other perspectives is the right way to proceed. We are not prescribing how this should be done; it would be whatever is most appropriate for the business.
Thirdly, our discussion paper asks for views on whether some of the features of corporate governance that have served us well in our listed companies should be extended to the largest privately held companies.
These are issues about competitiveness, and creating the right conditions for investment, as much as they are, importantly, also about fairness. This Green Paper is designed to frame that discussion, so that we can move quickly to consider which changes are appropriate at this time. We want to hear from as many people as possible about how best we can increase confidence in big business and achieve better outcomes for our economy. This does not mean the imposition of regulation when other avenues are open. One of the strengths of our system of corporate governance has been the use of non-legislative standards adopted by business itself.
We are determined to make Britain one of the best places in the world to work and carry out business. This review will help us achieve that aim and the views of businesses, investors, employees, consumers and others with an interest in successful business are warmly welcomed. I commend the statement to the House.
Clive Lewis (Norwich South) (Lab)
It is a shame that the Secretary of State did not share the statement with us in advance; presumably we are now expected to get first sight of Government policy through a long lens on Whitehall. But after weeks of press briefings, at least they have finally decided to come to this Chamber, because we have heard a lot about the Prime Minister’s policy on corporate governance, but the more they said, the less we have actually known.
When the Prime Minister launched her leadership, she said she wanted a change in the way big business is governed. She said:
“later this year we will publish our plans to have not just consumers represented on company boards, but workers as well. Because we are the party of workers.”
But it seems there has been a change of mind because just weeks ago we heard it was not about putting workers on boards but about finding a model that works for everyone. Perhaps it is the same model as for Brexit: to have their cake and eat it.
When we debated in the Chamber last month the fate of Sir Philip Green, I said that the most shocking thing about the whole affair is that everything he did was legal. A key question today is whether anything that has been proposed would change that: do these proposals pass the BHS test?
Bringing private companies into the plc rule book is a move so targeted at a particular series of events that I expect it will come to be known as the BHS law, but had the proposals outlined today by the Secretary of State been in place six months ago, I am not wholly convinced we would have avoided the corporate governance scandals that have plagued the last summer. To force private companies to abide by the corporate governance code will do little unless the code is tightened. BHS may have been a private company, but Sports Direct is not, and we all know what has gone on there.
Similarly, to strengthen the power of boards to give oversight on how companies are run or their remuneration structures will change little unless the make-up of those boards is also shaken up, yet we all know what has happened to the Government’s commitment to put a diversity of voices on boards. It is a weakness of too many discussions of corporate governance, and a weakness reflected in this Green Paper, that they are dominated by high-profile scandals.
For too long our economy has suffered from an inherent short-termism—a short-termism that sees the long-term health of a company being sacrificed for a quick buck, and that all too often obscures the link between rewards and long-term performance. In 1970, £10 in every £100 went on dividends; now, it is between £60 and £70. It is employees and investment that have lost out from this shift. We see that in our pitiful investment and productivity rates. Britain now languishes 33rd out of the 35 OECD countries on investment rates. Seen in this light, it is no surprise that it takes British workers five days to produce what German workers produce in four—and we see this in the yawning gap between top pay and average pay: in the 10% increase in executive pay when workers are suffering 10 years of stagnant wages.
Our damaging short-termism is also seen in corporate takeovers that occur against the public interest and the company’s interest—takeovers that have instead served as a means to asset-strip, as when Kraft took over Cadbury with hedge funds buying up 31% of the shares and selling Cadbury short.
When the unacceptable face of capitalism surfaces, as it has in the last few months with the scandals in BHS and Sports Direct, what we are witnessing is the extreme manifestation of these broader problems, and that is what makes today so particularly disappointing. Corporate governance reform is not just about improving the image of our corporate sector or placating our innate sense of injustice at the lack of proportionality between the salaries of directors and their employees; nor is it just about fulfilling the wishes of the six out of 10 members of the public who, as TUC figures show, want to see workers on boards. These things matter, of course, but corporate governance reform is also about changing the way our companies, and therefore our economy, work.
The recasting of how our economy works is key to Britain’s success. Without more long-termism in our corporate practices, we will not be able to address the problems—
Mr Speaker
Order. The hon. Gentleman has had his five minutes. I do not know whether he was then proposing to put questions, but I gently say to Members that in these matters there is a form to be followed—a procedure to be adhered to—and although I have listened to the hon. Gentleman with great care and attention, he has contributed in the manner of a debate rather than a response to a statement. Ordinarily, I would be very happy to hear his questions, but Members cannot make a long preamble and exceed their time, and then almost as an afterthought get around to some questioning. So I think we will for now have to conclude that the hon. Gentleman has concluded his contribution. But I am sure the Secretary of State will find in the commentary some implied questions, using the great intellectual dexterity for which he is renowned in all parts of the House.
Greg Clark
I am grateful to you, Mr Speaker, and I apologise to the hon. Member for Norwich South (Clive Lewis) for not getting the statement to him earlier; we started a bit sooner than we were expecting, but—
Mr Speaker
Order. As I have mildly castigated the hon. Member for Norwich South (Clive Lewis), I should say that it must be admitted that that would have been helpful.
Greg Clark
You are absolutely right, Mr Speaker, and I apologise.
I hope the hon. Gentleman will contribute to the consultation. It is clear that he shares an interest in improving the standards of corporate governance, which we have done from time to time in this country over many decades. We have a good reputation for corporate governance, and it is important to record that the rest of the world looks, and has looked, with admiration at the British economy, the rule of law and the non-legislative aspects involved. I hope he will agree that the examples of poor corporate governance he mentioned are blemishes on a very strong overall record of responsible corporate behaviour in this country. We should put on record our recognition of the importance of business and our support for the job creators, the risk takers, the innovators and the investors—the people who, through their profits, generate the taxes that sustain our public services.
It is reasonable to have a constructive discussion on this matter through the consultation, and that is what we intend to do. The hon. Gentleman said that executive pay had been escalating. Perhaps he would like to reflect on the fact that the biggest rise in chief executive pay was actually in the period from 1998 to 2010, when the average rose from £1 million to £4.3 million a year and the ratio of chief executive pay to full-time employees’ pay rose from 47:1 to 132:1. He is a reasonable and generous man and I know that he will concede that, under the years of Conservative leadership, the average pay for chief executives has fallen from £4.3 million to £4.25 million a year and that that ratio has fallen from 132:1 to 128:1. So we are moving in the right direction and these further reforms will take us further.
The hon. Gentleman mentioned the proposals to have workers and consumers on boards. The Prime Minister has been very clear on this, and it is testament to her leadership that she set out her intentions right at the beginning of her term of office and that we are now coming forward with these proposals. She made it clear that we would have not just consumers but employees represented on company boards, and these proposals will allow that to happen and encourage the practice to be taken up.
The hon. Gentleman mentioned the relevance of our reforms to the more high-profile sources of controversy. Of course, one option is to extend the good provisions for public companies to our very largest private companies. He will know that the Financial Reporting Council’s governance code requires extensive monitoring of risk levels for plcs over and above the requirements placed on limited companies. He mentioned cases involving listed companies, and I hope he will agree that having a greater connection between employees and directors is a step in the right direction. Conservative Members are unashamedly and unequivocally pro-well-run business, and I hope that he shares our view. Consistent with that, it is important to work with business, employees and other groups from time to time, to look at what we can do to stay ahead of the pack. That is what this consultation does.
Sir Desmond Swayne (New Forest West) (Con)
Will any of these proposals result in a diminution of the pile of cash on which corporate Britain is sitting, and of the practice of companies buying up their own shares?
Greg Clark
We are encouraging a greater role for shareholders in driving behaviour in the boardroom, because this is a matter of concern. It is connected to the point that—to be fair to him—the hon. Member for Norwich South made about long-termism. We want to see a more patient form of capital sustaining businesses that have the capacity to grow, and I hope that this will come out as part of the consultation.
Callum McCaig (Aberdeen South) (SNP)
May I start by giving a cautious welcome to the Secretary of State’s announcement? It represents some progress, but there are aspects missing and more clarity is required in some areas. There is general consensus that the pay gap between executives and employees is too large, and we firmly believe that addressing that by properly valuing and investing in employees is a key part of addressing the productivity problem. Companies need to be transparent about pay. If their pay for executives is justifiable, they must justify it to their staff and to their shareholders. In particular, the move to give shareholders greater control and a binding vote on executives’ pay is welcome. Indeed, it is incredible that such a situation does not already exist. What is the timescale for the entire process, and when will the changes be implemented?
More needs to be done about boardroom diversity. I was given very short notice of the statement, and it remains unclear what is to be done about diversity in the boardroom. Will the Secretary of State expand on that aspect of the proposals? I think we would all like to see boardrooms reflecting society more completely. That would be good for business and it would send a clear message to everyone across the country that business is a place for them.
Let me turn finally to the question of workers on boards. In the Prime Minister’s party conference speech, she said:
“Too often the people who are supposed to hold big business accountable are drawn from the same, narrow social and professional circles as the executive team.”
From my reading of the proposals and from what the Secretary of State has said, it appears that that will remain the case, but with one person from those same narrow social and professional circles designated to speak to the employees or consumers. That does not go far enough; it is a missed opportunity. When the Prime Minister said, “We are the party of workers,” was that post-truth or was it never true at all?
Greg Clark
I am grateful for the way in which the hon. Gentleman started his remarks, at least. He struck the right tone in welcoming the proposals as a sensible way to proceed, as I believe all business organisations, consumer groups and others have done. I hope that he will contribute to the consultation. He made a point about the value of transparency, and that is very much what we are proposing. We do not want to specify the appropriate pay for a chief executive—I do not think he does either—but it is right that companies should justify their decisions to shareholders and to employees. They should make their case for the pay and the package that they are choosing to offer.
The hon. Gentleman asked about the timing of the consultation. It will close in three months’ time, in February, and we will respond as soon as possible after that, depending on the number of responses. He also asked about diversity on boards and remuneration committees, and he will see that both questions are addressed in the Green Paper. It is important that remuneration committees are advised by and have a greater connection with the workforce, and that they should be less insular in their approach. There has been some criticism that the overlap of remuneration committees in public companies has excluded outside voices. The consultation refers to particular reviews of gender and ethnic diversity on boards, and it is important that we continue to make progress in that regard. We have further to go. Finally, the Prime Minister was very clear that we should have consumers and workers represented on company boards and that is what the proposals will do. This is a big advance and it has been warmly welcomed. I hope that the hon. Gentleman will support it too, when he makes his response to the consultation.
Several hon. Members rose—
Mr Speaker
Order. I would like to accommodate the substantial interest in the statement, but if I am to do so, given that there are two notable pieces of business to follow, pithiness will be required from those on the Back and Front Benches alike. That pithiness is first to be exemplified by Mr Michael Gove.
Michael Gove (Surrey Heath) (Con)
I congratulate my right hon. Friend on his statement today. We all know that the dynamic growth on which our future depends will be secured only if there is public support for the free market system that generates such growth. To that end, what more can he say about ensuring that we have working-class representatives at the heart of decision making in our great companies, and about effective curbs on executive pay when pay follows failure?
Greg Clark
As ever, my right hon. Friend makes his points powerfully. It is important that all the talents are represented in our boardrooms, for that is how we will achieve corporate and industrial success in this country. It forms part of the case we make in the Green Paper. Pay is appropriate when it is to attract the best talent and to reward success, but what is not in the interests of the company or confidence in industry is when pay does not reflect performance.
Mr David Winnick (Walsall North) (Lab)
The pay of top executives, bosses in particular, has been scandalous, and some of these people are not keen to pay their taxes and use tax havens. The most effective way for working people to defend themselves in their place of work is to belong to a trade union and for that union to be recognised. Time and again, when the worst exploitation is exposed, the cause is often a lack of trade union representation.
Greg Clark
I hope that the hon. Gentleman will congratulate the Government on their reforms over the past five years that have increased the scrutiny and moderation of executive pay. I hope that the trade unions will contribute to the consultation. I met Frances O’Grady last week, and trade unions have an important role to play in our economy.
Several hon. Members rose—
Mr Speaker
I observe in passing that there is an undiluted sea of men seeking to catch the eye of the Chair. If a female Member were to stand, she would be called, but at the moment she is not, so she will not.
Victoria Atkins
I welcome this statement. Will my right hon. Friend assist the House by saying how the plans tie in with the need to ensure that business owners comply with not only the letter of the law, but the spirit? I am thinking in particular of the Companies Act 2006 and corporate governance failures that have led to prosecutions—something that may be relevant when the hon. Member for Norwich South (Clive Lewis) talks about BHS.
Greg Clark
My hon. Friend makes an excellent point. There are two complementary elements of corporate governance. One is the law and statutory requirements—it is important that they are enforced with vigour—but it is also true that the culture and practices of companies should reflect the high standards that we enjoy in this country and that contribute to business’s high reputation. I hope that we can further increase that through the measures that we are proposing.
Tim Farron (Westmorland and Lonsdale) (LD)
I thank the Secretary of State for his statement, and we welcome many of its suggestions. Does he accept that fairness in salaries must also sit alongside fairness in opportunity? Would he therefore consider going further and requiring companies to report on the training and opportunities available to employees for career progression? Would he also accept that alongside the bad practice, on which we must clamp down, there is much good practice in governance to learn from? I commend to the Secretary of State the innovative forms of employee participation in so many small and medium-sized enterprises, particularly in new start-up companies and particularly, of course, in Cumbria.
Greg Clark
The hon. Gentleman makes an important point. Outside of family and education, work offers some of the principal opportunities for progress and making use of people’s talents. The best businesses recognise that spotting and promoting talent is a sure way to corporate success. That is not part of the consultation, but he makes a reasonable point and will have the opportunity to respond to the section that asks whether other areas should be considered.
David Rutley (Macclesfield) (Con)
I welcome today’s statement. At a time of uncertainty, it is vital that we have greater confidence not only in free enterprise as a principle, but in the listed businesses and privately held companies that operate in our free market. What support has my right hon. Friend received from the business community in favour of the Green Paper, in particular the concept of greater shareholder scrutiny of a company’s activities?
Greg Clark
Business wants to enhance its reputation and it is much in its interest collectively to do so. This morning, the Institute of Directors, the CBI and the Investment Association, which represents those who invest the funds that the pension funds of ordinary working people put into British business, all welcomed not only the content, but the approach that is being taken. I am pleased and grateful for that support.
Clive Efford (Eltham) (Lab)
Last week, the Chancellor adopted Labour policy on fiscal investment to stimulate the economy. This week, the Secretary of State is adopting Labour policy on worker representation on boards—[Interruption.]
Clive Efford
No, you’re coming over here I’m afraid.
We need consistency from the Government. I have been advocating for years that football supporters should be represented on the boards of professional football clubs, but the Government have consistently said that that is not appropriate, so what has changed the Secretary of State’s mind?
Greg Clark
There are two Labour Back Benchers here. If one compares that with the number of my hon. Friends who are in the Chamber, there is scant evidence of Labour’s enthusiasm for these reforms. The hon. Member for Norwich South (Clive Lewis) tried to imply that Labour is the party of working people, but the difference in interest in this statement between the parties shows the opposite. I hope that the hon. Member for Eltham (Clive Efford) welcomes the measures that the Prime Minister and I are proposing to give not only employees but customers a voice in the boardroom. The hon. Gentleman is a big football fan and a fan of greater involvement of enthusiasts in football, and I hope that he will contribute positively to the consultation and back our proposals.
Mr Andrew Tyrie (Chichester) (Con)
Good pay structures encourage wealth creation, but the financial crisis showed that poorly constructed remuneration schemes contribute to catastrophic failures in corporate governance. In response, the Parliamentary Commission on Banking Standards recommended, among other things, longer deferral for bonuses and clawback for serious misconduct in some cases. Has the Minister examined whether those recommendations have any relevance to his Green Paper and whether they may, with particular regard to large firms, have a bearing on ways to militate against serious harm to customers, employees and the wider public?
Greg Clark
My right hon. Friend is right that good corporate governance can stop corporate failure and the effects of contamination that his commission was set up to investigate. The commission made some valuable recommendations, many of which have been enacted. When he comes to look at the Green Paper, he will see further proposals for how incentive schemes for executives can be better aligned with the long-term interests of the company and made more transparent.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The statement represents a welcome step forward, but if the UK Government are serious about tackling income inequality in companies, they should go a step further and introduce fair pay structures whereby the remuneration of those at the top and bottom are linked. That would be a way of ensuring that the economy works for all.
Greg Clark
I do not agree with that approach. It is right to have transparency and right that companies engage with their employees and make the case both to shareholders and to the workforce for the choices that they make. However, given our diverse range of companies and industries, it would be a mistake that would be bound to hamper their success if we, in the Government or in this House, were to specify precisely what people should be paid.
James Cartlidge (South Suffolk) (Con)
The second question that the welcome document asks relates to improving links between workers and boards. One possible route would be to encourage more employee share ownership. The evidence shows that that encourages productivity and, at a time of pension and housing crises, it would give people a stake in the future and a saving. Above all, it would make them feel that they are part of the business for which they are working.
Greg Clark
I completely agree with my hon. Friend. The times when we had very high levels of shareholder participation were ones when there was an enhanced understanding of the importance and role of business. I will take his recommendation seriously and take it forward.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
I urge the Minister to consider that corporate governance leans too much in support of shareholders and dividend, and the protection thereof. The focus of any good corporate governance initiative should be: supporting workers’ rights; driving towards a fairer pay distribution, an issue much covered by colleagues here, and away from inflated corporate management remuneration; and the reinvesting of any funding in research and development, and good protective governance for employees and management, as well as job creation and job security.
Greg Clark
When the hon. Gentleman reads the Green Paper, I think he will welcome our proposals, which address some of the points he is making to ensure that the pay of the top management is aligned with the long-term success of the company, and to require a greater connection between the workforce and the management, as well as customers and other groups. That is a step in the right direction, and as my colleagues have pointed out, business has warmly welcomed it. This is a timely and useful upgrade in the standard of corporate governance in this country.
Mr Stewart Jackson (Peterborough) (Con)
Untrammelled corporate greed is no more one of our party’s values than untrammelled trade union power is, so this is an authentically Conservative statement, which I welcome. May I press my right hon. Friend specifically on how he will ensure adequate scrutiny of institutional investors who are discharging their role in respect of corporate governance?
Greg Clark
My hon. Friend is absolutely right; Conservative Members believe in competition and that it provides the best possible environment, which has benefits to consumers, employees and taxpayers. That is very much our watchword. The Green Paper contains proposals on how we can encourage institutional investors, who, as I said, invest the money from pension funds to which many people in this country contribute, to be more active in exercising their stewardship of the companies in which they invest.
Nigel Huddleston (Mid Worcestershire) (Con)
The Secretary of State is right to point out that British corporate governance is already admired around the world, but will he be looking in this consultation at best practice from around the world, particularly in those countries where women have better representation on boards?
Greg Clark
I will indeed. It is important that we maintain and extend our reputation for being the place in the world where business is done best. We have been able to make that proud boast over the years. The representation of women on boards is of great importance, and we are looking at how we can best encourage companies to move in that direction.
Rebecca Pow (Taunton Deane) (Con)
I welcome this report on corporate governance, but is not one way of improving corporate governance on boards to encourage more women to get on to those boards?
Greg Clark
Yes, it is, and I hope my hon. Friend will welcome the proposals we are making.
Mr Peter Bone (Wellingborough) (Con)
The Minister must give credit to some of the Opposition parties today, as one eighth of the Liberal Democrats are here, one third of Plaid Cymru are here and one 50th of the Scottish National party are seeking to take part, so people are taking this seriously. Does he agree that the whole House should be available to take part, and it is unfortunate that now only one Labour parliamentarian who took part in this statement is in the Chamber?
Greg Clark
I share my hon. Friend’s surprise and dismay that there is so little interest in the Labour party in extending the rights for working people to have a say in the way companies are run. My disappointment with the Opposition is only matched by my pleasure at seeing so many of my Conservative colleagues, including my hon. Friend.
Jeremy Quin (Horsham) (Con)
Alongside other hon. Members, I investigated BHS, a company where corporate governance went seriously awry, so I warmly welcome the extension of stronger corporate governance to large private companies. However, I also hope that as part of the consultation there will be no risk of any ambivalence or questioning about what private company directors are expected to do in those roles and where their obligations lie. There are a range of stakeholders to whom they owe those obligations.
Greg Clark
There are indeed, and the range of stakeholders has long been recognised in company law, as my hon. Friend knows. The question is: in a world in which there are now more very large privately held businesses that do not have a full stock market listing than was the case in the past, is this the appropriate time to extend this measure to those businesses?
Jason McCartney (Colne Valley) (Con)
Will the Secretary of State join me in acknowledging the good point made by the hon. Member for Walsall North (Mr Winnick) about trade unions? A decade ago, as a union representative, I led industrial action against our then fat cat boss, who was making poor business decisions, cutting jobs and having a pay freeze, while still getting his multimillion-pound bonuses. Of course I am now a Conservative MP, and he is now a Labour peer.
Greg Clark
That is a useful parable, which just goes to illustrate further the point I was making about the commitment we have on the Conservative side of the House. I know that my right hon. Friend the Member for Surrey Heath (Michael Gove) is also a veteran of industrial action, showing that my hon. Friend the Member for Colne Valley (Jason McCartney) is not alone in this shared history.
Oliver Dowden (Hertsmere) (Con)
The self-serving practices of many executives have done much to undermine popular capitalism in this country, but does my right hon. Friend agree that, although it is important to review company law in this fashion, that is no substitute for basic morality, which has been sadly lacking in many recent cases?
Greg Clark
My hon. Friend is right in what he says, and I think Conservative Members would not regard legislation as being the way to cure all ills. I would take issue with him to this extent only: in general, the standards of both governance and behaviour are very high in this country, and most employees have good jobs in successful businesses. We should be proud of the standards that we have, while taking action against those who depart from them.
Chris Philp (Croydon South) (Con)
Does the Secretary of State agree that giving shareholders more power has a good chance of curbing corporate excess, including excessive pay, and that in Sweden the use of a shareholder committee to control both the appointment and removal of directors, and to approve executive pay, has had extremely positive effects in both those areas?
Greg Clark
I am delighted to see my hon. Friend in this place. When he reads the Green Paper, he will see that the proposal he made in a very well-written paper for a think tank to suggest a shareholder committee in this way is one option we are consulting on. I congratulate him on his influence on this debate and look forward to the responses to it.
Mr Alan Mak (Havant) (Con)
Family-run businesses, and small and medium-sized enterprises, are well-known for their good governance and values, so will my right hon. Friend join me in encouraging more of them to come forward in the review and the consultation so that we can get the complete picture of corporate opinion?
Greg Clark
I will indeed. I would like to thank the Federation of Small Businesses, which has helped contribute to the shaping of these proposals, through some work it has been doing on corporate governance. Small businesses are very important. Small Business Saturday is coming up, and I think Members on both sides of the House will be paying tribute to and celebrating the vital contribution that small businesses make to this country.
Mr Philip Hollobone (Kettering) (Con)
People in Kettering will be pleased that after years of Labour excess the gap between the highest-paid executive and the lowest-paid employee is narrowing under Conservative leadership. May I suggest to the Secretary of State that he go further, because a big problem is taxpayer subsidy for low-paid employees who are working in companies that make big profits and have big executive pay? May I suggest the use of a ratio: the profit after tax, before dividends, per employee, to the proportion of the workforce on working-age benefits? That would wheedle out the fat cats who are exploiting employees.
Greg Clark
I will look at my hon. Friend’s proposal carefully. It is in all our interests, including those of our constituents, that people should be able to have jobs in which what they contribute and what they produce is of sufficiently high value that they are able to have a prosperous future. Part of our reforms, which have come through the industrial strategy and what the Chancellor said in his statement last week, were to raise the earning potential of people right across the country.
Simon Hoare (North Dorset) (Con)
We all know that small and medium-sized enterprises are, in essence, the backbone of British employability and our corporate world. In welcoming the Green Paper, may I invite my right hon. Friend to confirm this afternoon that, throughout the whole of this process, he and his ministerial team will ensure that we do not add to any burdens of either reporting or officialdom for those vital SMEs?
Greg Clark
I can confirm that. We had it in mind that small businesses will be the beneficiary of these reforms, because, as suppliers to big companies, they are a group whose important voice should be reflected. That point was made in our conversations with small business organisations, which is why small suppliers are specifically referenced in the proposals on which we are consulting.
Richard Fuller (Bedford) (Con)
A common theme at British Home Stores and Sports Direct was that someone who was directly or indirectly a dominant shareholder also acted as chief executive officer. In the corporate world, Mike Ashley and Philip Green are outliers-become-outcasts, but the risk remains in those situations. Will my right hon. Friend, in his review, pay careful attention to that combination of dominant shareholding and chief executive powers?
Greg Clark
I will indeed. The Green Paper considers such matters. The responsibility that companies have through the privilege of limited liability status extends to employees, customers, pensioners and others, and that is part of the understanding under which good businesses operate to ensure that they are good for all those groups.
Tom Pursglove (Corby) (Con)
Wider community engagement is often very important in relation to these matters. Does the Secretary of State agree that one contribution that businesses can make is to try to help provide more role models for our young people, as, obviously, we want to see them go into business in greater numbers?
Greg Clark
My hon. Friend is absolutely right. One reason why Government Members are unambiguously pro-business is that the opportunities that that gives to people not only to earn a good living, so that they can support themselves, but to achieve their potential and go on to make full use of their talents is an incredibly inspiring way in which people can blossom. That is why we want to see flourishing businesses in this country.
Mark Pawsey (Rugby) (Con)
The Secretary of State has already referred to the important role of small businesses in which the relationship between owners and their employees is very different from that in larger organisations. Will he say a little more about the level at which the proposals he has announced today will be introduced?
Greg Clark
In the consultation, we asked what the cut-off should be. Clearly, there is no intention to capture small businesses in the disclosure requirements that are more appropriate to large businesses. That is something that we will consider as part of the consultation, and I hope that my hon. Friend will contribute to it.
Kevin Hollinrake (Thirsk and Malton) (Con)
May I first declare my interest as a non-executive chair of a listed public company before I offer warm support for these proposals? I also echo the comments of my hon. Friend the Member for South Suffolk (James Cartlidge) that employee share ownership schemes have had a transformative effect both in our workplace and on our business success. I ask the Secretary of State to look even closer at those schemes, with the aim of making them easier for businesses to implement.
Greg Clark
I will indeed. I am delighted that we have had two suggestions from my hon. Friends for this route. I will take them up, and take them seriously. I hope to make further statements to the House in the future.
Bill Presented
Access to Radiotherapy Bill
Presentation and First Reading (Standing Order No. 57)
Tim Farron presented a Bill to make provision to improve access to radiotherapy treatment in England; to define access in terms of the time that patients are required to travel to places providing treatment; to specify 45 minutes as the maximum time patients are to travel; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 24 March, and to be printed (Bill 102).
Statutory Nuisance (Aircraft Noise)
Tuesday 29th November 2016
(7 years, 4 months ago)
Commons ChamberRead Full debate Statutory Nuisance (Aircraft Noise) Bill 2016-17 View all Statutory Nuisance (Aircraft Noise) Bill 2016-17 Debates Read Hansard Text
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
For more information see: Ten Minute Bills
This information is provided by Parallel Parliament and does not comprise part of the offical record
Dr Tania Mathias (Twickenham) (Con)
I beg to move,
That leave be given to bring in a Bill to amend Part 3 of the Environmental Protection Act 1990 to make noise caused by aircraft a statutory nuisance; and for connected purposes.
When I talk about noise caused by aircraft, I am not talking about the level of noise that some Members of this House would have heard this morning walking over Westminster Bridge. If they were walking over the bridge and saw and heard an aircraft, doubtless they would have been able to hear the busker also on the bridge and their companion’s conversation. I am not talking about that level of noise. I am talking about the level of noise that would have prevented Members from hearing the busker on the bridge and their companion’s conversation. That is the level of noise experienced by residents in my constituency—and by residents in other constituencies judging by the cross-party support that I have for this Bill.
Such is the level of noise that residents are unable to hear the television in their own living rooms when aircraft go over. They cannot hear the radio or have a conversation when aircraft go over. Indeed, I have residents who are unable to go to sleep at 11 o’clock at night when aircraft operate at this level of noise. I also have residents contacting me at—yes—4.30 in the morning because they have been woken up by aircraft making this level of noise. Babies cry and pet animals even show fear.
Official data from the airport near my constituency—it is called Heathrow airport—put the noise level at 83 dB. A food mixer operates at around 80 dB and an electric drill at 95 dB. That is why this level of aircraft noise should be considered a statutory nuisance. There are playgrounds in some schools in Greater London where, to try to alleviate some of the medical problems that come from this level of aircraft noise, the children go into what are called “adobe” huts.
If Members look at part 3 of the Environmental Protection Act 1990, they will find a list of statutory nuisances—they have to be a nuisance or prejudicial to health—which include fumes, smells, dust, artificial light and model aircraft. If Members then look at Government websites about noise from model aircraft, they will find that it is considered a nuisance, especially if it takes place outside the hours of 9am and 7pm on a weekday and 10am and 7pm on a Sunday. Residents in my constituency are experiencing aircraft noise—not model aircraft noise—within and outside of those times. Aircraft noise is not only a nuisance, but prejudicial to health.
Since the 1990 Act, we have compiled more medical evidence. I am sure that Members are aware of many of the studies on aircraft noise and health. There is the well-known RANCH study—road traffic and aircraft noise exposure and children’s cognition and health: exposure-effect relationships and combined effects—which looked at 2,844 children around Heathrow, Amsterdam and Madrid. It found that children’s memory and reading comprehension is affected by aircraft noise—there is a linear relationship.
Members might also be aware of the HYENA study—hypertension and exposure to noise under airports —which looked at 6,000 people between the ages of 45 and 70 and found a relationship between hypertension and aircraft noise. Just a few years ago, The BMJ reported an American retrospective study of 6 million people over the age of 65 that showed a relationship between hospital admissions for blood pressure and cardiovascular problems such as ischaemic heart disease and heart attacks, and, yes, aircraft noise.
Now that we have evidence, we also need better monitoring, more data and more meaningful penalties, so that if aircraft noise becomes a statutory nuisance we have best practice. The Secretary of State for Transport admits already that some planes flying over my constituency fly lower than others and there are records of the so-called quieter aeroplanes reaching 83 dB levels around homes and school playgrounds.
I am asking through this Bill for us to update the 1990 Act. The World Health Organisation gives levels for noise that is considered to be moderate and severe; Members will notice that they are well below the levels encountered by my residents. We have the medical evidence. Many of us have evidence from our residents that this is causing a serious nuisance, so I suggest that we amend part 3 of the Act to take notice of medical and nuisance problems caused by noise from aircraft.
Question put and agreed to.
Ordered,
That Dr Tania Mathias, Tom Tugendhat, Andy Slaughter, Sir Alan Haselhurst, Jim Shannon, Ruth Cadbury, Dame Caroline Spelman, John Cryer, Caroline Lucas, Adam Afriyie, Paul Scully and William Wragg present the Bill.
Dr Tania Mathias accordingly presented the Bill.
Bill read the First time; to be read a Second time on 20 January 2017 and to be printed (Bill 101).
Commonwealth Development Corporation Bill
Tuesday 29th November 2016
(7 years, 4 months ago)
Commons ChamberRead Full debate Commonwealth Development Corporation Act 2017 View all Commonwealth Development Corporation Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for International Development (Priti Patel)
I beg to move, That the Bill be now read a Second time.
The Bill will raise the limit on the total cumulative level of financial support that can be provided to the CDC, the UK’s development finance institution. The CDC was founded by Clement Attlee’s Labour Government in 1948 and is the world’s oldest development finance institution. It is wholly owned by the UK Government and does not have private shareholders. Its mission is to tackle poverty by creating jobs and driving inclusive economic development for people in the poorest countries in Africa and South Asia.
The CDC exists to help to address what economists call a “market failure”: the desperate shortage of investment in the world’s poorest countries because, in part, of a misperception of the risks of doing business there. It addresses that market failure by providing investment capital to support the building of businesses throughout Africa and South Asia. Its explicit mandate is to drive labour-intensive growth by creating jobs and opportunities for working people. Since its creation, the CDC has been supported by all successive Governments—Labour, coalition and Conservative—because of its core purpose of tackling poverty through sustainable economic growth. I present the Bill in the hope that that spirit of cross-party support will continue. I look forward to colleagues across the House offering the fullest possible scrutiny, and I welcome the opportunity to constructively address any points that Members raise.
In recent years the UK has led the world in efforts to eliminate extreme poverty. The previous Labour Government made an important contribution, for example, in relieving the unpayable debts of the world’s poorest countries. Under David Cameron’s leadership, the UK become the first G7 country to meet its promise to spend 0.7% of our gross national income on international development. The current Prime Minister has made it clear that the Government will honour that commitment and intensify our leadership on key global issues such as tackling modern slavery.
The Government have also rightly made clear and bold manifesto commitments to tackle poverty directly.
Keith Vaz (Leicester East) (Lab)
I warmly congratulate the Secretary of State on her appointment to the Cabinet in this very important job—I know that she has been doing it for a while, but this is my first opportunity to do so. Later, she will meet the officers of the all-party group on Yemen. Will she confirm that the refocusing of funds in support of the CDC will not affect the Government’s commitment to the provision of emergency and humanitarian aid that she and her Minister of State have spoken of and given to Yemen over the past few years, as did her predecessor, the right hon. Member for Sutton Coldfield (Mr Mitchell), who is also in the Chamber?
Priti Patel
I thank the right hon. Gentleman for that welcome and for his remarks. He is right: successive British Governments have been very clear not just about their commitment to the CDC but about our collective focus on humanitarian need at times of crisis. I look forward to seeing the delegation from the all-party group later today, when I will of course speak more about the work that the Government are doing in Yemen, where we are seeing the most awful and horrendous catastrophe. I will speak to the right hon. Gentleman later in more detail about the type of interventions and the support we are providing to those trapped in that dreadful conflict.
By 2020, we will save 1.4 million children’s lives by immunising 76 million children against killer diseases. We will help at least 11 million children in the poorest countries to gain a decent education, improve nutrition for at least 50 million people who would otherwise go hungry, and help at least 60 million people get access to clean water and sanitation. We will lead the response to humanitarian emergencies. We will lead a major new global programme to accelerate the development of vaccines and drugs to eliminate the world’s deadliest infectious diseases, while investing to save lives from malaria and working to end preventable child and maternal deaths. We will also continue the inspirational leadership of my predecessor, my right hon. Friend the Member for Putney (Justine Greening), on women and girls.
Those commitments stand, along with our commitment to human development and directly meeting the needs of the world’s poorest, which is absolute and unwavering. Indeed, the first major decision I took in my role as Secretary of State for International Development was to increase the UK’s contribution to the Global Fund to Fight AIDS, TB and Malaria from £800 million to £1.1 billion. That will help to save millions of lives in the years ahead.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Secretary of State is outlining a long list of the Department for International Development’s achievements and her plans for the future, and she is praising her predecessors. Can she explain what has happened since she called for the Department to be scrapped and since she told the Daily Mail this year that most of our aid budget was being “stolen” and “squandered”? Those are her words.
Priti Patel
The hon. Gentleman has just heard not only what DFID has done in the past under two outstanding Secretaries of State—my predecessors, my right hon. Friends the Members for Sutton Coldfield (Mr Mitchell) and for Putney—which is a legacy that we will stand by in our manifesto commitments, but—[Interruption.] If the hon. Gentleman wants an answer, he should listen to my response.
I have already said that we will lead on major global programmes to accelerate the development of vaccines and drugs to eliminate many of the world’s diseases. The hon. Gentleman has also heard me respond to the right hon. Member for Leicester East (Keith Vaz) on the question of humanitarian crises and many of the immediate needs to which we are responding. Indeed, the hon. Gentleman will be aware that the very Select Committee of which he is a member is witnessing at first hand how aid is being spent in crisis situations, in refugee camps, and providing opportunities and, frankly, a lifeline to people around the world who are suffering. That is exactly what my Department is doing and what I am doing as Secretary of State, and I am disappointed that the hon. Gentleman—[Interruption.] This is not about briefing the press, and, if I may say so, I think the hon. Gentleman’s remarks do a huge disservice to the international development community. He is sitting there smugly smiling, but it is an international community that comes together—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Gentleman knows that he should not make remarks from a sedentary position, but if he is going to make remarks from a sedentary position, he should not use the word “you” because he should not be accusing me of anything.
Priti Patel
It is not just in times of crisis that the international development community comes together. My Department is championing economic development and investing in people and human capital. I appreciate that the hon. Gentleman may not like that and may disagree with it, but that is the core purpose of the Department.
Stephen Doughty
The Secretary of State is making some very strong statements. Of course I do not deride the work of the Department; I think it is doing a fantastic job. She has outlined many of the positive things it is doing and the humanitarian aid it is providing to refugees, but why did she say that most of the Department’s budget was being stolen and squandered, without any justification?
Priti Patel
As the hon. Gentleman knows from my appearances at the Select Committee, I have clearly stated that I will drive transparency and accountability in the Department. There have been examples. I am sorry that on an issue as important as not only saving lives but transforming lives and investing in people, he chooses to take such a narrow focus.
Tom Brake (Carshalton and Wallington) (LD)
On the subject of the Bill, does the Secretary of State recognise that there are concerns that the CDC is not in fact targeting the poorest countries? Although private sector investment is very welcome, surely it needs to be just as targeted and as effectively monitored as investment in non-governmental organisations and other ways of boosting aid.
Priti Patel
I thank the right hon. Gentleman for his comments. It is right that the focus is on development impact and on outcomes. That has been shown by many of the reforms that the CDC has undertaken since 2010. Yesterday, a National Audit Office report was published which showed exactly that.
Richard Fuller (Bedford) (Con)
Will my right hon. Friend please be reassured that her efforts to ensure that we have accountability and transparency in all aspects of public expenditure, but particularly in the area of international development, are a key part of maintaining public confidence behind the 0.7% target?
Priti Patel
My hon. Friend is absolutely right. We owe that to those who contribute to the taxes that enable the Government to make these important decisions about international development, and in particular our humanitarian responses and how we spend and invest that money. As I will go on to say, there are many examples around the world of lives being transformed, and that is something that our country can be very proud of.
Fiona Bruce (Congleton) (Con)
Does my right hon. Friend agree that with regard to the concerns expressed about the CDC, the gravest relate to the period when the Opposition were in government—for example, the excessive levels of pay to CDC staff? Has the Conservative Government not got a grip of that, and is the CDC not much more efficient following the review in 2012 by the then Secretary of State?
Priti Patel
I thank my hon. Friend for her comments and observation. As I outlined at the beginning, the CDC is an established organisation that we should all be proud of. Clearly, there was a period before 2010 when the management of the CDC was, to put it mildly, not doing what it should have been doing. There were concerns about excessive pay and the lack of focus on development outcomes. Since 2010, when DFID led the way forward in working with the CDC, we have seen great progress.
Priti Patel
I must make progress.
As I mentioned earlier, contrary to some of the reports that we have seen in the past week, the future of the CDC will absolutely not come at the expense of DFID’s existing work on humanitarian support, human development and directly tackling what might be called the symptoms of poverty—disease, hunger and preventable suffering.
We all have a deep responsibility to tackle the underlying causes of poverty. That is why successive Governments have rightly focused increasingly on helping countries to grow, lifting the poorest out of poverty forever. That means creating jobs for the world’s poorest people, and driving the structural economic change that will end poverty permanently. To do this, we need to build the broadest possible coalition to fight poverty.
That includes NGOs and civil society organisations from the UK and from developing countries, which do such vital work. DFID’s recent civil society partnership review clearly stated the Government’s desire to work even more collaboratively with them in pursuit of these objectives.
Eliminating poverty also means working in partnership with multilateral agencies such as the Global Fund, with other bilateral development agencies, and directly with Governments in developing countries.
Mark Menzies (Fylde) (Con)
An example of that was the event that I and the Minister of State, Department for International Development, my hon. Friend the Member for Penrith and The Border (Rory Stewart) went to last week with His Royal Highness the ambassador of Saudi Arabia. DFID is working with wealthy donor countries to unlock enormous potential across the middle east. If not for the leadership shown by DFID, some of that work would be undone.
Priti Patel
I thank my hon. Friend for his comments. As he knows, a great deal of work is taking place with other Governments, helping them to develop their own capacity for aid, so that they can work more effectively bilaterally and with multilateral agencies. At a time when we see a great deal of conflict in that region, we are working on an agreement with some countries in the Gulf and the middle east on what their own development bodies and agencies can do to support humanitarian relief as a result of crises taking place on their doorstep.
Today I want to explain why CDC is a vital partner in our efforts to end poverty, for it is widely recognised that aid on its own will not eliminate poverty. No country can defeat poverty and leave aid dependency behind without the prospect of a functioning economy, sustainable economic growth, jobs, trade and investment. Development investments via CDC complement our other work and allow us to fight the scourge of poverty on all fronts. In the world today, faltering economic growth and rising young populations have exposed the chronic need for jobs and better opportunities. At present, most developing countries are not growing fast enough or industrialising fast enough to leave poverty behind.
The additional financing needed to achieve the UN sustainable development goals by 2030 is estimated at $2.5 trillion every year, but current investment levels are less than half that. As the UN and many international development banks have made clear, much of this finance will need to come from the private sector. The chair of the OECD’s development assistance committee, Erik Solheim, has stated:
“There is no longer a dispute about the need for private sector involvement in development. The role of DFIs”—
that is, development finance institutions—
“is to connect development aid with private investment, and explore how we can employ market forces in the world’s most challenging places.”
Dr Dirk Willem te Velde, head of the international economic development group at the Overseas Development Institute, writing in the Financial Times yesterday, said:
“Statistical evidence to be published by the Overseas Development Institute soon suggests that a £10bn increase in exposure of DFIs in Africa would raise average incomes and labour productivity by a quarter of a per cent, which is actually slightly above the average impact of aid overall. Most jobs are created by the private sector, and working with the private sector to create jobs is vital for inclusive growth.”
We know that that will be difficult in the poorest, most fragile and conflict-affected states. These are the hardest markets, where businesses will not go on their own because it is perceived as too risky, yet it is in those very places that jobs and economic opportunities are so desperately needed. CDC does exactly that by creating jobs, stimulating growth and supporting local business.
There are currently only a few investors in the world with the skills and risk appetite to create jobs and opportunities in the most difficult frontier markets. CDC is one of those investors. CDC uses its expertise and capital to support over 1,200 businesses in more than 70 developing countries to grow and create jobs. It is a great British success story that has a long history of creating jobs in the developing world.
This is not just about abstract numbers; importantly, it is about investing in people. The life-changing impact of CDC’s investments can be seen in countries such as Sierra Leone, where the UK has supported businesses to get up and running to drive forward the country’s recovery following the devastating Ebola crisis, which killed thousands and damaged the economy. In the words of Henry Macauley, Sierra Leone’s Energy Minister, whom I met just three weeks ago:
“CDC has played an important role in supporting key businesses during the Ebola crisis and continues to do so in Sierra Leone as the economy now recovers. They are an increasingly important investor in the nation’s power sector and I’ve found them to be a great and promising private sector partner.”
The life-changing impact of the CDC’s investment can also be seen through people such as Yvonne, in Uganda. Thanks to a CDC-supported loan, she could buy a vehicle, a scrubbing machine and a vacuum cleaner for her cleaning business and attend training courses. In just 10 years, she had expanded her business from one person to providing jobs for 175 people. It is people such as Yvonne who we should have in our minds as we debate the Bill.
In the past, legitimate concerns were raised about some aspects of the CDC’s performance. That is why, in recent years, the CDC has modernised and transformed its approach. In 2010, DFID undertook a public consultation and an extensive review of the CDC, and began moving the CDC in a new direction, including by bringing in a new board and chair and hiring a new chief executive. Under its new leadership, the CDC has transformed itself. Before 2011, it operated a financial-return-first strategy, with no screening tool to help filter out insufficiently developmental investments.
Keith Vaz
The Secretary of State may have answered this question, or she may be coming on to answer it, but there were concerns about some of the salaries paid to senior officials at the CDC and about the monitoring of administrative costs. Given that we support this organisation, which is moving in the right direction, is she satisfied that there is proper monitoring of that aspect of its work?
Priti Patel
That is an important point. Back in 2009, the CDC’s then chief executive was criticised quite extensively for the level of their salary and other pay, which stood at £970,000. The current chief exec’s total remuneration is now limited to a maximum of £300,000, and that is because the remuneration policies have changed dramatically since 2012. It is also important to reflect on the fact not only that pay across the organisation has been reduced by over 40%, but that compensation is no longer benchmarked, as it was prior to the changes in 2012, against the private equity industry. This is not a private equity firm at all. The CDC is now benchmarked against other development finance institutions, and any bonuses are based on the CDC’s development performance and returns, whereas, previously, they were based solely on financial performance. That has now changed.
Priti Patel
No, I will not give way.
Under its new leadership, the CDC has transformed itself. As I said, it operated a financial-return-first strategy before 2011. It has now introduced dual objectives to deliver development impact and financial return. It has developed completely new ways of assessing and measuring development through job creation and of screening prospective investments for development impact. It is an innovative and intelligent investor with a core mission of fighting poverty. That was recognised in yesterday’s NAO report, which stresses that DFID’s oversight of the CDC led to
“important, positive changes...a significant departure from the previous strategy”.
Following new objectives agreed with the UK Government, the CDC now invests only in Africa and south Asia, where 80% of the world’s poorest live, and where private capital is scarce. The CDC focuses now on the sectors that create the most jobs and on sectors that create environments for other businesses to thrive, such as infrastructure and financial services. In the last year, CDC-backed businesses have helped to create over 1 million new jobs, and they have paid over $7 billion in local taxes in the last three years. That is money that Governments can use to invest in vital services, such as health and education.
As yesterday’s NAO report recognised, the CDC has addressed Parliament’s concerns about pay, and salaries have been cut, as I have just outlined. The whole ethos of the organisation has changed and, importantly, strengthened, with oversight from DFID. The CDC of today is a different, and much improved, organisation from the one it was many years ago. Some of the media coverage in recent days has not properly reflected that important shift, and I urge all Members to look carefully at the facts rather than some of the reporting.
Of course, there is more to do. Therefore, as part of the Bill, my Department will work to improve the transparency of the organisation further and to strengthen further the assessment of its development impact. As the NAO recognised, my Department has commissioned several independent evaluations of the CDC’s impact. Just last year, a team from Harvard, reviewing the CDC’s investments from 2008 to 2012, concluded that they had been “transformational”, creating hundreds of thousands of new direct jobs and billions of pounds in increased earnings. We are currently in the design stages of a complex new study to generate even more detailed data on the wider market impacts of CDC investments. We are the first Government ever to conduct such an in-depth study into their development finance institution.
There is no question but that the CDC offers value for money. Over the last five years, we have seen significant returns from it. Every penny of profit generated by the CDC is reinvested into businesses across the world’s poorest and most fragile regions, making every taxpayer pound invested in the CDC go further. The NAO further concluded that the CDC now has
“an efficient and economic operating model”
with low costs, compared with other development finance institutions. CDC salaries are covered by the returns the CDC makes on investments, not from development budgets.
Wherever possible, the CDC invests in countries, and it uses neutral jurisdictions only when it is absolutely necessary to do so, to protect taxpayer moneys from being lost to weak legal systems and to bring confidence to other global investors in the hardest-to-reach markets. However, the CDC uses only financial centres that are compliant with international tax transparency standards, as monitored by the OECD’s global forum on transparency and exchange of tax information. There are no exemptions.
Far from hiding investments, the CDC was one of the first development finance institutions to make public investment information about every single investment. In fact, with DFID’s support, the CDC is now a global leader on transparency. It has signed up to the international aid transparency initiative and has an online searchable database on its website, allowing users to access information on every investment and fund in the CDC’s portfolio. I can assure the House that my Department will continue to be an active and engaged shareholder in the CDC, ensuring that it continues to deliver for the world’s poorest and the UK taxpayer.
Richard Fuller
My right hon. Friend is outlining a strong case for what she proposes for the CDC. However, on the issue of probity, there are tremendous resources in the City of London, which could provide support for some of the businesses the CDC invests in as they look to get to the next stage of growth capital. Is there any element in the Bill, or are there any DFID proposals, to encourage City of London firms to provide that support for DFID goals?
Priti Patel
It is important to acknowledge the City of London and the great expertise that exists there when it comes to not only investment in some of the most challenging parts of the world but transparency. Through the work the Government have done on tax and transparency, the City of London has moved incredibly far. My Department is working across the City of London on a range of issues, such as insurance. We are also looking at how we can do more on transparency and accountability, and that is absolutely right.
We will shortly be setting out a new investment policy for the CDC, covering the next five years. That will include a new reporting framework to better capture the broader impact of investments on development, beyond job creation and the tax revenue generated. We will ensure there is maximum transparency, so that CDC investments can be scrutinised and, importantly, so that their impact on combatting poverty is made clear. As I stated, the CDC has a strong and transparent track record on which to build. With our support and oversight, we want the CDC to do more, and that is why we need the Bill.
The Commonwealth Development Corporation Act 1999 set a £1.5 billion limit on the overall amount of Government financial assistance that can be provided to the CDC. That limit was reached in 2015. The need to raise the CDC’s capital limit was clearly signalled in the UK aid strategy back in 2015. The Bill builds on the economic development objectives of Clare Short’s 1999 Act and should be seen not as a new political direction, but as a logical continuation of the cross-party approach that has been in place for decades.
Any money given to CDC will meet the internationally agreed rules about which spending counts as aid. Raising the limit by £4.5 billion to £6 billion and introducing a delegated power to raise the limit further via statutory instrument to £12 billion over time will enable the UK to accelerate the CDC’s growth, so that the UK can deliver on its international development objectives. Let me stress that this £6 billion is not an annual spend; it is a cumulative figure and a limit placed on the total amount of financial assistance that a Government could provide to the CDC over a period of time before coming back to the House to seek a further increase via statutory instrument.
James Duddridge
I fully support what my right hon. Friend is saying. This is a progressive, cross-party movement, and this is not a radical piece of legislation. Decisions have not been made to spend the full £6 billion straight away, but if the Department did commit to spend right up to that limit and fund it each year up to 2020, it would still represent only 8% of the Secretary of State’s budget, so 92% of aid would be spent in a more traditional way. This is a progressive move, not a radical change.
Priti Patel
I thank my hon. Friend for his comments. He is absolutely right about the 8% figure. It is also worth pointing out, putting this into context, that total aid spending over the course of this Parliament is likely to be £60 billion.
Some inaccurate reports have suggested that this Bill somehow paves the way for the entire aid budget to be given to the CDC in perpetuity. That is clearly not the case. Increasing the capital limit does not guarantee that we will use our resources in this manner, or commit us to any increases in capital. My priority is to ensure that we achieve maximum value for money with UK aid. The provision of any new capital to the CDC will require a full and detailed business case that will show how further investment will continue to achieve value for money, have a clear development impact for the poorest, and deliver in the UK’s national interests. Furthermore, it is worth noting that because CDC investments generate a return, any additional money we give to the CDC is not spent once and then lost; it contributes to the CDC’s capital, which is continually reinvested now and in future years. Importantly, therefore, it remains an asset that ultimately belongs to the UK taxpayer.
This Bill is fundamentally about people: improving life prospects by helping individuals to find work and earn money, so that they can feed their families, send their children to school and put clothes on their backs; empowering girls and women to determine their own future; and giving people in the poorest and most marginalised places hope, so that they do not feel the pressures to migrate or turn to some of the extreme causes that we see around the world. The CDC is just one part—a relatively small part in the context of overall development spending—of our crucial investment in developing countries. We will continue to invest in our life-saving, life-changing health, education and sanitation programmes, meeting our manifesto commitments. Ultimately, though, this is about jobs, growth and enterprise that will defeat poverty for good. It is right that Britain leads the world to tackle poverty across the world given that we still have more than 1 billion people living on less than a dollar a day. The UK Government are playing a leading role in building a more prosperous world. This Bill is the right thing to do for the poorest people in the world and for British taxpayers, and I commend it to the House.
Kate Osamor (Edmonton) (Lab/Co-op)
The vast majority of Members of this House support the UK’s guarantee to spend 0.7% of gross national income on international development. This view is supported by the people of this country, who understand that our aid programme makes a significant contribution to creating peace and economic sustainability around the world and to building a more secure and stable international community. Our aid budget makes a huge difference to the lives of hundreds of thousands of the world’s poorest people. Underpinning the faith that the British people have in our aid programme is the knowledge that the money that is spent in developing countries—taxpayers’ money—is transparent; that the funds are provided for projects that have clear objectives and tangible outcomes; and that the money goes directly to source, with no middlemen, no creaming off the top, and no profiteering from people’s poverty.
We will always welcome any measures that aim to improve the quality of life of those less fortunate than ourselves. This Bill, with the right safeguards, could achieve that. The job of Opposition Members, and of the whole House, is to ensure that some of the previous excesses and failures of the Commonwealth Development Corporation are not repeated. I say that as a friend of the CDC. It was the post-war Labour Government of Clement Attlee who created the forerunner of the CDC. Much of the work of the CDC is vital, and we should of course work to strengthen its ability to support businesses and create jobs around the world.
However, we have a number of serious reservations about this Bill. Since the Government are proposing up to an eightfold increase in the amount it can contribute to the CDC, it is right that we ask questions. Let me begin with executive pay at the CDC. While we would all acknowledge the steps that have been taken to curtail the excesses of the past, what guarantees have the Government received that we will see no repetition of the eye-watering salary hikes that people awarded themselves in the past? It would be fundamentally wrong for the extra money proposed in this Bill to be used to fill the bank accounts of the executives of the CDC instead of going to those who need it the most.
James Duddridge
Does the hon. Lady accept that no one is considering going back to those bad old days? While I do not want this to be a partisan issue, because I think there is a wide degree of consensus, the original deal with the chief executive was signed off by Clare Short, and the new deal, which reduced the salary by a third and placed a cap on the maximum, was signed off by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) when he was Secretary of State. There is no going back to those bad old days; this is about working together on the new framework.
Kate Osamor
I thank the hon. Gentleman for his intervention. I am concerned that we learn from the past. I am not here to pull punches: this is about learning from the past and ensuring that we move forward in the correct, transparent way.
The second question the Government must answer is on the priorities of the CDC. Recent history is not kind to the CDC and the decisions it has made on the allocation of its funds—UK taxpayers’ money. In recent years, the CDC has become a more commercial organisation. In 2004, the CDC created the private equity arm, Actis. In a deal that raised serious concerns on the governance of the corporation, 60% of the equity firm was sold to managers at the CDC at a bargain basement price. In the space of a few years, they had turned the CDC from an aid agency into a cash machine. With the focus turned to maximising profits, mainly for those who worked at the CDC, the traditional areas of financial support that the CDC had focused on for nearly 60 years were being abandoned. Food security through agriculture programmes went, safe and clean water projects were cancelled, and transport and infrastructure projects were abandoned. Poverty reduction—surely key to any development objectives—withered on the vine of self-interest and, I am afraid to say, earning a fast buck.
It is worth comparing the principles and values on which the CDC was founded to achieve its aims with the realities of its present-day operation. In 1998, the CDC spent 50% of its budget on agribusiness in Africa. That investment had two virtues: first, it helped to feed people in those countries, where starvation and hunger were rife; and, secondly, it enabled communities to become more self-sufficient, created jobs, and was a step on the ladder out of poverty. Today, funding for agribusiness has dropped to just 5%.
We see similar patterns in the CDC’s infrastructure programme. For people to live healthy lives, and to enable communities to thrive, not simply survive, we need to help create a solid infrastructure as part of our development priorities. Dirty water and poor sanitation robs the lives of over 300,000 people each year. Infants and young children are especially susceptible to diseases because of their immature immune systems. Their young bodies simply do not have the right immune system to cope with waterborne diseases. According to UNICEF, over 40% of medical facilities in Africa do not have access to clean water. Dirty water and a lack of good sanitation do not just rob people of their lives; they make a country less productive. A recent study estimated that there was a $150 million shortfall for water and sanitation projects in sub-Saharan countries, while the World Health Organisation estimates that we need £535 billion in investment to achieve universal access. I accept that those are huge sums of money, but look at the benefits. It is estimated that every dollar spent on improving water quality and sanitation delivers $4 in increased productivity. With such overwhelming evidence for the health and economic benefits, the case for investing in infrastructure programmes should be beyond doubt.
Mr Jim Cunningham (Coventry South) (Lab)
Another dimension, when we are talking about health, is the pharmaceutical industry and the products that it sells to some African countries. Surely, the Government should be looking at this area and trying to make pharmaceuticals a lot cheaper for those countries.
Kate Osamor
I totally agree with my hon. Friend. We need not only to look at the health of poorer people but to make sure that they can access water and sanitation.
It is surprising, if not shocking, that the CDC reduced infrastructure support for water, sanitation and roads from 35% of its budget in 1999 to just 8% a decade later. If the money is no longer going to support agribusiness or infrastructure, where is the CDC spending it? Let us begin by looking at some of its recent investments, such as Xiabu. I do not know about you, Madam Deputy Speaker, but I am partial to a takeaway on a Friday night—so, it seems, is the CDC, because it has provided thousands of dollars to the Chinese fast food chain Xiabu. That may be a good commercial investment, but is it the best use of the CDC’s resources? Can the Secretary of State set out what guarantees she has obtained that the UK’s increased contribution to the CDC will not go towards such projects?
While the Secretary of State is here, I would like to hear from her that the Government will seek assurances that in Africa the CDC will put more emphasis on food security than it puts into funding the building of new shopping malls at present. I have no doubt that the people of Accra are grateful for their brand new shopping mall, but what strategic role it plays in increasing life expectancy in Ghana is a mystery to me.
James Duddridge
The people who were employed in the construction of those shopping malls in Accra—I have seen them recently—would disagree with the suggestion that that has not helped families in Accra and in nearby villages. Less than 1% of the CDC budget has gone on shopping and infrastructure, which provide a lot of jobs. Agriculture, which the hon. Lady talked about earlier, is incredibly important, but it is less important than it used to be in the modern economy in Africa, where there is a greater degree of diversification and urbanisation.
Kate Osamor
I thank the hon. Gentleman for his intervention. I know that he went around Africa in his previous role as a Minister, so he knows a lot about Africa, but there are parts of Ghana where there is no electricity and parts of Ghana where there is no water. Yes, middle-income families may enjoy going to malls, but while many people are living in poverty I do not think that a mall is the best use of CDC resources and money.
The examples that I have given lead me to my third and fourth questions for the Secretary of State. The Government propose to increase funding from £1.5 billion to £6 billion, with the option for the Secretary of State to raise it to £12 billion at a future date. But it seems she is putting the cart before the horse. As yet, the CDC has not published its investment strategy for 2017 to 2021. In the absence of an investment strategy outlining how the additional resources would be spent by the CDC, the Government are essentially proposing that we provide the CDC with a multibillion-pound blank cheque. In 2015, the coalition Government gave the CDC a cash injection of £735 million, and the Secretary of State published the business case for that increased funding at the time. Will the Secretary of State place in the House of Commons Library the full business case for the increase to £6 billion of funding to the CDC? Will she assure the House that if the Government wish to extend that to £12 billion, a business case will be brought to the House?
Keith Vaz
My hon. Friend was in the House when the Secretary of State gave me a very welcome assurance concerning Yemen, which we appreciate. Does my hon. Friend agree that it is so important that emergency and humanitarian aid should be ring-fenced and that any resources to the CDC—whatever they may be, after the business case has been prepared—should not take money away from that emergency and humanitarian aid, which is important in Yemen and in other parts of the world?
Kate Osamor
I thank my right hon. Friend for his intervention. Yes, humanitarian aid is paramount. In times of crisis, we need to know that that money will be ring-fenced to ensure that those who need it most will be able to get it.
During proceedings on the Bill, we will be setting the Government six questions, which we hope they will be able to address and gain our support. I began my response to the Secretary of State’s opening speech on Second Reading today by setting out the key principle that should guide us on international development funding—transparency. Indeed, the lack of transparency over the CDC’s work has created considerable scepticism about its activities and some of its investments. When spending taxpayers’ money on international development in an age of austerity, it behoves the Government to do all in their power to reassure everyone that their money is being spent properly and effectively. The Secretary of State would alleviate some of the concerns felt by Opposition Members—and, I am sure, in the country at large—if she were to insert a transparency clause into the Bill, which would meet the Government’s stated aim and their commitment to transparency, value for money and tracking development results.
That is particularly important when it comes to the CDC’s use of tax havens for its investments. It is extraordinary that the CDC has routed its investments through tax havens. The CDC and DFID have a moral duty to adopt the highest ethical standards if they are to have moral authority as the UK’s leading development actors. We should not be rewarding tax havens with UK taxpayers’ money, and the Government could and should lever the CDC away from the use of tax havens. Not a penny of the proposed £6 billion should find its way to a tax haven, and the Bill should be explicit in enshrining that principle.
Providing any organisation with £6 billion—and potentially £12 billon—is a significant step, and that is particularly true of an organisation with such a chequered recent past. The House would welcome a clear sense from the Secretary of State of how her Department has evaluated the costs and benefits of providing the CDC with such a significant sum of public money. There is a clear need for the Minister to set out how DFID’s investment plans for CDC have been informed. Has that been achieved by assessing other options for investing these resources. Has it been achieved by comparing their value for money and the potential for development impact?
There are two issues that the Secretary of State should address to demonstrate the Government’s commitment to transparency. At present the CDC is not subject to the scrutiny of the Independent Commission for Aid Impact. That is an anomaly, and it should be rectified immediately. Will the Secretary of State insert into the Bill a provision to enable ICAI to scrutinise and audit the effectiveness of the CDC, particularly given the significant increase in the CDC’s funding proposed in this Bill? Secondly, I would like an assurance from the Government that the CDC will not be sold off or privatised during this Parliament. It would, surely, be wrong for this House to provide billions of pounds of taxpayers’ money, only for the CDC to be handed over to a private equity firm or suchlike company.
When the Colonial Development Corporation was established in 1948, it had bold ambitions. For much of its life, the CDC has achieved those ambitions, first as the Colonial Development Corporation and then as the Commonwealth Development Corporation. Lives have been saved and lives have been improved as a direct result of the CDC. Sadly, the CDC has lost its way in recent years. The ethos and values that drove its inception six decades ago have been lost, sacrificed on the altar of fast-buck economics. We are beginning to see some welcome reforms to the CDC, but history has taught us that we must remain vigilant.
As I set out at the beginning of my speech, the Opposition firmly believe in the principle of aid as a vehicle for improving the life chances of millions of people. The question the Government must answer before they gain our full support for the Bill is: will they provide the assurance and the guarantee to deliver what we all seek, which is a CDC that truly lives up to its mission
“to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places”?
To achieve this, the Government must place the right safeguards in the Bill in Committee. If they do, and the Bill achieves the twin objectives of supporting the people who need it the most and of making the funding fully transparent, the Government will have our support.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
I draw the House’s attention to my outside interests, which are listed in the Register of Members’ Financial Interests.
This is an extremely good Bill, and I hope it will be welcomed in all corners of the House. During my brief remarks, I very much hope to be able to satisfy the hon. Member for Edmonton (Kate Osamor), who leads for the Opposition, on the perfectly fair questions that she posed. The fact that the Government are able to bring the Bill before the House today shows the success of Britain’s development policies in general, and specifically the success of the CDC reforms that we introduced in 2010 and 2011. Today’s Bill is the fruit of those reforms.
It is worth reflecting a little further on the history of the CDC. As has been said, it was founded in 1948. It was the first development finance institution— another British lead—and an early example of Britain’s generosity and of recognising the importance of the private sector and of job creation. The CDC made a huge contribution in the years after the war to agricultural development in the poorest parts of the world with which Britain had a close connection. By 1997, the formula had become a little tired, and the Commonwealth Development Corporation, as it had become, was losing money, which was hardly a good example of private sector entrepreneurialism for poorer countries to emulate.
In 1997, the Blair Government considered privatising the whole CDC. That would have been a huge mistake, since the whole point of the organisation is to complement the private sector, not to compete with it. In the end, the Labour Government privatised the management, while leaving the capital in the public sector. The then Government turned it into a fund of funds: it invested in other people’s funding vehicles, while the private sector did what it is supposed to do, which is focusing on making money.
When I travelled as the shadow International Development spokesman, other countries’ development finance institutions would say to me that the transformation of the CDC after 1997 was a warning to other development finance institutions of what not to do. When I travelled in countries where in the past the CDC had generated enormous good will, people used to say to me, “Whatever happened to the CDC? It has simply disappeared.” Of course, that was right. As the CDC was investing in other people’s funds, it had simply disappeared.
In 2010, the coalition Government said that the CDC, this former great development finance institution, had lost its way. The CDC was under regular attack in the press—particularly in Private Eye—and my judgment, as the Secretary of State, was that the attacks were largely valid. It had been turned from a somewhat sleepy development corporation that was losing money into a city slickers private equity business. It was mostly staffed by the same people, who saw their civil service salaries soar to the exotic levels normally populated by very successful hedge fund managers and private equity investors. The central aim of the coalition was to re-inject the CDC once again with its distinguished development roots without losing the ability to earn a commercial return. Our aspiration on entering government in 2010 was that just as DFID is undoubtedly the leading development ministry in the world, so the CDC should become the envy of all other development finance institutions—the best Government-owned DFI anywhere.
We had three key aims. First, we wanted to regain control of investment expertise by bringing the responsibility for investment back into the CDC. In other words—Labour Members may care to take note—we decided to reverse the Blair Government’s privatisation by bringing the expertise back into the public sector. Secondly, we wanted to broaden the toolkit of financial instruments by which the CDC could achieve this. Thirdly, we wanted to shift the geographical focus of the CDC on to the poorest and most difficult parts of the world—Africa and south Asia. The CDC had previously focused on a loose collection of geographical locations in a very undifferentiated way. Of course, capital in such circumstances naturally gravitates to the areas of lower risk and higher return. That was exactly what we did not want it to do, because for the CDC and development, those are the areas of least value.
It was with dismay that I read in the Financial Times of all newspapers—it has a reputation for outstanding financial journalism, and should therefore know better—a rehash of a past that the CDC has long left behind completely. A moment of research would have shown Financial Times journalists that they were completely out of date. The Financial Times said that
“the government should place the CDC under the same broader level of public scrutiny as DfID.”
The CDC is overseen by DFID, the Treasury, the shareholder executive, the International Development Committee, the Public Accounts Committee and, as yesterday’s report shows, by the NAO. Perhaps in a rather better researched piece, those Financial Times journalists could explain who might be added to this already extensive list.
Contrary to the Financial Times view, the CDC is now well on its way to achieving a reputation as the best DFI in the world. The reforms that we introduced inevitably confronted vested interests, and involved an area of expertise that we did not of course have any right to expect within the civil service. We wanted the CDC to provide both pioneer and patient capital. We wanted pioneer capital because we wanted to show the reach of the private sector at its best in promoting economic activity, jobs, decent working practices, and the provision of key goods and services to the poorest in the most difficult places in the world. We wanted patient capital because it can take a longer view of the financial return and can therefore complement the private sector by adding what is often the key ingredient to the mix—funding that would not otherwise be available to generate jobs, whether in the power sector or in infrastructure—in, once again, the poorest places. All of that had the additional benefit of delivering value for money and a return for the British taxpayer, while having a substantial impact on poverty alleviation.
The Bill is part of the proof that these reforms have worked and that this new approach is succeeding. I do not think it is fanciful to believe that in 50 years’ time, the CDC rather than DFID will be seen as the embodiment of the UK’s strong support and success in helping the world’s poorest and most excluded people. The flow of CDC-type investments made by the developed world in the poor world is now overtaking, in quantum, the level of aid. I believe that the work the CDC is carrying out should command everyone’s support from the far left of the Labour party to the development-sceptic press.
To achieve this position, the CDC has faced the need for and delivered radical change. This would not have been accomplished without the high quality of leadership at the top that has prevailed throughout. We were successful in hiring Diana Noble as the chief executive. Diana Noble will retire next year, and the taxpayer and the development community owe her a great debt of gratitude. She has changed a passive organisation by recruiting outstanding new talent. People tell me that the spirit in the CDC has been transformed. She inherited an organisation of 50 people, a figure that was subsequently reduced to 40 but now stands at approximately 220.
Those extraordinary changes would not have been accomplished, either, without the skills and commitment of Mr Jeremy Sillem, a senior and experienced City financier who served as an adviser to DFID and was subsequently a non-executive director of the CDC while the reforms were implemented, and of Graham Wrigley, who now provides his expertise as the CDC’s chairman. That team, above all, has delivered those changes and deserves the gratitude and thanks of Parliament and the taxpayer. Their personal reward will be the transformation of the lives of very large numbers of extremely poor people.
Our reforms turned the CDC from a one-product business—a fund of funds—into a multi-product one. I am not a golfer, but if I may use a golfing analogy, the CDC was traversing the golf course of international development with only one golf club, that of investing in other people’s funds. We have now equipped it with a full variety of golf clubs, including equity and debt, direct investments, trade finance and infrastructure lending. We have also regained control of the golf swing rather than delegating it to others—I have probably pushed the metaphor as far as I should.
Inevitably, operating in markets such as Afghanistan, Pakistan, Sierra Leone, the Democratic Republic of the Congo and Ethiopia is accompanied by considerable risk. Along with development impact, the CDC considers whether it is truly bringing additional funds that are unavailable elsewhere to each investment. It always seeks to avoid the lurking dangers of corruption that are ever present in development. It is a young business that will not always get it right, but for a young banker starting out in the financial world, as I did in 1979, there are few more exciting places to aspire to work across the financial world than the CDC, whose employees deploy their financial skills in an area where they have the power greatly to elevate the social condition of some of the poorest people in the poorest areas of the world. By the way, salaries have been sharply reduced and are well below what the staff at the CDC would earn in the commercial world.
Mark Field (Cities of London and Westminster) (Con)
I am just being slightly mischievous, but will my right hon. Friend confirm that all those interested in a career in the CDC cannot expect to spend too much time on the golf course, either on a Friday afternoon or on any other day of the week?
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before the right hon. Member for Sutton Coldfield (Mr Mitchell) replies to that intervention, may I just say to him that those of us who do not understand cricket are absolutely delighted to have had a golfing metaphor? It is so much simpler.
Mr Mitchell
I do not play golf, but I assure my right hon. Friend the Member for Cities of London and Westminster (Mark Field) that the staff in the CDC work phenomenally hard, including on Friday afternoons.
There are only a few investors in the world with the skills and risk appetite to undertake such difficult but vital investments, doing the hardest things in the hardest places. In 2014, in response to the Ebola crisis in Sierra Leone, the CDC partnered with Standard Chartered bank to support lending to local businesses and help the country’s economic delivery. In 2013, the CDC made an investment in Feronia, an agricultural production and processing company in the DRC, which is one of the most difficult countries in the world in which to invest. That investment would help people to lift themselves and their families out of poverty and provide much needed support to local agriculture, a sector that the hon. Member for Edmonton quite rightly mentioned. It should never be forgotten that the overwhelming majority of jobs are created by the private sector, not by Government, and having a job—being economically active—is how people all around the world lift themselves out of poverty. Of course, inevitably, not all those investments will succeed.
Since 2011 the CDC has focused its attention intensively on quantifying development impact. For example, this year it invested in a power plant at Virunga park in Matebe that is providing 96 MW of clean energy, creating around 100,000 jobs and boosting economic development. It is the first investment by a DFI in that region of the DRC since the 1980s. In 2015, the CDC invested in the largest independent power producer on the continent, Globeleq Africa, also bringing in Norfund, Norway’s development finance institution. That will add thousands of megawatts of electricity generating capacity over the next 10 years, addressing a massive gap. In my view, the CDC is the only DFI with the vision or appetite to undertake that type of work, including changing the whole strategic direction of the company and replacing the senior team and board.
The Bill ensures that the CDC can receive from the taxpayer the capital injection it will require to carry out the development work with which it is tasked. Many Governments are channelling development funding through DFIs such as the CDC because they use capital injection to address market failure, as the Secretary of State pointed out, and invest funds on a revolving basis in business in developing countries. The extent of the success of the CDC’s development investment means the Bill is required.
In its report published yesterday, the National Audit Office said:
“Through tighter cost control, strengthened corporate governance and closer alignment with the Department’s objectives, CDC now has an efficient and economic operating model”
with “thorough” governance arrangements. It also said that the CDC’s
“current portfolio of investments reflects the strategy it agreed with the Department in 2012…CDC has met the target for financial performance it agreed with the Department.”
Finally, the report made it clear that the CDC measures its effectiveness through financial return and development impact targets—targets that it has met. Measuring development impact is extremely difficult, partly because it is so long term. But above all it is about job creation. It is likely that the CDC is currently involved in investments that will create more than 1 million jobs. In any event, it is to be congratulated for the steps it has taken to quantify development impact and to be encouraged to go further.
For now, my advice to my successors in the Government is to leave the CDC to grow and deliver on the objectives we have set it and to hold it to account for what it does. However, probably the most anxiety-inducing statement the CDC team ever has to face is, “Government officials are coming round to interfere today in what you are doing.” When we hired the current CEO, Diana Noble, who has done such a brilliant job, I remember promising her that Ministers and officials would set the course for the CDC—as the shareholder properly should—but would then leave her to get on with the job and to deliver. I trust my promise is being honoured.
Patrick Grady (Glasgow North) (SNP)
I hope, Madam Deputy Speaker, that before I begin my remarks on the Bill, you and the House will allow me to note that today marks the third anniversary of the Clutha tragedy, when a police helicopter crashed into the Clutha bar in Glasgow, killing 10 people. We remember them and pay tribute to them and to the first responders on the scene that night. We hope that, in due time, families and friends will get the closure they require and the answers they seek through a fatal accident inquiry process.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I am sure that the whole House joins the hon. Gentleman in remembering those who lost their lives that day, and their families and friends.
Patrick Grady
Thank you very much, Madam Deputy Speaker.
The Bill is a rare piece of DFID-led legislation—the first in this Parliament, I believe—so I take this opportunity to welcome the new Ministers to the Government Front Bench and the shadow Ministers on the Opposition Front Bench. Lots of Scottish National party spokespeople seem to have been doing that in recent weeks and months, so at least there is consistency from our Benches.
Today’s debate gives us the opportunity to look in detail at the Government’s specific proposals on increasing the funding they can provide to what was the Commonwealth Development Corporation, now more regularly known as CDC Group or the CDC. In doing so, it is worth exploring how the Bill fits into the broader context of the UK’s aid spending and the direction the Secretary of State is setting, and how those fit with the global framework and consensus on poverty reduction.
Aid works. It has saved and transformed countless lives around the world. I have had the privilege of witnessing that with my own eyes in places such as Malawi and Zambia, and of meeting people from all over the world whose lives have been transformed by aid, when they have travelled to Scotland and the rest of the UK to share their testimony.
SNP Members happily give credit to the UK Government for meeting, in recent years and after 40 years of delay, the 0.7% of gross national income target for overseas development assistance spending. Despite the progress made in recent years, the need for aid spending has not gone away. As many analysts and institutions have said, including the International Development Committee, aid flows will need to continue to grow from the billions to the trillions if we are to meet the sustainable development goals—they are also known as the global goals—that have been agreed at the United Nations and if we are to tackle the challenge of climate change. The Secretary of State spoke about market failure. Lord Stern once upon a time described climate change as the biggest market failure of all, and that must be at the forefront of our minds.
I give credit to the Government for their leadership in negotiating and building consensus on the sustainable development goals, but the task is to continue to show leadership as the world works towards meeting them to end poverty and hunger, achieve universal education and gender equality, eliminate preventable disease and empower communities around the world. The first and most important question we must ask of the Bill is how it will help to meet those goals. What assurances can the Government give us that, in their agreements with the CDC and in setting policy direction, the investments that the CDC makes will be geared to the achievement of the global goals?
As a number of hon. Members have said, the Bill is tightly focused, which is perhaps a missed opportunity, because there is a chance to make more explicit in the Bill or the Commonwealth Corporation Act 1999 that poverty reduction is as much a duty of the CDC as it is of the Department for International Development. It is not clear in the Bill how much scope there is for amendments, but who knows how creative hon. Members will be in Committee?
Such a reassurance from the Government would help to make a stronger and clearer case for the role of development finance and for that specific development finance institution. The CDC is rightly proud of being the oldest such institution in the world. As a pioneer, it has had numerous successes, as we have heard, but it has also learned a number hard lessons over the years. To maintain support in the House, it will need to continue to do so. Stories of lavish expenses and inflated salaries, of channelling funds through tax havens, and of investing in luxury hotels and shopping malls, will not inspire confidence among the aid community or the public at large. As we have heard, the National Audit Office yesterday raised a number of concerns about transparency and impact measurement. Despite the progress and reforms of recent years, in 2013 still only 12% of new investments were made in the least developed countries of the world.
Since the Secretary of State’s appointment, she has made great play of seeking value for money for the taxpayer and increasing aid spending transparency. Will she commit to holding the CDC to the same standards as other stakeholders and recipients of DFID funding? She said in her speech that transparency would happen as part of the Bill, but I do not see it in the Bill, so how can we have those transparency guarantees? The right hon. Member for Sutton Coldfield (Mr Mitchell) asked who else could scrutinise the work of the CDC. The hon. Member for Edmonton (Kate Osamor) rightly suggested that the Independent Commission for Aid Impact could continue to have a role. Perhaps that provision should be in the Bill.
Mr Mitchell
The hon. Gentleman is right that ICAI should have a role, which it has because it can follow all official development assistance expenditure. He can rest assured that I should have added ICAI to my list.
Patrick Grady
I am happy to take that reassurance from the former Secretary of State, but I hope to hear it from current Ministers.
Fiona Bruce
As chair of the sub-committee of the International Development Committee that scrutinises the work of ICAI, perhaps our sub-committee could be added to that list.
Patrick Grady
DFID and the other bodies rightly face considerable scrutiny, which is as it should be, but we must ensure that it is extended and applied equally to all DFID stakeholders and all the resource that is spent. Perhaps there was an opportunity for the Bill to go further and to place statutory duties on the CDC to report on all its spending to the standards set by the international aid transparency initiative. I wonder what creative amendments might appear in that respect.
Let me be clear that I am not objecting in principle to the concept of development finance. There is a role for the private sector to play in stimulating the economies of developing countries and helping people into work—if carefully managed, it can support innovation and diversification. The Secretary of State’s letter to Members in advance of the Bill gave the example of the CDC’s early investment in the African mobile phone operator that eventually became Celtel. The investment was made when the technology was unproven and the market barely existed. I have seen first hand the impact that mobile phone technology makes in improving people’s lives across sub-Saharan Africa. Indeed, I have been a customer and user of Celtel services on many occasions.
The Scottish Government recently launched their own development finance initiative as part of their international development strategy. The Minister for International Development and Europe, Dr Alasdair Allan, announced in October £1 million of Scottish Government funding to help Malawian businesses over a three year period, which will be match-funded by private investors, providing £2 million in total to invest in Malawi. Those investments will be managed by a new Scottish company, the African Lakes Company Ltd, which has been registered as a limited company for that purpose. The African Lakes Corporation was originally established in Glasgow in 1878 to develop trade as an effective way of displacing slavery in Malawi. More than a century on, that mission has been revived with a contemporary view to investing in Malawi’s future. Through their support for that venture, the Scottish Government aim to show that responsible investment can help Malawi and similar countries to reduce dependence on aid, support the growth of existing businesses and create sustainable livelihoods.
The question is therefore less about the principle of development finance and more about how it is managed and how it fits within the overall picture of aid spending. The Scottish Government commitment of £l million over three years represents just under 4% of their annual development fund budget. The figures proposed in the Bill are of a far greater order—the Bill proposes the quadrupling of the funding cap from £1.5 billion to £6 billion, which would take the total amount that DFID can invest to the equivalent of around half the annual aid budget. I take the Secretary of State’s point that that will not necessarily be invested in one go, but if my understanding of the Bill is correct, it could be invested in one go in principle, which is a concern to some of us. The new maximum, which will be decided by statutory instrument, could be £12 billion, which is approximately the total annual aid budget. It is therefore worth asking, as the hon. Member for Edmonton did, where those figures came from and how they were arrived at. Why £6 billion and not £5 billion or £7 billion? Where is the needs analysis behind that figure?
As we heard in Treasury questions today, total aid spending is very likely to fall as a result of a slowing economy. The 0.7% target is by definition a proportion of total GNI. With further economic uncertainty on the horizon, there is no guarantee that the current figures will remain stable, let alone increase. Would it have been more sensible for Ministers to express the funding limits in the Bill as a percentage, or through some kind of formula that relates to the total amount of aid funding, to make investment in the CDC relate more clearly to the total aid budget at any one time? Although making the cap a proportion recognises the importance of development finance, it also recognises that it is only one small tool in a box, as the Secretary of State said.
We have been presented with the Bill, which incidentally was not mentioned in the Queen’s Speech, without seeing the long-promised policy statements in the shape of the bilateral and multilateral aid reviews. We therefore have no real idea exactly how the increase in the investment cap fits with DFID’s broader policy direction and goals. The Secretary of State has said that no disbursements will be made to the CDC without a robust business case. Will she assure us today that such business cases will have poverty reduction and the sustainable development goals, and people rather than profit, at their heart? As I asked earlier, has she given any consideration to the opportunity for building that into the Bill as a statutory duty on the CDC? [Interruption.] If the Secretary of State is not here, I hope that at least one DFID Minister can answer those questions at the end of the debate.
I and many other Members are keen to explore in Committee and other stages the question of how that significant scaling-up of DFID finance to the CDC fits into its broader policy goals and the wider global aid agenda. If satisfactory answers are not forthcoming, and if the Government are not willing to offer the reassurances and amendments we suggest, we reserve the right to oppose the Bill in its entirety on Third Reading.
Greater clarity is urgently needed from DFID and the Government as a whole on the purpose of their aid budget and how they will achieve that purpose. A global consensus framework exists, which this Government, or at least the Government elected in May 2015, helped to negotiate and write in the shape of the sustainable development goals. I said last week in Westminster Hall that, despite what may be read in some of the gutter and right-wing press, there is still public and political consensus in the UK on the importance of aid and the need to tackle global poverty.
The Secretary of State talks increasingly about making aid work in the national interest, but that raises the question: what is the national interest and how is it different from the goal of poverty eradication? Surely meeting the global goals in and of themselves is in the national interest, otherwise there is the implication that previously aid did not work in the national interest or that we have a deeper interest in its effectiveness beyond what the SDGs aim to achieve. If that is the case, what is that interest? What better or more noble purpose is there than the eradication of poverty and disease and the building of peace and equality for all? Surely a global community where everyone’s basic needs are met, where education allows people to thrive and where health and wellbeing contribute to more peaceful societies is by definition in our own interests, as well as the interests of those we are seeking to help.
That is why the goals must be at the heart of the work of the CDC. Ending poverty should not be a happy or convenient by-product of profitable investments; it should be the other way around. If investments that create jobs and provide services that lift people out of poverty go on to make surpluses that can be reinvested in more of the same, all to the good, but it should not be assumed, especially in the context of fragile and developing countries and economies, that generating a return on investment will of itself provide a rising tide that floats all boats. Old-style aid-for-trade and trickle-down investment have left us with a world where we still need a 15-year timetable to meet the global goals, after 15 years working towards their predecessors, the millennium development goals; yet we live in a world of plenty with the knowledge, resources and capacity to meet and exceed all the targets in the goals. What is lacking is the political will. The Government must show they understand that and that their support for the CDC is but one small and proportionate intervention in the struggle for a fairer, more just and more peaceful world.
Every penny that the Government invest in the CDC is a penny not invested in traditional, proven methods of aid delivery, so they have to show why each of those pennies is not better spent on gender empowerment, nutrition, farming, education or any of the other programmes working in partnership, on a non-profit basis, with specialist and grassroots organisations on the ground in developing countries. If they want to maintain the consensus in the House on the use and purpose of aid, the Government must show willingness in the coming stages of the Bill to engage on the points that I and others have raised. I look forward to continuing that debate in the coming days.
Marcus Fysh (Yeovil) (Con)
I draw the House’s attention to my outside interests, among which are some financial interests in developing nations.
The scale of the development problem facing us is largely to do with the projected world population growth over the coming years, so it is right that the CDC focus on Africa and south Asia, as they are key areas of population growth. Twenty African nations are posting fertility rates in excess of five children per woman, and in some that figure is over seven. Africa is predicted to account for 80% of world population growth, quintupling its 1.2 billion population to add around 5 billion to the global population this century, while the number of Africans aged 15 to 24 is expected to nearly double by 2050 to 452 million.
These facts present some of the most outstanding challenges of our time: the impact on global warming, which we heard about earlier; environmental degradation; the impact on biodiversity and access to resources; and the potential consequences of war and migration, all of which can also have a big impact here at home. The only way to meet these immense challenges is to give people opportunities close to where they live, and that is what the CDC is helping to deliver: more job opportunities; better education so that people can take advantage of those opportunities; better health and reproductive care; and the involvement of women in the workforce. We should be helping other people to invest in these sorts of things.
The difference between the CDC and other kinds of aid is that these funds can be used to create businesses that can go on and have their own life and be recycled. Yes, some of the capital can come back to us, for us to reinvest, but, more importantly, these businesses can have a life of their own. If they are doing something well, they will be asked to do it again and again with their own capital, personnel and creativity. If we are to tackle these almost insurmountable challenges, they have to have their own life. The CDC can deliver that potential for scalability into the future and help us to cope with those challenges.
The CDC is also great because it presents an example of good governance and an opportunity for us to lead by example—to inspire entrepreneurs, to build capital and expertise in local markets, and to develop companies and structures capable of stewarding their own capital into the future. This is about building trust in the future in nations where often a pound tomorrow is worth a lot more than a pound in just a few years, because they do not have the necessary confidence in local structures, in the enforceability of contracts or in their politics. If we can build that trust into the future through these methods, we can help to create a virtuous circle that has a great impact.
This investment can also bring us opportunities in terms of commercial information and so on. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) made some great points about the way the CDC works and about some of the great people involved with it. This is about creating human connections and using this country’s abilities to help nations develop in a positive way, to break down the barriers to development, to tackle crony capitalism, to reduce regulation, taxes and subsidies and licences, which often favour particular operators, and to enable more rapid growth and greater flexibility in those economies. That will also give stable politics a better chance in these places. I will happily support the Bill, and I commend it to the House.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I have clearly touched a nerve with some of my comments about the Bill, which I am afraid I will not be giving the wholehearted support that some in the House have given it today.
The Government have attempted to portray the Bill as a minor technical matter, which should go through on the nod with minimal scrutiny and to which we should all give a big hurrah. What appears to be a minor technical two-clause Bill, however, is in fact far more significant and controversial. As we have heard, it proposes an immediate quadrupling of the limits on taxpayer funding of the CDC and then suggests a further doubling at the whim of the Secretary of State and without further primary legislation.
Now the CDC expansion, which has been significant from 1999 to the present day, has required only £1.5 billion of taxpayers’ money, a large amount of it in the recapitalisation that took place last year. By stark contrast, the Bill will permit an increase of up to £12 billion over an as yet undefined period, although the explanatory notes make it clear that the Secretary of State intends to
“accelerate CDC’s growth over the current Spending Round”.
That could imply giving three times extra to the CDC— £4.5 billion—in three to four years’ time than it has needed in the last 17 years. According to the explanatory notes, this is justified as a response to an as yet undefined or evidenced
“forecast market demand over CDC’s next strategy cycle and in order for the CDC to play a fuller role in the delivery of the UK’s international development objectives.”
Ministers rarely take powers without the intent to use them fully, and the transfer of powers to use secondary legislation should always be subject to robust scrutiny. I will explore in due course whether I believe this Bill, and the proposed increase for the CDC, meets three key tests. It is not whether it has met its plans as defined in 2012, but whether, first, it has demonstrated enough effectiveness to justify such a huge increase; secondly, whether it ensures an adequate focus on tackling poverty in the poorest countries; and thirdly, whether it acts in a coherent way with respect to the rest of DFID and indeed wider HMG policy.
Let me first suggest my own answer as to why such a huge increase has been proposed, and why now. One of the primary reasons may lie in a little noticed change to the reporting of our aid spending—official development assistance or ODA—last year, which saw the CDC’s contribution to meeting the 0.7% aid target dramatically altered. Until 2015, the investment activities of the CDC could either add to or subtract from our total aid spending. Simply put, we used to look at the net benefit of the CDC to developing countries by subtracting money flowing back to the CDC from the new investments it was making. In fact, this resulted in a positive contribution to our aid spending of £228 million in 2010; £91 million in 2011; £103 million in 2012; £100 million in 2013; and £42 million in 2014.
In 2015, however, there was a significant change. Instead of reporting with the same measure, which incidentally would, according to the House of Commons Library, have resulted in a negative contribution to the aid budget of minus £9 million, DFID changed its reporting so that the capital flow from the UK Government to the CDC is scored as ODA by DFID rather than the CDC scoring its own net disbursements as ODA. Instead of a negative impact on aid last year, the UK reported the capital increase reported to the CDC as aid, which was £450 million—a stark difference. We now looking at the total money DFID puts into the CDC counting as aid, regardless of which country or sector it ends up in, let alone whether it resulted in a net flow of resources to the poorest countries.
Why does this matter and how does it relate to the Bill? It matters because it would allow the Secretary of State to classify the entirety of future capital increases to the CDC as ODA or aid, potentially diverting, and effectively privatising, up to £12 billion of our future aid via the CDC, yet continuing to count it towards the 0.7% target. This is particularly important, given the different focuses and priorities of the CDC. I acknowledge that the differences have narrowed in recent years, and I shall come on to praise the work undertaken by the right hon. Member for Sutton Coldfield (Mr Mitchell) in this area. However, the differences between the CDC and DFID’s objectives, and indeed its stated aims, are still significant, not least over whether our aid is focused on the very poorest countries that most need our support or on higher-income countries where we can more easily achieve quicker and bigger returns on investment. I shall return to this point.
Fiona Bruce
The hon. Gentleman suggests that the aims are significantly different, yet 83% of the new CDC investments are in DFID partner countries and 56% of new investments are now in fragile and conflict-affected countries. Is that not in line with DFID’s objectives?
Stephen Doughty
As I shall come on to explain more fully, there has been a significant change and there has been a narrowing, but there is still a significant difference. If we look at the bulk of the spending still being in India, we see a significant divergence from DFID’s priorities, as I shall come on to show. We were told that aid to India had ended, but apparently it has not.
This is also significant when coupled with an answer I received to a parliamentary question. I discovered that the amount of aid—ODA—to be spent by Departments other than DFID is set to increase from 18% this year to 26% in 2019. That is over a quarter of our aid spending going through Departments other than DFID. Even if we focus on the lower end of the implied proposal to spend billions extra via the CDC by the end of the spending review—let alone the £12 billion—we could be looking at anywhere from 35% to 45% of the DFID budget being spent, but not by DFID in the traditional sense. If the Secretary of State used her full power and more quickly than expected, it could be even higher. It is particularly ironic that the Secretary of State who promised us greater effectiveness, transparency and accountability in our aid spending appears to be willing to hand over billions of our aid funding to less transparent and less accountable parts of government.
James Duddridge
The hon. Gentleman seems to be implying that aid spent through other Departments is a bad thing. He is shaking his head, which is good, because far from being a bad thing, I would view it as a good thing. If we are helping education institutions in developing countries, we should use the expertise in our Department for Education. If we are looking at tackling local government, it should not be looked at through the DFID lens, but should involve our expertise. The key thing is having the same standards across those Departments and meeting the high quality that DFID deploys.
Stephen Doughty
I was shaking my head because I agreed with much of what the hon. Gentleman was saying, but my question is about the volume—the amount—and the fact that it is increasing so rapidly. It is well known that many other Departments have looked enviously at DFID’s budget and have attempted to take parts of its cash for many years. My questions are these. Is the aid being spent effectively; is it being used in accordance with the correct principles; and is it coherent across Government policy? As the hon. Gentleman will know, there are some fantastic examples of joint units involving the Foreign Office and DFID, but over a quarter of our aid budget is being spent on a massive increase, and that is a big issue.
Mr Mitchell
Surely the hon. Gentleman can be reassured by the fact that the Government have a double commitment, applying not just to the 0.7% but to the way in which it is spent under strict rules. Of course, any money that is spent by another Department is subject to the full investigation and rigour of the Independent Commission for Aid Impact, which is a very important part of the equation. All ODA expenditure is subject to review and analysis by the development watchdog.
Stephen Doughty
It is indeed. I am a member of the ICAI sub-committee, and I hope that we will look into these matters in due course, as, I understand, will the National Audit Office. That scrutiny is very important.
Mrs Madeleine Moon (Bridgend) (Lab)
I have seen the NAO’s report, and what concerns me is the fact that it states:
“It remains a significant challenge for CDC to demonstrate its ultimate objective of creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places. Given the Department’s plans to invest further in CDC, a clearer picture of actual development impact would help to demonstrate…value for money”.
Is that not the central problem? Does it not lie at the heart of the Bill?
Stephen Doughty
Absolutely. I shall return shortly to what the NAO report actually said, as opposed to the slightly glossed-over version that we heard from the Secretary of State.
Fiona Bruce
The hon. Gentleman is a member of the International Development Committee. He will therefore be aware that the Committee has committed itself to scrutinising ODA whichever Department it is spent through and that the Secretary of State has confirmed that we should have full authority, and her backing, to do so. If he had attended the ICAI sub-committee meeting last week, he would have seen that, for the first time, we had before us a witness from another Department who was scrutinising its spending of ODA.
Stephen Doughty
Indeed. I apologise for not being present at that meeting, but, as you will know, Madam Deputy Speaker, I had other commitments at the time. Obviously, the hon. Lady cannot attend all the meetings of all the groups in the House at any time either; she and I are both busy people. I hope that the Committees will investigate those matters, not least because of the volumes that we are talking about, but also because of the lack of transparency when it comes to documentation and the ability to scrutinise CDC’s spending, not least through its use of tax havens.
These dramatic shifts—under the cover of a “minor technical change” that we should all rush through in the House—must always set the alarm bells ringing for those of us who seek to scrutinise the Government and their decisions. I do not want to spend long on this, but we must feel additional alarm when we look at the agenda of the Secretary of State and consider what she has said about the Department being scrapped and about money being “stolen” and squandered. She does not like some of the headlines that have appeared in the Daily Mail. Obviously, she does not like the headlines that have appeared in newspapers such as the Financial Times. However, we are now seeing wild claims and accusations in the right-wing press which are clearly coming from her Department. Indeed, her special adviser has previously called for the 0.7% target to be abandoned, and in 2013 in The Sun described aid as an
“unaccountable, bureaucratic and wasteful industry”.
Why does all this matter to the Bill? I believe that, faced with the legislative and political constraints of the cross-party support for the 0.7% aid target, the Secretary of State has opted for a stealthier route and has chosen to undermine the Department by diverting and reclassifying aid. I appreciate that others may not share my sense of scepticism, so let me now deal with three practical objections to the Bill. The Secretary of State said that she wanted facts, so let us have some.
I should make it clear at the outset that I am not opposed to the existence of a development finance institution of the CDC’s nature, or to its playing its part in our portfolio of international development efforts. Nor, obviously, do I oppose the funding of private sector projects. The development of a vibrant private sector, key infrastructure and the support of new and emerging businesses in the world’s poorest countries should be a key part of any balanced portfolio of development assistance, alongside investments in basic public services such as health, education, water, and support for agricultural improvement to tackle hunger and nutritional challenges.
The Secretary of State likes to give us the impression that she is the only person ever to have realised the importance of private sector development and trade to tackling poverty and promoting economic development, but the fact is that both have been at the heart of DFID’s work since it came into being, under Governments of all political persuasions. Supporting trade is crucial to international development.
James Duddridge
I totally agree with the hon. Gentleman’s point that economic development has been important to DFID, but does he agree with me that successive Governments have been wholly unresponsive to co-ordinated work on economic development, whether we call it prosperity or trade? Successive Governments have not pulled that together and grabbed the opportunity, which could really help to grow continents such as Africa out of poverty. Much more should be done, and this House should be holding the Government and future Governments to account on this, and ask them to do more, not less, with the private sector.
Stephen Doughty
It is a mixed record. We had a joint DFID-DTI—as I think the Department was called then—Trade Minister, my hon. Friend the Member for Harrow West (Mr Thomas), who did a lot of good work in trying to bring those things together, ensuring investment went to key infrastructure projects, different corridors in Africa and elsewhere, but it is a mixed record and the hon. Gentleman makes an important point.
There are many CDC investments that I and others welcome, which are well run and have delivered poverty-reducing outcomes in the poorest countries. We have heard about some of them today, such as those in Sierra Leone and Uganda. Indeed we were with the National Audit Office earlier today talking about some of the projects it had visited which clearly do justify our investment.
But where is the robust business case for such a large increase of billions of pounds of taxpayer spending? Why has this Bill been published before a CDC investment strategy? In the explanatory notes, the Secretary of State describes forecast market demand as the justification for the Bill. However, she has not explained this at all there; neither has she done so today, and nor did she in answer to a parliamentary question I put to her. I asked her to explain this concept of forecast market demand, but instead of an assessment that might justify this spending of up to £12 billion of taxpayers’ money, I was given some classic development waffle, such as:
“As set out in the UN’s Global Goals, urgent action is needed to mobilise”.
The answer did not go into any level of detail that we would expect on the spending of such a considerable sum of money.
Let me also be clear that, as Members may have gathered earlier, I am also critical of a whole series of actions and policies at the CDC that I am sorry to say occurred under the previous Labour Government; the sell-off of Actis was mentioned, and there was also excessive remuneration, and massive investments made in markets that already attracted foreign investors—which incidentally is still going on. These are just some of the issues that should have inspired tougher intervention. To give credit where it is due, many of the actions that the right hon. Member for Sutton Coldfield (Mr Mitchell) took in agreeing that new strategy took us away from some of the mistakes made in the past, but my question is whether they have gone far enough in justifying such a huge increase in the funding.
We should look at what the NAO said. Yesterday’s report noted:
“Our previous scrutiny of the Department’s oversight of CDC led to important, positive changes.”
It points to improvements in financial performance, organisation and prospective—let us return to that issue in a moment—development impact, as well as the clamping down on executive remuneration. The NAO also agrees that the strategy set by the Department in 2012 has been met.
However, as my hon. Friend the Member for Bridgend (Mrs Moon) pointed out, the question for the House today is not merely whether the CDC has made improvements on a previous record deeply mired in controversy, or whether it is now adhering to the strategy set for it—which we can argue was right or wrong—in 2012; the question before us is whether a good enough case has been made that the CDC is performing so well and so effectively that it should receive that volume of increase in funding versus other potential outlets for that development spending.
It is common sense that asking any institution, let alone one with a history of recent problems, to take on a significant increase in its funding over a short space of time may lead to less optimal outcomes and, at worst, failure. Were we proposing an additional £12 billion for those dangerous campaigning NGOs or the dastardly World Bank, or worse still the EU development funds, I have no doubt that the Government Benches would be crewed by the anti-aid brigade warning of the risk of our aid being “stolen” or squandered. But because it is for a more obscure part of our development finance architecture and has the words “private equity” and “private sector” associated with it, we seem to be willing to accept a lower level of assuredness.
Mrs Flick Drummond (Portsmouth South) (Con)
Did the hon. Gentleman also read the bit of the report that says:
“Through tighter cost control, strengthened corporate governance and closer alignment with the Department’s objectives, CDC now has an efficient and economic operating model”,
and DFID’s
“governance arrangements of CDC are thorough”?
Stephen Doughty
I did; I have read the whole report. It also states:
“It remains a significant challenge for CDC to demonstrate its ultimate objective of creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places.”
It goes on to make other serious criticisms. On reporting impact, the NAO says:
“Changes in reporting development impact over the last four years have made it difficult for CDC and the Department to set out a consistent picture of what has been achieved.”
It criticises the CDC’s failure to deliver on the evaluation contract, which was a key part of the business case for the last recapitalisation involving more than £700 million. It criticises the CDC’s claim to have created 1 million jobs, stating that
“in 2015 it reported that more than one million direct and indirect jobs had been created…CDC does not attribute these jobs directly to the investment it makes in the company. Since 2012 it has been considering how to measure job quality but has not yet established an overall methodology to do so…its progress has been slow”.
Worryingly, the NAO warned that
“recruitment and retention challenges remain a significant risk to CDC’s operations.”
That is crucial for an organisation planning a massive financial expansion.
The CDC has indeed clamped down on excessive pay, although the CEO still takes home more than £300,000 a year, which is significantly more than the Prime Minister. However, the NAO also reports that
“the Department and CDC will shortly be negotiating a new remuneration framework”.
Could we expect salaries to go back up? Particularly worrying, one would think, for a Secretary of State who thinks that most of our aid is being “stolen” or squandered is some of the NAO commentary on the CDC’s efforts to tackle fraud and corruption. The NAO tells us that the CDC has
“only recently established systems to consolidate records of all the allegations it receives…This made it harder for it to provide comprehensive reporting to the Department. ”
The NAO report states that DFID’s own internal audit team concluded that the figure of just four allegations of fraud and corruption at the CDC in the entire period from 2009 to 2016 was “surprisingly low”. At the very least, the CDC is worthy of the same level of robust scrutiny and criticism that is levelled at other development funding outlets.
Fiona Bruce
The hon. Gentleman asks where the business case is. Has he seen the letter of 23 November from the Secretary of State? In it, she says:
“No new capital to CDC would be released without a business case subject to full Ministerial scrutiny and approval and the agreement of CDC’s board.”
Stephen Doughty
That might be reassuring to the hon. Lady, but it does not reassure me, not least because the CDC has not even let the evaluation contract that was a key part of the last business case.
Let me turn to the disjoint between DFID’s priority countries and those in which the CDC operates. That disjoint is likely to grow even larger with such a significant uplift in funding. Even with the refocus in 2012, the list of 63 countries in which the CDC is allowed to invest is significantly larger than the approximately 35 countries on which DFID normally focuses its efforts. The list includes many countries to which DFID has ended its bilateral funding. The CDC can invest in India, South Africa—albeit with caveats—the luxury Indian ocean islands of the Seychelles, the Maldives and Mauritius, and many countries across north Africa including Egypt. Despite their problems and challenges, those countries would not normally be regarded as among the poorest in the world.
According to the House of Commons Library, the CDC spends more in gross aid and official development assistance than DFID does in certain—often middle income—countries and regions, including some rather odd examples such as Algeria, Costa Rica, Mauritius, Morocco, South Africa and Thailand, as well as the more expected locations such as Cameroon, Niger and Côte d’Ivoire. Even if we discount the pre-2012 legacy investments in Latin America, the CDC is still investing the largest amounts in higher-income countries, according to data released to me in another parliamentary question.
At the top of the CDC investment list are India, which has received £760.5 million since 2009, South Africa with £194 million and, oddly, Egypt with £53.6 million. If we include the pre-2012 legacy investments, we find even more odd examples. India, South Africa—with caveats, as I said—and Egypt remain on the list of eligible countries for CDC investments, which is rather remarkable, given the fact that the last three Conservative Secretaries of State have made a huge meal of the fact that aid to India was ending. I find this strange. I took a long time to be convinced of the need to end our aid programme in India. There is clearly severe poverty in a whole series of Indian states. It is odd that a lion’s share of the CDC’s investments continue to go into a country that is not exactly the kind of frontier place for investment that the Secretary of State was talking about earlier. Is she really saying that India struggles to attract private investment capital and that we should be there at the forefront of those giving aid? I would find that hard to believe.
The House of Commons Library has found that the share of new investments in the poorest least-developed countries increased, but from just 4% to 12%, and the increase was from less than 1% to just 4% in the lower-income countries. The lion’s share of the CDC’s investments remained in the lower middle-income countries. The CDC’s own annual report for 2015 admits that its top four highest country exposures are India with 23%; China with 14%; Nigeria with 7%; and South Africa with 6%. It also tells us that just 6% of its investment goes into agriculture and just 6% into education. Bizarrely, those are not far ahead of real estate and mineral extraction. Focus has clearly improved, but the easiest and quickest returns for the CDC remain in certain sectors that are far removed from traditional, vital development impacts and in huge markets such as India and South Africa, not the world’s poorest countries. If the Secretary of State’s agenda is all about building a bilateral trading relationship with India in the post-Brexit environment and if we need to push our aid that way to sweeten deals, we should come clean about that. Many people feel that things are headed that way. Funds are not going towards the Department’s original development objectives.
Why does the CDC require such a potentially massive capital injection of taxpayers’ money when it managed perfectly well without one until last year? It recycles 100% of its profits and has total net assets of £4 billion, which rose by 16% in the last year, and an investment portfolio of £3 billion. Why does it need additional money in such large volumes?
Turning to tax havens and coherence, the Chancellor told us in last week’s autumn statement that the Government are committed to tackling tax evasion, avoidance and aggressive tax planning, and today the Business Secretary told us all about Government plans to crack down on corporate governance. The Government have repeatedly claimed that they have attempted to crack down on tax havens—not least in the aftermath of the Panama papers. Yet we find the CDC’s investment vehicles in those very papers. No less than 11 CDC subsidiaries are located in the Cayman Islands, 40 in Mauritius, and five in the Channel Islands. Oxfam points that three quarters of CDC investments in 2013 were routed through jurisdictions that feature in the top 20 of the Tax Justice Network’s financial secrecy index. Christian Aid has also been critical of the CDC, stating that it
“has been shown to be a heavy user of secretive tax havens, which serve both to obscure what is really going on with its investments and can also reduce the amount of tax its investee companies pay in poor countries”.
Even if Ministers, the International Development Committee or others wanted to scrutinise properly what is going on, the lack of transparency and detail provided by the CDC and the fancy shell companies make it incredibly difficult.
Our wider development and sustainability policies might also be incoherent. Many CDC projects are clearly coherent with DFID objectives and the sustainable development goals. We heard about electricity in Uganda and other excellent examples of investment in micro-finance, so there are clearly many high-quality projects, but there are some odd inconsistencies. The CDC apparently invests £29.2 million in GEMS Education Africa, the website of which describes a network of private fee-paying schools and education providers in “leafy, residential” locations that charge anything from around 582,000 to 1,287,000 Kenyan shillings a year—up to £10,000. The CDC also holds a 22.8% share in Rainbow Children’s Medicare Private Ltd, a fee-paying private hospital group in India that the NAO visited as part of its inquiry, saying that the investment was apparently in the whole company and not even focused on improving access for the poorest, for example. The former Secretary of State, the right hon. Member for Sutton Coldfield (Mr Mitchell), mentioned Feronia Inc. in which the CDC has invested £15.1 million. The main boast on its website is of replanting 13,000 hectares of palm oil, a commodity which is linked to deforestation, habitat degradation and climate change.
Without being able to get more detail from the CDC’s documents, it is difficult to know where the money is going and what it is being used for, but those are odd examples of spending going towards wonderful development objectives. The CDC continues to operate free from day-to-day policy guidance and intervention from Ministers. Oxfam points out that the CDC was assessed as poor in the aid transparency index in 2012, but there have been few improvements since then. All who support the cause of international development and poverty eradication face a tough task in justifying that spending to the public—however small a proportion of overall Government spending it remains. I am sorry to say that the task is not helped in any way by the misleading spin put out weekly in tabloid newspapers by the current Secretary of State, which was not a hallmark of her Conservative or Labour predecessors.
I am normally able to make a case for our development spending by appealing to moral duty and our national interest, not least when it comes to dealing with countries of conflict or instability, or with the huge migration flows we see. I am heartened by those among the younger generations who care about the prospects of our fellow humans around the world. I recently visited Moorland Primary School, in one of the more deprived areas of my constituency, where children told me that they wanted me to speak to Ministers to get more money provided for education in the poorest countries and to ensure that children are able to go to school and that they have healthcare and clean water. I will struggle to explain to those children why the Secretary of State wants to spend billions of our taxes handing money to what is, in effect, a privatised firm that does not need this amount of money; that gives large portions of it to countries that do not need it; that pays its chief executive officer more than £300,000 a year; and that invests through tax havens. It has some laudable aims, but it is not proving its effectiveness.
In conclusion, the Bill massively increases that funding to CDC and it fails three crucial tests. The first of those is the effectiveness test; the NAO assessment simply does not provide the evidence needed to back up such a huge increase in funding—has CDC even requested it? Secondly, it fails the poverty-focus test, as CDC remains massively focused on higher-income countries and high-return sectors, rather than on those that we should be pushing our efforts into. Thirdly, it fails the coherence test, given the continued use of tax havens and projects that simply do not sit comfortably with our wider development objectives. In its current form, this is a bad Bill. That does not mean that I do not support the continuation of the CDC and that I do not recognise that much of its work is good, but this level of increase is a stealthy way of diverting money away from our work in DFID, alongside the diversion to other Departments. We ought to scrutinise the Bill very carefully in Committee.
James Duddridge (Rochford and Southend East) (Con)
I suspect I am going to have the privilege of serving on the Committee with the hon. Member for Cardiff South and Penarth (Stephen Doughty). I will not go into this at the same length as he did, but he should beware: we are both supporters of DFID and of the 0.7% budget, but our enemies out there will use his comments and his narrative to criticise the fundamentals we believe in. I do not want to stand in the way of proper scrutiny, but hon. Members on both sides of the House should be very careful about the tone of the language we use, because we do now have consensus going forward.
I draw attention to my entry in the Register of Members’ Financial Interests and say from the outset that I am incredibly proud of our 0.7% commitment and of the work that the CDC does. I would find it strange to find any Conservative MP standing to support the work of Clement Attlee and Clare Short in one sentence, let alone one debate, but we do stand united in this work, despite the blips over the years, many of which my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) has resolved or has at least been able to point in the right direction.
My experience of the CDC has been substantive over time. I was a young banker in a small place called Nhlangano, one of the poorest places in Swaziland. It was CDC investment in the Shiselweni Forestry Company, my main client, that really generated wealth for that area. It put food on the table for the thousands of citizens and the hundreds of other clients that I had as a banker in that country. Over the years, Swaziland has been helped by 16 different CDC projects. The one for which I was the banker has now moved on—it is profitable and continuing, but not under a CDC auspice—but the CDC is still in the forestry sector in Pigg’s Peak, Swaziland.
In the Ivory Coast, I was interested in delving into a francophone country, looking beyond the Commonwealth, to see what we were doing in developing middle-income countries that can provide inspiration and trade throughout the geography of west Africa. Although I did not have any clients from the the CDC, I used to work for Banque Atlantique Côte d’Ivoire, now part of the Atlantic Bank Group, in which the CDC has invested. The small bank I was a member of had only about 30 employees. I am not sure exactly what has happened subsequently, but during that investment period that small bank has become much larger, with banks in Benin, Niger, Burkina Faso, Mali, Togo, Senegal and Cameroon. Those countries—a real mix of countries—are hard for British development aid to reach, but are a really good example of where the CDC can assist.
I wish to mention, as other colleagues have, the great work of Diana Noble, who took on the job at a difficult time and who has transformed the organisation and led a very strong team. I wish her well in her future beyond the CDC.
To those who work at the CDC, I say thank you, because in many ways they are between a rock and a hard place. People involved in African private equity feel that those at the CDC are putting development before profit and are not earning lots of money. The non-governmental organisations think that they are putting profit before development. In truth, they are in a sweet spot in the middle, and they do exactly what Clement Attlee wanted: to do good without losing money. In many ways, this is the gift that keeps on giving. Comparison has been made between a pound that goes into traditional aid and a pound that goes into the CDC. The main difference is that the pound that goes into aid is spent immediately, which is very positive, but the pound that goes into the CDC is retained—it is an investment that grows, whether that is by the 7.8% that we have seen over the past five years, or by a slightly more modest investment target of 3%, which focuses more on the development aspect.
As a former banker, I am perhaps the only Member in the House who can get thoroughly excited about compound interest, but, over time, this is a growing pool of money. There are those who will wonder why we are talking about £1.5 billion, when the assets of the CDC are nearly £3.9 billion. That shows the power of investment—of retaining the money. It is the gift that keeps on giving.
I, too, have looked at the investment in palm oil in the Democratic Republic of the Congo, where 9,000 workers are employed. I have dealt with places such as the DRC and Burundi—other colleagues have interacted with them—and they are horrendously difficult places in which to work. They are also politically difficult for the UK Government, but the CDC, through its intermediaries, provides inspiration in those places.
The CDC also actively targets countries that are low on the World Bank’s ease of doing business index, of which I am a great advocate, as a way of proving that business can be conducted more effectively if one can speed up the ease of doing business.
Celtel has been mentioned. Indorama in Nigeria is fantastic. Like Sir Paul Collier, I very much believe that the real benefits and advantages of economic development in Nigeria will come through Port Harcourt and not through the oil industry.
This is, to reiterate a point I made in an intervention, a progressive Bill. I do not share the concerns of the hon. Member for Cardiff South and Penarth that it is a Machiavellian way of diverting money. A business case will come. I do not believe that the Secretary of State will bring forward a business case to spend the full £6 billion over the course of this Parliament. Even if she does, it will still only be 8% of the overall DFID budget for those years. Obviously, the £12 billion of investment is compounded over time. It should not be compared with the slightly larger figure, which is our annual investment in the budget. We need to be careful that our enemies do not take advantage of our criticisms and use the similarity of the figures to make it look like there has been a sea-change on this Bill. If this Bill was about taking money from the poor and making money for the sake of it in India and South Africa, I would not support it.
James Duddridge
I will not take the intervention, because I want to conclude.
I strongly support the CDC. It is the right move and it is a progressive move. I hope that Members from both sides of the House will agree to have a proper debate in Committee and to support the Bill on Third Reading to start to grow Africa in particular but also Asia out of poverty.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to follow the hon. Member for Rochford and Southend East (James Duddridge). The hon. Gentleman was very robust in saying that the CDC is a gift that keeps on giving, as the aid keeps getting recirculated, but I would gently suggest that if it was as simple as that we would not need international aid at all, because we could just have that gift keeping on giving. It is quite clear that we still need international aid and we need to protect international aid budgets.
It is clear that there is consensus across the House that the principle of the CDC is a good one; a not-for-profit private sector company that encourages growth and additional investment in developing countries is very welcome. We have heard that it has stimulated growth and investment with varying degrees of success over a long period of time. We have also heard that it is not infallible; it has had issues and is starting to address them in a welcome way. Yesterday’s National Audit Office report shows that there are still further issues to address, so I agree we need a robust debate in Committee to try to pick up on them.
We have heard about salaries, and excessive salaries have clearly hit the news in the past. Yesterday’s report welcomes progress on reducing average annual salary costs from a high of £154,000 in 2009 to £90,000 in 2015. That is still quite a decent average salary; I think most people could live off that. The report acknowledges that the CDC has expressed concern about staff attrition and difficulties in recruitment as a consequence of lower salaries, but the report also notes that the staff attrition rate has plateaued at about half of its peak in 2012. I also note that salaries have increased again year on year from 2013. That suggests that a balance has been reached between staff attrition and salaries, but we need to watch that salary levels do not keep on increasing year on year. As we have heard elsewhere, £300,000 for a chief executive is a good salary. It is higher than that of the Prime Minister or of the Secretary of State for International Development. That chief executive’s salary has exceeded £300,000 for two years running now.
Mr Mitchell
Although £300,000 is a large salary, will the hon. Gentleman at least accept that in coming to take this job Diana Noble took a massive salary reduction? He should bear that in mind when considering these salaries.
Alan Brown
I note the right hon. Gentleman’s comments and, yes, if she took a massive reduction in salary that is clearly welcome, and the overall salaries have reduced, which sets a marker for the future if Diana Noble chooses to move on. At least there is a lower salary peg, and she has led the way with that. I accept that, but we need to recognise that it is a substantial salary. That cannot be forgotten.
The NAO report also states that there is now a greater focus on investing in poorer countries rather than markets that already attract foreign investors. That is welcome, but according to a Library paper investment in the poorest countries has increased from 4% to only 12%, with 4% of investment in the next income tier countries. Investment in the upper middle income countries exceeds the combined total of 16% in the lower two tiers. More work needs to be done and a measurable target should be put in place to encourage investment in the lowest income countries.
The NAO report also confirms that, as regards its financial performance, the CDC’s annual return on its portfolio ranges from 4% to 18% against a target of 3.5%. Normally, when a target is massively exceeded that suggests that it is too low or, as seems to be the case here, the returns are too high. If the returns are too high, either more money is being returned from the countries that have been invested in than is necessary or not enough marginal projects are being invested in. That needs to be considered. I accept that some of the historical returns are due to legacy projects that were invested in and had much higher returns because of the hedge fund system, so I hope that that will continue to be addressed and that we will see lower returns and the right investment in projects.
Although the NAO report says that there is a robust cost basis and that the CDC is in a good place to go forward, as has been mentioned by some hon. Members, what stands out is the need for better assessment and reporting of outcomes and the planned impact of investment. A more accurate assessment of the jobs created is required, as well as
“a clearer picture of actual development impact”.
That is crucial. To this end, it is clear that the NAO recommendations on performance targets and an evaluation contract must be implemented as soon as possible.
The NAO believes that the absence of a measure of additionality is a flaw, as additionality is a core principle of the investment strategy. That needs to be remedied. The Department should consider making it mandatory for the CDC to report on the four indicators outlined in paragraph 2.23 of the NAO report, which correlate to the CDC business case.
As has been mentioned, several organisations have expressed concern about the CDC’s tax transparency. “Transparency” is a buzzword that has been used by both the Prime Minister and the Secretary of State. If the CDC does not lead by example, it does not encourage other investors to avoid the use of tax havens. Worse still, the use of tax havens reduces the tax take of developing countries, preventing their Governments from generating additional revenue that they could invest in capital schemes, services or revenue support schemes. As long as the CDC has a model whereby it re-invests profit, it cannot adopt the “profit at any cost” ethos of the worst of the private sector. That becomes self-defeating, and smaller returns resulting from paying its full tax dues should not be a matter for debate.
It is clear that the use of tax havens takes away from the sustainability of developing countries. It is some five years on since the International Development Committee advised that transparency is essential for the public to hold the CDC to account. At present, the CDC is still some way off best practice and the transparency that the Government aspire to. The CDC scored “poor” in the 2012 aid transparency index, so for the Government to commit huge amounts of extra funding before improvements are made is not consistent with the Secretary of State’s stated aim of improving transparency across the aid budget. Aid cannot work in the national interest if three quarters of the CDC’s investments are routed through jurisdictions that feature in the top 20 of the Tax Justice Network’s financial secrecy index. That cannot be in the long-term national interest.
Oxfam has highlighted this issue, as well as other concerns about transparency, suitable investment and the use of tax havens. In addition, Christian Aid, which is a member of the ACT Alliance, a global coalition of more than 130 Churches and organisations engaged in humanitarian assistance, has called for an end to the use of tax havens. It is clear that the practice must be ended.
The founding principles of the CDC are good. Some of its working needs to be fine-tuned, and it is important that this happens before any more Government money is funnelled in. It needs to be explained what share of the overall aid budget this increase constitutes and what other types of aid might be reduced to make way for this investment. As others have asked, why have the Government introduced this Bill before publication of the CDC’s investment strategy for 2017-21? I note that the autumn statement last week shows a net decrease in overseas development assistance of some £80 million next year and a further £210 million the following year. It is crucial, therefore, that an arm’s-length company is not funded at the expense of other required aid. As the NAO report states,
“It remains a significant challenge for CDC to demonstrate its ultimate objective of creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places.”
We must not forget that. We need put in place everything that is necessary to allow that to happen.
Mark Field (Cities of London and Westminster) (Con)
Although this is a relatively straightforward Bill, which I had hoped would have the support of all Members of the House, it is worth examining some aspects of the strategic background to our DFID commitments.
I associate myself wholeheartedly with the wise and experienced words of my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and my hon. Friend the Member for Rochford and Southend East (James Duddridge) when they touched on the transformation of the CDC’s work over the past half-decade or so. I must confess that I did not recognise some of the rather more jaundiced views of its work, as set out in the rather long contribution from the hon. Member for Cardiff South and Penarth (Stephen Doughty).
Fiona Bruce
Does my right hon. Friend agree that the selective quoting of the NAO report by the hon. Member for Cardiff South and Penarth, who is no longer in his place, did not do justice to its conclusion that, overall, DFID’s grip on the CDC is strong and that the CDC has made radical improvements since the NAO’s last report in 2008?
Mark Field
I agree with everything my hon. Friend has to say.
I am glad that the Secretary of State is now back in her place, and I wholeheartedly support her somewhat expansive approach, which has been criticised in certain quarters during the debate. She appears determined to ensure that the UK utilises all its assets, including the DFID budget, to secure an optimal deal for the nation, not just as we extricate ourselves from the EU, but in the years to come.
That must mean extending DFID’s reach beyond the traditional aid referred to in the debate to broader development and infrastructure and to things such as security, but also to community sustainability and resilience across the globe. That change is long overdue, and I should like briefly to set out some of the somewhat negative ways in which DFID’s culture has developed since the Department was established in 1997, which I sincerely trust the Bill will help to address.
DFID was originally seen as a key component of an ethical foreign policy, centralising in a single Department overseas aid moneys that were previously in the budgets of the Ministry of Defence and the Foreign Office. The result was that those major Departments of State were left at that time with little or no financial autonomy on key international projects—regrettably, in my view.
Instead, a new culture of programming took hold in DFID, which managed out what was seen as inappropriate spending that could cause presentational problems for the Government of the day. Cautious mandarins became more risk averse, and DFID project money was routinely awarded to known international bodies, such as the World Bank or UNICEF, rather than to smaller, nimbler UK organisations and businesses.
That ensured that the Government would not be seen to be promoting corporate Britain abroad under the cloak of humanitarian assistance, but it also left those recognised brands to deal with any fallout, should questions be raised about the success of particular programmes. Indeed, the very respectability of those organisations tended to mute any testing questioning about the effectiveness and impact of what has become an ever-larger amount of British aid money. That shift, I fear, went hand in hand with the emergence of increasingly professional bidders, who learned to speak the language of DFID programmers to win contracts.
Too often, the result has been ponderous, expensive and wasteful programming, and I know that that culture is very much in the sights of the Secretary of State, who wants to eradicate it. In part, DFID programmers have often been overloaded with cash, which has been increasingly bundled off to the international bodies I mentioned. I am therefore absolutely delighted that the Bill increases the scope for money to be used by domestic bodies that are within the Government’s control and able to enact the Government’s priorities in the new world rapidly unfolding before us.
My right hon. Friend the Member for Sutton Coldfield laid out the way in which the CDC rightly operates. There is rightly oversight from not just the Government but a range of Select Committees, but we ultimately leave the organisation to get on and do the job that it is best able to achieve.
We need, above all, to ensure that DFID is not as process driven as it has perhaps been in the past, which has reduced our agility in this field and risked the benchmark for the success of our development aid being simply the amount spent, rather than the added value delivered, as has been referred to. That does not make our ongoing 0.7% commitment to overseas aid wrong—some of my right hon. and hon. Friends would probably disagree with that—and I am absolutely supportive of it, as is my hon. Friend the Member for Rochford and Southend East. Indeed, the case for extending Britain’s reach in this field grows stronger every day as we are confronted domestically with problems whose roots start many thousands of miles away.
I do, though, question whether, particularly as we leave the EU, large parts of DFID’s budget should not now be made available to the Foreign Office, the Ministry of Defence or the Department for International Trade, all of which should, necessarily and rightly, come under some scrutiny and oversight from DFID, but there should, none the less, be that sense of joined-up co-operation within the Government. That would enable and authorise those on the ground, whether in overseas embassies, military bases, or part and parcel of our intelligence services, to spend sensibly, carefully and locally against agreed objectives rather than within the rather ham-fisted DFID programming process.
Sir Hugo Swire (East Devon) (Con)
I am listening very carefully to my right hon. Friend and agree with everything he has said so far. Does he agree that there are still some savings to be made by bringing all those agents and representatives of Her Majesty’s Government abroad under one umbrella? Too often we see competing officials from the different Departments who, to save money, should all come under the umbrella of, probably, the Foreign and Commonwealth Office.
Mark Field
You can take the boy out of the Foreign Office but obviously, when it comes down to it, you can’t take the Foreign Office out of the boy. I suspect that this will be a live debate going forward. I know that my right hon. Friend feels very strongly about such matters.
Mr Mitchell
My right hon. Friend is quite right to slap down the former Foreign Office Minister, my right hon. Friend the Member for East Devon (Sir Hugo Swire), on his implied suggestion that we should go back rather than forwards and put DFID under the Foreign Office: that is basically what he was saying. We have long ago said that that is the wrong way to proceed. Let me point out that there are already pooled funds of the type that he describes. In my day at DFID—I have every reason to believe that this continues—whenever there was eligible funding under the ODA rules that the Ministry of Defence or the Foreign Office wanted to spend, they would always have access to those funds. The huge amount of DFID money that goes through the Foreign Office now bears testament to that.
Mark Field
I would like to think that I am much too diplomatic to slap anyone down, although he knows where we are all coming from.
Sir Hugo Swire
Just to clarify this, I am not sure that my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) was correct in saying what I was proposing. I was certainly not suggesting that the Department should come back within the Foreign Office. I was merely saying that I saw huge synergies to be achieved overseas where we have representatives from many Departments, including the Ministry of Defence, DFID and the former Department of Energy and Climate Change and that we should look towards making greater savings so that we can spend the money where it is needed.
Mark Field
I am sure that my right hon. Friend the Member for Sutton Coldfield was not wilfully misleading anyone on these matters. I am going to be slapped down myself by the Whips if I am not careful, because I need to make a little progress.
I hope that in further empowering the CDC, which, as has been pointed out, is 100% owned by Her Majesty’s Government, we are now making way for a more cross-departmental approach, with the DIT and indeed the FCO able to access CDC funds for projects within the key Commonwealth states, particularly in Africa and South Asia.
In this very dangerous and uncertain world, the importance of integrating our foreign aid with military, diplomatic and trade commitments cannot be overstated. To prevent crime, to curb new waves of immigration and to stop the spread of disease, our efforts can be made more effective by concentrating on the source of an issue. Hunger relief and health programmes may of course be laudable in their own right, but British people want urgently to understand how DFID money benefits them personally, and so there will no doubt be widespread support for more money being channelled through bodies such as the CDC rather than—dare I say it?—virtually unaccountable international organisations that have previously received millions of pounds in UK aid. We should also, as a matter of course, communicate how strengthening our ties with developing countries will be of huge benefit in terms of our trade, energy and security interests in this post-Brexit era. By moving away from a situation where too much of DFID’s budget and powers has been placed in the hands of international non-governmental organisations, I firmly believe that we will be able better to fulfil many more of our nation’s broader strategic interests.
Tommy Sheppard (Edinburgh East) (SNP)
It is a pleasure to follow the right hon. Member for Cities of London and Westminster (Mark Field). It is quite pleasant to be in the Chamber listening to the debate, because even though we appear to have differences over tactics and policies, there does seem to be some agreement on the overall objectives that we are trying to achieve, and I very much welcome that.
As far as I can recall this is, as my hon. Friend the Member for Glasgow North (Patrick Grady) said, the first opportunity we have had in this Parliament to discuss the wider strategic direction of the Department. I welcome the fact that the Government have achieved the 0.7% target. I commend them for doing so and providing an example to the rest of the world, particularly to our partner nations, to encourage them to do better with their aid budgets. Now that the Secretary of State is back in her place, I congratulate her and welcome her conversion to supporting her Department’s aims, rather than continuing with her previous attitude.
I was first exposed to the idea of international development as a kid at school in the late ’60s and early ’70s, when my mum was an enthusiastic participant in Christian Aid Week. I remember her spending a lot of time trying to raise money for Christian Aid to support projects in southern and eastern Africa. That was a long time ago, when I was very young, but I thought it was remarkable that, despite the fact that many people in my community lived in straitened circumstances, there was a common decency—people understood that there were always others who were worse off and that they had a common humanitarian responsibility to make some effort to assist, no matter how small.
Even in those days, there were critics of aid—of Christian Aid, Oxfam and all the others—who took a less selfless and more parsimonious attitude. Their criticism was twofold. They questioned whether the aid was actually going to the people in the destination countries who needed it most, and there was a continual suggestion that the people working in aid and organising the efforts were lining their own pockets.
Many of our NGOs—Christian Aid, Oxfam and others—have had to work for the last 40 years under the veil of those accusations. They make quite sure that they can counter those accusations and demonstrate that they are directly involved in projects in the countries that need it and that they work with the people in those countries to achieve sustainable development. They have also had to make public details of their organisation and cut their administrative costs to the core, so that they can demonstrate that they are delivering the maximum number of pennies per pound for the purposes for which that money was given.
I commend all those NGOs for doing so, but here is the problem with the CDC that we need to address. This does not apply to the majority of the projects in which the CDC is engaged, and it is not the CDC’s objective, but in quite a few cases, and not just occasional instances, public money—taxpayers’ money—has been used for purposes that people such as my mum would have difficulty comprehending. How can we justify, for example, the use of $3.5 million to support the development of a gated community in El Salvador for the super-rich? How can we justify the development in Nairobi of the Garden City Village and the shopping malls—$24 million, in that instance? How can we justify the development in Mauritius of the ocean village, with apartments costing a minimum of half a million dollars? It is difficult to hold those examples up and say that we are doing the right thing.
We need to make sure that that does not happen again. I have had arguments with people who justify such projects on the basis of the trickle-down theory. They say, “It may be a five-star hotel in an area of desperate deprivation, but look at the jobs that are being created.” Anyone who seriously thinks that an investment of $20 million or $30 million to create 50 low-paid service jobs in a hotel is an efficient use of aid money needs to re-examine their priorities. Let us assume that we do not have to engage with that neo-con argument.
I am not simply talking about things not being achieved; the situation is worse than that. By spending money on such projects and making mistakes with them, we may replicate and ingrain some of the structural problems that prevent us from raising the lot of the mass of the population in the first place. We need to be absolutely clear that such projects should not be some sort of international welfare scheme for capitalism, where we allow people to get super-rich while the poorest stay where they are or, in relative terms, possibly become even worse off.
In that context, I want to mention the whole question of salaries and remuneration within the CDC. This is not to criticise or castigate any individual in any way, but I thought the Secretary of State did well to keep a straight face earlier in the debate when she talked about the chief executive’s salary being reduced to just £300,000 per year. Most people would question whether it is right that someone leading an organisation whose ostensible role is to combat global poverty should get that level of reward in that job. I accept that part of the game is to play the private equity markets and to try to lever in funds, and we need to let people play such games. However, I welcome the education from the right hon. Member for Sutton Coldfield (Mr Mitchell), who described the renationalisation of a part of government that was privatised under the Blair Administration. That was right because, while these people are engaged in private equity schemes and trying to play capitalism at its highest level, they should remain public servants. Their ethos and their remuneration—how they are rewarded—should be as part of the Government operation that is working for such people on behalf of this Parliament. They should not be cut loose and allowed to pretend that they can operate like private bankers. I very much hope that we can have a solid look at the level of remuneration that operates in the CDC.
As my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) has mentioned, yesterday’s National Audit Office report says a number of things. I was struck by the fact that it says—the right hon. Member for Sutton Coldfield remarked that people working in the organisation looked over their shoulder with some apprehension when the Department’s officers came to call—there is a need to clarify that the Department should not be involved in individual project decisions and should distance itself. I agree: you do not own a dog and then bark yourself. If we are to hire people to do the job, particularly where it entails taking risks, we should let them get on and do it. I accept that, but the corollary is that we need to be much more hands-on in determining the strategy within which they operate and about the objectives that they are trying to achieve with their individual decisions. I therefore think it is probably putting the cart before the horse to have a discussion on this Bill before we have seen the CDC’s strategy for 2017 to 2021, which I presume is in preparation somewhere. Will the Minister tell us in his response whether we will be able to look at the strategy when it comes to the House?
The other point I want to make is about transparency. In 2013, three quarters of all the money going through the CDC’s accounts went to fund projects in the top 20 least transparent countries, where we are trying to improve things. Back when we discussed the Panama papers earlier in the year, the then Prime Minister and Government were very explicit about how we would try to clean up this mess and about how Britain would lead a campaign for financial transparency throughout the world. The absence of such transparency of course creates the conditions for illegality and for corruption in many of the target countries that we are trying to get aid to. I presume that that attitude has not changed and that we are still trying to lead a campaign for financial transparency. I therefore think it is very important, through the realm of the CDC, to make sure that when we try to lever in deals in these countries, we do so in a completely transparent way. We could start by making a commitment that the CDC will pay all the taxes due on projects in the countries in which it operates. We should also make sure that we use whatever pressure we can apply through third parties to advance the campaign for transparency.
That is pretty much all I have to say, except that we still live in a world where we have tremendous challenges and problems of extreme poverty, malnutrition, disease and illiteracy. I accept the need to play international capitalism at its own game and to try to lever in funds—to operate in the way that the CDC has been doing—but the end objectives must always be to make that situation better: eradicating poverty, combating illiteracy, eradicating disease. When we come back to look at the strategy document, we must set ourselves the challenge of making sure that everything the CDC does—every project it gets involved in—can, at the end of the day, be justified by attaining those objectives.
Mrs Flick Drummond (Portsmouth South) (Con)
It is a pleasure to speak in support of a Bill that will strengthen one of the world’s oldest and most respected development organisations. The Commonwealth Development Corporation has always enjoyed cross-party support and has been an important part of the transition of Britain from colonial power to leader of international development. The Bill is a sign of the focus this Government have given to the CDC and to our overseas development programmes across the board. We can be proud of our commitment to supporting overseas development in all its forms.
As my hon. Friend the Member for Congleton (Fiona Bruce) said, when this Government took office in 2010 the CDC was a byword for strategic confusion and mismanagement. Everyone from the National Audit Office to Private Eye could find something to object to in either its structure or its activities. Thanks to the work of this Government, initiated by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and followed up by his successors, the CDC and the way DFID manages it have evolved and improved. The CDC has radically transformed its approach over the past five years, following new objectives agreed with the UK Government. It targets investment where it is most needed, has the greatest impact for the poorest and delivers value for money for the UK taxpayer.
Many of the fears about the Bill and criticisms of the CDC that have been aired today belong to a different era. Some of my constituents have raised the issue of the amount of money that we spend on foreign aid. It is important that that money is spent wisely and transparently in helping countries to develop economically. A strong country will provide for its citizens, meaning that there will not be the economic migration that we have seen over the past few years.
By channelling money through the CDC, we can clearly see where it is going and where it is working. Although the National Audit Office report published yesterday identified some further room for improvement, it was very positive about the work done by DFID and the CDC, as the Secretary of State laid out. I am pleased that Members recognise the great improvements made since the 2008 NAO report and the criticisms of the CDC made by Select Committees in the 2005 Parliament.
I will focus on the reality of the CDC, the future of its work and the potential we will create with the passing of the Bill. The long-term aim of overseas development policy is to build economies and societies like our own—educated, free, and politically and economically stable. The philosophy behind the CDC has always been the same: give someone a fish and we feed them today; teach them to fish and they will eat for a lifetime. In particular, investing in women, where much of our aid is targeted, is investment in a generation, as every mother puts money towards educating their children.
The CDC currently invests in more than 1,200 businesses in more than 70 countries. Those investments supported more than 1 million jobs in Africa and Asia in 2015, almost 25,000 of which were created directly last year. As my hon. Friend the Member for Yeovil (Marcus Fysh) said, there is a virtuous circle of investment, job creation, tax revenue generation for the host Government, creation of sustainable businesses and reinvestment by the CDC at the end of the cycle.
The CDC has reached the ceiling of current Government backing—the Government’s investment of £735 million last year took it up to the limit of £1.5 billion. Through the reinvestment of past profit, it has built up a bigger portfolio, standing at just under £4 billion. It is therefore clear that the CDC is able to support development and recycle the returns to support further investment. We should not be reluctant to enable the CDC to do more and unlock potential. The NAO is clear that the CDC now has an efficient and economic operating model that is working and has improved its procedures for recording allegations of fraud and corruption.
With the clear investment strategy agreed under this Government, the aim is to make the great majority of new investment directly into businesses. If we want to achieve the global goals for sustainable development by 2030, we need to mobilise the private sector and work together. That helps the CDC in two ways. It allows it to help target its involvement at areas that genuinely meet the remit of supporting businesses that struggle to attract private sector investment. It also helps it to meet one of the goals set out in yesterday’s NAO report, namely better tracking of the success rate of the CDC’s investments. The CDC now concentrates on the poorest countries in Africa and Asia, where business finds it hard to attract stable and responsible investment from the private sector. It is right that the development finance institutions lead the way in those countries, and we should not be shy about it.
We invest more in aid overall than our European partners and invest less through development finance institutions. The CDC estimates the investment gap of unmet demand for capital investment in Africa to be more than $100 billion. If we want to bring jobs and growth to the poor, we must help them to help themselves. This simple and, I hope uncontroversial Bill does that. It is not an approval or a commitment to give the CDC access to £6 billion immediately, but to give it when there is a strong, robust, accountable and transparent business case that will provide the best value that aid can provide. I hope the House supports the Bill.
Richard Fuller (Bedford) (Con)
Sitting through the debate and listening to so many informed contributions has been informative, even the speech from the hon. Member for Cardiff South and Penarth (Stephen Doughty). Perhaps it was a little overlong in duration and repetitive in argument, but none the less it was a valuable contribution to the overall debate. Many of us welcome his general support for the direction of travel in the Bill and his points about oversight were well made.
Although I fully support the 0.7% commitment to aid, I do not agree with its statutory underpinning, which I believe will lead to unintended consequences. One reason why I welcome the Bill is that it helps in that respect. I fully and wholeheartedly welcome the Secretary of State’s introduction of the Bill for three principal reasons: it is modern; it will prove to be effective; and most importantly, it sets a tone of mutual respect between the United Kingdom and those countries and peoples who are the recipients of our DFID budget. The Bill will do that by harnessing the power of entrepreneurs around the world. It is those people who hold the key to so much in terms of the improvement of lives in less developed countries.
The CDC is an institution in which taxpayers can trust. We have talked about oversight and past concerns—as my hon. Friend the Member for Portsmouth South (Mrs Drummond) said, they are in the past. We should also recognise that the CDC has been around for 60 or 70 years. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) spoke of his experience as Secretary of State, when he saw people’s recognition of the brand’s strength. My hon. Friend the Member for Rochford and Southend East (James Duddridge), who is no longer in his place, spoke of his ministerial experience. Trust in our DFID budget is important. It is not enough for hon. Members to say, “It doesn’t matter. Everything’s fine. We all agree.” Out there in the country, there is tremendous scepticism—it is fuelled not only by the press—about the amount of money, whether it is being spent in the right way, and whether we should continue with the 0.7% commitment. Having institutions that we can trust to spend the money wisely is important. The Bill gives us that and is a big step forward in restoring trust.
The Bill is modern. As I have said, I am not knowledgeable about DFID issues in general, but I was drawn to the 2015 speech by Bono at Georgetown University, when he said:
“Aid is just a stop-gap. Commerce, entrepreneurial capitalism takes more people out of poverty than aid…of course, we know that.”
He was correct. Through the Bill, we must counter some of the pre-scepticism about the role of the private sector in developing countries in achieving some of our development goals. We must put our foot down on the accelerator of supporting the private sector through institutions such as the CDC.
I am tempted to quote Sir Angus Deaton from Bloomberg—he is the Scottish-American economist who won the Nobel prize last year. He said:
“Aid funded projects have understandably done much good…but the negative forces are always present: even in good environments, aid compromises institutions, it contaminates local politics and undermines democracy”.
The greatest bulwark against the corruption of political institutions, and one of the greatest defenders of democracy, is the opportunity for people to have a stake in something. People having a stake in a small business can preserve and protect freedoms, as well as enhance economic wellbeing. Human happiness is not solely a matter of one’s GDP; once one gets above a minimum, other issues start to matter, such as freedom and social environment.
Having that stake is also effective. The CDC and its work as a fund of funds created a distinctive expertise in investing in first-time funds in some of the most challenging investment environments across the world. We should be proud of that track record. I am grateful to my right hon. Friend the Member for Sutton Coldfield for explaining the move to direct investment. I had been sceptical, thinking it was drawing the CDC away from a pivotal part of its success, but I now better appreciate the role of direct investment, thanks to his contribution. The CDC nurtures investment talent. Growing entrepreneurship and private enterprise is not just about entrepreneurs; it is about developing people to spot the talented entrepreneurs from the less talented, and in that the CDC does a tremendous job.
That said, I have some questions and concerns about the Bill. Will the Minister explain how, if we are to give more money to the CDC, the skills within it can be developed and monitored? As many hon. Members have said, the worst thing is to pile money in if the team investing the money does not have the skillset, capacity or capability to invest it. What will we do about the investment focus areas? Contrary to other comments, perhaps, I am keen to see the investment focus move into more modern areas that provide opportunities for companies in developing countries to trade with the UK, as well as provide domestic support. Will the CDC be able to lever investors from other countries into its fund to develop further its capital for international development? Will he comment on the likely value of the CDC in the near term, given the comments by President-elect Trump on international development and the likely impact of the rising dollar on turbulence in local currencies in many developing countries?
Finally, I support the Bill because it will create mutual respect. It is time for us to recognise that development in developing countries is a matter for many UK citizens through the diaspora. There is no imbalance in that relationship: a British Nigerian sees themselves as a British subject and, on an equivalent basis, looks to their heritage in Nigeria. The work of DFID should reflect that equivalence in its treatments. The Bill is perhaps a first step towards promoting mutual respect. Other possible measures are turning back protectionist intellectual property restrictions between developed and developing worlds, using the opportunity of Brexit to lower trade barriers, and creating more and effective ways to harness remittances between ourselves and developing countries.
This is a small but important Bill because it sets the tone in the right direction. It sends a message that this organisation, which had a long history of effectiveness, went through a period of turbulence and is now back on the right course, can have the confidence of the British people as it continues to pursue its development goal for people in the poorest countries of the world.
Fiona Bruce (Congleton) (Con)
On behalf of other members of the Select Committee, I inform the House that many of them are abroad on a visit to the middle east but would have spoken in the debate had they been here. It would be wrong for me to indicate how they would have spoken or whether, like me, they support the Bill, but I will put on the record one or two comments previously made by members of the Committee. As long ago as 2011, my hon. Friend the Member for Stafford (Jeremy Lefroy) said in a debate on the CDC:
“It is extremely important that the Government should continue to support CDC.”—[Official Report, 14 July 2011; Vol. 531, c. 169WH.]
An IDC report on jobs and livelihood in the last Parliament stated:
“We are encouraged that CDC has followed our recommendations and has refocused on job creation.”
A final Select Committee example is a recent report on the sustainable development goals, which stated:
“The Government must ensure that the work it carries out to encourage private sector investment, through CDC…is focused on developing and fragile states”.
It went on to mention
“a positive impact on the achievement of the SDGs”,
which the CDC had the potential to achieve. It was interesting to note that in response the Government stated:
“CDC’s mandate is aligned with achievement of the Goals”.
Before I touch on a few of my prepared remarks, I would like to deal with some of comments made by another member of our Select Committee, the hon. Member for Cardiff South and Penarth (Stephen Doughty). He mentioned his concerns about the effectiveness, the poverty focus and the coherence of the CDC’s work, and I would like to respond to these.
The hon. Gentleman said that there should be more emphasis on health and education. However, the CDC’s development impact is amplified by the billions of pounds in local taxes that are generated by the companies it invests in. These help to support the public services such as health and education in developing countries. Over the past three years alone, these companies have generated over £7 billion-worth of local tax revenue. It is important to remember the impact that these taxes can have on those kinds of essential services.
The hon. Gentleman spoke about coherence, and he and others have mentioned transparency, but DFID works very closely with the CDC to ensure that it is at the forefront of global standards of transparency in development impact. Information about all the CDC’s investments is available on a comprehensive database on its website, with details of the name and location of every investment in the portfolio. I am sure that further information would be made available if members of the Select Committee requested it. If DFID is working, as we know it is, with the CDC on a new results framework, this will result in an even better capture of the broader impact of investments on development—even beyond job creation and tax revenue generated.
Finally, the hon. Gentleman raised his concerns about investment by the CDC in a private, fee-paying hospital in India, stating that this might be at odds with DFID’s general approach towards the expenditure of UK aid. However, I clearly remember the Select Committee visiting a private, fee-paying school in Africa not so long ago, and Committee members agreed that DFID’s support for that school was, in fact, well spent, particularly when there was no other option for children in that area to obtain an education. I believe these issues need to be looked at in context, and I am not so sure that support for this hospital is so out of line with DFID’s general approach.
Stephen Doughty
The hon. Lady raises the issue of private fee-paying education and health. The issue is about where we focus our efforts. Does she not accept that if we continue to support the expansion of private healthcare and education as opposed to supporting public systems that enable free access to healthcare and education, we will effectively supplant countries’ ability to provide national healthcare and education systems that support all their citizens, including the poorest?
Fiona Bruce
As with so many of these cases, it is not an either/or. It is often both when the need is clearly there and the money can be well spent.
I shall move on to my few prepared remarks about the Bill. I absolutely support the Bill and speak in favour of it. It is essential to look at how to support capital investment in countries where there is a paucity of it. A 2014 report from the UN Conference on Trade and Development calculated a £2.5 trillion annual investment gap in key sustainable development sectors, so the CDC has a very important role to play. It is important to remember that the Bill will allow DFID and the British people, as the CDC’s motto states, “to do good without losing money” on an even greater scale than hitherto. I cannot believe that anyone, even aid sceptics, could really object to that.
The NAO report, published yesterday, chronicles the many positive steps that the CDC has taken and the many improvements that it has made. We have heard many references to the report. It says that through
“tighter cost control, strengthened corporate governance and closer alignment with the Department’s objectives, CDC now has an efficient and economic operating model.”
This morning I spoke to NAO officers who had produced the report over eight months and had visited many projects, including some in Africa. They said that DFID now had a really good grip on the CDC’s work, that there were good lines of communication between the CDC and DFID, and that DIFD’s in-country know-how was being utilised, while it was rightly not interfering in day-to-day management. They identified several cases of CDC investments in areas where the private sector would not have initially dared to go, but three years later private sector money had come in. Indeed, in several instances they saw the results of what they described as “catalytic” investments. They said of the 13 or 14 funds they had inspected in Africa that, with one exception, they were “transformational”. I think that we have a really positive report on which to act.
Of course, there are views about previous investments, but I think it encouraging that 98% of investments are now in Africa and south-east Asia and 82% are in one of the seven priority sectors identified in DFID’s key objectives, which were devised in 2012, following the excellent review conducted by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell).
Without further ado, I shall end my speech, although there is much more that I would like to say in praise of the CDC.
Imran Hussain (Bradford East) (Lab)
It is a pleasure to follow so many distinguished speakers in all parts of the House. I thank them all for their contributions.
Let me begin by paying tribute, like many others, to the right hon. Member for Sutton Coldfield (Mr Mitchell), the former Secretary of State for International Development, for the good work that he has done. He gave us an eloquent history lesson, explaining how the CDC began. I accept much of what he said, but I think the whole House is united in accepting that his important reviews of the CDC back in 2011, and the strategies and policies that developed as a result, have left the CDC in a better place than it was in four years ago.
The hon. Member for Glasgow North (Patrick Grady) rightly reinforced the House’s commitment to the 0.7% target. He also made an important point, which has not been made enough today, about the implications for our strategic development goals. He welcomed the National Audit Office report, as do I, but urged caution in respect of its findings on transparency and the impact of monitoring, about which I shall say more later. He rightly pointed out that we are still awaiting the important multilateral and bilateral aid reports. However, the Secretary of State has assured me that they will be published on Thursday, and I am grateful for that speedy response.
I think the whole House agrees that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) is a passionate advocate, and he demonstrated that again today. He made some very important points about the sheer level of funding, another issue about which I shall say more later. He also drew attention to three boxes that needed to be ticked. I agree with him that the case has yet to be made.
The hon. Member for Edinburgh East (Tommy Sheppard), as always, made a passionate speech in his own style. He made an important point about the strategy and policy investment that was not forthcoming, and, like many Members, suggested that we were virtually putting the cart before the horse.
We on this side of the House want to reaffirm our commitment to poverty alleviation, which should be at the centre of DFID’s work. We recognise that the development of businesses around the world has a strong role to play in international development, through building economies by improving infrastructure and helping to put money into people’s pockets at the end of a hard day’s work, which is one of the surest ways of alleviating poverty. We also recognise that it has a strong role to play in the achievement of the eighth sustainable development goal: promoting economic growth, productive employment and decent work. It is therefore right that during the passage of the Bill we scrutinise both the Bill itself and what it will do, or will not do, for developing countries and the ability of the CDC to deliver for them.
Despite the Bill’s small size, it will have huge ramifications for the developing world and the UK’s development agenda. As previously outlined by my hon. Friend the shadow Secretary of State, we have several important points that we would like to see addressed.
The first is the worrying concern about the sheer size of the increase in assistance that DFID will be able to give to the CDC. In 2015, the previous International Development Secretary committed an additional £0.7 billion of funding to the CDC, but the Bill seeks to dwarf that by a large measure, by increasing the assistance to £6 billion. Moreover, the Secretary of State seeks the power to increase the limit to £12 billion through a statutory instrument, creating unease on the Opposition Benches that the Secretary of State will easily be able to extend the limit by £6 billion just through an SI, a move we believe to be wrong in principle.
We acknowledge that the assistance limit may have been reached—a substantial limit that has stood for just as substantial a period of time—but increasing assistance to this level has the potential to result in a considerable movement of ODA spending away from DFID in the traditional sense. That is particularly troubling given that the answer provided to my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) stated that 25% of ODA will be spent outside DFID and that the Secretary of State repeatedly states an intention to move DFID’s focus towards trade over traditional aid and development. If the Government want to move so much of DFID funding through the CDC, we need assurances that it is not a mechanism through which they can effectively privatise development, placing more money in the hands of investment funds whose main focus at the end of the day is not poverty but profit, while at the same time moving it out of the hands of development NGOs.
This takes us on to the next issue that we have raised today: for what purpose does the CDC require further assistance? After all, the current £1.5 billion assistance limit has stood a strong test of time and the CDC’s business model sees it largely self-financing, with healthy profits reinvested in projects. Therefore, if we are to support this Bill throughout its passage, we need to see updated documents provided and published by the CDC—namely, a new strategy for 2017 onwards, alongside a new investment policy for the next five years, both of which must set out what the CDC intends to do with such massive assistance being made available to it. Essentially, we must avoid a situation in which we would be putting the cart before the horse by granting funding assistance before actually seeing what purpose it will be used for.
Another area of concern raised is the scrutiny and oversight of the CDC’s development impact. On this issue, we note the findings of yesterday’s NAO report. The accuracy of the CDC’s self-assessment through its development grid and its declaration of the development impact of its investments cannot be guaranteed, because it assesses their prospective impact rather than the actual impact. Consequently, the CDC might believe that it is having a positive impact, but the actual impact could be very different. If DFID wants to increase its assistance to the CDC, it must carry out full, frequent and regular assessments of the development impact, beyond the CDC’s own measuring criteria.
We on this side of the House have raised concerns over the use of tax havens by the CDC, and our concerns are well founded. In 2013, £180 million of the £375 million given to investment funds by the CDC went to funds domiciled in notorious tax havens such as the Cayman Islands, Guernsey and Jersey. That is almost 50%. This use of tax havens denies tax revenue to developing countries, avoids capital gains tax and deepens existing governance and corruption issues in developing countries. This is happening despite the Prime Minister’s recent announcement of a crackdown on the use of offshore tax havens in the wake of the BHS scandal, and it is exactly the opposite of the kind of work that the CDC has a duty to carry out.
We have outlined our substantial and genuine concerns about the Bill, and we hope that the Government will give us a genuine response to those concerns and to the six questions that the shadow Secretary of State set out earlier. We look forward to hearing their response. We will not oppose the Bill’s Second Reading this afternoon, but if we do not receive adequate assurances or see positive steps being taken by the Government to address our concerns, we reserve the right to withhold our support for the Bill on Third Reading. Facilitating economic growth is of course important in the developing world, but development should always be the focus, and we on this side of the House will work to ensure that it remains so.
The Minister of State, Department for International Development (Rory Stewart)
I want to say a great thank you to all the hon. and right hon. Members who have taken part in the debate. I particularly praise the tone set by the hon. Member for Edinburgh East (Tommy Sheppard) and the way in which he picked up on the good atmosphere in the Chamber. I also pay tribute to the tone set by the shadow Secretary of State, the hon. Member for Edmonton (Kate Osamor) and by the shadow Minister, the hon. Member for Bradford East (Imran Hussain), and to the constructive way in which they have approached this short but quite technical piece of legislation.
Four major types of concern seem to have been raised today, and I will try to deal with them briefly, with the aim of stopping at exactly 5.20 pm. Those questions were as follows. Why are we focusing on private sector-led economic development? How do we balance the private and public inclusion in that development? Why are we using development finance institutions and, in particular, what quantity of money are we putting into them? Why are we specifically putting money into the CDC? That last question relates to concerns that have been expressed about the governance and transparency of the CDC. I shall try to deal with those four types of challenge in turn.
The first is a general concern about the weight that we place on the private sector’s role in economic development in general. That concern was expressed by a number of people today, particularly Members on the Opposition Benches. The shadow Secretary of State used the word “profiteering”, and the hon. Member for Edinburgh East talked about international capitalism. The right hon. Member for Leicester East (Keith Vaz) spoke of distracting our attention away from humanitarian concerns, and the hon. Member for Glasgow North (Patrick Grady) was worried that some of the investments might be made at the cost of other potential investments. The hon. Member for Kilmarnock and Loudoun (Alan Brown) emphasised the fact that aid is needed as well, and the hon. Member for Cardiff South and Penarth (Stephen Doughty) emphasised the importance of health and education.
The way in which to deal with these generic concerns about the role played by the private sector in economic development—and with all the matters in the general portfolio of the Department for International Development —is to state that what we are talking about today is just a part, not the whole, of what DFID does. Economic development is absolutely vital—I will come on to that—but it is currently less than 20% of the Department’s overall portfolio. The shadow Secretary of State quite rightly raised water and sanitation as important elements of our Department’s strategy—they are—but they are not primarily delivered through development finance institutions. The £204 million that we spent in 2015-16 came from other parts of the Department’s budget. As for the humanitarian concerns mentioned by the right hon. Member for Leicester East, the £2 billion that we are spending over this period on Syria alone comes from other parts of the departmental budget.
However, as pointed out by the hon. Member for Yeovil (Marcus Fysh), poverty alleviation cannot happen without economic growth, and that relies on the private sector. It relies on the private sector for jobs, for Government revenues and for the services that the sector provides. It is not a zero-sum game. The hon. Member for Glasgow North issued a challenge when he talked about investments coming at the cost of others, but it is not that kind of zero-sum game. To take a specific example, we were criticised by one Member for some of our investments in electricity, as opposed to other forms of infrastructure, as though that was somehow at the expense of other developmental objectives. However, that electricity not only delivers jobs through the business side, but allows us to deliver our objectives in health and education. We cannot have a decent education service and get children into school if there is no electricity and they have to go 10 miles to pick up firewood. We cannot deliver decent healthcare in Africa unless there is refrigeration for immunisation drugs and unless we have the electric lighting that allows doctors to perform surgery in the clinics.
We are delivering on the STGs, particularly goals 7 and 8 on energy and economic growth. Ellen Johnson Sirleaf, who is both a distinguished international civil servant and a President of an African state, has said that poverty in Africa cannot be eliminated without private sector growth. That also reflects the demands of Africans themselves. I was taken by the statements of my hon. Friend the Member for Bedford (Richard Fuller) about mutual respect. Recent surveys conducted in sub-Saharan Africa show that sub-Saharan Africans identify energy and jobs as two of their top three priorities at a level of 80% or 90%. We should respect their wisdom and desires when we talk about the kind of development investments that we make.
The next question is how to balance the roles of the public and private sectors in delivering development. I do not want to talk about this too much, but it is clear that there are serious constraints on the public sector’s ability to deliver all forms of commercial activity, partly because it often lacks the skills to ensure that those things happen. It lacks the skills to understand the market dynamics, the logistics, the productivity and the efficiency. We have all seen well-intentioned charitable and Government development projects attempt to set up businesses that have not worked. However, as Opposition Members have pointed out, the private sector cannot do it on its own—there are clear market failures. Returning to electricity in Africa as a good example, the private sector has clearly failed. If the private sector had been able to do things on its own, we would not be in a position where only 6 GW of power generating capacity has been built in Africa over the past decade. In China, 8 GW of capacity is built every one to two months.
That brings us to the question why we are putting money into DFIs, which was the particular challenge of the shadow Minister. The shadow Minister and the hon. Members for Glasgow North, for Cardiff South and Penarth and for Edinburgh East focused on the quantity of investment. The response is that I am afraid that some people still confuse stock and flow—in other words, the annual overseas development spend and the creation of a capital fund. The second response is that it is an option, not a commitment. What we are doing is raising the ceiling for what CDC, through rigorous business cases, can request; we are not imposing this on CDC. Over a five-year period, even if the maximum were drawn down, we would be talking about 8% of the total anticipated ODA spend, which is smaller than the amount I calculate the Scottish Government appear to be putting into a similar instrument in proportional terms.
There have been challenges on strategy. The strategy will be produced in line with departmental practice at the end of this year, but this Bill is enabling legislation, so we are putting the horse before the cart. We need the enabling legislation in place—we need the ceilings to be lifted—before we can look at individual business cases that wish to draw down on that money.
That brings us to the overall question why use DFIs at all, and I wish to pay a huge tribute to my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), who provided perhaps the most powerful explanation of why we go into these mechanisms in the first place. The answer of course is that they bring together the very best of the private sector and the very best of the public sector. They provide the discipline of the private sector in insisting on returns that produce sustainable enterprises and sustainable revenues; and they provide freedom from political interference and they provide leverage. To respond to my hon. Friend the Member for Bedford, let me say that they also allow us, as my hon. Friend the Member for Portsmouth South (Mrs Drummond) pointed out, to draw in other forms of capital behind. Some £4 billion of investment from the CDC has drawn an extra £26 billion into our investments in Asia and Africa. In addition, this approach provides good value for money for the taxpayer.
Stephen Doughty
The Minister is talking about the capital that this approach has brought in, but that has not always been in areas where capital has not been available—I think of places such as India. Given that he is about to publish the bilateral aid strategy, will he consider forcing the CDC to look more closely at the lower-income countries in Africa and elsewhere that need the investment the most?
Rory Stewart
I am trying to move towards my 5.20 pm conclusion, but let me deal with that quickly. As I was saying—and this partly answers the point—we are combining the best of the private sector incentives with the best of the public sector, because we are exactly able to prioritise maximising development impact. That is where our development impact grid, which, with respect, the hon. Gentleman is not providing enough focus on, answers his question. Members on both sides of the House should be aware that that grid targets explicitly countries with the lowest GDP per capita, countries where investment capital is not available and countries where the business environment is worse—that is the Y axis of the grid. On the X axis of the grid, we have sectors in which the maximum employment is generated. Every business case since 2012 has been assessed exactly against those criteria, which is why, as my right hon. Friend the Member for Sutton Coldfield has pointed out, many of the criticisms made today—the idea that somehow the CDC has lost its way—are not appropriate for the CDC of 2106; they are appropriate for the CDC of 2012 or 2010.
Let me deal with a few of the objections. An investment in Guatemala was mentioned, but all investments in Latin America stopped in 2012. An investment in Xiabu Xiabu in China was mentioned, but all investments in China were stopped in 2012. The issue of pay was raised, but, as has been pointed out again and again, the pay of the chief executive has been reduced by two thirds, to a third of its predecessor. Tax havens were mentioned, but we no longer, in any way, ever invest for reasons of tax or secrecy; we invest only to find secure bases for investment and to pool other forms of capital. All our investment goes simply into locations that meet the highest OECD transparency standards. On development impact, our DFID chief economist, Stefan Dercon, has worked with some of the most distinguished academics in the world, from Harvard and elsewhere, to create exactly the kind of impact that people are pushing for.
That is why right hon. and hon. Members should support this Bill. It is not only because of the history of the CDC, to which the shadow Secretary of State paid such good tribute to in her opening remarks: its experience of 70 years; the culture it has developed; the extraordinary brand that the institution has in Africa and south Asia; and the focus that my right hon. Friend has brought to this institution since 2010—its rigour and its narrowness of focus, which makes it very unusual among DFIs. It is one of the only DFIs in the world to be spending so much in conflict-affected states. It is accountable directly to DFID, which owns 100% of its shares. The examples of its performance today can be seen in the DRC; in places such as Burundi, where off-grid power would not be built without the CDC; and in its investment in energy through Global in Africa.
In conclusion, we should take pride in this institution; it is a very great British institution. In its historic evolution it has gone from a past where it was dominated in the 1950s by ex-military officers interested in building rafts and going into jungles to its current leadership under Diana Noble, a chief executive who exemplifies much of the best in development thinking and some of most progressive intuition in the British Government. She ensures that we are delivering in Pakistan gender-based programming that affects workers’ rights and that we have an institution that is today highly relevant and that faces and solves some of the greatest development challenges in this century.
Question put and agreed to.
Bill accordingly read a Second time.
Commonwealth Development Corporation Bill: Programme
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Commonwealth Development Corporation Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 8 December 2016.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Proceedings on Consideration and up to and including Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on Consideration.
(5) Any proceedings in legislative grand committee and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion four hours after the commencement of proceedings on Consideration.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.
Other proceedings
(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Andrew Griffiths.)
Question agreed to.
Commonwealth Development Corporation Bill: Money
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Commonwealth Development Corporation Bill, it is expedient to authorise:
(1) any increase in payments out of the National Loans Fund or money provided by Parliament resulting from provisions of the Act—
(a) increasing the limit in section 15(1) of the Commonwealth Development Corporation Act 1999 to £6,000 million; and
(b) conferring power to increase that limit to an amount not exceeding £12,000 million;
(2) any increase attributable to those provisions in the extinguishing of liabilities in respect of guarantees under the Commonwealth Development Corporation Act 1999; and
(3) any increase attributable to those provisions in payments into the National Loans Fund or the Consolidated Fund.—(Andrew Griffiths.)
Question agreed to.
New Southgate Cemetery [Lords]
(7 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Burrowes (Enfield, Southgate) (Con)
I beg to move, That the Bill be now read a Second time.
This Bill relates to New Southgate cemetery, which serves local residents in my constituency and that of my right hon. Friend the Member for Chipping Barnet (Mrs Villiers). The cemetery is sited in my right hon. Friend’s constituency. She supports the Bill, but she told me that she had a long-standing commitment and could not guarantee her attendance here at a particular time. It is excellent to see her in her place now along with other hon. Friends who have neighbouring constituencies.
The cemetery serves constituencies in the north London area. In particular, it serves the religious communities in the area, including the Greek Cypriot, Roman Catholic and Caribbean communities. It also has a unique section, which is administered and owned by the Baha’i community for their loved ones.
The cemetery was opened in the 1850s by the Great Northern Railway Company as a more cost-effective north London alternative to the better known London Necropolis Railway, which carried corpses and mourners to the cemetery. Indeed, in 1854, the largest cemetery in the world was designed to accommodate all the deaths in London for centuries to come. That has not come to pass, which is why there is a need now for this Bill. In eight or nine years’ time, there will not be sufficient space in this cemetery to deal with the demand.
There is a history behind the railway company’s involvement. At the time, it set different charges for first class, second class and third class burials. In fact, I am due to go to a public meeting involving Govia, which will address issues of space that will affect the railway, and it is that issue of space that we are concerned about in this Bill. I am sure that, with support from across the House, we can make good progress tonight, which will enable me to get to my public meeting and to see this Bill on its safe passage.
The larger part of the cemetery is administered and owned by the private company, New Southgate Cemetery and Crematorium Ltd, which is the promoter of the Bill. The remaining part, which is administered and owned by the National Spiritual Assembly of the Baha’is of the United Kingdom, has particular cultural importance for the Baha’is as their spiritual leader, Shoghi Effendi, is buried there. The cemetery was near the place of his death in 1957, and it therefore has particular importance for the Baha’i community. The cemetery as a whole extends over 60 acres, with well-tended sections dedicated to different faiths.
The issue at the heart of the Bill is simple: there are roughly 44,000 grave spaces in all, and 180,000 interments have been carried out in the 160 years for which the cemetery has been open, which means that there are now only 1,700 available spaces in the main part of the cemetery and a maximum of 100 spaces left in the Baha’i section. There is, however, demand for about 175 burials a year in the main part of the cemetery and about 10 a year in the Baha’i section. Space in both sections is likely to run out in nine or 10 years’ time, which causes problems for the local community and for the Baha’is and other groups that use the cemetery.
Attempts have been made to address the issue, and the local authority has not been willing to go down the route of acquiring additional land, which is why there is a problem. The Bill seeks to deal with the problem by allowing the reuse of areas of the cemetery where a burial has not taken place for at least 75 years, enabling the promoters to extinguish existing rights of burial and reclaim graves that have not been used for 75 years. In addition, a method to create extra space known as lift and deepen—that is fairly graphic, but it is the term used in the trade—would also be allowed, through which graves are excavated to their deepest depth, with all the remains placed in a casket and re-interred at the bottom of the deeper grave. That creates additional space above the re-interred remains.
Dr Matthew Offord (Hendon) (Con)
In the last Parliament, I asked the then Minister about the number of graves for which permission had been considered for lift and deepen. He replied that local authorities were able to do that, but none had. Will my hon. Friend please explain why we need to do this now when we have the London Local Authorities Act 2007, which permits lift and deepen?
Mr Burrowes
My hon. Friend is right. Parliament granted local authority-run cemeteries in London the power to reclaim graves in the 1970s and the power to lift and deepen in 2007. I understand that the City of London has made good use of the powers to reclaim and to lift and deepen in a cemetery in Newham without adverse reaction, while providing a sustainable future. In reality, the powers are available to cemeteries run by local authorities, but not cemeteries in the private sector. This Bill would seek to put the promoters on an equal footing with municipal cemeteries, which I would hope that Government Members supported.
Mr Christopher Chope (Christchurch) (Con)
I am grateful to my hon. Friend for giving way, and I am sorry that I was not in the Chamber for the beginning of his speech. Is it not right that the 2007 legislation has not been used by any local authority other than the City of London and that the cemetery in Newham is on consecrated land, where special rules apply? As I understand it, this Bill will not apply to consecrated land.
Mr Burrowes
I am grateful to my hon. Friend for his interest. Time will tell how many will take up this opportunity; this is a particular issue that affects London, and although successive Governments have not said that it needs to be a universal power across the country, there has been recognition of its critical importance in London. Newham has taken up the power and I understand that Kensal Rise is looking at the progress of this Bill and considering taking the powers further.
My understanding is that most of the land in New Southgate cemetery’s ownership is consecrated and that the safeguards that ensure proper consultation with the diocese will apply. They will be particularly pertinent to this Bill. The difference with municipal land is not whether the land is consecrated but the fact that it is in different ownership, and we want an even hand.
The Bill is critical because the communities that the New Southgate cemetery serves do not generally choose cremation. For the Greek Cypriots, it is not allowed, and in the Caribbean communities burial is the preference of 99%. Burial is also the strong preference of Roman Catholics, who are strongly represented around the area served by the cemetery. The Baha’i community also has a requirement to bury and not to embalm or cremate.
The Bill will enable the creation of more spaces in existing graves and ensure a sustainable future. It provides adequate safeguards; it ensures that there will be notices, that objections from relatives or owners will be heard, and that Historic England and the Commonwealth War Graves Commission will be involved as regards proper respect for the heritage of those sites.
Mr Burrowes
Unused graves can be reclaimed by allowing the exclusive right of burial to be properly extinguished. The alternative is through lift and deepen. If there are alternative directions from the Secretary of State, we will no doubt hear them from the Minister. It will reassure my hon. Friend to know that there are powers in clause 4(10) for the Secretary of State to provide additional direction in relation to the powers, if that is considered appropriate.
Mr Chope
My hon. Friend may have addressed this at the beginning of his remarks. The predecessors in title of the present company that owns the cemetery sold off vast areas of land that were attached to the original Victorian cemetery. If all that land had not been sold off, the issue would not have arisen. Is this not a case of a commercial organisation, having sold off a lot of its surplus land for housing, trying to use the land it has in a different way, arguing that it has not got enough space?
Mr Burrowes
My hon. Friend is trying to reach into the motivations and the history. At the beginning of my remarks I referred to the history and the involvement of the Great Northern Railway. The original aspiration was that the cemetery would serve the interests of Londoners for centuries, but that did not happen. We can go as far back in history as my hon. Friend wants, but we are where we are now. Although there is inevitably some commercial motivation for a sustainable commercial future, it is undeniably the fact that for the communities that the cemetery serves, there is an interest in ensuring that there are adequate graves available for their burials.
The consultations that have taken place have not led to any petitions. They have led to understanding and support for the in-principle situation. There needs to be a level playing field between the powers available for municipal cemeteries, which have also taken an interest in how much land is available as municipal land, and for privately owned cemeteries, which should have the proper powers available to them. I therefore commend the Bill to the House.
Mr Christopher Chope (Christchurch) (Con)
It is great that we are having a debate about the Bill. If I had not tabled a blocking motion, it would have gone through Second Reading on the nod. It is undesirable that issues such as this are not open to debate and discussion in this House.
The Bill touches on an area that successive Governments have long avoided. In 2004, the Labour Government held a consultation on the possible re-use of graves. The consultation lasted six months, and after about three years there was a response from the Government in which they said that they were definitely going to do something about it, and quickly. Nothing has happened since. A Minister in the coalition Government, the former Member for Bermondsey and Old Southwark, Simon Hughes, said that they were definitely going to do something about it, but, again, nothing has happened. Perhaps the Minister on the Front Bench today will seize the moment to tell the House what the Government’s plans are in respect of the cemetery.
The issue is much bigger than is reflected in the terms of the Bill. I do not intend to divide the House on it, but in such a debate it is important to be able to ask a few questions. When my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) comes to sum up, I hope he will be able to respond to them.
The cemetery has a long and interesting history. It was originally some 200 acres. Over a period of time—this is the ninth Bill relating to this land to come before the House, and there have been eight Acts of Parliament since 1855 covering New Southgate cemetery—more and more of the cemetery has been sold off. In 1976, the Great Northern transferred the ownership and management of the remaining parts of the cemetery to New Southgate. Since then, part of the cemetery has been sold off and part has been transferred to the Baha’is.
Mrs Theresa Villiers (Chipping Barnet) (Con)
Is it really unreasonable for land set aside to accommodate the dead to occasionally be sold off to accommodate the living? That does not seem an unreasonable thing for the cemetery to have done, and it is not really a reason to oppose the Bill.
Mr Chope
As I said, I am not opposing the Bill. What is unreasonable is that land retained to bury the dead was disposed of, and now the owners of that land, who profited from the sale of it, are saying, “We have not got enough space. We need special powers to reuse graves.” There is a difference between reusing graves in a municipal burial ground, where a local authority is accountable to local people, and reusing graves in a private burial ground, where there is no such accountability.
What worries me is that the local authority has apparently been unhelpful in allowing an extension to this area so that there is more space for the burial of the dead. More land has been sold than is needed now, but as soon as this organisation seeks to purchase a bit more land, all sorts of problems are apparently put in its way by the local authority—the very local authority that, I suspect, developed the houses on the land that was sold to it originally.
Dr Offord
I would gently urge my hon. Friend to recognise that my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and I have areas with great religious diversity, and the pattern of burial and cremation has changed in our constituencies over the years. Between 1997 and 2009, the number of cremations in London fell from 48,275 to 36,736, and the nature of our constituencies means that many people, for religious reasons, cannot be cremated, as people would have been previously, when the land was disposed of.
Mr Chope
I take very much the point my hon. Friend makes, and it is symptomatic of the change in the character of large parts of our country and particularly, for the purposes of this debate, of London. There is now a much increased number of members of the Muslim faith, for example, living in the United Kingdom. However, that is surely an argument for the local authority to facilitate the making available of more land to meet the religious needs of this very important part of the community, rather than an argument for saying, “We are so short of land that we are going to reuse the graves of those who were previously buried in the New Southgate cemetery.” I can understand why the Bill is being promoted, but I cannot understand why a sensitive local authority would not help to provide more land.
Mr Burrowes
I appreciate my hon. Friend’s interest in the Bill, but the crucial point is that the promoters are not the company that sold the land before 1976, but the company that bought the cemetery to run it, as set out in the recital. The only sale that has taken place in relation to that company is to the Baha’is.
Mr Chope
As I understand it, part of the cemetery was sold to the Baha’is because one of their religious leaders died while he was visiting London in 1957, and he was buried in the cemetery. That is why it is a place of particular pilgrimage and interest to people of the Baha’i faith. However, as my hon. Friend may have said earlier, it is not just Baha’is who are buried there. Our great hero Ross McWhirter is buried in the cemetery—it is some 40 years since he was cruelly murdered by the IRA. A lot of distinguished people have been buried in this cemetery. If Ross McWhirter has now been buried there for some 50 years, under the proposals in this Bill it will be only another 25 years before his remains can be disinterred. That puts these issues into perspective. I expect that members of the Freedom Association, which was founded by his twin brother, with whom he established the “Guinness Book of Records”, will still be going there for a lot longer than 25 years. It may well be that the grave of Ross McWhirter becomes a place to which people would wish to conduct pilgrimages, in the same way as, I think, many years ago, Ross McWhirter discovered in deepest France the burial site of the person who made the first rugby ball, and following that discovery, that grave itself is now visited by rugby enthusiasts.
We must not deal with these things lightly—I am not suggesting that my hon. Friend the Member for Enfield, Southgate is doing that—but there is a potential solution to this if there was more co-operation from the local authority.
Mrs Villiers
One of the reasons I support this Bill is that using our existing burial space more efficiently will relieve the pressure to create new cemeteries elsewhere in my constituency—something that is likely to encroach on green-belt land, substantially detracting from and damaging the local environment.
Mr Chope
My right hon. Friend makes a very important point. Not only in her constituency or in this area of London, but throughout the country where there is pressure on land, it is important that we have a properly worked-out policy for whether, and if so in what circumstances, graves can be reused.
As my hon. Friend the Member for Enfield, Southgate said, the London local authorities gave themselves powers in this respect that they have hardly used. With the exception of the cemetery in Newham, no local authority has started to use the powers given to them because of the sensitivity around them. That was indeed the conclusion that the Government reached when they went out to consultation on this issue more than 10 years ago. They accepted that it was a very sensitive issue and there was a lot of public concern about it, but no conclusions were reached. It was said that about 30 years’ worth of land was available for burials, and more than 10 years have gone by since then, yet nothing is being done. I hope that my hon. Friend the Minister will put this in the wider context of what proposals there are to address this problem, particularly in the light of the very significant changes in the character of much of our population and the very significant increase in the number of Muslims, for whom burial is a religious requirement that cannot be substituted with cremation.
Like all these things, when one starts to lift the stones and look at a bit more of the detail, one becomes aware of gaps in the proposed legislation. This Bill is defective in that it does not specify the means by which the graves may be reused. As I said, lift and deepen is one method, but there are others that could be much less sensitive.
Under lift and deepen, the remains are removed from the existing grave and put further down in the same grave; in other words, they remain in the same location. Less sensitive methods might be the cause of some offence. Once the decision has been made in a private cemetery, there is limited opportunity for public opinion or any individual to influence what happens.
The problem does not arise with consecrated land, because such land is subject to control by the Church of England authorities. Clause 4(11) and (12) give particular recognition to the status of consecrated land. Quite rightly, the Bill also makes exceptions in relation to Commonwealth war memorials.
It seems to me that a Bill such as this should be tightly drawn and subject to a lot of proper parliamentary scrutiny. My final point is that a commercial organisation is running the process, so how can we be sure that it will comply with all the requirements in the Bill to record the details of the graves that will be disturbed and the memorials that will be removed? Why has the company promoting the Bill not already recorded those details for posterity? Where will those records be kept, and who will maintain them? If this was a publicly owned activity, we might have a bit more control over it. That is why I have concerns about it.
The fact that there have been no petitions against the Bill suggests that people in the locality are content. Perhaps they are content in their ignorance; I do not know whether that is a fair comment. We should cherish the opportunity to debate the matter. The Government have always said that there was no time available to discuss it more generally, but I hope that they will be inspired by this evening’s proceedings to think about the public interest in public policy making on the matter. In the meantime, I thank my hon. Friend the Member for Enfield, Southgate for his great courtesy in dealing with the issue and for keeping me in touch with what has been going on. I hope that some of the concerns that I have expressed will be taken on board.
Mrs Theresa Villiers (Chipping Barnet) (Con)
I rise to urge the House to support this Bill to give new powers to the owners of New Southgate cemetery in my constituency. As things stand, within 10 years we will run out of burial space there, or we will come close to doing so. There is now a widely held view that the only way in which the public can continue to have affordable, accessible cemeteries is if we make better use of existing burial space.
As we have heard, public burial authorities in London already have some powers to lift and deepen existing graves that were last used 75 years ago, to create more space. The Bill would simply give to New Southgate cemetery broadly the same rights as those already afforded by Parliament to public burial authorities in London.
Mrs Villiers
I surmise that it is because the pressure on burial space is not so great as to require the use of such powers, but it is important that we equip cemeteries for the pressure that they will experience in the future.
Dr Offord
I may be able to help my right hon. Friend because when I was a councillor in the London Borough of Barnet, I was responsible for cemeteries, particularly the one in Hendon. The reason why the legislation was not used when I was the responsible cabinet member is that alternative locations were used. The Victorian planners of the cemetery originally decided that that land would not be used for burial, so we used those alternative locations, as well as other parts of the cemetery that were not originally intended for burials.
Mrs Villiers
I am grateful to my hon. Friend and constituency neighbour for supplying that information from his experience in the cemetery arena.
The powers conferred by the Bill would create new space for bereaved families. They would mean that a viable and sustainable burial ground could be preserved for the long term in the heart of the community it serves in my constituency. I am sure that the owners of the cemetery would, if they could, deal with the problem by acquiring additional land. However, the adjoining space is already built up with houses or is recreational land. Rightly, Barnet council wishes to preserve its recreational spaces and would be very reluctant for such land to be sold and used for cemetery purposes.
To return to the key point I made in my intervention, unless we reuse cemetery space and use the cemeteries we have more effectively, pressure will rise for the creation of new cemeteries. I have a particular concern about the pressure for new cemeteries in the green belt. There is already a proposal to create a natural burial ground in Arkley in my constituency, which is strongly opposed by the residents. The Bill would be helpful in creating sustainable burial space in pre-existing cemeteries. It will be important in helping to protect the green belt and our local natural environment. I urge the House to support the Bill this evening. I thank my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) for his great work on this legislation.
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
I congratulate my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) on moving the Second Reading of this private Bill.
Building on the historical tone of the speech of my hon. Friend the Member for Christchurch (Mr Chope), I am pleased to participate in what is nowadays one of Parliament’s less-used procedures. Historically, this procedure has played an important role. Indeed, I understand that more than 37,000 private Acts have been passed since 1539. In the 19th century, most legislation was private business, which typically addressed issues as diverse as transport schemes, public works, permissions for divorce and the settlement of estates. These days, there is little need to use private Bills for such purposes. Like the Bill we are addressing, private Bills are promoted by organisations wishing to disapply or modify the general law in relation to their own powers.
The New Southgate Cemetery Bill does so to address an identified need for additional burial space in the cemetery. I should it make it clear from the outset that the Government do not oppose the Bill. As has already been explained, in addition to doing so for the cemetery company, the Bill provides powers for the National Spiritual Assembly of the Baha’is of the United Kingdom. The cemetery, part of which is owned by the National Spiritual Assembly, is an important Baha’i spiritual centre, so it is appropriate that the Bill will facilitate its continued availability as a burial place for Baha’is.
Before I address the Bill in more detail, I want to mention the issue of burial space more generally. There is increasing interest in this issue in the media, in the burial sector and, indeed, among parliamentary colleagues. Burial space is running out in parts of our towns, cities and countryside, but this is not a concern in other areas. Even within Greater London, the picture is not consistent. A 2013 York University cemetery research group audit indicated that there is acute pressure on burial space in parts of London, but that is not true across all of London.
There is already private legislation that, for almost 10 years now, has enabled public burial authorities in London to reuse graves, yet very few have done so. It is therefore not yet clear that pressure on burial space is a national issue requiring central Government intervention. Successive Administrations have kept the situation under review; I and my ministerial colleagues are considering whether that position should continue. Where there is local pressure, however, it is right for local solutions to address it. The Bill addresses the needs of New Southgate cemetery, and the Government do not wish to prevent the cemetery from remaining viable and continuing to serve its communities into the future.
I move on now to Government scrutiny of the Bill. As lead policy Department, the Ministry of Justice wants to ensure that the legislation is fit for purpose, with appropriate safeguards, and that the views of those most affected by it have been fully considered. We have therefore consulted other Departments and arm’s length bodies. I am grateful to the New Southgate burial authority for agreeing amendments arising from that process, including requirements for Historic England to be notified of any proposals and a requirement for remains to be reburied in an earthen grave as opposed to a structure above ground. I am pleased to note that the burial authorities have fully engaged with faith groups using the cemetery. I am grateful for the information provided on that, and having reviewed it am satisfied that the issue has been properly addressed.
Dr Lee
As I understand it, the relevant religious groups have all been consulted, where those groups have an obvious representative to consult. I am happy to write to my hon. Friend with further details.
I have written to the Chairman of Ways and Means confirming that in my opinion the Bill’s promoters have fully assessed its compatibility with the European convention on human rights and that I see no reason to dispute their conclusions. However, I have noted two points: first, that the burial authorities will be required to act compatibly with convention rights in carrying out functions of a public nature within the meaning of the Human Rights Act 1998; and secondly that I am satisfied that other methods of developing burial space have been implemented as far as is possible. I therefore agree that the Bill’s powers are both justified and proportionate.
I turn now to the series of questions that my hon. Friend the Member for Christchurch raised. First, existing burial space can be maximised by something called mounding, which involves new soil being placed over existing graves to allow additional graves to be excavated; by cramming, which is where new graves are created in available spaces such as pathways; and by reclaiming unused space in existing graves. The latter can be applied only to private graves, unless under Church of England authority—so-called faculty. Outside London, only unused graves can be reclaimed. In 2007, the then Government endorsed the principle of reusing existing graves by the lift and deepen method, which saves on the cost on new land, avoids competition for new land, keeps burial local, represents a sustainable use of resources and provides a new income stream for burial authorities, in turn reducing local authorities’ financial liability.
My hon. Friend mentioned the cemetery’s selling off of land. We have dealt with the cemetery as it currently stands throughout. There is a need for additional space now and the Bill proposes all appropriate means of addressing that need.
My hon. Friend asked whether the 75-year period was long enough, referring in particular to the grave of Ross McWhirter. The Bill provides that graves can only be considered for reuse 75 years after the most recent interment. It also provides that relatives of the deceased can object; if they do so, the grave cannot be reused for at least another 25 years. In practice, therefore, a grave in which living relatives have an interest can be protected for 100 years.
My hon. Friend also mentioned accountability. As private providers, the NSC burial authorities are not subject to the same degree of statutory regulation as local authority providers. However, that is already the case regarding their existing management of the cemetery. There is no reason to expect that, as a subsidiary of one of the UK’s leading providers of cremation and burial services, NSC’s standards of operation and service would not continue to be upheld.
Mr Chope
Do the Government encourage the creation of more private cemeteries, and to what extent are they committed to what was said by the right hon. and learned Member for Camberwell and Peckham (Ms Harman) in a ministerial statement following the consultation? She said that it was the intention of the then Government to use powers under the Deregulation and Contracting Out Act 1994 to enable all parts of the country to have reused graves.
Dr Lee
The Government are conscious of the need to ensure that appropriate burial space is available across the country. My understanding is that need differs from region to region. We continue to consult and I expect to receive further information in the coming weeks.
On NSC accountability, the Bill provides significant recourse to users. NSC must give notice of proposals to extinguish burial rights, disturb human remains or remove memorials. Objection from the owner of burial rights amounts to a veto, and an objection from a third party is subject to directions by the Secretary of State as an independent third party. Objections from relatives to the disturbance of remains amounts to a 25-year veto. An objection from a third party is subject to directions by the Secretary of State as an independent third party. In addition, NSC has a published complaints scheme. I can confirm that the Government secured an amendment to require record keeping on the disturbance of remains and the removal of memorials.
Finally, I thank my hon. Friend the Member for Christchurch for securing the debate. I am grateful to all who have contributed to today’s proceedings.
Mr Burrowes
With the leave of the House, I thank everyone for their involvement in the debate, and my hon. Friend the Member for Christchurch (Mr Chope) for ensuring that the Bill is scrutinised. I very much value and support that. As he said, it is inspirational, as always, to look at things in such detail.
The Bill deals with a sensitive matter with far-reaching effects, but it is particularly pertinent, as my hon. Friend the Minister said, that we have a local solution. I am grateful for my hon. Friend’s support and for the support of my right hon. Friend the Member for Chipping Barnet (Mrs Villiers) and my hon. Friend the Member for Hendon (Dr Offord). It is proportionate and in line with other legal powers, and will be of great benefit to residents of the local area and to many religious and cultural communities, particularly the Baha’is, who will require the availability of burial sites at the cemetery. The Bill and its powers are required, as will no doubt need to be proved in the Select Committee. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time and committed.
Petitions
(7 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ms Margaret Ritchie (South Down) (SDLP)
I present the petition on behalf of my constituents from the coastal town of Newcastle who are deeply concerned by the humanitarian crisis in Syria. The petition is supported by the hon. Member for Strangford (Jim Shannon).
The petition states:
The petition of residents of Newcastle, County Down,
Declares that the humanitarian crisis in Syria has already resulted in thousands of deaths and shows no sign of a resolution; further that men, women and children are targeted by air strikes and, if lucky to survive, are being forced to leave their homes, tearing families apart and often resulting in further deaths; further that these people do not ask and do not deserve to be in this situation; and further that a peaceful means to end the war should be sought, rather than the continuation of air strikes.
The petitioners therefore request that the House of Commons urges the Government to help protect the rights and lives of those affected by the war in Syria through the administration of aid, food and medical care to those who remain in the country as well as those who have been displaced; and further that the Government is encouraged to find a peaceful means to end the war rather than the continuation of air strikes.
And the petitioners remain, etc.
[P001985]
Keith Vaz (Leicester East) (Lab)
I rise to present a petition signed by local residents. The signatures were collected by a volunteer in Leicester East, Sayeed Askari. Hajj is the fifth pillar of Islam, and travelling to participate is a vital tenet of the Islamic faith. Furthermore, Umrah is a holy passage of Muslims across to Mecca and has immense religious value. Mecca is regarded as the holiest city in the religion of Islam and is of course in Saudi Arabia. Travelling to Saudi Arabia for Hajj or Umrah for the first time is free, but visitors will now have to pay an additional surcharge of 2,000 Saudi riyals, equivalent to £450, for any subsequent visit. This represents a very large increase. Quite simply, any restriction to participating in either pilgrimages is of great concern to the Muslim community in my constituency and elsewhere, and I hope that the Saudi Arabian Government will reconsider the increase.
The petition states:
The petition of residents of Leicester East,
Declares that the Ministry of Hajj of Saudi Arabia has decided to increase the visa fees for foreign visitors to visit the country in order to complete the Islamic pilgrimage for a second time. Hajj is one the Pillars of Islam that every Muslim must complete once in their life time by visiting Mecca in Saudi Arabia. The increase in visa fees will cause hardship to many people who wish to perform this pilgrimage for a second time, which is sometimes carried out on behalf of a family member who is unable to carry out the pilgrimage due to ill health or age.
The petitioners therefore request that Her Majesty’s Government makes representations to the Council of Ministers of Saudi Arabia which is chaired by the Crown Prince Mohammad Bin Naif to reconsider the decision to increase the visa fees.
And the petitioners remain, etc.
[P001984]
Variant CJD and Surgery
(7 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sir Paul Beresford (Mole Valley) (Con)
I am delighted to see the Minister in her place, and I am sure that she is delighted to be here—or at least she is trying to smile under the circumstances. She has probably been made aware of my long-term interest in, and deep concern about, this subject. I am sorry to inflict it on her this evening, but she is bearing up. I also declare a potential interest, as a very part-time dentist.
Variant CJD is a fatal neurodegenerative disease originating from exposure to bovine spongiform encephalopathy-like prions, prions being small particles of protein. Variant CJD prion infections are associated with a very long and clinically silent incubation, but when the disease strikes, it causes a fast, spongy degeneration of the brain, followed by a horrible and untimely death. It is probable, but not certain, that carriers might not produce the disease themselves, but it appears to have a potentially decades-long incubation. The long incubation period means that some will die of other causes first, but, as we live longer, we cannot be certain that in time —after decades—the disease might not strike all carriers, if they survive long enough. Carriers might also unwittingly pass on the prion through blood transfusion and via surgical instruments.
Variant CJD is an appalling disease with no cure. The number of asymptomatic individuals with variant CJD prion infection is unknown, but recent research estimates that the carriers number about one in 2,000 adults, which is a staggering number. The disease poses a risk to others, via blood transfusions, blood products, organ or tissue grafts and contaminated medical or dental instruments. The response of this and previous Governments has been bipolar. To give an exaggerated simplification, the first position of this bipolar response is that as we have not had many recent cases, there is no problem—but considering the long incubation period and some recent changes, this is a dangerous assumption. The second position is that there might be a problem so we should apply the precautionary principle in some areas. We cannot have both. I believe that waiting and an occasional application of the precautionary principle really do not hit the problem. If the Minister takes no action, I hope she will recognise that the absence of evidence is not evidence of absence.
As I have said, research says that one person in 2,000 is a carrier. The incubation period may well be decades, and some individuals appear to be more susceptible and some less so, although in time this could be proven wrong. A death from variant CJD in Edinburgh in January this year showed a potentially deeply worrying change. People are of various genotypes: they can be VV homozygotic, or MM homozygotic or MV homozygotic—and for the sake of Mr Deputy Speaker, I will not explain that. Until this case of the Edinburgh patient, all cases of variant CJD had been MM. The Edinburgh patient was the first MV patient that we have seen. It was thought that being MV or VV might offer some resistance, but this does not seem to be the case. We should bear it in mind that about 45% of the population are MV.
There is still no conclusive evidence, but there is a possibility that patients with the MV genotype may have a longer incubation period, which could lead to a second wave of variant CJD. The real point is that until recently it was hoped that MV patients might not show clinical signs, but in these early days this appears to have been put in deep doubt.
Research also shows that prions are transmissible by blood products and contaminated surgical instruments, and as the prions resist decontamination from stainless steel, we have a problem. Over the years, a precautionary principle has been applied—it is still being applied, but only partially. Much has been done slowly over many years. Leucodepletion was introduced, and synthesised clotting factors have been provided for haemophiliacs. A prion unit was set up at Queen Square. Single-patient use of stainless steel endodontic reamers was made mandatory, which I find quite interesting and will return to in a few moments. Non-UK blood supplies were sourced for those born after 1 January 1996.
What I found curious about the endodontic reamers is that if a patient requires endodontics, it is possible to use the stainless steel reamer but singly; but if the patient for some reason does not have endodontics, the tooth will have to be extracted using a stainless steel instrument that is used repeatedly, called a pair of forceps.
Very early on the Government established, through Medical Research Council funding, a prion unit at Queen Square under Professor Collinge. This unit was tasked with finding a test, finding ways of stopping or reducing transmission and hopefully even finding a cure. The prion unit with DuPont has produced a RelyOn soak, which deactivates the prion on stainless steel surgical instruments. Following the soak, there is then decontamination and a washing machine—a dishwasher-type machine—and then a full-blown steriliser, particularly a vacuum-based one. These instruments will bring about total sterilisation, from which the prion will be lost.
DuPont is no longer producing the soak, because there is no market. And there is no market simply because hospitals, clinics and surgeries in this country are not required to use it; if they were, there would be a market. That is quite extraordinary considering that this country has the greatest deposit, if I may use that term, of people carrying the prion.
In a surgery washer, the disinfectant would do the job. Recently, Professor Collinge became aware that the Department of Health had announced funds for research into prion-disinfecting stainless steel instruments. I believe the prion unit has applied and will hopefully get a grant. The problem with the wash was that it meant an extra stage, which slowed everything down in the hospital, but if DuPont or another manufacturer could produce it in the form of a tablet, a powder or a liquid that would go into the dishwasher without frothing, that step would be taken away, we would get rid of the prion and there would be no time wasted. Those instruments would be prion-free.
Incidentally, the Minister may be aware that there is some evidence that a protein may—and I stress the word “may”—be responsible for the occasional transmission of Alzheimer’s disease. If she wants a little bit of help on moving with RelyOn, I can tell her that RelyOn would disinfect instruments with this protein as well.
Another major failure relates to the sourcing of blood products. People born after 1 January 1996 who needed blood products—for instance, a transfusion—could get non-UK-sourced plasma that was almost certainly prion-free. Those born before that date would get UK plasma, and would have to pray earnestly that the donor was not the one in 2,000. As a parent, I can imagine having two children born on either side of that date. If for some horrible reason they both needed blood transfusions, one child would get the prion-free plasma and the other would take the risk, as would elderly people like us.
With a test, we could be fairly sure of excluding that one in 2,000. Professor Collinge and his prion unit team have developed such a test. They tried it out in this country and subsequently went to the United States, where they checked it with an extensive research programme to make sure that it produced no false positives. They were successful. They then returned to this country. The final stage of the research needs to be tested on a large batch of anonymised UK blood samples, but the Medical Research Council will not fund it. At least, that is the case so far.
If we had that test, blood donors who were carriers would be sorted out and their blood not used, and special measures could be taken for surgery patients who proved to be carriers. In respect of the latter line, the Minister’s Department introduced new guidance in July this year. I understand that it requires separate instruments to be used on high-risk tissues in the case of patients born before and after 1 January 1997 respectively. That is sensible reasoning, because it is thought that people born since 1 January 1997—I thought that it was 1996—have had less exposure to prions via the food chain. Those people form a group who are at lower risk of prion diseases, and thus less likely to contaminate surgical instruments with prions.
The instruction from the National Institute for Health and Clinical Excellence on a risk-reduction strategy requires every hospital and clinic to have separate pools of instruments to be used for high-risk surgery. It distinguishes between patients who were born before 1 January 1997 and those who were born on or after that date. The instruments must be kept separately, and notated. Although I consider that instruction to be eminently sensible, it will add greatly to the costs to hospitals of instrument provision, storage, and the required regular re-sterilisation. Tracing and tracking of instruments has also proved costly, and some hospitals are etching all instruments with identification numbers to ensure that they can carry out the process properly.
I have only been able to obtain one figure, but I understand that since, I think, July, observing the new guidance has cost the National Hospital for Neurology and Neurosurgery in Queen Square an extra £120,000. A little further down the road, the cost to a hospital specialising in children will be considerably higher. If RelyOn were developed so that it could be used, that difficulty would be removed.
I have three small asks of the Minister. First, we must recognise that all patients need to be treated equally in respect of blood products. As one person in 2,000 is thought to be a carrier, until we have a variant CJD test everyone should receive non-UK plasma. Secondly, rather than chasing a new product for sterilisation, the Department of Health, through whatever means, should fund the manufacturer of RelyOn to produce it in a more user-friendly form. If NICE or the Care Quality Commission made the use of such a product mandatory, there would be a market potential, which might be sufficient to persuade DuPont or some other manufacturer to produce such a user-friendly product without the need for funding, because it would be sold and used every time sterilisation pouches went through the dishwasher. Thirdly, funding the last stage of the testing of the prion unit system for prion detection would enable carriers to be taken out of the blood transfusion pool, and would also ensure a more sensible separation of surgical instruments. The cost savings would be vast.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on making such a compelling case for those with CJD. In 2001, the Government set some money aside for a compensation scheme for UK victims of variant CJD. A trust fund was set up in April 2001 and compensation payments of £25,000 were made to the most affected families. Does the hon. Gentleman feel the Government should reconsider the compensation scheme and upgrade it for 2016 for those who, clearly from what he says, will probably fall into that category—although I hope not—in years to come?
Sir Paul Beresford
The hon. Gentleman makes a good point, but what I would really like to do is get the Government to take some action that is sitting, waiting, readily available to prevent it; otherwise, in time to come I believe we are going to have a chance of a considerable flood of variant CJD disease, but we do not know, and if this test was there we would know if the figure of one in 2,000 is right or wrong, or if we can separate patients out, so that those who have it have special instruments and the rest of us are all right, and we can also start using blood products in this country, because we will only be using products that do not have the prion on board.
In effect, the Minister needs to think about this: I do not want my grandchildren to be the generation that sees the re-emergence of variant CJD and for them to turn to me, if I am still around, and say, “Why didn’t we do something about it?” That is not a very big ask.
The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)
I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on securing this important debate on variant CJD and surgery. It is clearly an area on which he has a great deal of knowledge. I recognise that prion disease is the causative agent of transmissible spongiform encephalopathies such as variant CJD. It remains in many ways obscure and there are many aspects of these rare diseases that we are still in the early stages of researching. However, one thing I am confident about is that the UK system for ascertaining CJD case numbers has been for the past 20 years reliable and accurate. Our national CJD research and surveillance unit, which is based in Edinburgh and funded by the Department and the Scottish Government, leads pan-European work and has leadership from expert clinicians and scientists who, in 1996 following BSE, were the first to identify variant CJD as a separate form of the condition.
The Department recognises the potential seriousness of secondary—person-to-person—transmissions of vCJD and has since the late 1990s introduced a series of measures to reduce the risk of such spread, whether by blood transmission or by surgery. We are reassured that there have to date been no cases attributable to surgical transmission and only three cases of clinical disease attributable to blood transfusions, all of which occurred in or before 1999. However, our risk assessment models, which we use in our impact assessments of potential risk reduction measures, continue to take into account the potential for secondary—person-to-person—transmissions by both routes, in people with all genotypes and over potentially very long incubation periods, which my hon. Friend mentioned. This is why the scientific advice we have is that the surgical instrument measures in place are sufficient irrespective of the genotype.
My hon. Friend was right to mention the recent case. It was always anticipated on the basis of a wide body of published scientific work that, following the BSE epidemic, further cases of vCJD, including MV cases, might arise from time to time. We have seen that with similar diseases, such as kuru in Papua New Guinea, and studies suggest MV cases could be seen in small numbers for more than 30 years after exposure. Having reviewed the information about the case of vCJD in a patient with MV genotype, the Advisory Committee on Dangerous Pathogens has advised that no changes in the current risk reduction measures are needed at present. It advises that the measures in place are sufficient, irrespective of genotype, although of course the matter will remain under review.
It is important to stress that modern surgical equipment in the UK is very safe and that robust guidance is in place for the NHS on procedures and practices to reduce the risk of contamination of any kind, including the use of single-use instruments where possible and of decontamination practices. Where it is not possible to use single-use instruments in higher-risk procedures, there are processes in place to track the use of specialist equipment. As my hon. Friend will know far better than I do, there is a potential risk of vCJD transmission via dental surgery, and this has been recognised by the UK’s chief dental officers. In 2007, they issued letters to all dentists to advise that endodontic root canal reamers and files should be used as single-patient or single-use instruments.
Sir Paul Beresford
I am a little worried that the Minister appears to accept that surgical procedures are as good as they can be, given that the Department is inviting research to find a RelyOn equivalent, to improve the situation. The Department must therefore see a flaw in what we have at present.
Nicola Blackwood
My hon. Friend anticipates my next words as only an experienced Member of Parliament can do. I think it is right to say that there has so far been no evidence of any secondary, person-to-person, vCJD transmissions via surgery or dentistry. Nevertheless, we are maintaining and updating our precautionary approach. Surgical instruments guidance has recently been refreshed to support health organisations in delivering the required standard of decontamination of surgical instruments and to build on existing good practice to ensure that high standards of infection prevention and control are developed and maintained. My hon. Friend mentioned a number of these points.
The major change in this latest revision takes account of recent changes to the Advisory Committee on Dangerous Pathogens transmissible spongiform encephalopathy subgroup’s general principles of decontamination. This establishes a move towards in-situ testing for residual proteins on instruments. Residual protein is important because of the potential risk of the transmission of prions, though vCJD has not been shown to have been transmitted person-to-person in this way. The guidance provides information on how sterile services departments can mitigate the patient safety risk from residual protein with the objective of reductions in protein contamination levels through the optimisation of decontamination processes.
The ambition is that all healthcare providers engaged in the management and decontamination of surgical instruments used in acute care will have implemented this guidance by 1 July 2018. However, providers whose instruments are likely to come into contact with higher-risk tissues—for example, neurological tissue—are expected to give the guidance higher priority and to move to in-situ protein detection methodologies by 1 July 2017.
The chief medical officer has also recently written to NICE supporting the need to update its guidance on patient safety and the reduction of risk of transmission of CJD via interventional procedures, to ensure that it is fit for purpose, appropriately targeted, and can command the confidence of those who use it. We would expect this to take account of available evidence, including decontamination methods that are safe and effective against human prions; the epidemiology of CJD, including data on the prevalence of vCJD infectivity in the UK population from the appendix prevalence studies; and the availability and performance of single-use instruments in high-risk specialties. We would also expect the guidance review to be considered in the context of the latest research on prevalence, particularly for those born after 1996, who are currently considered unlikely to have been exposed to the BSE agent.
My hon. Friend is right, however, to say that adopting the precautionary principle alone is not sufficient. That is why successive UK Governments have been supportive of the development of new measures that might help in vCJD risk reduction. The Department of Health has provided over £70 million for CJD-related research in the last 15 years. That research has focused on infectivity, pathogenesis and transmission risk; decontamination of surgical instruments and the development of more sensitive methods to detect residual proteins to improve instrument cleaning; test development, treatment and diagnosis; and surveillance, screening, epidemiology and case finding.
Sir Paul Beresford
I accept everything that my hon. Friend says. However, a test solution is on the market and waiting to come through. The prion unit test has reached the point at which it just needs a final run to ensure that it does come through. I hope that I can count on the Minister to back me in persuading the MRC to support that last round of testing. If we could test blood, we would not have to import blood products from overseas. We could separate out the one in 2,000 or whatever the figure is and cut down on the costs of instrument storage.
Nicola Blackwood
That is one reason why the Department has continued in difficult financial times to ring-fence £5.5 million a year for CJD-related research. We are keen to see safe, evidence-based, cost-effective measures to reduce the risk of vCJD. At the moment, however, there is no validated diagnostic blood test that can be used before the onset of CJD symptoms to diagnose whether someone is infected or incubating the disease. We will of course take advice from the ACDP and the Advisory Committee on the Safety of Blood, Tissues and Organs on the use of any potential test in any proposed Department of Health-funded research study or deployment by UK blood services, but there are established systems for applying for research funds. We have put such funds out there, and any applications for those funds must go through the standard processes. To do otherwise would be to undermine the reputation for research excellence that the UK scientific community has fought hard to establish.
To that end, we recently launched an open competition, inviting proposals for research to further inform our risk-management and health-protection measures, including our understanding of vCJD infection in the UK population, the development of a test able to detect pre-clinical levels of infection in blood, and the development of decontamination technologies for reusable medical instruments. I understand that Professor Collinge’s RelyOn is one application that is currently going though that process, so it would be inappropriate for me to intervene.
I assure the House that the Department recognises the fatal consequences of all forms of clinical CJD and the devastating cost to individual patients, their families and carers, which my hon. Friend described movingly. That is why we set up the vCJD Trust in 2001 in recognition of their wholly exceptional situation and the fact that the Government are their last resort for help. The trust provides a no-fault compensation scheme for vCJD patients and their families, providing payments to be made in respect of 250 cases from a trust fund of £67.5 million. Over £41 million has been paid out by the trust to date.
Jim Shannon
In my intervention on the hon. Member for Mole Valley (Sir Paul Beresford), I asked whether compensation should be increased because of the number of years since the agreement was first made. With great respect and humbleness, I ask the Minister whether the Government would consider that.
Nicola Blackwood
The scheme is considered to be particularly effective. I shall look at it in the light of the hon. Gentleman’s comments, but it seems to be meeting current concerns. It is also important not to overstate the risks of CJD compared with other disease threats we face. The incidence is now low, with only two new cases in the UK since 2012. While every death is an individual tragedy and we must be alert, we need to ensure that finite resources—research funding, policy development or committee activities—are applied proportionately and are appropriately evidence based.
The ACDP continues to provide independent risk assessment advice on prion disease, informing both research priorities and public health measures to mitigate against risks from healthcare interventions, including the surgical, medical and dental procedures issues that were raised today. The ACDP is clear that risk to both patients and the general public is extremely low. Nevertheless, the current robust systems of active surveillance for CJD continue, and our experts maintain a close watch on new evidence, reviewing it as it becomes available. I assure the House that neither the Government nor the NHS has drawn back from our responsibilities to ensure that precautionary and proportionate measures are in place to protect patients from the risk of acquiring infection with prion agents during their healthcare. We have put in place robust research investment to ensure that the situation can only improve.
Question put and agreed to.
Petition
Symmetry Park Logistics
Technical and Further Education Bill (Fifth sitting)
Tuesday 29th November 2016
(7 years, 4 months ago)
Public Bill CommitteesRead Full debate Technical and Further Education Act 2017 View all Technical and Further Education Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 November 2016 - (29 Nov 2016)
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Chair
Members may remove their jackets during the sitting. Would everyone ensure that all electronic devices are turned off or switched to silent? The selection list for today’s sittings is available in the room. I have used my discretion to select amendments that were tabled only on Friday, for which the usual period of notice has therefore not been given, as I am satisfied that it was not practicable for Committee members to consider fully the policy statement supplied by the Government on Wednesday in time to table amendments before the deadline. I remind Members that we will consider the clauses and schedules in the order set out in the programme motion that was agreed last Tuesday, which is set out at the end of the amendment paper. We will now resume consideration of schedule 1.
Schedule 1
The Institute for Apprenticeships and Technical Education
Gordon Marsden (Blackpool South) (Lab)
I beg to move amendment 12, in schedule 1, page 23, line 6, at end insert—
‘(4A) The Institute must, in approving the group of persons specified in subsection (3), have regard to the desirability of the group’s members between them having experience of—
(a) representing or promoting the interests of individual students and apprentices, or students and apprentices generally;
(b) providing technical and further education;
(c) providing apprenticeships;
(d) at least one relevant trade union official;
(e) employing those who have completed technical and further education courses or apprenticeships; and
(f) any additional knowledge or profession that the Institute considers relevant.”
This amendment would ensure that the groups formed to set standards for the “routes” in technical and further education have relevant experience and include students in the process.
The Chair
With this it will be convenient to discuss the following:
Amendment 28, in schedule 1, page 23, line 6, at end insert—
‘(4A) The Institute, in carrying out its functions under this section, must show due regard for broad representation and diversity amongst the group of persons preparing each standard, including—
(a) gender and
(b) the representation of both large and small employers.”
Amendment 13, in schedule 1, page 23, line 20, at end insert—
(c) information about matters that it takes into account when deciding whether or not to convene a group of persons to prepare a standard for the purposes of subsection (6).”
This amendment would require the Institute to publish information about its reasons for convening, or choosing not to convene, a group of persons to prepare a standard for an occupation.
Gordon Marsden
It is a great pleasure to serve under your chairmanship, Ms Dorries. I express our thanks for the latitude given with regard to the amendments tabled on Friday, which is very welcome.
The commonality in these amendments is that they are designed to ensure that those who are involved in setting the standards for routes in technical and further education have relevant experience and that, where possible, students are included in the process. Amendment 13 would require the Institute for Apprenticeships and Technical Education to publish information about its reasons for convening or choosing not to convene a group of persons to prepare a standard for an occupation.
The skills plan consistently talks about the institute being employer-led, with college-based learning being decided by employer groups. That is precisely why further education colleges, other training providers and learners are an essential component of the roll-out and delivery of standards and assessments. I cannot emphasise enough how essential it is for the groups formed to set standards for the routes in technical and further education to have wide-ranging representation, including all key components of apprenticeship creation and delivery. The Minister will no doubt have heard several times—if he has not, I am sure he will in future—the term “co-creation” or “co-production”, which has come from many of the people in those groups.
Our vision for apprenticeships, which I hope the Government share, requires input from further education providers and colleges, and especially universities, given the crucial role of higher skills and degree apprenticeships. I will not labour the point that I made previously about how important it is, particularly in the context of higher skills and degree apprenticeships, that there is good read-across and co-operation between the office for students and the new institute, as well as the relevant trade unions, which have key experience, to ensure a broad outlook on new frameworks and accreditations. We believe that including apprentices and learners in that process is vital.
A representative of the National Society of Apprentices, which Members will know is associated with the National Union of Students, was scheduled to give evidence to the Committee last Tuesday, but unfortunately she was unable to attend because of illness. However, the National Society of Apprentices has said:
“At the moment, apprentices have no real opportunities to improve their education. Although most students going through the ‘traditional’ education system at college or university are able to give feedback through their class representative system, similar structures do not exist for apprentices.”
There is also the Industry Apprentice Council—I referred to it in a previous sitting—which is strongly supported by EAL and the Science, Engineering, Manufacturing and Technologies Alliance. Of course, there are other groups, such as the valuable group that Lindsay McCurdy and her colleagues convene, particularly around Apprenticeship Week, which involves a large number of different sorts of apprentices. Apprentices should be able to influence the way in which their training is developed and carried out. After all, they know from the frontline what has been helpful and successful for them and what has not. I hope that the Minister, who has been very passionate in his support of both apprenticeships and apprentices, appreciates that point.
It is also quite unclear what role there will be in the institute for workforce representatives and trade unions. I think it is appropriate to talk about that on a day when the Government, and particularly the Prime Minister, have again signalled their strong interest in making sure that, in some shape or form—the details will obviously have to be hammered out—there should be more workforce representatives involved in companies.
The TUC has said that it is crucial that
“Trade unions must be given a central role in setting and monitoring quality standards”
for technical education. After all, that is common practice in leading European economies with high-quality skill systems in place. Those systems are largely based on a social partnership model, which involves employers and unions agreeing standards and best practice at both national and sectoral level. Social partnerships have been key to the success of high-quality vocational routes in other countries, so I suggest that we would do well to take that lesson into account for our reforms of technical education. With particular regard to amendment 12, we might make a start in considering the composition of the groups formed to set standards for the routes. That is why I think it is important to give some form of direction to the new institute and its board of directors on that matter.
All the issues involved in getting the right sort of broad-based input are extremely important, because we have to get the routes right. We welcome the detailed and thoughtful proposals of the Sainsbury group. The Government are now, after some dithering, taking a new approach to the wilderness that has so far characterised aspects of skills policy, particularly in the technical and vocational areas. However, the devil is in the detail, and a number of stakeholders believe that the skills plan is not without fault. I mentioned in a previous sitting that the Opposition share the concerns of groups such as the Association of Employment and Learning Providers, and various others that we have quoted, about the potentially limited scope of the routes. I also spoke about the crucial role of the service sector, which will potentially provide huge numbers of apprentices with jobs and make sure that they are not left out of the process.
The Sainsbury review was clear that only jobs with technical aspects will be included within the 15 routes. I do not know whether the Minister was present at the recent Association of Colleges conference, as I was—I was not actually there when Lord Sainsbury spoke, but I read his remarks. I think there was some concern that he was—dismissive is perhaps the wrong word—too light on the importance of a significant number of jobs that are non-technical occupations, which currently lie outside the scope of these routes. I want to make it clear that we are not criticising the initial number of 15, and we are not necessarily arguing for the creation of lots more routes, but we are saying that, as this process develops, it is important that the Government generally, and the new institute in particular, pay attention to those jobs and to that training. We have to consider carefully the impact of workforce development in those sectors.
That brings me to amendment 13, which would
“require the Institute to publish information about its reasons for convening, or choosing not to convene, a group of persons to prepare a standard”.
The amendment’s underlying principle is transparency, because it is important to be able to monitor who is preparing the standards, in order to ensure that those standards will meet all of the requirements. However, it is also important as a signal of confidence to the broad range of stakeholders, who will not necessarily be directly involved in preparing the standards. The setting up of the new institute will be a busy period. With so many organisations involved in the process, transparency is crucial to provide students with the best available standards and to keep the rest of the stakeholders well informed.
I must again raise the vexed issue of capacity: the capacity of employers to put what they need to into the process, but also the capacity of the institute for oversight of quality assessment. We will move on to that when considering another aspect of the Bill. I just observe for the moment that the phraseology used in the guidance to the Green Paper is that there will be other options available, including Ofqual, professional bodies and others, and that some or all of those bodies may charge for doing it—or presumably not charge.
With those variables and parameters, there is inevitably some doubt about capacity, elasticity and the unpredictability of delivery from the new institute, certainly in the first couple of years, because other providers and options might have been taken up in the process of preparing standards. That inevitably raises concerns about whether the numbers for the new institute, as provisionally set out by Peter Lauener and confirmed by the Minister, will be adequate or what process there will be for boosting them if this somewhat variable geometry about who might take up the institute, as opposed to Ofqual and others, comes to pass.
Those are important issues and, again, a number of different agencies have commented on them. I draw the Minister’s attention to the written evidence submitted by the Association of Employment and Learning Providers, which states:
“Through its proposed funding mechanisms, the Government is encouraging employers and providers to move from Apprenticeship frameworks to standards by reducing the prices payable for frameworks, even though many standards are not yet in place. This makes it very difficult for providers to judge and therefore plan whether future provision will be viable. As has been reported in the sector press, apprentices have also started on Apprenticeships under a new standard without an EPA being in place, which means they have no means to complete it.”
That is the AELP’s view. I am not necessarily saying that I share it; I am just saying that this is one of the issues out there. It continues:
“The situation is exacerbated by the Government’s insistence that employers can negotiate with providers on the price of training and assessment.”
I would not necessarily agree with the AELP on that point—not in every detail—but the essence of what it says is this:
“Reform proposals may not currently be giving sufficient weight to the input of stakeholders and the concerns of and about learners, which must be rectified by the inclusion of stakeholder representatives on the Board of the Institute. We are therefore supportive in principle of the amendments to Schedule 1 of the Bill which have been tabled jointly by Gordon Marsden MP and Mike Kane MP.”
The AELP makes the strong point that the number of standards being developed, and the investment in time and resource required to develop them, could be leading to
“‘employer fatigue’ and a drop in employer engagement.”
We have also had written evidence from the Centre for Vocational Education Research. I know that the Government Whip is deeply interested in the bona fides of people who submit evidence to Committees.
The Lord Commissioner of Her Majesty’s Treasury (David Evennett)
Absolutely.
Gordon Marsden
We had a lively exchange on the issue when the Higher Education and Research Bill was in Committee. For the sake of the Whip, and indeed the whole Committee, let me explain that this evidence was prepared by the Centre for Vocational Education Research, whose people are stuffed full of qualifications from the London School of Economics. Even better—we cannot get much better than this—the Centre for Vocational Education Research is funded by the Department for Education and was launched in 2015. It states in its written evidence:
“An employer-led body as proposed by the Bill, in particular in the more competitive labour market of the UK, which does not engage with all relevant stakeholders, will not be able to achieve similar outcomes”
as they do in
“coordinated market economies…in Scandinavian and Western European countries”.
It states that the institute needs to
“bring together all relevant actors beyond the Department for Education and employers.”
It references unions,
“because of their role in life-long learning in the workplace”.
It also states:
“Associations of colleges and learning providers need a clear role in the Institute, and student associations and associations concerned with the interests of particular groups”—
I will not dwell on this now, Ms Dorries, because this will come up with one of our later amendments—
“also need to be involved from the start.”
It suggests that:
“Careers advice and…employment services…essential to balance short and long-term supply and demand in the labour market, need to be similarly engaged.”
That is the view of the Centre for Vocational Education Research, which touches on the three amendments.
I again underline a point made in the evidence submitted by the TUC, which specifically referred to the important role of the union learning fund. This year is the 10th anniversary of the official establishment of the union learning fund. The TUC commissioned an evaluation by academics at Leeds University Business School and the University of Exeter, based on surveys of employees engaged in training through the ULF and their employers. I will refer to two or three of the key findings. Over two thirds of learners with no previous qualification attained their first qualification as a result of engaging in union-led training. Four in five employees said that they had developed skills that they could transfer to a new job. And two in three said that those made them more effective in their current job.
Equally importantly, half of the employers said that
“their staff were more committed as a result of unions facilitating training and development opportunities.”
Separate analysis showed:
“Union-led training delivers an estimated net contribution to the economy of more than £1.4 billion as a result of a boost to jobs, wages and productivity.”
Those are also cogent points for broadening representation.
Finally, amendment 28 asked for the institute to show
“due regard for broad representation and diversity amongst the group of persons preparing each standard, including—
(a) gender and
(b) the representation of both large and small employers.”
For both your information, Ms Dorries, and the information of the Minister, this is a probing amendment, so we did not intend to include a list of all the potential groups that might be included; that would not have been appropriate at this stage. The reasons why we have highlighted those two are fairly obvious, I hope. First, the gender issue has already bulked large in our conversations in Committee. Secondly, because of the key role of large and, in particular, small employers—the Minister will know about the discussions on the delivery of the apprenticeship levy—it is crucial that those groups are involved.
The Minister sang the praises of the Apprenticeship Delivery Board the other day. It may be a fine body, but it was actually made up of members drawn from a relatively narrow section of business and, incidentally, had only one woman among its number. There was no role for others, such as further education providers, universities, trade unions and local authorities. There has been some progress with the number of women on the ADB—it has increased to three—but it is important that those lessons are taken on to a broad representation and diversity being found among the group of persons preparing each standard.
Kelvin Hopkins (Luton North) (Lab)
It is a pleasure to see you chairing our proceedings again this morning, Ms Dorries. I support the amendments tabled by my hon. Friend the Member for Blackpool South.
I do not want to be immodest, but I do have considerable experience in this field. I spent four years as the chair of governors at Luton College of Higher Education, which had welcomed thousands of apprentices through its doors. I have spent a total of 30 years on post-16 education governing bodies so I have very definite views. I have worked in the trade union movement; I was at the TUC for five years and I taught on trade union courses, so I have seen the involvement of the TUC and the trade unions in education. I spent 18 years working for NALGO and then Unison, which had a large department of education and undertook correspondence courses for local government officers.
I have seen a whole range of activities that are relevant to apprenticeships and post-16 education in the broadest sense, and I have definite views on what governing bodies should be like. They should not be too small or too large; they can become ungainly and unco-ordinated if they are too large. Equally, if they are too small and narrow in experience, they do not do a good job. I have seen both.
There is an optimum size for governing bodies, but I am talking about educational institutes, rather than the board of the institute. That board, however, will need the same kind of representation and a range of skills, and I have spoken in previous sittings about the importance of not having too narrow a field. If one has only a particular kind of business-led model, with small numbers of businesspeople of the same mindset and no challenge to that view, they will not necessarily pick up all the important issues that need to be discussed and considered when the board makes decisions and recommendations. Having a small body from a narrow field is not right.
The 1993 incorporation of post-16 education bodies—further education and sixth-form colleges—came from the then Government insisting on small, business-led governing bodies, which was a mistake. The governing body of which I was a member did not follow that model; we had a range of people with educational skills, a good degree of gender balance, and people from the community who were skilled in their fields and visibly representative of the very diverse community in which I live and which I represent. That is important as well. We also had skilled people with legal and financial qualifications. All that is so important in having a successful governing body.
One has to submit oneself to challenge if one is leading an important body, and intelligent, competent people have to be on board who have a range of views and will challenge things from time to time, but who will work positively and be supportive. The body should not go off in one direction, not be challenged and make mistakes. Mistakes have been made.
Even back in the 1990s, there were mistakes and some principals and leaders of educational institutions got out of control. They started paying themselves vast salaries and travelling abroad—ostensibly to recruit students, but actually they were just on jollies and looking after themselves. The Conservative Government of the time realised they had made a mistake and in the end came round to the kind of governing body that we had in the sixth-form college. It was a body of about 14 or 15 people, with a range of skills and representation. It is very important for the Government to recognise this point and to recommend, either in the Bill or through secondary legislation, what governing bodies and the board of the institute should look like. In particular, there should be representation from women, minority communities and trade unions, all of whom have expertise that will make the board function much better than if it was just led by a small group of businessmen.
As we know, the Confederation of British Industry and the Federation of Small Businesses often have different perspectives on business representation. The CBI typically represents global corporations, big business, banks and so on, whereas the FSB has an understanding of what it is like to be a small businessperson and of the needs of small companies. As my hon. Friend the Member for Blackpool South said, it is very important that small companies are represented, as well as large companies, and that we have those different perspectives.
I have probably said enough to reinforce my hon. Friend’s points and to try to persuade the Minister and the Government that what we are saying is sensible. It should be recognised and, at some point, included either in the legislation or recommendations by the Government. With those few words, I shall conclude.
The Minister for Apprenticeships and Skills (Robert Halfon)
I am grateful to the hon. Member for Blackpool South for tabling the amendment, and to him and the hon. Member for Luton North for what they have just said. I fully understand the concerns regarding the group of persons convened by the Institute for Apprenticeships and Technical Education to develop the standards, and I agree that the reforms to technical education should be informed by a balanced and diverse range of industry professionals. I also share the view that the institute should have a clear and transparent rationale for bringing together groups of persons to develop the standards.
I wish to comment on some of the issues raised by the hon. Member for Blackpool South. On apprentices and education, he will know that, as part of the reforms we have introduced, apprentices have not only to do the full-time, on-the-job training that is their apprenticeship, but to spend a significant amount of time at an educational institution, whether a private provider or an FE college. That offers them the education they need while they are earning.
Apprentices are able to give feedback to the employer and the provider. At the beginning of the apprenticeship, all parties have to sign a commitment setting out the roles and responsibilities, which include the giving and receiving of feedback. The apprentice is also able to give feedback during the review of the standard and assessment plans, and we can include that in terms of the guidance note from the Secretary of State.
Gordon Marsden
That is very encouraging. I know that that feedback process takes place; as I say, it has been welcomed by the various groups. I do not want to make things over-bureaucratic, but is there going to be a formal, or at least easily understandable, mechanism whereby apprentices can feed in—either as a group or as individuals?
Gordon Marsden
I am sorry, Ms Dorries. If the Minister is not in a position to say anything more on that today, I would welcome a note to the Committee at some point.
Robert Halfon
I will provide one, but I am always against very formulaic structures; things need to be flexible. The fact is that we give the opportunity for the apprentice to feed back at every step of the way, and the agreement has to be signed by the employer and the apprentice when the latter starts.
On the representation of small businesses, the hon. Gentleman will know that the trailblazer groups—there are roughly 10 employer organisations altogether—have to have a minimum of two businesses with fewer than 50 employers. We envisage that the employer panels will be the same. I am happy to reflect on that being included in the remit letter for the institute. We are also investing taxpayers’ money in huge incentives to encourage small businesses to hire apprentices and to encourage providers to take people on. We are doing everything possible to use taxpayer investment to ensure that small businesses hire apprentices and that providers do provide.
I would like as much as possible to be done by FE colleges, and I would be delighted if they took on more apprenticeship training. That is happening slowly, but I think they would be very willing. I have seen it happening in my own constituency of Harlow: whenever there is an issue to do with a company wanting an apprentice, Harlow College will be there, ready to advise the employer on what should be done and to offer training if it is required.
On the wider issue of the technical routes, I disagree with the hon. Gentleman. I shall set out the context of the problems we face. I have been quite open in admitting that we have a huge skills deficit in this country. The OECD said in 2012 that 20% of young people lacked basic skills. By 2020, the UK is set to be 28th out of 33 OECD countries for intermediate and technical skills. We are way behind.
The whole purpose of the reforms and the legislation—this is why Lord Sainsbury has supported them—is to ensure that we have state-of-the-art technical education for young people that transforms our skills deficit. People who do not want to do one of those 15 state-of-the-art routes, for technical and professional education, will have different options through other applied general qualifications and the academic route. The reforms focus on occupations that require the acquisition of a substantial body of technical knowledge and a set of practical skills that are valued by industry and that address employers’ needs and our huge skills deficit. I am glad that the hon. Member for Blackpool South quoted the Centre for Vocational Education Research, which my Whip guarantees is a blue-chip organisation.
Robert Halfon
Indeed. The centre says:
“We welcome the Report…led by Lord Sainsbury…the subsequent Post-16 Skills Plan”—
by the Government—
“and the measures contained in this Bill. The recommendations are consistent with our findings”.
It continues, and this is the whole point of the argument:
“Part of the problem is undoubtedly the confusing array of options, with uncertain pathways, that are on offer for young people after age 16. There must be a system that students, teachers, parents and employers…understand. Otherwise it is difficult for young people to be matched up with courses that are suitable for them and for employers to understand what qualifications actually mean.”
Gordon Marsden
I understand the Minister’s points, and I tried to make it clear that I am not asking for a huge response—we do not want to end up like the wax in a lava lamp, which starts off as a great base and goes up to the top before, after some time, becoming big again. I understand the need not to have duplication, but the AELP and others made a particular point about the service sector. Is the Minister not concerned that, if the Government are not careful, they will be, by excluding a large part of the service sector, in danger of sending out a binary message that certain sorts of occupations are valued and others are not?
Robert Halfon
No, because this is about technical and professional education. There are 15 routes, and people have many other ways of doing the vital training for the other areas that the hon. Gentleman mentions. People can do an individual apprenticeship, they can do part of the Government’s training scheme or they can do work experience. This is about addressing our skills deficit and, similar to what happens in other countries, ensuring that we have the technical education that our country needs.
On capacity, the institute will ensure that arrangements are in place for evaluating assessments. There are different options for employers and others to develop the standards. We will discuss the assessments later, but I will set out the current figures on apprenticeship assessment. On standards, some 61% of all apprentice starts have an end-point assessment organisation available to them, whether or not they are close to needing an end-point assessment. That figure rises to 94% for all apprentice starts, including those who are expected to reach the gateway—the end of their apprenticeship—within the next 12 months, where an organisation is close to being put on the register. We are considering a number of options and we will discuss them later, but the situation is not as bleak as has been said in respect of the assessment organisations and what is being planned and done.
The hon. Gentleman addressed the levy and the autumn statement, and I am pleased to say that we will still have £2.5 billion available for the levy, regardless of the announcements in the autumn statement. The Government are determined to create an apprenticeship nation, and by 2020 the spending will have doubled to £2.5 billion. We have discussed the providers, but I am happy to reflect on action that could be taken to ensure that SMEs are offering training that is relevant to their apprentices. I am pleased by the response from the providers so far.
The amendment raises other issues of concern. We need to learn from previous models, but there is a risk that requiring specific representation on the panels may not always be appropriate and may result in standards that do not have labour market currency. The purpose of the reform is quality, not quantity. If the panels try to do too much to please too many different groups, ultimately they might not support young people and adults in getting high-quality technical education to progress into skilled employment. The problem is that there is a proliferation of qualifications.
I agree that the groups should be as representative as possible, however. The Sainsbury report makes it clear that the institute will be best placed to ensure that the right people are brought together to develop the standards. Institute staff with expertise in specific occupational areas will know which employers and other stakeholders are suitable to develop standards that are representative of the occupations within the specific routes. The institute is independent. It should be for the institute to manage the composition of groups, and we should not constrain that process.
As for the approval of the groups that are not convened, it is for the groups to come together to put proposals to the institute. That has been the hallmark of the employer-led reforms, which, again, have been based on best practice in other countries. The groups should be flexible enough to reflect the requirements of specific occupations. In some occupations, such as blacksmithing, there are few large employers, while there may be other occupations in which there are no smaller employers or in which there is a bias towards a particular gender. On that point, I remind the Committee that 53% of apprentices are women, which shows that we are making significant progress, although of course we need to do a lot more to get women into STEM—science, technology, engineering and maths—and other key areas.
There are other ways in which views can be taken into account through the institute’s wider structure. Crucially, each route will have its own panel making decisions about the provision within that route. Standards will also be subject to peer review, the purpose of which is to ensure that the proposals meet wider needs. The institute’s board is open to applicants with a wide variety of interests. We hope to announce the composition of the board—genuinely—in the very near future. I firmly believe that once that announcement has been made, the hon. Member for Blackpool South will agree that there is important representation.
Kelvin Hopkins
Does the Minister agree that it is important to appoint the right person as chair of the board of the institute? We have had big, forceful characters in the field of public education, and sometimes they get it right and sometimes they get it wrong, but choosing the right person with the right skills and the right character to lead is crucial.
Robert Halfon
The hon. Gentleman is absolutely right. The board and the chairman are both incredibly important. The person has to have incredible knowledge of the field, as well as the charisma, connections and ability to drive the institute forward so that it can transform technical education in the way that we hope it will.
The Secretary of State will provide advice to the institute once a year on how it should carry out its functions, and the institute will have to have regard to that advice. As I have often mentioned, we will consult on the draft of the first guidance letter and provide advice on who the group of persons should be. We plan to encourage the institute to ensure that others with relevant knowledge and experience are included, as well as employers, professional bodies, sector experts, providers and assessment organisations—the more FE representation the better. The institute will need to explain in its annual report how it has taken that advice into account or, if it has not done so, explain why. I hope that that provides reassurance.
On amendment 13, the decisions to convene the panels will be driven by a robust evidence base. If the evidence shows that there is a need for a standard to be developed, the institute will be able to convene a group of persons if the trailblazer group has not already come forward. The need for the standard to be developed will be driven by the relevant occupational map. There will be an occupational map for each category of occupations or route. The maps will be underpinned by analysis of the labour market information and will illustrate how occupations are grouped together according to their shared requirements for skills and knowledge. The occupational maps will therefore provide the evidence base for all the provision within the route.
Robert Halfon
Absolutely. They will be available on the institute’s website. The institute will publish information so that employers and others know what is required to gain approval to become a trailblazer group. Amendment 13 is therefore unnecessary, because the need for a standard in the absence of a trailblazer group should be the only trigger for the institute to convene a panel. Where the institute convenes a group to develop a standard, its approval of that group is implicit.
In light of that information, I hope that hon. Members agree with this approach. Designing the system around clearly identifiable occupations, and bringing together employers and others to identify the skills, knowledge and behaviours needed for those occupations, will ensure the new system genuinely meets the needs of employers and technical education. I hope the hon. Member will feel reassured enough to withdraw the amendment.
Gordon Marsden
I am very grateful to the Minister for going into detail and for the thoughtful and measured way in which he responded on the three amendments. It is a very techie but extraordinarily important area to get right. The intervention by my hon. Friend the Member for Luton North about the chair was particularly apt in that respect, and I am glad the Minister recognises those points.
I am interested to hear the Minister say that £2.5 billion will still be made available for England. Presumably, that means there will be less available for Scotland, Wales and Northern Ireland. If I am wrong on that matter, I ask him please to come back to me. It was quite clear in the autumn statement that the figure was £2.8 billion, so I just assumed that it would go down to £2.3 billion. If the Minister assures me that it is £2.5 billion, that is obviously good news for England.
We share a view on the direction of travel with the routes, but I am not as sanguine about what the Minister said about the technical side. We will reflect on that. I am pleased that he has given more detail on the occupational standards and that he has addressed the SME and gender issues. Again, we may have a further discussion at some point about the mechanisms in that respect. On the whole, he has given a positive and reasonable response. We can always come back to these issues on Report, if necessary. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Gordon Marsden
I beg to move amendment 14, in schedule 1, page 24, line 6, leave out “as it considers appropriate”.
This amendment would require the Institute to publish apprenticeship assessment plans for all standards.
The Minister may want to say the same sorts of things on amendment 14 as he touched on under amendment 13. Nevertheless, I rise to move the amendment because it would require the institute to publish apprenticeship assessment plans for all standards. I hear what the Minister says about numbers and everything else. I shall reflect on that and drill down into the detail. However, recent analysis shows—this, of course, is real-time experience—that there are no approved awarding organisations for over 40% of learner starts on the new apprentice standards. Number crunching on the Government data that were published in October suggests that that applied to 1,790 or 42% of the total number of starts so far on the employer-developed programmes.
I accept, as I am sure will the Minister—it must make him tear his hair out at times—that because moving from frameworks to standards is an iterative process, there will be complications. There will be stats that do not appear to fit, and all the rest of it. I am not criticising the fact that there will be an element of confusion. However, those apprentices on the standards will have to pass end-point assessments for the first time, so those assessments have to be carried out by organisations that have been cleared for the task by Government or the Skills Funding Agency-registered apprentice assessment organisations.
I come back to my opening remarks on the previous group of amendments about the degree of uncertainty that still exists about how this will settle down in terms of what the institute does as opposed to other well established bodies such as Ofqual. Because of that, it is important that we have transparency on who is being cleared and who is doing the clearing.
The Minister may be familiar with the observations of Dr Susan Pember, who stood down as the civil service head of further education and skills investment in February 2013. I am very familiar with Dr Pember. On one famous occasion, when we had challenged the Government on various things, she said that we had been challenging them too much. The Minster’s predecessor, the right hon. Member for South Holland and The Deepings (Mr Hayes), said that we were absolutely right and that that was the role of the Opposition. Dr Pember has said:
“It is diabolical to let an apprentice start a programme without explaining not only what the end test will contain, but where it will be, what shape it will take and who will be the organisation—
that is the key point—
“to oversee and manage the process.”
We are told that the Department for Education—the Minister can contradict this if he wishes and it would be very pleasant were he able to do so accurately—is still struggling to recruit enough of those assessment organisations. Indeed, one of its spokespersons said:
“We know there is more work to be done to ensure we have the range and breadth of high quality assessment organisations we need.”
We are also concerned that the slowness with which this process has been taken forward has meant that students have not started on some apprenticeship standards for two years after they were launched. I appreciate that this refers to matters that took place not on the Minister’s watch, but it will colour and inform what people think about what the new institute does and what guidance the new institute is given in this respect by Ministers. The backstory, as it were, is an important one.
FE Week has looked at the latest Skills Funding Agency data, specifically the first standards that were given Government sign-off in 2014. It found that there were no starts at all in that academic year, or in 2015, while low numbers of students were recorded in several others. There may be an element here of what I described in a previous sitting as the very slow process of taking these trailblazers though. On that occasion, I alluded to the issues raised by the Transport Committee about the time it had taken to passport various standards that were developed in the maritime sector into the required frameworks for the SFA.
The National Skills Academy for Food & Drink took a lead role in developing one of the apprenticeships that ended up having no learners for food and drink maintenance engineers. Its chief executive frankly blamed the Government. She said that employers involved with the trailblazer group led by the NSAFD, which developed the standard, had been
“frustrated by the evolutionary nature of the government’s decision making process for approval. We were advised at the start that this new and innovative approach was called ‘open policy-making’… Unfortunately policy implementation does not lend itself well to this approach and valuable employer time and effort has been spent unpicking decisions made as policy decisions have firmed up. This has led to redrafting, reworking and lost time, such that the industry has written to the new skills minister, requesting that the Department for Education implements a far more structured and clear process for the future.”
That refers to things that have happened historically in the last couple of years, but the Minister will understand why, on the basis of that, we are keen to make sure that the institute publishes all of its apprenticeship assessment plans for such standards in a timely fashion. Will the Minister, if he is able to, tell us what is the status of his response to the NSAFD on that issue? Its chief executive, Justine Fosh, said that the standard had not been ready for apprenticeship starts until the beginning of this academic year, but that
“at least 60 students I know of”
have started since September.
That is only one example, but as this process strengthens and multiplies, as it needs to do to meet all the Government targets, the Government will have to pay close attention to this issue of capacity and this iterative process, otherwise they will find themselves in a logjam of standards approvals as early as the middle of next year. That is the point at which any Government of any political persuasion, when they have the Opposition or other stakeholders bearing down on them, might be tempted to cut corners. We do not want to see corners cut, but we, like the stakeholders, want to see what progress is taking place in real time. That is why we have put amendment 14 before the Committee today.
Robert Halfon
The hon. Gentleman said that there was a slow process in taking the trailblazers through. We have committed to carrying out all Government checks and approval processes within six weeks. The average development time is one year. The policy has changed over time and the employer groups have had to make amendments at times.
Under previous amendments, I set out the position on the 61% of all apprentice starting standards. That rises to 94% of apprentice starts, including those that are expected to reach their gateway. We have had some difficulties relating to low volume apprenticeship standards and we are considering recommending a targeted procurement organisation for a bundle of these standards. We are doing everything possible to make sure that the proper assessment organisation is in place.
The amendment recommends that all published standards must be accompanied by an assessment plan. The legislation already allows for the institute to publish assessment plans for standards as it considers appropriate. The flexibility on this is intentional. Our objective is that the Institute for Apprenticeships will assume responsibility for college-based technical education. At that point, standards will apply to both apprenticeships and the college-based routes, but assessment plans will still only apply to apprenticeships. College-based technical education will be tested in a different way because it is taught in a different way, even though it may be testing similar outcomes. It will be up to the panels to decide how each college-based course should be tested, but the proposals have to be scrutinised and approved by the institute. There will be some standards that are not appropriate for apprenticeships and that will be used only for the college-based routes; it is therefore unnecessary to develop and publish a plan for those standards. I hope the hon. Gentleman is reassured enough to withdraw the amendment.
Gordon Marsden
I am grateful to the Minister for his explanation and for his candour in admitting that there is still some way to go on the issue of capacity. I welcome what he said about procurement organisation. I am prepared to withdraw the amendment, although I would like to reflect on the Minister’s point about college-based technical education being best tested in a different way. A different way may be appropriate, but one would not want it to be seen as different in terms of quality. Is he able to say today—if not, perhaps he can write a note—whether more details of how that process will operate will be published? I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Gordon Marsden
I beg to move amendment 15, in schedule 1, page 24, line 20, at end insert
“and must include the following representatives—
(a) a number of employers which, taken together, comprise a broad range of employer within the given occupation;
(b) at least one relevant trade union official;
(c) at least one person engaged in delivering relevant education at the level of the standard being assessed; and
(d) at least one person who can represent or promote the interests of students.”
This amendment would ensure that groups developing apprenticeship assessment plans include adequate representation of all relevant stakeholders.
The Chair
With this it will be convenient to discuss amendment 16, in schedule 1, page 24, line 37, at end insert—
(c) information about matters that it takes into account when deciding whether or not to convene a group of persons to prepare an apprenticeship assessment plan for the purposes of subsection (9)”
This amendment ensures the Institute must publish information about its reasons for convening, or choosing not to convene, a group of persons to prepare an apprenticeship assessment plan in respect of a standard.
Gordon Marsden
The amendments take us back to the heart of the principle that we think should be guiding the establishment of this institute. There is no broad difference between the intentions of the Minister and indeed the Government about the need to involve a broad range of stakeholders. The issue is perhaps—though I hope not—how we create mechanisms that effectively deliver that process. The Minister and you, Ms Dorries, will be familiar with the proverb, “If wishes were horses, beggars would ride.” I am not suggesting that the Government want to put in place a beggarly structure for the institute, although some of the issues around capacity still need to be resolved. It is fundamental to make sure that groups developing apprenticeship assessments have adequate representatives of all relevant stakeholders. I do not think we can simply do that by saying, “We can leave it up to the individual groups.”
I have served on enough Committees in this House to know the danger of prescribing particular quotas for people from certain areas. I am not going to take us too far down memory lane, but in the early 2000s, when the then Government were developing policies on further education, we had lively debates on some of the new structures and whether, for example, there should be a trade union person on every area council. I am acutely conscious of the dangers of tokenism in quotas.
Kelvin Hopkins
I understand the point my hon. Friend is making, but surely the sensible way forward is to have broad guidance, either in the Bill or in subsequent secondary legislation.
Gordon Marsden
My hon. Friend is absolutely right. He has huge experience in this area and in the structures that have come and gone. It is about getting the balance right. I come back to something I said on Second Reading: when one is establishing new institutions, it is important not just to set frameworks and assessments but to set the tone. It is the tone that will determine whether the Government, or in this instance the institute, get the buy-in and involvement that will make that institute a success.
When we discussed the issue of capacity, the Minister was absolutely right to say, “Well, it’s not simply a question of who’s on the board. It’s all the various other groups of people who are involved on the various sub-groups, and all the rest of it.” However, the buy-in will depend upon those groups feeling that it is made very clear in the Bill that there is a place for them. As I say, it does not have to be a sort of automatic quota-type thing, but it has to reflect something solid and positive.
We had a relatively lengthy discussion of this principle under the Higher Education and Research Bill, in relation to the office for students and who in that new office should be involved from the student body. The thing that got the headlines was about putting students on the office for students board, but the amendments that were tabled during discussion of that Bill referred to other bodies as well, such as the assessment groups.
That discussion is relevant to the present one because the issues are broadly similar, with the exception that in the higher education world the principles and the organisations that allow involvement by other stakeholders have been far more developed than they have been in the technical education world. Therefore, we think it is very important that matters such as the contribution of other stakeholders to the assessment process, as well as trade unions, colleges and providers, should be put in the Bill. In the Higher Education and Research Bill Committee, the Minister’s colleague said, “Well, yes, it’s really important that all these things happen,” but they had to happen miraculously, without being put in that Bill. The Committee divided and the Government had their way, but I am glad to say that the Universities Minister went away, reflected, and tabled an amendment on Report which, although it did not give us everything that we and other stakeholders might have wanted, established the broad principle that students should be involved on the board.
I ask the Minister today to think carefully about this issue in the context of other advice that he might have received from elsewhere. I also say to him that it is much better at this stage to send that signal to stakeholders, some of whom are already concerned about whether they are part of this great step forward, than it is to shelter behind the idea of, “Well, we don’t want quotas, so we don’t want to have at least one person who comes from a broad range of employers in a given occupation, or at least one relevant person from the trade unions, or at least one person who can represent or promote the interests of students.”
Getting the tone right at the beginning is absolutely crucial to get the buy-in that everyone who wants this institute to be a success needs. If the institute is going to be accretive in its first year, when it will deal principally with apprenticeships, and in the second year it will take on the elements for technical education, then the Government have time to put the practical implications of this amendment into practice. There does not have to be a big bang, and then officials will say, “Well, how do we identify these people? How do we do it?” That is the point of amendment 15.
As with amendments 16 and 14, we still regard it as imperative to see who is assembled to prepare an apprenticeship assessment plan. It is also valuable to be able to experience that process in real time and to see what it takes to introduce and check assessment plans. Those are the principles underlying an addition to the Bill that is modest, but extremely important in setting the tone and sending the message about all the good and generous things that the Minister talked about only a few minutes ago such as inclusion and ensuring that all talents are taken on board. If faces are set against the measure, there will be much disappointment among stakeholders.
We and the Government want the institute to start off with that broad co-operation—not co-operation through gritted teeth, with people saying, “This is what you’re doing as a Government, so we’d better knuckle down and get on with it.” We want people to say, “Yes, they’ve got it right. We want them to go forward with this.” Amendment 15, which is a modest proposal, would be a great benefit in that respect. That is why we are moving these amendments.
Kelvin Hopkins
I will speak briefly in support of my hon. Friend. The reality is that those who have become chief executives and chairs of organisations—those with leading roles—are frequently strong characters who want their own way. Some will not want to include in their organisations and structures people who are likely to challenge them. I have seen at least one notorious leader—he has now left, I am pleased to say—who wanted his own way. He would have liked acquiescent, docile and amenable people in his organisation, not people who put alternative points of view, which is actually often a healthy thing. In this place, we want people to put forward alternative points of view and have a range of opinions, even within parties, so that we get things right. We can make mistakes if we allow a wilful leader to have their own way without ever being questioned, let alone challenged.
My hon. Friend is right. We do not want to cause problems within these bodies, but it is important that a range of insights into what is being done is represented within them. I have concerns about giving too much power and freedom to wilful individuals who may not wish to be constrained by having, for example, a trade unionist on the board. Indeed, there are those who will not want a trade unionist on a body, whether that body is a board or a committee deciding on apprenticeships. I strongly support my hon. Friend and hope that the Minister can be persuaded.
Robert Halfon
This discussion is incredibly important. I understand that the hon. Members for Blackpool South and for Wythenshawe and Sale East who tabled the amendments want a quality, fair, open and genuinely representative institute at all levels. For me, this is not an argument about quotas. There are three issues: that the institute gives us high-quality technical education that meets our skills deficit; that the institute is independent, but employer-led because, as the Sainsbury report argued, that is how we will achieve that goal; and the question of the best way to achieve representation.
I welcome the intention behind amendment 15, which is to ensure that the groups who develop assessment plans are representative of the sector and others with an interest in ensuring high-quality assessment that really tests the achievement of the standard. That is what we want to do. The experience of the past few years from running our own trailblazer process is that the vast majority of groups that have come together to develop the standards and plans have been representative of the sector. Like the hon. Member for Luton North, I am not opposed to trade unions. I am a union member and very strongly support Unionlearn, which the hon. Member for Blackpool South mentioned. I hope very much that the trade unions will be involved in some way or another.
Kelvin Hopkins
I know very well the Minister’s record and admire the fact that he is a trade unionist, but not all politicians in this place are quite so at ease with trade unionism. Indeed, in the world outside not all are as admirable as the Minister in his support of trade unions.
Robert Halfon
I thank the hon. Gentleman for his comment but I think the issue is about how to create that representation. That will be the point of discussion between us.
In the institute, we have designed an organisation that will be able to carry out apprenticeship functions independent of Government, so that the decisions have credibility with employers. The Enterprise Act 2016 gave it autonomy in determining who should be approved to develop each standard and related assessment plan. The idea was to ensure that it had the flexibility to respond differently to different sectors and ensure that the groups are representative. Although it is right that the institute is independent and can make its own choices about how it operates, it is incredibly important that the Secretary of State is still able to give it guidance through a written statutory notice. The institute must have regard to the statutory notice and must justify its actions if it chooses to disregard the advice.
We will shortly consult on the draft of that guidance and that will provide advice on who the group of persons should be. I very much want to encourage the institute to ensure that others, beyond employers, with relevant knowledge and experience are included. As I said in the previous debate, that would be professional bodies, other sector experts, FE providers, other providers and assessment organisations. I strongly encourage hon. Members of all parties to engage in the consultation and give their views.
On amendment 16, I appreciate the interest in ensuring that the institute must be transparent in why it convenes groups and develops an assessment plan. It is essential that we avoid the proliferation of new standards and assessment plans, learning from the experience of previous apprenticeship frameworks. The whole purpose of the reforms is to ensure quality over quantity.
I am sure that hon. Members are aware that in formal technical education, standards form the basis of both apprenticeships and college-based technical education courses. With reference to the previous debate, the quality will the same whether it is the assessment of an apprenticeship or classroom-based education. It just reflects the nature of the different delivery between apprenticeships and college-based courses. Quality is everything; it is the whole purpose of the reforms.
In addition to employer demand, the need for the standard will be informed by the occupational maps. There will be an occupational map for each category, and the maps will be underpinned by labour market information. That is the best way to provide an evidence-based road map for all the provision within each route. The institute must ensure that standards exist for all skilled occupations that need them. Where an approved group of employers and other persons is not available, the institute will be able to convene a group to develop a standard and an assessment plan where necessary, but the occupational map must be the primary factor for determining whether a group of employers is convened. The occupational maps, as well as the approved standards, will be available on the website. The institute can convene a group to develop a standard only if one has not come forward organically, motivated by employer demand. The only other criterion that the institute will use to convene a panel itself is the occupational map, which is publicly available. Therefore, the information that the amendment requests is unnecessary.
The amendment could also have the effect of requiring the institute to publish its set of criteria for who should form the group of persons who will develop the assessment plan. As I said response to amendment 15, it is up to the institute as an independent organisation to decide the detail of how it carries out its functions, but I will reflect seriously on what has been said. I believe in strong representation in all parts of the institute, and we can suggest that it be part of the Secretary of State’s guidance to the institute. For that reason, I hope that hon. Members will feel reassured enough to withdraw the amendment.
Gordon Marsden
The Minister, with thoughtfulness and detail, has taken much the same view on amendment 16 as he took on amendment 15, and I will do the same. I heard what he had to say. It is one of those issues on which we agree to disagree, but as he said, we will have the opportunity to pursue it when the guidance is issued. On that basis, I am content to withdraw amendment 16.
On amendment 15, I have listened carefully to the Minister’s measured and thoughtful response. We are not disputing that the process must be employer-led. That is why we particularly say in the amendment
“a number of employers which, taken together, comprise a broad range of employer within the given occupation”.
That is the issue: there must be somebody in that group who knows their stuff.
This might be a fundamental philosophical difference between us. I find it odd that the Government should so set their face against putting in the Bill the principle that there should be a trade union representative, or indeed someone who could represent the interests of students or apprentices. I was tempted on that basis to press the amendment to a vote, but I will not. I have heard what the Minister said. We will wait to see the guidance, and we will want to contribute to it. As I said, we can always return to the matter on Report. With some reluctance, but recognising his bona fides in the matter, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Gordon Marsden
I beg to move amendment 29, in schedule 1, page 25, line 17, at end insert—
‘(5) Regulations under subsection (4) shall be laid before Parliament and shall be subject to the affirmative resolution procedure.”
Heaven forfend that I should criticise groupings, but what I have to say to amendment 29 is probably very similar to what I will say to amendments 31 and 33. It is an important principle when setting up a new organisation that, at least during the first year or couple of years, it should make the process of regulation as transparent and open as possible. I say this with no disparagement or criticism of the Minister and the current Administration, but Governments of all descriptions have an enormous tendency not to do so when they set up new things.
To return to the point made by my hon. Friend the Member for Luton North about the need to have people testing and refining the arguments, it is easy to say, “Let’s have it done according to the negative procedure. After all, this legislation is only delegated and passported in, mainly from the Apprenticeships, Skills, Children and Learning Act 2009.” Before anybody says, “That was done under a Labour Government,” I will say yes, it was done under a Labour Government, and when I sat on Committees under that Labour Government, I regularly criticised the Government’s use of the negative procedure, especially when we set up new institutions. Famously, I and colleagues demanded that the Labour Government did not use that procedure for the casino in Blackpool, and we had to have a full hour and a half of debate on the Floor of the House. I think that, in those circumstances, I did my duty to both my constituency and parliamentary transparency. That is the principle behind why we are saying in amendments 29, 31 and 33 that regulation should be subject to the affirmative procedure.
The affirmative procedure, as you well know, Ms Dorries, is not the most onerous of burdens on Ministers and civil servants. It merely guarantees that there will be often quite limited discussion among a group like this one in a Committee Room. As the Minister will recognise, in those proceedings, even if the measures are not pushed to a vote, sometimes things are said and done that cause Ministers to reflect, to go away and to improve legislation, and, in this case, to improve the directions. The other point to be made—
The Chair
Mr Marsden, I did not want to disturb you in full flow, but it has just been pointed out to me that the grouping of these amendments is provisional. Would it be convenient for you, while you are in full flow, to speak also to amendments 31 and 33 to save time later? Then I will not call them.
Gordon Marsden
Absolutely. Ms Dorries, you make the point that all three amendments are designed to respond to that proposal. Having sweated blood over getting it, I want to refer to the famous policy statement for clause 1. From page 5, that gives the justifications for the Government’s proposals to treat these three areas according to the negative procedure. I am looking carefully at what is said about section A2B on page 7, section A3A on page 8 and paragraph 33 on page 8; those three sections relate to the three amendments we have tabled to change to the affirmative procedure.
In the commentary on paragraph 33, the policy statement says:
“Justification for procedure: this is essentially an administrative transitional provision to allow for the work…to continue by the Institute.”
On section A3A, it says:
“This is consistent with the existing power in relation to apprenticeships…and for which regulations have already been made and laid using the negative procedure”.
On section A2B, which relates to the first of our amendments, it also says:
“It is considered that a regulation making power subject to Parliamentary scrutiny is appropriate and provides flexibility…when new functions and procedures are being used for the first time.”
It talks about the amount of the fees chargeable in relation to particular assessments, what an appropriate fee is and all the rest.
Ms Dorries, we would be mad—I certainly would be—to want to have a major debate on, or to put in the Bill, what should or should not be prescribed for fee charges, in terms of the new evaluation of apprenticeship assessments. People would think we were bonkers. However, the principle of how to administer that, and particularly whether there should be charges or not—a live issue at the moment, being represented to us in briefing documents from various sectors—is quite important.
It is important that there is a set formula saying that this will be debated in a Delegated Legislation Committee, on a statutory instrument of some description, on the affirmative principle. Again, that gives support and value, and sends out that signal of inclusion to the stakeholders who will be significantly affected by the results of those affirmative resolutions or the negative procedures. That particularly applies to training organisations, which will be significantly affected and challenged by the changes—at least, that is what they have all said in their representations to us. That is to say not that the changes are bad or wrong, but simply that they are significant enough to be carried out through the affirmative rather than negative procedure.
Robert Halfon
I thank the hon. Gentleman for his scrutiny. I need to explain the context of why we have chosen to go down this route. We have had a lot of discussion about the quality and evaluation of apprenticeship assessments. Ensuring consistency between assessments will mean that an apprentice can be sure that, wherever they obtain their apprenticeship, they are being judged on a fair and equal basis.
Our aim is that the institute should work to ensure that an apprentice in Hull and an engineering apprentice in Blackpool both have consistent and high-quality assessment. The power that allows the institute to charge for its role in reviewing assessments is critical to enabling it to discharge its function of evaluating assessments effectively.
Other organisations approved by the institute to carry out a quality assurance role in relation to apprenticeship assessments, such as professional bodies, are likely to charge. If the institute were unable to charge, there would be an increased incentive for employers to use the institute instead of the other options, and the extra running costs would ultimately fall on the taxpayer. It follows that, like other organisations, the institute should be able to charge for its work and to recover all its costs.
Importantly, the specific fee is likely to be adjusted over time for a range of reasons, such as to reflect any changes in the institute’s approach to carrying out evaluations and as assessments are updated and altered. Additionally, as the Committee will appreciate, the institute is still finalising the operational detail on how it will carry out some of its functions, including the evaluation of assessments, which we have just debated.
The actual amount that the institute will need to charge is not known. It is conceivable, although it has not been decided, that there could be different fees in different cases to take into account the cost of evaluation in different sectors. I reassure the Committee that the policy is that organisations should be able to charge only to cover their costs. We will make that clear to the institute in the guidance letter. Of course, the institute will be able to charge only if authorised to do so, and subject to the restrictions set out in the regulations.
It is likely that the fees would need to be reviewed quite frequently to ensure that they were appropriate, which is why hon. Members will welcome the provision to allow for the introduction of a statutory instrument without requiring Parliament to debate the matter each time a fee changes. The negative procedure ensures that the fee levels can be updated relatively quickly, if necessary, thus protecting the taxpayer from unwanted financial risk. The procedure is consistent with the Secretary of State’s approach to charging fees for certificating framework-based apprenticeships and, more recently, for English apprenticeship certificates—we are doing that in parallel. Even so, as the hon. Member for Blackpool South pointed out, regulations tabled under the negative procedure can still be debated in Parliament. If there were real demand, scrutiny could still be achieved.
Amendment 31 raises the same issue. I agree that any matter left to secondary legislation requires scrutiny, but the negative procedure provides for sufficient parliamentary scrutiny and would enable debate if the secondary legislation was prayed against. In the event that the institute wishes to introduce an application or process, or to update the fee levels, the negative procedure allows for that to be done as quickly as possible, which is consistent with the Secretary of State’s approach to apprenticeships.
As the institute is not yet established, flexibility is needed to prescribe the most appropriate method. We may also wish to seek advice from the institute and others on what those measures should be. I confirm that, at most, the fees should cover all the costs connected with carrying out the function.
I turn to amendment 33. The Secretary of State has powers to make arrangements to develop new technical education provision. The Bill would allow the Secretary of State to transfer those powers to the institute to ensure continuity. I hope it will reassure the hon. Member for Blackpool South and his colleagues if I give a broad overview. We are progressing the arrangements that we are putting in place before the institute takes on its wider responsibility.
The hon. Gentleman will know that creating this new technical education provision is a complex process. Although we are committed to taking through the reforms quickly, and particularly to establishing all 15 technical education routes as soon as possible, we recognise that certain lead-in times are required for reform. The Government plan to phase the reforms in progressively; development will commence before the institute remit is expanded in April 2018.
We have already talked about the occupational maps and the routes to identify occupations. We know that employers will play an especially important role in assessing the standards, including articulating the knowledge, skills and behaviours needed. I assure hon. Members that the negative procedure provides sufficient parliamentary scrutiny. We have thought carefully about the right balance of primary and secondary legislation and about which procedure to use for secondary legislation. We have set out the rationale in the delegated powers memo for the Delegated Powers and Regulatory Reform Committee in the other place and I look forward to reflecting on that Committee’s response. I hope that the hon. Member for Blackpool South will feel reassured enough to withdraw the amendment.
Gordon Marsden
Again, I am grateful to the Minister for the thoughtful and measured way in which he has put his point of view. I entirely accept everything he has said about the need to move carefully and about the fact that there may be variations in charges and that we may have to return to them frequently.
However, none of that undermines the essential argument that this is a new Bill that is taking on new stuff. We believe—I am afraid that history teaches us lessons in this respect—that it is far safer for the Bill to specify the affirmative procedure than the negative procedure. Although I appreciate the Minister’s remarks, I regret to say that we wish to press the amendment to a vote.
Question put, That the amendment be made.
Gordon Marsden
I beg to move amendment 30, page 27, line 3, at end insert—
“A2DD Directions: consultation
Directions given to the Institute by the Secretary of State under this Act shall be subject to—
(a) periodic review, and
(b) consultation by the Institute with—
(i) organisations representing the teaching professions,
(ii) further education bodies and provider organisations,
(iii) employers and employers’ organisations,
(iv) awarding bodies, and
(v) organisations representing students and apprentices.”
Broadly speaking, amendment 30 continues the theme of our other amendments this morning. It is interesting to move the amendment after the Minister’s useful exegesis of the role of the Secretary of State and of the relationship between the Secretary of State and the institute, because it is that relationship that the amendment seeks to probe further. The Government’s policy statement gives those further powers to the Secretary of State, in particular in relation to matters concerning technical education.
Technical and Further Education Bill (Sixth sitting)
Tuesday 29th November 2016
(7 years, 4 months ago)
Public Bill CommitteesRead Full debate Technical and Further Education Act 2017 View all Technical and Further Education Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 November 2016 - (29 Nov 2016)
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 31, in schedule 1, page 28, line 32, at end insert—
“(3) Regulations under this section shall be laid before Parliament and shall be subject to the affirmative resolution procedure.”.
Amendment 33, in schedule 1, page 30, line 17, leave out “negative” and insert “affirmative”.
The Minister for Apprenticeships and Skills (Robert Halfon)
I will pick up on a number of points that have been raised before talking about the main substance of the amendment. A key recommendation of the Sainsbury report, No. 8, stated:
“While it is right for the Institute for Apprenticeships to be delegated wide-ranging autonomy across its operational brief, responsibility for key strategic decisions must be reserved for the Secretary of State. Crucially these decisions include those relating to the shape of the overall national system of technical education”.
The Secretary of State will obviously consult when making her decision, and she needs to ensure that any directions are reasonable and include all relevant factors, which means that the Government consult and listen where appropriate. Under public law duties, a Secretary of State has to act reasonably and fairly.
The hon. Member for Blackpool South mentioned City & Guilds, which stated:
“The City & Guilds Group fully supports the Government’s policy drive to improve the skills of the UK workforce and improve the transition for those entering employment from education and training. We see much merit in the Post-16 Skills Plan, and look forward to continuing to work with the Government and the new IATE to improve the quality and esteem of vocational and technical education in the UK.”
The hon. Gentleman also talked about the timescales. We will publish an implementation plan in due course—a real “due course”—which will set out the timeline for delivering the technical education reform set out in Lord Sainsbury’s independent plan and the Government’s post-16 plan. It will demonstrate firmly how we are to ensure that the institute will be able to deliver its functions according to the plan’s timescales.
As I said all the way through this morning’s sitting, the whole purpose of establishing the Institute for Apprenticeships—now to be the Institute for Apprenticeships and Technical Education—is to give employers a clear and independent voice. I understand that it must be strange at first sight that the Bill gives the Secretary of State powers to issue directions to the institute in respect of its responsibilities for technical education qualifications and the steps towards occupational competence, but the limitation in the amendment is neither necessary nor desirable, and I want to set out why.
I have mentioned Lord Sainsbury, who touched on this again in oral evidence to the Committee. We are including the direction provision in the Bill because it ensures that although the institute has real responsibility for developing and operating the technical education system flexibly, that will be in an overall strategic context guided by the Secretary of State. The Committee might be concerned that we did not include a similar power in respect of apprenticeships and the institute, but the two cases differ substantially. There is a stronger relationship between technical education and the education system as a whole—apprenticeships form part of that—particularly as it relates to young people, than is the case with apprenticeships individually.
To make it clearer, let me describe the circumstances in which we envisage that the direction power may be used. They could include a national requirement for all qualifications taken by 16 to 18-year-old students to include a specific core skill or knowledge. Or they could reflect reforms to other parts of the system, such as a change in the structure of A-levels or in the length of the academic year, which might have a strong impact on the shape of technical education provision. Many issues covered by the directions are likely already to be subject to specific consultation before they are put in place, such as the consultations that take place on A-level subject content. The direction power simply enables the Secretary of State to ensure that her wider policy responsibilities are given effect throughout the system.
Gordon Marsden (Blackpool South) (Lab)
I intervene on the Minister at this point to clarify that the point of the amendment, and the argument I made, was not to question in any way the ability, legality or desirability of the Secretary of State having an ongoing, one-to-one relationship with the institute. The point was that the aggregate of those instructions, if they are not tempered—that is the way I want to look at it—by a periodic review or consultation with the sorts of organisations that we have talked about, could cause not a chasm but a gap between what one set of people know and what another set know. I entirely understand the Minister’s point about making these decisions based on technical things, but that is the purpose of the amendment. The purpose was not to question in any way the desirability of the Secretary of State having that one-to-one relationship.
Robert Halfon
As I mentioned previously, it is highly likely that the Secretary of State, when issuing a strategic direction, will have a full and thorough consultation. We want to make sure that the Government are able to exercise overall strategic control where necessary and without delay.
The amendment relates to additional consultation on, and review of, directions issued to the institute, rather than the principle of the direction-making power itself. We have just agreed that those directions are likely to deal with changes to the education system as a whole, for which consistency of implementation is of primary importance. Consultation and review relating to only part of the system—the institute’s responsibilities for technical education—seems to have little practical value and, we think, might cause considerable delay, which could put coherent and consistent implementation of strategic measures in peril.
There might be other cases in which the Secretary of State would need to intervene quickly, for example before arrangements for particular qualifications are finalised. We therefore believe that the Secretary of State should be able to exercise a direction power of the kind the Sainsbury panel had in mind, without a specific requirement for additional consultation and review, even though it is unlikely that there would be no consultation when that directional power was given. I therefore hope that the hon. Gentleman will agree to withdraw the amendment.
Gordon Marsden
I have heard what the Minister has to say on this matter. Again, I make the point that we are concerned about the aggregate process, and it is that process that prompted this probing amendment. The Minister mentioned the implementation plan, which raises another issue that was brought to us by a number of different people. The Minister and I swapped quotes from City & Guilds, but the original comment I made was what City & Guilds said about the timetable. The implementation plan, which he says will give the timeline in due course, is welcome, and may well allay some of the concerns that others have had and which we have tried to reflect in the amendment. If that is the case—in due course—we will be satisfied. I therefore beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Gordon Marsden
Ms Dorries, we do not intend to move either amendment 31 or amendment 33. We have established the principle with the first vote, and I do not see the need to detain the Committee any longer on that.
Gordon Marsden
I beg to move amendment 17, in schedule 1, page 29, line 34, at end insert—
“(1A) In paragraph 2(1) of (membership of the Institute), after subparagraph (c) insert—
“(d) but at least one of the members appointed under paragraph 2(1)(c) must have recent experience of undertaking an apprenticeship, or of representing or promoting the interests of apprentices; and
(e) at least one of the members appointed under paragraph 2(1)(c) must have recent experience of undertaking a technical and further education course, or of representing or promoting the interests of students undertaking a technical and further education course.””.
This amendment would ensure that apprentices and learners are represented on the board of the Institute for Apprenticeships and Technical Education.
The Chair
With this it will be convenient to discuss amendment 32, in schedule 1, page 29, line 34, at end add—
“(1A) In paragraph 2, after subsection (2) insert—
“(3) The appointment of the Chair and Chief Executive shall be subject to a confirmation hearing by the appropriate select committee or committees of the House of Commons.””.
Gordon Marsden
We now come to what is essentially the last of the amendments to schedule 1 that we will pursue. It has been designed to broaden both the prospective and the actual membership of the Institute for Apprenticeships and Technical Education. Although we have dealt in earlier amendments with how apprentices, and indeed students, get represented, amendment 17 is the most specific.
The Minister will understand that we wish to insert sub-paragraphs (d) and (e) precisely to reflect what he and I have been talking about, which is that the situation of people undertaking FE and technical courses can be somewhat different in outcome and process from that of apprentices. It is important to make that distinction. There is a certain element of déjà vu here, because we discussed the same issue at the start of the year. I will not repeat the whole saga, but before the Government drafted the provision this was very similar wording to that in our model for the new institute. As my hon. Friend the Member for Cardiff West (Kevin Brennan) noted during the passage of the Enterprise Bill 2016, on which he led for the Opposition in Committee, the Institute for Apprenticeships did not—and for that matter does not—have any clear mechanisms for ensuring that apprentices and learners are able to contribute their experiences via the board, or the institute, to inform the work of their new regulator.
In this morning’s sitting the Minister and I discussed the nature of feedback, and it seemed that he thought it was more rigorous than I did, but we will let that pass. However, this is a question not so much of feedback—which is important—as of sending out a sign that there is proper representation. The institute must be broadly based. It cannot simply be employer-led, however important that may be; it should be guided and structured by them, and we will see in due course what the appointments to the board reflect. The idea that there is a board with no apprentice presence on it is as daft as it would have been in the Higher Education and Research Bill to have the office for students without a student representative. In one way, although we can gloss it, it is as simple as that.
From what Peter Lauener said in his oral evidence, and indeed from what the Minister himself has said, appointments to the institute’s board may or may not be imminent, happening in due course, at hand or whatever phraseology we want to use, but I do not think that I can overemphasise how essential it is for it to have wide-ranging representation, to include all the key components of apprenticeship creation and delivery.
I have referred, in relation to previous amendments, to the active participation of various groups of apprentices and their willingness to take up the challenge. These include the National Union of Students, with its own National Society of Apprentices, the Industry Apprentice Council, from whose excellent survey I quoted last week, and other groups such as that of Lindsay McCurdy. After all, in National Apprenticeship Week every year—an offshoot, of course, of the creation of the National Apprenticeship Service under the previous Labour Government—we all go around, as Members of Parliament, shaking hands, having photographs taken and saying how marvellous it is to hear apprentices’ life stories and initiatives. Next year the board will be established and the institute will take a legal rather than shadow form. It would seem odd then to go out and talk to apprentices and students at FE and technical colleges and have them say, “It’s nice that you have come to see us, hear my life story and take my photograph, but why have we got no representation on the board of the institute?” Perhaps the Minister would like to think about that for a moment.
Gordon Marsden
We have a weaker version of that. The Education Committee interviewed the chief inspector-designate of Ofsted and was not satisfied, but the Secretary of State was satisfied and that process went ahead. Amendment 17 is not proposing some form of constitutional innovation; it is something that goes on already.
Sometimes the Minister or the Secretary of State agrees with the view of the Select Committee and sometimes, if the Select Committee has said no, they do not. I do not have a problem with that. In terms of raising the profile of the institute, which is surely what we all want to do in the run-up to its formal launch in the spring, this would be a very useful measure for the Government to agree, which would send out a signal.
As I said, this is a probing amendment. If the Minister were to say, “It is probably more appropriate for just one of them—the chair or the chief executive—to have it,” we would not argue with that. Agreeing to this measure would send out an important signal about how important the Government consider this issue to be. The Select Committees have already shown interest in apprenticeships, technical education legislation and the apprenticeships levy, as the Minister well knows because he has been before them, so I cannot believe that they would not be happy to perform this duty. That is the basis on which we tabled the amendment.
Kelvin Hopkins (Luton North) (Lab)
I support what my hon. Friend says about amendment 17. It is very important to have representation by an apprentice or someone who has recently been an apprentice, so the board gets feedback from someone who has been on the receiving end of the experience, rather than just from people who think they know about it, but may not know it all. An apprentice who has spent considerable time going through the system will have a lot to offer to the board, so that is very important.
It is important to have members of the board who are different from the rest of the board. In the past, having one woman on a board—nowadays, we have many more than that, I am glad to say—made a difference to the nature of the discussions. Having representatives from minority communities on boards makes a difference by broadening the discussions and making them better. Assumptions that might have been made if the board were made up of small “c” conservatives and middle-aged white men in suits—I am one of them—can be challenged. We see too many people like me, and not enough of other people—[Interruption.] I said people like me, not necessarily me personally. It is important to recognise that there are other voices and other views, and the way to get those views represented is to have such people on the boards. Having at least one apprentice on a board is a good idea, although it should be someone who is experienced—someone who is coming to the end of their course or has just completed it, not someone who is at the beginning of their course. I strongly support what my hon. Friend said, and I hope the Government take cognisance of his views.
Turning to amendment 32, I have chaired two confirmation hearings and I sat on a committee interviewing an appointee before they went for their confirmation hearing. I think it is an extremely good exercise that has improved the quality of the appointments in recent years, so I very much welcome it. Occasionally, the people have not been ideal for the job and have chosen to stand down before going right through the process; I think that shows wisdom. Sometimes the Government and Ministers have been reluctant to let go of appointments, but they have now done so, and I think they are pleased with the job that Select Committees have done on confirmation hearings. I really do think that this would be a very good idea.
It is particularly important to have confirmation hearings for the chair, although perhaps the chair should deal with the chief executive. The confirmation hearings I chaired were to do with that role. It might not have been a chair—it might have been a director or something—but we were essentially interviewing for the chair role. It was extremely interesting and very useful, and I think that in each of those hearings we got the right result. I support amendment 32 in principle, even if my hon. Friend does not press it to a vote.
Robert Halfon
Let me begin by saying that if there were more people like the hon. Member for Luton North in education and skills, we would be in a very good place indeed—whatever their age may be.
Kelvin Hopkins
I should correct myself. I said “middle aged”; I think that is rather beyond me. [Laughter.]
Robert Halfon
I thank the hon. Member for Blackpool South for tabling these amendments, particularly amendment 17, which is a very thoughtful amendment. He may be interested to know that even before they were tabled, when we were discussing these matters, I made some of the points that he just made.
Regarding advertising and interviewing for the board members, we have had 281 applications to the board, representing a wide spectrum of apprenticeship experience. I believe that once the board is finalised the hon. Gentleman will be happy with the membership—we have a few rubber stamps to go yet, but I think he will be happy. He will know that the board is responsible for ensuring that the interests of apprentices and students of technical education are well represented.
I have thought about this issue very seriously—long before we discussed it in Committee—but I cannot go so far as to say there should definitely be apprentices on the board. In part that is because board members need to have experience and they carry a great deal of governance responsibility; they also come under press scrutiny, which is not easy. In addition, the board needs to represent the interests of all apprentices of varying levels, ages and sectors, so a single recent apprentice would be unlikely to speak for all apprentices. We do not think that the amendment offers the best way to represent the interests of apprentices and those in technical education.
I think we can square the circle by agreeing that the institute should draw on the experiences of apprentices, so I am pleased to announce that we expect the institute to invite apprentices to establish an apprentice panel, which would report directly to the board. The panel would be made up of apprentices from different occupations and experiences. The panel would decide for itself which issues to focus on, and it will challenge and make recommendations to the board. That squares the difficult circle of wanting experience but also having the vital input from apprentices up and down the country. The Institute for Apprenticeships and Technical Education will ensure that the first panel is in place before the institute goes live in April 2017. The institute will consider how best to engage with apprentices on an ongoing basis and how best to represent technical education students ahead of it taking on that responsibility in April 2018.
I am also pleased to report that there are plans to recruit three apprentices to work at the institute, which will review that number periodically. While I am in this post, I will certainly look at this issue with an eye to expanding the number of apprentices who work for the new institute.
Regarding amendment 32, I understand that it is looking for scrutiny of these crucial appointments—the hon. Member for Luton North spoke about how important these appointments are. However, given the size and scope of the institute, and even after the addition of the new functions in the Bill, I do not agree that the amendment is necessary. Generally, appointments that are subject to confirmation hearings by Select Committees are to much larger organisations. Furthermore, the appointment of the chair is subject to a code of practice set out by the Office of the Commissioner for Public Appointments, as the hon. Gentleman no doubt knows, and is already subject to a high degree of scrutiny.
In line with requirements, the Secretary of State has approved the launch of a recruitment campaign for the chair and the public appointment selection panel. The panel is chaired by a public appointments assessor, and as the appointing Minister I am kept informed every step of the way. A shadow chief executive is in post; the recruitment of the permanent chief executive will follow established civil service rules, with fair and open competition. Also, the Enterprise Act 2016 is clear that the chief executive will first be appointed by the Secretary of State in consultation with the chair and thereafter by the institute itself. The chair and chief executive can of course be called on by the relevant Select Committees to give evidence to Parliament and account for their actions
I do not think the amendment is necessary as I believe that the appointments will be subject to appropriate scrutiny, consistent with established public appointment rules. I hope that the Committee agrees on the need for the institute’s leadership to be established without delay, especially given questions posed by the hon. Member for Blackpool South about the institute’s capacity, whether it will be set up in time, and so on. I hope that the Opposition are sufficiently reassured by that information to withdraw the amendment.
Gordon Marsden
I will treat the Minister’s two responses separately. On amendment 32, which deals with the appointment of the chair and chief executive, yes, there is always the argument that because we are speeding towards setting the institute up—I do not criticise that—there is not time for a confirmation process. I hope that I do not misrepresent him, but I think that is the gist of what he said.
All these things are contextualised. I do not want to open old wounds, but the Institute for Apprenticeships has not had a great record with shadow chief executives—not because of their calibre, but simply because of the time for which the first stayed and the fact that the second, Peter Lauener, is doing the job two days a week. To be blunt, that has aroused scepticism—or to put it positively, a wish to be reassured—among stakeholders across the board about whoever the new chief executive is. It seems to me that an appointment hearing would be neither inappropriate nor unreasonable.
The Minister cannot have it both ways. He tried to persuade me the other day that I did not need to worry too much about the institute having only 60 employees because an enormous number of other people were doing things, but if that is the case, it is a rather more significant organisation than the Minister’s bald figures and comments suggest. To be frank, I am not sure that is the strongest of arguments.
Kelvin Hopkins
There is not necessarily a correlation between the importance of an institution and the number of people involved. Some institutions may be quite small but extremely important. As my hon. Friend says, size is not so significant.
Gordon Marsden
My hon. Friend may well be right. Significance is the important thing, and I just think a confirmation hearing would be appropriate for a new organisation such as this. As the Minister said, such a hearing may well take place in some shape or form with a Select Committee anyway, but we will see. We will not press amendment 32 to a vote at this point, but we reserve the right to return to it on Report.
Let me turn to amendment 17. I listened carefully to what the Minister said in addition to his point about the proposed apprentice panel to report directly to the board, and I am bound to say—this is an instant comment, not a considered reflection—that I think that is a positive and enlightened approach. It addresses many of the issues that concern us and I think will concern apprentices, and although the devil is always in the detail, it could be an elegant way of squaring the circle, to use the Minister’s phrase. We will see how things go and wait to see the list of appointments.
Incidentally, our proposed amendments are not comments on individuals. I always take the view that we are making legislation for a generation and we have to make it for all individuals. Having said that, I am particularly encouraged and pleased with the Minister’s response. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the schedule be the First schedule to the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 3—Report on quality outcomes of completed apprenticeships—
“(1) The Institute for Apprenticeships and Technical Education shall report on an annual basis to the Secretary of State on quality outcomes of completed apprenticeships.
(2) The report under subsection (1) shall include information on—
(a) job outcomes of individuals who have completed an apprenticeship,
(b) average annualised earnings of individuals one year after completing an apprenticeship,
(c) numbers of individuals who have completed an apprenticeship who progress to higher stages of education,
(d) satisfaction rates of individuals who complete an apprenticeship on the quality of that apprenticeship, and
(e) satisfaction rates of employers who hire individuals who complete an apprenticeship with the outcome of that apprenticeship.
(3) The Secretary of State shall lay a copy of the report before Parliament.”.
This new clause would require the Secretary of State to report to Parliament annually on specified quality outcomes of completed apprenticeships.
New clause 4—Institute for Apprenticeships and Technical Education: duty to promote awareness—
“(1) It shall be a duty of the Institute to promote awareness of—
(a) occupations, and
(b) steps by which people may become competent to work in occupations.
(2) In promoting awareness under subsection (1)(b), the Institute shall give due weight to—
(a) apprenticeships, and
(b) technical education qualifications.”.
New clause 5—The Institute: duty to consult—
“(1) The Institute shall consult on a regular basis on—
(a) the development and progress of standards and assessment plans, and
(b) the delivery of apprentice end point assessments.
(2) Consultation under subsection (1) shall be carried out with—
(a) further education bodies and provider organisations
(b) awarding bodies
(c) organisations representing employers, and
(d) organisations representing students and apprentices.”.
Ms Brabin, as you tabled a new clause in this group, it would be nice if you were to lead the debate.
Tracy Brabin (Batley and Spen) (Lab)
Thank you, Ms Dorries. I will speak to new clause 4 on careers advice and the duty to promote awareness of occupations.
We all remember the careers advice we received at school. I remember the suggested career given to me very clearly: as a young women with 11 GCSEs and four A-levels, I was advised to become an air hostess, because of my bubbly personality. I did not follow the careers advice that I was given because I had a dream that I was determined to follow: to become an actor. It is not lost on me how enormously lucky I am to have enjoyed the career that I have and therein lies an important point—careers advice has not improved in the way that we wish it had.
Even with the enormous amount of data and emerging opportunities open to us, some young people leave education, ready and able to start on their career paths, with hardly any guidance, never mind a plan to follow. That is why new clause 4 is so important. I was genuinely surprised to learn that its provisions were not already in the Bill. Surely any education Bill should at its very inception promote careers and give guidance on how people can work in occupations? I hope the whole Committee can agree that our young people deserve to be given the time and resources to plan their careers and to have all the information in front of them as they set out gaining qualifications and making educational decisions based on the goals they wish to achieve.
In private meetings, real concerns have been raised with me about the lack of careers provision in our colleges right now. It has been stressed that there is such a lack of advice available at the moment that without explicit legislation on careers guidance, it will be nudged even further towards the back of the priorities queue. With overstretched resources in colleges an ever-growing theme, I was not surprised to hear that at least one institution a receptionist at had been asked to carry out careers guidance, despite having no specialist qualifications or training in how to do that well. Although I was not surprised, I was ashamed that we had allowed our young people to be treated in such a way. I hope Members will join me in seeing the opportunities for the Institute for Apprenticeships and Technical Education to use its national role and unique connection between educators, institutions, learners and businesses to create a leading occupation awareness service.
Just this week, I had the pleasure of presenting an award to a company for its excellent apprenticeship programme. I heard testimony from the apprentices that showed that the employer was a great example of how employers can take the lead in careers advice, but we all know that, sadly, not every apprenticeship provider is the same. The company in question gives its new recruits a few weeks at a time on each aspect of its business, working out where the recruits’ skills lie before setting them on a course to earn qualifications and begin a career in a place where they will flourish.
The time and investment an employer puts into an apprentice differs enormously. Not every employer is as good as the next, so the advice learners get from college is essential, hence the importance of new clause 4. I suggest that, as part of its duty, the Institute for Apprenticeships and Technical Education seeks examples of good practice from employers and promotes them among their connections and levy payers. Careers advice should not be confined to the classroom or to one-on-one meetings, but should be practical and hands-on in the workplace as well.
It is important to mention that I was encouraged during the Committee’s first sitting last week by the warm words from the Minister on careers advice. I appreciate his genuine intentions to improve careers advice, but at a time when the co-Chairs of the Sub-Committee on Education, Skills and the Economy accuse the Government of appearing
“to be burying their heads in the sand while careers guidance fails young people, especially those from disadvantaged backgrounds, and exacerbates the country’s skills gap”,
I do not feel we can rely on warm words alone. We must have provisions in writing—in legislation—because we have an obligation to learners.
If anyone has yet to be convinced that there is a problem, a simple google of the words “careers advice apprenticeships” is illuminating. The first two links are aimed at parents; then there is a link to the Government website that no longer works, a link to a newspaper article lamenting the woeful careers advice for apprenticeships, and a link to careers advice in Nottinghamshire. I am glad that Nottinghamshire seems well cared for, but it is worrying that no obvious official advice is immediately available. While I am sure there is official advice somewhere, should it not be obviously available to the young people who seek it? I hope that the institute becomes the known home for information where anyone who is interested in careers or a new career can access information easily. From where we are now, that would be an obvious and basic improvement.
The Bill is designed to harness the talents of our young people and unlock the potential of the country. Those are worthy aims—we can all agree on that—but I cannot see how we can do that without an explicit commitment to promote awareness of occupations and advise young people on how to get a job in the area they wish. The opportunities that the institute provides are enormous. I hope we seize the opportunity presented in the clause to build a top-quality advice service for apprenticeships and technical educational qualifications.
Gordon Marsden
On a point of order, Ms Dorries. May I clarify that we are having a debate on all three new clauses and schedule 1 stand part, so it would be appropriate for me to speak to all of those?
The Chair
It would now, yes. I called Ms Brabin first because I thought it would be nice, for a change.
Gordon Marsden
Yes, I thought so, too. May I congratulate my hon. Friend—I think it is the first time she has spoken in Committee—on a lively and inspiring presentation? The issue of careers guidance is not new, but I will not go through its whole history. She was right to make those points, and the examples she gave of what appears to be there in principle but is not in practice were all too symptomatic of the difficulties the Government have had until relatively recently—I will be fair—in addressing the problem.
We had a lengthy period under the coalition Government and even at the start of this one where they were running rapidly to catch up with what had become a disastrous position in careers advice and guidance in schools, with work experience no longer required in the curriculum at key stage 4. An array of organisations—everyone from the CBI to the Federation of Small Businesses—complained and continue to complain. When the Government attempted to respond to some of the many cuts that virtually dismantled much careers advice in local authorities and schools—the Connexions programme was maimed beyond repair—to be fair, for post-24s they did do quite a lot in terms of online guidance and so on, but for under-24s they had done precious little, and my hon. Friend’s investigations suggest that even that is not in the best of nick at the moment, if I can put it that way.
We still await a formal strategy from the Government on careers advice and further reports on how the money allocated to the Careers & Enterprise Company will be spent and distributed. To be fair, as I have said previously, the Careers & Enterprise Company is beginning to do some useful work, but it is hampered by the sheer volume of stuff that needs to be done. The Industry Apprentice Council report to which I have referred previously makes that point as well. My hon. Friend the Member for Batley and Spen is right to raise the issue with the Minister in this way and at this time. As I said, I accept the Minister’s bona fides in this area and his wish to do something about it, but we need to see it taken forward.
Kelvin Hopkins
I will not speak for long, but I want to support the three new clauses.
I feel very strongly about new clause 3, because there has been a lot of talk in recent years about apprenticeships that do not really deserve the name—the quality of them was so poor that they were really forms of cheap employment and nothing more. Quality is important. Apprenticeships have to have a high reputation so that when people are offered an apprenticeship, they know that they will get something of real value from the experience. Therefore, reporting back information about apprenticeships—about how individuals are doing and about the quality of apprenticeships—is very important. We have to raise the status of apprenticeships and not allow that to diminish.
On new clause 5, which is about consultation, we want feedback from everyone concerned with apprenticeships to ensure that the institute and, indirectly, the Government have proper information about what is going on on the ground. We want to know what is actually happening and to be able to say that we are making progress and having success.
On new clause 4, I congratulate my hon. Friend the Member for Batley and Spen on her excellent speech; it was first class. Nothing more needs to be said, but I just want to reinforce what she said about the lack of careers advice.
When I was at school, there were two courses: either we were going to stagger on towards university and higher education or we were told, “Go and work in a bank.” That was all that was given. Indeed, an extraordinary number of my school friends ended up working in banks. Whatever their talents, many of them finished in a bank. I had friends who had superb writing skills or were natural cartographers and could have done all sorts of different things, but they finished up working in banks because that is where they were guided to by our school. They were almost dismissed. The school was really interested in those going on to higher education, and so to anyone else it said, “Go and work in a bank.” It really was not good enough. I was one of those who eventually staggered through higher education, otherwise I would have no doubt finished up in a bank—[Laughter.]—not as a senior banker, but just a clerk.
Over the past 10 or 20 years, I have seen a wonderful careers service in my town of Luton, where I knew most of the careers advisers as personal friends, being dissolved. It has been dismantled bit by bit, and the advisers have ended up doing other things. One has become a headteacher of a school, which is fine. She went on to retrain as a teacher after the careers service disappeared. That means young people are not getting the advice they need.
We are talking about apprenticeships and post-16, but lower down, in schools, we want children to be aware of the immense possibilities and tremendous variety of work, so that they can match their skills. If someone can write, they can then get into something that involves writing. If someone is naturally mathematical, they can move into that area. If someone is naturally bent towards engineering and mechanical things, they can be guided into all sorts of interesting jobs. However, if there is no advice, they might finish up doing the wrong thing and spending their lives being a bit frustrated because they really wanted to do something else. That is a very important point.
My two granddaughters are only eight and nine, but they are already talking about what they are going to do when they are adults. They fortunately come from a background where their parents talk incessantly about all sorts of interesting things and what they can do in life, but not everybody has that opportunity. Many children have parents who are not so well informed and cannot give advice, so they depend upon professionals giving advice.
Advice should cover the whole range of abilities, not only highly skilled jobs and professions. There are millions of jobs that are much more basic, but that are equally valuable to society. We depend on everybody and every type of skill, and we should present all our children and young people with a full understanding of the possibilities of life, so that they can not only enjoy life and fulfil themselves, but make the most effective contribution to the economy and to our world. What my hon. Friend the Member for Batley and Spen said was first class, and I hope that the Minister will accept it.
The Chair
Before I call the Minister to respond, I remind Committee members that any decisions on new clauses are taken at the end of the Bill.
Robert Halfon
I will start with new clause 4 and then go on to the other provisions before answering the general queries of the hon. Member for Blackpool South.
I congratulate the hon. Member for Batley and Spen on a really important contribution to the debate; I mean that genuinely. She knows from the brief conversation we had that I completely agree with much of what she says. I agree that we have a problem with careers in our country. I agree that for so long, careers guidance has pushed people towards universities. Having said that, I can imagine a lot of things, but I could never imagine the hon. Member for Luton North as a banker—I have a broad mind, but it is not that broad.
One reason why we have those problems is that wherever I go around the country, whatever institutes I visit and whatever kids I speak to, it is exactly the same: the chances are, they will not have been given advice on apprenticeships or technical education. It is university, university, university. We need to change that. I would be pleased to have the hon. Lady’s input. Careers guidance used to be fragmented and covered by two Departments, but we have moved it wholly to the Department for Education.
When I was appointed Minister for Apprenticeships and Skills, I realised that the title should have been Minister for apprenticeships, skills and careers guidance because careers guidance is perhaps the most important part of everything we are trying to achieve in the Bill. It is the first rung on the ladder of opportunity because without the right careers guidance we will not succeed in what we want to do. That goes back to the arguments of the hon. Member for Luton North on prestige and other things.
The hon. Lady said—this is important—that we need more than just warm words. I accept that and I am looking at the whole issue from the beginning: what we can do in careers guidance, whether it is possible to gear it much more towards skills and starting not in secondary school, but primary school and going all the way through. To be fair, the Government have done substantive work. First, it is now a legislative requirement that schools must give careers advice on apprenticeships. With reference to what the hon. Member for Luton North said, we have also tightened up in legislation the definition of “apprenticeship”.
When I spoke at an hotel recently, I asked someone whether they realised they would be paying the levy and whether they were going to have apprentices. The reply was, “We’ve already got some in the kitchen.” When I said, “You already have apprentices?” they replied, “No, they are interns, or whatever.” We have changed the definition to make sure that an apprenticeship is what it says on the tin.
We have also created the Careers & Enterprise Company, to which the hon. Member for Luton North kindly referred, and again I have been around the country to see it working in practice. I have been to east London and the north-east. Of course there is much more to do. Some £90 million, which is a serious amount of money and not just warm words, is being invested over the Parliament not just in the Careers & Enterprise Company, but in careers generally: 1,190 enterprise advisers and 78 enterprise co-ordinators. They have connected 900 schools in about 37 of the 38 local enterprise partnerships, the whole purpose being to build careers links with students and to get them to do work experience.
There is a £5 million careers and enterprise fund to boost provision for nearly 250,000 young people across England in 75% of the areas the Careers & Enterprise Company identified as cold spots. There is a £12 million mentoring fund, because mentoring is incredibly important. This year, £75 million is being spent on the National Careers Service to help its work and £24 million on web kits to support more than 650 people with face-to-face advice. We have started the work.
David Rutley (Macclesfield) (Con)
My hon. Friend is setting out some important things the Government are doing and no doubt he will explain what more is to be done. Does he agree with Lord Heseltine who said recently in a Select Committee that industrial policy for the benefit of the country starts in primary school classes if we are to achieve the productivity gains we want?
Robert Halfon
My hon. Friend is exactly right. I was in a primary school—it might have been in the constituency of the hon. Member for Blackpool South—where the kids had to guess the career of the individuals there. They included a fire officer, a business person and a pilot, who then went out and returned with their uniforms on. Careers guidance must start in school. We will not achieve what we want unless it starts in primary schools.
I am looking at the matter and there are substantive funds, but we must change the whole argument and gear careers advice towards skills and apprenticeships, although we have no problem with people going to university. I have held roundtables, not just with the great and the good, but with people from up and down the country, to get ideas for how to form our careers strategy. The hon. Member for Batley and Spen is very welcome to take part in them when they carry on next year.
Gordon Marsden
I understand the Minister’s point, and I, likewise, would not want to lumber the institute with the responsibility for all those things. Will he give us an assurance, because he said these things occur from time to time, that there will be, at some point during an annual cycle, what I can only describe as a “state of the nation” report? That report could actually bring these various things—not necessarily all of them—together, so that not only stakeholders but Parliament will have a clear picture of what has happened over the past year.
Robert Halfon
I will reflect on what the hon. Gentleman has said. I reiterate the point that a lot of that is done already. We have monthly and annual announcements of all kinds of data to do with apprenticeships and skills. I always ask about destinations because I think they are incredibly important. I am glad that surveys show, for example, that more than 90% of apprentices get into work afterwards, either by staying in place or entering other employment. That is an incredibly important destination statistic.
On new clause 5, the principle of consultation, which we have mentioned quite a lot today, is already a key feature of the current Institute for Apprenticeships. The institute has a statutory duty under the Enterprise Act 2016 to undertake its functions with regard to industry, commerce, finance, the professions and other employers regarding education and training within the institute’s remit. Even more importantly, the institute must also undertake its functions with regard to those who may wish to undertake education and training that is within the institute’s remit—the apprentices themselves.
More specifically, the institute also already has a statutory responsibility to ensure that all draft standards and assessment plans are subject to third-party scrutiny before they can be considered for approval, and it must take account of the findings and conclusions of those carrying out that independent review. The bodies and organisations listed in the new clause are already covered by that existing legislation, and the institute must have regard to them in all functions, not only the specific function set out in the new clause. That approach will also apply to the functions that the Bill plans to give to the expanded IFATE.
The consultative principles that will underpin the institute have already been evidenced. Antony Jenkins, the shadow chair, has held a series of roundtables with a wide range of external organisations to hear how they think the institute should operate. Later this year the shadow institute will publish a full consultation on the operational plan for the institute, setting out its core functions and proposals for how it will deliver them.
The Department also plans to publish a draft for the consultation of a statutory strategic guidance document, which it will issue to the institute next year. That will include the steers that the Government expect the institute to have regard to. It will ensure that the institute consults all those with an interest when carrying out its functions. I therefore hope that the hon. Members will be reassured and will not press the new clauses.
I will come to an overview of schedule 1 but will begin by answering some of the key questions the hon. Member for Blackpool South asked. Although the 19 to 24-year-old NEET figure increased by 0.8% in July to September, he will know that the overall trend has been down over the years. The figure for 16 to 18-year-olds fell by 1.5% compared with the same quarter in 2015.
The hon. Gentleman also asked about the clarity of a single awarding body—the Wolf report body. Of course, we looked at that but the Wolf report, as the hon. Gentleman will know, identified that a large proportion of vocational qualifications offered very little value to employers, young people and adult learners. The whole purpose is to remove thousands of poor-quality qualifications that were not valued by employers.
The proliferation of qualifications was partly down to the awarding organisations’ competition for market share within the existing system. Following Lord Sainsbury’s recommendations, we are bringing the system into line with the best in the world to ensure excellence in technical education provision and having a single awarding body per qualification model. It is strange that the hon. Gentleman should argue for competition while I am doing the opposite but we live in a topsy-turvy world. We are not being driven by competition in the market, with the adverse effects that that brought. Innovation will be driven by the awarding body competition for the market through winning exclusive licences.
Gordon Marsden
We may live in a topsy-turvy world but, on balance, we are a little less gung-ho about competition than the Minister’s colleague, the Minister for Universities, Science, Research and Innovation, was on the Higher Education and Research Bill Committee. However, that was not the point I was going to make.
The point I want to make is that there is a distinction. I made it clear that I was putting forward the concerns of a number of the awarding organisations that they put to us in evidence. There is a clear difference between letting 1,000 flowers wither because they are of poor quality, and coming down to a single qualification point. I made the observation in one of the papers that the suggestion had been made that there might be two or three. There was no suggestion that there should be no dilution; simply that a monopoly position was possibly unwise, not least because one of the awarding companies might one day go bust.
Robert Halfon
I will reflect on that but the whole purpose is to ensure quality and simplification. Once it is agreed to have another one, then there is another and another and so on. I think we are right to follow the recommendations of Lord Sainsbury and Baroness Wolf.
Tracy Brabin
I appreciate the amount of money given to careers advice; it sounds substantial. I have just googled the Careers & Enterprise Company and discovered that in my region of Leeds city only 5.6% of young people are in apprenticeships; 33% of 16-year-olds and 30% of 17 to 18-year-olds are poorly prepared for work. That is on the Government website. That suggests to me that they have not had brilliant careers advice, even given the extra money that is available, so maybe that message is not coming through.
Robert Halfon
I will find out what the Careers & Enterprise Company is doing in Leeds and in the hon. Lady’s constituency. It will be involved with the LEP, but it has not been there for a long time; it is a recent creation. It has been working to identify the spots where we need help the most. I will look into what is happening and write to the hon. Lady.
On the copyright issue, the content of qualifications will be determined by employers, with the support of the institute. That is very different from the current system, where awarding organisations develop qualifications in subjects or sectors of their choosing. In some cases that is with the involvement of employers, but not always. The new technical qualification will be based on the skills, knowledge and behaviours that employers have identified as requirements for particular occupations. As the content of the qualifications will be determined with the institute’s oversight, it is perfectly reasonable and appropriate that copyright for relevant course documents should rest with the institute.
On the relationship between the framework and the new standards, the same organisations can deliver assessments for frameworks and new standards as long as they meet the criteria for assessment organisations for standards and are admitted on to the register of assessment organisations. The same position exists for training. Providers can offer training for both but need to meet the criteria and get on to the provider register.
When I was talking about careers, I forgot to talk about the investment we are putting into training, which the hon. Member for Blackpool South mentioned. The hon. Member for Batley and Spen gave examples of constituents who are not getting apprenticeships and described the low take-up. For those people, we potentially offer traineeships. We have spent £50 million on that. Many of those people—over 19%—are people with learning difficulties and disabilities.
In terms of Ofqual and Ofsted, I see it not as a problem but as a bonus that there are all these qualification organisations out there, maintaining the quality of apprenticeships and technical education. As the hon. Member for Blackpool South knows, Ofqual and Ofsted are responsible for different elements of the system; Ofqual regulates qualifications and Ofsted regulates the trainers and providers. The institute will regulate the quality of standards and assessment plans. I do not think that is a problem. It is a good thing that all those bodies are there, to ensure we get the quality technical education and apprenticeships we need.
Gordon Marsden
I will reflect on what the Minister said. Even if it is a good thing that there is a plurality of opportunities, I will reiterate two points. First, it does not make the judgment of what capacity the institute may need when competing in this marketplace any easier. Secondly, I hope the Minister will understand and accept that there are enough difficult organograms out there already in further and technical education without creating one with lots of little dotted lines here, there and everywhere. If he is going to maintain that position, it is important that lines of responsibility and why they work are clearly explained to stakeholders and employers.
Robert Halfon
The hon. Gentleman makes a fair point and I will reflect on what he has said, but I think it will be set out clearly. We are considering how the new technical education qualification should be regulated. The regulatory approach will need to be designed specifically for new qualifications and in the light of the institute’s contract management function. Ofqual remains the qualifications regulator.
I am pleased to turn now to the schedule and give an overview of what the Bill seeks to do. We have discussed much of it today. The schedule seeks to extend the remit of the Institute for Apprenticeships to give it responsibility for implementing reforms that we believe will raise the quality of college-based technical education. The reforms will result in technical education courses that are designed around employers’ needs, support young people and adults to secure sustained employment and meet the needs of our economy.
Gordon Marsden
I rise to speak to clause 2 in particular, and to comment on the subsequent clauses that are also a statement of where this is going. It is important, in this context, to reflect—this will be very important when we come to the next part of the Bill—on why this clause is in the Bill in the first place.
The Chair
Mr Marsden, may I make it clear that, if you are speaking to clauses subsequent to clause 2, no amendments have been tabled for clauses 3 to 12 either? We understand that neither the Opposition Front-Bench team, nor the Minister, wish to speak to these clauses. Is that correct?
The Chair
So do we have the leave of the Committee to put the question—after the Minister has spoken—and we have dealt with clause 2, that clauses 3 to 12 stand part of the Bill?
Gordon Marsden
As I was saying, on clauses 2 to 12—we will obviously proceed to the second part of the Bill, which deals, in schedule 3, with the important issue of the innovation of education administrators—it is important to understand why the Government have to address these issues at this time. The reality is that these insolvency rules are important to protect, above all, students and those in colleges. Colleges are crucial for providing further education nationally and have an important local presence. When colleges have financial difficulties, that can affect many stakeholders, including students, employers, lenders, the funding and oversight bodies and the local communities in which they are situated. Colleges are, quintessentially, locally based and respond to local employment and skill needs. That is why they have been successful over the years in being able to adapt, sometimes in a rather more nimble fashion than universities—although there are community-based universities that resemble FE colleges in their output and remit more than they do traditional universities.
The reality is that the FE sector has experienced a prolonged period of funding cuts. The House of Commons Library briefing shows the scale of the reduction in funding: in adult further education and skills, funding fell from a 2010 baseline of
“£3.18 billion to £2.94 billion in 2015-16, a reduction of 8% in cash terms or 14% in real terms.”
The financial health of the FE college sector has been declining since 2010-11. There was a deficit in the sector in 2013 for the first time, and 110 colleges recorded an operating deficit. The number of colleges assessed by the Skills Funding Agency as having inadequate financial health rose from 12 to 29 in the same period. That decline in the sector’s financial health is one of the things that has fuelled what the Government have said here today.
We have already referred to the searing report produced by the National Audit Office in 2015, and I do not intend to go into detail on that again. It is obvious, and not an open secret, that the Treasury has insisted on a robust insolvency scheme as part of the quid pro quo for the additional funding that has gone into the sector. That is the reason for the profusion of these clauses in the Bill.
Mr Ranil Jayawardena (North East Hampshire) (Con)
Is it not also true that, from the evidence received, banks would welcome this certainty? The position for them is currently unclear, and that could help them lend more to the sector, which is invaluable in helping our students.
Gordon Marsden
I thank the hon. Gentleman for his intervention, and for the penetrating questions he put to the witnesses. Hopefully that will be a by-product of the process, and that is entirely right. I am also bound to observe that there are other factors pushing it down this route. One of those other factors is the underlying financial weakness of the sector. When the further education commissioner gave evidence—he talked of 82 or 84 colleges in a merger position—he was, to be blunt, far more optimistic and gung-ho about the outcome of those mergers than I would be. From memory, some other members of the Committee expressed a different point of view. The truth of mergers is that they do not always work out well, and this was commented on by Mr Pretty from the Collab Group. He made those observations based on his own experience. There are a number of factors here. Changing priorities in public funding is a reduction, it is how some colleges have struggled with large debts or partially completed capital investment projects. The latter partly reflects weaknesses in the planning and financing of capital projects under the former Learning and Skills Council.
Kelvin Hopkins
Two or three points were made about mergers during our evidence sessions. One was that it is not just a question of scale. Sometimes colleges are not enormous, but they still work well separately. Sometimes mergers take place where a weak college is merged with a strong college, which turns them into a joint weak college, not a joint strong college. So there are all sorts of possibilities, probabilities and problems with mergers, and they should be judged carefully on their own merits.
Gordon Marsden
My hon. Friend is right, and what he says is underpinned by his great experience in this area. I am not saying that every area review that produces merger proposals will automatically result in colleges finding themselves in a financially weaker position and therefore more in need of the insolvency clauses in the Bill than otherwise, but it is part and parcel of that aspect.
It is not just FE colleges feeling the strain. It was helpful to have the presence of the Sixth Form Colleges Association in the evidence session. It, too, mentioned courses having to be dropped as a result of funding pressures. Three quarters of colleges have limited the size of their study programmes and more than a third do not believe that next year’s funding will be sufficient to provide the support for educationally or economically disadvantaged students.
In my neck of the woods, as well as the excellent FE college, Blackpool and the Fylde College, which the Minister visited, is Blackpool Sixth Form College, which is also an excellent college that has, over the years, done splendid work on the vocational side, in traditional qualifications and with the previous Aiming Higher programmes. Although the college is outside of my constituency—it is just in the constituency of the hon. Member for Wyre and Preston North (Mr Wallace)—it takes students from three or four constituencies. It has done splendid work, but the previous principal and the current principal have had to juggle the finances very carefully indeed to complete some of the programmes they wanted to do for the college and for the physical infrastructure. Sometimes the physical infrastructure of such colleges is 30 or 40 years old, and needs renewing.
I am reflecting on the various factors that give rise to the clauses we are passing into legislation. I want to focus us on the detailed conversations we will have when we move on. The picture of fragility that I described makes it even more important that the insolvency clauses and the position of the educational administrator, which we will talk about in considerable detail in due course, are a real answer to this problem, rather than something that sounds good on paper but does not do the business in practice.
Kelvin Hopkins
I have some experience in these matters. There have been funding pressures in all spheres of post-16 education, although not necessarily in universities, which seem to be well funded compared with other areas. In spite of the fact that there are advantages of scale in producing wide ranges of subjects in whatever qualification one is taking, some of the smaller subjects are, even now, dying. We are getting to a point where subjects such as modern European languages are being lost entirely from an area because no college or school will teach them any more. That is tragic. We should be creating more variety of opportunity in technical and academic education, not less.
My second major speech when I first came into this place was about funding for sixth-form colleges and the fact that they did a superb job. I said that funding constraints were in danger of killing the goose that lays the golden eggs: the sixth-form college sector. They do a fabulous job and I know from experience that we should have created more of them. Sadly, a view was held that we should create lots of schools with small, less efficient sixth forms with much narrower subject ranges, instead of sixth-form colleges. I think that went in entirely the wrong direction. I hope that I can persuade the Minister and others that we ought to look more favourably on sixth-form colleges and FE colleges if we are to make serious advances in educating and training our young people better than we have done in the recent past.
Robert Halfon
May I put some things in context for the hon. Member for Blackpool South before I speak directly on the clause? No one denies that there have been funding pressures, as the hon. Member for Luton North pointed out, but, even with such pressures, 80% of colleges are either good or outstanding, and 79% of adult FE students get jobs, move to apprenticeships or progress to university. Some 59% of institutions are in good financial health and 52% are operating with a surplus. That does not mean everything is rosy, but it puts things into context.
Gordon Marsden
I have two observations: first, “protecting” is an interesting word when we are talking cash terms as they are not real terms. By 2020 inflation may have eaten into that figure. Secondly, the hon. Gentleman mentions the advanced learning loans, but are they not sums of money out there to be offered—and at the moment, only 50% of them have been taken up?
Robert Halfon
Yes, but it is still a Government expenditure item and its aim is to help more people take part in education.
Overall, the Department for Education plans to invest £7 billion in 2016-17 to fund education and training places for 16 to 19-year-olds. The area reviews will support those colleges that want to merge—no one is being forced to merge—and we will provide financial support where appropriate to help them do so. We are confident about the programme and we will deliver strong, sustainable colleges for the future. Mergers do not necessarily mean that provision in a local area will end. It will be up to the colleges to decide whether to keep a campus or site open.
The clause is probably the least technical of the Bill’s insolvency-related clauses. It explains that part 2 is about the insolvency of further education bodies and, in summarising what is covered by chapters 2 to 7, sets the scene for what we will debate over the coming sittings. Underneath the simple clause is the Government’s commitment to ensuring that every young person has the opportunity to achieve their full potential and to succeed.
The Secretary of State talked about the Government’s commitment to building a further education sector capable of delivering these skills and that is why we are supporting colleges through the area review to take whatever steps are needed to transform themselves into providers of the highest quality teaching. We are providing them with the opportunity to ensure they are in a strong and sustainable financial position for the future.
Once the area review recommendations have been implemented, the Government has been clear that we will no longer provide exceptional financial support to colleges that find themselves in financial difficulties. We will draw a line under what has become an implicit understanding among creditors and some educational institutions that those who fall into extreme financial difficulty will be able to rely on the taxpayer to make good the shortfall.
The provisions in the Bill will send a clear message to colleges that, to deliver excellence in teaching and leadership, they need to ensure that they have strong and robust financial controls in place. The commissioner who gave evidence said that, where there had been significant problems, much had been down to leadership and financial management. Why is it that so many colleges are doing extremely well, the college of the hon. Member for Blackpool South being an example?
Any college or creditor in extreme financial difficulties cannot look to the Government as the bank of mum and dad for a bail-out. The bank of mum and dad—the taxpayer—will be shut, because we have a duty to give taxpayer value.
Although we expect a college insolvency to be a rare thing, we cannot say it will never happen. That is why the measures the Bill introduces will ensure existing insolvency procedures apply to further education bodies, whereas ordinary insolvency procedures would offer protection only to creditors.
If I summed up this part of the Bill in a few words, it would be about protection, insurance, prudence and caution. Through the Bill we will introduce a special administration regime for the sector that ensures that, in the unlikely event that a college become insolvent, the Secretary of State or Welsh Ministers will be able to take action to protect the interests of the learners.
That is at the heart of the Bill: protecting learners and ensuring that colleges are cautious about borrowing and banks are cautious and prudent about lending. Young people entering a college expect to complete their studies, leaving with the skills that they need to move forward in their lives. That is the purpose of the SAR and I urge that the clause stand part of the Bill.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clauses 3 to 12 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(David Evennett.)
Westminster Hall
(7 years, 4 months ago)
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Supported Housing
(7 years, 4 months ago)
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Neil Coyle (Bermondsey and Old Southwark) (Lab)
I beg to move,
That this House has considered the effect of Government proposals on supported housing.
It is a pleasure to serve under your chairmanship, Mr Howarth. I thank hon. Members for their attendance. I formally congratulate the Under-Secretary of State for Welfare Delivery on her newish role—this is the first chance I have had to do it publicly.
We are here to talk about the effect of Government proposals on supported housing. Once again, this is a Government targeting a significantly disadvantaged group with ill-thought-through plans that will have long-term negative cost effects and which have already had a negative effect on the provision and supply of supported accommodation. In a September 2015 Department for Work and Pensions release, the then Secretary of State stated:
“Supported housing supports hundreds of thousands of the most vulnerable people across the country”.
[Interruption.]
Some of them are on crutches. The Department’s definition of vulnerable people covers older people, homeless people, people fleeing domestic violence, people struggling to overcome drug and alcohol addictions, and disabled people, including many people with mental health conditions and learning disabilities. Those are the people who use, and need, supported accommodation.
In 2010, the Department for Work and Pensions published a report that suggested that of people living in supported accommodation 25% had a learning disability, 42% had a severe disability or a physical disability, 17% were recovering from addiction, 5% had a significant mental health problem and 5% were fleeing domestic violence. We must ask ourselves why any Government would choose to make life more difficult or more uncertain for those groups of people. We are talking about a truly shabby policy on top of policies since 2010 that have significantly targeted, again and again, disabled people and other disadvantaged groups with cut upon cut. I will outline what the Government say they intend to do and why so many organisations and people have significant concerns.
Mr Jim Cunningham (Coventry South) (Lab)
I am sure that my hon. Friend will remember that only weeks ago we had a debate on homelessness in the House of Commons, and a motion was passed. I am interested to know how that motion can be implemented when there is a situation like this with regard to homelessness, particularly with capping going on. That is surely a contradiction in terms.
Neil Coyle
It is an absolute contradiction. Since 2010, we have seen a shocking rise in homelessness across the country, particularly in my constituency. I did a sleep-out for the Robes Project there last Friday evening, in very cold temperatures, so if Members have not already done so I urge them to sponsor if not me the project more generally.
In the 2015 spending review the Government outlined plans to cap the—
Julian Knight (Solihull) (Con)
I congratulate the hon. Gentleman on securing this important debate. He seems to be a bit stuck in a time warp from several months ago. Does he not recognise that the situation has changed and that there is a commitment to a new funding model based on localism, which should help with the allocation of resources so that those most in need will get the most help?
Neil Coyle
I am about to run through how the Government have ended up where they are now, but when it comes to localism, this Government have a record of devolving responsibility without the resources to meet the demand. That point should not be lost, as it is an important factor in how many organisations see the current consultation.
Coming back to last year’s announcement, the Government said that they would cap the amount of rent that housing benefit will cover to the relevant local housing allowance—the LHA—for supported housing, with a top-up paid by local authorities. Initially, they announced that the measure would apply to those who had signed a tenancy since April 2016. There was an immediate backlash, and it was clear that the Government had not properly thought through the plans or considered very well whom they would affect. They then announced a delayed roll-out of the change, initially for one year.
The hon. Member for Solihull (Julian Knight) alluded to the fact that there is now a consultation on further plans for a 2019 roll-out, including of the new funding model, but it should not be forgotten that the cap poses a considerable risk to supported housing as it might be insufficient to cover full costs for the people affected. Management costs for supported housing are significantly greater than generic housing costs. The limbo period has already caused some damage.
Alongside the delays to 2019 for both the change and the proposed new funding model, the Government have announced further damaging changes in addition to the proposals that they outlined last year. They have now included suggestions that will affect all universal credit claimants when the change is rolled out in 2019, not just those who have signed a tenancy since April 2016. There is concern among many organisations that the universal credit system is too clunky and inflexible to take into account what the Government had originally planned. It would be useful if the Minister indicated whether it is a “computer says no” approach rather than the flexible model that perhaps is needed. In another damaging change, the Government are applying a rent reduction to supported housing, with rents decreasing by 1% a year for three years up to and including 2019-20. That was not in the original plans and it has caused much dismay among the organisations and people affected.
Rebecca Pow (Taunton Deane) (Con)
I applaud the hon. Gentleman for bringing to the House this debate on a very important subject. Does he not agree, however, that it is local authorities that know where best to place the money and whom to help the most? That is what the new funding model will address. I am a firm believer that money should not come from the top, but locally. That is how best to spend it. I would welcome clarification about whether the funding will be ring-fenced. I believe that the Minister will promise that, but I am sure that the hon. Gentleman would like to hear that that is the case.
Neil Coyle
I will come on to ring-fencing. The trust that the hon. Lady puts in local authorities is, I am sure, welcome, but often that trust comes without the resources to meet the demand, and that has been a continual problem.
Ms Margaret Ritchie (South Down) (SDLP)
I congratulate my hon. Friend on securing this very important debate. Does he agree that as part of Government proposals regarding the provision of supported social housing, recognition needs to be given to the best locations, with good access to hospitals and other public services, as many of the people concerned are vulnerable and require care?
Neil Coyle
Location is important, and I will come on to discuss where needs are best met. For too many of the people directly affected, that has been in NHS accommodation, which has been inappropriate and at far greater expense, but the Government’s plans do not address that.
Mr Jim Cunningham
I do not think we should let the hon. Member for Taunton Deane (Rebecca Pow) get away with what she said about passing responsibility on to local authorities. That is a cop-out. Local authorities can do the work with Government resources but if they are not given those resources all that happens is that they get the blame and the public suffer.
Neil Coyle
It is the individuals who need the accommodation who suffer, and also the taxpayer in the longer term, for reasons I will come on to.
I want to give some national and local statistics. It is estimated by the House of Commons Library, which I thank for the figures, that there are 651,000 supported accommodation places across the country. That is not a massive number, as accommodation goes. Across my borough of Southwark, there are 1,200 places in a range of schemes.
I want to flesh out a bit more who is affected, by citing a couple of anonymised case studies from AmicusHorizon. The first is Mrs W, who is disabled and lives on her own in sheltered accommodation. She has no close family, and has mobility problems, a visual impairment and a learning disability. That is who the Government are targeting. She lives in sheltered housing, which means that she is in an accessible and supportive community with unobtrusive support from a scheme manager who operates as a kind of warden. That support enables her to live independently. Her combined rent and applicable service charge is £123.10, which is £57.44 more than the applicable LHA rate.
The second case study is that of Mrs P, who lives in an extra care scheme. She lives on her own and does not have contact with her children. She moved to the scheme after a spell in hospital because of a fall. In the accommodation her health has improved and the staff provide support to ensure that she stays well and is able to get out more and attend social activities. Without that support she would be in residential accommodation at potentially higher cost. Her combined rent and applicable service charge is £174.71, which is £64.04 more than the applicable LHA rate. Golden Lane Housing, which is a Mencap subsidiary, provides homes for people with very complex needs in my constituency, including people with learning disabilities. I visited its accommodation in Rotherhithe, and the people being supported there do not just have severe learning disabilities; they also have communication impairment. One was deaf and could not speak, and that is who the Government are targeting with the change. The wraparound support that those people need is absolutely essential, and by its very nature it is more expensive than routine housing costs.
St Mungo’s is another brilliant local provider of emergency and supported housing in Southwark. It helps people out of homelessness, and helps people with high support needs. In its client group, as it calls them, in Southwark, 53% have slept rough; 73% have mental health needs; 44% have a significant physical health condition; and 55% have or have had a substance misuse problem. As well as providing shelter for those people, St Mungo’s runs workshops that improve life skills and help many residents to avoid more intensive NHS services and to stay out of the criminal justice system.
The Government’s plans from last year and from before that simply do not take into account the broader benefits of supported housing. First, there is the social benefit. Supported housing gives people who would otherwise struggle to live independently control and choice over their lives while allowing them to receive essential support. There is the human, personal benefit of supported housing. There is also a financial benefit. The cost of supporting people in specialist supported housing can be half the gross cost of residential care placements. Lifeways estimates that the average net saving achieved by moving from residential care to supported accommodation is at least £185 a week.
There is a clear cost saving available if we get the policy right, but the Government have failed to do that. The lack of specialist supported housing is pushing people with learning disabilities, dementia and a range of conditions into more expensive residential care, including hospitals. The National Housing Federation states that stable and certain funding for supported homes and services reduces pressure on public services such as the NHS, saving the taxpayer around £3.5 billion a year. That is the potential saving from getting this right.
I thank all the organisations that have given me briefings or meetings on the issue, including the National Housing Federation, Golden Lane Housing, Lifeways, AmicusHorizon, the London Borough of Southwark, St Mungo’s, the Salvation Army, which I think is here today, and London Councils. Their involvement and all the supported accommodation that they provide has built up in the years following the extensive shift in public policy to enable disabled people to live more independently. In particular, that shift was meant to support disabled people to live outside NHS accommodation and residential care. That reflects a demographic shift, and we need to be aware that we have an older disabled population. We should celebrate the fact that more young disabled people are surviving into adulthood, but that comes at a cost. They need more support. In Southwark, the fastest growing cost group to social services is 18-year-olds with learning disabilities. Mencap estimates that that group alone requires the provision of 1,000 new places a year in supported accommodation.
There are some worrying statistics on how things will be directly affected by the Government’s proposals. Golden Lane Housing has suggested that 82% of local authorities agree that there is a shortage of supported housing for people with a learning disability. More worryingly, 41% of current schemes could be at risk of closure if the Government do not shift their plans. Some 80% of schemes due to be built to support that group would cease and not go ahead, leaving many disadvantaged people unable to access the homes and support they need and directly undermining Government efforts to provide supported housing in the community as part of the Transforming Care programme.
All of that has been put at risk by the mess, limbo and confusion from Government on the issue. There has been a clear lack of co-ordination across Government, with a rush to continue the squeeze on budgets without thinking more strategically or for the longer term. In September, the new Secretary of State said:
“The Government values the role supported housing plays and is committed to protecting and boosting the supply of supported housing”.
However, DWP policies have put existing and planned supported accommodation at risk. For example, Golden Lane Housing had to postpone a £100 million five-year bond to provide supported housing. It would not have relied on a penny of public funding. It is also likely to have to turn down a £500,000 grant from the Homes and Communities Agency it applied for under the care and specialised support initiative to develop new homes. Accommodation has been put at risk as a direct result of the Government’s confusion on the issue.
Unable to meet higher needs, the executive director of operations at AmicusHorizon said:
“The impact of the cap will be more than £1 million of annual rent and service income being put at risk. It will also have a significant impact on our residents. None more so than those living in extra care schemes. We’ve calculated they will have to fund an average shortfall of £41.00 per week”.
The Government have said that
“from 2019/20 core rent and service charges will be funded through Housing Benefit or Universal Credit up to the level of the applicable LHA rate…For costs above the level of the LHA rate, Government will devolve in England an amount of funding for disbursement locally.”
Very little detail has been provided, and there is an ongoing consultation on the issue.
Lifeways is based in my constituency and provides accommodation for more than 5,000 people with learning disabilities across the country. It has commented on the uncertainty that the Government have created and the lack of clarity in the funding model:
“The current uncertainty about the future funding of specialist supported housing is putting at risk our ability to deliver high quality, permanent homes in local communities...The new funding model currently been consulted on needs to ensure that the money devolved is sufficient and gets passed on to the right people. People with learning disabilities must not be overlooked.”
Julian Knight
I thank the hon. Gentleman for giving way again; he is most generous. We have had lots of detail from him on what he sees as wrong and so on. I am a member of the Select Committee on Communities and Local Government, and we have heard quite a lot of evidence on this, but I wonder what he proposes to do about the matter. Does he think that the status quo is the way to progress ad infinitum, or does he have any concrete proposals?
Neil Coyle
As I have outlined, if the Government introduced concrete proposals and knew what they were doing, we would not be in this position. I have some specific recommendations for how the Government might go forward, even though I fundamentally disagree that this group of people should be targeted for a reduction in support.
Lifeways has expressed concern about the fact that providers need confidence to invest and build. The Government’s position since September last year has undermined that confidence and caused some schemes to be put on hold or cancelled altogether. Some providers of supported accommodation have said that they will pull out of the sector if the policy is not done in a way that reflects actual costs. The pressure is on the Government to get it right. While it is welcome that the Government have made exemptions for some groups—in particular, people fleeing domestic violence—Lifeways’ concern about people with learning disabilities should not be overlooked. Sadly, there is a clear history in public policy of people with learning disabilities often being left behind or neglected in policy initiatives. It would be useful to hear from the Minister whether there are plans for other groups to be offered specific protections.
Many organisations expressed concern about the difference between supported accommodation and sheltered housing. It would be useful to hear how the Government see the difference between supported accommodation and sheltered housing for older people and the homeless.
As a London MP, I wanted to speak about the higher costs in London. I am grateful to London Councils for the information that they have provided. Its figures are based on applying LHA rates to the current total weekly costs eligible for housing benefit. It should be remembered that most providers cannot reduce rents in reaction to lower housing benefit entitlements set by Government due to the higher cost of provision, because of the nature of the needs of people in supported accommodation. If the Government plans go ahead as on paper, it is estimated that the London Borough of Ealing could have an annual shortfall of £528,000 a year. “Red” Kensington and Chelsea has forecast an annual loss of £440,000 a year. My borough of Southwark could have a shortfall of £167,000 a year. It would be useful if the Minister outlined how the Government will ensure that those additional costs are recognised and met. There is a lack of detail on the local top-up fund that forms part of the consultation. An indication of how the Government intend to operate that would be useful.
Conservative Back Benchers are keen to suggest that discretionary housing payments will always cover any housing shortfall from the Government. I hope that we do not hear a lot of that this morning. It is an insufficient answer and only a temporary solution, even when such payments are possible. For Greater London, there was a £23 million cut in DHP between 2013-14 and 2015-16. My borough regularly spends well over what the Government provide for DHP. It would be useful to know how the Minister intends to meet that need without relying on discretionary housing payments.
I have some questions on the operation of the new scheme and funding model. Is there an intention to pilot the new funding model rather than rolling it out nationally? The changes proposed are significant. The National Housing Federation and others are keen to work with the Government to ensure a successful pilot, not just for the individuals but in terms of value for money under any new model.
The Government have suggested an element of ring-fencing, but ring fences do not always work; people are looking for an iron-clad ring fence on this issue. How will the Government give certainty that any ring fence would last in the longer term? If housing associations and others are to be able to plan to meet the higher level of need for supported accommodation that we know we will see, the ring fence must be iron clad, not just for current demand but into the future. The Government need to be clearer about how funding will keep pace with the level of demand. How do they intend to measure and monitor the level of need and the level of funding required?
I conclude by repeating that this policy change is very poorly targeted. It was ill thought-through last year, it has been poorly developed since and the limbo period has caused considerable discomfort. There is still a very poor level of information available on how the Government plan to take the policy forward from 2019.
Several hon. Members rose—
Mr George Howarth (in the Chair)
I am anxious to get everybody in. I am not proposing a time limit at this point. If Members stick to eight minutes or under, it should be possible to get everyone in who has signalled that they want to speak.
Derek Thomas (St Ives) (Con)
It is a pleasure to be able to speak under your chairmanship, Mr Howarth. I congratulate the hon. Member for Bermondsey and Old Southwark (Neil Coyle) on securing this urgent and important debate.
I agree that it is important that we put supported and sheltered housing on a secure footing for the long term, but I am not comfortable with the idea that we are targeting a particular group. I have some experience in this area and we have not been doing as well as we could have; this is an opportunity to improve the service that we provide for vulnerable people in this housing situation, because it is absolutely right that people deserve to be supported to live independently and with dignity.
There are many organisations and people who support vulnerable people, including older people, people with learning disabilities and vulnerable young people. Examples of all those types of organisations exist in my constituency and I am familiar with them. They need the confidence that any changes that the Government make will ensure that they can continue to deliver those essential services for those who need them and that money ring-fenced for supported living is spent on supported living.
Julian Knight
Will my hon. Friend reflect on the fact that there have been some successes in this area, despite what the Labour party has been saying? Between 2011 and 2015, the Government delivered more than 18,000 new supported homes in England alone.
Derek Thomas
Certainly. I will come to the work that the YMCA is doing in my constituency to increase the amount of housing it provides for vulnerable young people, even in these supposedly uncertain times. There is a real opportunity to do something significant. There is work to be done, but the Government are heading in the right direction. What the people who provide the housing solutions need is confidence and a secure footing, and this is an opportunity to achieve that.
Rebecca Pow
Is it not then important that we commend the Government for opening up a consultation? I have met many housing associations in my constituency, including Yarlington and Knightstone, which build across the south-west. Although one or two of those associations have projects on hold, they have certainly got some good ideas about how we could succeed in this area and make it better for the vulnerable people who need support and who we absolutely must support.
Derek Thomas
I welcome that intervention and completely agree. I delivered supported housing in the past, and there were decisions made, or done “to us”. The current situation is exactly as my hon. Friend says: an opportunity to get the people who understand the situation, the challenge and the solutions to work with the Government to deliver those things. We need confidence in three areas: that we will continue to deliver these essential services, that money awarded for supported living is spent on supported living, and that funding will keep up with demand—that is extremely important.
Long before I came to this place, I worked with people with severe learning disabilities and often with very elderly parents who were looking after adult children. The stress and pressure on the parents were enormous. The worry about where their adult children would end up when they could no longer look after them was significant. They had no confidence that the current arrangements would ever provide housing in the right place that their adult children needed to help them to live full and free lives. It is important that we use this opportunity to focus our attention and to address how we can provide the housing needed to support the whole family as they look to move their adult children into secure, independent housing that looks after them as whole people. We worked hard to do that. Local people put in their money to buy a property where we could house up to five people, close to their families, with the people in place who could support them to live there, but the barriers were so immense that we could not continue that service. The property is not lost because it is supporting homeless people, but we were unable to provide a secure arrangement for those people, where they felt they had a home for life.
Particularly in Cornwall, to which people gravitate because of the quality of living, many people with learning disabilities are living with older parents. We need to meet that housing demand now and in the very near future. We are not discussing the built environment, but it is important that the Government use every resource available to Departments to increase the supply of housing for people who have learning disabilities, to ensure that they are in the right place, with good transport links, close to home, where they can still be in close contact with their families and where they are part of the local community.
Devon and Cornwall Housing run foyers in my constituency, which are places where vulnerable 16 to 18-year-olds with quite horrendous backgrounds are supported. They are invited to live there. Alongside the housing—the roof over their heads—they receive support on growing up and the skills needed to become independent and to live lives that we all take for granted. The YMCA also works in my constituency. Years ago, I was on the board of YMCA Cornwall and sat on a panel that interviewed young people to ensure that the housing we provided was for them and would give them the tools that they needed to move on. They are only ever allowed to live in one of those properties for two years, so it is important that in that time they are supported to learn the skills and have the resources and abilities to go and set up homes of their own.
The challenges facing young people who qualify for such supported services are considerable. For years, both Devon and Cornwall Housing and the YMCA have been influential in helping young people to gain a firm footing in their lives. As I have said, there is good news, despite the uncertainty referred to by the hon. Member for Bermondsey and Old Southwark. Two weeks ago, I attended the annual general meeting of the YMCA. Bearing in mind that this is a rural, west Cornwall constituency where there are enormous housing challenges, the YMCA is being ambitious and is setting out to build 19 extra units in the constituency—it already has several—to support vulnerable young people. While the Government are focusing on what supported housing looks like and how we can respond appropriately and effectively to that important demand, will the Minister also pay attention to the barriers for young people in supported housing environments? A safe place to live is essential, but so is the right support to help them to move on from supported housing.
I would like to read a letter that I received from The Coach House, a foyer run by DCH in my constituency. It is right that we focus on supported housing, but we should also look at the barriers created by Government policy that hinder young people from getting the skills and tools they need. The letter says:
“Further to our conversation last week”—
I went along and sat in on one of the house meetings—
“about the young person I have that would like to do a university course at Cornwall College.”
This gentleman is 19 and has
“completed a level three music course at Penwith college. He completed it with triple distinctions. We went to Cornwall College to talk about him doing the foundation degree and was told that he would have to apply for student finance. I looked into how this would affect his benefits and was told that he couldn’t claim benefits if he had student finance. The rent at the Coach House is £230 per week student finance would not cover this. So he is now in the position that living in supported housing is holding him back. He still needs a lot of support so isn’t ready to move on. I think that if we could support him through the first year of his course he would be more than ready to move on. This would be a fantastic opportunity for this young person. He is more than capable of doing the course.
Since being told that he couldn’t do it because of funding his mental health has spiralled to the point that he hasn’t been getting up, washing, eating properly he is very depressed at the moment. I have just come back from the doctors with him and he has been referred to the mental health team”.
We could do more to help that young person to have a fantastic life—to get the skills and the degree he needs and to find the job satisfaction that we enjoy, but at the moment the system is hindering him from doing that further training. I would be interested to hear what work the Government can do across Departments to remove those unintended barriers.
In summary, can the Minister ensure that money given to local authorities will go in its entirety to supported living? Recently, we have heard about extra money for social care from an extra precept on our council tax. We are a year into that, but in my constituency I have struggled to be absolutely sure that the money has gone to social care. We would not want a repeat of that, so if the Government are to give money to local authorities to deliver locally based, locally driven solutions, we must be absolutely sure that it goes to where it is intended so that the people we are talking about receive the supported living they need and deserve.
What more can the Government do to increase the supply of supported housing for people with learning disabilities? How can we ensure that those homes are in the right places so that tenants can play a full part in local society and, equally importantly, access public transport? Finally, will the Minister address the difficulties faced by young people who want to gain skills but risk losing their support by doing so?
Several hon. Members rose—
Mr George Howarth (in the Chair)
Order. It would be helpful if Members can now confine their remarks to about six and a half minutes so we can get everybody in. Quite a lot of time has been taken up already.
Martyn Day (Linlithgow and East Falkirk) (SNP)
It is a pleasure to serve under your chairmanship, Mr Howarth. I am grateful to the hon. Member for Bermondsey and Old Southwark (Neil Coyle) for securing this debate. I intend to speak briefly, as this is not the first occasion since joining Parliament that I have spoken on the subject of supported accommodation, and I suspect it will not be the last. However, I have a few points to make.
When I last spoke on this issue back in April, I welcomed the delay in introducing the housing benefit cuts for those in supported accommodation, and I also welcomed the September announcement to further delay applying LHA rates to the supported accommodation sector until 2019-20. However, it is not enough merely to delay them; the UK Government must exempt supported housing tenants altogether from those devastating changes or find an alternative funding model. The change to housing benefit can undermine the ability of such tenants to pay their rent, thereby putting their home at risk and threatening their physical and mental wellbeing, as well as posing a genuine threat to housing associations’ financial stability. It could also end up costing us more money in the long term if those people move on to other forms of housing.
In previous debates, I have illustrated my concerns with practical examples from my constituency, and I will do so again. The Open Door Accommodation Project, based in Bathgate, which operates in my constituency, works with vulnerable young people. It has a number of supported flats throughout West Lothian and can accommodate up to 16 young people between the ages of 16 and 21. The flats are fully furnished, and most are shared accommodation. The aim is to prepare young people for their own tenancy. I was glad to hear that the shared accommodation rate will not apply to those residents.
When a young person joins the supported flat service, they are allocated a dedicated support worker who works with them to give personal and practical support and helps them to develop the self-confidence and skills they need to live independently. The young people being supported are already experiencing issues with the time it takes to receive benefit payments. That wait can have a huge impact on the likelihood of their sustaining their accommodation.
Another major concern is that there is no longer a seven-day run-on between accommodation, which means that young people have to move immediately when they sign up for a tenancy. That gives them no time to set up utilities or apply to the social welfare fund for the most basic of necessities. The uncertainty about the reduction of housing benefit further exacerbates those issues and, worryingly, might even put that vital supported accommodation at risk. How will such organisations plan for the future if they are faced with yet more funding challenges and uncertainty, which can only continue to deter investment in new schemes?
An area of particular concern for projects such as Open Door is the impact of the eligibility for the housing benefit single-room rate rising to from 25 to 35. That could make it much more difficult for young people to find suitable tenancies when they move on from the supported projects due to increased demand on single rooms and the difficulty in finding suitable flatmates in areas such as West Lothian and the Falkirk districts that make up my constituency—I do not believe that my area is unique in that respect. Those areas have a very different housing landscape from large cities such as Edinburgh or Glasgow, where shared living is much more common. An additional knock-on effect may be that a significant number of young people will move out of the more rural and suburban areas in search of shared accommodation, which may potentially have a negative impact on local economies and employers, as they may struggle to find young recruits.
I am also aware that the age increase to 35 could mean that a huge range of young and youngish people will be living in shared accommodation, which will lead to a new range of challenges. In particular, I worry about the vulnerability of teenagers who go through projects such as Open Door and then have to move on from supported projects to share accommodation with effectively middle-aged adults of 35.
There is much that concerns me about the UK Government’s proposals. I am, however, glad that there are plans to devolve funding to the Scottish Government for supported accommodation. In my opinion, that is a step in the right direction. It will help to ensure that supported accommodation is supported in a secure and sustainable way for the long term. I just hope that, as with the bedroom tax, Scotland will not have to mitigate the effects of yet another botched Tory attempt at savings that simply moves an increased cost burden on to Holyrood.
Peter Aldous (Waveney) (Con)
It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Bermondsey and Old Southwark (Neil Coyle) on securing this debate.
It is fair to say that there was a significant policy vacuum earlier this year, which was causing much concern for those involved in the sector. Credit is due to the Government for coming forward with proposals to fill that void. I particularly commend the ministerial team at the Department for Work and Pensions for the speed with which it responded with its statement on 15 September. It should be acknowledged that, back in July, it was a brand new team. This is not a straightforward matter, and it moved quickly to address the sector’s worries.
I believe that the framework within which the Government are working up their proposals is sensible. They carried out an evidence review, and they have acknowledged that the proposals cannot be worked up just within the confines of the Department for Work and Pensions and the Department for Communities and Local Government. There is a need to work with other Departments and providers.
The Government are also right not to be rushing to put the new system in straight away. As they move into the consultation and detailed design stages, I have six specific concerns that I want them to address in their work with those involved in the sector day to day. First, there is a widespread concern that the 1% cut in rents to commence from next March will impact on the viability of schemes, in particular those of small providers, and will lead to either a reduction in much-needed services or the closure of schemes altogether. Another worry is that the cut will lead to housing associations drawing back into cheaper, general needs housing.
I acknowledge that the Welfare Reform and Work Act 2016 provides that social landlords can be exempted from the requirement to reduce rents if that would result in serious financial difficulty or jeopardise their financial viability. The feedback that I am receiving, however, is that so many providers will be adversely affected and the measure is casting such a shadow of uncertainty over the sector that it would be simpler to exempt all supported housing from the provision.
Secondly, there is concern among providers that the Government’s proposed model from 2019-20—in which core rent and service charges will be funded through housing benefit or universal credit, and costs above the local housing allowance rate will be paid from devolved funding—could lead to a postcode lottery. The National Housing Federation expressed that opinion, and Riverside has provided regional maps to illustrate it. Emmaus, which serves my constituency, has similar worries, as has the Salvation Army, which is concerned that the housing support entitlement of vulnerable men and women will be substantially reduced everywhere except certain parts of London and the south-east. I acknowledge that London has serious homelessness challenges, but so do other cities, towns and coastal communities such as the one that I represent. We need a one nation solution.
Thirdly, it is important that any funding mechanism has the ability to maximise the amount of finance that can be leveraged in from external sources, whether banks or pension funds. Bear in mind that new developments are invariably funded over long periods of between, say, 10 and 30 years, because lenders are looking for certainty that their investments are secure over the lending period. Rents eligible for housing benefit provide that comfort, because that is Government-backed income. The worry, however, is that the local discretionary top-up funding does not provide the secure, long-term solution that investors seek—it is too risky. As the NHF has pointed out, we need to ensure that the ring fence for funding is iron-clad into the long term.
My fourth point concerns mental health. Rethink Mental Illness has expressed serious concerns that the position of those with mental health challenges could be seriously compromised. Housing is the foundation stone for those facing mental health challenges to get their lives back on track, so we need to look very closely at the proposals as they affect that. Fifthly, the sector is very diverse. It has a number of different parts and, although we should have a core system, we need add-ons to address particular worries and concerns. Finally, as has been mentioned, this is complicated and not straight forward, so I ask the Government for a pilot project, which is necessary before the scheme is rolled out across the country.
In conclusion, the Government are to be commended for providing a framework within which a sustainable system of funding for supported housing can be delivered. Our challenge is to address the devil in the detail. This is very complicated and we need to work with the sector during the consultation period and beyond to deliver a system that fairly and properly provides for many vulnerable residents.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship, Mr Howarth, and it is always a pleasure to follow the hon. Member for Waveney (Peter Aldous), who made some good points and struck a better note than some of his colleagues have done.
Repeat debates on the same subject suggest either that someone is going for easy political point scoring or that the matter is one that the Government are continuing to get wrong. In this case, it is clearly the latter, and I congratulate the hon. Member for Bermondsey and Old Southwark (Neil Coyle) on securing the debate.
In a debate last year, I stated that the Government’s housing strategy was a mess, unless we assumed that they wanted to dismantle the entire social housing concept. A year on, my sentiment remains the same. We only need to look at last week’s autumn statement to see that it allocated a further £0.25 billion to the right-to-buy pilot. Given the volume of right-to-buy properties that end up in the private rental market, that becomes a problem pushing up the housing benefit bill. The Government need to consider that, rather than attack supported housing, which provides lifeline services.
Supported housing provides refuges that can end years of hell, save people from domestic abuse, prevent rough sleeping, support people with mental health issues and allow older people to live independently in a safe environment. All those things combined can lead to an offset of savings within the NHS or can eliminate the need for people to be housed in more intensive and expensive residential homes, so helping to prevent bed blocking in hospitals.
My local Kilmarnock Women’s Aid organisation confirmed that it provides
“information, support and temporary refuge accommodation to women, children and young people experiencing domestic abuse.”
It believes that the
“impact of benefit sanctions and reforms are already having a disproportionate effect on women and lone parents. Universal Credit, which will be paid monthly to one householder, further increases the possibility of financial abuse.”
Therefore, it states:
“If refuge services are not exempted from Housing Benefit, a vital lifeline for women and children to find safety from domestic abuse could be lost.”
Against that backdrop, and as proof of a lack of joined-up government thinking, we have had a policy announcement confirming that the Government had no idea of its actual impact, which led to delays—which are welcome, but still only delays—consultation and now loose and woolly ideas for the future. The lack of greater detail from the Minister leaves a lot of uncertainty in the sector. There were some interventions on localism earlier, but the proposals do not offer confirmation that that will work; there is still insufficient clarity about what will happen.
In the here and now, we have had confirmation of the 1% rent decrease from 2017 in the supported housing sector, which will impose cuts on supported accommodation. The delay in the introduction of the local housing allowance cap until 2019-20 simply looks like a stay of execution, unless further clarity is provided.
Last year, an Inside Housing survey revealed the stark reality that 95% of providers might close their schemes, and the Government’s proposals have not changed much since then, apart from the possibility of some additional funding. The thing is, though, that we do not know how that funding will work. Will it make up the complete shortfall? I suggest that it will not, or else there would be no point in introducing a more convoluted system. The Government now seem to be hiding behind the discretionary housing payments excuse that they used for the bedroom tax. The Government have been defeated in the courts over the bedroom tax, so who knows what lies in the future for this?
As my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) said, it is a minor comfort that the relevant funding will be devolved to Scotland, although the Scottish Government are already spending £100 million to mitigate other Tory policies, and the Scottish Federation of Housing Associations has estimated a loss of funding of up to £14 million per annum. Will the Government take account of real need when looking at provision of top-up funding? Will the uplifts provided to the fund in future be at a flat rate? We need more clarity.
In a previous life, as a councillor, I was pleased to see the construction of a new development, Lilyhill Gardens, which provided supported accommodation to people with special needs, allowing them to live independently with the support of a telecare package. That project was truly transformational for the tenants, and won several awards. Local authorities and other providers would like to roll out similar models, but how can they do so when future funding is insecure? It is important that the Government provide clarity. In Scotland, we are trying to reshape the social housing model and provide a stock that is better suited to people’s living conditions and demographics, but it is really difficult to do that without clarity about funding. That could lead to bed-blocking and other things that will cost more money in the long run. Will the Minister reconsider this issue, apply an exemption to supported housing and abandon the Government’s penny wise but pound foolish strategy?
Mr George Howarth (in the Chair)
Order. I will begin calling the Front Benchers at 10.30 am. Will the hon. Member for Strangford (Jim Shannon) bear that in mind?
Jim Shannon (Strangford) (DUP)
I certainly will, Mr Howarth. I am quite happy to stop at 10.30 am, as you indicated. I am quite happy to be the last to speak in this debate as well.
I congratulate the hon. Member for Bermondsey and Old Southwark (Neil Coyle) on setting out his case so well and allowing us all to participate. It is good to speak in this debate. Like other hon. Members, I have spoken before about this issue, which affects some of the most vulnerable people in our society, and we are back here to do so again. We are back here for a purpose: there are quite clearly outstanding issues for us to address, and the matter is worthy of consideration and continued debate until we get it right. We are back here to get it right. I am pleased to see the Minister in her place; I hope that her cold or flu symptoms do not prove too much for her. I am sure that she will be able to respond to the issues that we bring to her attention.
I appreciate the extension until 2019-20 of the introduction of the local housing allowance cap, as that gives short-term relief to supported housing organisations and allows them to organise and work out whether they can continue to provide their valuable service not only to their residents but to the rest of the community. What those organisations do is important. It is estimated that at the end of 2015, there were some 651,000 supported accommodation units in Great Britain. That gives us an idea of the magnitude of the issue. The estimated annualised cost of the supported housing sector covered by housing benefit in Great Britain at the end of 2015 was £4.2 billion. Back home, I get requests about housing benefit almost every day, if not several times a day, and I am sure other Members do too.
It is claimed that supported housing provides a saving of around £940 per resident compared with the cost of housing them in other Government-provided facilities. On my maths—I hope my figures are correct—that is a saving of almost £612 million per year.
David Simpson (Upper Bann) (DUP)
The bedroom tax was mentioned earlier. Does my hon. Friend agree that the Northern Ireland Executive made a wise decision not to move forward with the bedroom tax?
Jim Shannon
Yes, absolutely; my hon. Friend is right. That was a very wise decision. It was supported by all and was done for the very best reason: to help vulnerable people in society. I will focus on those people in the short time that I have.
We must surely consider that saving when looking at housing benefit and supported housing schemes over the long term. In March 2016, the Government confirmed that people living in supported and sheltered housing would be exempt from the LHA cap for a year to allow the Government to carry out a proper strategic review of how supported housing is funded. That is good news. Let us give credit where credit is due: that is a step in the right direction. I have been furnished with the results of the consultation carried out by members of the National Housing Federation, which represents housing associations. More than 200 organisations contributed their views to that consultation.
Ms Ritchie
Does the hon. Gentleman agree that the best way to deal with the need for supported housing is to provide additional resources for more housing, particularly more specialised housing, for those who are in most need?
Jim Shannon
I could not agree more. That is clearly what we are all trying to achieve, and I hope the Minister will confirm that that is the Government’s target too.
The National Housing Federation says that the following three principles should underpin reforms to the funding of supported housing:
“No-one with support needs will become homeless or end up in unsuitable accommodation…The actual housing and support cost of delivering a quality service will be fully met, and will be flexible enough to meet changing levels of demand”—
things change, and we must be ready for that—and the
“taxpayer and those living in supported and sheltered housing will have evidence of the quality and value for money of the services being funded.”
That seems a solid foundation on which to build a supported housing policy, and I hope that the Minister will respond positively to that.
We must look at all those principles in the light of what the Government seek to do. The local housing allowance cap will apply to all tenants in supported and sheltered housing from April 2019. Housing costs will continue to be paid through the benefits system up to LHA level. There will be no shared accommodation rate; the one-bedroom LHA rate will apply to under-35s in supported housing. There will be local authority top-ups, and ring-fenced funds will be transferred from the Department for Work and Pensions and allocated by the Department for Communities and Local Government. The 1% rent cut will apply to supported and sheltered accommodation from April 2017.
There are still problems and many issues to be addressed. The hon. Member for Waveney (Peter Aldous) referred to people with mental health issues, and I want to focus on them, because those issues come up every day in my constituency. I do not believe that the Government’s aims allow them to follow through on the principles that are in place. Only last evening, before I got my flight to Heathrow to come to the House, I had a young man with mental health issues in my office who was finding it difficult to get housing benefit to allow him to live close to his family. I had only to talk to him to know that he was suffering from severe depression, anxiety and angst and really needed help and support to allow him to live his life somewhat independently. I speak out for him, to ensure that the Government’s proposals do not stop housing associations creating supported housing schemes, which are needed not simply for the elderly but for people of all ages and from all walks of life.
We have had 30 years of conflict in Northern Ireland. We often say that, but that does not lessen the statement. We have acute and complex issues in Northern Ireland; many people from all sides of the community and of all ages suffer from anxiety and depression and need help. It is important that supported housing schemes can be created and sustained. The Government must recognise that need and allow for it in their proposals.
Although the ring fence and the commitment not to use a shared accommodation rate for LHA for people under 35 are most welcome, we must ask how local authorities will prioritise the spending of their devolved funding. For example, will they prioritise people with social care needs over single homeless people? How will the Government ensure that local authorities get the right amount of money and that funding grows in line with need? How will we ensure that services that require relatively little additional funding, such as sheltered housing, are not caught up in complicated administration? The hon. Member for Waveney spoke about how complex that is both for us and for our constituents. How will we ensure that existing tenants are protected in the transition from one system to another? I know the Minister, and I know that her response will be positive. We want to hear positivity from her when she addresses those questions. I am aware that this issue is out to consultation, but it has surely been considered since the initial review in 2011.
I conclude with this comment. Reform is needed. The present system can be taken advantage of. We speak for the most vulnerable people—those with mental health issues, emotional issues and complex personal issues, who are in situations where they are taken advantage of, not supported—and we must ensure that they are not left alone. I implore the Government and the Minister to consider fully the responses of the bodies that deal every day with those vulnerable people, and ensure that we leave no one alone and vulnerable without the support that they need to live.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I add my congratulations to the hon. Member for Bermondsey and Old Southwark (Neil Coyle) on securing the debate. This is a timely opportunity to re-examine the issues around the 2015 proposal to cap—in effect, cut—housing benefit for tenants in supported housing, given the Government’s temporary postponement of the plans, their further announcement in September that they were stepping back from the brink of implementation, and the publication of the report arising from their evidence review just over a week ago, which we are still digesting.
We have had insightful contributions from Members from both sides of the Chamber. One of the common themes is that supported housing is a crucial part of the social rented sector. It meets a variety of specialised needs in our communities—needs that would not easily be met in other ways. We heard that supported accommodation include homes for elderly people, for people fleeing domestic violence and for people overcoming addictions. For the majority, we are talking about homes for people with learning difficulties, substantial physical difficulties, serious mental health problems or other complex needs. In other words, they are people who would otherwise be unable to live independently—people who are frequently disadvantaged—some of whom are also very vulnerable.
We have heard stories from every part of the UK about the huge value of supported accommodation in our constituencies, the huge difference that it makes to the lives of those who need it and benefit from it, and the challenge and uncertainty that the Government’s proposals have caused not just to the people living in those homes but to those who provide those homes. My hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) highlighted the impact of the arbitrary age restrictions on disabled young people—those under 35 in that regard. The hon. Member for Waveney (Peter Aldous) expressed a range of concerns about the financial implications of the proposed changes for local authorities and supported housing providers. He also called for a pilot scheme for any changes that come in, which seems to be a sensible suggestion that I hope the Minister will take on board.
My hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) got right to the heart of the matter when he challenged the Government’s approach to social housing in the wider context of austerity. He also made crucial points about women’s refuges and the role they play in helping people leaving violent home situations. The hon. Member for Strangford (Jim Shannon) focused his remarks on the impact on vulnerable tenants in Northern Ireland, and the hon. Member for South Down (Ms Ritchie) who, regrettably, was unable to make her own speech in the debate, emphasised the need for investment in the supply of supported accommodation to meet identified demands.
We should remind ourselves that, if we turned the clock back 40 years or so, many people with similar types of disabilities to those who live in supported housing today often did not live in the community. If they could not live with family or, as outlined by the hon. Member for St Ives (Derek Thomas), their family could no longer look after them, they were moved into large residential hospitals, often out in the countryside away from everyone. There was one in my constituency, and while I do not doubt that the residents had a high standard of professional nursing and medical care, most were not ill and did not need to be in hospital. Most of them were people with learning disabilities. It was an institutional model that cut patients off from wider society and robbed them of their independence. It also cost a fortune, even by the standards of the time. By contrast, there are now real homes in the area for disabled and learning-disabled people, and that is immeasurably better for everyone.
Supported accommodation has developed in the subsequent decades in a far more humane, appropriate and altogether better model of living for adults who would struggle to live independently without some degree of external support. However, the proposals we have seen from the Government in the past year to 18 months or so have put real question marks over the viability of that. The hon. Member for St Ives said that there is growing demand for supported accommodation, and I suspect that that is driven by changing demographics, with many members of the baby-boomer generation who were looking after adult disabled children at home no longer able to do so. Many young disabled adults, as we have heard, want to go to college and university, just like their peers. That has to be a good thing in the longer term, but it means that there is still a demand for supported accommodation. It has been a success, so let us not undermine that success with unnecessary cuts.
The Scottish Federation of Housing Associations represents dozens of housing associations in Scotland that provide supported accommodation of one sort or another. It estimates, based on projected turnover of tenancies, that nearly 6,000 new tenants could be affected by the proposed cap if it is introduced—obviously it is impossible to know exact numbers because the cap will affect future, not current, tenants.
The financial shortfall for those people—the gap between their housing benefit and their rent—is likely to add up to between £4.3 million and £5.6 million a year. That may sound like a small sum relative to the debates we were having in this place on the autumn statement last week, but for a tenant in supported housing in receipt of housing benefit the gap between their rent and housing benefit will on average be about £615 a year. That is nearly £12 a week, which would represent a substantial portion of income for, say, an adult over 25 on the new rate of employment support allowance. That would leave them with only about £60 a week to feed, clothe and keep themselves warm. A young person under 25 who has been assessed as fit for work would be left with only about £46 a week for their essential needs.
It is important to understand that many of the people we are talking about in supported accommodation may be on ESA for a lengthy period. Some may be in work or on jobseeker’s allowance, but for many the special needs that make them eligible for supported accommodation also make it difficult to find sustained full-time work. We should accept that some folk in supported accommodation will always need quite extensive support to have a decent quality of life.
We need to ask ourselves what happens when tenants in supported housing cannot pay their rent. The answer is simple. Whether people are in private sector, local authority or housing association-owned property, when rent arrears get out of hand or build up over time their tenancies are put in jeopardy. A rise in evictions and homelessness is not an outcome that anyone wants to see. It is also hugely costly to deal with the consequence of failed tenancies.
There is a real risk to social landlords’ willingness to invest in supported accommodation. If it becomes economically unviable to build and operate supported living, housing associations will not do it. That would be a disastrous outcome for individuals who could live independently in supported accommodation, and it would also leave local authorities with an almighty challenge of finding ways to meet the basic welfare and housing needs of some very vulnerable people.
In many of the case studies provided by the SFHA of current tenants with similar types of support needs to prospective future tenants, the only alternative safe forms of accommodation would be care homes or long-term hospitalisation. That would make us feel like we were turning the clock back. In my local area, finding care home places is extremely difficult, and I know that that is the case in many parts of the UK. Our hospitals cannot cope as it is with the problems of delayed discharges: having people in hospital who do not need to be there. That would become a hugely problematic issue if we lost the ability to place people in supported living.
The critical point is that either option—care homes or hospitals—is significantly more costly than a measly £12 a week for vulnerable people, which could make the difference between retaining and losing a tenancy. Money spent to keep people living in their community is money well spent and it is a false economy, and quite mean-spirited, to squeeze the already low incomes of economically deprived people, as the Government’s original policy proposed.
Before I conclude, what discussions has the Minister had with the Scottish Government about this issue? I welcome the plans to devolve funding in the area, but I hope she will confirm that it will continue at the current level. I am keen to know what engagement she has had with stakeholders in Scotland, most notably supported housing providers such as housing associations and local authorities but also the organisations that support tenants in those homes to live independently.
It is just wrong to target cuts on some of the poorest, most disadvantaged and, in some cases, very vulnerable people in our communities. It is also extremely short-sighted, economically counterproductive and socially retrograde. I appreciate that the Government are rethinking their approach. Sometimes the best thing is to accept that a previous ministerial team got it wrong and to recognise that the easiest, least bureaucratic and most cost-effective and compassionate way out is to back away from the cuts and exempt supported housing from the cap altogether.
Margaret Greenwood (Wirral West) (Lab)
I thank my hon. Friend the Member for Bermondsey and Old Southwark (Neil Coyle) for securing today’s debate on an important topic, and for giving such a balanced picture of the impact of Government policy. We have heard important contributions from hon. Members across the House, including the hon. Member for Waveney (Peter Aldous), who spoke of the shadow of uncertainty over the sector—something that I think everyone present will recognise—and described concern about the development of a postcode lottery. He called for a one-nation solution.
We heard contributions from my hon. Friend the Member for Coventry South (Mr Cunningham) and from the hon. Members for St Ives (Derek Thomas), for Taunton Deane (Rebecca Pow), for South Down (Ms Ritchie), for Linlithgow and East Falkirk (Martyn Day), for Kilmarnock and Loudoun (Alan Brown) and, of course, for Strangford (Jim Shannon). The hon. Member for Strangford spoke about the importance of providing appropriate accommodation for people with mental health issues. The hon. Member for Banff and Buchan (Dr Whiteford) did a good job of summing up the debate, and dealt particularly with the point that the special needs that make people eligible for supported housing can also make it harder for them to find employment. I think that all hon. Members would agree that money spent to keep people living in their constituencies is money well spent.
As has been said, the Government plan to cap housing benefit at local housing allowance levels for people living in supported housing schemes and to introduce a reduction of social rents in England of 1% a year. The housing benefit cap will force the closure of tens of thousands of supported homes for people most in need. The National Housing Federation predicted that 82,000 specialist homes would be at risk of closure if the cap and rent cut were implemented. Why the Government would pursue such destructive policies, which will drastically decrease the amount of supported housing that is available, is a question that still needs to be answered, especially when a number of national studies have demonstrated that supported housing services provide excellent value for the public purse. That is particularly true in relation to keeping the costs of health, care and criminal justice down—something that several hon. Members have mentioned.
Supported housing is one of the fundamental building blocks of independence. It includes a variety of schemes designed to provide both housing and support to help vulnerable people live as independently as possible in their community. Supported housing in the community is vital to the wellbeing of those people, and presents the best opportunity for them to take control of their lives. That is exactly why the Government must ensure that there is good local supported housing. Will the Minister explain what the Government are doing to ensure that the supported housing sector is properly funded to provide a vital service to vulnerable people?
Supported housing is a lifeline for people in vulnerable and sometimes dangerous situations. It is a way for vulnerable people to maintain their dignity and a degree of independence. Those are real people, with real problems, who need our support during these hard times. They are not statistics, or potential savings. They are domestic abuse survivors escaping abusive partners, older people in need of additional support, people with mental health issues or learning or physical disabilities, who need specialist care, or they are homeless people in desperate need of a safe place to sleep for the night. That is just a snapshot of the types of people who rely on supported housing. Anyone who leaves the Palace of Westminster late on a Monday night and walks past people sleeping in sleeping bags in doorways will be acutely aware of how desperate the situation is. Are the Government not ashamed to turn their back on the most vulnerable people in society?
Supported housing is a place of sanctuary and much-needed refuge. For example, the domestic violence charity Women’s Aid reported that 67% of its affiliated refuges in England would face closure if the local housing allowance cap were applied, while 87% of them would be forced to scale down their operations. With nowhere to go, women fleeing domestic violence would have even more perilous lives. What steps are the Government taking to ensure that there is good quality and properly funded supported housing for those who need the safety and security it offers? Good, well-funded and integrated supported housing makes economic sense. Evidence shows that it delivers average net savings to the public purse of about £940 per resident per year. Does the Minister agree that the cost benefit of supported housing is beneficial to the public purse, and that it should be properly funded?
I am pleased that the Government have finally listened to the Labour party and to housing and community groups, and have decided at least to delay the implementation of the LHA plan that was included in the previous autumn statement. However, the future of supported housing is still not secure. The Secretary of State’s written statement of 15 September promises at column 38WS to make “efficiency savings” to the supported housing sector in the same way as the rest of the social sector. The Government last week published a consultation, seeking views on their plans for a new housing costs funding model for supported housing. Will the Minister explain what exactly those efficiency savings will entail and how supported housing can be expected to make efficiency savings in a housing crisis? Ministers have promised a new, ring-fenced, fund; however, the similar, and once ring-fenced, Supporting People fund has been slashed by 45% since 2010. What guarantees can she give that a new fund will not also be cut?
The uncertainty is having an immediate impact; it has left tens of thousands of the most vulnerable people in limbo. Services coming up for re-tender are at risk of closure, irrespective of the outcome of the consultation. The charity Mencap said that the proposed cap had caused 80% of plans for new supported housing to be put on hold, and 40% of existing schemes to be threatened with closure. Does the Minister agree that the decision on the cap was merely delayed, causing unnecessary anxiety for those concerned?
Riverside has looked at the possible geographical difficulties of the new top-up scheme. I share its concerns about where the line is drawn between housing costs met by DWP through a national benefits system, and additional housing support costs met through locally administered funding pots. With LHA rates more modest in many lower-value areas of the country, significant top-up would be required just to meet core rent and basic accommodation-related service charges. For example, the LHA level for a one-bedroom Riverside home in Hull is £69.73, as opposed to £260.64 in Westminster—a difference of £190.91. In many lower value areas, significant top-up would be required. The local top-up funding allocations will need to perform a very different role in different parts of the country. In my area of the north-west, along with the rest of the north and the midlands, the top-up funding will mainly be meeting core rents and services, compensating for the fact that LHA rates are so much lower. In other areas, top-up funding can support new services.
The Government have committed to continue supporting “specialised supported housing”, but will still impose savings on general supported housing. Can the Minister explain what constitutes specialised supported housing as opposed to just supported housing? Homeless Link has said that the definition of “specialist” covers very few supported projects and would protect very few homelessness services. I would argue that any housing that provides expert support to vulnerable people is specialised and therefore should be protected from the LHA cap. Anyone in the sector will say that shelters and refuges are at capacity. It is already a struggle to provide the support needed to help people live independently. Vulnerable people are being turned away. That is happening now, and I dread to think what will happen when the Government finally announce the outcome of their consultation.
Supported housing is oversubscribed and more units are desperately needed. The Government need to do much more to secure the long-term future of supported housing. People who have fallen on hard times should not bear the brunt of Tory economic mismanagement. They deserve dignity and support. I urge the Government to rethink their position urgently, to listen to the deep concerns expressed by the supported housing sector and to ensure that all supported housing is fully exempt from the cuts.
The Parliamentary Under-Secretary of State for Welfare Delivery (Caroline Nokes)
It is a pleasure to serve under your chairmanship, Mr Howarth. I add my congratulations to those offered to the hon. Member for Bermondsey and Old Southwark (Neil Coyle) on securing this important debate. Prior to his election, the hon. Gentleman worked in the field of disability and he continues to be an important campaigner for disabled people in his role as a Member of Parliament. He will know from his experience—we have heard a little of it this morning—how broad the supported housing sector is. He therefore has an excellent insight into the challenges of finding a proposal that will work across the whole sector.
As we have heard, supported housing is vital for many vulnerable groups. Whether additional support is needed for a short time to help someone recover from difficulties or setbacks in life, or whether it represents a longer-term arrangement, the valuable role that such accommodation plays is clear. Last week we published our evidence review of the supported housing sector, which we commissioned jointly with the Department for Communities and Local Government. The review has given us an important indication of the scale, scope and, indeed, cost of the sector across Great Britain. It estimates that there are about 651,500 supported housing units, predominantly provided by housing associations, local authorities and charities. The majority of the units—about 71%—are for older people, and the remainder for those of working age. It is estimated that at the end of 2015, just over £4 billion of housing benefit was being spent annually on the sector in Great Britain. That amounts to 17% of the total departmental expenditure on housing support. The review also provides an indicative estimate of just over £2 billion per annum for additional funding from other sources in addition to housing benefit in Great Britain. That was largely made up of local authority spending.
The focus of debate today is specifically the effect of the Government’s proposals on supported housing. The Government are committed not only to protecting but to boosting the supply of such housing, and ensuring that it provides value for money and works for those who use it, as well as those who pay for it. As Members will be aware, we have announced that a new funding model will be introduced for supported housing when the local housing allowance rates are extended to the social rented sector from April 2019. In future, housing costs up to the level of the relevant LHA rate will be met through either housing benefit or universal credit. Funding for the additional costs of providing supported housing in excess of that amount will be met through local funding, which is to be devolved to local authorities in England and to the devolved Administrations.
Neil Coyle
I think three different Members have asked about the potential for a pilot of the new funding model. Will the Minister clarify whether there will be one?
Caroline Nokes
The hon. Gentleman must not fret; I will come to that later. Many comments were made by hon. Members and I will try to respond to most of them, but I am conscious that time may not allow for all. I will allow the hon. Gentleman time to come in at the end as well.
As hon. Members have heard, the Department for Communities and Local Government and my Department last week jointly launched a consultation on the detail and implementation of the new sustainable funding model. I welcome this debate as an important opportunity to draw Members’ attention to that. I will turn to the specific points raised by hon. Members in order. I hope to get to every point, but if time does not permit, I will write to hon. Members to clarify a few points.
My hon. Friend the Member for Taunton Deane (Rebecca Pow) and the hon. Members for South Down (Ms Ritchie) and for Bermondsey and Old Southwark mentioned local funding and why it is important that local authorities and devolved Administrations are going to be involved. I absolutely believe that local authorities are best placed to make decisions about how to support vulnerable people in their own areas. We heard about location from my hon. Friend the Member for Waveney (Peter Aldous) and the hon. Member for South Down, and they are right that it is important. However, it is also about understanding local need and being able to reflect that in the most appropriate type of provision.
The hon. Member for Bermondsey and Old Southwark mentioned disabled people, and he was right to do so. As he will know, disability spending will be higher every year to 2020 than it was in 2010. He also spoke of the types of people living in supported accommodation and, like me, he celebrates the numbers of young disabled people who are both living longer and wishing, quite understandably, to live more independently. He is right to point out that that is also a challenge, but it is one that we are determined to rise to.
Likewise, we have a growing elderly population. At the start of the debate, the hon. Gentleman outlined some percentages of individuals living in supported accommodation and what their particular needs might be. I emphasise that people do not necessarily have single needs. We have an ageing population, and as people grow older, their needs tend to become more acute and they tend to have more of them. It is important that we have a system that enables those with really quite intense needs to live independently for as long as they can and, indeed, for as long as they wish to.
Under the Care Act 2014, local authorities have a general duty to promote an individual’s wellbeing when carrying out their care and support functions. Through the consultation, we will be seeking views on whether further protections may be required to ensure that all relevant client groups can gain appropriate access to funding, including those without existing statutory duties.
I can reassure the hon. Gentleman that Departments across Government have worked closely together on the proposals and will continue to do so. They include the Department for Work and Pensions, the Department for Communities and Local Government, the Department of Health, the Ministry of Justice, the Department for Education and the Home Office. We are also working with colleagues in the devolved Administrations.
We have to make it clear that this is not about targeting individuals but about ensuring that we have a system in which the quality of services is central and there is a clear focus on outcomes for individuals. Under the current system, effective oversight of quality and value for money is not strong enough. Through the consultation, we will consider new approaches to transparency and oversight. Our aim should be consistent standards for everyone living in supported housing, alongside a clear demonstration to the taxpayer of value for money.
We want to ensure simplicity and a streamlined process, in line with the principles of universal credit, which a number of hon. Members have mentioned. We have a solid foundation of universal credit delivery in every Jobcentre Plus, and people who are moved from housing benefit to universal credit by the Department after April 2019, and whose overall benefit entitlement will be lower, will be protected in cash terms under transitional arrangements.
As I have said, we recognise the diversity of the supported housing sector, in terms of both the groups of people who live in such provision and the range of support needs that they may have. Officials and Ministers from across the DWP and DCLG have held extensive meetings with representatives from across the sector to understand the nuances of what a new model needs to deliver. They have asked specifically about additions in the consultation document, including what potential role additional statutory provisions or duties for local authorities in England could play, particularly in terms of protecting provision for specific vulnerable groups. The task and finish groups we are setting up to consider a number of detailed aspects of the model are being carefully put together to ensure that the breadth of the sector is represented. I think three hon. Members asked whether the Government would commit to piloting the new funding model. There will be shadow-year arrangements in place on the detail and allocation of funding, to allow for the full transition to the new model from April 2018.
During the last two financial years, the majority of local authorities spent less than 100% of their allocation of discretionary housing payment from central Government. The hon. Member for Bermondsey and Old Southwark has urged me not to dwell on DHP—this will be one of my few references to it—but we provided local authorities with £560 million in DHP funding in the last Parliament, and we have committed to a further £870 million over the next five years. The amount of top-up funding will be set on the basis of current projections for future need. Budgets for years beyond those already set will be determined in the usual way: at future spending reviews. I emphasise again that we want to work with the sector, through the consultation, to consider the wider strategic goals, such as responding to expected future growth in demand.
We see an opportunity here to do things differently, and to create a new strategic approach to commissioning supported housing. My hon. Friend the Member for St Ives (Derek Thomas) made a number of important points about doing better. He also raised the issue of the YMCA. I have been pleased to visit a number of projects since coming into this role in July, and I have long been a supporter of the work of the YMCA and have welcomed the input it has made to this process so far. I also visited a foyer in St Ives, and I absolutely agree with my hon. Friend on the importance, particularly for young people in the supported housing sector, of having move-on accommodation and increasing their level of education and training so that they have a better opportunity of employment.
The hon. Member for Linlithgow and East Falkirk (Martyn Day) spoke of Open Door in his constituency and its supported flat service. He made the valid point that there are very different accommodation landscapes across Scotland. We recognise that challenge, which is one of the reasons why we are devolving this responsibility to local authorities and to the Scottish Parliament.
The hon. Member for Banff and Buchan (Dr Whiteford) asked what contact I had had with Scottish members of the sector. In one of my roundtable meetings, I was pleased to have representatives from Scottish housing associations who came down to London to put their point of view across. I pay particular tribute to Scottish Women’s Aid, along with Women’s Aid nationally, which has been really constructive and engaged throughout this process, both with myself and with my noble Friend Lord Freud, who is the Minister for Welfare Reform. My hon. Friend the Member for St Ives mentioned a specific case in his constituency about students. I will be happy to meet him later to discuss that.
As we know, the Scottish and Welsh Governments have devolved responsibility for housing policy and already determine their own priorities. We anticipate that the Treasury will advise those Governments of their allocations at around the same time as the local authorities in England, which we expect will be in autumn 2017.
Caroline Nokes
I am sorry, but I really have no time left and I would like to leave a couple of minutes for the hon. Member for Bermondsey and Old Southwark to wind up—it will probably be 90 seconds now.
There is a specific point in the consultation about working with the sector to design an alternative model for refuges, which was raised by the hon. Member for Kilmarnock and Loudoun (Alan Brown), and the hon. Member for Strangford (Jim Shannon) said we should get that right. He is absolutely correct to say so. That is why we are not rushing this, and it is why I am pleased to be here today. My first debate as a Minister was on supported housing and that is the issue again today. Getting this right and ensuring that the consultation is as full and thorough as possible is an important part of my role, so that when we move forward with the new funding model, it works for those groups who hon. Members have rightly identified.
Neil Coyle
I thank all hon. Members for contributing to the debate and I also thank the Minister and the Front-Bench spokespeople. Members from St Ives to Strangford have emphasised the need to get this right. The context is that the Government made an ill-thought-through announcement last year. They got it wrong, and while there have been some welcome comments from the Minister, I note that there was no apology for the damage done to the sector by that uncertainty and instability over the last year. It is a sector that saves the taxpayer about £3.5 billion through things such as preventing bed-blocking, as mentioned by the hon. Member for Linlithgow and East Falkirk (Martyn Day).
I hope the Minister will use the consultation and the next few months to genuinely develop and improve these plans, to ensure that the Government get the policy right for the people, organisations and councils affected. I am sure there will be further opportunities to examine the issue in more detail, including through the joint inquiry by the Work and Pensions Committee and the Communities and Local Government Committee in the new year. I hope all Members will contribute more fully over time.
Question put and agreed to.
Resolved,
That this House has considered the effect of Government proposals on supported housing.
Dissident Activity (Upper Bann)
(7 years, 4 months ago)
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David Simpson (Upper Bann) (DUP)
I beg to move,
That this House has considered dissident activity in Upper Bann.
It is a privilege to serve under your chairmanship, Mr Howarth. It is disappointing that I must focus today on dissident republican activity in my constituency. That said, I must take this opportunity at the outset to remind Members that Northern Ireland has come such a long way from the pain and dreadful history that our Province holds. We have made remarkable progress. We are making headlines—largely on a positive note—and now receiving global recognition for the right reasons.
However, there remains an element within our community that cannot look to the future. There are some who cannot and will not build on our strong foundation, which is delivering, and delivering well, for the people of Northern Ireland. It is that element that forced the security threat level in Northern Ireland to severe. It is that element that saw our Prime Minister, the then Home Secretary, deliver the news that an attack on the UK by dissident republicans was a strong possibility. It is that element that is continually undermining the great work that our political leaders in Northern Ireland are striving to achieve.
A town in my constituency is regularly brought to the fore, with reports of dissident activity. It has one of the highest threat levels, and we all need to be on our guard and highly vigilant. In 2009, my constituent, a serving police officer, responded to a 999 call. Constable Stephen Carroll attended without hesitation, in an attempt to fulfil his commitment as a police officer and his pledge to protect the wider public, but that call turned out to be an elaborate trap set up by dissidents who lay in hiding and fatally wounded him. I vividly recall attending Craigavon that evening, as the reports came through that the first officer of the Police Service of Northern Ireland had been shot. It is a night that I will never forget. I must commend the PSNI for its skilful and thorough investigation and for bringing those responsible before the justice system. Two men are currently serving life sentences for that brutal murder, but it does not erase the pain for Constable Carroll’s family.
Ian Paisley (North Antrim) (DUP)
My hon. Friend gives a very sombre recognition of the slaughter of an innocent police officer in Northern Ireland. Does he agree that one thing required in his constituency and all our constituencies is more police officers on the ground? We are about 800 short from what Patten recommended. We need the police to urgently recruit new members and the Northern Ireland Office to stump up the money for it.
David Simpson
I agree. I had a meeting with the Police Federation for Northern Ireland yesterday about the shortfall in its members. Hopefully we will see the fruition of that, with extra members on the ground in the not-too-distant future.
Jim Shannon (Strangford) (DUP)
I congratulate my hon. Friend on securing this debate. Does he agree that we need communities to support the PSNI and all the investigations it is doing and to ensure that the evidence and information those communities have can be sent to the PSNI? The communities, together with the police and elected representatives, can then take on the dissident republicans and eradicate them totally from society in Northern Ireland.
David Simpson
I agree. Community support is important, and I will deal with that later on in my speech.
Our security personnel are on constant high alert. In my constituency, prison officer David Black was gunned down on the motorway as he travelled to work in 2012. That brutal ambush was carefully planned and carried out at the hands of skilled gunmen, who carefully targeted and shot him at high speed. Mr Black served Her Majesty’s Government in the Prison Service for more than 30 years and was awaiting the outcome of his retirement application. That is another mammoth loss, not only to his family but to Northern Ireland as a whole.
That is the distinct reality of the dissident republican activity we face today. They continue to generate support through illegal republican parades and protests. They are engaging with impressionable young men—a generation who have not fully witnessed the darkest days of the troubles. Having indoctrinated those teenagers, they send them out to engage in crimes, while maintaining a safe distance. In May this year, reports stated that a 10-year-old boy was cautioned after a masked colour party took part in a republican parade through Lurgan. It is extremely disturbing how young children are being exploited to try to progress a violent and brutal agenda.
Ms Margaret Ritchie (South Down) (SDLP)
I congratulate the hon. Gentleman on securing this debate. Does he agree that the cancer of paramilitarism must be eradicated from all quarters and that to do that once and for all there must be community support for the PSNI and also community involvement with it, working together with all community and political organisations?
David Simpson
I agree entirely. It is important that the communities co-operate and that information is fed into the security forces.
At the time of that parade, the PSNI was aware of possible illegal parades and made several announcements regarding such activity. It urged the public not to engage in any way and reminded everyone of the repercussions of doing so. However, its pleas to the public were ignored by some, and following that parade, the PSNI followed through with robust and thorough investigations. Last week, it reported that a total of 81 files had been forwarded to the Public Prosecution Service for consideration. I understand that 35 of those files were on residents of the Republic of Ireland. There is a widespread concern that when those files are passed to the PPS, the good work of the PSNI is undone. On occasions, the files that are passed to the PPS for prosecution do not come before the justice system. In cases where they do reach the judiciary, sentencing is often too lenient and therefore ineffective as a deterrent, especially to the said impressionable young men.
In August this year, following a number of co-ordinated policing operations, locally based police officers working in conjunction with specialists from crime operations branch recovered a fully constructed explosive device, firearms and components for other improvised explosive devices in a number of searches in the area. Just a month later, in September, the PSNI uncovered an armour-piercing direct-fire mortar. Along with that find, three men were charged with targeting a former member of the security forces, and a fourth man was charged with attempting to kill police officers. We have recently seen the use of that type of weapon not only in my constituency but in Iraq, Syria and Afghanistan.
In my constituency of Upper Bann, more firearms and ammunition have been recovered this year than in 2015; more people have been charged with terrorism-related offences this year than in 2015; and more explosives, including the vicious mortar, have been seized this year than last year. I want to put on record my admiration for the district commander, the chief inspectors and all the police officers on the ground for their resilience in working under these difficult and very dangerous circumstances.
The team of PSNI officers come under regular attacks in my constituency. Earlier this year, officers were on the receiving end of orchestrated, intense and prolonged violence when more than 100 petrol bombs were thrown and shots were fired at them during serious disorder in the local town in relation to the railway line. That railway line is famous in my constituency. It runs through a high-profile area of dissident activity and is the main thoroughfare from Belfast to Dublin, with trains approximately every 30 to 45 minutes. There have been numerous security alerts on the line, with more than 90 closures. This year, that has been somewhat reduced because of Translink’s work and that of the security forces. We all know that this is an attempt to lure police officers and forces of the Crown into the area so they can be attacked and their lives taken.
Such activity is simply not what the vast majority of my constituents want. They are trying to get on with their daily lives, but it is a stark reminder of how dissident republicans are holding the wider community back from enjoying the freedom and prosperity that Northern Ireland has to offer. I have met collectively the PSNI and Translink to discuss the impact that such closures on the line have on travellers on the railway and we are making steady progress.
Ms Ritchie
The hon. Gentleman is being generous with his time. Does he agree that the interruptions to the Belfast to Dublin service add to the problems for Translink, which has received a lot of criticism from many travellers as a result of undue delays in travelling to Belfast or Dublin, which is having an impact on the local economy?
David Simpson
Indeed. That is my next point. Shoppers, travellers and people going to work are affected, and not all employers are as sympathetic as they perhaps should be in the circumstances when people may have to use buses for transport. It is a disaster from start to finish. It is unacceptable and affects the economy greatly.
The PSNI has received cross-community support—there is no doubt about that—for stamping out dissident activity where possible. With limited resources, it is delivering a high-profile response to tackling these criminals, but we cannot ignore the fact that they are maintaining a presence and continuing to build on their support network. In recent meetings with the PSNI it has said it is greatly concerned about that.
The dissidents have a strong recruiting process, including vulnerable teenagers, and even those who were involved in provisional activity are coming back to help to build devices. Not all have been built correctly. One day, God forbid, they may get lucky and take the life of a police officer, but we hope and trust that will not happen.
Tom Elliott (Fermanagh and South Tyrone) (UUP)
I welcome the hon. Gentleman’s motion. Does he accept that the so-called dissident terrorists are wreaking more havoc and doing more harm and damage to the community they purport to represent than to general society?
David Simpson
That is correct. One concern of the security forces is that the dissidents may not have the capacity for a full-blown terrorist campaign, but they only need to be there and to carry out attacks once a month or every three or six months because the security forces must remain on high alert. The cost to the economy is phenomenal and we must be vigilant about that. The security forces are very aware of that, as are the Northern Ireland Office and the Executive, but unfortunately the dissidents are there and the security forces must deal with them. In recent days, parts of the group have formed a new political party with a leading character in the area—the Minister will know who I am referring to. He is so blatant, sitting in the middle of a room proposing to organise a political party when he is responsible for many dissident activities. He is like Teflon-man: nothing sticks to him. It is unfortunate that he seems to get away with it.
David Simpson
Absolutely.
What more can be done? We know that the judiciary is impartial, but can anything be done to exert pressure to ensure that the necessary sentencing is handed down? If money is an issue, will the Northern Ireland Office consider helping to provide more assistance so that we can stop dissident republican activity and bring some normality to my constituents’ lives?
The Parliamentary Under-Secretary of State for Northern Ireland (Kris Hopkins)
It is a pleasure, as always, to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Upper Bann (David Simpson) on securing this important debate. It is important to reiterate the continuing threat in his community and other parts of Northern Ireland and to ensure that we articulate, as the hon. Gentleman did, the fact that, although there has been a huge transition in recent years, a small number of individuals continue the horror of the troubles. I will refer later to some of the hon. Gentleman’s comments.
I want to speak briefly about the wider dissident republican threat before turning to the specific points raised by the hon. Gentleman. It is important to say at the outset that through the hard work and sacrifice of many brave people, there have been great strides forward in the security situation since the troubles. However, as the hon. Gentleman so clearly articulated, we continue to face a threat from dissident republicans. Dissident republicans are relatively small, disparate and factional groupings, but they are also reckless and determined, and they have lethal intent. In Northern Ireland this year, they have been responsible for five deaths and since 2010, when policing and justice were devolved, there have been 199 national security attacks in Northern Ireland. Although the threat is severe, most people across Northern Ireland are not directly affected by it. Terrorists target their efforts against the brave police, prison and military personnel who work to keep all our communities safe. We owe these public servants a tremendous debt of gratitude for their work day in, day out across Northern Ireland. We always say that in debates such as this, but we must keep reiterating it because they are the people who look after every part of our community. They are immensely brave. I have the privilege of working with them every day, and I will continue to sing their praises.
An unacceptable burden falls on people and communities who are affected because terrorists seek them out to cause them harm, because they have the misfortune to be caught up in security incidents or because they happen to live in areas where dissident republicans operate. We have all heard about the terrible injuries and deaths caused by terrorists, but even where there are no injuries, the terrorists attempt to control and disrupt the lives of many people. Often frail, elderly people or young people must be evacuated on cold nights, people have to move out of their homes or miss hospital appointments and businesses may be impacted on because a small number of disaffected individuals target their own communities to achieve their bizarre aims.
For these reasons and so many others, those who seek the path of violent republicanism cannot secure broad support. They offer nothing to the vast majority of people who want peace and good fortune for themselves and their children. The good people of Northern Ireland have a right to live in peace. They do not want the violence, intimidation and control that those terrorist groups try to impose.
Mr Nigel Dodds (Belfast North) (DUP)
I agree with what the Minister is saying in response to the speech of my hon. Friend the Member for Upper Bann (David Simpson), whom I congratulate on securing the debate. Does the Minister agree that in an area such as north Belfast, which has seen a lot of dissident terrorist activity, one problem that people face and express concerns about is open displays of dissident paramilitary activity, whether it be through parades, murals or other activity? They want to see the police and security forces trying to put a stop to that, because it is designed to intimidate, to stake out territory and to create prominence in the media.
Kris Hopkins
I recognise the point that the right hon. Gentleman makes and I support him in encouraging our police to try to bring an end to that activity. He also makes the point that many people have made, about the community articulating what they want and demonstrating that they do not want to kow-tow or capitulate to a small group of thugs who want to influence the progress being made in Northern Ireland. Both the police and our security services play an important role in identifying and pursuing dissident republicans and disrupting and suppressing their activity. We want to keep that pressure on.
I want to comment on some of the points made by my hon. Friend—I will call him that—the Member for Upper Bann. We say many things in these debates, but to go back to the police and the other people on the front line, nothing demonstrates more clearly the immense contribution that people have made than someone making the ultimate sacrifice. I am thinking of individuals out there who have actually been targeted by these people. The hon. Member for Upper Bann referred to Stephen Carroll and David Black—two people who were brutally murdered by these individuals. Of course, they are not the only people who have been targeted. There have been many other attacks, and the attacks continue.
David Simpson
The Minister is right to say that other people are being targeted, and not only serving members of the security forces. I have cases in my constituency of officers who left the force nine or 10 years ago but are currently being targeted.
Kris Hopkins
Yes. We need to do everything we can, and I know that police colleagues are doing that as well. The constant dialogue that we have, not only with other MPs but through agencies and councils, through different people, ensures that we have an understanding of the threat on the ground.
I want to offer my condolences in this arena to the families of the two people I mentioned and the other people who have been killed or had their lives disrupted. I also want to refer to the comments made by Assistant Chief Constable Will Kerr. He said:
“I would ask all those with any influence in the community to use that influence to persuade people not to get involved in this type of activity. People who get involved, particularly young people, face the prospect of significant, possibly life changing, consequences.”
That is really important. It reiterates the point made by several hon. Members, including the hon. Members for Strangford (Jim Shannon) and for South Down (Ms Ritchie), that we all have a responsibility.
Gavin Robinson (Belfast East) (DUP)
The point that the Minister makes is one of confidence in the Assistant Chief Constable wishing to demonstrate that pursuing a path of paramilitarism will always be negative and dangerous. Will the Minister reflect on how frustrating it is that, following the murder of Adrian Ismay in my constituency, the man who has been charged with his murder—Christopher Robinson— breached his bail conditions no fewer than five times, yet was still free and still is free to walk the streets? How can we encourage the community to stand against such activity when the system is not working with them?
Kris Hopkins
I will not comment on the specific case, but I will touch on the broader issue of justice. Before I do, however, I want to refer to the point made by the hon. Member for Upper Bann about a 10-year-old child being targeted. I am thinking about my own constituency and the fears about the drug-dealing scum in my town who use innocent young people, because they are cowards. They franchise out that activity to someone else—to an innocent. I would say to parents, to families, out there: be extremely vigilant. These people are not bringing someone into a cause but exploiting innocent young people, and we must do everything we can to protect them.
Ms Ritchie
I know that the hon. Member for Upper Bann (David Simpson) will agree with me about this. There is supposed to be a direct correlation between those people who are actively involved in these activities, and drug activities. Both are equally insidious and both are a cancer in society that must be eradicated.
Kris Hopkins
The hon. Lady makes a very good point, with which I agree.
I will briefly move on to the justice system. Justice is a devolved matter, and we treasure the independence of the judiciary, but I will make some observations. First, a review of the system is going on, but, as a citizen, I have observations on some of the choices that have been made, such as individuals being allowed to go to pop concerts. This is about confidence. I want a system that is independent, but it also has to be fit for purpose and reflect the demands of our broad public, who have made an immense journey. When we ask people to step away from paramilitarism and have faith and confidence in a system, whether it is the police or the broader judicial system, the system must be able to sentence; it must be able to process these things. I say this for people who are charged as well. I want them to have a good system that enables them to enter the process, understand and participate in it, and have their day in court. At the moment, I think there are huge question marks over its ability to deliver that. I know that the Minister of Justice in Northern Ireland is doing everything she can to deliver it. I implore my friends across Northern Ireland to make a positive contribution in seeking change in that process.
I want finally to mention what we are doing. On a personal level, I feel so honoured to serve as a Northern Ireland Minister in a Northern Ireland that is in a far better place. It is an exciting place to be. We talk about the terrible things that we have talked about today, but when the chief executive of Belfast City Council tells me that 82 cruise ships have docked in Belfast, when the city tour bus is going around Stormont and when we have thousands of tourists coming to so beautiful a place as Northern Ireland, we need to ensure that we have some balance. A small group of individuals are seeking to go back to the past, but I believe that the vast majority of good people desire to be in a different place.
From a resource point of view, we have put an extra £160 million in this year, and we have put £25 million into addressing paramilitarism. I say to colleagues in the House today and to other friends in Northern Ireland that if I can change things or help them on the path to greater prosperity and greater peace, I will do everything I can.
Question put and agreed to.
Equine Slaughterhouses (CCTV)
(7 years, 4 months ago)
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Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I beg to move,
That this House has considered CCTV in equine slaughterhouses.
It is a pleasure to serve under your chairmanship, Mrs Main.
Believe me, like many horse-obsessed women, I could happily entertain Members with an equine monologue for at least an hour and a half, but although I would rather be taking about the brilliant exploits of horses I have known, the welfare of horses at the end of their life none the less remains an unavoidable issue requiring much greater scrutiny and action. Sadly, if someone keeps livestock, sooner or later they will have to dispose of deadstock. Those of us who care about horses would prefer to convince ourselves that every animal will either meet a natural, pain-free death or be euthanised by a vet. The reality for thousands of horses and ponies is, of course, very different. If we are concerned about their welfare, it is our duty not to be blinded by sentimentality, but rather to improve reality as we find it.
Protecting animal welfare at slaughterhouses is an emotive topic at the best of times. I am proud that as a matter of policy, Plaid Cymru believes that CCTV systems are the best means to monitor, and so protect, the welfare of animals in slaughterhouses. Smaller slaughterhouses should be supported so that they can install CCTV, as it should be borne in mind that small slaughterhouses often have welfare advantages in terms of the time and distance travelled by animals.
Although the use of CCTV in Welsh slaughterhouses falls within the competence of the Welsh Government, the specialised nature and geographical spread of equine slaughterhouses makes this a cross-border issue. Due to the lack of local facilities, horses kept in north Wales may well be taken to slaughter in the north of England. This is a particularly relevant issue to Wales, where the 2013 mislabelling of red meat scandal resulted in the discovery of horse meat in supermarkets, and also resulted in raids at a number of slaughterhouses, including one near Aberystwyth in the constituency next to mine.
As with almost any contemporary legislative or regulatory issue, Brexit has created questions on equine slaughter and broader animal welfare laws. Minimum standards for the protection of animals at the time of slaughter are set out in 2009 EU regulations. If—and I use the word knowingly in this context—one day the Government’s great repeal Bill does what is promised and transposes all EU law into UK statute, decisions on minimum standards in slaughterhouses will have to be made once again. Making CCTV mandatory in equine slaughterhouses, as well as in other slaughterhouses, must be a top priority.
Nowadays we no longer regard horses as working animals, but treat them as companions or pets, so the idea of horse slaughter is something that many people feel uncomfortable about. Sending a horse to an abattoir is far less common than it used to be. There are alternatives to abattoirs for horse owners wishing to provide a compassionate end of life for their animal, such as euthanasia by a vet or taking the horse to an experienced knackerman or to hunt kennels. However, the costs of those options have risen in recent years, making them unaffordable for some horse owners. Euthanasia by a vet and carcase disposal can cost more than £500, while a knackerman may charge around £150. In contrast, an abattoir will pay for the horse, so affordability never has to impact on the horse owner’s decision. It is important that all horse owners can afford to provide a humane death for their animals.
Dame Caroline Spelman (Meriden) (Con)
I congratulate the hon. Lady on securing this debate. Does she agree that one of the things that holds horse owners back from sending their horses to an abattoir is their lack of confidence? The World Horse Welfare survey shows that over half of respondents would consider using an abattoir if CCTV was in place.
Liz Saville Roberts
I am grateful to the right hon. Lady for raising that point and will go into it in further detail. The fact that people lack confidence in the potential of abattoirs, and feel that they will be criticised by fellow horse owners for resorting to them is, in effect, a welfare issue itself. It may well be causing some horse owners to delay euthanasia and that causes welfare problems and distress. Addressing that is one of the key horse welfare challenges identified in a four-year study on the welfare status of horses in England and Wales. As mentioned, the results of that research, which was conducted by the University of Bristol and funded by World Horse Welfare, were published in a report called “Horses in Our Hands”, which was launched at Parliament this summer. It cited how emotional attachment to the animal played a role in delaying euthanasia, as did negative attitudes to killing, financial considerations and peer pressure.
Old, sick and unmanageable horses are too often sold or given away when owners should be taking responsible steps to end their life humanely. What happens to horses that are sold or given away when they are no longer wanted or useful? Very often they will be sent to horse sales and markets, passed between owners and shipped from pillar to post only to end up in the meat trade anyway. In Wales, the sight of unwanted and worthless ponies filling the pens at markets and being shunted from lorry to lorry is depressing. However, the distress caused to those animals is unnecessary, and if the public had greater confidence that horse welfare would be protected at slaughter, fewer horses might suffer prolonged misery.
According to the Food Standards Agency, the latest public attitudes tracker from May 2016 shows animal welfare as equal third when it comes to concern for our food, alongside salt and behind sugar and food waste. That lack of confidence is especially evident among horse owners. A high-profile exposé on the practices of a now defunct UK slaughterhouse in 2013 showed an appalling disregard for horse welfare, with horses beaten, stunned in sight of each other and some appearing to regain consciousness before they were finally killed. Those practices were revealed only through covert CCTV footage; had CCTV been in place, with access to the footage given to authorities such as the FSA, the proprietor, or the regulator, could have stopped the malpractice much sooner. That clearly would have been in everyone’s interest and particularly that of the horses that were undergoing the experience.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Lady on securing this debate. Is she saying that there is a reluctance in equine slaughter facilities to put in CCTV? I know that in the red meat sector, although it is not compulsory, some have voluntarily done so. Is there is a reluctance in slaughter plants to do that?
Liz Saville Roberts
The issue is that it is not compulsory; that is particularly pertinent in relation to horse behaviour and the behaviour of horse owners. CCTV is not necessarily present—its use is voluntary—in every slaughterhouse. It appears to have reached a certain point and be going no further—a plateau.
Mr Philip Hollobone (Kettering) (Con)
The hon. Lady is making an excellent speech, which I am following closely. Does she agree that the cost of installing CCTV has fallen rapidly in recent years and should not in any way be a barrier to good abattoirs installing CCTV without being required to do so?
Liz Saville Roberts
Indeed, I understand that many larger-scale slaughterhouses already have CCTV installed externally; to all intents and purposes, including the internal installation as well would not be prohibitively expensive. I think that is an issue for smaller slaughterhouses, and that they need to be supported.
Julian Knight (Solihull) (Con)
I thank the hon. Lady for giving way and congratulate her on securing this debate. She is being most generous in taking so many interventions. Does she think, as I do, that another flaw in the current arrangement is that in those slaughterhouses where there is CCTV, the owner has the option of not allowing the FSA to see the footage? In fact, not only is the CCTV voluntary, but access to the footage is voluntary.
Liz Saville Roberts
It would indeed seem that if CCTV were present, we should be making full use of it. This is another aspect—given that CCTV itself is not compulsory—that should be mandatory; there should be access to the footage gained through those means.
It is important to emphasise that although we are having this debate today, that does not in any way presume that there is poor treatment in the UK’s five equine slaughterhouses, all of which also take species other than horses. However, horse owners have not forgotten that incident from 2013. A Facebook survey carried out by World Horse Welfare in September provided some interesting insights. Around 90% of more than 900 horse owners who responded did not consider the abattoir as an option for their horse, but 40% agreed that horse slaughter should remain an option within the UK as the costs of euthanasia are so high. More than 70% said that they would not use a slaughterhouse for their own horses because they did not have confidence that their welfare would be protected through the process or that the horse would have a humane death.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
I thank the hon. Lady for securing the debate. I am unsure whether hon. Members are aware of this, but there are no abattoirs in Scotland licensed for the slaughter of horses. None the less, the wider issue of animal welfare at abattoirs is important to many people north of the border. At the SNP conference in the autumn—
Mrs Anne Main (in the Chair)
Order. The hon. Lady is making a speech. Her intervention should be brief.
Mrs Anne Main (in the Chair)
Order. Will the hon. Lady sit down when she is being brought to order? “I am coming to my question” is not an adequate response. She is taking too much time from the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). She should ask a brief question.
Margaret Ferrier
Does the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) agree that the provision of CCTV is vital in ensuring that animals are protected prior to their slaughter?
Liz Saville Roberts
I believe that CCTV protects animals and workers in slaughterhouses and public confidence in the meat produced there. All those things are important. We have a real issue in relation to CCTV and public confidence. There is concern at present that horse welfare is not protected during the process, perhaps because of the particularly sensitive nature of horses. Specific characteristics of equines can make them vulnerable. For instance, they are “fight or flight” animals; when frightened, they seek to flee, and they become panicked or aggressive if they are not handled competently. They are sensitive and highly social herd creatures, and it is a legal requirement for them not to be killed in sight of other horses. Let us not forget that horses, unlike agricultural livestock, have been bred for hundreds of generations to interact with people. That is part of their behaviour pattern and is one of the reasons why we love them—those of us who keep them.
It can be the horse owners themselves who take their horse to slaughter, and that horse may have been a companion to them for many years. Society expects horse owners to feel an emotional attachment to their animals. The horse owner will want—perhaps more than most—a guarantee that the welfare of their horse will be protected at the abattoir, and they will want other horse owners not to judge them for ending their horse’s life in this way, which means that we need to ensure that the abattoir is, and is seen to be, a humane end-of-life option.
Will CCTV provide such a guarantee? On its own, of course it will not, as the Royal Society for the Prevention of Cruelty to Animals, the FSA, the Farm Animal Welfare Committee, the British Meat Processors Association and many others have said. CCTV is but one of many tools to help safeguard welfare. It should be seen not as a replacement for on-site monitoring, but as support for it. Official veterinarians work in every slaughterhouse across England and Wales and make regular unannounced checks on live animals at slaughter to ensure that their welfare is safeguarded.
The FSA’s veterinary audit team checks compliance. However, no single person can monitor the whole slaughter process—from animals held in lairage, through to being led to the stun box or slaughter area, through to the actual killing. CCTV that is in constant operation, placed to cover all live horse areas, such as the unloading, lairage and so forth, provides a record of the entire process and of the animals’ experience throughout.
As I have said, CCTV could have great benefits for the slaughterhouse operator, who is responsible for ensuring the welfare of animals while on the premises. Operators would be able to monitor and assess whether their staff were complying with the law. They would also have evidence to disprove spurious allegations of malpractice. In that respect, CCTV protects slaughterhouse workers and owners, and furthermore, it can be used for staff training and development. A European slaughterhouse told World Horse Welfare that CCTV was invaluable for staff training purposes.
The most common rebuttal of mandatory CCTV is cost. However, the costs, as the Minister explained in a debate on the issue last year, are “relatively modest”. CCTV systems can be purchased for less than £1,000 and many slaughterhouses already have the systems in place to monitor the exterior of their premises for security reasons, so why not inside as well?
To provide genuine transparency and engender confidence, the footage should be available to authorities. No law currently requires CCTV footage from slaughterhouses to be shared with official vets or the FSA, whose role is to monitor welfare at slaughter. For the use of CCTV to be effective, that must change. Mandatory CCTV in equine slaughterhouses must be legislated for in tandem with a requirement for footage to be made available to those authorities. Only that will truly deliver the transparency that the public need and expect.
What is the state of play? The Department for Environment, Food and Rural Affairs has said that it wishes to encourage a voluntary approach to installing CCTV. The Welsh Government have also indicated that they support the use of CCTV in slaughterhouses in Wales, but have failed to legislate to make it mandatory. It is clear that that approach is not working. The FSA, in its board report of 21 September this year, confirmed that take-up of CCTV had “plateaued” at 49% in red meat slaughterhouses. When slaughterhouses have CCTV, it might not be placed in areas which allow them to monitor horse welfare. We need a mandatory approach.
Mr James Gray (North Wiltshire) (Con)
No horse lover could possibly disagree with the general thrust of the hon. Lady’s arguments; of course it is right that we should have CCTV where that can be done. However, only 5,000 horses a year are killed in abattoirs, of the 75,000 or 100,000 that are killed. Is there not a risk that if she focuses all her attention on persuading the Government to introduce primary legislation—an extremely difficult thing to do—she would be ignoring the horse welfare issues associated with the other 95,000?
Liz Saville Roberts
I agree with the thrust of the hon. Gentleman’s arguments but perhaps the fact that, at present, so few horses travel through slaughterhouses to the end of their lives is, in itself, a welfare issue. If more horse owners, and the horse-keeping society as a whole, were more confident that that approach was appropriate, perhaps the number of horses doing that, in turn, would increase.
Let me return to the state of play. Another DEFRA approach has been to say that consumer and retailer pressure, as opposed to legislation, should be the means used to encourage the greater use of CCTV. DEFRA cites the fact that most major food retailers—I will not list them, but it is all the major supermarkets—now insist on the use of CCTV in supply chain slaughterhouses, and there are many assurance schemes, such as RSPCA Assured. However—this is pertinent—that consumer-pressure approach will not work for horses, because horse meat is rarely sold or eaten in the United Kingdom. Most of the horse meat that we produce is sold on the continent, mostly to wholesalers, so consumer and retailer pressure is not applicable.
In conclusion, I hope that the case for making CCTV mandatory in the UK’s equine slaughterhouses is clear. The current voluntary approach will not deliver that. Horse owners do not have confidence that abattoirs will protect horse welfare throughout the process. There is neither transparency nor accountability in the system for horses—just the memory of the horrific covert footage from 2013. The losers in this state of affairs are not just the horses, but horse owners, retailers and the general public, who all suffer from the negative consequences of bad practice and low confidence in equine slaughterhouses. I therefore urge the Minister to do all that he can to provide a system that ensures high standards of welfare and instils greater confidence in the sector by exploring a mandatory requirement for CCTV in equine slaughterhouses.
Sir Roger Gale (North Thanet) (Con)
I congratulate the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on securing this debate. This is a highly emotive subject, which has to be approached, as the hon. Lady said, with practicality rather than sentimentality.
I should start by declaring an interest as a patron of the Conservative Animal Welfare Foundation and as an honorary member of the British Veterinary Association. In that context, I would like to quote immediately from a letter from a constituent of mine, Diana Stark. She said:
“As a horse owner and veterinary surgeon I am most concerned about possible harsh handling of horses at the end of their lives when everything should be…calm and quiet…I feel strongly that if all those working in slaughterhouses knew they were being monitored they would be more likely to be considerate towards the horses in their care.”
My son and daughter-in-law are both qualified veterinary surgeons and they both own horses, so I know at fairly close quarters that one of the hardest things for any horse owner—indeed, for the owner of any animal at the end of its life, but particularly for a horse owner—to have to deal with is that end-of-life process.
It is fondly believed that people who own horses are rich, but there are huge numbers of people right across the country hacking with little ponies often bought for their children and enjoying equestrian sports. Many of them are not rich and the costs of disposal of a much-loved animal can often be a real burden. As the hon. Lady said, veterinary costs can be quite high. I do not think that many horse owners would want, given an alternative, to pass their animals to the knacker man. Even then, there is a cost.
As my right hon. Friend the Member for Meriden (Dame Caroline Spelman) said, this comes down to a question of confidence. If the horse-owning public do not have confidence in the work of the abattoir and the slaughtermen, where do they turn? We know only too well—from the footage, from anecdotal evidence and, in some cases, privately from veterinary surgeons who witness things that they would sooner not witness as observers of slaughterhouse procedure—that there are things going on in slaughterhouses that any reasonable person would abhor. I commend the World Horse Welfare campaign for the introduction of closed circuit television cameras in slaughterhouses that deal with horses. Actually, I would go much further. I would like to see mandatory CCTV cameras in all slaughterhouses, and a mandatory requirement to provide footage on demand when required by a Ministry inspector or a veterinary surgeon dealing with that practice. The Conservative Animal Welfare Foundation also throws its weight behind the call for mandatory CCTV.
We are continually told—quite often by Ministers—that we do not want to burden rural business with additional costs but, as has been said, the cost of CCTV cameras and recording equipment has fallen so dramatically that it is practically available for anybody in this room to purchase. Indeed, my suspicion is that some probably have done, simply for their own security purposes. If it can been done in those circumstances, it can certainly be done in a slaughterhouse.
The object of the campaign is very straightforward. It is to seek to deliver, at the end of a working or entertaining life, a decent end for a much-loved and dedicated animal. I do not think that is too much to ask. I heard what my hon. Friend the Member for North Wiltshire (Mr Gray) said, but primary legislation does not have to be lengthy or difficult. A private Member’s Bill with a couple of clauses, given a fair wind from Government and Opposition—I cannot believe that either would oppose such a measure—could almost go through on the nod. That is really all we are talking about.
The idea that this is somehow difficult is nonsense. It is not difficult. If the will is there, it can be done. That is what Parliament is here for and what we are here for, and I suspect it is what so many colleagues in the Chamber this afternoon are here to support. Let’s not duck it. Let’s get on with it. Let’s seek to ensure that every working or domestic animal in the land is given a decent end and a right to a decent end. That is a very simple request. I would like the Minister, in his closing remarks, to endorse this call to get on and do it.
Angela Smith (Penistone and Stocksbridge) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts)—my Welsh is getting better all the time—on securing this important debate. I declare an interest as an honorary life member of the British Veterinary Association. It is a pleasure to follow the hon. Member for North Thanet (Sir Roger Gale), who has a long history of promoting animal welfare interests in Parliament. Before going into the detail of the topic, I want to pay tribute to the campaign launched by World Horse Welfare to secure mandatory CCTV in slaughterhouses as part of its drive to raise the profile of what the charity calls the invisible horse.
The invisible horse is an imaginative way of recognising that the welfare needs of many horses go unheeded because people do not always see these wonderful creatures from the perspective of whether their needs are being met. Sometimes, of course, that means that the horse is perfectly visible in a literal sense. Nevertheless, its needs are not properly recognised. In the case of the horse in the slaughterhouse, it is the risk of real invisibility that needs tackling with changes in the law. Let me be clear: the mandatory use of CCTV in slaughterhouses should, as the hon. Member for North Thanet has just pointed out, apply in all circumstances and in relation to all animals.
With your good will, Mrs Main, I would like to spend a few moments outlining the more general case for mandatory CCTV before focusing on the issue as it relates to equine welfare. There has been progress. The Food Standards Agency estimates that in 2016, some 92% of cattle in England and Wales were monitored using CCTV, with figures in that range also applying to pigs, sheep and poultry. Looked at another way, the percentage of abattoirs with CCTV has grown to 49.3% for red meat and 70.4% for white meat. However, there is some evidence that this growth in the use of CCTV has plateaued, as the hon. Member for Dwyfor Meirionnydd pointed out, as the figures for 2016 are barely different from those for 2015. Coverage is not only incomplete; it is frequently not comprehensive, very often failing to cover the five principal areas in a slaughterhouse. There is no requirement for the footage to be independently monitored, with unfettered access for official vets and other enforcement officers.
In answer to a recent written parliamentary question in the House of Lords, Lord Gardiner stated:
“The vast majority of animals are slaughtered in slaughterhouses which have CCTV present, so the Government is not currently persuaded of the case for introducing regulation which would require all abattoirs to have CCTV, but we are keeping the issue under review.”
There are two problems with that response. First, it gives the impression that the welfare needs of a small minority can be compromised, although I am absolutely sure that the Minister did not mean that. Secondly, and most importantly, it overlooks the fact that, for some species, CCTV coverage is nowhere near as comprehensive as it should be. Equines stand as a good example of that.
In the equine sector, only five abattoirs are licensed to slaughter horses and all of those premises slaughter other animals as well. Indeed, in one case, 10 other species are slaughtered in the same abattoir. The latest figures suggest that around 4,000 horses per annum are slaughtered at those five establishments. The key point is not so much the number killed; rather, although the majority of horses were killed at abattoirs offering CCTV coverage—three of the five—the coverage was only partial. In other words, very few of the abattoir areas were monitored by the technology, even when it was present in some form or another. In fact, only a very small—and I do mean very small—number of horses were slaughtered under the scrutiny of comprehensive CCTV coverage in 2015-16.
Something therefore needs to be done. The situation is not acceptable. It is even more unacceptable when one considers the special circumstances that apply when slaughtering horses. The Welfare of Animals at the Time of Killing Regulations 2014 stipulate that horses must be killed in a separate room, or in a bay that is kept specifically for that purpose, and that a person must not kill a horse in sight of another horse or in a room where there are the remains of another horse or animal. That heightens the case for comprehensive CCTV coverage.
Additionally, World Horse Welfare believes that horses’ unique social and physiological needs make CCTV scrutiny even more critical, as the hon. Member for Dwyfor Meirionnydd said earlier. Horses have a strong “fight or flight” instinct, which can make them panicked or aggressive when stressed. Competent handling is therefore required at all times.
CCTV must therefore be comprehensively applied and accessible to relevant authorities in order to support them in undertaking their duty of monitoring welfare throughout the slaughter process. Such technology would improve transparency and would not involve the relaxation of other rules relating to the direct oversight of the process or the need for other checks by officials, but it would be an important addition to the process.
There is another reason for our making CCTV coverage in slaughterhouses mandatory, and once again it relates to equine welfare in particular. For many owners of horses, this method of disposal of a well-loved animal would not be acceptable, with euthanasia carried out by a vet being the preferred option. Of course, that latter choice is rather expensive, with euthanasia costing some £500.
The recent “Horses in Our Hands” report for World Horse Welfare, which the hon. Lady mentioned, examined the problem and established, through research at the University of Bristol, that one of the four key priorities for equine welfare is addressing delayed death. In other words, some horses are kept alive for longer than is humane, and cost is often a factor in that decision. The risk is that the animal gets passed around, losing value and frequently ending up in the meat trade anyway. World Horse Welfare therefore views slaughter as an important option in that context.
When asked, more than 40% of horse owners agreed that slaughterhouses must remain available, and nearly two thirds agreed that sending a horse to a slaughterhouse is better than allowing a horse to suffer. CCTV makes an interesting difference to the perception of the acceptability of using equine slaughterhouses. More than 90% of horse owners asked would not use a slaughterhouse to end their horse’s life, but the figure reduces significantly if measures such as CCTV are made available.
This is not an animal rights issue. I deplore and condemn the concept of aggressive picketing and intimidation of slaughterhouse establishments and their staff. Rather, this is an important animal welfare issue. It is about raising welfare standards at slaughter, and it is about transparency and understanding that the humane slaughter of our horses is important for a range of reasons. Not least, it is important because surely we believe that the highest possible animal welfare standards must be maintained in a civilized society.
Mahatma Gandhi is often quoted as saying: “The greatness of a nation can be judged by the way its animals are treated.” I do not know whether that quote is accurate, but it does not really matter because the sentiment is good and sound. This debate is important because we judge ourselves by how we look after those more vulnerable than ourselves.
Lady Hermon (North Down) (Ind)
I am reluctant to intervene on the hon. Lady, who is making a very good speech. I commend the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) for securing this debate.
Will the hon. Lady reflect on the statistic that, according to the most recent figures from 2014, where CCTV is compulsory in slaughterhouses, only six cases have been referred to the Crown Prosecution Service by the Food Standards Agency? I strongly support the compulsory introduction of CCTV, but does it make a difference? Is she reassured that animal welfare is better with CCTV if only six cases have gone to the CPS?
Angela Smith
I thank the hon. Lady for her intervention. I have made the point throughout my speech that we need comprehensive CCTV coverage. Some equine slaughterhouses have CCTV in only two of the five key areas, which is part of the problem. This is not just about having some form of CCTV in the slaughterhouse; it is about having comprehensive coverage of the process in the slaughterhouse.
I was trying to finish on the point that we judge ourselves by how we look after those more vulnerable than ourselves, which includes our equine friends. I therefore call on the Minister—I repeatedly say that he is a reasonable man—to proceed with mandatory installation of comprehensive CCTV in equine slaughterhouses and, in fact, in all slaughterhouses. I look forward to his response.
Mr James Gray (North Wiltshire) (Con)
I congratulate the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on introducing this extremely important debate in such a professional and sensible way. It might seem odd, but I have not disagreed with a single word that she or any other speaker has said in this debate. Incidentally, before I forget, I declare that I, too, am an honorary member of the British Veterinary Association. I am also a member of the Countryside Alliance and I own a variety of horses, and have done so for many years. It is true to say that there is no correlation between richness and owning horses. Indeed, I have discovered over the years that owning horses is what makes one poor. I have had a rather large number of horses at one time or another.
I have also had the experience of taking horses to slaughter, and there can be no more terrible event in one’s life than to take to its death an animal with which one has had a day-to-day working relationship for many, many years—I am sure the same applies to dogs and cats, too. I strongly support the thrust of what has been said by all the speakers, especially the hon. Member for Penistone and Stocksbridge (Angela Smith) a moment ago. Their points are absolutely correct, and I strongly support World Horse Welfare’s campaign to introduce compulsory CCTV in abattoirs, of which there can be no doubt.
I hope that those who feel strongly about this subject will forgive me if I raise a couple of issues that I hope will not detract from the strength of the campaign, but that none the less need careful consideration. The first, which was touched on by the hon. Lady for Northern Ireland (Lady Hermon), is that there have been remarkably few prosecutions, even where there is compulsory CCTV. I am ashamed to say that one of the biggest prosecutions was of that dreadful man from west London called James Gray. I assure the House that he is absolutely no relation; none the less, it was an appalling case.
The question is whether introducing compulsory CCTV in the small number of abattoirs that kill horses would necessarily have a significant effect. My concern is that this might be one of those occasions where we make a huge effort to introduce regulation or new legislation that has little effect and might, on the contrary, assuage our concerns and make us feel that we have done something when what we have done is actually relatively inconsequential.
Sir Roger Gale
I seek not to be mischievous, but does my hon. Friend concede that it is just possible that there are so few prosecutions of places with CCTV cameras precisely because the cameras are having the deterrent effect that we seek?
Mr Gray
That is possible, of course, but it is hard to work out the cause and effect. In the case of horses, I suspect that it is probably because, depending on the statistics we use, only 4,000 or 5,000 are slaughtered each year in up to five abattoirs—there are none in Wales or Scotland. In other words, something in the order of 1,000 horses are slaughtered per equine abattoir spread over 50 weeks. A very small number of horses are being killed in licensed abattoirs today, and therefore there is no presumption that any of them is carrying out anything other than the highest possible standards of slaughter.
Angela Smith
The hon. Gentleman is generous in giving way, given that I have just delivered my speech. It is a mistake to assume that the five abattoirs kill an equal number of horses, because they do not. The numbers are very uneven. The FSA’s figures show that the best records and CCTV coverage are sometimes to be found in smaller abattoirs.
Mr Gray
The statistical point that I was making was not whether the same number were killed in each of the five abattoirs; it was that a relatively small number are killed across the whole of England. As far as I am aware, there is also little evidence of anything other than high standards in the abattoirs that do kill horses. We must not start by presuming that they are all bad people doing wicked things. They are not, necessarily; many of them are extremely professional abattoirs doing good things, so let us not start from the presumption that they are bad.
There is a bigger gap in the campaign that we are discussing. I think I am right in saying that the only horses that go to abattoirs are those going into the food chain, which in the UK is a relatively small number. If we presume that there are between 1 million and 1.5 million horses in the UK today, that means that 75,000 or 100,000 die every year in one way or another. Of those, only a tiny proportion go into the food chain. Again, my concern about the campaign is that we would be assuring ourselves that we were doing something terribly important about the euthanising of horses, whereas in fact we would be dealing with an extremely small proportion of those that are killed or die every year, and there may well be other abuses elsewhere that we could more usefully spend our time addressing.
That brings us to the question of horse passports. It must be remembered that the only horses that can be presented at an abattoir are those with up-to-date horse passports, in which no veterinary medicine appears. Nearly all horses, especially low-grade horses, will have had some form of veterinary medicine during the course of their life, particularly bute, which rules them out for presentation at an equine slaughterhouse.
Neil Parish (Tiverton and Honiton) (Con)
Does my hon. Friend agree that it is time that the Government introduced the national equine database to check all horses to ensure that their passports are correct and have the right information?
Mr Gray
My hon. Friend tempts me down a corridor that is not directly relevant to this debate. I take exactly the opposite view, which is that we should abolish passports and the database, relying only on some form of documentation for those horses presented to be eaten, to prove that they are fit for human consumption. All other horses and equines need no form of documentation to prove that. At the moment, of course, every zebra and vicar’s donkey is required to have a horse passport, merely in order to allow that small number of horses to go through abattoirs every year. That is a disproportionate bureaucratic solution to a very small problem.
The point that I am making is this. An extraordinarily small number of horses go through the abattoir. The only ones allowed to do so are those that have never had any form of medication. Therefore, many of the worst horses, in welfare terms—wilder, cheaper or less valued ponies—are unable to get into the abattoir, even supposing that it does have CCTV. We in this place often do things to make ourselves feel better. We are concerned about the end of life for horses; of course we are worried about it, and quite right too. Of course we are concerned that abattoirs should apply the highest possible standards, and it is absolutely right that we should take steps to ensure that they do.
However, my concern is that in concentrating solely on that, we are concentrating on a tiny part of the problem of horse welfare. A far bigger problem is the number of dumped horses and wild horses; we do not know where they are or what to do about them. This is a tiny problem, and we do not even know that it really is one. If we were to use our primary legislation to solve something that might or might not really be a problem, we would be fooling ourselves that we had done something useful.
Jim Shannon (Strangford) (DUP)
CCTV has a dual purpose. First, it ensures that the slaughter of animals is done correctly. Secondly, it also ensures that slaughterhouse personnel have done it correctly—the proof is in the CCTV footage. Is there not a dual purpose? It protects both the slaughterhouse and the staff.
Mr Gray
That is, of course, correct, but it applies only to the tiny proportion of horses that go to the slaughterhouse. That is the point that I am making; only a very small number are killed in equine slaughterhouses. There is no protection whatever for horses killed by the knackerman, although contrary to what somebody said a moment ago, most of the knackermen that I have met are extremely professional animal lovers; the notion that they are bloodthirsty murderers is incorrect. By far the biggest professionals of all in terms of killing horses are at local hunt kennels, where people feel strongly about horses and know more about them than almost anybody else. Hunt kennels provide a fantastic resource for the countryside by slaughtering horses at the end of their lives.
Liz Saville Roberts
I agree with the hon. Gentleman’s argument that many horses might not be reached by a scheme, as they are not passported, but I refer him to my speech, in which I mentioned that horse owners who are concerned about the welfare of their horses, who have passports and who know whether bute has been used or not are a particular cohort of people whom we should address by making slaughterhouses as accessible to them as possible as an alternative.
Mr Gray
I agree. Of course there are responsible, sensible, grown-up horse owners who would prefer their horse to go into the food chain, although I must say that I am not certain that I want my horse to be eaten. I would much prefer my horses to be burned, or buried in some instances. I am not certain that taking them to the abattoir to be turned into horse meat and sold in supermarkets across the continent is what I personally would want to happen, even though I believe that I am a reasonably responsible horse owner. However, my concern is not so much the people like us who are responsible and who understand about veterinary medicines and all that; it is about the hundreds of thousands of other horses that are not owned by responsible owners, that would not be taken to abattoirs and that have had veterinary medicines. They are the horses towards which we must address our concerns.
All I am saying is that the minimum—proper standards in the abattoir—must not be the enemy of the best. Although I support this particular campaign—it is a good idea, and we must find a way to ensure that there are no abuses in our equine slaughterhouses—I ask the Minister not to use it as an excuse for not doing something about the much bigger problem of the large number of horses that are unwanted, dumped on other people’s land or used in the extremely inhumane horse trade. There are a whole variety of welfare problems that this small matter would not necessarily solve.
Lady Hermon
I am grateful to the hon. Gentleman for allowing me to correct the record by clarifying one point. He referred to me as “the hon. Lady for Northern Ireland”—I am the hon. Member for North Down—and quoted me as apparently supporting the idea that the low number of prosecutions was evidence that CCTV was not working. Quite the opposite: I think that CCTV should be comprehensive throughout the entire slaughterhouse, and that Food Standards Agency staff should have compulsory and easy access to all the footage. That was my point. That would make horse slaughterhouses much more effective.
Mr Gray
I know that the hon. Member for North Down will forgive me if I inadvertently misquoted her; of course we understood that she meant that we prefer to have CCTV in all slaughterhouses. If some remark of mine made her feel that I had not understood that point, I apologise. My concern is simply that by introducing legislation that is the least we can—
Christina Rees
I definitely do not want the hon. Gentleman’s horses to be eaten. I watched a TV documentary on slaughterhouses as a teenager, and it turned me into a vegan; I have not eaten meat all my life. I support the campaign, because I think that any exposure of slaughterhouses would be beneficial, and I support CCTV cameras in—
Mrs Anne Main (in the Chair)
Order. The hon. Lady is making a speech, not asking a question of the hon. Member speaking.
Mr Gray
I accept what the hon. Lady says. A couple of experiences that I have had in slaughterhouses over the years have nearly made me, the biggest beef-eater in Parliament, a vegan. It is a revolting sight, and I would certainly not want to see my horse taken there and slaughtered. However, she makes an extremely good point, which is that the only horses that go to horse slaughterhouses are those destined for the food chain. Other horses do not. Ninety-five per cent of horses are not destined for the food chain, and could not go there. There is a bigger issue. I always argue that we ought to abolish equine slaughterhouses in the UK altogether, thereby sending no meat at all into the human food chain, although I accept the animal welfare downside to that as well: where would those ponies and horses then go?
My message to the Minister is that we must avoid making one thing that we do—introducing compulsory CCTV into slaughterhouses—the enemy of the best. We must address the huge animal welfare concerns about horses, particularly about the large number of unwanted horses abandoned across our land, which is growing as we speak. Those horses will never go anywhere near an equine slaughterhouse, and the provision of CCTV in such slaughterhouses will therefore not help them even slightly at the end of their lives.
I look forward to hearing what the Minister has to say, and congratulate the hon. Member for Dwyfor Meirionnydd on obtaining the debate. I hope that she does not feel that I have in any way lessened the thrust of her argument, which was very powerful. None the less, I hope that one result of this afternoon’s debate will be that the Government begin to listen and think more carefully about the wider welfare issues that affect horses across our nation.
Dr Paul Monaghan (Caithness, Sutherland and Easter Ross) (SNP)
I am grateful to have this opportunity to consider the use of closed circuit television in equine slaughterhouses and to present the views of the Scottish National party. I congratulate the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on securing the debate, which clearly has strong cross-party support, and Kate Fowler of Animal Aid on her tireless work to bring many of the issues that have been presented today to the attention of MPs; I also congratulate colleagues in World Horse Welfare and Blue Cross.
Undercover filming of poor welfare practices in slaughterhouses has, as we have heard, led to campaigns by a number of animal welfare groups to make it a legal requirement for all slaughterhouses to install CCTV—including those that slaughter horses. It is worth reminding ourselves why we are debating the issue today. The investigations that have been conducted have highlighted cruelty and regulatory breaches in no fewer than nine of the 10 randomly chosen English slaughterhouses that were filmed. The abuses included animals being punched and kicked in the head, burned with cigarettes, and beaten with paddles and broom handles, as well as sheep being picked up by their fleeces and thrown across rooms or smashed head first into solid structures, and animals being attacked with shackle hooks or being deliberately given powerful electric shocks through their ears, tails, abdomens and open mouths. That state of affairs is unacceptable.
Currently both the Food Standards Agency and the UK Government support the use of CCTV in slaughterhouses to prevent cruelty; but neither has yet taken the step of arguing that it should be made a legislative requirement. Five abattoirs in England are licensed to slaughter horses. The public would undoubtedly be surprised to learn that a total of 12,431 horses have been slaughtered in those abattoirs over the past three years. Indeed, according to World Horse Welfare, 4,515 UK horses were killed in slaughterhouses in 2014 alone.
Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)
I apologise to the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) for my late arrival.
I come from the Scottish borders, where there is a rich equestrian tradition. There may be five such slaughterhouses in England, but there are none in Scotland, which adds impetus and interest to our interest in this issue south of the border. Does my hon. Friend agree with what we heard—that although CCTV is important it should be just one of a package of measures to ensure the appropriate welfare of all animals sent to slaughter?
Dr Monaghan
I agree with my hon. Friend. CCTV is an important initiative that will contribute to animal welfare across all the nations of the UK.
The practice of slaughtering horses in abattoirs is clearly relatively common, as is the gratuitous cruelty. That is a vital consideration, particularly given that 40% of horse owners state that the cost of euthanasia is too high, which leaves slaughterhouses as the only affordable alternative for their companion animals. As my hon. Friend has said, no abattoir in Scotland is currently licensed to slaughter horses. Nevertheless, the Welfare of Animals at the Time of Killing (Scotland) Regulations 2012 highlight the relevant standards. The regulations pertaining to horses provide that where
“a slaughterhouse is one in which horses are killed, the business operator must ensure that…a separate room or bay is provided for the killing of horses and no person may kill a horse except in that separate room or bay”
and that
“a lairage in which a horse is confined must contain at least one loose box which is so constructed as to minimise the danger of any horse injuring itself or any other animal confined in that lairage.”
Paragraph 13 of schedule 1 to the Scottish regulations makes it clear that
“No person may kill a horse within sight of any other horse.”
That is broadly similar to the regulations that apply in England.
It is right and proper that slaughterhouses should protect against animal abuse. The Scottish Government take the welfare of animals at the time of slaughter seriously, and will continue to do so. They, along with the Food Standards Agency, have already recommended the installation of CCTV as best practice in monitoring the welfare of animals at the time of killing, regardless of the species. At present, the FSA estimates that 95% of animals slaughtered in Scotland are killed in plants where CCTV has already been installed. The Scottish Government continue to monitor its role in promoting animal welfare.
The European Union also plays a role in guaranteeing the welfare of animals across Europe. Approximately 80% of UK animal welfare legislation originates from the EU, with over 40 laws relevant to animal welfare. Those laws cover all four groups of animals—farm, research, wildlife and companion—and have developed over 40 years. In Scotland we place a value on that legislation. Let us hope that animal welfare will be recognised in the promised great repeal Bill and that there will be no attempt to dilute, cancel or repeal animal welfare laws such those I am advocating.
While CCTV will not prevent all welfare breaches, it is an invaluable tool to help vets, slaughterhouse operators and auditors ensure best practice and compliance with welfare laws. There is compelling evidence that properly monitored CCTV cameras work. Footage has been used to cast light on thousands of abuses resulting in slaughterhouse workers’ licences being revoked and abusive workers being successfully prosecuted. Independently monitored CCTV protects animals. Cameras also protect staff from bullying and false allegations, promote health and safety and deter workers from committing acts of cruelty. Where the cameras are properly and independently monitored and robust action is taken where appropriate, they are a powerful deterrent. Where their presence fails to deter abuse, resultant footage provides evidence for prosecutions.
The UK Government argue that voluntary CCTV schemes do not work. If that is so, let us make CCTV mandatory. Independent monitoring and robust action is essential; without them, the presence of cameras is worthless. I am calling for regulations to set out the details of how the footage is gathered and stored, who monitors it, how much they view, and how often. That change can be achieved simply under section 12 of the Animal Welfare Act 2006, which provides for the making of regulations
“for the purpose of promoting the welfare of animals for which a person is responsible”.
Such a change would not be without precedent as the Welfare of Farmed Animals (England) Regulations 2007 were introduced in that way. Israel and India have already taken similar steps.
Sheffield University has calculated that the cost of an independent CCTV monitoring system would be in the region of £370,000 a year for slaughterhouses in England, and substantially less for Scotland, Wales and Northern Ireland. In weighing that against the cost of not acting, it is worth noting that the Minister of State for Environment, Food and Rural Affairs said on 3 February 2015 at column 251 that the cost of cameras themselves was “relatively modest”.
The 2016 Rotherham report suggests that the costs be met by placing a levy on each animal killed, so that industry and consumers pay, rather than government and taxpayers. In that scenario, the costs would be negligible—about a penny per animal. One penny per animal to avoid further scandals emanating from the industry and further reputational damage arising from welfare abuses, deaths of workers and horsemeat contamination seems like a good investment. That investment could address inconsistent management practice in slaughterhouses, inconsistency in CCTV usage, and variable retention periods, and challenge the many businesses currently unwilling to share footage with regulators.
Sending a horse to slaughter is clearly not the preferred choice for most horse owners, but it is an alternative to other methods of ending a horse’s life that are prohibitively expensive, and a more humane alternative to leaving a horse to deteriorate. We must ensure that horses and indeed all animals are treated humanely in slaughterhouses, and I urge the Minister to amend section 12 of the Animal Welfare Act 2006 to mandate independently monitored CCTV in slaughterhouses.
Mary Glindon (North Tyneside) (Lab)
It is an honour to serve under your chairmanship, Mrs Main. I, too, congratulate the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on securing this really important debate. The excellent speeches that we have heard from hon. Members reflect the strong public opinion that CCTV should be installed in all equine slaughterhouses. Forgive me, but I must declare an interest: a member of my family works in the meat industry.
I support the argument of the hon. Member for North Thanet (Sir Roger Gale) and my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) that there should be CCTV in every slaughterhouse throughout the UK. Like my hon. Friend, I pay tribute to the animal charities, particularly World Horse Welfare, which contacted me about its campaign to make CCTV mandatory and whose work is helping the public campaign to grow. In its recent survey of horse owners, which has already been mentioned, World Horse Welfare found that 90% of those surveyed would not use a slaughterhouse to end their horse’s life, but that if measures such as CCTV were in place, 50% of respondents would change their minds. The fact that owners do not have faith that horse slaughter is humane may well lead to welfare problems as horses are passed through various routes until they meet their death. We have already heard that that is a particular concern for horse owners, who simply cannot afford the costs of veterinary euthanasia and the resulting carcase disposal, which can be well over £500.
I am presuming that the Minister will refer to the fact that under the relevant EU regulation, slaughterhouses are not required to have CCTV in place; that he will point to the Farm Animal Welfare Committee’s opinion document, which hon. Members have already mentioned and which was published last year; and that he will reiterate his own statement that he was keeping the issue under review. However, the Government must act to increase the confidence of the public, of horse welfare charities and of horse owners in the slaughter process for these animals.
According to the most recent Food Standards Agency survey of operating slaughterhouses in England and Wales, just over 49% of red meat slaughterhouses and 70% of white meat slaughterhouses use some form of CCTV for the purpose of protecting animal welfare. As hon. Members have said, that number has now plateaued. The British Veterinary Association and the Veterinary Public Health Association have called for mandatory CCTV in slaughterhouses too. These organisations have gone further, though, and requested legislation that would allow vets unrestricted access to the CCTV footage. The health Minister responsible will not agree to that, even though there are no national records to show how effective the current system is, yet the FSA’s authorised officers can ask the food business officer present for access to relevant footage. Will the Minister look into using legislation to strengthen the powers of vets when a breach is suspected?
The conclusion of the FSA publication is that CCTV can be used by operators as part of their system for monitoring and protecting animal welfare and to complement direct oversight by management and checks by officials. I stress the importance of the industry and the Government in reassuring the public that the welfare of the animal is paramount throughout the whole slaughterhouse process, because even though we are not known to consume horsemeat in this country, the recent horsemeat scandal is well remembered. The cost implications of using CCTV are thought to be manageable for businesses, even smaller companies. Many companies already have CCTV installed for security issues—many hon. Members have made that specific point, and so has the Minister on previous occasions.
It is now time for the Government and the industry to take the opportunity to make their commitment to horse welfare in equine slaughterhouses more transparent and effective and to make CCTV mandatory, as has been called for in this debate.
The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)
I congratulate the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on securing this important debate and articulating an emotive subject so sensitively. As she pointed out, people who have owned a horse all their life are often reluctant to see that horse meet its end. She acknowledged that even if we had CCTV in slaughterhouses, it would get us only so far, because people have a natural reluctance to see the horse that they have lived with for all those years go to a slaughterhouse, with all the uncertainty that they believe that would involve.
I acknowledge the work of World Horse Welfare and other groups on this issue and their long-standing campaign for mandatory CCTV in equine slaughterhouses. I must point out that this is a devolved issue and that my response to this debate applies to England. As hon. Members will know, devolved authorities in Wales, Scotland and Northern Ireland are responsible for the welfare of animals at slaughter in their respective Administrations.
The Government share the British public’s high regard for the welfare of horses. We take seriously our responsibility to ensure that the right laws are in place to secure our horses’ welfare.
Lady Hermon
I am grateful to the Minister for allowing me to make an early intervention. He will know well that the lead that is set at Westminster is often followed by the devolved Administration in Northern Ireland. If this Government lead the way with compulsory CCTV in slaughterhouses, that will set a very good precedent for the Northern Ireland Assembly.
George Eustice
I understand that; indeed, in many areas we learn from one another when different Administrations trial different pieces of legislation; we share ideas and often work together.
A variety of laws provide protection for the welfare of horses. The Animal Welfare Act 2006 places a clear duty of care on owners and keepers to provide for the welfare needs of their horses. My hon. Friend the Member for North Wiltshire (Mr Gray) discussed abandoned horses and made the important point that there are wider welfare issues that we must not lose sight of. He will be aware that, in recognition of the specific welfare issues that arise with some horses, the Government recently supported the introduction of the Control of Horses Act 2015 to help landowners and local authorities to deal with the problem of horses left on other people’s land without their permission, which can often give rise to animal welfare issues.
The Government are also firmly committed to improving standards of animal welfare at slaughter. At the end of their lives, horses are covered by WATOK—the Welfare of Animals at the Time of Killing (England) Regulations 2015—which sets out requirements pertinent to the protection of animals at slaughter.
Neil Parish
I know that the Minister is very keen on animal welfare and does a great deal to promote it. I just wonder why it is not possible to have compulsory cameras for the slaughter of horses, both in the slaughterhouse itself and in the lairage, to ensure that the horses are handled properly all the way through. I feel that that is something that we could do, and it would not be so difficult to make it compulsory.
George Eustice
My hon. Friend will appreciate that I will come on to all those issues, which are so pertinent to the debate.
WATOK sets out protections for all animals, regardless of whether there is CCTV in slaughterhouses. There are clear legal obligations on all operators to have standard operating procedures, including monitoring procedures, in place for all slaughter operations, as well as trained stockmen and trained slaughtermen. Official veterinarians from the Food Standards Agency are present during slaughter operations to monitor and enforce animal health and welfare regulations.
On equine slaughter specifically, several long-standing national requirements in WATOK are relevant to the special needs of horses at the time of killing—the business operator must ensure that a separate room or bay is provided for the killing of horses; no person may kill a horse in a room or a bay where there are the remains of a horse or other animal; and no horse may be killed within sight of another horse.
As several hon. Members have pointed out, there are currently five approved equine slaughterhouses in England and Wales, and they are all located in England. Three of them have CCTV installed in some areas for animal welfare purposes. Some 3,280 horses were slaughtered in the past 12 months, and the two plants without CCTV were responsible for only 32 of those animals. From the perspective of equine slaughter, then, most horses are slaughtered in premises with CCTV—
George Eustice
I may be about to answer the hon. Lady’s point. It is important to note that CCTV is not present in all areas in the equine slaughterhouse with the highest throughput.
Angela Smith
Will the Minister confirm that in 2015-16 only 61 out of 4,000 horses were slaughtered in an abattoir with comprehensive coverage in all five areas?
George Eustice
No; the number would be far higher than that. I will have to write to the hon. Lady to confirm the figures, but the figure of 61 is for only one of the slaughterhouses—the one in Lincolnshire.
Mr James Gray
The Minister mentioned that in the past 12 months only 32 horses were killed in abattoirs with no CCTV; is he aware of any reason to presume that those 32 were killed under anything other than 100% humane circumstances?
George Eustice
The feedback we have had from the Food Standards Agency’s official veterinarians and reports is that it has not encountered any particular problems or concerns about the welfare of horses at slaughter. We should also note that the number of horses slaughtered at abattoirs in the UK has been in steady decline since 2012, when 8,426 horses were slaughtered. That fell to 5,000 by 2013, and in this past year it is down to just 3,280. That partly reflects a changing view among owners about the end-of-life choices that they have for their horses. It also reflects, as several hon. Members have said, how people are increasingly choosing to have their horses euthanised.
I want to talk about the meat of this debate, which is CCTV. As many hon. Members have said today, CCTV can and does play a useful role. Last year, the Farm Animal Welfare Committee published an interesting report that detailed the positive benefits of CCTV to slaughterhouse operators and those monitoring and verifying compliance with welfare standards. The benefits go much wider than any deterrent effect, and include, for instance, more accurate ante-mortem inspection in the lairage—for example, sheep often mask lameness if stressed when a stockman or vet is present, but behave normally under remote observation.
Another benefit is that CCTV can be a valuable training tool for operatives to encourage sensitive and sympathetic behaviour towards animals, and it can enable the spotting of any bad practices that could result in incidents or near misses. It can also allow the observation of activities in small or confined spaces that it would otherwise be difficult for the official veterinarian to observe. As the Royal Society for the Prevention of Cruelty to Animals briefing for the debate also illustrates, it can be of use to operators and audit schemes in providing assurance that good practice and legal requirements are followed.
The Government understand the desire for the use of CCTV in all slaughterhouses, although we are yet to be convinced that it should be a mandatory requirement. I do, though, understand the calls for the Government to go further by introducing legislation to require slaughterhouses to have CCTV installed, and that official veterinarians should have unfettered access to CCTV footage. As I have made clear previously, the Government have never ruled out further action, and we keep the matter under review. I shall ensure that my noble Friend Lord Gardiner, who now has responsibility for the relevant part of the Department for Environment, Food and Rural Affairs portfolio, is made aware of the points made today. We will, of course, consider them all carefully.
It is important to highlight one other important point about CCTV made by the FAWC, which is that it is at its most powerful when used as a tool for food business operators to manage their operations and staff and to help with training. There is one area of caution here: CCTV cannot be a substitute for responsible food business operators, and nor can it replace the role of official veterinarians. If it is used, it is preferable that it is used because food business operators really want it and want to use it to improve the management of their operation. In considering legislation, we need to be careful that we do not inadvertently change the culture and thereby lose out on all the benefits from CCTV highlighted by the FAWC. It is for that reason that the Government have encouraged the voluntary take-up of CCTV in slaughterhouses, and will continue to do so.
It might help if I clarify the current situation concerning CCTV in slaughterhouses generally. The latest FSA survey figures show that in Great Britain 92% of cattle, 96% of pig, 88% of sheep and 99% of poultry throughput is currently from premises with CCTV. As the hon. Member for Penistone and Stocksbridge (Angela Smith) pointed out, the number of slaughterhouses with CCTV installed has been at the same level for the past couple of years. The numbers of high-throughput slaughterhouses with CCTV reflects the fact that, although the installation of CCTV in slaughterhouses is currently voluntary, it is also a requirement of many retailers and food assurance schemes. I acknowledge that many of the medium and smaller slaughterhouses have not yet installed CCTV. Many operators who have installed CCTV say that it is a positive training tool, so we would like to consider the issue to ensure that we get greater uptake of CCTV installation.
I shall briefly address some of the issues mentioned by hon. Members. The hon. Member for Dwyfor Meirionnydd talked about EU law. She is right that the initial intention of the great repeal Bill is that existing EU regulations will be put on to a UK legal basis, but I should point out that there is currently nothing in EU law that would prevent us from legislating to introduce mandatory CCTV if we so wished. This also relates to a point made by the shadow Minister, the hon. Member for North Tyneside (Mary Glindon). I do not intend to blame the EU and say that we cannot do it because it is not required; it is not required under EU law, but there is nothing in EU law that would prohibit it.
The hon. Member for Dwyfor Meirionnydd also mentioned the cost. I have said in previous debates that the cost is indeed modest. She said that it can be under £1,000, and it can be for single cameras, as I have pointed out previously. However, when the FAWC looked into the cost, it estimated that for most abattoirs the cost of installing CCTV in the areas that people would want covered, which would require several cameras and additional monitoring systems, would be £3,000 to £10,000. As I have said previously and will say again, though, that is a relatively modest cost.
Mr James Gray
Does the Minister accept that there is a risk that the number of abattoirs killing horses and the number of horses killed in abattoirs might well decline further if CCTV is made compulsory? Many abattoir owners will simply say, “Why bother with horses?”, because they are a huge hassle anyhow and the carcass value is very low. Is there not at least a risk that the small number of abattoirs will become smaller?
George Eustice
There is another, wider point. This debate is focused specifically on CCTV at the point of horses’ slaughter, but all five of the slaughterhouses that are licensed to slaughter horses also slaughter other animals. The reality is that, were anybody to consider measures on CCTV, I am not sure there would be a specific reason to single out those abattoirs licensed for horses. I think that if someone was going to install CCTV, they would take a broader view, across all species, because the principles involved are broadly the same for each species.
The final point that I will make on the speech of the hon. Member for Dwyfor Meirionnydd relates to her claim that in the case of horse abattoirs there is not retail pressure. I think she is missing a point here, as all five abattoirs also slaughter other animals—other farm livestock. That is probably why three of the five already have CCTV.
I know that my hon. Friend the Member for North Thanet (Sir Roger Gale) has been a long-standing campaigner on a wide range of animal welfare issues. He made a separate legislative point, saying that if there is not time for primary legislation to address this issue, perhaps the Government should give a fair wind to a private Member’s Bill. Obviously, private Member’s Bills are an issue for the House and for private Members; it is open to anyone at any time to bring one forward. However, I am not sure that we would need primary legislation if we decided to address this issue. Potentially it could be dealt with under the Animal Welfare Act 2006, which has quite wide provisions to deal with these types of things. Nevertheless, I take on board his point, and if any Back Bencher wanted to introduce such legislation, they could obviously do so.
Sir Roger Gale
Will my hon. Friend the Minister undertake to have a look at the Animal Welfare Act 2006 and see whether it is possible to introduce a statutory instrument to achieve this aim?
George Eustice
As I think I explained to my hon. Friend, my belief is that we probably could.
I will move on to the point that my hon. Friend the Member for North Wiltshire made. He brought a refreshing sense of balance to this debate; we always need to question ourselves when we consider new measures of this sort. He made the very important point that we have had serious welfare breaches in slaughterhouses where there has been CCTV, so we should not see CCTV as a panacea for these problems. There are strong arguments for CCTV in slaughterhouses, but some of the breaches of animal welfare have been in slaughterhouses that already have CCTV.
Finally, the shadow Minister, the hon. Member for North Tyneside, mentioned access to footage. If the Food Standards Agency is conducting an investigation, it already has access to footage where CCTV exists; it can require access to that footage. Also, the British Meat Processors Association and others have developed protocols with their members about how to store, share and use data, where it is available.
George Eustice
I will give way only briefly, because I want to give the hon. Member for Dwyfor Meirionnydd time to reply to the debate.
Mary Glindon
It was simply to say that the Government do not keep a national record of incidents. Such a record would be really beneficial.
George Eustice
We are obviously aware of prosecutions brought by the FSA nationally. So, where there are incidents or breaches, we get involved, and I am often involved in sanctioning the withdrawal of licences and other such sanctions.
In conclusion, I again thank all hon. Members for their contribution to this interesting debate. It is about 18 months since I last responded to a debate on the issue of CCTV in slaughterhouses. While the evidence on the impact of CCTV on animal welfare within slaughterhouses has probably changed a little in that period, I do take on board all the issues that have been raised today. In addition, I note that take-up of CCTV among some of the smaller abattoirs has plateaued over the last two years.
I reiterate that, as well as helping to protect the welfare of animals, many of the benefits of CCTV in slaughterhouses that were identified by the Farm Animal Welfare Committee’s report also help the slaughterhouse operator. Also, the Government have never ruled out mandatory steps on CCTV in slaughterhouses, although we have always encouraged voluntary uptake.
I assure the hon. Member for Dwyfor Meirionnydd that this Government remain committed to promoting high animal welfare standards and protecting animal welfare on-farm, in transport and at slaughter, and I hope that I have been able to address some of the concerns that have been raised today.
Liz Saville Roberts
Diolch yn fawr iawn—thank you very much, Mrs Main, for giving me the opportunity to close this debate.
I thank all hon. Members who have contributed to this debate this afternoon. I think that I need to put on the record, as I have heard everybody else doing so, that I have been an honorary member of the British Veterinary Association for about three weeks or so. It is important that I record that.
Listening to the speeches, the general thrust was to do the best that we can for the welfare of horses, and of domestic and agricultural animals more widely. I particularly welcome the support from the hon. Member for North Thanet (Sir Roger Gale) of the Conservative Animal Welfare Foundation, and also his comment that the cost of CCTV need not be prohibitive.
I also welcome the comments of the hon. Member for Penistone and Stocksbridge (Angela Smith), who mentioned the “invisible horse”, referring to the fact that there are many animals out there that are effectively not seen by anybody. It is very easy for an animal that is kept, say, in a field simply to disappear from sight; although we are concerned for its welfare, we are not really in a position to know much about what is happening to them.
I agree with the concern of the hon. Member for North Wiltshire (Mr Gray) about the wider issue with horse welfare. I understand that there are almost 800,000 horses in the United Kingdom, although we do not know how many there really are, and a great many horses are owned by people who, in all honesty, are not interested in any aspect of their welfare. Although I feel strongly that CCTV would improve the welfare of horses in certain circumstances, we should not fool ourselves that CCTV in itself would resolve all the problems for horses. I share the hon. Gentleman’s discomfort with the idea that horses are meat animals. None the less, the fact that, although they are not meat animals, they are still large herbivores in itself affects their life experience.
Turning to the contribution of the hon. Member for Caithness, Sutherland and Easter Ross (Dr Monaghan), of course, Scotland and Wales are in the same situation; we do not have licensed equine slaughterhouses. That means that horse owners in Wales or Scotland have to travel outside our nations if they wish to use those facilities.
It is important that all the nations of the United Kingdom set standards for each other. Wales passed the Control of Horses (Wales) Act 2014, which dealt with fly-grazing; previous to that being dealt with in England. Interestingly enough, only a certain number of authorities have used those enabling powers. I suspect that is partly because some of them do not want to be seen to be responsible for the death of horses that come under their control, which is part of the irony of our relationship with horses. In welfare terms, we perhaps need to address that irony.
Finally, I turn to the contribution by the hon. Member for North Tyneside (Mary Glindon). She summarised the views of many in this House by saying that the welfare of animals in slaughterhouses is of paramount concern to the public. I very much welcome some of the Minister’s comments. I noted his comments that CCTV has a useful role to play; that it can make evident concealed injuries, such as lameness, which animals conceal when they are under stress and feel that they are being observed; that it can be used for training; and that it can be used in particular when it is difficult to gain access to smaller spaces.
I noticed the subtleties of the Minister’s comment that he perhaps remains to be convinced about CCTV but that he has never ruled out further action. He also said that this issue could be dealt with by a private Member’s Bill or a statutory instrument arising from the Animal Welfare Act 2016, which was certainly an interesting comment. I hope that he will commit to consider that matter further in future.
Of course, CCTV is not a substitute for responsible work practices or the presence of official veterinarians. Nevertheless, there is a strong feeling that it contributes to and enhances welfare. As for making CCTV mandatory, we have been talking about equines today but that could also apply—well, it should apply—to all other agricultural animals. The time has come to deal with this issue, and there are strong feelings about that.
I will close by saying that many little girls aspire to own their first My Little Pony and then to own the real thing—
Liz Saville Roberts
And little boys, possibly. I am talking for myself and my own daughters; forgive me. However, horses are not necessarily well served if they are regarded an aspirational status symbol. They are neither an agricultural animal nor a visible family pet. They can be dumped, “invisible” and uncared for, in barns or fields. They can be cheap to buy; indeed, they can easily be free to acquire. The costs of worming them and maintaining their feet can be prohibitive for people who might find it easy to acquire them, and their value disappears after they reach a certain age.
Mandatory CCTV and ensuring access to CCTV footage will improve the reality of horse welfare, and indeed that of all animals sent to slaughterhouses, and I hope that we can address this issue further in the future. Thanks very much—diolch yn fawr iawn.
Question put and agreed to.
Resolved,
That this House has considered CCTV in equine slaughterhouses.
Foreign National Offenders
(7 years, 4 months ago)
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Mr Philip Hollobone (Kettering) (Con)
I beg to move,
That this House has considered the return of foreign national offenders to prison in their own country.
I am grateful to you, Sir Alan, for your time in the Chair, to Mr Speaker for granting me permission to hold the debate, and to my constituents who have sent me here to articulate their concerns. I welcome other hon. Members to the debate, and declare myself open to as many interventions as they care to make.
My main contention is that there are too many foreign national offenders in prison in this country and that they should be in prison in their country of origin. I invite the Minister to update the House on the latest figures, first on the number of prisoners in our jails. I think it is something like 85,000, which basically means that our prisons are full to bursting. It is good that we catch people who do bad things and lock them up, but my understanding is that more than 10,000 of those 85,000—something like 12%—are foreign national offenders. At a time when our prisons are full to bursting, when we, by the Government’s own admission, do not have enough prison officers and when public expenditure is tight at best, it seems that we need to redouble our efforts to ensure that we send those foreign national offenders back to their own countries.
Mr Hollobone
It would be an honour and a privilege to give way to the former Chairman of the Home Affairs Committee.
Keith Vaz
I congratulate the hon. Gentleman on securing the debate. Earlier today, the Minister gave evidence about this very issue to the Justice Committee and I asked him a question about it. Does the hon. Gentleman think it is inexcusable that there are 4,270-plus EU nationals in our prisons? If there is one group of prisoners we should return to their country of origin it is prisoners from EU countries, because they are costing the British taxpayer £169 million. Does the hon. Gentleman agree that it is essential, as part of the Brexit negotiations, that we get that problem sorted out once and for all?
Mr Hollobone
I do think we should get the situation sorted out once and for all. I pray in aid the excellent report by the right hon. Gentleman’s previous Committee, which looked into the issue. I quote, I think, from that report:
“The public would expect our membership of the EU to make it easier to deport European offenders, but this is clearly not the case, and we continue to keep thousands of these criminals at great and unnecessary expense.”
There is in place an EU prisoner transfer directive, which means that countries can compulsorily return prisoners to their country of origin within the European Union. The last time we managed to wheedle a figure out of Her Majesty’s Government on how many EU nationals we had returned to their country of origin, I think the number was 101—pathetically low. Legislation, in the form of that directive, exists with which to do that, but we are simply not getting on with it. Perhaps the Minister in his response will confirm how many EU nationals are in our prisons, how many we have returned to their country of origin, and why we are not sending thousands more of these individuals back.
I have to tell the House that, beside EU nationals, there are representatives of 160 nations from around the world in Her Majesty’s prisons. Not only are we a cosmopolitan society at large, we are also a cosmopolitan city in Her Majesty’s jails.
Mr Andrew Turner (Isle of Wight) (Con)
Would my hon. Friend also like to elicit the numbers for Jamaica? I believe they are the highest in the world.
Mr Hollobone
I am grateful to my hon. Friend for that intervention. The figure I have for Jamaica is 567, and I, like him, would like the Minister to update us.
In a minute, I will come to a list of shame, of those countries that have the most foreign national offenders in our prisons.
Mr Hollobone
I would be honoured and delighted to give way to the hon. Lady.
Lady Hermon
The hon. Gentleman will be well aware that dissident republicans continue to wage a very violent campaign in Northern Ireland. These are individuals who claim they want to achieve a united Ireland through violence. At present, some of them are relaxing at Her Majesty’s pleasure in Maghaberry prison in Northern Ireland. Does the hon. Gentleman have any facts and figures relating to such prisoners who have requested to go back to the Republic of Ireland?
Mr Hollobone
I do not have the answer to the hon. Lady’s question, but I hope that the Minister does, because he is paid to have that sort of information. I can tell her, however, that according to my figures, southern Ireland—Ireland—has 783 nationals in UK prisons and is No. 2 on my list of shame.
Some 80% of the world’s nations are represented in our prisons. A third of those prisoners have been convicted of violent and sexual offences, a fifth of drug offences, and others of burglary, robbery, fraud and other serious crimes, yet we have the privilege of paying for them to stay in our country. The National Audit Office, in a report just a couple of years ago, looked at how much that is costing our nation. The average annual cost of incarcerating a prisoner is £33,000, so the very least this costs us is something like £330 million a year. The National Audit Office estimated that if things such as police costs, Crown Prosecution Service costs, legal aid costs and prison costs were added in, the total bill would be between £769 million and £1 billion a year, with its median estimate being £850 million.
I come now to my list of shame, the list of the top 10 nations, according to the latest figures I have, on the basis of how many of their nationals are in our prisons. At No. 10 is Nigeria with 385, No. 9 is Somalia with 430, No. 8 is India with 458, equal sixth are Lithuania and Pakistan with 471, No. 5 is Albania with 472, No. 4 is Jamaica with 567, No. 3 is Romania with 629, No. 2 is Ireland with 783 and No. 1 is Poland with 951.
Mr Hollobone
I will be delighted to give way to both Members, but I feel I should give way to Rochdale first.
Simon Danczuk
I thank the hon. Gentleman, not least for securing what is a very important debate. He mentioned Pakistan. People will remember Shabir Ahmed who is serving more than 40 years for raping dozens of children as part of the Rochdale grooming gang. Does the hon. Gentleman agree that he should be deported to Pakistan to see what he thinks of prison there?
Mr Hollobone
That is a very sensible suggestion. I am not aware of all the details of the horrific crimes that that unpleasant gentleman has committed, but I do not see why British taxpayers should pay for him to be in prison—Pakistani taxpayers should. In fact, I would go further. I take the view that if a foreign national in this country commits a crime for which they are potentially imprisonable, they should be deported and banned from ever returning, whether they are in prison or not.
Keith Vaz
I felt that I had walked into an early edition of “Top of the Pops” when the hon. Gentleman did the countdown from 10 to one—I suppose that from his point of view it is “Bottom of the Pops”. In respect of that list, with one or two exceptions they are either EU or Commonwealth countries. We would expect, as far as the Commonwealth countries are concerned—Nigeria, Jamaica and the others—that Ministers would be able to elicit a better deal than the one they have. Only yesterday, the Polish Prime Minister was in the country. I asked the Minister this question earlier in the Justice Committee meeting. Should this issue not be the No. 1 concern when our Ministers are meeting the leaders of other countries? It would save the British taxpayer a lot of money and would enable those countries to imprison their own citizens. We would be happy to take back our prisoners who are in their countries.
Mr Hollobone
As always, the right hon. Gentleman makes an extremely good point. From the list of 10, four are EU countries and four are Commonwealth countries. He is absolutely right. I hope that in the Prime Minister’s discussions with the Polish Prime Minister yesterday, she raised the fact that Poland was top of the list of shame and asked the Poles what they were doing to take their citizens back. I understand that Poland has a derogation from the EU prisoner transfer directive until this month. I hope that the Minister will get on to his Polish counterpart at the end of the month to say that we look forward to triggering the proposals that have become live.
Those top 10 nations account for 5,617 prisoners, but we have imported—I am afraid this is absolute truth—a wave of crime from eastern Europe with the accession of eastern European countries to the European Union. Poland has 951 of its citizens in our jails. In 2002, before Polish membership of the European Union, there were 45 Poles in prison in this country. I urge the Minister to get on with it, but I also urge him to speak to his counterpart in the Department for International Development. My list of shame of 10 countries could be cross-checked with the 28 countries that receive large amounts of aid from DFID. Indeed, I asked a few years ago how much aid we give in total to Jamaica, Pakistan, Nigeria, Somalia, India and Bangladesh, and the answer in that year was almost £1 billion, yet those six countries provide us with almost 3,000 foreign national offenders. It costs us more than £100 million a year to incarcerate those people in our jails, yet we are giving those countries £1 billion in international aid assistance.
I think we should do more things such as those we are doing in Jamaica, where we are using international aid money to build a prison to which we can return its nationals. That is a sensible use of the international aid budget. In Jamaica, we signed an agreement in 2015 to build a 1,500-bed prison. It will be built with British taxpayers’ money, and Jamaican nationals in prison in this country will go back to prison in Jamaica as soon as it is completed. Will the Minister urge DFID to look for similar arrangements in the other five countries that I mentioned?
Perhaps more worrying than those foreign national offenders in prison is the very large number of foreign national offenders who are in this country, but not in prison. Alarmingly, it takes the Home Office 149 days on average to deport a foreign national offender. That is simply too slow. The latest figures I have are for March this year. They show a total of 5,895 foreign national offenders living in the community awaiting deportation. These dangerous people are not even in prison. They are free to go about their business on our streets. Of that 5,895 FNOs, 84% have been at large for more than one year and 30% have been at large for more than five years. That is a national scandal. Very large numbers of those individuals will have committed further offences in this country since they have been outside prison. My contention is that those foreign national offenders also need to be deported. If they are not going to be in prison, they need to be walking the streets of their country of origin, not those of our country.
This is an alarming state of affairs, and I am looking to the Minister—he has a solid reputation for being enthusiastic about his portfolio and being skilled and articulate in arguing the case to get things done—to knock heads together in his Department and the Home Office to say that it is not good enough. The previous Prime Minister said to the Home Affairs Committee that the Government’s performance was not good enough, and I am sure the present Prime Minister would admit that. The issue is costing British taxpayers more than £800 million a year. Almost 5,000 foreign national offenders are at large on our streets. Some 10,000 are in prison in this country when they should be in prison in their countries at the expense of their own taxpayers. My constituents in Kettering are looking to the Minister to get it sorted out.
The Parliamentary Under-Secretary of State for Justice (Mr Sam Gyimah)
I begin by thanking my hon. Friend the Member for Kettering (Mr Hollobone) for securing this afternoon’s debate. I know he has raised the issue before. The debate has raised a number of issues that I will try to tackle in turn. I welcome an opportunity to highlight the Government’s approach and the progress we are making.
Let me say at the outset that the House should be in no doubt that the Government are absolutely committed to increasing the number of foreign national offenders removed from our prisons. Any foreign national who comes to our country and abuses our hospitality by breaking the law should be in no doubt of our determination to deport them. Increasing removals is one of our top priorities. When I was appointed, the Prime Minister certainly made it clear to me that it was a key priority for the Department. All FNOs sentenced to custody are referred to the Home Office at the earliest opportunity to be considered for deportation.
My hon. Friend asked for an update on the numbers. Overall, since 2010 we have removed more than 33,000 foreign offenders from prisons, immigration removal centres and the community. In 2015-16, we removed 5,810 FNOs, which was the highest number since records began. That represents good progress, but there is certainly a lot more that can be done, and I am ambitious to do more. My hon. Friend asked for clarification. FNOs make up 12% of the overall prison population, with 4,180 EU nationals in prisons and immigration removal centres. He went through a list of his top 10. Without going into too much detail, I can confirm that Poland holds the highest number of offenders. Ireland is second and Romania is third.
The primary responsibility for the removal of FNOs sits with the Home Office. It is the Home Office that can remove someone from this country. The Ministry of Justice and the National Offender Management Service support that work by setting the policy and administering the removal schemes. As I am sure everyone present will recognise, the removal of an FNO requires a co-ordinated and sustained approach across Whitehall. My hon. Friend alluded to that. My Department works closely with the Home Office, the Foreign Office and the Department for International Development. Only last week I met ministerial colleagues from those Departments to agree a programme of work to increase FNO removals.
Mr Hollobone
We have got oodles of time to explore the nitty-gritty of the issue. My understanding is that it is regularly on the agenda of the National Security Council. Can the Minister confirm that? Can he confirm how often the NSC meets to discuss the issue? Can he confirm that he is able to attend those meetings to press the case, given that the Prime Minister said to him that it is one of her top priorities?
Mr Gyimah
I can confirm that I have met the Minister for Immigration twice in the past two months. He has the levers to remove people. I met him only this week. We have widened the meeting to include Ministers from the Foreign Office and the Department for International Development. We have got an ambitious programme and clear actions to take forward. We have agreed to meet as often as possible to give the issue the ministerial attention it deserves. In addition, we are making sure that when other Government Ministers meet Ministers in countries with which we have a concern about foreign nationals, this issue is included as a top priority in their briefing pack to raise with and get feedback from Ministers of those Governments, so that we can act on that.
Simon Danczuk
Will the Minister do all that he can to ensure that Shabir Ahmed is deported to a prison in Pakistan?
Mr Gyimah
I am certainly willing to look at that case. The hon. Gentleman will appreciate that I cannot make a decision here about who gets deported and under what terms; we have to look at the case very carefully. If he writes to me, I am willing to look at that with the Immigration Minister and the Home Office.
Lady Hermon
I intervene with reference to dissident republicans. Terrorism is not an issue that is devolved to the Northern Ireland Assembly; it is a responsibility for this Government, thank goodness. I would like the Minister to reply to my earlier question. How many dissident republicans—who wage a violent campaign and who have murdered, bombed and shot people in Northern Ireland and elsewhere—have requested to return to prisons in the Republic of Ireland? Since they want a united Ireland, surely one can understand that they would wish to go back to prison in the Republic of Ireland.
Mr Gyimah
I thank the hon. Lady for her very forcefully put question. I do not have those data to hand, but if they are available—I look to my officials—I will be happy to write to her with the detail.
There is a huge amount of activity under way on each stage of the FNO process, from the point of arrest to appearance in court, being given a prison sentence and removal back to the home country. For example, the Government have introduced clauses in the Policing and Crime Bill, which is currently going through Parliament, that will strengthen police powers with regard to early identification of nationality and will require anyone appearing in court to state their nationality. Those provisions are designed to help to speed up early identification of FNOs and so assist with their quick removal from the UK.
Mr Gyimah
I believe that is included in the process that I have outlined. In other initiatives, my Department is currently working on proposals to introduce a new fast-track appeals process that will apply to all detained foreign offenders. That process will make sure that appeals are determined as efficiently as possible, so that foreign offenders may be removed from the UK more quickly.
We have also strengthened our ability to deport foreign offenders through new powers introduced by the Immigration Act 2014, which contains a discretionary power allowing us to deport first—the FNO can appeal later. That means that foreign offenders cannot delay their removal with frivolous appeals and are instead required to appeal from abroad, but only if the Home Secretary certifies that removal pending the outcome of any appeal would not risk serious irreversible harm following their return. More than 4,100 foreign offenders have been deported under that new provision since it came into force in July 2014, with many more going through the system.
In terms of wider cross-governmental work, which I have touched on, I am determined that we make extensive use of the influence and worldwide reach of the Foreign and Commonwealth Office and the Department for International Development, which my hon. Friend the Member for Kettering so articulately focused on, so that we can bring our relationships to bear in discussions, to make sure that we fast-track the process.
Mr Hollobone
I want to ask the Minister two things. How many foreign national offenders have we sent back to EU countries under the EU prisoner transfer directive and how many compulsory transfer agreements do we have with other non-EU countries?
Mr Gyimah
If my hon. Friend bears with me, I will come to those facts in my speech. Wider cross-governmental work means that there is a focus on countries in which DFID operates and for which we hold large numbers of FNOs in our prisons, such as India, Pakistan, Nigeria and Somalia.
I am sure hon. Members will appreciate that the barriers to returning FNOs to their countries of nationality are both varied and complex. That is why the action we take must be tailored to each specific country. To that end, I am working closely with my ministerial colleagues, with work ranging from Ministers pressing the issue with foreign Governments every time they travel overseas, to supporting other countries with our aid spending in order to increase FNO removals from our prisons.
The early removal scheme is our principal mechanism for removing FNOs from our prisons, especially those on shorter sentences. Under the scheme, offenders are returned to their home countries and are barred from entering the UK, potentially for life. In 2015-16, we removed more than 2,000 prisoners via that scheme. That is around 95% of early removals from prison. It is worth highlighting that although that number of removals is very welcome, I am working with the Home Office—I see the Immigration Minister has just walked in, which shows how closely he takes an interest in this important matter—to improve the removal mechanism still further and ensure that it is working as effectively as it possibly can. We have more than 100 prisoner transfer agreements with countries and territories around the world.
Mr Hollobone
How many compulsory transfer agreements do we have? My understanding is that something like 95% of those removals are voluntary. In other words, they require the permission of the prisoner himself.
Mr Gyimah
I am about to make a point about the compulsory and voluntary nature of removals. Where an agreement is in place, prisoners can be transferred on a voluntary basis or on a compulsory basis, meaning that their consent is not required. Most of the agreements we have are necessarily voluntary—which is the point my hon. Friend touched on—due to the standard of prison conditions and the treatment of prisoners in many parts of the world.
Our approach is that we will seek to secure compulsory transfer agreements wherever possible. We have one in place with EU member states, as well as with a number of other countries, such as Albania, the home country of one of the top nationality groups in our prisons. It is worth saying that we are working closely with Albania in particular to improve our prisoner transfer agreement in order to remove more FNOs from our prisons. For that reason, the Minister for Courts and Justice, my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald), recently met the Albanian Justice Minister to reinforce the importance of returning FNOs as quickly as possible. In terms of compulsory agreements, which my hon. Friend the Member for Kettering asked about, we currently have compulsory agreements in place with Somalia, Libya, Rwanda, Albania, Nigeria and the EU. That is the factual answer to his question.
The most recent published statistics, from June this year, show that we have transferred 102 prisoners back to their home countries since the EU PTA came into force. We continue to see increasing numbers of transfers as member states become more familiar with the processes. I am determined to maintain that progress and build on it. The number of transfers should of course be seen within the wider context of our work to remove FNOs. The early removal scheme is only one mechanism. It is the most successful one, and 2,000 people were transferred under that scheme last year.
We are working across Government to consider options for securing transfers of EU nationals once we leave the European Union. That is one of the key Brexit priorities for the Ministry of Justice and we have made that very clear to the Department for Exiting the EU in terms of our negotiating position. Although it would not be appropriate for me to provide a running commentary, I hope that what I have said underscores how important the issue is for the Department. I am particularly focused on returning FNOs to those member states for which we hold large numbers in our prisons, such as Poland, Romania and Lithuania in particular.
It is worth bearing in mind that there are also, of course, British nationals detained in prisons overseas—the current figure is roughly 2,046. We are thinking of savings, but in that context there would be a bit of going backwards and forwards.
The time available for today’s debate only allows for an overview of the numerous initiatives and policies under way. I am willing and available to meet with hon. Members who want to look at our processes in more detail and contribute to them. Wherever possible, we will always look to remove those who have broken our laws and will continue to work with Governments across Europe and the world to increase the number of prisoners removed. Be in no doubt that the Government are absolutely committed to reducing the number of foreign national offenders in our prisons, which is why each year we are increasing the numbers of people removed.
Question put and agreed to.
Refugee Family Reunion (Immigration Rules)
(7 years, 4 months ago)
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Thangam Debbonaire (Bristol West) (Lab)
I beg to move,
That this House has considered immigration rules for refugee family reunion.
It is a pleasure to serve under your chairmanship, Sir Alan. The world is facing the greatest refugee crisis since the end of world war two. According to statistics from the United Nations High Commissioner for Refugees, which I checked today, an unprecedented 65.3 million people have been forcibly displaced worldwide for various reasons including famine, war, poverty, climate change and internal repression. That total roughly equals this country’s entire population. Of those 65.3 million people, 21.3 million are classed by the UNHCR as refugees.
An International Rescue Committee report published in March described the rapid acceleration of the problem. In 2010, 10,000 people a day were displaced from their homes, and by 2014 that number had quadrupled. Again, that comes from UNHCR statistics. It is slightly less than that now, but still very high.
The UK has legal obligations to refugees under international law. There is a rigorous process of assessment before someone is granted refugee status, and only then are they allowed to apply for work and look for somewhere to live. The refugees I have met have all been determined to do everything they can to contribute to the UK. They have also been determined to be reunited with their families.
I am the chair of the all-party group on refugees, and I have initiated a public inquiry entitled “Refugees Welcome?”, which has just completed four oral evidence sessions. We have received hundreds of pieces of written evidence and will be visiting Bristol and Nottingham later this month to see for ourselves how refugees who have been granted status in this country are treated. The refugees we heard from in person gave powerful testimony about their difficult journeys, their painful experiences in their countries of origin, and their desire to contribute to and be part of this country, which has welcomed them. They also spoke about periods of destitution and poverty after being granted status. That subject will be dealt with in our report. Pertinent to this debate, they spoke of their natural desire to be reunited with their family as soon as possible.
This is a highly gendered issue. Women and children are far more likely to have been left behind than men. Their only hope of escape is to wait for a male family member to reach a country of sanctuary and then apply for reunion. Recent research by the Red Cross shows that 95% of applicants waiting to join family members in the UK through refugee family reunion are women and children. It also found that the process was not safe.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
I understand that, under the current rules, if the child turns 18 before the refugee status of the family member in the UK is confirmed, they are no longer eligible for family reunion. Does the hon. Lady agree that that is a problem, and that the Government should look at changing the rules so the age of the child is considered when the Home Office procedure begins?
Thangam Debbonaire
The hon. Lady is absolutely right. I will come on to that issue. I completely agree that it is unjust and leaves many vulnerable young people in danger and alone.
Fifty-one per cent. of the families Red Cross helped in 2014 were at risk of violence, torture or harassment during the process of applying for family reunion, so the process is not safe. The British Red Cross also told me that, to date in 2016, it has supported the travel of 1,551 people accepted by the Home Office under refugee family reunion, 580 of whom were from Syria. As of the beginning of September, 767 children granted family reunion visas had arrived in the UK after assistance from the British Red Cross, 280 of whom were from Syria. Those are hardly huge numbers. In its 2015 research, “Not So Straightforward”, the British Red Cross found that the current UK policy for refugee family union is not simple, not affordable and not safe.
The system is failing many women and children. Women for Refugee Women, which is represented here today, told me that it knows of many women in the UK who have had to flee from danger without their children and then struggled to bring their children to join them, as the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) said. The problems include, first, delays from the Home Office. If a woman has waited many years in the asylum process, her children back home may be older than 18 by the time she has been granted status, so they are not allowed the automatic right to join her.
Secondly, there are the costs of accessing family reunion rights. I hope the Minister will address both those issues. For instance, a woman whom Women for Refugee Women knows well, and whom I am going to meet later today—she has given me permission to describe her story—entered the UK in 2007 after being imprisoned in the Democratic Republic of the Congo as a human rights activist. She left behind her children, aged 12, 15 and 17. It was three and a half years before she was called for her first asylum interview, and she was not granted status until 2013. By then, her children, still vulnerable, were 23, 21 and 18, and were therefore refused the right to join her. She is still struggling to find a legal route to be reunited with them. She has already spent £600 per child on the first application and has been told that she needs to spend still more for the appeal. As can be imagined, those sums are an incredible burden for a refugee woman who can access only very low-paid jobs due to her interrupted employment history.
This afternoon, at a City of Sanctuary event that I hosted, I met two brothers. Both were Syrian. One was granted status quickly, but the other was still in the process after being in detention. Their parents are still in Syria. They cannot come on the resettlement scheme or on family reunion, even though the first brother now has a full-time job and has said he is willing and able to support them.
I want to talk about expanding the scope of refugee family reunion rules to protect children and bring families together. The UK, unlike most European Union states, does not allow children to bring family members to join them here. Under the Dublin regulation—EU regulation 604/2013—they can be transferred to another EU member state if they have a relative living there, but that just moves children around the EU and places more burdens on the states that receive the most refugees. It does not allow children already here and granted status to bring their parents here.
The Minister for Immigration (Mr Robert Goodwill)
May I point out that the Dublin process is a two-way process, and that we are taking children who have family here from elsewhere in the European Union? We have resettled a number of children this year, and the process is gathering pace.
Thangam Debbonaire
I acknowledge that it is a two-way process. That is important, but there is a lot more we can do.
Someone fleeing war, torture or conflict may have lost relatives or been separated from parents or children. They may have been cared for by an aunt or an older sibling. They may have a wider idea of family than the nuclear family of western social policy. As the hon. Member for Rutherglen and Hamilton West said, their children may have reached 18 by the time their status is confirmed, but they may still need protection or be dependent. If refugee family reunion rules in the UK are to ensure the security of refugees’ family members and family unity, they must address relationships of dependence beyond those currently permitted.
Stella Creasy (Walthamstow) (Lab/Co-op)
My hon. Friend is making an incredibly powerful case. The reason why people run needs to be at the heart of how we do our refugee policy. Nobody decides to leave their family lightly. We need to counter the idea that one member of a family is at risk but another is not to understand how to have a dignified and humane approach to refugees.
Thangam Debbonaire
I agree. I find it difficult to understand why a child who has come from a place that is deemed unsafe for them to go back to cannot simply bring their parents here.
In July, the Home Office published updated guidance on refugee family reunion, which set out details of types of cases where exceptional circumstances may apply—for example, in the case of dependent children over the age of 18. It is important that there are exceptional circumstances, and it is a welcome sign that the Government recognise the importance of family reunion, but it is not enough. People are usually granted leave to remain in exceptional circumstances for only 33 months, and they may be subject to other restrictions to which those granted refugee status are not subject. Those restrictions are left to the discretion of Home Office officials, which does not give them the certainty that a change in the rules would provide.
The Home Affairs Committee, in HC 151, its sixth report of this parliamentary Session, reviewed the work of the immigration directorates:
“It seems to us perverse that children who have been granted refugee status in the UK are not then allowed to bring their close family to join them in the same way as an adult would be able to do. The right to live safely with family should apply to child refugees just as it does to adults. The Government should amend the immigration rules to allow refugee children to act as sponsors for their close family.”
I thank my right hon. Friend the Member for Leicester East (Keith Vaz) for that work.
The same Committee, in HC 24, its seventh report of this Session, on the migration crisis, stated:
“Family reunion of migrants has been shown to have benefits in terms of integration and support networks, in addition to the human rights requirements of allowing families to be together, and there is clear scope for further measures to facilitate women and children joining husbands, fathers and other male relatives who have reached the UK…We also recommend that the UK broaden the scope of family reunion rules”.
I therefore support the Home Affairs Committee, the Refugee Council, Refugee Action, Amnesty International, the British Red Cross and many others, and call on the UK Government to end the discrimination against children, allowing those recognised as refugees the right to be joined in this country by other family members. Further, the definition of “family” should be expanded to include a wider range of family members. I recognise that that is challenging, but those people have come from war zones.
Our system needs to be properly implemented to fulfil our legal and moral obligations. The effect of cuts to legal aid is that refugees and UK citizens struggle to be reunited with their family members. Legal aid for specialist legal help for family reunion was cut by the coalition Government in 2013, on the grounds that it was considered a straightforward immigration matter that did not warrant the need for specialist legal support. The evidence, however, from the British Red Cross, the Refugee Council, Women for Refugee Women and my own caseload shows that many of the cases are far from straightforward—they are complex and require specialist legal advisers. Given what is at stake for families, there should be legal aid provision to assist refugees making family reunion applications.
Furthermore, those refugees who have been granted citizenship cannot sponsor family members in the same way as those only with refugee status. That seems particularly harsh. They are subject to the same minimum income and other requirements of the spousal visa process as other UK citizens. I understand why that has happened, but it is difficult for newly arrived people to meet such conditions—for those who have arrived here from war zones, it seems unnecessarily harsh. I therefore ask the Government, after their review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, to reinstate the provision of legal aid in family reunion cases. Will the Minister comment on that?
I also ask the Government to expand the scope of family reunion so that those who have been granted UK citizenship, or who were born UK citizens, can sponsor family members in the same way as those with refugee status. I further ask that they be granted legal aid in the same way.
Rather than simply turning down an application if there is not enough information, it would be helpful if the Home Office asked for more information. The Refugee Council reported to me that applicants are not being given the opportunity to submit further evidence for their application when their supporting documentation is deemed insufficient. They are simply told that their application has been turned down, which forces them into lengthy and costly appeals processes. During that time, refugees who want to come here continue to live in precarious conditions, often in a third country—for example, if they have fled Syria, they might be in a camp in a neighbouring country such as Lebanon.
That would save the Government money on the appeals process and, most importantly, it would end the practice of leaving families stuck in vulnerable and precarious situations for months on end, waiting for an appeal to be heard. I therefore call on the Government to revise their practice guidance to officials carrying out the process and to move to asking for more information, rather than simply rejecting a family if there is insufficient information.
Demonstrating a relationship involves further complications. In applications for a sponsor’s spouse, whether through marriage or civil partnership, as well as an unmarried partner, the applicant must demonstrate a “subsisting relationship” that preceded the sponsor’s application for asylum, as well as the intention to live together permanently. Again, I understand why that has come about, but I hope that the Minister accepts that relationships and marriages happen, and children are born, while refugees remain in third countries awaiting decisions on resettlement. The rules exclude such families from reuniting, because they are deemed to be post-flight families.
For unmarried and same-sex partners, applications must also demonstrate that the couple
“have been living together in a relationship akin to marriage or civil partnership which has subsisted for two years or more.”
Again, I ask the Government to recognise that resettled refugees are likely to form family relationships during the often lengthy period between their flight from their country of origin and their resettlement in the UK. I ask the Government to revise their rules accordingly.
The process should be safe. The British Red Cross report, “Not So Straightforward”, which I mentioned earlier, described how, although the initial application for family reunion can be made online, the following process requires family members wishing to join relatives here in the UK to travel to their closest visa application centre. The report highlighted examples of families risking their lives to travel to an embassy, crossing conflict zones, or of people being turned away from the embassy when they arrived, even when they had appointments. I therefore ask the Government to change the rules so that the process is safer, by allowing refugees in the UK to submit the family reunion documents, rather than forcing their family members to make journeys that are often costly and dangerous.
In conclusion, I ask the Government to consider eight requests, and I hope that the Minister will be able to give an answer to some, or at least an indication of the direction of travel. If he cannot grant my requests, will he agree to meet me in any case to discuss them further?
First, will the Government allow children recognised as refugees the right to be joined here in the UK by family members? Secondly, will the Government expand the definition of family to include a wider range of family members? Thirdly, will the Government reinstate the provision of legal aid in family reunion cases? Fourthly, will the Government expand the scope of refugee family reunion so that those who have been granted UK citizenship can sponsor family members in the same way as those with refugee status? Fifthly, will the Government grant legal aid to refugees with UK citizenship? Sixthly, will the Government revise the guidance so that officials ask for more information, rather than simply rejecting a family’s application because of insufficient information? Seventhly, will the Government recognise that resettled refugees are likely to form family relationships during the often lengthy period between flight and resettlement, and revise the rules accordingly? Eighthly, will the Government change the rules, so that the process is safer, by allowing refugees in the UK to submit the family reunion documents?
Those people have fled from war, persecution and torture. Many of them have gone through terrible journeys to reach sanctuary in the UK. Many are children. Surely it is not too much to ask that they are allowed to be reunited quickly, safely and easily with their families. After all, is that not what we would want if it happened to us?
Owen Thompson (Midlothian) (SNP)
I thank the hon. Member for Bristol West (Thangam Debbonaire) for securing this important debate, and I commend her for it. The topic is important to my constituents, as it is to her and, of course, to the many refugee families and lone children throughout the world.
The UK Government have made some progress in expediting the move of refugee children to the UK from the fallout of the Calais “jungle” camp shutdown. That has to be welcome to an extent, but the lack of speed and organisation has been disappointing. While delays continue, children go missing, fall victim to traffickers, are bought and sold, are damaged, and are alone.
Stella Creasy
Does the hon. Gentleman share my concern that the Government seem to be changing the rules retrospectively on the children whom we take from Calais, specifying certain countries rather than persecution as the question at the heart of the issue? Just as this debate is about how to help those being persecuted, it is important that we as a country do not renege on our commitments.
Owen Thompson
I very much agree with the hon. Lady. At times, it feels like a feast of moving goalposts, which does not help those in most need of the support that we should be giving them. The Government need to do more to speed up the process of helping.
Lone children wandering Europe, who are now estimated to number in the hundreds of thousands, will not reduce in number if we ignore the situation in Syria. That is why we must take a joined-up approach and not separate the problems. I am confident that the Minister will tell us about how the Government are putting more money into support for refugees than any other country in Europe, but simply throwing money at a problem is not enough. We need to accommodate the points made by the hon. Member for Bristol West and to change our system, taking into account individual circumstances, which would make a real difference to families and, most importantly, those young people who are so often left alone.
I recently raised in the House the case of one of my constituents who had lost their son. He had not been known to the family for more than a couple of years and was sadly thought to be dead. Luckily, we found that he was still alive. However, having had the joy of discovering that, the family then had to battle to bring him to join them in Scotland. At one point, they did not know whether they would ever see him again. I commend the Home Office for the support that it has given the family. Although it took a bit of time to arrive, that support has been productive, and we are hopeful that there will be a positive outcome to that case in the near future. The Home Office must work with all the agencies on the ground that do such an amazing job to help children who are alone in a war zone. We need to do so much more to ensure that the process of bringing those young people back to join their families is much faster.
The humanitarian situation in the region affected by the Syrian conflict is vast and growing. Atrocities happen every minute of every day, and the children caught up in that situation who so often flash up on our TV screens and social media feeds sadly face many more years of conflict, pain and hurt before there is any end in sight to that conflict. It is so sad to consider that children and families are separated.
We must do what we can now. We must act swiftly and with compassion. We must not continue waiting for child refugees to come knocking at our door; doing so leaves them with little option but to make dangerous journeys, often with dangerous people who do nothing but profit and prioritise money over their safety. Where it is safe to do so, we must actively seek out displaced families and children in conflict zones. We must make more of an effort before an entire generation of children is put at risk of losing the care of their families, many of whom have been affected by emergencies and cannot support their children without help.
Anne McLaughlin (Glasgow North East) (SNP)
I congratulate the hon. Member for Bristol West (Thangam Debbonaire) on bringing this crucial issue back to this place. I must confess that I find it difficult to fathom why any Government would put as many barriers in the way of family reunion as the current Government and their predecessors have. I want to focus on children who have been granted refugee status in this country—children who are recognised by the state as part of a group that is in danger in its home country. What possible benefit is there to them or us in denying their parents the opportunity to be reunited with them?
Even if the overarching concern is financial, it is expensive to keep a child in care. In the long term, such children have a higher chance of developing mental health problems, getting involved in crime and becoming homeless. By virtue of having been in care, their life outcomes are lower than those of the average child, and dealing with those reduced outcomes is expensive for any country. Can I convince the Minister to consider that allowing the parents of such children to come here to look after them could be classed as preventive spend? Given that we know that preventive spending means huge future cost reductions, would that not be a sensible financial decision?
The Government may well argue—they have in the past—that we cannot let that happen lest it creates some perverse incentive for unaccompanied migration, but that argument is flawed on several levels. Not just that—it is offensive and betrays a deep cynicism about humankind. First, there is no evidence from other jurisdictions that permit family reunion for unaccompanied children that such incentives actually exist. It is worth stressing that in the EU, only the UK and Denmark do not permit reunion in such cases. In all earnestness, I must ask the Minister on what evidence the Government base their assumption—or is it simply an excuse?
Secondly, as I said, that argument is based on a base and deeply cynical view of human nature. Yes, some people would abuse the system, just like there are MPs who abuse their systems and companies that abuse the tax system, but should Governments really reach a position based on what a minority of those vulnerable people might do? Who would send their child off unaccompanied into a foreign country with strangers on the off-chance that they might get to safety and be able to send for their parents? Surely only those who were desperate and genuinely in fear for their lives and their families’ lives, such as the parents whose three-year-old was murdered and eaten in front of them by terrorists and the mother who was forced to watch as soldiers raped her little girl in the Democratic Republic of the Congo. I should say “mothers and fathers”—there have been many more than one.
Given that unthinkable choice—rape, murder or an uncertain journey into the unknown that could end in their child reaching a place of safety—what would any parent here do to protect their child? Perhaps one day they will see them again, but if not, at least those children have a chance. Who would send their children on such a journey? Only someone who was desperate—only genuine refugees.
I echo Amnesty International’s call—it was also one of the eight requests of the hon. Member for Bristol West—for the Government to reinstate legal aid in family reunion cases. The Scottish Legal Aid Board continues to fund such cases, but given the complexity of some of the processes involved, particularly for refugees with a limited grasp of English, natural justice surely demands that legal aid must be available to all so that the proper evidence on which to make decisions is submitted. I know that that costs money, but the alternative, which is that those with valid claims—those who are at risk of suffering the terrible atrocities I have just mentioned—routinely fail due to a lack of proper legal support, should be repugnant to a civilised society.
The Immigration Law Practitioners’ Association raised several detailed points about the definition of “family” when it comes to family reunion. Does that cover grandparents or siblings in the case of parental deaths? There must be far greater recognition of the difficulties that refugees face. I spoke earlier about the financial cost of putting children in care to the taxpayer and the cost to those individuals in terms of life outcomes. It has long been agreed that it is far better to place children with a wider family network if their parents cannot be with them. In this country, that is called kinship care, which is rightly praised by all Governments because of the sacrifices that are made and the benefits to us all. Yet when grandparents, siblings, aunts or uncles of refugee children are willing to make that sacrifice and take care of those children—as all kinship carers do—which would benefit us all, that is suddenly deemed not such a good thing and they are not recognised as family.
In short, the Government have got themselves into a complete and utter fankle in this area. They need to look again at family reunion so that refugees who have already had to give up their homes, families, friends and familiar surroundings do not also have to give up their families and never have to choose between safety and family because of decisions made by the UK Government. We in the Scottish National party group will continue to press the UK Government to be at the forefront of efforts to respond to the humanitarian crisis and ensure that our systems for dealing with these complex issues are fit for purpose and reflect a kind and compassionate set of values.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
It is a pleasure to serve under your chairmanship, Sir Alan. I, too, thank the hon. Member for Bristol West (Thangam Debbonaire), the chair of the all-party parliamentary group on refugees, for securing this debate. I agree with pretty much everything she said. In fact, this is one of those debates where I probably agree with everything that everyone has said so far.
I also thank the organisations that have once again been in touch with excellent briefings. It is only a few months since the right hon. Member for Orkney and Shetland (Mr Carmichael) led a debate on the very same topic, and we had a debate prior to that on UN pathways. I salute all those campaigners for their perseverance, which reflects the significance of this cause.
In international human rights instruments, the family is the fundamental unit of society, and no one should ever have to consider making a choice between finding a place of safety and living with their family. Refugee family reunion is also a hugely significant part of what should be a strategic response to the refugee and humanitarian crisis, the circumstances of which the hon. Lady set out.
Lady Hermon (North Down) (Ind)
I am grateful to the hon. Gentleman for allowing me to intervene when he has only just got started. I have listened carefully to all the contributions. Will he take a moment to pay tribute to the many churches and community groups that do so much to welcome and warmly embrace the vulnerable people who manage to make it into the UK, who may be isolated and frightened and do not have the language or an education?
Stuart C. McDonald
The hon. Lady makes a good point. The churches who have taken such steps deserve our full praise. In fact, some have gone even further and are now trying to get involved in offering homes to refugees through resettlement programmes and so on. Many other organisations deserve praise as well, many of whom will have been present at the meeting that the hon. Member for Bristol West organised today, which I very much regret having missed.
To return to the point about how family reunion is also important as a part of our strategic response to the crisis that the hon. Lady described, there are two reasons for that. First, it provides safe legal routes for many people who are also at risk of persecution. It stops them from having to rely on smugglers, as my hon. Friend the Member for Midlothian (Owen Thompson) said. Secondly, it is a vital method of building support networks here, because family members arriving in the UK will have help and assistance in integrating and settling into communities. They can then provide support to the refugees with whom they are reuniting. These are people whose rehabilitation and ability to integrate can be greatly enhanced through the presence of partners and children.
In short, family reunion is an effective way for this country to step up to its obligations to do its fair share for those fleeing persecution—an obligation that we are a long way short of being able to say we have fulfilled properly. We have the family reunion basics in place, but vital improvements need to be made. They fall into two categories: the scope of eligibility rules and making the process much easier for those who qualify. In the time available, I will mention a handful of areas in which we need to see improvement.
We have heard about the cut-off age of 18, which I regard as brutally harsh. Why are we saying that an 18-year-old Syrian woman, separated from her family during escape and now living with her grandmother in Damascus, does not automatically qualify to join her refugee mother here in the UK? One hard and fast cut-off based on age is too arbitrary. Cohabitation and dependency are surely better guides to whether someone can really be considered part of the family unit of which we should be promoting a reunification.
More generally, the rules are also too restrictive regarding the range of other relatives who can apply. Particularly in this crisis, many, such as kids with only an uncle in the United Kingdom, will not fall into the limited partner or children categories under the rules, but they have no-one else to turn to. I also support calls made by hon. Members today and recently by the Home Affairs Committee for the UK to change its mind on parents being able to join refugee children here. Quite simply, there is no evidence that following the approach taken in every other EU country—with the exception of Denmark—will undermine child safeguarding. On the contrary, as my hon. Friend the Member for Glasgow North East (Anne McLaughlin) pointed out, it will promote child safeguarding.
While we are on the subject of different types of qualifying relationships, the hon. Member for Bristol West raised an important point about the latest statement of changes to the immigration rules and concerns expressed by organisations such as ILPA about the definition of unmarried partners. There are concerns that the new rules could be read as altering the definition of unmarried partners so as to create a new requirement of cohabitation, which could be difficult to prove if, for example, a couple is gay and same-sex relationships are prohibited or perhaps because persecution has meant separation. I understand that the intention was to consolidate the rules rather than to change the definition, and it would be useful for the Minister to clarify that point.
Hon. Members have also touched on refugees who have family members who are British citizens or, indeed, persons settled in the United Kingdom. There is a strong case for opening up family reunion rules to apply in such circumstances, and the eye-wateringly prohibitive immigration rules on spouses are particularly inappropriate when used in that context. The consequence is that we have seen British citizens or settled persons living in refugee camps across Europe with family members who they cannot get admitted here. I and my hon. Friend the Member for Glasgow North East, along with other colleagues, met some of them in Calais and Dunkirk earlier this year.
Hon. Members have also rightly highlighted post-flight families. Surely it is wrong to expect refugees, particularly those fleeing persecution and perhaps waiting for resettlement in a third country, not to develop family lives while in third countries, especially if they are waiting to go through programmes such as the one the United Kingdom now operates.
In response to those concerns, I have no doubt that the Minister will highlight the possibility of exceptional grants of leave outside the rules based on the recently amended guidance I referred to, but that remains far from good enough, with the ridiculously high hurdle of exceptional, compelling compassionate circumstances utterly inappropriate for the times we live in, because previously tragic and exceptional circumstances are now all too common and therefore not exceptional at all.
The guidance retains a caution that leave outside the rules is appropriate only rarely—and, with just 175 such grants in five years, that part is clearly being scrupulously implemented. Just 175 grants outside the rules in five years is wholly insufficient. Hon. Members’ suggestions are all sensible proposals to expand the scope of the eligibility criteria, but we also need to ensure that practical problems do not prevent those who do qualify for family reunion from achieving that goal.
I will give a few examples. Organisations such as Red Cross have shown how tricky the process can be, as shown in “Not So Straightforward”, the report mentioned by the hon. Member for Bristol West. In fairness, the Government have listened to recommendations, but they can do more. There is a need for qualified legal support. I fully back calls for the reintroduction of legal aid funding, which remains available in Scotland—from the Scottish Legal Aid Board, as part of its advice and assistance scheme—so it can be done.
Problems have been highlighted with applications being treated in essence like any other immigration application, as the hon. Lady pointed out, with the entry clearance office refusing to wait for extra information. Applications should not be treated like normal immigration applications; these are profound questions of family unity and protection.
The Home Affairs Committee has highlighted problems with the short entry clearance periods sometimes granted to families, who then face an impossible task to arrange transport in time or having to choose between leaving separately and risking one of the entry clearance periods running out. I recall a reassurance being given in the debate in June that that issue would be addressed, so it would be useful to know whether progress was being made.
A final, practical issue is about making applications easier to submit, because 95% are made by women and children and, as the hon. Lady pointed out, many of them are required to make dangerous journeys to third countries to find the nearest British embassy. I urge the Minister to work with organisations to explore ways of making sure that people are not put at risk in trying to access what should in essence be a safe legal route.
The work the Government have done in the countries neighbouring Syria has been excellent, but that is not the issue today. My hon. Friend the Member for Midlothian put it perfectly. It is not enough for us simply to support other countries to host refugees. Particularly now that those countries are way beyond coping, it is more imperative than ever that we step up our efforts in hosting refugees. Refugee family reunion is an utterly compelling way to provide protection, ensure better support groups here and provide safe legal routes for those who would otherwise be likely to take horrendous risks. It is a win-win policy that the Government should expand and make easier to access.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
It is a pleasure to serve under your chairmanship, Sir Alan. I begin by congratulating my hon. Friend the Member for Bristol West (Thangam Debbonaire) on securing this important debate and, if I may say so, on making a powerful speech. With a big immigration and migration case load, I have seen examples of the problems she cites. It is a particular and random cruelty to meet a constituent who applied for refugee family reunion and, because it has taken so long, the children are now over 18. It is important to do something about that, among the many other things she raised.
Some Members are marvelling at why our approach to refugees is not as fair or humane as we would want. There is nothing to marvel at: we have had a debate on immigration in this country down the years that, sadly, has rendered the issue of refugees toxic. Much of the unfairness in the way that refugees are treated is to do with the fact that, in popular opinion, “immigrant” applies as much to a refugee or asylum seeker as to anybody else. I will return to that in closing my remarks.
One of my hon. Friends made the point about how desperate people are. We really must focus on desperation. I have been able to visit refugee camps, not just in Calais but in Lesbos and Lebanon. I cannot stress how desperate these people are. It is also worth reminding the House that thousands of those people have crossed the Sahara and seen their friends and comrades lose their lives; they have been at the mercy of criminal gangs in Libya; and, finally, they have crossed the Mediterranean, sometimes sat on rafts or ships and seeing family members die. Desperation is the key, and making it harder and more difficult for people to claim family reunion—the notion being that that will help to somehow choke off applications—completely understates the desperate situation those people are in.
Thangam Debbonaire
I am glad that my hon. Friend is highlighting so many things and broadening the scope of the debate a little bit, but I reiterate that if we make routes for family reunion safe and legal, we are cutting off the business model of the traffickers. That is surely something we all want to do.
Ms Abbott
I have to tell my hon. Friend that the weight of the public debate on immigration sometimes stops politicians doing the fair and rational thing on refugees. When we live in a political time in which a well-read tabloid newspaper can have on its front page a series of six pictures of lorry drivers and the headline, “Foreign lorry drivers reading their phones”, we are talking about a toxic debate, which, as she says, militates against what is fair, appropriate and reasonable in dealing with refugees.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
Does it not come to the fact that, for most people, actually getting refugee status and getting here is only part of the beginning of the story, not the end? The hon. Lady is talking about people who need to rebuild their lives from the ground up, and there is no better context in which to do that than the family environment.
Ms Abbott
The right hon. Gentleman makes an important point. If we regard these people as people, then gaining refugee status is only the beginning, as has been said. What they need around them, if at all possible, is their family. That is what the unfair and inappropriate state of family reunion rules militates against.
I remind the House of the final act of the United Nations conference of plenipotentiaries on the status of refugees and stateless persons, which provided that signatories—we are one—take
“the necessary measures for the protection of the refugee’s family”,
with particular reference to
“Ensuring that the unity of the refugee’s family is maintained”
and
“The protection of refugees who are minors”.
I think the summation of this debate so far is that we are not taking the necessary measures for the protection of the refugee’s family.
Article 3 of the 1989 UN convention on the rights of the child states that the interests of the child must always be the primary consideration in all actions relating to them. The Home Office guidance from 2009, “Every Child Matters”, says that there is a statutory duty to promote the welfare of children, which must also apply to children overseas. I have dealt with so many cases down the years in which it was quite clear that the welfare of the children overseas was the last thing on the Home Office’s mind. As we have heard, many campaigners, non-governmental organisations and immigration lawyers argue that the current UK legislation and practice may meet the letter of the UN convention but not the spirit. As I think most of us know, there is scope to allow an application outside of the immigration rules, but in my experience that is an extremely rare occurrence.
The then Immigration Minister, the right hon. Member for Old Bexley and Sidcup (James Brokenshire), argued in the House in 2015 both that the UK rules were more fairly drawn than other countries and—this is the essence of the problem in fairly treating refugees—that to widen them would act as a pull factor for more refugees. That is what is behind the Home Office’s thinking. The Dublin III regulations are designed to allow greater access for child refugees, but they are widely regarded as bureaucratic and unwieldy, and the same verdict is widely shared of the application form itself. The Dubs amendment, to which my hon. Friend the Member for Walthamstow (Stella Creasy) referred, was designed to provide access in the interests of the child. However, it now seems very unlikely to meet its designated target of 3,000 child refugees from the encampment in Calais. We have let those children down, and we have let those Members of the Lords and the Commons who supported the Dubs amendment down.
As the Minister will no doubt tell us, there is a series of long-established refugee resettlement schemes, such as the mandate and gateway schemes, and the Syrian vulnerable persons scheme. The Government have also recently announced a vulnerable child resettlement scheme—I dare say we will hear about too. However, the effect of those various ad hoc schemes is to add to the complexity and bureaucracy, as any of us who have dealt with refugees will know, and to exacerbate inconsistencies—Syrian children, but not Yemeni or Afghan children.
I am quite clear that the reason why the existing regime for refugee family reunion seems unfair and incoherent and not in the spirit of the UN conventions that we have signed has to do with the toxic debate on immigration that we are having. In the post-Brexit era, and in the era of Trump, I cannot let the issue of the general debate on migration go past.
Stella Creasy
Does my hon. Friend agree that this is not a debate that makes sense in Britain? Actually, we have had a proud tradition of taking and supporting refugees in this country. I am mindful that Creasy, like Farage, is a Huguenot surname, and that all of us come from communities that have benefited from the input of refugees. That is the true British, patriotic tradition that we should be supporting.
Ms Abbott
My hon. Friend is completely correct: this is a not a debate that makes sense in the UK any more than it makes sense in the US—a country that was built on immigration, more than any other society that can be named. However, because migrants, refugees, asylum seekers and so on are conflated in the popular narrative, we are where we are.
With Brexit, Trump and the debate about the conditions under which we leave or do not leave the European Union, there is no doubt that the issue of migration is going to come up over and over again. I urge Members who have shown such sympathy and compassion to refugees, and on family reunions specifically, to hold their nerve on the question of immigration. It is so important that as politicians we have a debate on immigration that is based on the facts, not on urban myth. It is so important that we do not propagate notions that immigrants in some general sense drive down wages, when it is in fact predatory employers who drive down wages. It is so important that we do not join UKIP in the gutter when talking about migrants and refugees.
My hon. Friend the Member for Bristol West made eight very important points. I want to leave the Minister plenty of time to respond to each of them—not with waffle, not by trying to change the subject and not by referring to general things the Government may have done in the past. I say to the House that these are difficult times to argue for fair treatment for asylum seekers, refugees and immigrants, but precisely because it is a difficult time, it is so important that those of us who feel able to should stand up and be counted. After all, the point about refugees is that they are not just figures on a Home Office briefing; they are not just images on a television screen; they are not just the subject of Nigel Farage’s speeches—they are people, and they deserve to be treated as people in a fair and humane fashion.
Sir Alan Meale (in the Chair)
Before the Minister begins, I ask him to leave a small period of time at the end so that the hon. Member for Bristol West (Thangam Debbonaire) can wind up.
The Minister for Immigration (Mr Robert Goodwill)
I am happy to do so, Sir Alan. First, I congratulate the hon. Member for Bristol West (Thangam Debbonaire) on securing this debate on an important subject and pay tribute to the work of the all-party parliamentary group on refugees.
I want to make it clear that there is no need for a question mark when I say that refugees are welcome here. I was recently in Jordan and met a number of refugees, some of whom had just arrived from the berm. I had very helpful meetings with the United Nations High Commissioner for Refugees, which was selecting the most vulnerable families and children to come as part of the schemes we have in place. I am proud that we are the second biggest donor of humanitarian aid. That shows that we are determined to help those most in need in the most vulnerable locations, which in many cases is in the refugee camps, not, for example, in European Union countries.
I am aware of calls in favour of widening the family reunion immigration rules. That issue has been debated at length, including in both Houses during the passage of the Immigration Act 2016. The recent campaigns by the British Red Cross and the Refugee Council demonstrate the interest in this subject. This has been a good debate, and I welcome the thoughtful and passionate contributions from right hon. and hon. Members.
We recognise that families may be fragmented due to conflict and persecution and the speed and manner in which asylum seekers often flee their country of origin. That is why the Government have dedicated family reunion immigration rules and have granted more than 22,000 family reunion visas in the past five years. Our policy meets our international obligations and allows immediate family members who formed part of the family unit before the refugee sponsor fled their country to reunite with them in the UK. British citizens are able to sponsor their spouse or partner and children under the age of 18 to join them under the family immigration rules, providing they make the appropriate entry clearance application and meet the relevant criteria.
Mr Goodwill
I would not accept that. As I will say later in my remarks, we do not want to create the pull factor that results in people drowning in the Mediterranean or the Aegean. That is one of the major reasons why we are maintaining this policy.
Thangam Debbonaire
I urge the Minister to think about the fact that the so-called pull factor does not go away. These people are living in danger. They are fleeing for their lives. When we make safe and legal family reunion routes harder, we actually make it more likely that these people will end up in the hands of people traffickers and make these dangerous journeys.
Mr Goodwill
I understand the hon. Lady’s point, but I will justify exactly where we are and why we believe we have got the right policies.
As I was saying, the rules reflect our obligations under article 8 of the European convention on human rights. Where an application does not meet the rules, our policy requires consideration of any exceptional or compassionate reasons for granting a visa outside the rules. That caters for extended family members of refugees and family members of British citizens who cannot meet the financial requirements of the rules.
Mr Goodwill
I will make a little progress, otherwise I will not be able to answer the points made during the debate, given the time constraints.
In July, the Home Office published revised guidance on the types of cases that may benefit from a grant of leave outside the rules in exceptional circumstances, including adult dependent sons or daughters over the age of 18 who are not leading an independent life and are living in a conflict zone. The new guidance also provides more clarity for applicants and their sponsors, so that they can better understand the process and what is expected of them. I do not believe that widening the definition of family is practical or indeed necessary, especially as the numbers of people granted a family reunion visa are likely to increase in line with the numbers of recognised refugees in the UK.
A balance has to be struck between reuniting families quickly and not creating a situation where the UK becomes the destination of choice, with family members and children in particular being encouraged or even forced to leave their country and risk hazardous journeys to the UK. They should instead claim asylum in the first safe country they reach.
Stella Creasy
More of us might have sympathy for the Minister’s argument about a pull factor were it not for the fact that only the UK and Denmark put this restriction in. Surely if there were a pull factor, it would be coming from other countries. Does he have any evidence that other countries offering this form of family reunification has been a pull factor? If not, I think it is time to put this straw argument to bed.
Mr Goodwill
The point was made by the hon. Member for Glasgow North East (Anne McLaughlin) that if children could sponsor parents, it would not be a pull factor. I point out that Eurostat figures show that in 2015, there were 35,250 claims from unaccompanied minors in Sweden and 14,400 claims from unaccompanied minors in Germany. Those are the countries with the highest number of unaccompanied asylum-seeking children and the most welcoming asylum policies.
We must not inadvertently create a situation where parents are incentivised to place their children’s lives in the hands of traffickers or criminal gangs and risk dangerous journeys to Europe. Indeed, I was in Nigeria over the summer and had that precise point made to me by those whom I met there. The Government’s priority is to provide humanitarian aid to those most in need in the regions affected by conflict. We have pledged £2.3 billion in humanitarian aid to Syria and neighbouring countries. We are also providing nearly £65 million in response to the Mediterranean migration crisis.
The Government remain strongly committed to resettlement. We are on track to resettle 20,000 Syrians by 2020, and there will be an update on those figures later in the week. That is in addition to the vulnerable children’s resettlement scheme, which will resettle up to 3,000 children and individuals at risk by 2020, and our long-standing gateway and mandate schemes, which the shadow Immigration Minister mentioned. There is no limit to the number of refugees who can be resettled under the mandate scheme, and individuals with close family ties in the UK may be eligible. That route also allows wider family members to be resettled in exceptional circumstances.
The hon. Member for Bristol West mentioned the time taken to grant asylum claims. I point out to the House that we have turned asylum performance around. Since the end of 2014, we have consistently met our ambition of deciding 98% of straightforward cases within six months. We are committed to improving the process for those applying for family reunion, and my officials have been working with the British Red Cross to ensure that the application process is as smooth as possible and decisions are made in a timely fashion, to ensure that families are separated for the shortest possible time. In 2015, the Home Office was deciding family reunion applications within an average of 40 days.
I have met the chief executive of the British Red Cross, Mike Adamson, to discuss many of the issues we have debated today, and my officials are looking at what more we can do to improve our service to those applying for family reunion, including redesigning the application form. A simpler application form, as well as the improved guidance, will help applicants better to understand the family reunion process.
There have been calls, including today, for legal aid to be made available for family reunion applications, but I do not believe, with the changes we have made and continue to make, that it is necessary. Applications for family reunion are free of charge, and in deciding how to allocate legal aid support, the Government must be mindful that this is all taxpayers’ money.
UK Visas and Immigration is formulating plans to consolidate decision making for family reunion applications into one team based in the United Kingdom. That work was initiated following the inspection of family reunion applications by the independent chief inspector of borders and immigration. I am grateful to David Bolt for conducting such a thorough inspection. I assure the House that the Home Office treats all applications for family reunion with compassion and sensitivity and will continue to do so. The Government have accepted all the recommendations in the chief inspector’s report and work is under way to implement them.
I want to reassure Members that I have listened carefully to the arguments put forward today in favour of widening the family reunion criteria. The Government recognise the important principle of family unity, but our policies must be balanced, and we must not inadvertently and perversely create a situation in which families see an advantage in sending people ahead, in particular children, putting their lives at risk by attempting perilous journeys into and across Europe: tragically, such journeys have cost many lives. I therefore remain of the view that widening the criteria to include many other categories of people is neither practical nor sustainable.
Thangam Debbonaire
Thank you, Sir Alan, for allowing me to sum up. I thank all right hon. and hon. Members for their contributions and the Minister for answering. It will not surprise anyone, and surely not him, to know that I am incredibly disappointed by his response. I was not expecting promises on any of the eight points, but it is disappointing that the Minister emphasises exceptional circumstances rather than the reality of people’s lives. All of us, at our darkest times and our best of times, want our family with us.
There is no evidence of this pull factor. People come because they are desperate, not because they have read in a brochure that the UK is an easy touch. For the sake of the young men I met today who want to bring their old parents here from Syria, for the sake of the woman whose children were too old to come here by the time she was granted status, and for our conscience as public servants, I ask the Minister to reconsider and to make refugee family reunion work for refugees, to whom we owe a legal and moral obligation. I ask him if he will meet me to discuss that.
Question put and agreed to.
Resolved,
That this House has considered immigration rules for refugee family reunion.
Written Statements
(7 years, 4 months ago)
Written StatementsRead Full debate Read Hansard Text
Coalition Operations against Daesh
(7 years, 4 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Defence (Sir Michael Fallon)
The coalition has today published its findings from an incident report into the coalition air strikes in Dayr Az Zawr on 17 September 2016.
While the report has concluded that the decision to identify the targets as Daesh military objectives was both reasonable and supported by the weight of information available at the time, post-strike analysis indicates it more likely than not that a Syrian regime aligned force was struck after being mistaken for Daesh.
The Ministry of Defence will always carefully examine any credible evidence that suggests we have struck a target in error. We have contributed fully to the coalition’s investigation into this incident.
The UK armed forces operate under strict rules of engagement, which govern the use of force, and we take all reasonable steps to avoid non-combatant casualties. All strikes conducted by the RAF are carried out in accordance with robust rules of engagement, UK interpretation of the law of armed conflict and rigorous targeting processes and are approved through a strict assessment process undertaken by a team including British military, policy and legal advisers.
Both the coalition and the UK are reviewing the report’s conclusions and we will act on any lessons identified in order to mitigate the risks of such an error recurring.
[HCWS292]
National Shipbuilding Strategy
(7 years, 4 months ago)
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The Secretary of State for Defence (Sir Michael Fallon)
Sir John Parker has submitted his independent report to inform the United Kingdom national shipbuilding strategy. He has consulted widely with Government, industry and the trades unions during his work.
I have today placed copies of the report in the Library of the House and it will be made available on the Government website, www.gov.uk.
The report is a balanced critique of the challenges faced by Government and industry in the naval shipbuilding sector in recent years. However, Sir John has identified a “renaissance” in a range of regional shipyards across the United Kingdom where he has found entrepreneurial attitudes and an enthusiasm to embrace change. His report includes 34 far-reaching recommendations to transform the United Kingdom’s shipbuilding industry which will lay the foundations for a modern, efficient and competitive sector capable of meeting the country’s future defence and security needs. It will also bring prosperity benefits for shipyards and their supply chains across the country. These are for the Ministry of Defence (MOD), wider Government and industry to consider.
The Government welcome the report and are committed to delivering a modern national shipbuilding strategy. We see it as a vital part of our industrial strategy focusing on increasing economic growth across the country and investing in a more skilled workforce: which is this Government’s approach for rebalancing Britain and delivering an economy that works for everyone, not just a privileged few. While many of the recommendations are for Government, the themes of Sir John’s report —modern digital engineering, industrial innovation, competitiveness, focus on apprenticeships and jobs, export focus—also show where industry, working with Government, needs to invest in order to increase opportunities for the shipbuilding sector across the United Kingdom and enable it to thrive and grow. It also means using our shipbuilding expertise to become a leading producer of ships for export. We must use the opportunities that Brexit provides to become a global trading power again.
Shipbuilding is an important part of our economy. The MOD estimates that the Government spent around £1.4 billion on shipbuilding and repair in financial year 2014-15, of which approximately 96% was spent with five UK prime contractors. Around 15,000 people are directly employed in UK shipbuilding and repair, with an additional 10,000 jobs indirectly supported through the wider supply chain in the UK. Realising Sir John’s ambition for shipbuilding would benefit the whole of the United Kingdom.
Our vision therefore is for a strong shipbuilding sector, backed up by a modern industrial strategy.
It is important that the Government give Sir John’s work the full consideration that it deserves. I have asked officials, working with others across Government, to examine the report and recommendations, and to discuss them with industry. The Government will then publish a full and considered response and implementation plan in spring 2017. This response will be the national shipbuilding strategy.
I would like to place on record my thanks to Sir John for providing such a thorough analysis of naval shipbuilding and recommendations for a new era of co-operation and drive across the shipbuilding enterprise.
[HCWS288]
November Agriculture Council
(7 years, 4 months ago)
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The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)
I represented the UK at the Agriculture and Fisheries Council on 14 and 15 November in Brussels.
Commissioner Vella presented a proposal for a Council regulation setting deep sea fishing opportunities for 2017 and 2018. Commissioner Vella noted there were challenges in setting total allowable catches (TACs). The UK, Poland, Sweden and Denmark stressed the need to protect stocks, although Denmark noted that the TACs should not be lowered too far or these stocks would become obstacles to fully implementing the landing obligation. A compromise text mitigated some of the proposed cuts, while still providing adequate protections, and was therefore unanimously agreed.
Commissioner Vella presented proposals for the North Sea multi-annual plan (MAP). The UK, Sweden, Germany, Denmark, Belgium and Poland expressed their general support for the proposal. However, the UK, echoed by France and Denmark had concerns that some of the additional controls would increase the administrative burden without any commensurate benefit.
Mr Cees Veerman, Chairman of the Agricultural Markets Taskforce (AMT), presented the report of the AMT and the main recommendations within it, which set the agenda for future work. They included strengthening market transparency, and setting out a framework including a list of prohibited, basic unfair trading practices (UTPs) which would carry the penalty of sanctions. The UK welcomed that the AMT largely based the recommendations for UTPs on the work of the UK groceries code adjudicator.
Commissioner Hogan and Vice-President Katainen presented the DG AGRI report on the cumulative impact of free trade association (FTA) concessions on agriculture. Commissioner Hogan stressed that it did not represent a projected outcome of the 12 ongoing or potential EU-third country FTAs within its scope. The report analysed the cumulative economic impacts of tariff liberalisation through two theoretical scenarios. Overall, the conclusions were balanced and confirmed potential for net trade gains. Vice-President Katainen set the report in the context of the EU’s wider free trade, jobs and growth agenda. The UK underlined its long-standing support for tariff-free access and reduced non-tariff barriers, but noted that agriculture goes beyond questions of simple economics.
Any other business items
The UK introduced an item on behalf of the North Western Waters regional group on the landing obligation. It drew attention to the good progress made so far in implementing the landing obligation, a key part of the last reform of the common fisheries policy (CFP), but also the potential problem of choke species had to be dealt with. The UK presented ongoing work in the regions on this issue and pressed the Commission to heed it. The UK points were supported by Portugal, Germany, Ireland, Denmark, Belgium, France, Spain, the Netherlands, Latvia and Sweden, with many thanking the UK for bringing this important issue to the table.
Greece voiced their concerns that the difference between customary names and standard names for geographical indication protected products undermined the EU system. The Commission pushed back by pointing out that the current legal wording ensures sufficient security.
Commissioner Andriukaitis announced that the Commission will establish and host the first meeting of the animal welfare platform, which will discuss best practice in this field, during the Maltese presidency. The UK’s support for this call and the need for a review of rest periods in line with current scientific advice was praised by several animal welfare charities via online media platforms.
Denmark raised concerns about the increased use of antimicrobials in the veterinary sector in some member states and called for immediate action. The UK, along with eight other member states supported this call.
[HCWS289]
IBRD Loan to the Government of Iraq
(7 years, 4 months ago)
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The Secretary of State for International Development (Priti Patel)
I have today laid a departmental minute outlining updated details of a contingent liability of the US dollar equivalent of £360 million which the Department for International Development (DFID) has undertaken, in respect of the World Bank Group.
On 25 October, I laid a departmental minute setting out DFID’s intention to guarantee a portion of a forthcoming development policy loan from the International Bank for Reconstruction and Development (IBRD) arm of the World Bank to the Government of Iraq, subject to finalising the details of the terms of the guarantee. Further consideration of the implications of the original arrangements for the treatment of the World Bank by credit rating agencies has led me to amend the element of the proposal relating to the treatment of any payments recovered from the Government of Iraq, in the event of a default and the guarantee subsequently being triggered.
The revised proposal entails the World Bank transferring the right to pursue and retain recoveries to the UK Government, should it wish to do so. This amendment to the guarantee arrangement will avoid undermining the Bank’s preferred creditor status, which is so critical to its ability to borrow at very favourable rates from the market and pass these on to its borrowers.
The change to the treatment of recoveries should have minimal, if any, impact on the probability of a default by the Government of Iraq. There remain strong incentives for Iraq avoiding entering into arrears as doing so would lead to the IBRD not agreeing any new lending, and not providing any lending agreed under existing loans; it would also entail the payment of penalty charges by the Government of Iraq.
In the event that a default did occur, and the guarantee is called, the UK would still provide compensation to the World Bank, in proportion to the UK’s guaranteed share of the overall IBRD loan. If this liability is called, provision for any DFID payment would be sought through the normal Supply procedure.
[HCWS291]
EU Transport Council
(7 years, 4 months ago)
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The Secretary of State for Transport (Chris Grayling)
I will attend the only Transport Council under the Slovakian presidency (the presidency), taking place in Brussels on Thursday 1 December.
The presidency is aiming for a general approach on the proposed regulation on common rules in the field of civil aviation safety and establishing a European Union Aviation Safety Agency. The proposed general approach embodies the principle of proportionality and encourages the use of performance based regulations. It also makes small but appropriate extensions to the scope of the European Aviation Safety Agency’s responsibilities.
The presidency is also aiming for general approaches on two proposals aimed to simplifying and streamlining existing passenger ship safety legislation.
The first of these is an amending directive on safety rules and standards for passenger ships. This directive sets harmonised safety standards for seagoing passenger ships operating on domestic routes throughout the UK, and the proposed amendments look to simplify the current legislation. In particular, this deregulatory approach proposes that standards for passenger ships below 24 metres are better suited to regulation at national level.
The second is a proposal for a directive on a system of inspections for the safe operation of ro-ro ferry and high-speed passenger craft in regular service. The proposed revision updates, clarifies and simplifies the existing survey (inspection) requirements for ro-ro ferries and high-speed passenger craft, while maintaining the same level of safety and key delivery mechanisms.
There will be a progress report on a related proposal to amend two directives; one on the registration of persons sailing on board passenger ships operating to or from ports of the member states of the community, and one on reporting formalities for ships arriving in and/or departing from ports of the member states. Negotiations are at an early stage, and the presidency’s progress report summarises the discussions so far. Discussions on this proposal will continue during the forthcoming Maltese presidency in 2017.
The presidency has proposed a policy debate on the extension of the European fund for strategic investments (EFSI) and connecting europe facility (CEF) blending, which provides further funding for EFSI. The proposal will continue to enhance the financial case for projects and value for money from the EU budgets.
Under Any Other Business, the Commission will provide an update on the outcome of the 39th Assembly of the International Civil Aviation Organisation held in September and October 2016, combined with the latest developments in the International Maritime Organisation. The Commission will also provide information on the state of play on security in the transport sector, its planned package of road initiatives, road safety, developments in EU-type approval legislation and the progress made on the implication of the ‘emissions irregularities’. The Commission will update on the state of play on GALILEO, present its European strategy for low emission mobility, and provide information on its initiative on “Women in Transport”. The Cyprus delegation will provide information on the draft common aviation area agreement between the Republic of Turkey and the European Union and its member states. The Dutch delegation will then update the Council on co-operation in the field of connected and automated driving. Finally, the Maltese delegation will inform the Council on the work programme for their forthcoming presidency.
[HCWS290]
House of Lords
Royal Assent
Tuesday 29th November 2016
(7 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Amendment Paper: HL Bill 70-I Motion to be moved on consideration of Commons reasons (PDF, 76KB) - (15 Nov 2016)
Sport: Corruption
Lord Naseby
To ask Her Majesty’s Government, in the light of this year’s Global Corruption Report by Transparency International, what action they are taking to tackle corruption in sport.
Lord Naseby (Con)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so I declare an interest as president of Northamptonshire County Cricket Club and the MCC, and as a member of the All England Lawn Tennis Club.
The Earl of Courtown (Con)
My Lords, the Government are fully committed to tackling corruption in sport at all levels. This is reflected in Sporting Future, the Government’s sport strategy. Working closely with bodies such as UK Anti-Doping and the Gambling Commission, we are not only taking steps to protect integrity in the United Kingdom, but playing our part in tackling these threats through co-ordinated international efforts with partners such as the World Anti-Doping Agency.
Lord Naseby
I am extremely grateful for that reassuring Answer. Nevertheless, I wonder how many of your Lordships understand the extent of the illegal betting and fixing of matches going on across so many sports. While the ECB for cricket and the All England Club and others in the tennis world are taking action, in my judgment far too many sporting bodies have only just started to realise the challenge before them. Against that background, will my noble friend, through the Government, put pressure on these governing bodies, in particular to monitor that they have governance in place, that there is transparency in what they are doing, and, above all, that there is an independent assessment of whatever procedures they may have?
The Earl of Courtown
My Lords, I congratulate my noble friend on his Question, and in particular on his contacts with so many famous sporting groups. At the domestic level, a new United Kingdom code of sports governance was published only last month, as my noble friend is aware. It sets out a commitment in the Sporting Future strategy and makes it clear that we expect the highest standards of governance and transparency from all sports governing bodies that wish to receive public funding from 2017. If these are not adhered to, their funding will be under question.
My noble friend also talked about independence of examination, but one must remember that government funding is only part of such organisations’ funding. They are independent bodies but they must adhere to the governance code. Part of the checks and balances must minimise the likelihood of integrity issues arising.
Lord Addington (LD)
My Lords, will the Minister assure us that we will not only put pressure on our own governing bodies, but encourage those of other nations, particularly of our allies and friends, also to have a coherent approach? Unless we are international on this, we will do nothing.
The Earl of Courtown
My Lords, the noble Lord makes a very good point about putting pressure on international bodies, and this is being carried out through the sport integrity partnership. We welcome the intention to launch the international sport integrity partnership in the margins of a meeting of the International Forum for Sport Integrity in Lausanne in early 2017. I also draw the House’s attention to the anti-corruption summit that happened in the early part of this year. The Prime Minister reaffirmed the United Kingdom’s commitment at the G20 summit earlier this year.
Lord Stevenson of Balmacara (Lab)
My Lords, sadly I have no clubs to declare an interest in—I am still an active sports player. The Department for Culture, Media and Sport is conducting a cross-government review of the existing anti-doping legislative framework and assessing whether stronger criminal sanctions are required. Can the Minister confirm that if the review should make it clear that stronger criminal sanctions are needed, the Government will not hesitate to act?
The Earl of Courtown
My Lords, as the noble Lord knows very well, this point was debated in Committee on a Bill before your Lordships’ House earlier this month, and I suspect there will be later opportunities on the same Bill to discuss it again. I cannot pre-empt what will be decided from the review. The Government are in the final process of the review but we must realise that criminalisation is not always a panacea for doping and that not all countries have legislation in place.
Lord Watts (Lab)
My Lords, too many sporting bodies are run by the old boys’ brigade. Do we not need to have far more professional sport in the UK and around the world?
The Earl of Courtown
My Lords, transparency and openness in all these sporting bodies is of paramount importance. This is why, at the G20 summit, we looked at setting up the Anti-Corruption Coordination Centre, and why we are looking at the Criminal Finances Bill and establishing a joint financial analysis centre. The Government are investing in expertise in data and intelligence. The point is that these sporting bodies, many funded in part by public money, have to show their transparency, openness and correct behaviour.
Lord Brooke of Alverthorpe (Lab)
My Lords, this is a googly: is the Minister prepared to have a look at the full report by Transparency International, which he will find supports the Private Member’s Bill that I put before the House on lobbying transparency to avoid corruption within lobbying of government? Is he prepared to try to persuade the Minister in question to take a similarly positive approach to clearing up the mess there as he is doing on this subject?
The Earl of Courtown
My Lords, I have been in the Chamber part of the time as the noble Lord’s Bill passes through your Lordships’ House. I will of course pass on his concerns to the Minister.
Asylum Detention Centres: Safety
(7 years, 4 months ago)
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Baroness Barker
To ask Her Majesty’s Government, in the light of the report by the UK Lesbian and Gay Immigration Group and Stonewall published on 27 October No Safe Refuge, what plans they have to make detention centres safer for LGBT asylum seekers.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the Government remain committed to continually improving the asylum process for all persons claiming asylum, including those who claim on the basis of their sexual orientation and gender and those in detention while their claim is considered.
Baroness Barker (LD)
I thank the noble Baroness for that Answer. Incarcerating lesbian and gay asylum seekers with people who threaten them with exactly the same violence and intimidation from which they are fleeing is a uniquely severe punishment. These people pose a very low flight risk. Why are we spending upwards of £36,000 a year keeping them locked up?
Baroness Williams of Trafford
My Lords, I can reassure the noble Baroness that there is actually a presumption against detention. On that note, the Government commissioned Stephen Shaw to do a review into the detention of vulnerable individuals. The noble Baroness and I had a very brief chat before we came into the Chamber. A new category, “adult at risk”, has been introduced, with the clear presumption that people at risk should not be detained, and this includes transsexual and intersex people. Stephen Shaw will carry out a short review next year to see how the actions he suggested have been implemented.
Baroness Burt of Solihull (LD)
My Lords, LGBT asylum seekers have already faced persecution in their countries of origin. This report shows that, having risked everything to get here, they are now facing it again. Does the Minister agree that, in order to tackle a problem, you have to quantify it first? Why has the Home Office refused to break down asylum seeker numbers by gender identity and sexual orientation?
Baroness Williams of Trafford
My Lords, all genuine asylum seekers—LGBT or otherwise—have experienced persecution in the countries from which they have arrived, which is why they are in our country seeking asylum. I stress that detention is used only sparingly: to establish the identity of a person; if there is a reason to believe that a person will fail to comply with conditions; or to effect removal from the UK. But I stress that people genuinely seeking asylum have nothing to fear from seeking asylum in this country. Some of the training has been really improved with regard to the questions asked, particularly of the LGBTI community, because of the sensitivity around their claims.
Lord Rosser (Lab)
In 2010, the coalition pledged to improve the system for LGBT applicants. I think that the then Home Secretary also ordered a review of the LGBT asylum system in 2014. In the light of the findings of this latest report, what has been the outcome of these two commitments in actually improving conditions of detention for LGBT asylum seekers, and what hard evidence is available to prove that those detention conditions have improved?
Baroness Williams of Trafford
The noble Lord is absolutely right. An inspection was commissioned by the Independent Chief Inspector of Borders and Immigration back in 2014. It did not indicate any systemic or endemic issues of bullying, violence or victimisation. In fact, it praised the training and the guidance and our work with organisations such as UKLGIG and Stonewall. But the Government do not rest on their laurels. A new detention services order on LGBT was published in April, which provides operational guidance to suppliers and Home Office staff in the immigration detention estate. As I said, Stephen Shaw will be doing a review next year of how his suggested actions have been bedded in.
Parliament and Central Government: Relocation
(7 years, 4 months ago)
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Lord Greaves
To ask Her Majesty’s Government what assessment they have made of the case for moving Parliament and central departments to the north of England.
Baroness Chisholm of Owlpen (Con)
The Government have made no assessment of moving Parliament to the north of England. This is a matter for Parliament to decide. Government departments determine their workforce requirements and the Civil Service has a significant UK-wide presence, including in the north of England.
Lord Greaves (LD)
My Lords, the British economy is ever more unbalanced, as most growth and investment are dragged into the already congested hothouse of London and the south-east. Meanwhile, the so-called northern powerhouse amounts to little more than a few new railway lines and roads, welcome though they will be. Does the Minister not agree that in order to rebalance this country we need a real new vision, in which a wholly new capital city is built somewhere near—
Lord Greaves
—the geographical centre of the country, in the Midlands or the north? That would provide a new centre of government for the country, taking power to the powerhouse out of this congested place we are in, together with a new home for Parliament. Only by something as radical and visionary as this will we ever tackle the problem of imbalance that so affects us all.
Baroness Chisholm of Owlpen
Well, my Lords, this is a radical suggestion. I feel that Parliament should really be in the capital city but your Lordships will be relieved to hear that it is not up to me. Indeed, it is not even up to the Government to decide. It is a decision for both Houses following recommendations from the Joint Committee. The House of Commons Commission and the House of Lords made the decision in 2012 that the Palace of Westminster should remain where it is.
Baroness Chisholm of Owlpen
The second part of the noble Lord’s question was about the northern powerhouse. The northern powerhouse is absolutely going ahead and is very important to this Government, but it is about private sector growth, not public sector growth.
Lord Alton of Liverpool (CB)
My Lords, although the people of Dunsop Bridge, which is at the geographical centre of the country in Lancashire, might be perturbed to find that the capital would be moved to that part of the country, nevertheless is the noble Lord, Lord Greaves, not making a good point? Does the Minister not agree with the maxim of Benjamin Disraeli that centralisation is the death blow of democracy, and that in the rust-belt towns and cities of the north of England, where there is considerable disaffection, it is crucial to ensure more subsidiarity, not least to the elected mayors and councils?
Baroness Chisholm of Owlpen
That is why we have taken great care to make sure that the Civil Service is placed in various hubs all round this country, including the north. It is also why in central London we have moved from having 181 offices in 2010 to only 54 now, which has contributed £2.8 billion in workforce savings. We are supporting departments in moving to smarter working and encouraging them to have regional hubs outside central London.
Lord Lennie (Lab)
My Lords, when the Labour Government were last in power—some time ago now—we pledged to devolve power down to the nations that make up the UK. What plans do this Government have to establish a people-led constitutional convention to consider the future shape and extent of necessary reforms—including the location of the capital if that becomes necessary?
Baroness Chisholm of Owlpen
That is exactly why the Government are concentrating at the moment on the devolution which is happening, bottom-upwards.
Viscount Ridley (Con)
My Lords, does my noble friend the Minister agree that one of the side benefits of the proposal of the noble Lord, Lord Greaves, might be that there were a lot of early retirements from the senior ranks of the Civil Service, enabling us to inject fresh northern blood into it? There might even be some early retirements from this House.
Baroness Chisholm of Owlpen
I thank my noble friend for that very interesting point. We are encouraging people to join the Civil Service and looking for highly intelligent, motivated people. As I said earlier, a lot of those people will be working in the north; they will also be working in the east, the west and the south. That is why we are encouraging departments to have hubs outside the centre.
The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
My Lords, we will go to the Bishops’ Bench.
The Lord Bishop of Chester
Are we quite sure whether the people of the north would want Parliament in the north?
Baroness Chisholm of Owlpen
The right reverend Prelate has a very good point; if they have any sense, they will not.
Lord Clark of Windermere
My Lords, what I know is certain is that the people of the north of England would appreciate Civil Service jobs there. Before being so dismissive, would the Government be prepared to have discussions with the BBC, which took an inspired and successful decision to move so much of its activity to MediaCity, on the border of Salford and Manchester?
Baroness Chisholm of Owlpen
Yes, that was certainly a very good decision by the BBC. That is why the Government Property Unit, which is in charge of seeing how the departments work with their civil servants, is indeed trying to drive this radical reshaping of the Civil Service estate, and so encouraging departments to move their civil servants out of London, as I said earlier. That could well be to the north and it would certainly encourage people from the north to take those jobs.
Baroness Janke
My Lords, given the Government’s commitment to devolution and the reference in the Autumn Statement, do the Government have specific plans to devolve financial powers to local level? Has the Minister taken note of the various reports that state that, for the economic balance to be redressed away from London, financial and fiscal powers need to be given to local authorities across the country?
Baroness Chisholm of Owlpen
My Lords, the problem is that that could interfere with central budget considerations, and then the whole thing becomes a bit muddled.
Baroness Rawlings (Con)
My Lords, the Minister mentioned that the northern powerhouse will be mainly private sector. Will the Government encourage the artistic institutions to move up there more?
Baroness Chisholm of Owlpen
Absolutely. The whole point about the northern powerhouse is that it considers everything in the round—businesses, artistic initiatives and tourism. It is meant to bring financial stability to the country in the round for all interested parties.
Baroness Farrington of Ribbleton (Lab)
My Lords, will the Minister please stop referring to devolution when it comes to the northern and western English regions? All this Government have done is to transfer responsibility for carrying out government budget decisions. When will London and the south-east and its representatives here in Parliament stop micromanaging the rest of England, where we would like genuine devolution?
Baroness Chisholm of Owlpen
I am surprised the noble Baroness says that. That is what we are doing with devolution. We are not interfering. That is the whole point: for it to go out into the communities for them to be in charge of what they want.
Lord Harris of Haringey (Lab)
My Lords, is there not a nasty tone in some of this debate, of people attacking our capital city? Given that the people of London subsidise the rest of the country to the tune of billions of pounds each year perhaps it would make sense if, before we go down the road of automatically deprecating London, we remember that it would be a very satisfactory outcome as far as the people of London were concerned if the principle of devolution were followed and London had full fiscal autonomy.
Baroness Chisholm of Owlpen
The noble Lord certainly has a point. London is our capital, but I do not think noble Lords were denigrating it when they were talking about moving things to the north. Our capital is very important, and that is why I think we feel that this is where government should be.
Lord West of Spithead (Lab)
My Lords, does the Minister think there might be merit in building a purpose-built ship, which would help British shipbuilders and British steel, could visit various parts of England when needed—and would be quite useful during recesses as well?
Baroness Chisholm of Owlpen
I think this is an excellent idea. The only problem is that I only have to step on a ship and I feel very seasick, so I might not be able to take part. As long as it was full of admirals, I am sure we would be in agreement.
Affordable Housing
(7 years, 4 months ago)
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Lord Beecham
To ask Her Majesty’s Government, further to the announcement in the Autumn Statement that they will invest £1.4 billion to deliver 40,000 affordable homes, how many affordable houses to rent they expect local authorities to build by 2020.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, our expanded affordable homes programme, with a total capital budget of £7.1 billion between 2016 and 2021, including the additional investment of £1.4 billion announced last week, will now fund a wider range of affordable housing, including affordable rent, rent to buy and shared ownership. Local authorities will be able to bid into this.
Lord Beecham (Lab)
My Lords, I declare my interest as a Newcastle city councillor and an honorary vice-president of the Local Government Association. Could the Minister please explain the arithmetic underlying the Government’s claim that the £1.4 billion announced in the Statement will build 40,000 affordable homes, given that this appears to represent a cost of only £35,000 a home? Will he confirm the estimate of the chair of the Local Government Association, his noble friend Lord Porter, that the enforced reduction of council rents by 1% yearly until 2020 will cost councils £2.6 billion, which could have built, according to its estimate, 19,000 homes, while housing associations will suffer a loss of income of £2.7 billion, with a similar impact on their capacity to build affordable homes?
Lord Bourne of Aberystwyth
My Lords, as the Mayor of London, Sadiq Khan, said, this is,
“the largest sum of money ever secured by City Hall to deliver affordable housing”,
and no doubt he would have been more effusive if it had not been for political considerations. This is the largest affordable housing programme for 40 years, and social housing can bid into it too, as the noble Lord appreciates. This is all part of the programme of ensuring that we have 400,000 affordable homes in this Parliament.
Lord Shipley (LD)
My Lords, I am a vice-president of the Local Government Association and have long believed that local government’s capacity for building more homes for social rent should be encouraged. Last week, the Chancellor said:
“One person without a home is one too many”.
Do the Government accept that the main reason for people not having homes is the sheer cost of housing and that there is an urgent need for more social rented housing? Will the White Paper on housing supply due before Christmas empower local councils to get building?
Lord Bourne of Aberystwyth
My Lords, first, the White Paper will be a far-reaching one and will look at many issues. Self-build, for example, will be there, as will purpose-built—what we could call prefabs for the 21st century. This is, as I said, the most ambitious programme for affordable housing for 40 years. It is clear that we need to look at a range of tenures, as the noble Lord indicates, but of course social housing being subject to a greater subsidy means that if all the money is targeted at social housing, we would be building fewer affordable houses across the piece. There needs to be a balance. As I have indicated, it is for local authorities and housing associations to bid in for that money.
Baroness Sharples (Con)
My Lords, will my noble friend confirm that local councils will provide enough allotments when all these houses are built?
Lord Bourne of Aberystwyth
My Lords, I know that that is a subject dear to the noble Baroness’s heart. We are concerned about allotments in the department—as she will know, we are ensuring that they are not part of the brownfield sites agenda, so they are safe from that. I am sure that local authorities will have heard what she has had to say and will heed it.
Lord Campbell-Savours (Lab)
My Lords, is not the real problem the cost of land for housing development in the United Kingdom? When sold for agricultural purposes, land can come out on average nationally at £20,000 a hectare, whereas when that same hectare of land—at the stroke of a planner’s pen—is turned into land for housing, it can be worth anything between £1 million and £5 million? Is that not the real problem we have to sort out in this country?
Lord Bourne of Aberystwyth
My Lords, the noble Lord is right about the cost of land—it is excessive, although of course it varies according to which part of the country one is looking at—and this perhaps ties in with the last question and the answers to that. It is far cheaper to build affordable housing in most parts of the country outside of London. I have looked at figures for the east Midlands, where it would be well under half the cost, and it is a factor. But it is a fact that successive Governments have not built enough. We recognise the need to build more affordable houses, which is why the housing White Paper will be ground-breaking—not to mix metaphors—as we tackle this problem going forward.
The Lord Bishop of St Albans
My Lords, in the financial year 2015-16, the Government’s own statistics show that just 6,550 homes for social rent were completed. That is the lowest number since records began and far below the just under 40,000 completed in the years 2010-11. Would the Minister agree with me that whatever the value of other forms of affordable tenure, only social rented housing is going to deal with the problem faced by the most disadvantaged communities? Will he further tell the House what the Government are doing to address this rapid decline in the provision of this form of housing?
Lord Bourne of Aberystwyth
My Lords, the right reverend Prelate is right to the extent that we need a balance with social housing. As I have indicated, the Autumn Statement has concentrated on ensuring that a balance of different tenures will be looked at. We recognise the role of social housing, which is vital. We recognise the role of affordable housing as well. On affordable housing more widely, of the 893,000 homes that have been built since April 2010, 313,000 were affordable and two-thirds of those were for affordable rent. However, the right reverend Prelate is right that social housing is also crucial.
Lord O'Shaughnessy (Con)
My Lords, the Government should be congratulated on doubling the amount of housing starts since the crash, but still not enough houses are being built. The cost of land is one issue but one of the other barriers is local residents’ concern about the look, feel and quality of design of new housing. What is my noble friend doing to ensure that these aesthetic considerations are at the centre of the Government’s housebuilding strategy?
Lord Bourne of Aberystwyth
My noble friend is right about starts, which are up considerably, particularly local authority starts. The number of local authority starts in 2014 was running at just under the level of the number of local authority houses built in the 13 years under the Labour Party, so we are getting council home starts right.
With regard to the issue he raises about design, it is undoubtedly a factor that people want to see designs that are aesthetically pleasing. I think self-build will help to contribute to that; the evidence from the Continent is that self-build, for obvious reasons, tends to be better. Perhaps counterintuitively, the modern prefabs are actually very attractive. I saw a poll in the Daily Mirror suggesting that even when they were called prefabs, support for them ran at 67%. So they too will help to better design homes, which helps the general agenda.
Digital Economy Bill
Historical Sexual Abuse in Football
(7 years, 4 months ago)
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Baroness Chisholm of Owlpen (Con)
My Lords, with the leave of the House, I shall now repeat as a Statement the response to an Urgent Question given in the other place by Karen Bradley, Secretary of State for DCMS. The Statement is as follows:
“Mr Speaker, nothing is more important than keeping children safe. Child sex abuse is an exceptionally vile crime; all of government take it very seriously indeed, and I know that this House does too. Children up and down the country are able to play football thanks to the dedication of thousands of adults, many of them volunteers, and the vast majority have no stain on their character. However, where people who work with children betray their trust, the effect is devastating.
I pay tribute to those who have summoned the courage to speak out. It is vital that they should know that their voices will be heard, whether they are speaking about historic crimes or anything that is happening today. And of course coaches, parents and indeed everyone has a duty of care to children, and must also speak out where they suspect abuse.
My department, the Home Office, the Department for Education and the Ministry of Justice all have responsibilities in this area. Recent allegations of sex abuse are currently an operational police matter, so you will understand that I cannot comment in detail, Mr Speaker. As soon as this news broke, I spoke to the Chair of the Football Association, Greg Clarke, and the Chief Executive of the Professional Footballers’ Association, Gordon Taylor. I made it very clear that the Government will support them in addressing these issues head on.
The NSPCC has set up a hotline, supported by the FA, which anyone can call if they want to talk to someone in confidence. This will help to build a picture of the potential scale of abuse, both historic and more recent, to inform next steps. The number is 0800 023 2642.
The FA has instructed independent leading counsel Kate Gallafent QC, an expert in child protection, to deal with its review of the allegations. The internal review will look at what the FA and clubs knew, and when, and what action was or should have been taken. Alongside that, the Child Protection in Sport Unit, which assists the FA in its safeguarding procedures, will carry out an independent audit of the FA’s practices. Today, my honourable friend the Minister for Sport will write to all national governing bodies to ask them to redouble their efforts to protect children who play their sports. I spoke this morning to Chief Constable Simon Bailey, the national police lead for child abuse, and we agreed that I will convene a meeting with him, the FA and others to discuss the situation.
It is important to turn to what measures we have in place today to prevent abuse. The Child Protection in Sport Unit was founded in 2001 to work with UK Sports Councils, national governing bodies, county sports partnerships and other organisations to help them to minimise the risk of child abuse during sporting activities. The unit helps organisations to identify adults who are a threat to children and young people, and to develop safeguarding knowledge and skills among all staff and volunteers. Since 2002, the Disclosure and Barring Service, previously the CRB, has provided a mechanism to request criminal record information relating to people working or volunteering with children.
The first duty of any Government is to protect their citizens, and the first duty of us all is to protect children”.
Lord Stevenson of Balmacara (Lab)
My Lords, I am very grateful to the Minister for repeating the Answer on this subject made in the other place. I should like her to be aware that we support what the Government are doing in this difficult time. I am sure that the whole House will want to pay tribute to the members of the Brazilian football team and all those who have lost their lives in the tragic plane crash earlier today. It shows that sport is universal. I am sure that the whole House also wants to record its thanks to former footballers who have shown unparalleled bravery in sharing their stories and bringing the awful scandal to our attention. Our thanks should also go to the Guardian and other newspapers which have helped bring out their stories.
This has all the makings of a major scandal. It is reported that six football clubs have been named by victims, more than 20 players have now come forward, five police forces across the country are opening investigations and FIFA is monitoring the situation closely. The NSPCC hotline to which the Minister referred had more than 50 calls in the first two hours of opening, and there are now 250 reported incidents. It is vital that all concerned do as much as they can to reassure parents that everything is being done that can be done. Let us remember that a good safeguarding system is in place and that all but a few coaches and volunteers have only the best interests of children at heart.
We welcome the FA’s announcement that Kate Gallafent QC will assist it in its investigations. Can the Minister confirm that this report will be published? We also want to make sure that the police have the resources and powers to ensure that all claims are fully investigated and that prosecutions take place where the evidence exists. Again, I should be grateful for the Minister’s confirmation that this will be put in place. As this scandal may not be restricted to football, can she confirm that the DCMS is looking across the sports sector to ensure that cases such as these do not take place more widely? As she hinted, we have a cross-party duty to protect our children and young adults, and I am sure that, on this, we can all agree.
Baroness Chisholm of Owlpen
My Lords, I thank the noble Lord for what he said and his support; this is very much a cross-party issue that we need to tackle. Of course, I also express my sympathies to the Brazilian team for the appalling crash. As the noble Lord said, the fact that we are so interested in it just shows how sport brings us all together. I also endorse the bravery of those people who have come forward. My goodness, it takes a lot to do so as an adult when this has happened to you as a child—particularly in football, which I feel has been a male-dominated sport. It must have taken an enormous amount of bravery for those 20 footballers to come out and be open about what had happened to them.
A far as I know, the report will be published, but I will have to go back and check that.
The noble Lord also asked what else we are doing from a wider viewpoint. Earlier this year, Ministers asked the noble Baroness, Lady Grey-Thompson, to carry out an independent review of the duty of care that sport owes to its participants. Her review covers a wide range of areas, including safeguarding. She is due to report back shortly to the Minister of Sport, and she has set up an independent group to support her in this that includes Anne Tiivas, chief executive of Child Protection in Sport Unit.
Lord Addington (LD)
My Lords, it is very good that we can echo on a cross-party basis the sentiments that have already been expressed here—and, indeed, the international support for that very unfortunate football team. Will the Minister give us an assurance that there will be a concentration on the one-to-one contact between coach and player, particularly when they are juniors, and how that is monitored? That will ensure that not only parents and participants but also potential coaching staff know what the correct boundaries are and what safeguards apply on both sides. Without them, we are in danger of doing considerable damage.
Baroness Chisholm of Owlpen
The noble Lord makes a very good point. That is indeed going to be part of the reviews that are taking place. No stone will be unturned, and we are going to learn a lot of lessons along the way. As the noble Lord said, that is a very important point, and I know that it will be taken back and looked into.
Lord Laming (CB)
My Lords, the Minister will recall that only last week Her Majesty’s Inspectorate of Constabulary published a very challenging and frankly thoroughly dispiriting report on the failure of the Metropolitan Police to protect children vulnerable to sexual abuse. I cannot believe that the Metropolitan Police is alone in needing to look again at its procedures and practices. Would she agree that there are no grounds for complacency in any of this business and that the review needs to be very tough-minded and sharp?
Baroness Chisholm of Owlpen
The noble Lord is absolutely right. I know that the Secretary of State talked to Simon Bailey, who is the national policy policing lead for ACPO. Each individual is going to have a single police lead. Of course, these will be shared—in fact, five police forces will be engaged in this. As I said, Simon Bailey is very much on this, and is talking to the Secretary of State. I think that that is the way forward.
Lord Watts (Lab)
My Lords, does the Minister agree that we need to have the highest possible standards of child protection in sport, but this review must not undermine how it is done by volunteers with children on a weekly basis? The last thing that we want to see is adults removing themselves from this position.
Baroness Chisholm of Owlpen
That is so important. We need to have appropriate, robust safeguards in place to make sure that, as parents and grandparents, we can feel safe that, when our children go and play sport, they are properly protected. But equally, as the Secretary of State said in her Statement, all across the country, every day, there are volunteers who are doing magnificent work with children. Of course, we hope that this is a minority—we do not know until we look into it—but the majority of volunteers are doing a marvellous job with children, encouraging them to take part in sport, get involved with other children and take exercise. Those people must not be forgotten.
Lord Clark of Windermere (Lab)
I declare an interest as a non-executive director of Carlisle Football Club. Like most football clubs at the lower level, we think that we are clear, but none of us is complacent, and the Football League has been very helpful in providing information. We tend to know the youngsters who play for us, but it is important that any inquiry looks at the Premier League, which has tens of thousands of young people going for training six days a week. I suspect that those are the people who are most susceptible today, and I hope that we look at the activity of the Premier League.
Baroness Chisholm of Owlpen
The noble Lord makes a very good point. I understand that it will be looked into as well.
Lord Faulkner of Worcester (Lab)
I too declare an unpaid interest as a vice-president of the National League, formerly known as the Football Conference. Does the Minister agree that one of the most worrying aspects of these dreadful allegations is the way that they were ignored by the football authorities when they were first made and that it is only as a result of the press coverage in the last few days that they have come to light? The Minister referred to other sports. Do the Government have any information about whether similar allegations are likely to be forthcoming concerning those sports? Will the helpline to which the Statement referred—its announcement is very welcome—be extended to help other people who may have experienced the same sort of event?
Baroness Chisholm of Owlpen
The normal contact for someone with an allegation is the police. Since this has come out, 250 people have already contacted the police in England and Wales. The Secretary of State’s letter went out to all sports bodies, telling them that they need to look at their governance to make sure they have the appropriate safeguards in place. The governance code which came out in October covers these points. It will be important for sports bodies to make sure that they are complying with the things the noble Lord mentioned: if they do not, they will not get funding in future.
Lord Paddick (LD)
Does the Minister agree that it is important to make a distinction between professional coaches, who have such power over young people in terms of determining their future in the sport, and volunteers who do not have such a degree of influence?
Baroness Chisholm of Owlpen
Could the noble Lord repeat the beginning of his question? I had somebody speaking in my ear.
Lord Paddick
Does the Minister agree that a distinction needs to be made between professional coaches, who have a considerable amount of power over young people in terms of determining their future in the sport, and volunteers who do not have such influence?
Baroness Chisholm of Owlpen
The noble Lord makes a good point. That is one of the things that will be covered by the FA when it has its inquiry.
Corporate Governance
Lord Henley (Con)
My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy in another place. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement about the Government’s corporate governance Green Paper which was published earlier today.
Successful businesses are the backbone of our society. They are the reason why we are the fifth largest economy in the world. They create employment opportunities, and they contribute significantly to funding our country’s public services. There are many reasons why we are a reliable place to do business: our legal system and our framework of company law have long been admired around the world. This Government are proud of our thriving industries, and we want to build on these strengths and enhance our competitiveness even further.
One of our biggest strengths is our record on corporate governance, which is already highly regarded around the world, especially for its combination of flexibility and high standards. But despite this record, our strong reputation can be maintained only if government and business regularly review and upgrade those standards. We want to guarantee not only that Britain is an excellent place to do business, but that it is also where business is done best.
I am privileged, in my position as Secretary of State, to meet regularly not only those who run successful businesses, but their employees and customers, too. I have spoken with company heads about how their corporate governance is an integral part of their success. It inspires confidence among investors, loyalty among employees and trust among customers. Ordinary working people who work hard for their living deserve to have confidence that businesses act responsibly and fairly. When an individual business or businesses lose the confidence of the public, faith in business generally diminishes, to the detriment of us all.
There is no conflict between good corporate governance and profitability: indeed, poor corporate governance is usually the prelude to financial disaster. This Government are unequivocally and unashamedly pro-business, but in doing so we hold business to a high standard. It is right to ask business to play its part in building an economy that works for everyone. Over the last few years, there have been a number of proposals, from both the Government and those representing business, to update our corporate governance framework. In some cases these have been made in response to concerns about the actions of a very small number of businesses which have undermined the reputation of British business generally, whose standards are among the highest in the world. Today, we have launched a discussion paper on how corporate governance could be reformed. I will be placing a copy of the Green Paper in the Libraries of both House.
The paper considers three aspects. First, it asks for opinions on shareholder influence on executive pay. Members of the House will be aware that executive pay has grown much faster over the last two decades than pay generally and at times is not in line with corporate performance. The document seeks views on this issue, and in particular on strengthening shareholder voting rights with a view to making them binding, encouraging shareholder engagement with executive pay and promoting greater transparency over pay.
Secondly, the document asks whether there are measures that could increase the connection between boards of directors and employees and customers. It asks whether the establishment of advisory panels and the appointment of designated non-executive directors to take formal responsibility for articulating employee, customer and other perspectives is the right way forward. But we are not prescribing how this should be done; it would be whatever is most appropriate for their business.
Thirdly, our discussion paper asks for views on whether some of the features of corporate governance that have served us well in our listed companies should be extended to the largest privately held companies.
These are issues which are about competitiveness, and creating the right conditions for investment, as much as they are issues about fairness. This Green Paper is designed to frame this discussion so that we can move quickly to consider which changes are appropriate at this time. We want to hear from as many people as possible about how best we can increase confidence in big business and achieve better outcomes for our economy. This does not mean the imposition of regulation when other avenues are open. One of the strengths of our system of corporate governance has been the use of non-legislative standards adopted by business itself.
We are determined to make Britain one of the best places in the world to work and to carry out business. This review will help us achieve that aim, and the views of businesses, investors, employees, consumers and others with an interest in successful business are warmly welcomed. I commend the Statement to the House”.
My Lords, that concludes the Statement.
Lord Mendelsohn (Lab)
My Lords, we welcome the Green Paper on corporate governance. I do not think there is anyone who does not recognise the mood of the country given that, since the financial crisis, we have faced growing disparities and unfairness that are neither justifiable nor economically efficient. We also have to recognise that we have long delayed any serious action to deal with chronic issues such as short-termism, weak R&D investment, the lack of large UK businesses acquiring overseas and the problems with productivity. This is a vital debate and the Green Paper should be welcomed as an opportunity to start the long required process of change, not end it. However, this Green Paper will have as much impact on changing the issues at hand as a stick would have in changing the course of a river: it is the exercise of power without purpose and policy development designed for press releases, not practical impact.
Business and business people are also crying out for change, be they investment managers, entrepreneurs, investors or corporate leaders. However, this measure does little but protect the status quo. To set the debate in terms of shareholders’ influence on executive pay is too limited, not least when a huge underlying problem in our country concerns the investment industry. Its pay, performance and methods of charging are, in and of themselves, part of the problem. It is also instructive that BlackRock, for example, is now being criticised by its own shareholders and investors for voting against positive environmental policies despite claiming to adhere to them. Shareholders are arguably less of a problem than the boards which fail to address the normally compliant shareholders’ voting patterns when they vote against executive pay.
To extend the public company governance requirements to private companies is rubbernecking on media coverage and not a serious analysis even of the event that it purports to address. Its obvious weakness will be starkly laid out in the attempts to draft legislation, if it ever gets that far. As for the watering down of the commitment to place workers on boards, that is an illustration of the limited thinking about the effectiveness of governance on public companies. Advisory panels and non-executive advocates—this is thin stuff. No wonder we have ended up with a debate on publishing pay ratios to do with remuneration—a suggestion so limited that it does not deserve the controversy that it has generated.
The chronic problem is that the current arrangements for corporate governance enshrined in the corporate code is the problem. All you have to do is read the few paragraphs on relations with shareholders, which does not even muster a page, to understand the nature of the problem. This Green Paper is not enough. We have to admit that the road started by Cadbury has gone too far in the wrong direction and needs to be addressed.
The balance between shareholders, workers and customers has drifted too far away from the interests of the country, and nothing but a complete overhaul and review of the combined code will deal with it. The 2009 Walker review was, and should have been seen as, the drink in the last chance saloon. The glass is now empty. Will the Minister accept that the Green Paper should accept the debate on all aspects, including the code itself? Does the Minister also agree that the code itself should not be seen as the gold standard to set against private companies, and that to extend it to all private companies will require its own evaluation, given the very different nature of what a private company can be?
Executive remuneration is out of control—a point recognised in the Minister’s Statement. Will he please tell us whether this Green Paper will rein back some of the completely unjustified leaps in executive pay? Does he agree that pay itself is an example of the weakness of a second-rate code being mixed with transparency? The principal reason is that what is known as the “ratchet effect” has occurred. Remuneration consultants present a company with data comparing their executives’ pay—now that it is fully published—with others. They ask: “Does the company want to be seen as a company in the top quartiles—the top performers and payers; those who are most attractive?”. Of course, every director will want to appear in the top one or two quartiles of pay, but for every director who is inserted in the top half, another must fall to the bottom—a fact that will soon be drawn to their attention by remuneration consultants. So the ratchet clicks over and creates a natural inflationary effect, with no relationship to pay, performance or anything to do with the company. This has become a chronic problem. I urge every Member of this House to look at the reports of company accounts of companies that declare that they are in the upper quartiles. That tells you the story of unrelenting pay advances with no justification.
Remuneration consultants have done an appalling job and a great disservice to the UK economy. They represent a prophylactic for weak and lazy boards. As the noble Lord, Lord Myners, the former Trade Minister said,
“They allow the remuneration committee to say ‘this is what the consultants say, so we should do it’”.
Non-execs frequently complain that the report they have seen has been redrafted to the advantage of the executives by the executives with the remuneration advisers. Will the Minister recognise the problem with remuneration consultants and confirm that their role will be the subject of a review, whether in this Green Paper or at any other time?
It is not as if we do not have enough challenges ahead. Yes, the Government should be credited for starting a debate, but it does no credit to set it off in a manner that just feeds media headlines and is poor policy. It will inevitably lead to thin and limited proposals like this and, rather like the non-appearance of the Small Business Commissioner tackling late payments, will be delayed as the Government do not listen to the sensible suggestions, which I am sure will come from all sides of the House, that will make this work.
This Green Paper is a new type of dangerous dogs debate. We should be wary of the bark being worse than the bite.
Lord Foster of Bath (LD)
My Lords, we on these Benches acknowledge that we have many excellent businesses with high standards of corporate governance. However, following the appalling cases of BHS and Sports Direct, it was hardly surprising that the Investment Association and many others said that big business needed to rebuild trust. When the public see that executive pay has grown much faster than employee pay, with FTSE 100 CEOs earning 128 times more than average pay, they too want reform.
This Statement and the accompanying Green Paper offer some proposals that will help rebuild trust, and we offer a cautious welcome to them. They include strengthening shareholder voting rights and requiring larger, privately owned businesses to meet higher corporate governance and reporting standards. I single out for special mention the welcome proposal for large companies to have a dedicated non-executive director on the board to give small suppliers a voice, improve prompt payment and challenge supply-chain bullying. This measure is vital to help our SMEs and start-ups.
However, we also have disappointments. When the Prime Minister said,
“we’re going to have not just consumers represented on company boards, but workers as well”,
it was widely believed that she meant that elected employees would be on boards, emulating the practice in many countries and in many of our own successful start-up businesses, but now we learn that she has bowed to industry pressure. So I want to ask the Minister a very clear question. Will the proposed representatives of employees who serve on boards in the future be elected by the workforce or just be allocated the job from among existing board members? After all, the public have a right to choose their representatives in Parliament, so should employees not have the right to choose their board representatives? Better still, why do the Government not do what more than 60% of the public want, which is to put workers on boards?
Why is there nothing in this Statement or the Green Paper about increasing board diversity? Only three weeks ago, the Business Minister, Margot James, said:
“It is not right that boardrooms in 2016 can still be predominantly male and exclusively white”.
What plans do the Government have to ensure a diversity of voices on boards?
Although we welcome the Government’s intention to consult on improving the transparency of executive pay, we acknowledge that they are right to accept that a simple ratio of CEO pay to median salary could produce misleading results. Does the Minister agree that, as part of avoiding that problem, there would be considerable merit in ensuring that companies report on the total remuneration of both executives and employees? Is it not important that companies that provide, for example, enhanced childcare facilities or in-work training for employees, have that acknowledged and thereby, it is hoped, encourage others to do the same?
Reference is made in the Statement to the role of shareholder influence on executive pay. Does the Minister agree that there would be a real impact on this from a massive expansion of employee share ownership—not the disastrous George Osborne model, where shares are traded for basic employment rights, but with shares forming part of everyday remuneration for all workers, not just those at the top—giving everyone a stake in the company and a vote on how to run it?
Similarly, why are there not proposals to encourage more companies to mutualise? Some of the best examples of British companies—John Lewis being the obvious one—are run on alternative business models such as the mutual. Does the Minister agree that there is great merit in having a diversity of types of companies, rather than simply relying on listed and private company models?
The vast majority of businesses in this country act responsibly, but if we want to restore faith in business we should go even further. We should put workers on the boards, as happens in other countries, improve share ownership schemes and ensure that support made available to workers, such as training and skill development, is highlighted, alongside information on pay, as part of any reporting system.
Lord Henley
My Lords, I start by thanking both the noble Lord, Lord Mendelsohn, for his initial welcome for the Green Paper—he seemed to go off a bit after that when he compared this to a dangerous dogs debate—and the possibly slightly more generous welcome we heard from the noble Lord, Lord Foster. However, that too went a bit off as he went through his various disappointments. I hope I can deal with a number of those points in my response.
The first thing I must make absolutely clear to both noble Lords is that this is a Green Paper and therefore it is out for consultation. We are not, at this stage, telling people what our plans are. We are looking for views from noble Lords, including the noble Lords, Lord Mendelsohn and Lord Foster, and we are reaching out to people throughout the country to give us their views on how we should proceed It is important to remember that this is collaborative in its intent. We are not seeking to impose solutions. As I said, we are seeking consultation and high standards with low burdens.
The noble Lord, Lord Mendelsohn, claimed that the proposals have been designed purely to protect the status quo and watered down from earlier ideas. I completely refute that. As I said, this is a Green Paper designed to seek the views of noble Lords and people throughout the country as to what they want to do. We want to make this country one of the best places in the world to work. We want to invest and do business, and to seek the means to continue to have the right corporate governance framework, as is currently admired across the world—we have to look only at the amount of inward investment into this country to see evidence of that. We also seek further improvements that will receive the support of industry and of all others, including trade unions, who might have an interest in this.
The noble Lord, Lord Foster, asked what we are going to do to improve board diversity. It is not for us to impose solutions but we will certainly support the Hampton-Alexander review and its call to increase gender diversity in the boardroom—something I would like to see more of from boards. The noble Lord also mentioned small suppliers. It is very important that, as a constituency, small suppliers, which sometimes have problems with larger companies, be appropriately consulted and their voice better heard, whether in board decision-making or other fields.
The range of the consultation is obviously important and, as I said, we want to reach out to and hear the views of all concerned. For that reason, the Green Paper will focus on ensuring that executive pay is properly aligned to long-term performance, giving a greater voice to employees and consumers in the boardroom, and raising the bar for governance standards in the largest companies, whether privately owned or otherwise. Obviously, there will be other opportunities for noble Lords and others to put their views forward as we discuss the Green Paper. The consultation period will continue until 17 February next year. I will certainly welcome the views put forward by both noble Lords who have spoken and others, and I am sure the department will as well.
Lord Lea of Crondall (Lab)
My Lords, the noble Lord argued that the remark made by my noble friend Lord Mendelsohn could be refuted on the grounds that there had been no back-pedalling by the Prime Minister since her original speech on this subject. But you have only to read her speech about putting workers on the board, and then look at the Green Paper, to find that my noble friend’s statement is absolutely accurate. Perhaps the noble Lord would consider that.
I have two questions. One arises from the complacent tone of the first section of the Statement, which states that,
“our framework of company law has long been admired around the world”.
That may have been true 200 years ago. It was certainly in the Victorian era that we put together the basis of company law that exists to this day—which is that the company is the shareholders. It has nothing to do with other stakeholders. Is the Minister aware that the issue that arises from that is that there is no priority for the involvement of the workforce in the policy-making of the company?
The Minister referred to competitiveness and so forth. In Scandinavia, where there are board representatives and works councils, people go to these companies when there is a merger or something and the first question—a friend of mine had this experience—of the chairman of the works council is, “Mr Struthers, if you take over our company, how will that improve our world market share?” When he got home he said, “No one has ever asked me that question in this company”. So the value of the involvement of workers’ representatives is not the flavour of this Green Paper. Will the Minister acknowledge that that is a defect in it?
Lord Henley
My Lords, I completely reject what the noble Lord, Lord Lea, said. He said that that is not the flavour of this Green Paper. But the Green Paper makes it quite clear that a number of options are being put forward. We are seeking views on a range of options that companies could take up to improve the connection between the boardroom and the workforce and other interests. It looks at the idea of creating advisory panels and of the designation of non-executive directors to take formal responsibility for articulating a particular perspective. It looks at appointing more individual representatives at board level to take forward a particular perspective. It looks at strengthening reporting requirements around the duties of company directors to have regard to the interests of employees, customers and others. It is quite clear that we are inviting views on all subjects. I will take note of what the noble Lord, Lord Lea, said—as will others, I am sure. That is the point of a Green Paper and that is the point of the Green Paper before us.
Lord Bilimoria (CB)
My Lords, it was argued that the regulation we had before the financial crisis was light touch and should have been the right touch. On the other hand, with corporate governance, starting with Cadbury, Greenbury and Hampel and leading to the combined code and Higgs, the UK is respected around the world for our excellent governance, which is principle based. But some of the rhetoric that came from the Prime Minister and the Home Secretary at the Conservative Party conference appeared to be anti-business in terms of tarring all business with the same brush as some of the bad eggs that sadly exist. Surely we should be working towards increasing our principles-based corporate governance system and increasing transparency. When it comes to disclosing workers’ pay, will the Minister acknowledge that it is not as simple as disclosing ratios, because the ratio between the chief executive and the lowest paid in a supermarket is very different from that in an investment bank. The original reason for the Cadbury code was that companies faced with minimum standards in law would just comply with the law and not the spirit of the rules.
Lord Henley
My Lords, there is much that I can agree with in the noble Lord’s response to the Green Paper. He is right to say that we should keep a light touch in these matters and that there are inherent dangers in any statutory approach that one might take in that people then feel that they must simply obey the law and nothing but the law and go no further. It is right therefore that one should offer guidance and encouragement to take the right approach. That is why I sought to make it quite clear in my initial response that we are looking for a collaborative approach as we move along so that all parties, in business or wherever, feel that they can play a part in putting this together and thus achieve the right level of guidance in a code of corporate governance that everyone feels they can live with. As I say, I agree with much of what the noble Lord said.
Lord Deben (Con)
My Lords, is my noble friend aware that the payments problem is much more urgent than any White Paper? Large companies are now pushing back the dates by which they pay smaller companies and the problem has never been as bad as it is today. Will the Government look at that separately from the Green Paper, because in the meantime many companies will go to the wall if we do not?
Lord Henley
I take it that my noble friend is referring to the problem relating to payments made by big companies to their suppliers down the line. He is right to draw attention to this issue and it is certainly something that I would want to pass on to my right honourable friend because, as he says, it can be a cause of major concern for those in the supply chain if they are not being paid in good time. As I say, I will pass that on.
Lord Puttnam (Lab)
My Lords, the Minister said that the Government were looking for suggestions. As someone who has been the chair of the remuneration committee of a number of public companies, let me say that it is a very lonely place to be. A great deal could be done by the Government to align more clearly and unambiguously the responsibilities of the remuneration committee with the interests of shareholders. It may look simple—but, believe me, if you are in the hot seat trying to deal with these situations, it can be very difficult indeed. It would be very helpful to be able to rely on statute so that the pressures that need to be brought to bear could be brought to bear.
Lord Henley
I think that the noble Lord has it absolutely right when he says that being the chair of the remuneration committee can be a lonely place to be. That is something which all those in business, and the rest of the board, ought to take into account when listening to the chair of that committee.
Baroness Donaghy (Lab)
My Lords, I welcome the Green Paper because it gives us the opportunity to discuss some very important issues indeed. I equally welcome the fact that the Minister mentioned trade unions in his answer to one question. Only one mention is made of trade unions in the Green Paper. I would like to ask for an assurance from the noble Lord that, given that most successful companies in the UK are highly unionised with skilled workers, they will recognise the importance of the trade union contribution to all the subjects contained in the Green Paper. Will the Government ensure that trade union views are taken fully into consideration?
Lord Henley
My Lords, I think that I can give that assurance to the noble Baroness. I can also say that, as far as I am aware, my right honourable friend has had discussions with the head of the TUC and others, and certainly those discussions will continue over the period of the consultation relating to this Green Paper.
The Lord Bishop of St Albans
My Lords, I, too, welcome the Statement and the Green Paper because we urgently need some fresh thinking in this area. Those of us who have been following the issues concerning banking standards can see that it is really quite complex. There is a delicate and difficult relationship between legal regulation on the one hand and values and social responsibility on the other. We face a number of problems. We have a disconnect between shareholders and corporations that has become ever more complex and further apart. How can we encourage shareholder engagement in long-term, sustainable business rather than short-term gains? How are we going to align more closely the remuneration of senior management to reward long-term growth and sustainability, and how can we reboot some of the social responsibility which is fundamental to this long-term success? The Statement mentions our legal system, our framework of company law and so on, and of course many of the multinationals rely on our social structures, including our education and health services. They take advantage of them but do not necessarily respond by taking their full responsibilities. I hope that the Green Paper will spark a wider debate about values as well as about law and regulation.
Lord Henley
I am very grateful indeed for the right reverend Prelate’s intervention. I am grateful that he recognises that this is a Green Paper and is therefore designed to initiate discussion on these matters. I do not know whether it will lead on to a White Paper—it might or might not—but it will certainly allow the Government to collect the views of all those who have an interest in these matters. The very idea that it is a Green Paper is the most important aspect of it. That is why we welcome views from the right reverend Prelate on this matter and from all sides of the House—even from the noble Lord, Lord Mendelsohn, and others. We will take note of all those as this process goes forward.
Autumn Statement: Economy
Lord Young of Cookham
To move that this House takes note of the economy in the light of the Autumn Statement.
Lord Young of Cookham (Con)
My Lords, I preface the debate with a personal reflection. The last time I spoke for the Government in a set-piece economic debate was more than 20 years ago. As Financial Secretary I wound up a debate in the other place on the unified Budget, which is what we had in those days. In the Speaker’s Chair were the noble Baroness, Lady Boothroyd, and then my noble friends Lady Fookes and Lord Naseby. Among the contributors to that debate were the Lord Speaker, my noble friends Lord Jopling and Lord Carrington of Fulham, my pair, the noble Lord, Lord Reid, and winding up for the Opposition was my then shadow, the noble Lord, Lord Darling.
I fear my peroration on that occasion contained exactly the sort of partisan language that this House deplores and which made me blush when I reread it:
“What this country now wants are solutions and not sound bites … policies and not pantomime … remedies and not rhetoric … goals and not gimmicks. What the people will get from the Conservatives are remedies, goals, policies and solutions. All they will get from the Opposition are sound bites, pantomime, rhetoric and gimmicks”.—[Official Report, Commons, 5/12/1994; col. 116.]
The young Treasury special adviser who helped Ministers craft their diatribes in those days was that current upholder of political impartiality, Speaker John Bercow. I am a reformed man, and I promise to do better at the end of this debate.
In the short time I have been in this House, I have been struck again and again by the expertise of those who speak in these economic debates. I know that noble Lords will have familiarised themselves with the details of both the OBR forecasts and the Autumn Statement made by the Chancellor. I do not propose a full run-through of the information and measures contained in it, but perhaps it would be helpful briefly to frame today’s debate by outlining some of its key themes, namely our fiscal discipline, our work to raise British productivity, our commitment to providing a competitive environment for business, and our determination to build an economy that works for all.
To begin, the Government remain resolute about maintaining fiscal discipline. This underpins our approach to both upholding market confidence in our economy and securing strong and stable public finances. Noble Lords will have studied the sobering forecasts from the OBR. These are, of course, independent forecasts, and the creation of the OBR in 2010 was an important step in enhancing the credibility and transparency of economic and fiscal forecasts in the UK. They recognise the uncertainty of this transitional period for the UK and predict a period of slower growth in consequence, combined with lower tax revenues.
It is in the light of these circumstances that we no longer seek to deliver a surplus in 2019-20. Nevertheless, we are continuing along the course that has already seen the deficit reduce by almost two-thirds over the last six years. The new draft charter for budget responsibility, which Parliament will need to approve, sets out that public finances are to be returned to balance as soon as possible in the next Parliament. By the end of this Parliament, cyclically adjusted borrowing must be below 2% of GDP and public sector net debt as a share of GDP must be falling. Welfare spending must also be capped by the Government and monitored by the OBR. It is a robust fiscal framework.
Just as we address the need to bring down the deficit, reduce debt and live within our means, so we must address a long-standing issue for our economy—one that we have examined on many occasions in this House, not least in September’s Economic Affairs Committee hearing. It is the need to raise UK productivity. Some of the statistics set out last Wednesday by my right honourable friend the Chancellor of the Exchequer bear repeating, showing as they do the scale of the challenge before us.
Our productivity is 30 percentage points behind countries such as the US and Germany and we lag other major economies like France and Italy too. So this Autumn Statement made an important contribution to raising our productivity by prioritising high-value investment in our infrastructure and innovation. One of the central announcements was the new national productivity investment fund, with £23 billion of extra spending. This additional capital has been well received in recent days. Indeed, last week the director of the IFS, Paul Johnson, said that this will take public sector net investment to well above the average of the last 30 years. To those who have said that this is a re-announcement of previous commitments I make it clear that this is indeed new funding—additional borrowing enabled by our record of fiscal responsibility.
This funding will be targeted at projects of high value to our economy that will deliver more opportunities and higher living standards for working people: improving the transport networks on which British people and businesses rely, establishing the digital infrastructure we need to support our growth and investing further in our research and development capacity. It will also contribute to meeting the long-standing challenge to deliver more homes, something this House explored in depth in the July report of the Economic Affairs Committee. Since its publication, the Government have launched the £3 billion homebuilding fund to unlock more than 200,000 houses. At the Autumn Statement last week, we announced that we will go further and invest an additional £5.3 billion in housing, including through investing in infrastructure to unlock land for homes and through additional investment in affordable housing.
We also announced that the Government will relax restrictions on affordable housing grant funding to allow a wider variety of tenures to be delivered. This responds directly to the committee’s recommendation that the Government should deliver a broader range of tenures, including homes for affordable rent. Increasing the supply of homes through measures such as these is something that my right honourable friend the Communities Secretary will be returning to in his forthcoming housing White Paper. That will also pick up on further themes of the Economic Affairs Committee report, including reforms to planning and the Government’s ambition for housing.
Let me turn to the third theme I outlined, which is our focus on not only making the UK an exceptional place to do business but also—and this is particularly pertinent given the period of adjustment we have entered into—providing additional certainty for our businesses. That is why we have recommitted to the business tax road map we have already set out. It means a tax regime for our businesses which is highly competitive: the often-cited example of corporation tax falling to 17% by 2020 is just one illustration of that. Our move to a single main fiscal event a year will mean a more stable tax environment for businesses as well as more time for them to prepare for the new tax year. We have already heard a number of businesses express the strongest support for this change.
There were, of course, a variety of other measures to support British businesses, but I will single out just two: the £400 million new investment in venture capital through the British Business Bank to help innovative businesses to scale up; and the doubling of the support that UK Export Finance can provide to exporters. This again reflects our determination to address the current account deficit we have so frequently discussed here.
The last theme I want to highlight from the Autumn Statement is that of making sure that people across our society share in the prosperity that economic growth brings to the country. Despite the forecasts of the OBR and despite the pressures we face on the public finances, this was an Autumn Statement that took further action to support people in their day-to-day lives and help their money go further. We confirmed, for example, that we will raise the personal allowance to £12,500 by the end of this Parliament, by which point it will have increased by more than 90% since 2010, taking millions of the lowest paid out of income tax altogether. We have also introduced a new savings bond, frozen fuel duty and banned letting agents’ charging fees for tenants.
There was an increase to the national living wage, which we introduced in April at £7.20 an hour to help over a million of the lowest-paid people. Last week’s announcement of its increase to £7.50 from April next year means the equivalent of a £500 a year pay rise for a full-time worker. We also helped around 3 million households by reducing the universal credit taper, which will further strengthen the incentives for people to increase the number of hours they work and earn their way out of financial insecurity and welfare dependency. Universal credit will be a distinct improvement on the previous system, tackling, as it will, the old issue whereby some people working more hours did not always end up with more income in their pockets. That focus on getting more people into work and supporting them to increase their earnings will remain a priority for this Government.
The employment rate has been growing faster in the UK since 2010 than in any other G7 country. In that period, unemployment has also fallen by 906,000 and wage growth has now outstripped inflation for two full years—the longest period of real wage growth since before the recession. It is also worth noting the OBR’s forecasts of wage growth of over 3% per annum from 2019 onwards, and real wage growth in every year of its forecast. It is also predicting that by 2021, living standards will be 2.8% higher than they are today.
Protecting and promoting jobs is a clear path to creating a sustained rise in living standards. Although employment is a key pillar of the Government’s economic priorities, it is of course only one part of building an economy that works for our entire society, including those who cannot or no longer work. We heard confirmation last week that there are no plans to introduce further welfare savings measures in this Parliament, beyond those already announced, and we continue to protect the most vulnerable disabled people by exempting disability benefits from the uprating freeze and benefit cap, with spending on disability benefits higher than in 2010 in every year to 2020. We will meet our commitments to pensioners set out for this Parliament. We should note that there are 100,000 fewer pensioners in relative poverty since 2010.
Just recently, in the debate secured by my noble friend Lady McIntosh, I outlined some heartening signs of the resilience of the British economy over the past few months. I pointed to the smooth functioning of the financial markets, our near-record employment rate and strong retail sales. Friday’s estimates from the ONS also suggest solid growth in household consumption of 0.7% in the three months following the referendum. I also pointed to the huge votes of confidence we have seen from investors into this country such as SoftBank, GlaxoSmithKline, Nissan, Jaguar Land Rover, Apple, Facebook and Google. These are all reflections of some of the fundamental strengths of our economy.
No one can deny that we face a period of uncertainty as we negotiate our departure from the EU but we are in a strong position to meet any challenges ahead, as a result of the action the Government have taken since 2010. We will continue this approach, to support the well-being and prosperity of the British people, by steadying our public finances, backing our businesses to drive up growth and investing in a bright future for Britain. I beg to move.
Lord Livermore (Lab)
My Lords, this Autumn Statement was a turning point for the Government. It downgraded forecasts, abandoned targets, revealed an economy in decline and, of course, was the first instalment of the bill we will all have to pay for leaving the European Union. Just two months ago, the Chancellor of the Exchequer told the Conservative Party conference that the British people did not vote on 23 June to make themselves poorer, yet last week in his Autumn Statement he set out how Britain and its people will indeed be poorer as a direct result of the outcome of the referendum. Growth and productivity will be lower. Borrowing and inflation will be higher. Wages will stagnate and living standards will fall.
The independent Office for Budget Responsibility set it out in detail. The forecast for growth next year has been cut from 2.2% to 1.4%. Over the next five years, borrowing will rise by £58.7 billion as a direct result of Brexit—a cost of £226 million a week—and total extra borrowing will be even higher at £122 billion. Debt as a proportion of GDP will climb to over 90% in 2017, reaching almost £2 trillion in 2020. By that time, the economy will be 2.4 percentage points—or £26 billion—smaller than it would have been were we not leaving the European Union.
This is not even short-term pain for long-term gain. Our economy will be weaker in the long term as well. The OBR states that,
“the referendum result and forthcoming … negotiations have generated uncertainty for firms that will lead to some investment being postponed or cancelled”.
As a result, the business investment forecast has been revised down by 5% this year and 6% next year. The OBR goes on to warn that the level of investment is expected to remain permanently lower, slowing the productive potential of the economy. It yet again revised down Britain’s productivity growth to just 1.6%.
At this time of huge challenge and change for the British economy, the question for the Government in the Autumn Statement and in the months to come is whether they are able to respond in the national interest. It is the most important question any Government have faced for a generation and as they address it, I would set the Government three tests. First, are they doing all that they can to minimise any further harm to growth and jobs? Secondly, are they advancing the interests of the whole of society, promoting fairness and protecting the living standards of all? Thirdly, do they begin to restore faith in our politics after the shock of the referendum by honouring the promises made to the British people?
To meet the first test—to minimise further harm to our economy—a Government acting in the national interest would immediately make a firm commitment to remaining a member of the single market. Ensuring that businesses are able to continue to trade on the same terms as they do now has consistently been shown to be the least damaging future arrangement, offering the greatest opportunities for growth. Already, the Autumn Statement sees lower import and export growth for the next 10 years. Failure to remain in the single market would therefore be devastating to Britain’s future prosperity. Yet when the OBR asked the Government to provide details of their preferred post-Brexit trading relationship, they were unable to do so. Like the rest of us, the OBR has been left in the dark, given no reason to believe that a future strategy even exists. In failing to commit to membership of the single market and signalling that they favour instead an extreme hard Brexit, the Government are failing this first crucial test. The perception arises that they are acting not in the national interest but in a narrow party interest, more concerned with the needs of their parliamentary majority than the economic needs of the nation.
This same narrow interest seems to be driving the Government’s determination to cut immigration even at the expense of future growth, jobs and living standards, so it is welcome that the Chancellor, in the Autumn Statement, put into the public domain for the first time the cost to the economy of doing so. He revealed that the UK would need to borrow an additional £16 billion by 2020 to make up for the reduced tax take caused by falling migration, with a further cost of £8 billion every year thereafter. Perhaps having these costs in the public domain might begin to raise the standard of debate in this country about immigration, which has become increasingly ill-informed and ugly. Perhaps it might cause those who are pushing us relentlessly towards an ever more anti-immigration position to reconsider. Perhaps it might even halt the spread of the self-harming and increasingly poisonous anti-immigration rhetoric which, having once been confined to the far right of politics, is now spreading across the political spectrum—including, regrettably, into elements of my own party. But perhaps I say this more in hope than in expectation.
As I said earlier, a Government acting in the national interest would advance the interests of the whole of society, promoting fairness and protecting the living standards of all. This is my second test for the Brexit economy. We should have been heartened to hear so much from the Government and the Prime Minister about their concern for working people who are struggling to make ends meet but the Autumn Statement shows us the true reality: household real incomes will fall next year, as inflation rises. Unemployment will rise and the fall in the value of sterling will increase the bills that British families have to pay. However, they will not have much to pay them with. According to the Resolution Foundation, average incomes will now rise over the next five years at less than half the rate that they did in the last Parliament. Average earnings will now be £830 a year lower than expected by 2020.
The Institute for Fiscal Studies has calculated that real wages will still be below their 2008 levels in 2021. To quote its director:
“One cannot stress enough how dreadful that is. More than a decade without real earnings growth. We have … not seen a period remotely like it in the last 70 years”.
The Government are failing the second test too. By their actions and because of their values, they have shown that they cannot govern for all in society. For all their words, their chief concern can never be for the working people of this country. We see that once again in this Autumn Statement, for who will pay the price of the deteriorating Brexit economy? Once again, as the Government’s own distributional analysis shows, the poorest will pay the heaviest price, with the entire bottom third of the income distribution seeing their incomes fall.
My third test asks whether the Autumn Statement honours the promises made to the British people and, in so doing, begins to restore faith in our democracy. The previous Chancellor of the Exchequer argued, convincingly, that a fiscal straitjacket was necessary to maintain economic and financial confidence. His decision was that public services and struggling families should wear the tightest of straitjackets. This argument secured victory at the past two general elections, when we were told that reducing debt and eliminating the deficit were the most important challenges facing our nation, but not anymore. In this Autumn Statement we have discovered that all these promises were for nothing and that all the sacrifices made by working people in their living standards and their public services were in vain. After six wasted years, people are poorer and our public services are underfunded, but debt levels are even higher than where they began. All the hard-won gains in the public finances have been thrown away, together with the Government’s old fiscal rules. The mandate won by this Government scarcely 18 months ago has been trumped by Brexit. All three of the fiscal rules they set since 2015 have already been either missed or abandoned and, conveniently, it will be impossible to assess whether the new, far looser rules have been met until after the next general election.
What, then, of the extra £350 million a week we were promised for the NHS? All too predictably, the Autumn Statement found not a single extra penny of investment for the NHS or social care, despite every single independent health organisation saying that more investment is needed. The Government will not restore faith in politics if they claim to care about working families while cutting their living standards, if they elevate cutting debt to a moral crusade and then increase debt, or if they promise more money for the NHS and then fail even to mention it at the first opportunity they have to keep that promise.
This Autumn Statement has revealed that the price of Brexit is a downgraded economy, a devalued currency, falling living standards and a poorer country. It shows a Government without a plan, a Government who cannot act in the national interest to protect our economy, govern for all in our nation or restore faith in our democracy. This is a Government who are unable to offer any hope that they can overcome the enormous challenges that now lie ahead.
Lord Fox (LD)
My Lords, I draw your Lordships’ attention to the interests registered in my name in GKN and Smiths Group, both of which are active in the UK economy.
The Chancellor of the Exchequer had a tough job in the other place last week. On the one hand, he had to avoid the trip-wires that had been set by his colleagues who consider every negative comment a betrayal of the true one spirit of Brexit. On the other hand, he was seriously constrained by reality—the reality of his situation and ours. So he pushed out the goals of his predecessor and tried to make the best of it, but there is no gloss shiny enough to hide the terrible prospects for public finances by the end of this Parliament because by the end of this Parliament a £220 billion Brexit-induced debt black hole looms for our country, and this from a Government who at the last election stood on economic probity.
It is hard to see how the return of real inflation can be avoid, not least as a result of the steepling fall in the value of the pound. Many external independent forecasters, some of whom have been referred to by the noble Lord, Lord Livermore, have made clear that its effects will keep millions of working people anchored firmly in an austerity lifestyle. The Prime Minister’s JAMs will be just about making the same as they were in 2008, which really is dreadful—a word used by some other commentators.
From a Liberal Democrat perspective, we were clear that, having thrown off Mr Osborne’s straitjacket, the Chancellor should have prioritised spending on the National Health Service with at least £4 billion of emergency funding. We also believe that he should have used his position, that Statement and his knowledge of the problems that we will face to affirm our commitment to remaining a part of the single market. On that point, perhaps the Minister will tell us whether the aide’s notes so publicly photographed, seemingly counting us out of the single market so soon, are true. If they are not, perhaps he can reassure the House that the Government have the objective of remaining in the single market, because I am sure he recognises the importance of this vital cog in our trading relationships. Given the opportunity of wiping the slate clean and starting again, the Chancellor has, I fear, made one or two bad choices in avoiding or ignoring our National Health Service and in avoiding the opportunity of affirming our commitment to the single market.
However, as the noble Lord, Lord Young, quite rightly pointed out, this House likes to take a balanced view, and I will take a balanced view. There were some positives, and I will talk about those now before talking about the industrial strategy to which these positives point. I will focus on two areas: the British Business Bank and the research and development part of the national productivity investment fund. First, I welcome the announcement of £400 million in additional funds for the British Business Bank—that should be a good thing—but with the proviso that the Minister confirms that this is additional money, over and above the £600 million or so of European Union investment that will be lost following Brexit. In other words, is this extra money or an inadequate patch for money the bank is going to lose?
Secondly, I turn to the research and development part of the national productivity investment fund. In terms of the fund itself, it is clear that there are huge elements of infrastructure which still need to be funded after this fund. It is a very small step in the direction of improving our national infrastructure, but it is good to recognise that this is an important cog in the productivity wheel, which we all hope can turn much more quickly. Research and development is a genuinely pleasing element in the Chancellor’s Statement, which recognises a real shift in the place that science and research, and hopefully the wider technology agenda, are going to have, and should have, in our industrial strategy. That is good, but there are loose ends. I will just go through a couple of them, but there are more elsewhere.
For example, how is the money going to be split? Some of the money will go to this new invention, the industrial strategy challenge fund, while some of it will go into innovation, applied science and research. Something from the Minister on how that will be split will give an idea of the Government’s priorities going forward. This is quite important because the Higher Education and Research Bill is shaking things up substantially around this whole element at the moment. As your Lordships know, it is proposed to bring the research councils and Innovate UK together. Some £425 million of extra funding will come next year, but the institution that I suspect has been designed to manage this will not have been invented. Could we have some explanation from the Minister as to how this is going to be achieved in the transition period, and an indication of whether he is confident that this can happen? I do not want to be too nerdish, but the Chancellor said that the industrial strategy challenge fund will be modelled on DARPA in the USA. This is a very grand objective, and I guess we should share it, but could the Minister explain what that really means in terms of the administration of the fund?
The Minister is right to point out that infrastructure and research and development are key areas of the industrial strategy. I think most of us had expected that the Green Paper would be published in conjunction with the Statement and were a bit disappointed that it was not forthcoming, so I am pleased to hear that it will come before the end of the year. Consultation is an important element of this, and we look forward to participating in that consultation, but it would be helpful if the Minister could tell us when he thinks the strategy will actually be in place and guiding all these other things which seem to be somewhat ahead of the horse at the moment.
In the meantime, as a short cut to this process and, hopefully, to help the Minister, here is where we think the industrial strategy should be heading and what it should seek to achieve. It has to be able to develop the skills that we need to take on a competitive world, and has to be able to create the situation where we have access to the talents of that creative world in a seamless and effective way. It needs to build on the highly successful green industrial revolution that was started in the last Parliament. It needs to put in place a plan that values and nurtures the industries where we are already world leaders or where we believe we can become so. It needs to deliver a world-beating research and development environment and foster true innovation. It needs to work to develop and enhance UK supply chains. Last but by no means least, as evidenced by my noble friend Lord Greaves’s Question at Question Time, we have to create a blueprint for regional development—the benefits of success must be spread more widely around our country. These measures are the basis upon which we think the industrial strategy should be judged, and the objectives that we think should be put in place.
The journey ahead will be rocky. I agree with the noble Lord on my right; it is going to be a tough time ahead. Brexit has not happened yet, but as we move nearer to it the economic outlook really will deteriorate —so much so that even the most seasoned expert deniers will start to recognise that there is a problem. In the financial Statement last week, the Chancellor could have made a vital infusion of funds into the National Health Service but chose not to. He could have committed the Brexit process to keeping the UK within the European single market but chose not to. We believe that that was poor judgment. On the plus side, he set out some plans towards the industrial strategy that we believe are the right thing to do. That industrial strategy is going to be vital. We have to get it right, and we will work with whoever we must to try to help that to happen. Once we have it, we will have to stick with it beyond the length of just one Parliament.
Lord Wakeham (Con)
My Lords, I am delighted to follow the speech of the noble Lord, Lord Fox—although perhaps not for the reason that he might reasonably anticipate. I was talking to an extremely old friend of mine who asked how the noble Lord was doing in the House of Lords. I had to confess to my awful shame that I had never heard him speak—so I will at least be able to ring her this evening and tell her that he spoke very well. That pleases me, even if it does not please him. I cannot say that I agreed entirely with what he said, but that is not the point. I declare an interest as I am a chartered accountant. I have now been so long a chartered accountant that they do not even collect a subscription from me any more.
Considering the Autumn Statement, it seems to me that so much has changed since the 2016 Budget that the Chancellor has done extremely well to set out a message of stability while at the same time showing confidence in the future, when he has been dealing with forecasts from all sorts of people who have been saying all sorts of different things. This is a very difficult time for a Chancellor. The Autumn Statement also gave me great hope that this Chancellor, with his practical business experience, will make some changes to our taxation system that will be beneficial to business and wealth creation without necessarily having to reduce the rates of tax. For example, his proposal to bring certain non-cash benefits into taxation is, in my view, a move in the right direction.
The Chancellor’s proposal to abort the Autumn Statement is very welcome. I do not think he made enough of how significant that is: not just because it will stop the twice-a-year go at altering taxation so loved by Gordon Brown but because it should mean that the changes he proposes will in future be better thought-out and debated. I do not think a lot of people know what a struggle it is to get a Finance Bill into law after a March or April Budget and before Parliament rises for the Summer Recess. Of course the Finance Bill has priority in that time, but it usually means that a number of smaller but significant matters are left out.
The effect on other business in the Commons is also significant. Anyone who has been Chief Whip in the Commons will know just how that has to work. A Budget in the autumn, with until the summer to get a Finance Bill through, will give Parliament a much better chance to scrutinise it and taxpayers much longer to know what is happening. This is a very important and welcome step. It is not that it has not been tried before—I think Ken Clarke tried to do it some years ago—but the idea was snookered by Gordon Brown’s desire to have two Budgets a year.
I also detect in the Chancellor’s Statement that he might be persuaded to look at some of the anomalies and inconsistencies in our present taxation system. I refer not to the rates of tax but to the way that liabilities are determined. Lower rates are always welcome but they may not always be possible.
The Government have started to do something about corporation tax. The important issue here is that UK companies are at a disadvantage compared with overseas companies that can hive off profits into a low-tax regime. I appreciate that international discussions are going on about all this, but I will believe the results when I see them.
Other taxes need reform—and I repeat that I do not mean rates of tax. For example, capital gains tax is for many people mainly a tax on inflation. Hold an asset for a long time and your effective rate of tax will be much higher than a quick in-and-out capital transaction. It ought to be the other way round. Stamp duty is a tax on change, and we should be encouraging change. Stamp duty is loved by the Inland Revenue because it is an easy tax to collect and cheap to work, but it is an economically bad tax. There are better ways than stamp duty to collect the same revenue. The differences in tax and national insurance rates between the self-employed and employed are much too high and need to be lessened. It may not be possible to make the same, but the differences are far too large. The same could be said for the taxation of sole traders and those who set up a company.
Those are just a few examples; there are many more where the Government should be looking at the effect of their taxation and not just at the money-raising system. I want taxation where everybody pays their fair share of tax and does not spend a great deal of time and effort, as a good many people do, trying to decide what form of structure to set up to maximise their tax benefit. I hope that the Chancellor and his colleagues will think in the same way.
Lord Hain (Lab)
My Lords, it is a pleasure to follow such a distinguished parliamentarian as the noble Lord.
Somewhat to my surprise, I had half-expected to begin my speech by welcoming the thrust of the Autumn Statement with a quote from the arch monetarist Milton Friedman: “We are all Keynesians now”. Those words seemed to fit all the early signals and spin coming from Britain’s new Prime Minister even before she took office: Britain had reached a fork in the road, and the former Chancellor and his failing fiscal policy could fork off.
The signals and spin also matched the £30 billion fiscal boost that the Japanese Government launched in August, as well as the £12 billion of measures to stimulate the UK economy called for by the CBI. They matched the pledges made on the campaign trail by United States President-elect Trump. Candidate Trump was more explicit than candidate May. Of course, the Prime Minister was more Mrs Maybe than Mrs May when it came to clarifying how thoroughly she intended to do away with George Osborne’s austerity strategy. By contrast, Donald Trump made no bones about going for faster growth, promising to boost US growth to 4% a year with a big fiscal stimulus focused on higher infrastructure spending.
I wrote a book published last year calling for the adoption of just such a target for the UK economy. I also proposed pursuing that aim with a £30 billion additional fiscal stimulus in each of the next two years focused on extra investment in infrastructure, housebuilding, education, skills, and a low carbon economy—a £30 billion figure, by the way, which is modest, easily financeable at current low interest rates and supported by many respected economists including Jonathan Portes and Paul Krugman. Such a stimulus could help to boost Britain’s growth rate next year to about 4%, instead of somewhere in the miserable range of 1% to 1.5%, which is what the Bank of England, the National Institute for Economic and Social Research, the CBI, the Institute for Fiscal Studies, the IMF and now the Office for Budget Responsibility all expect.
Having heard the new Tory leadership talk about making budget limits take second place to faster economic growth, and even having read in August a call from the international business editor of the Daily Telegraph, Ambrose Evans-Pritchard, for a £40 billion fiscal stimulus, I wondered whether Tory arch-austerity was being consigned to a well-deserved scrapheap. Was the Autumn Statement to be another shock in a year of surprises? Like Dickens, were hard times to be followed by great expectations? Were we about to witness a strategic Tory masterstroke, designed to appeal to Labour and UKIP working-class supporters feeling left behind by globalisation? Sadly, however, the Autumn Statement makes it clear that austerity has been abated but not abandoned. The deficit targets may have been modified, but the budget squeeze goes relentlessly on and on. The pieces have been moved about a bit, but it is the same old board game—slow as you go. We are still stuck in bleak house.
Few Governments have pursued austerity with more vigour than those led by David Cameron and George Osborne. The former Chancellor claimed to have squeezed the UK economy tighter than any of the other advanced economies. At least that claim was valid. The cuts strategy for this Parliament, which George Osborne announced in March, was a carbon copy of the failed austerity strategy he pursued in the last Parliament. So it was heartening in July to hear the opening words of the new Chancellor, contemplating scrapping any plans for more of the same medicine, hinting at a new fiscal framework, and dropping the completely unachievable but destructive target for a budget surplus in 2020. But the Autumn Statement makes it plain that, instead of ending austerity, the Chancellor is prolonging it. Instead of bringing the budget squeeze to an end, he is giving it a new lease of life beyond 2020.
Deferred debt and deficit targets are only the obvious indicators of an economy in trouble. Some of us on these Benches have been arguing for years that austerity does not work, that slow economic growth brought on by a tight fiscal squeeze leads only to a drop-off in tax revenues and causes debt and deficit targets to go for a burton, as indeed duly happened—a point made by my noble friend Lord Livermore so expertly. All the former Chancellor’s targets on borrowing and debt were missed by miles; he was indeed a serial offender. Shockingly, borrowing will be fully £120 billion higher than forecast in the March Budget just eight months ago. Tory austerity has failed abysmally by its own obsessive objectives, and at terrible cost to the economy and the social fabric of our society.
The key concern today is that economic growth is getting slower and slower. That is what has caused the Government’s fiscal targets to be missed year after year, both before and after Britain’s Brexit vote. That is what has kept real incomes per head below their pre-banking crisis peak and inflicted so much needless suffering on so many for so long. It is why so many industrial jobs have been lost in areas such as Neath in south Wales, which I used to represent and where I live, making them more reliant on welfare benefits and tax credits and adding to the pressures on the public finances. It is what the Autumn Statement should have addressed but emphatically did not.
The fact that it did not is likely to mean more political upheaval and instability in Britain. Brexit, Trump and maybe Le Pen next year are perhaps only the start of a popular revolt against the smug, self-satisfied political class now ruling the democratic world—including, sadly, here in our country. The British economy grew slower last year than the year before. It is growing slower still this year and, according to the OBR, it is due to grow even slower next year, and barely any better in 2018. Only barmy Brexiteers like John Redwood seriously expect growth next year to get anywhere near the 2.2% forecast in the OBR’s report just eight months ago in March 2016. Like Don Quixote, the Member for Wokingham sees possibilities that are denied to us mere mortals.
The Chancellor began his Autumn Statement with news that the IMF expects Britain to be the fastest growing of the G7 economies this year. This may be true, but the context is one of a slowdown in global growth. We all need to take action to get our economies growing again, not look to the next guy to save us from our own inadequacies. The IMF has been calling on Governments across the world to use fiscal policy to promote faster growth. Feeling pleased about the relative performance of the British economy is like Jasper Carrott’s joke about admiring a Reliant Robin hurtling downhill, slipstreaming a milk float.
HSBC recently cut the interest rate it pays on some of its savings accounts to 0.05%. There is nothing more that monetary policy can do through lower interest rates to encourage spending. The ball was well and truly in the Chancellor’s court to use fiscal policy to stop the slowdown and get the economy moving again. His response, sadly, has been to play a dead bat in his opening innings. The Chancellor intends to ease the squeeze planned by his predecessor by an amount so small that you need an electron microscope to spot it in the Office for Budget Responsibility report—a £2 billion let-up in a £2,000 billion GDP economy. That is how much the change in the structural budget deficit differs under the new Chancellor from the old one. My hopes were confounded. We are certainly not all Keynesians now.
The Prime Minister says she is ambitious for Britain. Well, the Autumn Statement needed to be made of sterner stuff if she is to deliver on that aim. First, the £23 billion extra public investment announced by the Chancellor is spread over five years. The two-year package of extra investment advocated in my book would mean £30 billion more both next year and the year after. The Chancellor’s proposals mean less than an extra £5 billion per year. Even the CBI called for an extra £6 billion a year. It is a small beer budget as far as extra public investment is concerned. Leo Quinn, the boss of Balfour Beatty, also feels that the Chancellor did not go far enough. He summed up Britain’s situation articulately on the Radio 4 “Today” programme last Thursday: our productivity is poor because our infrastructure is poor. Low interest rates allow people to buy bigger houses, he said, so Government should do what business does: borrow money that is effectively free and invest it in assets that have a 50-year yield. Lower interest rates mean we can have a bigger infrastructure which will improve our competitiveness, and help to build a fairer society and a bigger economy. I agree with Leo Quinn when he says that investing in projects today to build the capability for tomorrow is absolutely critical.
Secondly, the Autumn Statement did nothing to invest in social care in our ageing society—the growing nightmare, with almost all families except the very richest facing misery. Stephen Dorrell MP, the former Conservative Secretary of State for Health and former Health Select Committee Chairman, has condemned the Autumn Statement’s failure to provide much more funding for social care. Two weeks ago three health charities—the King’s Fund, the Nuffield Trust and the Health Foundation—all called for urgent extra investment in social care to plug a £2 billion funding gap next year. This would be the single most effective step the Government could take to relieve the pressures on Britain’s hospitals, where bed-blocking is costing the NHS £800 million annually. A £2 billion investment in social care to deliver £800 million of annual savings seems a bargain.
Thirdly, the cuts to further education college funding are diabolical because these institutions provide the very technical skills Britain needs to bridge the massive productivity gap the Chancellor rightly drew attention to.
Eight years ago, President Obama launched an $800 billion fiscal stimulus package days before taking office. It helped to bring the US recession to an end, lessened its severity, saved more than 2 million US jobs and raised GDP by 3% above what it might otherwise have been. It explains in good part why the US budget deficit as a proportion of GDP rose in 2009 to 13% but fell in each of the next six years, to 3.5% last year. It is why I say that higher borrowing today can lead to lower borrowing tomorrow if it causes the economy to grow faster.
Britain’s Brexit vote has hit the public finances hard; we all know that. There is no end in sight for dreadful UK productivity; no end in sight for fraying, second-class UK infrastructure; no end in sight for the UK’s record trade deficit; no end in sight for UK manufacturing decline; no end in sight for ballooning private debt; no end in sight for housing asset bubbles; no end in sight for growing inequality; no end in sight for falling real incomes; no end in sight for job insecurity; no end in sight for sluggish private investment; no end in sight for austerity and no end in sight for the slow to no growth Tory Chancellors have delivered for Britain since 2010. The crying shame is that there was, all along, and still is, an alternative to this failed neoliberal economic agenda. It is called a progressive Keynesian agenda. It is what Labour delivered so successfully before and after the global banking crisis and it is what the Chancellor should have delivered last week.
The Lord Bishop of Portsmouth
My Lords, after nearly three years in this House, and having had the opportunity to speak in most of the debates responding to the Budget and Autumn Statements, it is not difficult to note the tendency for some contributors to applaud proposals they consider welcome; for others to criticise proposals they consider to have sectional interest or bias; and to have the expectation—or at least the hope—conveyed that the Chancellor and the Government will, and can, do even more when they are praised for welcome initiatives. I want to do a little of that this afternoon, though recognising the restrictions the Chancellor faces. I invite the Minister, and through him the Government, to reflect on what they ought to do—I introduce a moral note in using that phrase—to repair the fractures of trust, address growing injustices that are perceived as more hurtful than inequalities, and create not just a flourishing economy but a nation where people believe there is more that unites us than divides us. Indeed, my question to the Minister is whether the Government can better articulate their rationale and approach in the important area of inequality and injustice.
First, I welcome the new National Savings and Investments bond on terms, and with a maximum investment set low enough, I hope, to ensure that it is not monopolised by those who already have comfortable levels of savings; and with the advantage of a decent rate of interest, which I trust the Minister will confirm will be set according to interest rates available at issue rather than now. Similarly, the Productivity Investment Fund is a welcome tool in addressing a significant national economic challenge. I hope that there will be more much-needed policies and strategies to raise productivity. I am glad too that some LIBOR fines are to be committed to armed services’ charities which, as I know not only from the naval charities in and around Portsmouth but also from the splendid work of Army, Air Force and tri-service charities around the country, do so much to support our service men and women and, just as importantly, their families.
In the Chancellor’s Statement, which I heard from the Gallery last week, there were two commitments in relation to there being no change in policy and its implementation. They are in contrast and give emphasis to the question I raised earlier about whether the Government believe this ought to happen—whether the commitments are just. There was a commitment to the pensioners’ triple lock for this Parliament and that departmental spending plans will “remain in place”. That is protection against inflation, and potentially more than protection, for all people of pension age, some of whom indeed need it but not all, and no protection —indeed, the expectation of declining income—for people who are predominantly in pressing circumstances, often with young or vulnerable family members. The departmental spending plans freeze key benefits, tax credits and local housing allowance rates for private rented accommodation to 2020. Ought we, not only as a Government but as a nation, to be content with that?
The aspiration to encourage work, which I know is a factor in the Government’s policymaking—although sometimes obscure, if not hidden—is in my judgment the right one. The dignity of work is important, but so is the dignity of just treatment across the population and across generations. I therefore welcome the rise in the national minimum wage, look forward to further rises and, meanwhile, urge good employers to pay the living wage. With rather less enthusiasm I note the reduction in the universal credit taper rate by 2%. Of course any reduction is good, but because it is a reduction after tax and national insurance, it is an even smaller reduction than it seems, amounting to a marginal tax rate not of 63%—which is often said to be far too high as a marginal tax rate for people on higher incomes—but in practice a rate of 75%. Can the Minister explain why people should not see an injustice in the operation of two such different approaches to offering incentives for hard work? Why is 75% or even 63% an acceptable marginal rate for those in low-paid employment?
Similarly, the raising of the income tax threshold again will be welcomed by many of us in the country and indeed in this House, and with the benefit we shall all receive. Taking some more people out of income tax liability is welcome but—and I am sure the Minister is aware of this—the benefit of raising the threshold is disproportionately small for taxpayers with low income on benefit because of the 63% taper rate. The advantage for those not receiving benefit will therefore be about threefold higher as a proportion of income. What plan do the Government have, as the benefits to the lowest paid of raising the threshold decline, to introduce new measures to address the unjust disadvantage for poorer working people and families?
I appreciate that the Chancellor is yet to deliver a Budget, is unwilling to make two sets of fiscal announcements each year, and is constrained by uncertainties and unknowns after the events of this year —boxed in by Brexit, as a colleague of mine put it. I hope that at the least he and the Government can indicate readiness to be more flexible than so far indicated on the pressures facing working people and families on low incomes, particularly if inflation does cumulatively rise by over 12% by 2020 as the OBR forecasts. The outlook for some is worrying, and it would be good as well as right for the needs of those just managing to be indeed paramount, as promised.
Baroness Noakes (Con)
My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Portsmouth, although my speech will focus on rather different issues.
I want to start with a little about the tax content of the Autumn Statement before turning to the economy. From a taxation perspective, this was an unexciting Autumn Statement. It is good news that my right honourable friend the Chancellor of the Exchequer has confirmed the downward path of corporation tax to 17%, and it is even more welcome that the Prime Minister has hinted that it might go even lower if that is necessary to remain competitive in the G20. But the G20 is not the only show in town in terms of competitive corporate tax rates, and I hope that the Government will be even more ambitious in future years.
On the other hand, the Chancellor has offered nothing on personal taxation to incentivise wealth creation or to underline the attractiveness of the UK as an investment destination. I am disappointed that he has ignored the top rate of income tax. At 45%, it is higher than the EU, OECD and global averages, and marginal rates are often very much higher than 45% as a result of tax code complexity introduced by both Labour and Conservative Governments.
High tax rates do not necessarily result in higher yields. We can see the impact of this in the stamp duty forecasts in the Autumn Statement: the top rate of 12% of stamp duty on houses over £1.5 million, introduced earlier this year, has led to fewer transactions and a significant downward revision in forecast receipts. When my noble friend Lord Lawson, who unfortunately is not in his place today, overhauled tax rates in the 1980s, he demonstrated that lower tax rates can result in higher yields, including at the top end of the income distribution. We seem to have lost sight of that valuable lesson.
On national insurance, the Chancellor has tinkered at the margins but has shied away from reform. The Office of Tax Simplification has recently called for significant simplification and alignment with income tax. Others, notably the TaxPayers’ Alliance, have called for full merger. I have argued in earlier debates in your Lordships’ House that this is an area that is ripe for radical change and I regret that the Chancellor has not been bold on this.
There is not much else to say on taxation. One small change is, however, worth mentioning—the abolition of the employee shareholder status scheme. The shares-for-rights scheme was a completely crazy idea. It was obvious from the outset that the major use of the scheme would be in tax planning for the higher paid, and so it proved. Few outside the tax planning community will regret the scheme’s passing.
There might not be much to say on taxation but there is quite a lot to say about the economy. My starting point is the forecasts made by the Office for Budget Responsibility. The OBR does an excellent job in difficult circumstances and I am glad that it is now an established part of our system. As it happens, I do not believe the forecasts but I do not blame the OBR for that. It was doing its job in the context of considerable uncertainty—in particular, about separation from the EU following the referendum. The OBR is not supposed to guess this kind of thing and it asked for the Treasury’s guidance. The Treasury gave it none. I think that this is exactly the kind of situation where we should have had forecasts prepared on alternative scenarios. This would have helped to illustrate the range of potential outcomes given the degree of uncertainty. But the OBR is obliged to give a single forecast, which makes its report considerably less useful than it might otherwise have been.
Although no one doubts that there is uncertainty about the impact of leaving the EU, so far that uncertainty is having, at worst, a small impact on our economy. Some of the predictions made ahead of the referendum, in particular by the Treasury, have already been proved wrong. We know what has happened in the past few months—GDP growth has been solid, unemployment has been decreasing and employment increasing, business investment is continuing and consumers are still spending. That is why the OBR’s forecast for the growth rate for this year, at 2.1%, underlines the resilience of our economy.
However, when the OBR looks into 2017, it comes up with only 1.4% growth, largely as a result of its view of the impact of uncertainty on business investment and consumer spending. The OBR is not out of line with the average of other independent forecasters, but there is quite a variation out there. The gloomiest have largely moved away from their early forecast of a recession, but there remain big differences of opinion around the key variables. Kristin Forbes, an external member of the MPC, showed in a speech last week how forecasts can systematically overestimate the impact of uncertainty. I do not have a crystal ball to show the future, but it is relatively easy to construct alternative paths for the economy which are more optimistic than those that are laid out in the OBR’s forecasts. Uncertainty does not always have to have a negative outcome.
I personally do not think that it is worth spending too much time disputing the forecasts or picking away at the OBR’s estimate that approximately £60 billion of extra debt can be attributed to the outcome of the referendum. The Chancellor may or may not need to borrow extra on this account, but it is probably prudent of him to include an estimate of extra borrowing. However, just as businesses do not necessarily need to draw down the whole of their credit lines, there may well be no need for the Chancellor to increase the national debt for this reason. If the economy turns out to prove the pessimists wrong, the Chancellor will not need that borrowing capacity.
As has been pointed out already in this debate, one of the keys to GDP growth is productivity growth, and the OBR is assuming a downward trend in response to our exit from the EU. Both the low annual rate of increase and the gap between the UK and other major economies are generally regarded as problems that we must solve. One of the puzzles has been that the very obvious technological change all around us ought intuitively to have improved our productivity, but this has not shown up in the statistics. The ONS has been working on this since Sir Charles Bean’s review last year, but we still do not have any clear answers. I have not ruled out the possibility that the statisticians have simply been getting this wrong.
The Chancellor, like others before him, thinks that he has to do something about productivity. The “something” he has settled on is the national productivity investment fund. The aims of this fund—housing, transport, digital communications, and research and development—are all worthy aims. However, whether any of the £23 billion earmarked for the next five years will have any impact on productivity is a moot point. I say very gently to my noble friend the Minister that the sentence in the Autumn Statement that:
“The government will raise productivity across the UK”,
is just not true. Governments do not raise productivity. At the very best, Governments create the environment in which productivity is raised by the actions of others. I do not think that the Government, or the public sector bodies that will help them spend the £23 billion, know how to invest for productivity. Therefore, I hope that this programme will be subject to rigorous scrutiny. If the money does not demonstrably achieve productivity gains—and I am a sceptic, as can be seen—the Government should stop spending and let the private sector use the economic capacity for other things.
The Autumn Statement cannot be accused of being overoptimistic. Any set of forecasts that has debt rising above 90% of GDP is at best depressing. I support the Chancellor in what he is doing in response to the forecasts, even though that means deferring the essential task of eliminating the deficit and reducing debt. But I sincerely hope that the forecasts are wrong and that we can in fact make an early return to the task of repairing the country’s finances.
Baroness Hollis of Heigham (Lab)
My Lords, the outlook, says the IFS, as has already been quoted, is dreadful, especially for the poorest third of our people, especially women and children. Stagnant wages—0% in real terms between 2017-18—severe benefit cuts, job insecurity, unaffordable rents and rising debt all compound their family poverty. Some 4 million children are already in poverty, even though two-thirds have a parent in work. Some 200,000 children will this Christmas need a food parcel to get a Christmas dinner.
I do not blame the DWP, but George Osborne for cutting welfare spending because recipients either do not vote or vote the wrong way, and claiming that public opinion supported him. Yet the public mood is ambiguous. They believe that 40% of social security goes on the unemployed, although it is actually under 4%, and that £50 billion a year is lost to fraud—it is probably £1 billion, exceeded by DWP errors. They believe that people on benefits like their own are deserving, but people on other benefits are probably not. Yet out of 30 leading economies, we are fifth from the bottom. Only Chile, Portugal, Ireland and the US are more unequal than we are. Every other country is fairer than us, and 80% of the public believe, decently, that our society is too unequal.
For this confusion of outlook, I blame the stigmatising language of welfare employed by politicians and media alike. They talk of handouts to the feckless and fraudulent. But welfare includes, rightly, not only cash benefits but health, education and pensions. We spend about £80 billion a year on working-age benefits and tax credits—as a percentage of GDP that is actually falling—but we spend £48 billion on pension tax relief alone, some two-thirds of that going to the better off. That includes tax relief on ISAs, the protection from schedule D on family property, the artificially low cap on council tax bands, the reduction in levy on capital gains and IHT and the higher rate threshold in tax in prospect for all of us, while those on benefits lose every penny if their scratched-together savings reach £16,000. At that point they lose all benefit entitlement against our tax privileges. Tax relief is a transfer payment to the better off—a shadow welfare state for the wealthy, which most of your Lordships, and I, take as our entitlement even if it may exceed direct welfare spend on the poor.
I will be told that the top 10% pay more taxes—58%—but then, of course, they have more money. As Michael Johnson has calculated, they get back 49% of tax reliefs. Our tax system is not progressive; it is merely and simply broadly proportional. Over their lifetime, the rich may pay more in, but rich and poor get much the same out. Even the poorest deciles pay through their taxes, especially indirect taxes, for half the benefits they receive, while the top 10% get back four-fifths of what they pay in. As Professor Sir John Hills has said, over their lifetime, people pay for their own social security irrespective of income. Three-quarters is self-financed and only a quarter is redistributed. We are not talking about handouts but about social insurance and social security, and that is the language we should employ.
Against that, how do we assess the Autumn Statement? Universal credit offered a ladder out of poverty and into work. Except that, despite the gallant efforts of the noble Lord, Lord Freud, now it does not. Her Majesty’s Treasury has savaged not only tax credits but the moral and economic case for UC, and it has done so quite deliberately. As the Resolution Foundation has noted, 3 million families getting tax credits will lose them entirely while 1.2 million will be significantly worse off. Some 4 million children are in poverty, two-thirds of them with a parent in work. People will now be even poorer under universal credit. Far from transforming lives, the Resolution Foundation which is chaired by David Willetts—the noble Lord, Lord Willetts—states that universal credit has become,
“little more than a vehicle for rationalising benefit administration and cutting costs to the exchequer”.
Precisely so. Peter Aldous, Waveney’s Tory MP, told the Commons a fortnight ago that since May this year UC has been fully rolled out in his constituency:
“I have to report that it is not going well. Those in my constituency office are spending most of their days addressing very real problems people face in having nothing to live on, nothing to pay for food, and no money to pay the rent … people in areas now on universal credit will, as a result of these changes, be significantly worse off than their neighbours … who remain within the tax credit regime”.—[Official Report, Commons, 17/11/16; col. 419.]
In 2010 universal credit promised to lift 350,000 children and 600,000 adults out of poverty. Instead, child poverty will be 50% higher by 2020. Why is that?
Let us take first the work allowance; that is, earnings before the withdrawal of the taper of 65 pence in the pound, now 63 pence, kicks in. As the right reverend Prelate said, it is still three times the rate of basic income tax. The work allowance has been cut by a third for those with children and halved for lone parents, down from £8,808 taper-free to £4,764, cutting £3 billion. I refuse to use the word “saving”—it saves us but it certainly does not save them.
Add to those the cuts due next April: scrapping the family premium, scrapping support for future children beyond the second one even though we know that larger families are poorer. That will ultimately result in a cut of £5 billion a year.
Add to those the four-year benefits freeze. As my noble friend Lord Livermore mentioned, the Office for Budget Responsibility has stated that by 2020 it will cut claimants’ income cumulatively by 12%. So by 2020, a lone parent with two children working 30 hours a week as a shop assistant on the national living wage will have lost more than £60 a week—£3,210 a year. Having done everything we asked her to do, she will be punished for it. That will result in a cut of £4.6 billion.
Finally, we must add in the benefit cap, which is being reduced from £26,000 to £20,000, irrespective of family need or size. Some 100,000 families are facing cuts this winter of an average of £60 a week. Before the Minister tells us that this has got them back into work, which is often said, it is not true. The Institute for Fiscal Studies shows that only 5% have done so.
Against this litany of cuts, what has the Autumn Statement offered? There is no mitigation of the work allowance cut, which would have made a real difference. There is no restoration of the CPI link when inflation rises above, say, 1%, which would also have made a real difference. There is no review of the benefit cap when even affordable rents cannot be afforded and families are becoming homeless. Instead, the noble Lord, Lord Young, has listed offsetting goodies—the rise in the national living wage, the higher tax threshold, the 2% reduction in the UC taper, the freeze in fuel duty, and the additional hours of childcare. But, as the right reverend Prelate said, for the bottom third of our people they are basically trivial. When set against the benefit cuts, a main earner—a husband in full-time work on the national living wage with two children, say—will be £1,780 a year worse off, while gaining just £190 from the Autumn Statement.
By 2020 we will have spent nearly a decade and nearly £2 billion in implementation costs for UC to make people poorer than they would otherwise have been, sending half a million more children into absolute poverty and into the dark shadows of our economy. Ministers talk about difficult decisions. I am sorry, they are not difficult decisions for Ministers, but they are for those whose living standards will spiral down and down. Their difficult decisions will be how to cut out another adult meal to feed the kids. How much extra can be borrowed from the family? How limited and low can the heating be set?
Four-fifths of the Budget and Autumn Statement goodies go to the richest half of households. The gains go to the rich, the cuts to the poor. It is simple really. The Government have made a deliberate choice that the poor will pay for austerity. Net, they lose proportionately 25 times more than the top deciles, the IFS says. The Government have taken pounds from them and given back pence. As the IFS said, it is dreadful.
Lord Bilimoria (CB)
My Lords, straight after the European Union referendum vote the pound plummeted 20%. It is now 15% below where it was. This was a clear sign from the whole world of no confidence in the result. It was a clear sign that the world unanimously does not want us to leave the European Union and of the worry about the uncertainty ahead.
Of course, the Brexiteers rallied round and said that the lower pound would help exports. From Cobra Beer’s point of view, yes, it will help our exports—we have exported to 40 countries. But as a country we are net importers; even with the European Union, it is 45% exports to 55% imports. Some 50% of the produce we buy from supermarkets is in some way or another imported. Supermarket prices have already gone up and will go up by a minimum of 5% to 8%. The other factor is that, although a lower price helps exports for manufacturers, for many manufacturers on average 30% of their components are imported.
Interest rates and inflation will probably go up. We have heard about the £122 billion black hole over the next five years, including £59 billion from the result of the referendum. Borrowing will go up to 90% of GDP, with a slower GDP growth rate ahead. There has been a complete change from this country being, and giving the impression of being, open and outward looking, to giving the impression of being a country that is closed and inward looking from the rest of the world’s point of view. We are the second-largest recipient of inward investment in the world, yet we have a completely imbalanced economy. From being 30% of GDP in the 1970s, manufacturing is now 10%— high-quality though it is. We do not have a target like that of a country such as India to increase manufacturing from 16% of GDP to 25%—but manufacturing creates jobs and is great for innovation.
On that note, I welcome the Government’s announcement of £2 billion a year for R&D and innovation over the next five years. Hooray. This is amazing; this is fantastic. However, let us put it into context. I have said time and again that when it comes to R&D and innovation, we underinvest compared with other countries, the EU and OECD, let alone the USA. Let us put £2 billion a year in context. We spend 1.7% of our GDP on R&D and innovation. Germany and the United States spend 2.8%. To spend just that extra 1% would mean spending £23 billion more a year—10 times more than the £2 billion—just to catch up in pro-rata terms with the United States and Germany. Does the Minister acknowledge that? The EU average is 2% of GDP and at 1.7% we are well below that. We will have to put in much more than £2 billion a year.
This is one of the keys to increasing our productivity. The other key to increasing our productivity, of which there is no mention in the Autumn Statement, is our universities, which are the best in the world, along with those of the United States. Cambridge University—I declare an interest as chair of the advisory board of the Cambridge Judge Business School—has won more Nobel prizes, almost 100, than any other university in the world, and yet there is no mention of universities in the Autumn Statement. Our investment as a proportion of GDP is well below the EU average, well below the OECD average, half that of America, and then we wonder why our productivity is not as high as it should be. I will go further when I talk about our Prime Minister and her visit to India.
We need to invest in our scale-up companies and encourage entrepreneurship. London is one of the most entrepreneurial cities in the world today. Investment in the Autumn Statement amounting to £1 billion is good, but I would say that it is a drop in the ocean. Will the Minister clarify the wonderful news that the UK is going to ratify the EU patent system?
The other thing the Autumn Statement does not do is put overall government spending into context. Our net contribution to the EU is £8 billion. Do people realise—did the people who believed the “£350 million a week, let’s put into the NHS” on the bus realise—that our net contribution to the EU of £8 billion is barely 1% of our annual government spending of £800 billion? On a pie chart you cannot even have a line that shows that, it is so thin. Why can we not put things into context?
I applaud the Autumn Statement continuing the reduction in corporation tax to 17%. This will make us more attractive for inward investment and encourage wealth creation. Already we have seen that lowering that tax rate has increased corporation tax receipts. On the other hand, there was nothing there to reduce employers’ national insurance, which I call a tax on jobs. If we reduce that, we will help job creation and help SMEs in particular. Also, the Government could do much more to increase exports. For example, there could be tax incentives to export: there are none at the moment.
There is another crucial issue that the Autumn Statement has not addressed. As the Minister said, we have less than 5% unemployment and the highest rate of employment in living memory—but this is in spite of 3 million people from the European Union working over here in the UK, as well as people from outside the European Union. Yet there is a target to reduce net migration to less than 100,000. How will we continue to manage? Where are we going to get the workers from? I do not think that the Autumn Statement addresses that at all.
Immigration is a big issue. Since Tony Blair removed exit checks at our borders in 1998 we have lost control of our borders. We have no idea, at the moment, how many people have overstayed, or about the number of illegal immigrants. The Autumn Statement should have invested in implementing visible exit checks at our ports and airports to give us control of our borders. International students are still treated as immigrants and included in the net migration figures, although the public very clearly do not wish to see that, and we have no target to increase the number of international students at all.
The Prime Minister went to India and spoke about trade deals. A good way to speak about trade deals is to focus on tariffs and ignore the movement of people. The week before we went to India, the minimum salary for IT workers in India—one of India’s main services exports to the UK and elsewhere—was increased by 50%. That makes India less competitive. Then, when the Prime Minister was in India, she spoke about the return of Indians who have overstayed here. That went down like a lead balloon.
There were 35 university leaders, along with Jo Johnson, the Universities Minister, who were there at the same time as the Prime Minister. She did not even meet the university leaders. She did not mention higher education or international students once, and yet Prime Minister Narendra Modi, one of the most powerful people in the world, very humbly said that the mobility of young Indians and their ability to be educated abroad was really important to India. In fact, the Indian Cabinet Minister of Commerce and Industry went so far as to say, “We thought that our relationship with the UK was close. We now realise it is merely transactional”. This is not going to help the future. International students bring in £14 billion to our economy, directly and indirectly. Once again, this was not addressed at all in the Autumn Statement. This is such a huge earner —50% higher than the aid that we give every year.
There could be more increases in capital allowances to encourage investment. The Statement did not have anything on that. We need a positive, welcoming attitude to immigration—skilled, non-skilled, across the board. We need people in hospitality: in the curry restaurant industry that we supply, 98.6% of the restaurants have a huge skills shortage because they cannot bring over chefs from south Asia. The pub industry has a shortage of chefs. We had a debate recently on the NHS and the care sector: 130,000 people from the EU alone work in the NHS and the care sector, yet the debate on immigration in the build-up to the referendum and afterwards has been, “Migrants are a burden on this country. Migrants are a burden on the public sector”. How would the public sector exist without the immigrant workforce? Over 30% of doctors are foreign; in some areas, such as paediatrics and obstetrics, it is over 50%. Migrant workers put in five times more than they take out. They contribute to our economy, they contribute to our taxes, they pay for our public services—and they are called a burden on our economy. The very sad thing for the JAMs—a horrible term for people who are “just about managing” —is that, sadly, many of those who voted for Brexit will be the ones who will be hit so badly by it, as the noble Baroness, Lady Hollis, just said.
We are in only the foothills of the Brexit situation. There is hard Brexit, soft Brexit—we need a smart Brexit, if it is going to happen at all, because a hard Brexit would be absolute folly. We have a budget deficit, we have a fiscal deficit, we have a current account deficit, we have 90% of debt—oh, and the good news of £23 billion of infrastructure investment. I think that is excellent. That will really help this country, including in broadband and with Crossrail, which is fantastic.
But there is a negative approach to business. There is a Green Paper on corporate governance. But on the whole, the government rhetoric has tarred all business with the bad eggs that exist. The few bad eggs have tarred all hard-working SMEs and businesses, including FTSE 100 businesses. We need to encourage the right values but also appreciate that Britain actually has some of the best corporate governance and business practices in the world. The noble Lord, Lord Wakeham, spoke about stamp duty being too high. If it is too high, it will stifle sales. If you stifle sales, you will reduce your tax receipts. In many areas, housing sales have come to a standstill. We need to provide confidence to consumers, business and the rest of the world, because many countries, such as India, look upon the UK as the headquarters of the EU, and they need to continue to do that. If we lose passporting rights in financial services, it will be disastrous.
The other good news in the Autumn Statement is that public spending is coming down to 40% of GDP. It had hit nearly 50%. That was unaffordable; 40% is much more affordable. The Autumn Statement did not mention it but it assumed that our defence spending will carry on being 2%, in agreement with the NATO commitment, which is wonderful news.
Before I conclude, let us consider the NHS. We know that in 2015 the NHS recorded its largest deficit: over £2.4 billion. Yet there was no mention in the 72 pages of the Autumn Statement of the words “NHS”, “mental health”, “public health” or “social care”. I ask the Minister: why was the NHS missing, taking into account that it needs more money? We spend less as a percentage of our GDP on health compared with many of our European counterparts. Of the original 15 EU countries, we are the 13th in healthcare spending. Figures released recently show that we come 25th in the EU for doctors per 1,000 people: we have 2.8 and the EU average is 3.5. On hospital beds per 1,000 people, we are 25th with 2.7: the EU average is 5.2.
On the reduction in funding from the EU for research and development, the vice-chancellor of Cambridge University, Sir Leszek Borysiewicz, said:
“More worrying than the loss of revenue is the damage to the networks of collaboration on which world-class science depends today”.
As Martin Wolf said,
“nothing can disguise the reality that Brexit is likely to make a UK economy already blighted by low and stagnant productivity still weaker … The UK is likely to be poorer than it would have been if it had not made the decision to exit the EU”.
As the poet Robert Frost said, there are,
“miles to go before I sleep”.
We are in the foothills of this wretched referendum. The motto of the Duke of Wellington’s regiment was “Fortune favours the brave”. If we are to deal with this uncertainty in the years ahead, the Government have not been anywhere near bold enough. They need to be much braver.
Lord Flight (Con)
My Lords, I very much agree with what the noble Lord, Lord Bilimoria, said about Indian students coming to the UK and the disappointing fact that the mission to India did not really address that. I also agree with his comments about needing a larger manufacturing sector. However, he seemed to be quite blind to the fact that the main reason why we have an inadequate manufacturing sector is that sterling has been too strong for too long. Indeed, at a time when those in the rest of our disinflationary world all want to see some depreciation of their currencies, it has been handed to us on a plate. It will be very welcome to the manufacturing industry in this country.
I have great respect for our new Chancellor. He has the practical experience of having run both a successful business and a business that failed. I find him extremely straightforward. I believe him to be a man of good faith who will act in the national interest, even though I do not agree with all that he has done. However, he has had very limited scope in what he could do, and if anything he has been quite brave in allowing the increase in national indebtedness which will come about essentially as an insurance policy to keep the economy afloat if things are more difficult than expected. It is correct that productivity and infrastructure are the two key things to this economy and I very much hope that the fund will be successful in improving both, although I share some of my noble friend Lady Noakes’s concerns. I welcome the fact that the Chancellor is sticking to the planned reduction in corporation tax, which should encourage people to invest in this country. I cannot help commenting that, in all the doom and gloom we have heard, overseas investment in Britain is running at the highest levels ever and we are the fastest-growing economy in the whole EU. It seems rather strange that people should ignore those factors.
One thing about productivity—which the noble Lord, Lord Darling, has largely confirmed—is that although income tax credits were introduced with the best of intentions to help increase people’s take-home pay, they have clearly had the effect of holding down wages and, if anything, of creating luxury in employment. Businesses can afford to employ more people than they necessarily need, which is one main reason why the net effect has been a fall in productivity. In the case of France, the reverse is true: it is such a nightmare to employ people there that no one employs any more than they absolutely need, so productivity looks much better. Socially, in the period following the 2008 recession, it was a very good thing as it stopped lots of people being thrown out of work. I fear that it has subsequently served to continue our poor rates of productivity growth.
The one complaint—perhaps I should not call it that but it was the one area where I was disappointed, and others have raised this—is that the Chancellor did not reverse or at least reform the stamp duty tax and the fiscal attack on buy to let, but perhaps that will come later. It is clear, first, that revenue from the stamp duty tax has collapsed—it is £1.6 billion less than forecast. Secondly, the market has collapsed. It seems ridiculous that the top rate of stamp duty for buy to let is now 16%. It is little more than a wealth tax. I suspect that the politicians and the Treasury have perhaps been over-persuaded by the Inland Revenue, which, as commented, loves stamp duty because it is cheap and easy to collect. This is serious in that there is the risk that it could precipitate a crash in house prices in central London. Although stamp duty tax rises to 10% for houses costing more than £925,000—which in many parts of the country would buy a very expensive house—in London and the Home Counties that will often buy an extremely modest house. It bears particularly harshly on young professionals who have children and need to move to a larger house. If they are living in London, they simply cannot afford to do it.
Buy to let has very much been the saviour in terms of providing accommodation in this country. There are something like 2 million small buy-to-let landlords. Many have saved via buy to let rather than a pension scheme, for understandable reasons given the disappointing returns of pension schemes over the last decade or so. However, the new tax arrangement bites extremely hard. It will lead to a significant reduction in the supply of buy to let and a significant increase in rents, at a time when RICS has advised that we will need 1.8 million new rental units by 2025. When the Irish did something similar in 1998 they experienced rents going up by 50%. So I think it would be very much in the national interest to think again on the taxation of buy to let. The alleged justification was that buy to let was competing with first-time buyers and owner-occupier buyers. In fact, as studies have shown, the area of overlap was very small. The argument that buy to let had tax advantages over owner-occupiers was also found to be quite wrong, because whereas buy to let is taxed on the use of the property, owner-occupiers are not so taxed and enjoy tax-free capital gains. I have dwelt on those two specific points and believe it would be extremely desirable to address them.
We have heard comments that the Government are not Keynesian enough. To me, an increase of £122 billion of borrowing over the next five years, ending up with borrowing of 90% of GDP, is about as Keynesian as you can get. To some extent, our new Chancellor, for good reason, is taking a gamble that it will lead in due course to faster growth as well as sustain the economy. As to the arguments about Brexit and growth, current-year growth is far better than was forecast even back in March. For the next two years, the forecast is that it will be marginally down on the March forecast, and for the year after that there is no change in the forecast. So the overall balance is not that different. Potentially, as I have said, the UK remains the fastest-growing economy in the EU and among European countries.
The base of the problem with public spending is that the mixture of welfare, health and education now comprises 65% of government spending. It is over £500 billion and the rate of growth is, candidly, unsustainable. When Sir John Major retired as Prime Minister, the NHS was costing about £18 billion. It will soon cost £160 billion. That sort of growth in expenditure is simply not affordable.
Perhaps I may close on an optimistic note. Although I have said it before, I have never in my 45 years’ experience known this country to be more entrepreneurial than it is today. A number of people have the boldness to come straight out of university and start businesses. We are leaders in digital and leaders in high-tech. We are perhaps the most innovative economy in the world right now. What is happening is wonderful. It will mean that of those who succeed—and many will, of course, fail—we are likely to have many more large and successful new businesses in the future to take this country forward. That has been a great and highly desirable achievement.
Lord Whitty (Lab)
My Lords, I regret that I am not quite as optimistic as the noble Lord, Lord Flight, but I shall start by congratulating the Chancellor on a couple of things. First, I join the noble Lord, Lord Wakeham, in saying that it is time we got away from having two Budgets a year. I am not sure he was absolutely historically right to blame it all on Gordon Brown. My recollection is that what used to be a rather minor, low-key White Paper on public expenditure has been turned into an alternative Budget by successive Governments from Thatcher and Blair through to Cameron. It is time we abandoned that. I am not entirely sure that we will ever adapt to having a Budget in November rather than in the spring, as has been the case since Gladstone’s time, I understand, but I am sure we will get used to it.
The other thing I congratulate the Chancellor on is the presentation of the Autumn Statement. At least it has faced up to the fact that there is, on the best estimates—the OBR’s estimates—some detrimental effects of Brexit. That degree of realism from something which comes with a government package is very welcome.
There are a few small things I particularly welcome in the Autumn Statement, but not many large ones. The small things include the abolition of pay to stay, which was iniquitous. It threatened communities and was a disincentive to work. The measures on agents’ fees I very much welcome. I have been campaigning for them for many years as a consumer representative. I am also in favour of much of the infrastructure programme. I particularly thank the Government and the DfT for a very small part of the infrastructure budget which relates to safer roads—I declare my interest as chair of the Road Safety Foundation.
There are good things in the Autumn Statement, but we have to recognise that there are a number of things that it is not, some positive and some negative. First, it is clearly not a continuation of Osborne-omics: it is a clean break. It abandons deficit-figure fetishism after six years, and I welcome that. Secondly, the fact that we have abandoned that degree of fetishism does not mean we have abandoned austerity. Regrettably, the poor will still suffer, as my noble friend Lady Hollis said very eloquently, and the reality is that public services face a serious squeeze, and the divisions in our society are growing. Nor is it what was needed post-Brexit—not to any great degree, anyway—which is the fiscal equivalent of what the Bank of England did immediately following Brexit. The relatively good economic news since Brexit does not mean that the previous forecasts were wrong. It means that the Governor of the Bank of England, the person who was most reviled during the Brexit campaign, has acted like a good Bank governor should and provided a significant boost to the economy. Without that, the Daily Mail and the Daily Express would, ironically, not have been able to run their positive headlines last week and this week.
The effects of Brexit are being felt right through the economy. Not only did the Treasury, the Foreign Office and No. 10 not have a contingency plan; nor did many parts of British industry and business. They are now rapidly coming up with them, but we are all having to adjust to something that the metropolitan elite, as we are now calling them, in all their manifestations did not expect. That takes some time. Thank God that Mark Carney and the Bank of England did the right thing. I am not sure the Chancellor has matched his ambition in offsetting the effects of Brexit on the uncertain economic prospects we face.
The reality is that the Autumn Statement and the OBR forecast clearly show that despite the Government’s increased borrowing, real wages and real household incomes will fall over the next few years. Expectations of new business investment and of productivity rises have been written down. Social security has been made less of a safety net, and getting out of dependence on social security has been made more difficult and more regressive.
We are where we are on Brexit, and I am not one of those who wants to reopen that issue, at least at this stage. The Government face very tough negotiations, and we will be unclear for some time about what the trading arrangements for this country are going to be.
Despite the difficulties that Brexit has left us in, there are some things that the Chancellor could and should have done. In particular, he could have done substantially more on housing. It is unlikely that 40,000 new homes will solve the endemic housing crisis in all forms of tenure across our country. He needed to do more, in particular to free local authorities to engage with partners in housing associations and the private sector to build by further removing borrowing constraints. Possibly an even bigger omission was the failure of the Autumn Statement to mention anything about the crisis in social care. There is a huge problem in social care for our elderly and infirm, for which we are going to have to budget substantially over the years. I would have hoped that a new Administration and Chancellor could at least indicate how we are going to develop a new form of social care and the financing of it over the next few years.
The Autumn Statement could also have done something for those in whom the Prime Minister and the Government claim to be most interested. I, too, hate the term “JAMs”, but I suggest those who are just about managing are likely to be managing slightly less in the next few months and years, following this Statement. Yet something could have been done with the distributional effects of this Statement, instead of primarily giving tax concessions to the already well-off, hitting the very poor and effectively leaving those in between slightly worse off over the coming years. There are many things that could have been done. The country faces many major economic problems, not least our lamentable productivity performance and industry as a whole adapting to Brexit.
It is worse than that, because we also face very considerable political, social and economic divisions in our society which have been manifest in the political developments of the past few months, not uniquely in the UK but in the US and potentially in France. The Brexit vote revealed dramatic multiple and cumulative divisions in our society. There are geographical divisions between north and south or, more accurately, between London and the south-east and the rest of the country. There are divisions on grounds of tenure—between established home owners, those having to rent in whatever sector and those trying to buy their first house. Perhaps most difficult of all, there are generational inequalities, with the real wages of those under 30 falling far faster than the wages of those in middle age or approaching retirement, accompanied by insecurity in the job market and no affordable housing.
In some senses, government policy over the last six years has favoured pensioners: those who are roughly the same age as your Lordships. That is a social judgment, but the Government have favoured them only up to the point at which they become infirm and require heavy investment in their health or social care. This Statement has provided for neither of those. What is needed is a new strategy, with new investment in social care and a recognition that individuals who are living longer, but in greater and greater ill health, require substantial resources being spent on them—not through the liquidation of their assets or those of their children but through the burden being taken on by society as a whole.
On affordable housing and on social care, this Autumn Statement has missed a real opportunity. Whatever time of year we have the next Budget, I hope the Government will have taken up those challenges and given us at least a sense of direction to get the country and society out of some of the terrible divisions and deprivation that so many of our fellow citizens currently face.
Lord O'Neill of Gatley (Non-Afl)
My Lords, as this is my first speech from these Benches, I will start by thanking the Prime Minister for allowing me to have served in her Government, as well as her predecessor for inviting me to join in the first place. It was quite a surprise at the time, as well as a huge honour. I also thank the right honourable George Osborne specifically in this regard. It was a great pleasure working with him at the Treasury.
Turning to today’s debate, I also offer my support to the Minister ahead of his wrapping up, as I have sat in the same seat facing such a challenge a few times after absorbing your Lordships’ collective wisdom. It is not an easy task, but it is an honour. Turning to the Autumn Statement, I will concentrate on three areas out of the many that I could choose: the economy and economic forecasts; inequality; and the northern powerhouse and devolution.
First, there remains huge uncertainty about the cyclical and structural outlook for the economy. But although it is easy these days for us all to identify obvious specific factors that enable us to make reference to this uncertainty, this should not disguise the fact that the outlook is always uncertain—a point the noble Baroness, Lady Noakes, partially made earlier. It seems now that the situation is more uncertain than usual, but I suspect that is probably not the case. I say this partly because the OBR was less pessimistic than it has sometimes chosen to be relative to others, but it is also important—a couple of noble Lords have touched on this already—that the economy has actually performed notably better since the EU referendum outcome than many expected, myself included. As we have been told, there are widespread expectations that this is unlikely to last, and I agree with many of the stated reasons for that, but it is just possible that the economy could continue to surprise, which would mean a different set of risks from the ones that are being widely discussed at the moment. Although the shift to a less tight cyclical fiscal stance is an obvious move given the possible downside risks, that might need some tinkering in the opposite direction in that event. I have confidence that were that to be the case, despite the much-welcomed new budgetary timetable, the Chancellor would act accordingly.
Secondly, I turn to the sensitive issue of inequality, aspects of which I have talked about in this House in my previous guise. As has become apparent in so many other walks of life—and as has been topical recently in this social-media-driven, 24/7 era—separating fact from fiction sometimes seems beyond many people. During the past 20 years, and indeed beyond that, there has actually been a massive decline in global inequality, as hundreds of millions of people have been, and continue to be, taken out of poverty, primarily in the so-called emerging world. The fact is that the UN’s declared millennium goal of halving poverty by 2015 was actually achieved by 2010—perhaps one of the very few times the UN has been so successful. Many people seem to be unaware of, or choose to ignore or deny, this remarkable achievement of the recent past. However, within many countries, despite this incredible feat, internal measures of equality have often shown widening inequality. This is true even for the likes of China and for some, but far from all, so-called developed countries. Some of this is probably unavoidable, but also possibly transitory, as the bringers of this global wealth enhancement keep, perhaps temporarily, more of the proceeds.
Although the UK undoubtedly has a high level of income inequality compared to other developed countries, it is also a widely unappreciated and frequently ignored fact that UK income inequality is a bit lower today than it was about 20 years ago, on the most usable and best comparable cross-country measures. You would not know this from the general media or from political debates on the topic in our country. In my view, focusing on the younger generation, and more concerted efforts to rebalance economic opportunity around the UK—both to help accelerate a reduction of greater magnitude in national inequality and to benefit those more truly hurt in recent decades—should be a priority for policymakers in this regard. Something that has received some, albeit modest, attention from the latest OBR forecasts is the startling deviation of the income performance of younger people compared to those over 60, and the remarkable generosity of policy towards the latter relative to the former. Surely policymakers must address this startling gap in the years to come, especially with the likely challenging productivity issues related to Brexit. We need to do more to create productive opportunities for those starting their working lives, rather than for those towards or at the end of theirs.
That brings me to the third issue, namely the northern powerhouse and some aspects of devolution. It was heartening to see the Treasury publish specific documents on the powerhouse along with the Autumn Statement, but that did not entirely compensate for the lack of new or additional initiatives. Of course, the Government have provided commendable support for the much-needed improvements in northern road and rail infrastructure, but the importance of east-west train and road links to enable consumers and producers to behave almost as one in what I have often referred to as the ManSheffLeedsPool—Manchester, Sheffield, Leeds, Liverpool—corridor cannot be overstated. As those who have done this analysis—there are not many—show, this would be likely to do much more for productivity in the country, and therefore for living standards, than many other transport infrastructure projects.
State-of-the-art transport infrastructure is necessary but not sufficient. The same is true with respect to devolution, especially to urban areas that have not yet started on this journey. It is disappointing to see no further progress in the Autumn Statement following that initiated with Greater Manchester, now commendably followed by Liverpool and the West Midlands.
There remain key urban areas within the northern powerhouse and elsewhere that, in addition to requiring more local ambition, need not to allow our frequently petty national party politics to hold back what is necessary to unleash more of the local bottoms-up-driven vitality that is needed to boost their, and national, productivity. This would help all the UK to compete better with the challenges that lie ahead and, of course, to have a much more meaningful impact towards further narrowing inequality. I hope the Government will put their political-party rivalries aside in this regard and make a renewed push in the area, as it is central to their appropriate mission to raise national productivity.
Lord Lea of Crondall (Lab)
My Lords, some years ago a trade union colleague used to spend his holidays once a year in Cuba. He used to go for a drink on a terrace overlooking the Caribbean with Fidel Castro, which was all very nice. On one occasion, after a few years, he said, “Fidel, may I ask you a question?”. “Certainly, Alex,” said Castro, “what’s your question?”. My colleague said, “I’ve been coming here all these years and you’re normally smoking a big cigar about that long. This year you’re smoking a smaller cigar that’s only this long. Is there any particular reason?”. Castro said, “Well spotted, Alex. The answer is that I’m trying to get closer to the people”. Aren’t we all? But it is not easy.
I think the noble Lord, Lord O’Neill, who has just made an interesting piece of analysis about income distribution, knows well that I do not accept that the Gini coefficient, to which I think he was referring, is a credible measure these days. I cannot go into that now, but we have a methodological dispute. It is quite right to mention that in connection with all the other factors, such as the apartheid in our educational system.
I echo what the noble Lords, Lord O’Neill and Lord Adonis, among others, are jointly responsible for in our minds about infrastructure investment. Although you would think the idea had been invented only last week, it is one that all of us have been looking at, with differing degrees of enthusiasm, over many decades. In the roads programme, for example, there have been huge troughs and peaks that do not seem to have had any particular economic rationale. Until recently we were told that it could not be done but now we are told that borrowing an extra £23 billion can be done. Talking of changes of doctrine, another thing we were told could not be done was increasing revenues from tackling tax avoidance, but now we are pledged to getting an extra £2 billion from that source.
In response to a point made by the noble Baroness, Lady Noakes, whose assessments on these matters are always very much worth pondering, I say that what I would call a competitive reduction in corporate tax rates is precisely, in my way of looking at the world at the moment with regard to multinational corporations—not least Apple and Google—the race to the bottom that ignores the question. If we are going to spend significant sums on the health service, as my noble friend Lord Whitty and others have pointed out, the sums of money that we are not getting from multinational corporations are not chickenfeed; they amount to trillions. People say, “Take back control”, which is a highly tendentious way of looking at the world. Take back control from what—multinational corporations, Brussels or something else? This is not the same sort of idea but there is that same disquiet, if not disaffection, in many of the industrial democracies.
The collapse of standards in the labour market and the rapid spread of zero-hours contracts—come back Ed Miliband, all is forgiven—have been very accurately analysed by the Labour Party now for four or five years, and its time has come; actually, it is overdue. There is an idea that we should see this as some sort of benign future economy but the economy is actually going in the opposite direction from where it should be going if we are going to give people the security of employment, the pensions and the tax contributions that in the other half of our schizophrenic brains we are advocating, almost in the same paragraph.
The pound is worth 15% less in international terms than before the Brexit vote, while I think the pound in our pockets, as Harold Wilson would agree, has been devalued by 2% to 3%—at least that is what the supermarkets are saying, if that is a good guide. Workers having had a real-terms pay freeze for some time, they will want to get that back—hard enough in any event at any time after a devaluation—unless there is a supplement to national income with a significant impact, and I cannot see that coming from exports, especially if you glance at the terrifying graph in the OBR report showing the downward fall in our share of world exports. So we have 7 million Britons with little or no job security, a figure that has grown by almost 2 million in the past decade, according to the highly respected labour market economist John Philpott.
I have a background proposal to try to staunch the damage that Brexit is doing to our future prospects, as currently it is overhanging discussions like a spectre. The problem with the so-called binary is that it was a binary comparing something we knew about with something we knew nothing about. I think that was a stupid thing to do, but the British public will start to figure out what the opposite side of the binary actually means. I want to bring in a point that, interestingly, is mentioned in a story in today’s Guardian. It quotes the Prime Minister’s spokesman—not the lady carrying the notes that were photographed—as saying that we cannot stay in the single market simply under membership of the European Economic Area because membership of the EEA entails being a member of either the EU or EFTA. I have tried to point out twice in my modest contributions that no one has ever opposed our membership of EFTA. No one in the 1950s opposed our membership of EFTA—apart from one or two fringe people; the great majority was for EFTA.
I happen to have chaired the last meeting when Britain was a member of the EFTA consultative committee of trade unions and employers in Vienna in December 1972, before we joined the EEC on 1 January 1973. We knew—everybody knew—that EFTA itself had rules. In the Stockholm treaty of 1958, there were rules on state aid and many of the things that we now associate with interference or other people trying to run our affairs. This is what Norway, Switzerland and the other countries are members of, more or less.
I now advocate that we rejoin EFTA. I think that would deal with the objection of the Prime Minister, if it is her objection, that we cannot join the EEA because it would entail us being a member of either EFTA or the EU. Okay, let us become a member of EFTA again. That is my proposal, and if it is carried forward, bringing with it the internal market as well as the customs union, as I understand it, we could remove one huge incubus from the terrifying arithmetic set out by the OBR and the IFS in the light of the Autumn Statement.
The Lord Bishop of Birmingham
My Lords, the noble Lord mentioned doctrine, and I am sure that the aspirations of the Government’s economic plan fit in perfectly with the newly arrived season of the Christian Advent, where we offer the expectation of a fulfilled and better future, and the hope that the general population will continue to display their usual dependence on the freely available social measures of faith, hope and love. If your Lordships think I am getting too far from the point, when it comes to high economic doctrine or ordinary daily lives, the person on the top of the bus between the centre of Birmingham and Berkeley Green, which I take regularly, might ask me what I was doing tomorrow, and I might say, “I am coming down to Parliament”. “Tell them there are two things that matter: that we get on together and that we have enough to live on”—love and hope. But then we consider the Autumn Statement in the knowledge that the third one—faith—is the assurance of things hoped for, the conviction of things not seen.
There is much assurance in the Statement. It is a serious facing up to sustaining peace and prosperity and maintaining a standard of living in an increasingly uncertain world—although the noble Lord, Lord O’Neill, pointed out that the world is always uncertain: that is also a very good theological point. There are some examples in the Autumn Statement of practical fiscal wisdom and much ambitious housekeeping as we reposition this country in the world of new and old markets. If we have long memories, we seek to keep a very close eye on the evils of inflation and admit to uncertain growth, on which we have depended for so long on general prosperity.
Following the third point of the noble Lord, Lord O’Neill, I should be grateful if the Minister would say more about one thing that has not yet been discussed: how the details of this will be experienced in the English regions. Mention was made in the Statement of the Midlands engine. There is a welcome focus on skills, transport, housing and digital connectivity and an honest description of our lag in productivity, so ably exposed by the noble Baroness, Lady Noakes. In passing, I hope that we will do more work in this Parliament on connecting big infrastructure investments with the actual gap of 30%, which has been mentioned, that exposes our performance compared to some of our international competitors.
I focus particularly in the regional experience of the Statement on something that has already been mentioned: a welcome for our share in the £1.4 billion for 40,000 new affordable homes. That is a positive move, but does the Minister agree that there must be greater focus on social rented homes to support the most vulnerable in society, for whom home ownership is not a realistic prospect in the immediate future—not least some of those young people who are not gaining access to the economy?
Furthermore, where will responsibility lie for all these essential targets mentioned in the Statement? Do the Government envisage a greater role for regional government, such as the evolving West Midlands combined authority? If so, can the Minister illustrate the economic power and oversight it will have in these key policy areas under a second devolution deal? Of course, the proposed borrowing facilities for mayoral combined authorities are welcome, but can the Government explain how local enterprise funding, for which £392 million is to be made available in the Midlands, and the investment fund payments by the British Business Bank for small and medium enterprises, will be united in an overall, measurable, regional delivery system? Some of the remarks of the noble Lord, Lord Fox, were leading towards that kind of arrangement.
It is also in the local communities of England that those who are just about managing will receive encouragement—small encouragement, some have suggested—from the Statement: the national minimum wage up to £7.50, tax thresholds increased and the welfare taper rate in universal credit reduced, but perhaps not significantly enough. Will the Minister also highlight the dire need of those who are not managing at all, and keep on with the promotion of focused initiatives such as coping with manageable debt and the early habits of saving, which are so necessary to the foundations of successful personal behaviour in a prosperous economy, in addition to the excellent credit union expansion project and Help to Save? Starting life properly will be a great achievement. In this connection, I commend to the Government the forthcoming report of the ad hoc Select Committee of your Lordships’ House on Financial Exclusion.
In conclusion, there is an underlying anxiety behind some of the remarks in the debate about those who have responsibility for those who are not economically active—children in poverty and the vulnerable elderly. The noble Lord, Lord Hain, mentioned them. It is well known that local authority budgets have been pared to a minimum and the NHS overloaded. In the absence of any major discussion in the Statement of those big sums, can the Government give more impetus to imaginative and cost-effective initiatives for ordinary human caring? Those were so well demonstrated in the Near Neighbours initiative where, for a tiny amount in the context of this debate, a great deal of social good was achieved; new and powerful relationships were built up, achieving greater social capital to go alongside the billions of pounds that we are discussing today.
There is much of this that we cannot see and, if we are to succeed in developing our ambitions, the Statement will rely more and more on the natural abilities and resilience of our diverse population but, as the Chancellor returns—attractively, I believe—to one opportunity a year to raise our expectations of salvation, let us, in an economy that works for everyone, ensure that the weakest and poorest are saved first.
Lord Higgins (Con)
My Lords, it is a particular pleasure to follow the right reverend Prelate, not least because one of his distinguished predecessors as Bishop of Birmingham was a very good and kind friend to me when I was an undergraduate at Cambridge.
I am very glad that my noble friend Lord Young of Cookham has taken on the responsibility on the Front Bench. The House as a whole will benefit from his very considerable experience. He pointed out that he may not be as belligerent as he was in the Commons, but his expertise will be of benefit to us all.
No one can imagine that the new Chancellor of the Exchequer has anything like an easy task, given the immense problems with our poor productivity performance, the balance of payments and, not least, the overhanging shadow of Brexit. Then, of course, there is the continuing problem of the deficit. In response to some of the remarks made opposite, I am bound to say that the previous coalition Government and then the Conservative Government could not have continued to allow the deficit to go on and on as it was, living far beyond our means and putting an ever-increasing burden on future generations. The determination with which they tackled a very difficult problem was absolutely essential. Of course, it will remain a problem—and I will come to that in a moment.
We are at risk of separating monetary policy from fiscal policy in a rather dangerous way. Of course, the independence of the Bank of England is a good thing, but we do not really have any debate that brings the two things together. I have been critical in the past of the present Governor of the Bank of England. I thought his efforts at forward guidance were misled, and anyone who followed his advice immediately would probably have lost money. Having said that, he has acted admirably in warning of and reacting to the dangers of Brexit. The reason why Brexit immediately after the referendum did not work out as badly as might have been thought is to a significant extent the result of the action taken by the Governor of the Bank of England. But we should be clear that he is faced with a very real dilemma. He wants to keep interest rates down to stimulate the economy; on the other hand, the downward pressure of Brexit on the exchange rate and the inflation that that would generate means that he will have to put interest rates up. Taking those two things together, he has very limited room for manoeuvre, so fiscal policy is all the more important.
The crucial question we have all been debating is whether the Chancellor has made the right Budget judgment. We are indebted to the OBR for its report, in which it points out:
“With our underlying borrowing forecast higher—and policy decisions pushing the deficit up further—the Government’s three existing fiscal targets would all be missed by considerable margins”.
It then goes on to comment on the fact that the old fiscal mandate is clearly no longer appropriate. The Government therefore propose a new draft charter for budget responsibility, which will set out the situation now. That is clearly more relaxed than the previous situation, and I am sure it is the right judgment, but it is very difficult at this stage to know exactly what should happen as we go forward. Unfortunately, the OBR is no help on this because, when it asked the Government to indicate what “Brexit means Brexit” meant, alas, answer came there none. Nor did the Government give the OBR any indication about access to the single market on the one hand, and immigration on the other. There is a tendency for people to think there is a trade-off between the two, but for business, both are absolutely essential. Alas, the OBR has no idea what the Government’s position will be. Having some degree of fiscal relaxation is probably the wisest thing for the Chancellor to do in the present circumstances.
Given that I have been concerned with monetary as well as fiscal policy, perhaps I might mention that the new Chancellor, in co-operation with the governor, might at some stage want to indicate what will happen to the vast number of assets purchased as part of the quantitative easing programme. They are clearly never going to be reissued, because the maturity dates and rates of interest are not appropriate. They are hanging around in the bubble—that is the fashionable word—with no one doing anything about them. At some stage there ought to be clarification as to what we are going to do on that.
So we have a more relaxed fiscal policy, which I believe is the right approach. What I really welcome is the greater emphasis on investment in infrastructure with a view to increased productivity and, in particular, the proposed increase in expenditure on housing and roads. Nearly 20 years after I ceased to be a Member of Parliament for Worthing, at which stage it looked as though we were going to get an A27 bypass any minute, I still have hope that at some stage it will actually be built. I got stuck there for an hour the other night.
Lord Higgins
Well, that would be one idea—and, to some extent, we have done so. None the less, we will need to borrow to invest, and the problem with that is that it makes the deficit look bigger. But we do not actually define clearly the component parts of the deficit. Here, I am glad to have the support of the Liberal Benches. Borrowing because taxes are not enough or other items of expenditure are too much is not the same as borrowing to increase productivity and improve investment. Some time ago, some of my former constituents and I discussed subject of war loans, and I begin to wonder whether we should not finance this by issuing, say, housing bonds, just as we used to issue war loan bonds, so that we can distinguish clearly between those two different kinds of finance, and different parts of the deficit, which all come into it but are really very different in terms of impact.
We must all wish the Chancellor well. It is going to be a very difficult period ahead for him. The debate today has been extremely helpful and I am sure it will continue to progress. We must all consider this issue very clearly. Although today’s debate has been very sophisticated, I begin to wonder whether this is the ideal format for discussing the OBR’s statement. If we are going to say that we must have a totally new contract as far as the deficit is concerned, a debate in the Moses Room, with less pressure on time, might be more appropriate. Generally, I welcome the Chancellor’s statement. In the circumstances, and given the uncertainties created by Brexit, it is probably as good a shot at it as he could make.
Baroness Warwick of Undercliffe (Lab)
My Lords, I want to focus on the housing aspects of the Autumn Statement and I declare an interest as chair of the National Housing Federation, the trade body for England’s housing associations. The Autumn Statement contained a clear and welcome commitment to increasing the supply of affordable housing. As the Prime Minister herself said, we simply need to build more homes. As a nation, we have not built enough houses for decades and we are currently almost 100,000 short of the number we need to build each year. This is having a real impact on the lives of ordinary families who, faced with high housing costs, find themselves, as the Chancellor has put it, “just about managing”. The public are looking to the Government to act and the housing announcements in the Autumn Statement were an important step in the right direction.
To tackle the housing shortage we need two things: a determined Government and an ambitious housebuilding industry. Housing associations are ready to step up to that challenge. They built one-third of all new homes last year—more than 40,000 houses—and they have an ambition to triple that number over the long term. The sector has a strong track record of building during times of economic uncertainty. At the height of the crash, between 2007 and 2008, output from private developers dropped 37%. Housing associations increased their output by 22% over the same period. They want to do that again and the housing measures in the Autumn Statement will support them to do it.
Looking at the specifics, the Chancellor announced an extra £1.4 billion for affordable housing, as well as flexibility over how the remainder of the £4.7 billion shared ownership and affordable homes programme will be spent. Flexibility is vital. The National Housing Federation has long argued for the Government to relax restrictions on existing affordable housing funding, so the flexibility promised in the Autumn Statement is welcome. Housing associations have worked at the forefront of delivering innovative routes to home ownership for people who find themselves “just about managing”, and they will continue to so.
However, we also know that communities need affordable rented homes, too. Flexibility on funding will enable many more of these to be built. The extra flexibility will not only allow the sector to build homes that better meet the needs of the communities they serve but will ensure that they are able to deliver the maximum number of houses for every pound the taxpayer puts in. The evidence backs this up. Recently, housing associations submitted bids to the shared ownership and affordable homes programme—both useful tenures in their own right—but they have told the federation that, had there been greater flexibility on tenure, they would have bid to build 60% more homes. One-third told us that they would have more than doubled the number of houses they bid for.
A flexible approach to investment will not only allow housing associations to build more homes more quickly but will foster greater innovation. As well as helping those in greatest need, the sector has long provided homes for low-income and middle-income families who are in work but struggling. The sector wants to build on this heritage and will make the most of flexible funding by developing innovative routes into home ownership. These new home-ownership products will make a real difference to the lives of hundreds of thousands of people for whom home ownership has become a distant dream. The sector will do even more with flexibility, using it to invest in regeneration in those communities that have felt left behind for far too long.
The Chancellor also announced £2.3 billion of new infrastructure funding specifically to unlock land for up to 100,000 new homes in high-demand areas. Again, this is good news, and a welcome recognition from the Government that housing is critical to improving the nation’s productivity. I would also argue that housing itself should be viewed as infrastructure. I echo the calls of others for large housing developments of around 1,500 homes or more to be considered as part of the nationally significant infrastructure projects planning regime. If this were to happen, the decision-making process would be much more certain, which would enable housing associations and other housing developers to build the homes more quickly. Given the difference this change could make, will the Minister consider extending the remit of the National Infrastructure Commission to include housing?
Certainty and freedom are two things that enable housing associations to build more homes. Certainty enables investment; freedom—in the form of more flexibility—ensures that the homes that are built are the ones that people actually need. But both certainty and freedom are lacking in one vital area. Despite being independent businesses, housing associations cannot set their own rents. The housing White Paper, now promised for January, provides an opportunity to fix this. I remind noble Lords that housing associations built one-third of all new homes last year. Rental income is critical to the success of their business plans. Yet it is an area where the Government have heavy involvement, both by setting rents and by capping housing benefit, affecting tenants’ ability to pay rent.
Giving housing association boards control of rent setting could improve their ability to plan for the future, manage risk and make the most effective use of their assets to deliver their ambitions for homes and communities. The existing regime does not match rents to the ability of people on low incomes to afford them, so giving the sector rent freedom could also help housing associations make rents genuinely affordable for tenants. I hope the Minister will agree to meet me to discuss how, by handing control of rent setting to housing association boards, the sector could deliver greater fairness for tenants by matching rents to local market conditions.
Finally, I turn to social care. The Government have talked a great deal about building a country that works for everyone—yet in his Autumn Statement, the Chancellor was utterly silent on the future funding of social care, despite the fact that the most recent proposals from the previous Government are now gathering dust after being shelved. At the same time we have hit crisis point in our social care system. Despite more people needing care, investment has shrunk by one-third in just five years. In every region of our country this has left people without the care they need even to get dressed, eat or leave the house. One in three women and one in four men will need care at some point in their life. Is the country really ready for this? Absolutely not. According to the King’s Fund, 81% of local authorities have cut their spending in real terms on social care for older people over the past five years.
Figures published on 10 November showed that the NHS had a total of more than 196,000 delayed transfer-of-care days in September—the highest figure since data were first collected in 2010. As Jane Ashcroft, CEO of Anchor, said:
“Such pressures demonstrate with tragic clarity the importance of funding services which can prevent people needing the NHS or help people leave it”.
As the Work and Pensions Select Committee calls for the triple lock on pensions to be scrapped, the Government must think hard about how to protect the least well-off older people. Failure to do so is already having an impact on NHS costs and risks huge consequences for older people.
We need to address urgently the financial black hole in social care. It is astonishing that the Autumn Statement failed to do that. The Care and Support Alliance, a coalition of more than 90 of Britain’s leading charities, which campaign alongside millions of older people, disabled people and their carers—and of which the National Housing Federation is a member—has expressed its outrage in no uncertain terms. Its chair, Vicky McDermott, said:
“Ignoring the social care crisis is deeply irresponsible. The sector couldn’t be clearer on how dire the situation is for social care and those who rely on it”.
I hope the Government will listen to the strong concerns raised by social care providers across the country, by local authorities and by the NHS, and will take action. I hope that the Minister will address this huge gap in his response.
In conclusion, I will return to my initial point on housing. The welcome announcements on housing in the Autumn Statement will not by themselves end the housing crisis. However, after decades of failing to build the homes we need, they feel like a genuine and important start in tackling it. Every part of the housebuilding industry will have to step up to the challenge. Housing associations are certainly ready to play their part. They know that the public are relying on them to do so.
Lord Taverne (LD)
My Lords, supporters of Brexit have attacked the Chancellor’s Statement as being too pessimistic. I believe that it may be too optimistic, mainly because of the political background.
Suppose it begins to dawn on markets and investors that we are likely to end up in 2019 with a hard Brexit, outside the single market and the customs union, with no prospect of an early free trade agreement with the European Union, no passports or licences based on equivalence for our service companies to operate in the world’s biggest market, no cherry picking or special exemptions from tariff, non-tariff and bureaucratic obstacles for key export industries, and no transition agreement. That is a far from inconceivable scenario. The word from Brussels and most of the 27 is that they are in no mood to help us achieve a soft Brexit or to concede a quick transition agreement. That will be just as difficult to negotiate as a free trade agreement, and the Canadian free trade agreement took more than seven years. Temporary arrangements have a habit of becoming permanent. Of course, their mood may change. Theresa May too might do a U-turn and give single market membership or access top priority over immigration control. However, that is not quite the feeling she has expressed in the past or at the Conservative conference, and I would not bet on it.
Suppose further that we find that those who promise a wonderful free-trade bonanza after Brexit are living in cloud-cuckoo-land. Who welcomed Brexit? Donald Trump, whose battle cry is “America First”—something he is not going to go back on—and an end to America’s traditional noble role as the champion of world free trade. Marine Le Pen, arch-nationalist and protectionist, welcomed it, plus all the other nationalists and protectionists whose influence in the European Union is growing. Free trade is linked with unpopular globalisation and the likelihood is that we will not face a world with more free trade but one with more protectionism.
What, then, would be the consequences if the market began to take the prospect of a hard Brexit seriously? Probably a further drop in the pound, a further reduction in investment, a major emigration of companies based in Britain, a rise in interest rates, inflation and unemployment—in fact, a Brexit recession. I am not saying that it will happen—of course, we are living in a world of unparalleled uncertainty—but it is too feasible a possibility. Even without that scenario, the IFS has forecast that we face the longest spell of no wage increases that we have seen for 70 years. The poor will suffer most, as the noble Lord, Lord Livermore, and many others have pointed out.
Of course, Brexiteers immediately attack anyone who contradicts their vision of a glorious post-Brexit future. They promptly denounced the IFS as a Brussels lobby group. I should declare an interest because in 1971, when the IFS had been incorporated and had no staff or money, I was approached, as a former Financial Secretary when Roy Jenkins was Chancellor, to be its first director and get it off the ground. One of the things I am rather proud of in my political life is of having acted as the midwife at the birth of an infant who has grown up to be such a formidable adult, with an international reputation for independent, objective expertise.
However, whatever the cost of Brexit, currently conventional wisdom holds that a referendum is the ultimate expression of democracy, and that the so-called advisory June verdict is binding and must be irreversible. According to some tabloids, even to suggest that it might be reversed is an act of treason against the will of the people. But why should a referendum vote be any more sacrosanct than the result of a general election, which at least gives us a clear choice among detailed manifestos? Those who most loudly denounce any challenge to “the people’s will” have been the first to challenge it themselves. Before the June vote, Nigel Farage declared that if Remain should win, he would never accept the verdict. Much more important, it is an essential underlying principle of democracy that no decision should ever be irreversible. Autocrats declare that people must never be allowed to change their minds. Democracies allow people to admit that they made mistakes and to change their minds if circumstances change.
Furthermore, we should learn from history. Ever since the Enlightenment, there has been a rift between the followers of the English philosopher, John Locke and the disciples of the Genevan philosopher, Jean-Jacques Rousseau. Locke argued that we should have regard not only for the view of the majority, but also for the rule of law and the protection of the rights of individuals and minorities. His followers regarded parliamentary democracy, with its careful checks and balances, as the best guarantee of freedom. Rousseau declared that the will of the majority must always prevail and the individual has no right to disobey it. Locke proved the inspiration of liberal democracies and has been at the root of our own constitutional traditions. Rousseau, and belief in the unchallengeable supremacy of the people’s will, have always appealed to autocrats. Hitler represented the will of the German people before the war. Was Hitler a democrat? Thank God Germany is now a successful democracy with a central role for an independent judiciary and a deep respect for the rule of law and the rights of the individual.
Stalin was revered by the Russian people. Was he a democrat? Among the most popular national leaders at this time are Putin and Erdogan. Are they democrats? Of course, times have changed. Nowadays most democrats accept the occasional use of a referendum. I too, somewhat reluctantly, accept it. But we should also remember that an invocation of the will of the majority as sacrosanct tends to lead to the denial of the rule of law and the suppression of individual rights. The Daily Mail, for instance, showed its devotion to Rousseau when it denounced the independent judiciary, who are, after all, our ultimate guardians of the rule of law and the rights of the individual, as the “enemies of the people” because they dared to interpret the law in a way which the Mail thought defied the people’s will, and its own views. There was a whiff of fascism about that screaming headline.
If the OBR forecasts and the IFS predictions prove wrong, as, of course, they well may, and if there is no change in the public mood, the June verdict will stand. However, if they are proved right and Donald Tusk was right, that in the end we face a choice between a hard Brexit with a very unpleasant series of consequences or Remain, and if there is a major shift in public opinion, I put, in conclusion, a question about a possibility which many will regard as unthinkable. What should a rational, sensible Government, who are concerned for the welfare of the country, do in two and a half years’ time if their policy has become deeply unpopular and is clearly proving disastrous? Would they continue blindly staggering towards Brexit? Or might they decide that their duty was to follow Sir John Major’s advice and ask the country to think again? In those circumstances, another vote before a final decision, preferably a second referendum, would be fully justified. Indeed, to deny it would be undemocratic and the Government would be failing in their duty to the nation.
Lord Kakkar (CB)
My Lords, I thank the Minister for the very thoughtful way in which he introduced this debate. I propose to concentrate on his second theme—productivity—and in particular on the role that enhanced investment in research and innovation may play. I declare my own interests as professor of surgery at University College London; chairman of University College London Partners, our academic health science system; and UK Business Ambassador for Healthcare and Life Sciences.
There is no doubt that the pursuit of technology investment in science and innovation has had a dramatic effect, transforming the lives of our fellow citizens and the population of our planet in the last 100 years. Its impact, properly directed and targeted at improving well-being and wealth, is quite astounding. It is therefore quite right for the Government to have recognised in the Autumn Statement the importance of a further emphasis on research and innovation funding and expenditure, not only to drive an improved productivity in our economy but to ensure that, as a knowledge-based economy, we are better able to compete globally. We should not take for granted that even this renewed commitment to research and innovation at a national level will protect us against substantial global competition. Only this week it was announced that 40% of all patents registered last year were registered in China, with 60% of the total global output in patent registrations being in Asia. It is a clear demonstration that whereas previously we looked to competitors in the European Union and the United States as the principal source for our competition as an innovation economy, that is no longer the case. It is therefore right that the Government have this emphasis.
There has been concern for a considerable time that we lag well below the OECD average for national investment in research and innovation. I ask the Minister: with this additional £2 billion a year of investment at steady state by 2021, where will we be in OECD rankings with regard to national investment in this area?
The current proposal does not provide all the answers with regard to improving our productivity based upon a greater emphasis on innovation. What approach will the Government take with regard to being able to bring together the broader ecosystem that has supported our national effort in research and driven our knowledge economy, to ensure that not only this investment but investment made on a commercial basis from other academia and universities, and in particular philanthropic investment, can be strategically directed towards driving the research effort in important areas of national need, one of those being, in particular, the life sciences?
I would also like to explore with the Minister what this extra investment means in reality. Our country has been particularly successful in achieving competitive research funding from European Union sources. The research and university communities rightly welcomed that the Government have committed to underwrite any applications made to European funding sources between now and final Brexit. This additional £2 billion of investment represents clearly a major investment but also an important challenge. Will the funds that have been announced replace those that may no longer be available from the European Union beyond the time of Brexit, or are they additional to funding that will come from other sources in our country to make up for the loss of research funding available to our universities and to our small and medium-sized enterprises from European sources after Brexit?
In terms of the allocation of this funding, how will the balance be struck between funding that is driven by research excellence and allocated on the basis of the Haldane principle, where the research needs and opportunities are identified by scientists, and funding for strategic investment in research that is identified as part of the national challenge, where interested parties—small and medium-sized enterprises and the universities and academic research collaborations—can come together and apply for that funding? Will it be the responsibility of UK Research and Innovation once both Innovation UK and the research councils come together? How will those national priorities be determined, and how will a determination be made of the effectiveness of this innovation as regards driving additional and much-needed productivity in the economy?
There is no doubt that the strategy is absolutely correct. It is absolutely appropriate to ensure that research council funding can be brought together with innovation funding and that the universities and commercial enterprises can work more effectively together to ensure not only the best approach to discovery but the exploitation of that discovery in order to generate wealth in our own country and provide the opportunity for us to contribute globally to addressing many of the important challenges facing not only our own country but many others around the world. However, there needs to be much more clarity. It may not be possible for the Government to address that at this stage but those answers will need to be provided to allay anxieties and fears and ensure that a confident approach towards a sustained research effort is maintained.
In addition to that, much of the benefit that we have derived as a nation from our participation in European Union research funding has come not only from the quantum of funds that have been made available to support our universities and other academic enterprises but from the capacity to participate in research networks in Europe and to access major infrastructure to undertake research activity. How much of this £2 billion in additional research and innovation funding that has been announced will be made available for the participation of our international institutions in global research networks? Will some of the funding be used to allow a continued participation in European networks? Will there be an opportunity for us to start to explore new and broader research collaborations, potentially with networks in the United States—another knowledge-based economy with a substantial and long-standing national strategy for investment in a similar fashion to that proposed by the industrial strategy challenge fund?
Those are vital questions that clearly need to be addressed carefully. However, they also need to be addressed quickly. There is a growing anxiety among those involved in research and innovation that if those questions are not answered, the great opportunities that the Government’s commitment to this area offer will be lost. That would be a great shame not only for our economy but for the well-being of our people in the years and decades to come.
Lord Horam (Con)
My Lords, this has been an interesting debate, thoughtfully started by my noble friend Lord Young of Cookham. He declared that he was a reformed character. Not too much reformed, I am glad to say—as we saw, he still retains his sense of humour and his remarkable stamina. He has sat throughout this entire debate and has already listened to 19 speakers, with another 20-odd to come. That is a remarkable example of his stamina as befits the bicycling baronet he was in the other House. I can also tell the House that he is also still remarkably non-partisan. Indeed, he managed to be non-partisan in the other House when he was Chief Whip, which is some sort of a record. We—at least on these Benches—are delighted to have him in his present position in the House of Lords.
I will make only two brief points in this debate. The first is that I am extremely glad that growth has come back as the centrepiece of economic policy-making in this country, as opposed to the deficit. It has always been obvious to me, speaking as a bit of an unrepentant Keynesian economist, that if you go for growth, first of all you get growth, and secondly, if you get growth you also get the resources to deal with the deficit. If you make the deficit your priority, you do not get growth, and you may not do much better on the deficit. Therefore the logic of the situation has been plain. I know that my noble friend Lord Higgins will recognise some of the arguments here from his days at the Treasury. He was Treasury Minister when I first went into the House of Commons, and I remember those days with great affection. I am therefore delighted that this fundamental change has taken place.
I only wish that we could persuade the German Chancellor, Dr Wolfgang Schäuble, to adopt a similar Keynesian demand-management approach. I respect Dr Schäuble; he admitted that he shed tears when he learned the result of the referendum. That is an interesting admission by the German Finance Minister. Unfortunately, the Germans are still in hock to the so-called Freiburg school of economics, which places all the emphasis on structural reforms—which, in practice, means reducing wages and throwing people out of work—and not on any kind of demand management. As a result, the European economy is performing much less well than it could. One reason that we are seen to be doing better is that, sadly, the European economy is doing much worse. One might ask, “Why does that matter to us when we’re not going to be in the European Union?”, but how the European Union performs economically still matters profoundly to us and that will continue to be the case, and I am sad that the German economy is not performing as well as it could. Given the situation that we find ourselves in, perhaps now is not the time to lecture the Germans on the economy. None the less, I wish to make that point because it is important to our general performance.
My second point reflects on what the noble Baroness, Lady Warwick, homed in on—no pun is intended here. She mentioned that housing is central to our problems. I am delighted that the Chancellor made such an issue of housing and that he is trying to do all he can to improve the situation. It is clearly a question of supply, and I am glad that we have got rid of some of the fungus of other issues that surrounded this matter under the previous Administration. We are now homing in on what really matters.
As the right reverend Prelate the Bishop of Birmingham rightly said, it is a question not just of housing but of affordable housing—social rented housing as well as every other kind. Every aspect of our housing situation needs to fire on all cylinders if we are to meet the targets, although I am afraid that we may not do so. I was delighted that the Secretary of State for Communities and Local Government, Sajid Javid, talked only the other day about being radical. We absolutely need to be radical in this area if we are to have any hope of meeting the demanding targets that we have set ourselves, but I am afraid that those targets may not be adequate to deal with the situation that we face.
However, I believe that we have a good team at the DCLG with Sajid Javid and Gavin Barwell, who is a London MP and therefore understands the situation. I hope that those two can bring about a Harold Macmillan/Ernie Maples solution to our housing problems and achieve a new 300,000 houses a year. I fear that they will fail on that target because it is a demanding one; none the less, I hope that they will achieve much in the next four or five years.
On the subject of housing, I would like to make one point which may seem rather strange but it is related to the Chancellor. I welcome unreservedly his saving of Wentworth Woodhouse, the house just north of Rotherham in Yorkshire. People believe that it was the model for Mr Darcy’s Pemberley in Jane Austen’s Pride and Prejudice. That may or may not be true—the noble Baroness, Lady Hollis, indicates that she agrees with me on that—but anyone who knows the house is aware that it is an incredible Palladian building. Actually, the building is Palladian at the front and baroque at the back. The second Marquess of Rockingham decided that the baroque building that his predecessors had built was unsatisfactory. He was twice Prime Minister of this country and he had the means—from coal-mining on the estate—to achieve his ambition, and he built a Palladian addition on the front. It is a remarkable building. If it is true that by the end of this century Asia will have all the manufacturing jobs, America will be providing all the food and Europe will be the museum where people come to spend their money, then it was indeed a very wise investment by the Chancellor to save this remarkable building. If it is properly conserved, I think it will be the equal of Chatsworth and Blenheim.
I wish the Chancellor well. I think that he is now a round peg in a round hole. As one or two speakers have said, he is well equipped from his business experience—both as a failed businessman on some occasions and as a successful businessman on others—to do this job. I wish him well and I believe that he has fundamentally taken the right attitude as regards both the economy and housing.
Viscount Hanworth (Lab)
My Lords, the Chancellor’s Autumn Statement is invariably delivered in optimistic and upbeat language. Its customary hyperbole serves to divert attention from the substantive contents of the message, which may be unwelcome and unpalatable.
In reality, our economic circumstances are parlous. The Government’s budget deficit has persisted, and the deficit in the balance of payments of our international trade has reached an unprecedented level. Industrial productivity is disastrously low and economic growth has faltered. Masses of people are employed in jobs that barely enable them to make ends meet. To compound this misery, we have a housing crisis that is the equal of what Britain experienced at the end of the Second World War.
A testimony to this economic failure is an oversized welfare budget, much of which is used to supplement the inadequate incomes of working people. This Government have made strenuous efforts to restrain the welfare bill, but now they appear to have recognised that no further inroads are possible without creating widespread and severe destitution.
The financial circumstances of the Government, which prevent them taking effective remedial action, are a consequence of their unwillingness to raise the taxes paid on higher incomes and of the further reductions in corporate taxation that were proudly announced in the Autumn Statement. Nevertheless, the Government know that the British economy requires an upgraded infrastructure. They have reasserted their commitment to high-speed rail linkages and the need for an increased airport capacity. They have proposed relieving road congestion by advancing money to be used to ease traffic pinch-points. This is in denial of the modern nostrum of transport planning that such schemes serve only to encourage more vehicles on to the roads.
There has been a partial recognition of the demands of the housing crisis in an undertaking to encourage the building of more affordable houses. However, the concept of affordability is meaningful only in relation to the income and capital resources available to the people in question, and such housing has proved to be way beyond the reach of those in most need.
The most notable omission from the undertakings of the Autumn Statement that should arouse considerable anxiety is that there are no provisions to meet the worsening crisis in the health service and in the care for the elderly and other disadvantaged groups.
Looming over this grim landscape is a dark cloud of uncertain contents called Brexit. At present, we are feeling the cold gusts that are likely to precede a major storm. The fact that the storm has yet to break has allowed some parties to evince an unreasonable optimism. I will not attempt to penetrate this cloud, but I may say that I expect that others in the European Union will wish to expel us from the European Economic Area, which will amount to a hard Brexit. Ultimately, the choice will not be ours to make; it will reside with the European Parliament.
Our current economic distress is the culmination of the persistent industrial and economic decline of the UK, which has been occurring ever since the end of the Second World War. A feature of our society that has accompanied our economic decline has been the ascendancy of the financial interest over the industrial interest. This has extended to the boardrooms of our companies, where accountants and finance directors have held sway to the exclusion of technologists and engineers.
Examples of the damage that has been inflicted on our industries by this distortion are too well known and too numerous to recount in detail. Nevertheless, to my mind, the paradigm of the destructive role of the financiers has been the demise of the great industrial conglomerate that was GEC. The finance directors of that company divested it of its heavy engineering in favour of the purchase of a handful of high-tech American electronics companies, which proceeded to fail spectacularly. One reason for the failures was the desertion of those companies by their technologists, who chose to establish competing enterprises. The obtuseness of the GEC directors in the face of this predictable outcome was stupendous, but it was also typical of many similar instances throughout British industry.
One might have expected that there would be some recognition of these problems by the Government—and one might have looked for this in the Autumn Statement. An overhaul of our rules of corporate governance that would restrain the depredations of the financiers is long overdue. There should be more stringent rules regarding hostile takeovers, which might prevent the easy capture of our industries by foreign interests. There was no sign of this in the Autumn Statement. Nor does today’s Green Paper on corporate governance reform address these issues in any way.
What we do find in the Autumn Statement is a promise to reduce corporate taxation, together with a repetition of the mantra that “Britain is open for business”. This indicates a desire to attract inward financial investment, which can be seen as a response to the failure of our own industrial investment and a means of mitigating the imbalance of our international payments. The inward financial investment that the Government are keen to foster has two principal effects: it enriches the financial sector, which mediates the transactions, and it places the ownership of our industries and utilities in foreign hands.
A further effect of the inflow of funds has been to elevate the value of the pound. Recently, we have witnessed the inevitable collapse in the value of the pound. The immediate cause of the collapse was undoubtedly the vote on 23 June in favour of our leaving the European Union. Of course, devaluation was long overdue and there may be further devaluations to come. The devaluation of the pound was the subject of a debate in the House two weeks ago, in which conflicting opinions were expressed. Whereas it was conceded by some that, in theory, a weaker pound should stimulate our export industries, it was widely recognised that we lack the industrial capacity to profit significantly from this effect, which is bound to take time to materialise. In summarising that debate, the Minister declared that the Government have no policy as regards the level of the exchange rate and that they do not comment on its level. According to this doctrine, it is up to the markets to determine the exchange rate.
I do not hesitate to say that this amounts to a major dereliction of economic management. If the Government had been active throughout their tenure in maintaining the exchange rate at a sufficiently low level to allow our industries to compete in world markets, we would not now be faced with the inevitable catastrophe of a massive devaluation. We are bound to level a charge of economic incompetence against this Government. They have contributed significantly to the nation’s economic decline.
Lord Leigh of Hurley (Con)
My Lords, I echo my noble friend Lord Horam’s remarks: what a pleasure it is to see my noble friend Lord Young of Cookham—which is the neighbouring village to Hurley—at the Dispatch Box for this marathon debate. I begin by commending the direction of travel for policy-making set out by the Chancellor last week. All of us, whatever our views on the referendum in June, can at least unite around the sense of relief that an emergency Budget was not required and that we, and indeed the Chancellor, have had until this Autumn Statement to pause and take stock. Furthermore, the decision to switch to one Budget a year, in the autumn, is a sensible one. Not only will it give those affected by Budget measures time to plan ahead of the new financial year but, more importantly, one Budget event a year is the right approach to economic policy-making. It encourages long-term thinking, fundamental change and sticking to a long-term economic plan.
Speaking of a long-term economic plan—a phrase that some might recall—I am proud to continue to lend my support to the Government on theirs. While I think we are all concerned about the deterioration in the public finances and the delay in returning to surplus, we can at least be sure that under this Government our fiscal credibility is secure. The ONS has confirmed that the economy grew 0.5% in quarter four. Business investment grew by 0.9% quarter on quarter—the opposite of what some very distinguished economists predicted, some of whom have fessed up today—and exports grew by 0.7%. That is some positivity on which to refresh and secure our long-term economic future.
I turn now to some specific measures in the Budget, most of which I do not believe have been raised before. There are several to be commended. The first is the implementation of promised limits to interest deductibility —something I called for in my maiden speech some three years ago. It is quite right that interest on loans should be deducted as a legitimate business expense from a corporation tax bill. Such a practice encourages the natural flow of business, finance and growth. However, as is often the case, interest deductions had become abused—essentially, debt had replaced equity. Entire capital structures were being rejigged to appear as debt to allow for deductions, until there was no corporation tax left to pay. The limits now imposed will stop this without curtailing business activity.
A similarly just balance has been struck with non-domiciled individuals. We want to attract as much foreign investment as we can to this country, and the non-dom regime has helped us to do this—but only for those who are not in fact UK residents masquerading as non-doms. From April 2017, if such individuals have been resident for 15 of the past 20 years, they will pay UK tax. That said, the changes to the rules for business investment relief mean that legitimate non-doms who are taxed on the remittance basis will be able to continue to bring offshore money into the UK to invest in bona fide UK businesses.
I would also highlight that the Government are following through on termination payments, in making sure that where they are over £30,000 and subject to income tax, they are also subject to employer NICs. More broadly, the corporation tax road map continues to send out clear signals on what kind of business environment the UK will offer in the years ahead. I am slightly puzzled to see that the diverted profits tax is scheduled to raise only £100 million a year for four years. I think that that is a gross underestimate of how much tax will be paid by the foreign corporations that seek to send their profits abroad and ask my noble friend the Minister if his department might care to review that.
We may, finally, see light at the end of the tunnel on housing, with the new £2.3 billion housing infrastructure fund, as has been mentioned. Housing is important for all our citizens, but it is also vital for our economic competitiveness. People will not want to come to the UK, and to London in particular, if housing costs continue to run out of control. High house prices are not necessarily a sign of success and I am glad that the Government are taking action. However, I note in today’s Times that they seem to be planning a lot of houses in the Maidenhead area, which incorporates both Hurley and Cookham. I hope that the green belt will be spared. Of course, it was the brilliance of my noble friend Lord Horam who made me realise that perhaps the Marquess of Rockingham’s stately pile, with its estimated 365 rooms, will be turned into more suitable housing—there is a cunning plan.
I commend the continuing support for fintech. As Brexit negotiations rumble on, our financial services industry must be given the chance to succeed. However, as important is that we secure the future generation of financial services practitioners, and that is where rolling support for fintech is so important. I strongly recommend that the Government look carefully at the Politeia report published last week, A Blueprint for Brexit, which explains that the role of the financial services post-Brexit will be enhanced if we adopt either equivalence-based areas or the financial centre model and reject the passporting suggestions that others have mooted.
As these and other options become clear, in particular the need to leave the single market, I am more and more convinced of the great opportunities that will be afforded to this country outside the EU. This was highlighted in the debate in your Lordships’ House on international trade post-Brexit about a month ago, in particular by my noble friend Lord Bamford, whose speech gave us all great hope for this country’s opportunity to flourish and prosper outside the EU.
To be clear, although I am a Brexit supporter, I do not question the credibility of the OBR. We must have, and continue to have, robust economic forecasts that give the Chancellor and others the best available information. We may hope that it is wrong, but, instead of wishing it away, we must put in place credible long-term plans to deal with whatever may come. This Autumn Statement was a solid start.
Lord Jones (Lab)
My Lords, I very much appreciated my noble friend Lord Livermore’s surgical consideration of government policy and I recollect the monumental presence of the noble Lord, Lord Young of Cookham, in the other place. He always obtained his legislation. I recollect countless squash matches with the noble Lord, Lord Horam, and one or two with the noble Lord, Lord Young. But my remarks are made in the context of what is now known as the northern powerhouse. The Economist of 3 September carried a headline “Ropy Roads, Rail and Runways”. The lesser headline was that “Britain needs to hurry up with transport projects—both large and small”. I seek positive action for a host of relatively small projects: for clogged roads and inadequate railways in an economically active region. That is, relatively speaking, golden crumbs from the laden table of the northern powerhouse. As the Economist said, in its hymn for investment in infrastructure,
“the tiddlers are just as important”.
Shovel-ready projects addressing congestion hotspots can make immediate differences. There are plenty of these hotspots in north-east Wales, Chester and Cheshire. I declare my interest as president of the Mersey Dee Alliance, a cross-border grouping of local government authorities of north-east Wales, Chester and Cheshire, West and Wirral and others. I also declare my interest as president of the North Wales Exporters’ Council, Deeside Business Forum, Flintshire BusinessWeek and Wrexham Bidston Rail Users’ Association.
Concerning four deputations this year that I accompanied, I thank the chairman commissioner of the National Infrastructure Commission and the then Chancellor of the Exchequer. I also thank the then Minister for the Northern Powerhouse, the noble Lord, Lord O’Neill of Gatley, for his courtesy and informed interest. He was right on devolution and the governance challenges. I also thank the current Minister for the Northern Powerhouse, Mr Andrew Percy, who received us most warmly and accepted immediately my invitation to visit our area. Indeed, he arrived in the area within a week and brought with him my compatriot, the Parliamentary Under-Secretary of State for Wales, Mr Guto Bebb. The chair of the newly formed All-Party Group on Mersey Dee North Wales, Mr Ian Lucas, the MP for Wrexham, has lobbied hard, and the Cabinet Secretary for Economy and Infrastructure, in the Wales Assembly, Mr Kenneth Skates AM, recently met the all-party group in the most positive and constructive manner. I think that he means business.
The Mersey Dee Alliance represents Britain’s only cross-border economy—an economy with a strong manufacturing base. Indeed, Flintshire’s workforce has more than 30% in manufacturing work. This month, at the mighty 6,000-strong, highly skilled Airbus factory in Flintshire, the Airbus plant manager, Mr Paul McKinlay, alongside the Wales Assembly Government Secretary for the Economy, Mr Skates, and the chair of the Deeside Enterprise Zone, Mr David Jones—a distinguished troika—announced the setting up of an institute for advanced manufacturing. This is truly a game changer. It is a huge boost to the morale of the business community. It is a vote of confidence in local government, on both sides of the border. It shows that collaboration—on both sides of the England/Wales border in this case—leads to the most positive self-help in manufacturing.
As a cross-border collaborative alliance, we need better rail and road connectivity to make the best of our successes. That includes better links with Manchester and Liverpool airports. In north-east Wales and the north-west, we have made successes: to make more successes we seek those golden crumbs from the laden northern powerhouse table. What is wrong with smaller local projects for the north? Let us not just concentrate on the prosperous south. If the south gets many billions of pounds of infrastructure investment, give our area the cash for its proven practical projects, especially those shovel-ready projects that are ready to go.
Since this is a Parliament, here is my shopping list for the next decade for my homeland. We need to dual the A550 to connect two great industrial parks at Deeside and Wrexham. We must enhance the A483/A525 to improve access to the technology park. We must endow park-and-ride facilities at Hope and Pennyffordd. We must improve the Crewe to Holyhead mainline railway and plan its ultimate electrification. This is our big ask. Give us improved and more frequent twice-hourly rail services on the Wrexham to Bidston rail line. We need to go forward with the cross-border Growth Track 360, as backed by the Mersey Dee Alliance, the North Wales Economic Ambition Board and the rail users’ association. The 9,000-strong Deeside Industrial Park needs better access to the railway. It needs a rail spur with a Deeside parkway station. This industrial park is as good as any in western Europe. It deserve better rail access. Merseytravel and the Welsh Government have fine plans for robust and practical rail services. They deserve praise and backing. Both the rail stations at Wrexham and Chester should be enhanced and modernised.
The most positive feature in the campaigning by the Mersey Dee Alliance is the input and co-operation of the great Wrexham Glyndŵr University, the go-getting University of Chester and the outstanding FE centres of West Cheshire College and Coleg Cambria. The Mersey Dee Alliance has a small and brilliant staff led by Emma Wynne. The input of the Welsh Local Government Association is superb. The chair of the Wrexham Bidston Rail Users’ Association, John Allcock, has transformed that association, and the MDA chair, Councillor Butler is a highly experienced and constant councillor. Their campaigning has been an exemplar of civic duty.
Most seriously, will the Minister in this context tell us what is happening in the Cheshire & Warrington LEP, concerning the northern powerhouse? What projects do the various departments of state provide money for? How soon shall we know? Will the departments tell us that they will support the short-term priorities of Growth Track 360 rail? Will the Government tell us that they will continue discussions on the growth deal between north Wales, Cheshire and Chester? As the great Sir Winston Churchill said,
“Give us the tools, and we will finish the job”.
We have made an exceptional unique cross-border economy, but investment in our infrastructure is now urgent, vital and well merited.
Lord Hennessy of Nympsfield (CB)
My Lords, it may be that future economic historians will single out the new industrial strategy element in the Chancellor’s Autumn Statement as its most enduring and significant ingredient. I hope so, but my hope is tempered somewhat. Why is that? It is because we have form as an industrial strategy nation.
Watching from the House of Commons Gallery last Wednesday as Mr Philip Hammond anatomised what he called the “financial backbone” of the latest one, I could almost sense the ghosts of industrial strategies past flitting about in the Chamber with rueful if sympathetic smiles creasing their pallid faces. By my calculation there have been at least seven previous industrial strategies since 1945, and with the help of our ever wonderful Library, I have been revisiting them and savouring their hopes, their fears and their prescriptions. They coincide exactly, curiously enough, with my life living and breathing on our cherished islands. For in the papers on the morning of 28 March 1947, the day I was born, came the announcement that the Attlee Government had appointed the industrialist, Sir Edwin Plowden, to lead their Central Economic Planning Staff and to chair the new Economic Planning Board which would bring together government, employers and trade unions for the purpose of boosting output.
The second of the post-war industrial strategies was the Macmillan Government’s creation in 1962 of the National Economic Development Council and supporting staff—tripartitism once more but laced this time with a dash of French-style indicative planning. Its purpose was to tackle what a still later stab at strategy, the competitiveness White Paper of the noble Lord, Lord Heseltine, in 1994, called our “long-standing relative decline”. The noble Lord, Lord Young of Cookham, was I think a young NEDO economist in the 1960s and has inside knowledge of that particular phase of this extraordinary story.
Between 1962 and 1994 three more Governments pitted themselves against this toughest of problems at the very core of our country’s political economy and industrial activity. The Wilson Government’s National Plan of September 1965 was by far the most ambitious. It was a plan, the incomparable Secretary of State for Economic Affairs, George Brown, declared in its first sentence, that would cover,
“all aspects of the country’s economic development for the next five years”—
I emphasise the word “all”—for the purpose of propelling the UK economy to a higher trajectory of growth of around 4% a year, which was way above the 2.5% it had thus far achieved over the post-war years. As we all remember, sadly, it failed. Growth stubbornly remained slightly below 2.5%, which had been the norm hitherto. The Heath Government, as part of what their critics called their U-turn from a less statist approach, produced a strongly interventionist White Paper in March 1972, out of which emerged the genuinely interventionist Industry Act later that year. The last of the Wilson Governments had another go in 1975. This time there was no grand national plan, but rather a more selective picking of winners through a strategy of state aid to promising and growing industries outlined in their Approach to Industrial Strategy White Paper which was published in November 1975.
In more recent times, the White Paper of the noble Lord, Lord Heseltine, entitled Competitiveness: Helping Business to Win, published in May 1994, placed an unremitting quest to raise productivity and adapt to ever quickening changes in technology at the heart of the Major Government’s assault on this most deep-seated of problems. Finally, the coalition’s strategy concentrated on emerging technologies and the new Catapults to project R&D into UK-based production lines while turning its back on what Sir Vince Cable, the lead Minister on it, described as the “cack-handed” interventionism of the 1960s and 1970s.
In the Commons Chamber last week, the Chancellor could have been crying out for all those who had gone before at that Dispatch Box when he declared:
“The productivity gap is well known … but shocking none the less—it bears repeating. We lag the US and Germany by some 30 percentage points in productivity, but we also lag France by over 20 points and Italy by 8 points”.
When the Chancellor outlined the Government’s welcome plan for,
“a new national productivity investment fund of £23 billion to be spent on innovation and infrastructure over the next five years”,—[Official Report, Commons, 23/11/16; col. 902.]
he reminded me just a tad of Sir Stafford Cripps as Chancellor of the Exchequer in the late 1940s, enthusiastically backing the work of the Anglo-American Council on Productivity, set up as part of the Marshall Plan of aid, in dispatching groups of British businessmen and trade unionists to see the roaring production lines of North America to work out how they could do it in a way that we could not.
For all our post-referendum anxieties, which I in no way diminish, we are not in the perilous position we were in when Sir Edwin Plowden took up his post and I sprang into the world in the North Middlesex Hospital beside the North Circular Road in March 1947. Then, we were a heroic but nearly bankrupt nation that had lost a third of its wealth in the Second World War. What a time for a superpower to throw in its last hand. As Keynes said:
“We threw good housekeeping to the winds. But we saved ourselves and helped save the world”.
It was a glorious enterprise but we were very poor and very worn out. None the less, how it matters that the Government’s new industrial strategy works. I keenly await the Green Paper in the next few weeks that will flesh it out, and I hope that a genuine national consensus will cohere around its contents, even though we do not quite know what they are yet. It will be, in my judgment, a crucial element in our rising to the level of events that we face as a country and as a people.
Am I optimistic after that litany of industrial strategies past? I am with the great Albert Schweitzer who said, whenever he was asked if he was an optimist or a pessimist that,
“my knowledge is pessimistic, but my willing and hoping are optimistic”.
Every generation tries a new alchemy on industrial strategy, but the ever wished-for transformation becomes in some ways tougher to achieve as markets globalise and the possibilities for planning or strategising in a single country become more difficult. But I live in hope that this time, we will take ourselves and the world by surprise.
Lord Desai (Lab)
My Lords, of all the things that can beset one when one is the 24th speaker, following the noble Lord, Lord Hennessy, is the worst that has happened to me. But I fully endorse what he has said: suspect all industrial strategies and suspect all looking for champions because the productivity gap between us and Germany goes back to the 1880s; it is not new. I have been waiting to say this for a long time: we should be aware that this country had a financial revolution 100 years before it had the Industrial Revolution and we must not downplay our financial strength, because it has kept us at the top of the tree for all these years while our industrial strength has come and gone. Despite all that, we are still a very rich country, so we must be doing something right.
I want to concentrate on the forecast made by the Office for Budget Responsibility. I am a little puzzled by it. Making forecasts is a completely thankless job. Economics is a subject where we do not even know with certainty what happened yesterday. Over the five years of the coalition Government we were citing double-dip recessions and crises and so on. But let us look at chart 1.3 in the OBR paper. It shows that throughout the coalition Government’s tenure we had positive rates of growth. The growth rate between 2010 and 2015 is about what the OBR is also projecting for the next five years. I want to pass on that I find that hard to believe, because all the previous forecasts we had were lower than what actually happened. We therefore need to understand these forecasts a little better. I have the greatest respect for the people who do this work and at least two of them are good friends of mine. They are both extremely talented people who are doing their best. But something is missing in our understanding of the British economy. Either we continuously underestimate the growth potential of the economy or we are lucky every time.
I believe that, just as happened in the two quarters following the referendum, we perform better than most people expect. Indeed I said in this House a week after the referendum result that there was not going to be a recession because we had the same economy on the Monday following the referendum on Thursday 23 June, and there was no reason why it should change. Many people said, “Oh, but there is a lot of uncertainty”, but it is not radical uncertainty and people know what to do in the one or two scenarios which might happen. My suspicion is that the OBR is being more pessimistic than one needs to be. If the OBR is correct and we expect low growth for the next two years, the remedy is for the Chancellor to do something about it, now that the fiscal constraint has quite rightly been relaxed. It does not go as far as George Osborne wanted to and rush to a surplus, but the fiscal constraint has definitely been relaxed.
Because we are borrowing for investment projects, we should borrow. Borrowing is bad if you are borrowing for consumption; it is not bad if you are borrowing for investment. For the time being, interest rates are low and it is a good time to borrow. If Donald Trump succeeds in launching his expansionary strategy, interest rates will harden and go up. The window for borrowing is not that long. At least by the March Budget the Chancellor should do something to speed up and increase the amount of investment he plans. That may correct for the likely shortfall in growth that the OBR perceives. I am not sure it will happen, but if he takes the OBR forecast to heart he should definitely revise his strategy about borrowing and borrow much more now. It will repay him later in the cycle. He would be better off because the growth would be better. A useful aspect of the OBR’s forecast is that it should lead to corrective measures in a Budget, so we do not take for granted that we cannot do better than a growth rate of 1.2% or 1.7%. We ought to do better than that. That is the way to do it.
I very much liked the emphasis my noble friend Lady Warwick gave to housing. The noble Lord, Lord Higgins, suggested that we might have housing bonds. In the various meetings I go to, I often meet sovereign wealth funds, pension funds and people like that. They are utterly flush with money. Lots and lots of money is waiting for long-term investment, believe me. I can take you to those people. They are looking for an investment, such as housing, where they can have a 50-year payback. They need some sort of instrument: some combination of renting and buying, some kind of steady flow of revenue. The Government could very successfully use some sort of public/private partnership to borrow the money that is around. There is no doubt that the world is flush with lots of money that can be borrowed, especially for longer-term projects such as housing. There are things we can do creatively in that respect.
I have one more thing to say, partly about investment strategy and partly about productivity. The noble Lord, Lord O’Neill, knows my scepticism about productivity. Robert Baldwin has written a very interesting book on a new interpretation of globalisation. He has said that, in the recent phase we are having, ideas can be costlessly traded across long distances. To begin with, all movement was very expensive. Then with rail, road and shipping it became easier to move goods around. Now it is very easy to move ideas around. That is allowing people to transform industrial processes. Indeed, the whole concept of an industry may no longer be valid, because bits and pieces are being transformed by technology and linked to supply chains across other parts. We need to look at this whole new approach to understanding manufacturing and the role IT plays in it. We therefore need to raise the level of education of people who are already employed in the way they can handle new technology. I therefore welcome the investment the Government plan to make in productivity growth, but most if not almost all of it should go on the IT frontier. I hope that will improve our productivity.
Lord Skidelsky (CB)
My Lords, it is always a great pleasure to follow the noble Lord, Lord Desai. I will take up one or two things he said, but a preliminary question that occurred to me is: if the private sector is so flush with money, why is it not investing more of it? Why does it need government help to do so? The answer that occurs to me is that the private sector does not see sufficient demand to justify the kind of investment that would employ those funds that are sitting idle. I will come to another point made by the noble Lord on the OBR in a moment.
As a long-term critic of the Government’s economic policy, I recognise that the Chancellor’s Autumn Statement has some good news in it. He has relaxed the absurd commitment to balance the budget by the end of this Parliament. That is good news. Instead, he has allowed for discretionary fiscal policy of up to 2% of gross domestic product in his fiscal rules for the coming Parliament. Mr Hammond has also paid lip service to public investment and productivity, with a small sum set aside for a national productivity investment fund. That is a welcome change of tack. We inch closer to the views I have been advocating in this House and elsewhere for eight years: public investment, not austerity, is the appropriate response to depressed conditions.
We have recently been treated to a remarkable insight into Mr Osborne’s state of mind as austerity took its toll on the British economy and his own sense of mental stability in 2012. In an interview with a journalist he said:
“I got myself into … a hole”.
He said he shut himself in a room and stopped listening to people who disagreed with him. This was the Chancellor of the Exchequer in 2012. He got into this hole because his policy was not working. If he had listened more he would probably still be Chancellor, Brexit would probably not have happened and the British people would certainly have been better off. His austerity policy cost the British people dear—and it cost him dear.
I have to disagree with the noble Lord, Lord Livermore, who is not in his place, when he said that the fiscal targets were trumped by Brexit. The fiscal targets were trumped because they were wrong. They were based on a theory that fiscal consolidation would cause the economy to grow faster. In fact, it caused it to grow slower. That is why George Osborne missed his targets; it had nothing to do with Brexit. Mr Hammond has wisely abandoned those targets, using Brexit as an excuse. The Government have not yet reached that point of honesty when they can say, “We were pursuing the wrong policy”. Instead, they put up a European smokescreen to cover their retreat.
I welcome the Chancellor’s commitment to public investment, but we must recognise how limited it is. He proposed to spend £23 billion extra over five years. That is not nearly enough to reverse the fall in public investment since the Conservatives took office. To get public investment back to the 3.4% of GDP it was when Labour left office, he would have had to commit not £23 billion over five years but £130 billion over five years—so let us keep the change of tack in perspective.
Further, the Government have emasculated the role of the National Infrastructure Commission of the noble Lord, Lord Adonis. The original idea was to empower it to oversee and co-ordinate key infrastructure projects. Now it is just advisory. The departments have made sure that they keep control over all the investments. That is a pity. The idea behind the National Infrastructure Commission was that there should be independent monitoring of investment projects that would keep its distance from political interference—but that apparently has been abandoned.
The Chancellor is rightly concerned about the collapse of productivity. It was chugging along at about 2.2% a year in the decade before the recession and since then it has fallen to below 0.5% a year, taking the period as a whole. The Chancellor has promised £2 billion extra a year for research and development. That is good—but the British problem has never been lack of research but the application of research to business, the source of productivity. As the noble Lord, Lord Desai, rightly said, this has been a British problem for a long time. The problem of productivity is very difficult. There is no simple answer to it. There is a close, though complicated, connection between education, training, investment, productivity and jobs. Here I want to highlight the role of the distribution of jobs in our productivity situation. This has been a job-rich but productivity-poor recovery.
In my view, the collapse of productivity is the direct result of the jobs that have been created since 2010. Between 2007 and 2015 the real hourly wage in the UK dropped by 10.4%—a fall equalled only by Greece in the OECD. This is consistent with the shift from capital-intensive to labour-intensive jobs: in other words, a big increase in the proportion of low-wage, service jobs. If you have that, you are going to get a fall in productivity. Reversing the productivity decline requires investment in good-quality jobs and in industrial strategy—I will come to that in a second—not just small dollops of money for training. Training for what?
The noble Lord, Lord Hennessy, gave a very amusing account of industrial strategy—and it was accurate, as far as it went. There have been many industrial strategy policies, one after another: seven, I think he said. But were they all failures? I do not think that they were. There were losers and there were winners, but that is also true of the private sector. I do not think that industrial strategy has been by any means as bad as that account suggested. The more telling point is that France and Germany—much more successful countries than we are—have also had industrial strategies. Why did theirs succeed while ours did not? Are we uniquely bad at industrial strategy? This seems to be an unsolved problem. It is just assumed. The narrative is that we are hopeless at industrial strategy and that we always pick losers—and then we point to other countries that pick a fair proportion of winners. Japan is another example I could give. So there is something lacking in the explanation.
I want to end by saying something about the role of the Office for Budget Responsibility. It was set up,
“to examine and report on the sustainability of the public finances”.
There is a little issue here because the public finances were supposed to be based on its forecasts. So, in effect, it was set up to monitor the sustainability of its own forecasts. We are surely one monitoring body short here. In June 2010, the OBR made a set of forecasts about the growth in key economic variables over the following six years. The noble Lord, Lord Desai, accuses the OBR of excessive pessimism, but surely he remembers that in this period all its forecasts were excessively optimistic. It predicted that the economy would grow by 17.2% in that period. In fact, it grew by 12.9%. Investment was predicted to increase by 47.1%. In fact, it only grew by 21.8%. It said that productivity would grow by 12.8%. In fact, it grew by 2.5% over the six years. It was consistently overoptimistic. Now, on the basis of four or five months, we accuse it of being too pessimistic. I think we have to take the record as a whole. It is neither continuously overoptimistic nor continuously underoptimistic; it is just continuously wrong.
There are two reasons for these divergences between forecast and outcome. The first is radical uncertainty. Economics is not physics, and no group of economists will ever be able to predict large bits of the future accurately. The OBR is doomed to make mistakes. Why then do we pay attention to these forecasts, when most are fictional? The answer is that we have nothing better. Sure, we have to use the best data we have, but we must not treat them as gospel or believe that they exclude the need for judgment by politicians on what is sensible. We do not currently know what form Brexit will take, we have no clue as to what a Trump presidency might be like, and Marine Le Pen may become President of France at their next general election, yet in the Autumn Statement the Chancellor pronounced that public sector borrowing at the end of this Parliament will be at its lowest in two decades. That means absolutely nothing. We can put no reliance whatever on that, but it is on the basis of OBR forecasts.
The second reason for the divergence between forecast and outcome is more profound. I admire the OBR for its political neutrality and professionalism, but it is naive to believe that it is theoretically neutral. All forecasts must be based on an underlying theory of the economy. These supposedly “scientific” predictions are treated as gospel because of the political independence of the OBR: as a result, the economic theories underlying them are not subjected to public scrutiny at all. They are hidden in mathematics and models, lending them a false air of objectivity. We have seen this time and again. The OBR’s theory of the economy ignored the damage to productivity that austerity would produce. The IMF has constantly underestimated the fiscal multipliers. Now it has changed its tune and said that it did underestimate them and cried mea culpa—but the OBR has never properly explained why its forecasts are bound to be as imprecise or inaccurate as they have turned out to be.
I am as big a critic of economics as anyone in this House—I do not think that economics has a very sympathetic audience here and I am critical of it, too—but sometimes it is better to get the theory right, especially when the lives of nations are at stake.
Baroness Vere of Norbiton (Con)
My Lords, last week I ventured to the other place, which I found to be a somewhat noisy experience, to watch the Chancellor of the Exchequer give his Autumn Statement. He gave a measured and, I thought, very sobering account of the economic state of the nation, and without wishing to fall into the trap of “talking our country down”, I am sure that very few of us would conclude that we are in the strongest of places. I am now going to mention Brexit, and I fear I am going to be a bit political.
I am disappointed by the comments of noble Lords on the Labour Benches that suggest that Brexit was somehow nothing to do with them. I remind your Lordships’ House that the majority of Conservative MPs actually supported remain. The majority of Conservative Peers actually supported remain. I know this. I compiled the list and I published it in the Daily Telegraph. I worked at the heart of the campaign and I am afraid that my report card for Labour during the campaign would have been, “Should have tried harder—much harder”.
However, we are where we are. Even without the uncertainty and the forecast cost of Brexit, our deficit remains significant and our debt, to coin a phrase, is eye-watering. Progress has been made over the past six years, I think we can all agree. The deficit is down, there are more people in work than ever before, the lowest paid have been taken out of income tax and 3 million people are in apprenticeships. There is more to be done. We must redouble our efforts now to build a strong foundation for the future. By “we”, I mean all of us— in the private sector, the public sector and charities—supported and encouraged by government. We must adjust the course of our great nation along a different and more prosperous trajectory to yield greater economic benefits for all over the decades to come, but we have to start this today.
I am not going to reiterate grim forecasts from the Autumn Statement or go into great detail about it, but there is one area that I believe offers great benefit—I am a very positive person so I like to look for opportunities —and that has to be the opportunity to improve our nation’s less than stellar productivity, particularly of the labour market. We know that we lag behind many countries: France, the United States and Germany. That has been said many times in today’s debate. If we want to improve our living standards and achieve real wages growth, we have to be more productive. As the economist Paul Krugman said:
“Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker”.
We should and we must catch up.
The Government can go ahead and pull all the levers they have—they can spend the money, as they do, in research, which is a wonderful thing, given that we have the Higher Education and Research Bill coming up—but it is not enough. The private sector, the public sector and charities must also step up. There are changes that we can make—to the ways that we do things and the way that we think. In essence, we need a change in culture.
Three factors affect the productivity of labour: time, effort and skill. It is very simple. Looking first at time, we know that British workers work far longer than their counterparts in other nations and yet we are less productive. Is it always the case that when someone is at work, they are actually always working? There is an argument that, for some, a kind of presenteeism, of being at work but not always working, has set in. In some cases, I am sure that employees do not even realise that they are doing it. It is a cultural thing. It must be up to the leaders of all organisations to understand the culture in their workplace. Individuals must never be incentivised to eke out the work they have to do across the hours in which they have to do it. Change will require a fundamental shift in attitudes and must be supported by employers. They must look for incentives to encourage change; for example, they might offer “quick finish” bonuses—paid time off when a job has been done well in less time. We also need to build a more robust culture of team working. When workers have finished their work, they should look around to help others, to share the burden, recognising that if one person does well, everybody does well. Organisations must support this and change their reward structures.
Somewhat linked to time is the second factor: effort. All of us in your Lordships’ House will, I am sure, have had good days and bad days. The bad days are when you know that you could have done a little bit more and a slightly better job, but it did not get done. I think we can change the culture a little bit to make a marginal but significant difference. If all organisations recognise and reward the effort—as distinct from time at work—of those who go above and beyond, it would yield results. It is worth noting, and I think this is quite important, that our predilection for crafting ever more tightly drafted and overly bureaucratic job descriptions is probably hindering, not helping, in this regard.
The third factor is skills. Of course, the Government can make great changes to the skills of our nation but our organisations also need to take part. There has to be a greater focus on formal and on-the-job training, more time spent on ensuring that people’s skills match the role that they have, and more opportunities for people to progress in a more flexible labour market. This means regular and formal appraisal structures—activities which are sometimes deemed less than important and, indeed, sometimes overlooked completely, yet which provide a vital forum for both the employer and the employee. Some people are overskilled; that is, underutilised. It may not be possible to progress because it is a small organisation; there is no space. So what should we do? Is it really beyond the pale for organisations to help people find more suitable roles in other organisations, to be at the heart of an orderly, sensible and positive transition, not because they are not good at the job that they are doing but because there is no room for them to progress? It is far better for the individual and, often, the organisation that they are given leave to fly.
The Autumn Statement gave a very clear signal that productivity is top of mind. It must be up to all employers—private, public and charitable—to step up, to create a culture where employees feel that their employers care about them and motivate them to be the very best they can. All government can do is not stand in the way. All the things I have outlined are not new. They are absolutely standard fare for any management training course. But sometimes, in tough times or in busy times, employers can forget what it means to be a responsible employer, to be a good or outstanding people manager. The right reverend Prelate the Bishop of Portsmouth, who is not in his place, calls it just treatment. It is time to remember what we already know and put it into practice.
The political class—the establishment, the elite—has been shaken by recent events in politics at home and abroad. Employers should not regard themselves as being immune to the mood of the country and these shifts in public opinion. Indeed, they might learn some important lessons from the political sphere and proactively improve relationships by fostering positive and frequent engagement with those in their fold. If not, we may find that the chill winds of change course through workplaces, too, and have a very cooling effect on our productivity and our economy.
Lord Tomlinson (Lab)
My Lords, the Minister waxed eloquent about the growth in real wages, as he did about what he called our robust economy. His speech was full of optimism and good news, but that was not borne out by the analysis of the Office for Budget Responsibility. The confidence that the Minister manifested, which he shared with the Chancellor of the Exchequer, was very much misplaced.
When the providers of what is required to be our independent advice did their job within the legal constraints placed upon them by Parliament, there was an orchestrated criticism of bodies such as the Office for Budget Responsibility, the Bank of England and whoever put their head above the parapet and criticised the Government. The Office for Budget Responsibility was attacked with a ferocity usually reserved for the Governor of the Bank of England, especially when he is right.
The reality was somewhat different. We have had many quotations from the report of the Office for Budget Responsibility and I will not go through all of them again. Suffice it to say that they raised several clear points. For one, it said that it,
“is required by legislation to produce its forecasts on the basis of current stated Government policy”.
That is what it was doing. It did not deserve the venom that was heaped upon it for getting a different answer from that of the Chancellor. It went on to say that it,
“made a judgement—consistent with most external studies—that over the time horizon of our forecast any likely Brexit outcome would lead to lower trade flows, lower investment and lower net inward migration than we would otherwise have seen, and hence lower potential output”.
Those are very clear statements that follow quite logically and the Government ought not to get too upset by them but to heed them.
The OBR particularly made the point in its report that in its opinion—I say this particularly to the noble Lord, Lord Horam, who spoke about growth in the economy—
“the economy will grow more slowly than we expected in March, with GDP growth in 2017 revised down from 2.2 to 1.4 per cent and cumulative growth over the whole forecast revised down by 1.4 percentage points”,
and so it went on. The difference between the perspective of the Government and the view of the Office for Budget Responsibility is certainly welcomed by members of the public, and by Members on this side of the House, so that we can make a judgment about exactly where the truth lies. This is not to say that if you believe in one, you are accusing the other of lying but there is a clear conflict of views.
The noble Lord, Lord Wakeham, who is not in his place, made two interesting points that need to be taken up. I hope that they will be when the Government look at their next Budget. I say in passing that I welcome the idea of reverting to annual Budgets, so that we get taxation dealt with only once a year. I very much agreed with what he said about stamp duty and about equalising national insurance contributions for employees and the self-employed. Those two anomalies really need to be dealt with, and they can be to the benefit of the economy without there being any real adverse effects on the income that they produce.
There have been a number of interesting contributions on both sides of the House about the imperatives of growth in the economy and the need to have an increase in spending in the economy. We have had suggestions about investment spending leading to improvements in productivity and spending in relation to housing, the National Health Service and social care. All those things are very valuable. Has the Minister read the report published last week by the OECD, since its advice to the world is, “Spend, spend, spend”? If we want to get employment, growth, productivity and all those issues dealt with, that is its advice. I will understand if he has not read it but I commend it to him as a useful bit of post-Christmas-lunch reading, if he wants something different.
I particularly agreed with the speech of the noble Baroness, Lady Noakes, about productivity and I was interested to hear the noble Baroness, Lady Vere, on the same subject. Productivity is a problem that has been with us for the whole of my political life. I remember in the 1960s, when I was head of the research department for a large trade union, that productivity was the issue. I remember during my time as a Member of Parliament that every time that I met with the local chamber of commerce or the Engineering Employers’ Federation, the agenda did not change. It was about skills shortages, the training to meet those shortages and how we could improve productivity. That agenda is still the same. We have to consider very carefully not just the productivity that comes from investment, which is important, but labour productivity as well. I was very pleased that the noble Baroness, Lady Vere, dealt with this.
I say with all due respect to the Government that if they want to get great improvements in labour productivity and have workers’ collaboration in improving it, they should not do it on the back of having tried to attack them with the Trade Union Act. They were saved from themselves as a Government by the votes in this House because, had that Bill been carried as it was, trade union relations would be vastly worse than they are today. The Government and the unions would not have been able to talk comfortably to each other. Labour productivity must not only be increased; it has to be done on the basis of collaboration with our trade unions and representatives of labour.
We have had from the Prime Minister herself what appeared to most observers to be a discussion about worker directors on the boards of our companies. It then seemed to be withdrawn a few weeks later without any explanation—or the only explanation we got was that, “I never promised it in the first place”, and that everybody else was so stupid that they misunderstood what the Prime Minister was saying. That is not the best atmosphere in which to have negotiations with trade unions in order to get their imperative collaboration with improvements in productivity. Against the background of the comments that we had on the Autumn Statement from the Resolution Foundation on the one hand and the Institute for Fiscal Studies on the other, that is not the atmosphere in which trade unions are necessarily going to say that discussions on productivity are automatically a good thing.
The Resolution Foundation said:
“Average earnings are now forecast to be £830 a year lower than expected in 2020, with this decade now set to be the weakest one for wage growth since the 1900s”
Paul Johnson, the director of the IFS, had a stark assessment for the Government when he said,
“real wages will, remarkably, still be below their 2008 levels in 2021. One cannot stress enough how dreadful that is—more than a decade without real earnings growth … We have certainly not seen a period remotely like it in the last 70 years”.
The instinctive view of many people who are working in the areas where we need to see increases in productivity is: if we work more productively, we will get the work done with fewer people, but we are already being paid lower wages and we do not want the sack to happen at the end of our collaboration in increasing productivity. The Government have to accept that it is almost a necessary requirement to guarantee no compulsory redundancies in the circumstances in which you want to negotiate productivity deals with labour. The situation is pretty bleak.
I conclude by saying that I have probably surprised some of my friends in that I have chosen to abstain from inflicting on your Lordships any of my views on Brexit. We will have enough time to do that in what I suspect will be the years ahead. Suffice it to say that of its own volition Brexit will have a negative effect on budgeting forecasts. When the process is aided by the right honourable gentlemen Boris Johnson, David Davis and Liam Fox, the outcome is bound to be worsened.
Lord Suri (Con)
My Lords, first, I am glad that this will be my last response to the Autumn Statement—not that I am going anywhere, but I am relieved that the Chancellor has decided to have only one large, set-piece fiscal event a year. In previous years, the Autumn Statement has become disconcertingly like the Budget, locking us into a frustratingly short-term mindset. I remember the need for it when it was first announced in 1975, when all the financial indicators were warning of terrible times, but we now, thankfully, live in more stable times, not least because of the measures taken by the former Member for Finchley, more recently of this place. Indeed, I believe the noble Lord in whose name this debate is tabled served briefly in her Government.
Moving forward to the present day, I find plenty to be pleased with in this latest set of data. Growth is projected to outstrip that in the eurozone, and a number of assumptions made by the Treasury prior to the referendum have been proved false. I was not a Brexiteer, and campaigned hard for remain, but even I was sceptical about much of the material put out by the Government. Growth has not collapsed and will be 2.1% next year. Inflation has not skyrocketed. Unemployment has actually fallen significantly. A recession is not occurring, and the OBR is not even predicting one. Indeed, even business investment has held up well, despite great uncertainty. All of this is testament to the resilience of our country’s economy and puts us on a firm footing heading into the Brexit talks.
However, there are some indicators which I am worried about. The likelihood of debt hitting 90% of GDP greatly concerns me. I feel that I must remind all my noble friends that borrowing is always a burden that we choose to undergo but do not bear the costs of paying back. The cost of servicing the debt last year was equivalent to 3% of GDP or 8% of government revenues. Every percentage point we pile on to that figure means fewer nurses, less funding for academies and an ever-diminishing number of warships. The Chancellor has changed the debt reduction timeline to allow himself fiscal headroom, quite sensibly. However, there are a number of areas where I feel expenditure could be diverted to more productive investment and therefore boost growth without adding further funds.
Some time ago, I spoke about the enormous and swelling HS2 budget. The Eddington report was clear that that the pressing rail capacity issue was overcrowded commuter lines around big cities, especially London, Bristol and Manchester. The case for spending £55 billion on a high-speed connective link is weak when it makes more sense to invest the money in higher-capacity and faster regional and metropolitan services. I can confidently predict that, as with most big infrastructure projects, that figure will rise during construction. That may also be the case with the projects I suggest, but at least they will be more manageable.
The obvious cure for the uncertainty felt by business is to set out a transparent timetable for Brexit. If the Government lose the Supreme Court appeal, they must come to Parliament with a concise Bill authorising the triggering of Article 50. This House would be ill advised to frustrate the will of the people, and I am confident that it would not be so foolhardy and brash. Beyond this, the Government have to just show that Britain remains open for business and is willing to provide a friendly atmosphere.
The announcement of high-speed broadband and a new runway at Heathrow have both been large steps towards this aim, but another key one would be corporation tax cuts. Although we currently have the lowest taxes of any major economy, President-elect Trump has pledged to cut his to 15%. We must match any changes, not only to make ourselves attractive but to recompense businesspeople who could be negatively affected by less free access to the single market.
Baroness Donaghy (Lab)
My Lords, I want to talk about the low-paid and those who are probably not managing at all. The Resolution Foundation has said that,
“in the UK twice as many workers are low paid as in some other advanced economies. We pay the price not only in lower living standards but in increased spending on benefits for working families”.
The Conservative-led coalition Government and the Conservative Government from 2015 made enormous capital out of their long-term economic plan and the need for austerity. We had it every day from the Dispatch Box. Now, the long-term economic plan is dead, and the national debt is rising and set to be 90% of GDP by next year. The Government cut 1 million public service jobs. They cut public service pensions. They slashed benefits. They attacked trade unions and their ability to collectively bargain. The long-term economic plan is now dead and the debt has doubled. Instead of investing in a high-wage, highly skilled economy, the Government are continuing their race to the bottom, where low wages, low skills, insecurity and an overreliance on the service sector are the order of the day.
The headlines make much of the national living wage, which is due to be increased to £7.50 by April 2017 for those aged 25 and over. The OBR thinks that it will be £8.80 in 2020—already lower than the £9 forecast of the March Budget. On the other hand, the Low Pay Commission’s independent forecast is that the national living wage will be £8.60 in 2020—40p per hour lower than the March forecast a mere eight months ago. These figures may have a small, favourable impact on someone who works full-time, but they do nothing for part-time or seasonal workers. The Social Mobility Commission has stated that only 10% of those on a low wage ever escape to a higher wage.
The Government have tinkered with fuel duty, a more favourable tapering of benefits and banning upfront letting fees, but the Resolution Foundation calculates that these cover only 7% of the losses that families face with £12 billion of welfare cuts. The poorest third of households will lose income, and higher inflation will make them lose even more. Perhaps our low-wage economy explains in part our poor productivity record—the 35% difference between ours and Germany’s has already been cited several times. I accept that the employment rate has grown in the last six years, but the 2.7 million increase in jobs should be offset by the 1 million jobs lost in the public services. The cap on pay increases in the public services will mean that yet again it is public service workers who are subsidising their own services in health, education and the civil service.
Household saving as a proportion of disposable income has fallen from 11.5% in 2010 to 5.1% now. The level of personal debt is very worrying; it has passed £180 billion, not counting mortgages—more than the NHS costs. Personal debt is growing at the fastest rate in 10 years, and most of those who seek help are young and in work. If there are salary rises and economic growth then this will not become a crisis, but all the forecasts point the other way.
Although there has been real pay growth this year, which gives a small amount of help to the low-paid, women, young people and part-time workers, it is in the context of still being 6.8% below 2009 earnings and still a relatively small sum of money. The top 1% of full-time earners in Britain started at £60 an hour in 2013 figures. Someone paid at the minimum wage would have to work 24 hours a day for 830 days in order to match that figure. We are not talking about “just about managing” here; we are talking about not managing at all.
The proposed improvement to the universal credit taper means that taxpayers in receipt of universal credit will keep 25p of each pound earned instead of 24p. A taxpayer working an additional eight hours at the national living wage in 2020 would be better off by only £1, according to the Resolution Foundation, while a non-taxpayer would be better off by £1.40. These small gains will be more than offset by the cuts in the value of work allowances and the freeze on working-age benefits until April 2020.
Government policies are failing our elderly and our young people. Many Conservatives have called on the Chancellor to provide more money for social care for the elderly, describing the underfunding as having a devastating impact on individuals and the NHS. This has the greatest impact on those without a cushion of savings to allow them some choices. It also has the greatest impact on women, who either will be deprived of their present basic needs this winter or will be doing what they can to support their elderly relatives. Nearly 100 care homes have closed in the last six months. A cross-party group of local government leaders has said:
“The social care crisis is real and it is happening right now. The government cannot ignore it any longer if we are to truly have a society that works for everyone”.
As for young people, ONS figures reveal that there are now a total of 857,000 16 to 24 year-olds not in education, training or employment, an increase of 0.2% since last year.
I want to raise two issues with the Government, one where they have done nothing and one where they have done too much. The 5 million self-employed, many of whom bump along the bottom of the earnings league, are as varied as hill farmers, actors and writers, along with hundreds of other professions. Their typical earnings are actually lower than 20 years ago, according to the Resolution Foundation. Sometimes they need state support when times are hard. The chasm between HMRC and the DWP could not be more obvious; they have failed completely to set up a system that works for the self-employed who are in need, and make completely unrealistic assumptions about annual earnings by the self-employed. My plea is for the Government to look at this again. Will the Minister agree to take it back and look at it? People who are doing their best to manage deserve support. Government inaction does not help the self-employed.
The second issue, where the Government have done too much—people might be a bit surprised by my raising this—is insurance premium tax, which has been increased from 10% to 12%, gathering in £6 billion a year—a nice little earner. This has not received publicity in the same way as has, say, fuel duty, but the costs are passed on to the consumer.
The question is: at what stage will the poorer consumer opt out? One million cars on the road are uninsured and one in four homes has no contents insurance. We will all be picking up the cost of this increase. Will the Minister give an assessment of the proportion of people who might opt out of taking out insurance policies because of increased costs? If he cannot, will he publish details of how the £6 billion will be spent?
Finally, and in summary, leaving the lowest earners without hope or protection will turn people away from our democratic system. It brought it home to me when I watched an American blue-collar worker being interviewed about why he had voted for Donald Trump against what he saw as the Washington elite. The interviewer said to him: “Apparently, it was the uneducated people who voted for Donald Trump”. He replied: “I may not be college educated but I know BS when I see it”. Let us beware that our words of wisdom are not regarded as BS.
The Earl of Listowel (CB)
My Lords, I declare my interests in property as noted in the register. I begin by warmly welcoming the Government’s success in achieving a record high of 74.5% employment in the first quarter of this year. I pay tribute to the noble Lord, Lord Freud, who has championed this area for many years, who has written the report on employment and who has met with such success.
In his debates on poverty in your Lordships’ House, my noble friend Lord Bird has eloquently argued the case for employment as a road out of poverty. Louise Casey, when she was homelessness tsar, made one of her first priorities finding purposeful activity for rough sleepers. The noble Lord, Lord Freud, has himself spoken many times of the benefits to mental health of employment. I recently raised with him my concern about the increasing number of boys and girls growing up without a father in their home. Since then, I have been advised that high male unemployment is followed by increases in couple breakdown, so I welcome the Government’s success in securing record levels of employment, while recognising concerns about the use of sanctions and the quality of employment and that two-thirds of children in poverty have a parent who is in work. I particularly welcome the reduced risk for boys and girls of growing up without contact with their father that high employment appears to bring.
I regret that I was unable to be with your Lordships between 6.30 pm and 8 pm. I was entertaining a group of care leavers supported by the Drive Forward Foundation. They were speaking to me about their housing experience—and I, too, welcome the additional investment that the Government are making in housing. One theme has been the trap that young care leavers can find themselves in. They may have housing benefit to pay for accommodation, but, as soon as they seek work, they risk losing it, so there is every incentive for them simply to sign on and not go into employment.
One very brave young woman described her experience as a care leaver with severe impediment to her vision. She has successfully secured an apprenticeship in a City firm, but has been immensely challenged trying to rent in the private sector to allow her to turn up regularly, as her job demands. It is inspiring to hear from such young people, and I am particularly grateful to Jordan Morgan, the care leaver who helped organise this meeting and has produced a report on homelessness and care leavers.
On productivity, I was surprised that no mention was made of investment in ensuring that children have the very best start in life. The Minister might wish to speak to his colleagues the right honourable Andrea Leadsom MP and the right honourable Iain Duncan Smith MP, who have great expertise in early childhood. The evidence is that high-quality early years education and childcare can produce a huge boost later in terms of educational attainment and arguably provide good protection into later life against mental ill health and help productivity.
On that note, I welcome the Government’s extension of free childcare to 30 hours a week to working parents of three and four year-olds. I appreciate the early years funding review and the significant financial investment that the Government have made in childcare. However, I share the concerns of the early years sector, the Pre-school Learning Alliance, the National Day Nurseries Association and the Family and Childcare Trust about the sufficiency of future funding after this year. I am concerned that future funding may not sustain the sector and ensure the vital high quality of provision.
I would like to see an annual review of funding of early years provision to secure quality and sustainability of provision into the future. What role do early years care and education play in the Government’s strategy for employment and productivity? What means will they use to assuage concerns about adequacy of funding beyond this year? I quite understand if the Minister might prefer to write to me. High-quality and sufficient early years provision is vital to sustaining high employment today and a future generation of productive citizens. I look forward to the Minister’s response.
Lord Northbrook (Con)
My Lords, it was extensively trailed that that the Autumn Statement would be peppered with bad news. Facing weak economic forecasts, the Chancellor refrained from indulging in fiscal gymnastics and instead set out a simple plan: the Government would borrow £122 billion more during this Parliament, including new spending, and £59 billion extra due to Brexit, and push deficit reduction beyond the next election, in contrast to George Osborne’s plans to get into surplus by 2019-20, which I always felt were unrealistic. I welcome the commitment to reduce the structural deficit to less than 2% by the end of this Parliament. The Chancellor will be giving out some £23 billion, mainly to invest in infrastructure; he will also be keeping £27 billion aside as a Brexit shock absorber, if he needs to turn on the spending taps ahead of the next election.
First, I will look at the economic forecasts for GDP growth in the light of the Statement. The good news, as the Chancellor said, is that the UK is forecast to be the fastest-growing G7 economy in 2016, and the third quarter annual GDP growth was 2%. The bad news is that the slump in sterling and Brexit uncertainty have caused the OBR 2017 and 2018 forecasts to be severely reduced, although they are unchanged for 2019 and 2020.
On the public finances, the OBR’s forecasts show a deterioration since the Budget of 2016, due to disappointing tax revenues over the first half of this year, a weaker economic outlook weighing on receipts from income taxes, and higher spending by local authorities and public corporations and on welfare benefits. Compared with the OBR’s Budget 2016 forecast, borrowing is higher in every year and £32 billion higher in 2021-22, according to the Autumn Statement. Debt is expected to peak at over 90% of GDP in 2017-18, due to a combination of higher borrowing, lower asset sales and the impact of the Bank of England’s monetary policy operations. The Chancellor stated that he is determined to,
“return the public finances to balance as soon as possible in the next Parliament, with an interim objective of reducing the structural deficit to less than 2% of GDP, and for debt as a percentage of GDP to be falling by the end of this Parliament”.
Public sector debt will, on the OBR’s forecast, top £1.9 trillion by the end of the decade, up from £500 billion 10 years ago and £1 trillion in 2010. As Martin Wolf of the FT said last Thursday, two of the three fiscal rules established by George Osborne have been broken. He failed to achieve public sector net debt falling as a share of national income every year. Also, he was unsuccessful in keeping welfare expenditure below a cap. Brexit has now killed the third, the legislated commitment to reach an overall budget surplus by 2019-20. Although the debt figures are mouth-wateringly high, the Chancellor is gambling that, as other major G7 countries also have very high levels of debt, the markets will take this calmly. The wild-card factor is whether the reappearance of higher than expected inflation—with the RPI forecast by the OBR to rise from 1.8% this year to 3.6% in mid-2018—coupled with prolonged trouble over Brexit will cause problems, for instance with gilt issuance, and upset his calculations. We have already seen signs of inflation price increases with sterling’s depreciation since Brexit.
One area where the forecasts look particularly gloomy is projected revenue, particularly from income and national insurance contributions. The OBR expects them to be much lower than had been thought in March, while corporation tax revenues are expected to be higher. The OBR has noticed that, in recent years, the Government are raising more than expected from corporation tax—and I welcome the plans to cut it further—but much less from income tax and national insurance contributions. One factor is that many more people are classifying themselves as businesses rather than workers. The rate of corporation tax is much lower than the top rate of income tax and this supports the Laffer curve theory that taxes can raise more revenue at reasonable lower levels. I praise the raising of the personal allowance for income tax but, like my noble friend Lady Noakes, I criticise the failure to cut the top rate of income tax from 45% to 40%. Stamp duty revenue projections are down. I also agree with my noble friend Lady Noakes’s criticism of this. When the former Chancellor raised rates to an unreasonable level, I entirely expected this to happen. Does the Minister accept that the rate is far too high at the top end? I also echo the criticisms of the treatment of buy-to-let stamp duty, as mentioned by my noble friend Lord Flight. I do not understand, from the receipts forecast table 4.6 of the OBR outlook, why tax revenues are going to increase from 2017 to 2019 when GDP growth is declining. Will the Minister explain this to me?
Moving on to the standard of living, rising inflation is expected to squeeze the purchasing power of people’s wages in real terms. As other noble Lords have mentioned, analysis by the Resolution Foundation shows that the outlook for family finances looks bleaker than the OBR’s forecast in March, with average real earnings set to be £830 lower by the end of 2020. As Paul Johnson, director of the Institute of Fiscal Studies, put it in the wake of the Autumn Statement:
“Real wages will still be below the 2008 levels in 2021 … more than a decade without real earnings growth”.
Growth in real earnings is expected to be only 0.1% in 2017. The rise in the national living wage to £9 by 2020 will, according to the OBR, put upward pressure on the employment figures.
The subject of productivity was ably covered in the Autumn Statement and has been mentioned by other noble Lords. As the Statement says, raising productivity is the,
“central long-term economic challenge facing the UK”.
The Chancellor said that Britain was facing a productivity emergency. It takes a German worker four days to produce what we make in five, which means that too many British workers work longer hours for lower pay than their counterparts. He is making it a key area of focus for the forthcoming industrial strategy. He tells us that if the UK raised its productivity by 1% every year it would add £240 billion to the size of the economy—£9,000 for every household in Britain.
The Government’s approach to raising productivity is based on encouraging long-term investment in economic capital such as technology, innovation, infrastructure and skills. It is also based on encouraging a dynamic economy which ensures that resources are put to their best use. According to the Statement, there has been a sustained worldwide slowdown in productivity since the financial crisis, which has exacerbated a long-standing gap between the UK and the most productive nations. Hence the Autumn Statement announces the setting up of a national productivity investment fund, which will be targeted at four areas which the Government believe are critical for improving productivity—housing, transport, digital communications, and research and development. It is to this body that the £23 billion I referred to earlier is being given to spend. Let us hope the money is spent wisely.
The Chancellor had a difficult task in the Autumn Statement. In the circumstances he had little room for manoeuvre. However, he has made a promising start.
Lord Hunt of Chesterton
My Lords, the Autumn Statement focused on policies to improve people’s prosperity. I declare my interests, which include giving a little help to business and government.
We should welcome the Government’s maintaining a national living wage. It is another pillar of a modern state that the Conservatives and their business supporters first resisted long ago. It is now very welcome that they endorse this policy as being part of a modern Government. The other pillar that is integral to the welfare state of most European countries is modern, environmentally secure housing for all. However, the Government’s welcome plan to increase housing does not include any significant return to social housing for the majority who cannot afford the huge costs of owner-occupation. I welcome the noble Lord, Lord Horam, on the Benches opposite making that point on the Minister’s behalf.
We can all welcome the Government’s objective to improve prosperity. However, as other speakers on this side of House have emphasised, we fear the downbeat assessments of the damaging threat of Brexit and the prospect of the continuing low productivity of UK business, which will not be helped by the dislocation between UK and EU business and technology that I fear will result from Brexit. I will return to that. Low productivity means that too many people have low-skill jobs that do not use their education and training. It also demotivates people from pursuing higher training, as the noble Baroness, Lady Vere, explained.
Reduced unemployment should remain a vital objective, as the noble Earl, Lord Listowel, commented. The UK needs to encourage overseas high-productivity companies such as Veolia and Suez, which provide basic services, to come here. Some companies provide laboratories and design centres, such as Nissan at Cranfield. The Government should help increase productivity by linking their policies with public bodies’ investments, but Whitehall—I had experience of Whitehall when I worked at the Met Office—always finds linking such policies a challenge, as the noble Lord, Lord Hennessy, said. Perhaps the new ministry—the BEIS—will succeed.
The Chancellor advocates that UK companies need to grow and have high productivity. But how will these companies remain in the UK? The Chancellor did not have the answer but he pointed to the problem. This will surely depend on collaboration between the Government and the financial sector to keep these companies in the UK with sufficient finance. We have seen many high-tech companies grow and then leave the UK—some of my own friends in Cambridge did that. Socially and economically important types of UK companies need to grow and make good use of advanced engineering technology. For example, UK businesses need to provide materials and technology to improve the thermal efficiency of buildings. This needs to be a UK effort and success story in place of the huge imports from the continent that we have at present. The thermal efficiency and resilience against flooding of UK buildings are much inferior to those of other European countries. The Government’s green plan for improving housing was not a success.
Investment in road and rail is another aspect of the Government’s plan for investment, which is very welcome, and this construction is equally important for the UK’s economic future. Some of the UK’s transportation is of course world leading: for example, we should not forget that the tunnel in London is definitely a world leader. But I am always amazed that our business community does not follow our French neighbours in establishing toll roads—which, as we see in France, are generally superior to our saturated motorways and built so much faster across their whole country. UK A roads are also being built too slowly, and their parking lay-bys are very unhygienic places.
I will end on a more positive note, about how the Government and City are progressing the growth of UK-European technological and commercial collaboration. The success of non-carbon nuclear and wind by French, Danish and Japanese companies working in the UK contributes greatly to Britain’s contribution to reduce climate change. Airbus is a partially UK-owned business, centred on advanced collaboration in manufacturing and aerospace. My noble friend Lord Jones is expert in that, since of course the wings are built in the Welsh-English border territory. However, will the Government ensure that the UK’s share will be maintained? It is now less than 20%, and the UK is no longer involved in the strategic steering of Airbus. Perhaps we should be confident that this collaboration will be supported by the Prime Minister. Unlike Mr Cameron, who flew to Beijing in a Boeing, Mrs May recently flew to India in an Airbus 330. Even the Daily Mail thought that was a good thing—although it did not mention that the aeroplane was built in France: that would have been too much. This is an encouraging sign for European and global collaboration, and perhaps it is the right sort of industrial strategy.
Baroness Kramer (LD)
My Lords, as the first of the wind-up speakers, I will say what an insightful debate this has been, with a great deal of food for thought. Of course, that makes winding up exceedingly difficult, so I thank your Lordships.
Almost every speaker today has focused to some degree on the extraordinary impact of Brexit on the OBR forecast, and looked at the before and the after. I will not repeat the numbers on the impact on growth and output, which have often been shared on the Floor today. However, I will pick one number, described by my colleague, my noble friend Lord Fox, as a Brexit black hole: the impact on public sector net debt. As many who read the Autumn Statement will be aware, the March forecast for 2019-20 for public sector net debt was £220 billion lower than the new November forecast. Some £100 billion of that was due to action by the Bank of England. I pick up that point in part to respond to the noble Lord, Lord Higgins, because I want to agree on the effectiveness and importance of the impact Governor Carney has had on stabilising the economy. That £100 billion is part of the stabilisation package to give long-term assurance that financial institutions will be in a secure position as a consequence of Brexit, but it is still a Brexit number. That, essentially, leaves another £120 billion, the bulk of which, one way or another, is due to the negative impacts of Brexit. We can see how that number has in many ways paralysed the Chancellor and limited his options. While in many ways I support the various spending commitments he has made, almost all of them are small and limited because he sees no room for manoeuvre, especially in trying to keep some capacity to deal with a worse outcome than that suggested by the OBR.
Speaker after speaker—the noble Lord, Lord Livermore, my noble friend Lord Fox, the noble Baroness, Lady Hollis, and many others—focused on the damage that this loss in growth and rising public sector net debt causes families. According to the OBR forecast—by the way, the OBR is more optimistic than many other bodies, such as the Bank of England—national income in 2020-21 will be down by over £30 billion, which is equivalent to more than £1,000 per household. There have been many quotes from the Institute for Fiscal Studies but the one that particularly struck me is the following:
“the outlook for living standards has deteriorated rather sharply since March. The OBR is forecasting both lower nominal wage growth … and higher inflation”.
The noble Lord, Lord Flight, who is not in his place, talks happily of the benefits of the collapse in the value of sterling, but it imports inflation, which will be borne by the least well off in our communities and those very families whom so many speakers have identified today. Real average earnings will be 3.7% lower in 2021 than was projected in March.
“To put it another way”,
says the IFS,
“around half of the wage growth projected for the next five years back in March is not now projected to happen”.
That is a serious and dire consequence for people who have been living through a long period of austerity. They include public workers, who are still facing a significant wage freeze, despite the fact that we now have high inflationary forecasts.
The Government will say to us, “We’ve adjusted the taper rate for universal credit and we’ve made a slight increase in the national living wage”. However, before they say that, I point out to them that the IFS has explained that they,
“pale into insignificance alongside the benefit and tax credit cuts announced last year”.
The right reverend Prelate the Bishop of Portsmouth could not have put it more eloquently, and we also heard the noble Baroness, Lady Donaghy, on the same issue: there really is no jam for the JAMs in this Autumn Statement. We have done a back-of-the-envelope calculation and it looks as though those who were facing a planned cut of about £2,000 a year under the changes in universal credit and the allowance benchmarks will get no more than a reduction of about £200 in that £2,000 cut, so the change is essentially quite marginal.
That tiny bit of jam is actually being paid for by families. So far in this debate no one has mentioned the whacking great increase that is coming in insurance premium tax. It is already set at 10%, which is way too high, but it will be rising to 12%. It is a tax that, above all, hits young people—millennials and young families. For the typical family, the IPT alone will bring an additional burden of £90 a year compared with 2015. It is the mechanism through which some of the ameliorations in the harsh welfare cuts are being financed. As we heard from the noble Lord, Lord O’Neill, who talked about intergenerational fairness, and a range of other speakers, of all the groups that need relief, not punishment, surely this group of millennials—young families and young people—should have been recognised in the Autumn Statement, but quite the reverse was true.
The only real nod to that group has been the ban on charging tenants for letting agents’ fees, which was mentioned by the noble Lord, Lord Whitty. I totally support that, but perhaps I may recommend to the Government that they support the excellent Private Member’s Bill which is already in this House, sponsored by my noble friend Lady Grender, because it tackles exactly this set of issues and would enable the Government to achieve quickly and without delay the goal of relieving those tenants of the burden of paying these fees. With this Bill there is an “immediately to hand” mechanism.
I, like others, am absolutely shocked that there was no mention in the Autumn Statement of additional funding for the NHS and social care. The issue was raised by my noble friend Lord Fox, and the noble Baronesses, Lady Warwick and Lady Donaghy, and a range of others. Scarcely a week ago, the NAO reported on the absolutely perilous state of NHS finances. I and my party have argued that, despite the fact that we are in such tough times, we need an immediate £4 billion injection—that means now, not in future years—including £1.3 billion ring-fenced to go directly to social care and delivered directly to local authorities, and £500 million ring-fenced for mental health. We are in a state of crisis. This is an emergency and it needs an immediate government reaction. Frankly, the Autumn Statement should have been that opportunity.
The Chancellor has agreed to more funds for capital spending, and I support that thoroughly. The largest item within that offering is the national productivity investment fund of £23 billion over five years. However, a number of noble Lords, including the noble Lord, Lord Bilimoria, pointed out that when you divide £23 billion by five, it is not really such a big number. There are then various scatterings of other investment throughout the Autumn Statement. It is a very good example of how constrained the Chancellor feels. However, he is making a commitment to additional funding for infrastructure and long-term investment, and I say to the noble Lord, Lord Higgins, that I desperately hope that this reflects a change in Treasury thinking, even though it has not been said out loud. Long-term investment in capital expenditure needs to be on an entirely different set of tram tracks from the management of the current account. It is a different consideration with a different set of issues, as I have been arguing for years. The noble Lord, Lord O’Neill, who is in his place, is quite sympathetic to the view that the current account and the associated deficit should be considered completely differently. I wonder whether we are now beginning to see that in the Treasury’s thinking—I hope that is true.
I am still unclear as to whether all the spending is new spending. I point out the £1.8 billion allocation from the local growth fund that was announced in all these numbers. I remember announcing that, as did various other Ministers back in the coalition years, when we set the spending allocation until 2021. Therefore, it may not all be entirely true, but I am glad that there is some new money in there.
As we have heard from speaker after speaker, if we are to increase our productivity as a nation, we have to increase our capacity to invest and deliver on an even greater scale. This morning, I was at a rail conference. Frankly, everyone agrees that, everywhere, the rail network is out of capacity—and that is just one sector of the economy. In the coalition days, it was quite difficult to deliver new infrastructure projects rapidly because the analytical work and the planning had not been done. However, on project after project that is now in place. Skills are short and there are still organisational problems, but we should be able to start delivering on a far greater scale than we have been able to in past years. Surely the Government should be looking at that, for the variety of reasons that were given in this debate.
I want to pick up on the point that we must not neglect the regional element in all of this. The noble Lord, Lord O’Neill, talked about the northern powerhouse and the noble Lord, Lord Jones, talked about the Midlands engine. Other noble Lords talked about the south-west and many other parts of the country. All that remains essential and needs to be captured within this more significant investment. We need a complete step change in this area, and we have to regard the Autumn Statement as only a minor downpayment on this essential investment. I have one question for the Minister. I am unclear whether any of this money is replacing the money that is now being lost from the European Investment Bank, which, as he will know, is now reluctant to fund any UK project with a life longer than two years.
On reading the Chancellor’s Statement, you would think that we were going to build more houses. However, I recommend that noble Lords read the OBR forecast, which makes it clear that, thanks to the changes in the funding for housing associations, 13,000 fewer houses are forecast to be built over the next five years. The money for 40,000 new affordable homes is too little to make up the shortfall. This is, frankly, dire. Those points were made by the noble Baroness, Lady Warwick, and the noble Lord, Lord Hunt. Let me call yet again for the Chancellor to uncap local authority borrowing for homebuilding purposes. Housing is becoming a national emergency and he must put local councils, as the bodies most able to deliver affordable homes quickly, back into homebuilding in a significant way—of course working with housing associations, which are so important to local delivery. But we have to get the capacity back on stream and very quickly.
It is really quite shocking, to pick up the point made by the noble Lords, Lord Hunt and Lord Fox, that the Chancellor has no investment money for our cutting-edge green energy industries. We are going to lose our world leadership in that area without even a fight unless we deal with its need for significant investment now. There is money for ultra-low emission vehicles—an issue very close to my heart—but I can tell noble Lords from experience in the coalition years that it is below the amount needed to deliver us dominance in this new technology.
Some noble Lords will say that some of the measures I have called for require more money, and that is true. I have always been opposed to the cuts we have seen in capital gains tax, but even more, I cannot understand why the Chancellor, at a time of real fiscal pressure, has confirmed future cuts in corporation tax to 17%, well below the current 20%. He must know—and I say this to many on the other side of the House, including the noble Baroness, Lady Noakes, and the noble Lords, Lord Flight and Lord Suri—that almost no corporation large or small has been asking for further reductions. He will also know that we now have long experience that cutting tax rates, particularly below the 20% mark, does not tempt companies to invest or grow. To make matters worse, he has confirmed that corporation tax may go even lower. In a race to the bottom, he has seconded the Prime Minister’s promise always to have the lowest corporation tax in the OECD—in other words, confirming this Government’s self-identification as the largest tax haven of any developed country. I wish him good luck in trying to find friends to do a trade deal when that is what is promised.
I have never known the OBR’s forecasts to be so uncertain. I disagree with the noble Lord, Lord O’Neill, on this, because often there are what pundits call unknown unknowns. We have never been in a situation of so many known unknowns. There are so many issues of such uncertainty, on such scale, and I can understand that that makes all this difficult. But in that circumstance, the Government’s continuing refusal to give any guidance on where they are taking Brexit is making life fraught, and not for us—who cares about us?—but for the companies that are the foundation of our economy. Even the public are now worried, with sharp drops in confidence in the future in all but the oldest age groups. No experienced negotiator buys for one minute the idea that complete silence is necessary or even sensible for a strong negotiating hand. That leaves us with the feeling that the Government say nothing because they have not a clue what they are going to do. That is more worrying than almost any other feature. I call on the Government to shift the dial, have that conversation and declare where they intend to lead this country, rather than meandering rudderless, as they are tending to do right now.
Lord Davies of Oldham (Lab)
My Lords, this has been an excellent debate, but somewhat mistitled. It is not in the light of the Autumn Statement, but in the shadow of the Autumn Statement and Brexit. That has been the theme of this debate. Even the more optimistic outline that the Minister put before us has been countered by a range of real anxieties expressed widely across the House.
Although the Minister did an excellent job in indicating that the objective is to create an economy that works for all and one in which all will share in its prosperity by making their contribution to improved productivity, what was missing from the analysis was how to arrive at that point. There was no confession that there have in fact been six wasted years in the pursuit of an austerity programme that, while it has had an impact on the deficit, has done so at enormous cost to the economy, and of course with low growth rates. They are so low that the Government have now decided that they have to relax their fiscal objectives and be prepared to borrow more in order to bring some element of growth into the economy, which will be the basis of increased prosperity in this country. As my noble friend Lord Livermore pointed out in his speech at the opening of the debate, on which I congratulate him, there is a whole range of acute difficulties facing the Minister given his suggestion that the Autumn Statement brings good tidings for all sides.
The shadow that has been present over the debate is of course the shadow of Brexit. As the OBR indicates in its paper, Brexit is going to have a very significant impact on growth and the public deficit, and it is extremely difficult for the OBR to be totally confident about its predictions because its legal obligation is to reach such predictions on the basis of clear government policies. However, as has been indicated by noble Lords on both sides of the House, when the OBR asked the Government about their policies, answer was there none. The Government are in an extraordinary position in which they are not prepared to disclose any area of policy relating to Brexit—apart from Nissan. We have never worked out just what it is that Nissan will benefit from, but there seem to be some assurances, perhaps also for the rest of the car industry, for manufacturing as a whole and in fact for the rest of the economy. The nod and the wink that one can take from Nissan is the basis for the future of the Government’s negotiations on Brexit. We shall see, and of course we hope that they are hugely successful, but we must recognise that the international perspective presents us with great difficulties.
It is not easy to talk about our friends in Europe because the only people who are coming forward at the present time seem to be expressing some pretty severe criticism of the British Government. But if we look to our oldest friend and ally across the Atlantic Ocean, we might have some difficulty being overwhelmingly optimistic there. I do not know because I am no better versed than anyone else on just what to take seriously about President-elect Trump, but if I was asked to suggest one commitment to which he might adhere when he takes office, the element of protectionism might run strong: making America great again by sealing off other competitors. That is not exactly the best context in which Britain should be putting itself on the world stage, having left the advantages of a very significant market and hopeful that we can make up for that through fresh trade agreements elsewhere.
It may be that the Government feel that it is possible that Brexit will turn out to be much better than some fear. However, what is almost undeniable is that we are bound to live through this period of uncertainty. We are all aware that one of the greatest dangers to the economy is a period of uncertainty. That is what deters investment and what afflicts the population with a somewhat more pessimistic view than they otherwise would adopt. It creates difficulties for us all.
What has been established in the debate is that the Autumn Statement abandons the long-term economic plan—so long term that it survived six years—and we are going to have a plan on productivity. The noble Lord, Lord O’Neill, who often responded to debates in this House by educating us on the difficulties of increasing productivity, gave a speech of great interest and relevance to the debate, but which somewhat veered away from dealing with productivity. I am not surprised. As the debate developed it became clear that although the Government have a nice title for their scheme for the development of productivity, the challenges that face us in improving productivity are great. The noble Lord, Lord Skidelsky, identified them with some precision.
This is against a background where, for the past six years—in fact, since the period of the financial crisis—the Government have been running a low-wage and poor-jobs economy. It is not surprising that productivity registers pretty poorly on the scales as a result. On this, the Government have stayed true to the past. There was bound to be some degree of continuity, not least given that, although certain Ministers went, certain Ministers survived. Some prospered, such as the Prime Minister and the Chancellor with his elevation. I do not know whether the noble Lord, Lord Young, regards this as a vast improvement on his previous role in the Commons. We think it is because we are glad to have him here and we hope he enjoys it. But my goodness, he should not anticipate that he will get an easy ride on economic debates, as he will have recognised this evening.
A series of questions has been addressed to the Government, but one relates directly to the fact they have continued their bad ways. They are setting out to make sure that the less well off and those on benefits are the ones to pay the really savage price. That was the charge made by my noble friends Lord Livermore and Lord Hain, but most significantly by my noble friend Lady Hollis. She identified just what the impact would be of the persistence of the freezes of benefits contained as part of the relics from the past, which are continuing into the early years of this new Administration, and of the determination to ensure the amount of money spent on benefits is kept down to the levels the Government approve of, which are mercilessly difficult for those seeking to cope with them.
The right reverend Prelate the Bishop of Portsmouth identified that we have to think about equity and fairness. If we are to get through these difficult times—I do not think there is anyone, even the most optimistic of Conservative supporters, who does not recognise that there will be some pretty stiff challenges ahead—would it not be better to have a nation that is united in the objectives and wished to follow a common plan of recovery? How is that possible to achieve when the Government are pursuing their old strategy of making those who have the fewest resources pay the heaviest price?
Of course, there are good things in the Autumn Statement. My noble friends were kind enough to indicate that they appreciated aspects of the housing strategy, although we all want assurances that any housing strategy will include affordable homes in large numbers, otherwise it will not be a housing policy that meets the dire needs of so many of our people at the present time, including the young. One aspect of the debate that was perhaps covered only tangentially is the fact that, whether we like it or not, most of us here are of one generation and an awful lot of people who are suffering in our economy at the present are at least one generation below us, if not two. Are we being fair to younger people? Housing is critical, because we know that, at present, apart from the well endowed or those supported by wealthy parents or grandparents, getting on to the housing ladder is phenomenally difficult for those with limited resources and earning power. We cannot solve our housing problem unless we deal fairly with those, too.
This has been a debate in which every line that I wrote and had ready to deliver to the Minister has been covered more than adequately by contributions from all noble Lords, who have thought deeply about these issues. The Minister will recognise anxieties on his own side regarding the position that he has to defend this evening, but they are as nothing compared to the position of Her Majesty’s Opposition. All noble Lords on my side set out clear priorities which the Government ought to follow. We have no obvious faith at the present time that these will be followed by the Government in these crucial few months.
Lord Young of Cookham
My Lords, it is presumptuous to try to distil more than 300 minutes of high-quality debate into an acceptable summary. There is a clear tension between, on one hand, doing a discourtesy to noble Lords by not addressing all the issues they raised and, on the other, testing their patience by going on for too long. I will try to get the balance right, but if I do not address the key issues that have been raised I will of course write to noble Lords.
I thank all those who have contributed today for bringing their knowledge and experience to bear, from academia, business and government, on the issues in the Autumn Statement. No one was sorrier than I was to see the noble Lord, Lord O’Neill, leave the Government, to which he made a hugely important contribution over the last two years. My presence at the Dispatch Box as a Whip shows that he is absolutely irreplaceable. His contribution was great, not only through his dedicated efforts to see global action to counter the threat of antimicrobial resistances, but also of course through his work as Commercial Secretary to the Treasury, particularly on rebalancing the economy, with his unswerving determination to ensure growth outside London and the south-east and the northern powerhouse. We heard his encouragement to go faster and be bolder this evening. Indeed, it is thanks to him that we have been able to give power and resources to our great cities.
One theme that ran through the debate concerned living standards and income distribution. This was touched on by the first speaker, the noble Lord, Lord Livermore. I agree with what he said about the need for a better-informed, tolerant, broad-minded discussion about immigration. Picking up something that the noble Lord, Lord Bilimoria, said, I think there is scope to reskill the indigenous population to reduce, if not eliminate entirely—I take that point—our dependence on inward migration. The noble Lord, Lord Livermore, raised the subject of income distribution. Living standards are at their highest ever level—3.3% higher than in 2010—and by 2021, as measured by real household disposable income per head, are forecast to be 2.8% higher than they are today, according to the OBR. That figure is different from some of the figures that other noble Lords used because they tended to use earnings growth, whereas our view is that real household disposable income is a better measurement of living standards.
The noble Baroness, Lady Hollis, and others developed the theme. Those who are migrated from legacy benefits to universal credit will receive transitional protection, so they will not experience any cash losses. Here there is a real risk of getting lost in a war of statistics on child poverty. The percentage of individuals and children in relative income poverty is lower than it was in 2009-10—there are some 100,000 fewer than in that year. Between 2010-11 and 2014-15 the percentage of families in the bottom half of the income distribution who were in work increased from 60.3% to 65.7%. In the year to April 2016, workers in the fifth income percentile saw wages grow by 6%, which was the highest growth at any point in the distribution. Of course, we have supported that with the national living wage. The noble Lord, Lord O’Neill, put it much more concisely by saying that income inequality is lower than it was 20 years ago. In fact, disposable income inequality is lower than it was in 2010 and close to the lowest levels since the mid-1980s. Of course, we need to do more but progress is being made.
On that theme, the noble Earl, Lord Listowel—in some ways the conscience of the House—raised a number of issues about care leavers and homelessness. I will pass his remarks about early years funding on to the relevant Ministers and accept gratefully his generous suggestion that I should write to him on some of the other issues.
The theme of intergenerational inequality was raised by the right reverend Prelate the Bishop of Portsmouth and others. To put that in perspective, pensioners have lost what used to be the age allowance, which they got when they reached a certain age. That has been abolished. Of course, people have to wait longer and will have to wait even longer before they get the state retirement pension and lower interest rates have tended to disadvantage pensioners and help younger people. It is not entirely a one-way equation.
We had a number of comments about the OBR and its forecasts. The noble Lord, Lord O’Neill, and the noble Baroness, Lady Noakes, indicated that the OBR forecast might be too pessimistic and there were reasons for being optimistic. I think my noble friend Lord Suri also came from that camp. The noble Lord, Lord Desai, suggested that we should use the OBR forecast to front-load the borrowing while interest rates were still low. I take the point but that sits uneasily with the Government’s objective to reduce indebtedness.
The noble Lord, Lord Whitty, and my noble friend Lord Higgins both agreed with the action taken by the Monetary Policy Committee. I think the noble Baroness, Lady Kramer, also made the point that the action which it took post the referendum decision has enabled the economy to be more resilient than it otherwise would have been. My noble friend Lord Higgins raised the serious issue of the interface between fiscal and monetary policy—the one being in the hands of the independent MPC and the other being in the hands of the Government—and asked what would happen when quantitative easing unwound. The answer is: the sale or reinvestment of gilts in the asset purchase facility is a matter for the MPC but the Bank of England has stated that it will have due regard to the Government’s debt management objectives in the event that it decides to sell the assets.
If I were to pick out two speeches that people outside should read—of course they should read all the speeches—they would be the contributions of the noble Lords, Lord Hennessy and Lord Taverne. The noble Lord, Lord Hennessy, stood back and put the issue of national planning in perspective. He reminded noble Lords of my own modest role in the 1960s, when I worked for the National Economic Development Office on the national plan, which turned out to be a notional plan rather than national because the economy could not sustain the public sector investment that was predicated. His was a stand-alone and distinctive contribution. The noble Lord, Lord Taverne, again stood back and asked a relevant constitutional question about the future of Brexit. Mercifully, he answered it himself in his final sentence; I shall not risk my career by going down that path. Nor shall I irritate noble Lords by repeating the Government’s line to take on the single market, on Brexit, on running commentaries and everything else. However, those two contributions were very important. On the point made by the noble Lord, Lord Hennessy, I hope that this industrial strategy will have learned the lessons from the previous ones that he mentioned. It is about creating the conditions for winners to emerge and grow, rather than picking winners.
We then moved on to what was perhaps the most interesting contrast between the two sides of the debate: whether we should borrow more or less. A range of noble Lords from the Opposition Benches including the noble Lord, Lord Hain, and the noble Viscount, Lord Hanworth, wanted more borrowing. More borrowing would reverse the progress which the Government have made in getting it down to a manageable level. I listened to some of the gloomy forecasts made by noble Lords opposite; so far, the performance of the country has confounded all forecasts. Indeed, over the weekend the OECD uprated its forecast for the UK economy for next year. Counterbalancing those who wanted us to borrow more we had my noble friends Lord Northbrook, Lord Leigh, Lady Vere, Lady Noakes and Lord Flight, who thought that Keynesianism had perhaps gone as far as it should. Noble Lords on this side were arguing for prudence rather than for more borrowing.
The answer to “Why should we not borrow more?” is that the deficit reached 10.1% following the financial crisis and, despite our reducing borrowing as a share of GDP by almost two-thirds, at 4% it still remains too high. Public sector net debt, which is forecast to reach 90.2% of GDP in 2017-18, is also eye-watering, as some of my noble friends mentioned. We are trying to have a new fiscal framework that gets it down to a manageable level.
The noble Lord, Lord Skidelsky, talked about the OBR in somewhat disparaging terms but I hope he would agree that it is better to have the OBR doing forecasts than the Government doing them, which is what used to happen. It is independent and there is greater transparency and, I think, credibility in the economic and fiscal forecasts on which policy is based by having the OBR. It regularly publishes comprehensive forecast evaluation reports, in which it examines its own errors and models. The latest report was published in October.
My noble friend Lady Noakes was cautious about whether the national productivity improvement fund would achieve its objectives. I hope that it will identify the bottlenecks and areas where the economy is underperforming, enabling us to make faster progress. The NPIF was welcomed by, among others, the noble Lord, Lord Bilimoria.
My noble friend Lady Vere argued for a culture change in the whole of society to drive up productivity. My noble friend Lady Noakes made the point that the Government do not create productivity, but we do create the environment for businesses to increase it. The OBR expects productivity growth to increase over the forecast horizon and average 1.5% a year between 2015 and 2020.
Many noble Lords commented on R&D spending, including the noble Lords, Lord Bilimoria and Lord Kakkar. We recognise that the UK is a world leader in science and the most productive country for research in the G7, but levels of innovation are lower in the wider economy. The R&D spending that we have announced seeks to combat this and maximise our research base. It will now increase by around 20% in this Parliament—the biggest increase in any Parliament since records began in 1979. I will write to the noble Lord, Lord Kakkar, on the specific questions he raised about the distribution and timing of decisions on R&D.
The noble Lord, Lord Fox, asked what the industrial strategy challenge fund would look like. Further details will be set out in the Budget next year. Many of our Autumn Statement measures, including the NPIF, will form part of the industrial strategy. We await that with interest.
Perhaps the most expensive speech of the evening came from the noble Lord, Lord Jones, who had at his fingertips some shovel-ready schemes in Wales and the north-east. I will certainly see that those bids are passed on to the relevant Ministers.
There were other requests for regional funding. The right reverend Prelate the Bishop of Birmingham asked what we had done in the Autumn Statement for the Midlands. The answer is that there is £5 million of development funding for the Midlands rail hub, which is a programme of rail upgrades in and around central Birmingham. Local enterprise partnerships in the Midlands will receive up to £392 million of growth-deal funding. On devolution, which the right reverend Prelate raised, we are committed to devolving powers to support local areas to address productivity barriers.
A number of noble Lords mentioned housing, including the noble Lord, Lord Whitty, and the noble Baroness, Lady Warwick. I preferred the tone deployed by the noble Baroness, Lady Warwick, in her contribution rather than the more grudging contribution of the noble Lord, Lord Whitty. It is worth putting on record that net housing supply increased by 11% last year to almost 190,000 homes, the highest supply for eight years. If you multiply 190,000 by five, you are almost at the 1 million homes that the Government have set themselves as a target.
The noble Baroness, Lady Warwick, said that what we had done was an important step in the right direction. Like her, I pay tribute to the work of the housing association movement, which has responded to a wide range of challenges, from reduced grant funding to rent caps and all the rest. I welcome what my noble friend Lord Horam said about the change of emphasis in housing. I think Gavin Barwell is doing a first-rate job with that portfolio. He has moved the dial a little bit to switch emphasis away from the exclusive promotion of home ownership towards a more balanced portfolio of renting. Housing associations do not just build houses; they build communities, run training schemes and do home improvements.
During the debate, some noble Lords suggested that there was lots of money waiting to be invested in infrastructure. Housing associations are for ever raising bonds and private finance. To my knowledge, that has historically been a very good investment—so if sovereign growth funds are looking for areas in which to invest, I am sure that housing associations would be very pleased to have a dialogue with them. As I said a moment ago, we are committed to delivering affordable homes of a variety of tenures to support a wide range of people in different circumstances, at different stages of their lives, and we recognise that home ownership is not possible for everybody.
The noble Baroness asked me whether the terms of reference of the National Infrastructure Commission might be varied. I will certainly take that up in the appropriate quarters. She wanted freedom for housing associations to set their own rent levels. That is a big ask, with housing benefit implications for the Government. Given the large sums of money the Government have invested in housing, I think they will continue to have an interest in the return that society gets from that investment.
A number of noble Lords understandably expressed concern about social care and health. On social care, it is worth making the point again that there is a new social care precept that enables local authorities to increase council tax by 2%. That raised £380 million in the first year—and it is cumulative: you can do 2% on 2% on 2%. By 2019-20, the cumulative total raised will be £2 billion, which is a sizeable sum.
We will also have the new social care fund from April next year, which will rise to £1.5 billion in 2019-20. That will be rolled into the better care fund, a single-pool block of money that local authorities and the health service can draw on in order to break down the iron curtain between health and social care.
I was asked this evening for £4 billion of extra money for the NHS, but the noble Baroness will understand that it is not within my capability to give that. We have delivered what the NHS asked for under the five-year forward view—and, as it asked, we front-loaded it.
Some of my noble friends expressed impatience about the 45% higher rate of tax. We have to honour our manifesto commitments about the personal allowance and the 40% rate before we look at that—although I take on board my noble friend Lord Lawson’s initiative, mentioned by my noble friend Lady Noakes.
The noble Baroness, Lady Hollis, mentioned pension tax relief. That has been cut back quite sharply in recent Budgets, and I think that there was a further reduction in the Autumn Statement of the amount that those drawing on their pots can pop in—so action is being taken there. The noble Baroness, Lady Donaghy, raised a point about the self-employed and HMRC and DWP, and of course I will pursue that.
A number of noble Lords raised IPT: insurance premium tax. It is a tax on insurers and it is up to them to decide whether and how to pass the cost on to consumers. We are working with the industry to make improvements. For example, we are taking action to clamp down on minor fraudulent exaggerated whiplash claims, which add significant costs to motor premiums. Insurers have committed to pass the savings on to consumers, which should save drivers an average of £40 per year. They will also benefit from other measures, including the cut in corporation tax. I do not have the specific figure that I was asked for about the impact on millennials.
The right reverend Prelate the Bishop of Portsmouth welcomed the LIBOR fines going to service charities. The noble Lord, Lord Bilimoria, welcomed the reduction in corporation tax, although the noble Baroness, Lady Kramer, was not quite so keen. My noble friend Lord Leigh made the point that something he suggested three years ago has now happened—so perhaps what he suggested today will be in a future Budget in three years’ time. I note what he said about the diverted profits tax, which in his view ought to raise a larger sum of money than it does.
The noble Viscount, Lord Hanworth, repeated to some extent a debate we had about exchange rates. The Government do not think that we should have a view on the exchange rate; we will simply have to agree to disagree on that. The noble Lord, Lord Lea of Crondall, asked about our share of exports. It has trended downwards as emerging countries have entered the world economy and pushed up their share.
On procedural issues, my noble friend Lord Wakeham and others, including the noble Lord, Lord Whitty, and my noble friend Lord Suri, welcomed the move from two events a year to having one unified Budget. My noble friend Lord Wakeham, as a former Chief Whip and former Leader of the House, made the point about the business management advantages of starting in the autumn in order to get it through.
My noble friend Lord Higgins asked about having a debate in the Moses Room. That is a matter for the usual channels—I see two of them here, one on each side, and they will both have heard that. My noble friends Lord Flight and Lord Northbrook raised some issues about stamp duty, and I will write to them on that.
Many of the things we have looked at today are ongoing challenges—whether securing the public finances, addressing the productivity gap or supporting the most vulnerable as effectively as possible. I thank all noble Lords who have contributed today. It has been a thought-provoking debate, and I have enjoyed listening to the vast knowledge and wisdom which has been shared. If a consensus has not emerged, I hope that even our grudging opponents might agree that the Government have gone some way in the Autumn Statement to ensuring that Britain has a brighter future, and I echo the optimism with which my noble friend Lord Flight ended his speech.